Agenda item

To consider a report from the Executive Director, Corporate Development.

The Committee considered a report and received a presentation on the outturn and the accounts.

 

Members were advised that despite an overspend during the year, the delivery of more than £10m of savings from the reorganisation had been achieved.   COVID-19 was also likely to have a long and sustained impact on the council’s finances and officers were still unclear about the levels of funding the Council would receive from Government in the future.

 

Members received a presentation from the Corporate Director for Finance and Commercial explaining the background to the achievement of producing the first set of accounts for Dorset Council. This presentation is attached as an annexure to these minutes.

 

Following a question about earmarked reserves, the Corporate Director explained these included insurance reserves, PFI reserves and reserves to support particular risks and mitigation. Money in reserves included grant income that hasn’t yet been spent.

 

In respect of continued assets, the Corporate Director confirmed that Section 106 monies was money that has not been received yet but if everything proceeded as expected it will.

 

The Service Manager for Finance, Policy and Compliance explained the ‘reduction in current assets’ mostly related to changes in how the Council has accounted for the collection funds, and the reduction of temporary investments in which all short- term investments were reduced except for those with UBS Global Asset Management and CCLA Diversified Income Fund which have both increased.

 

Following a question from the Chairman regarding whether all the LGR costs had now been paid out, the Corporate Director confirmed they had but some would continue as arrangements were in place between councils on how some things were done.

 

Members received a presentation from the external auditors, Deloitte, on their audit the year ending March 2020.  The audit was on track to be signed by the end of November. The officer congratulated the finance team for preparing a complex set of accounts in difficult circumstances.  He highlighted the key messages and significant risks within the report.   Members were advised that when this audit is was completed Deloitte would produce a report to outline the final conclusions.

 

One member expressed concern about uncollected revenue and what percentage was owed by council tax-payers and what measures were being taken to recover these debts. The Executive Director for Corporate Development highlighted a general point about collecting council tax in that at present we were in exceptional times and officers were tracking but not actively pursuing collections given the economic frailty.  The Council needed to wait until a more normal time to actively pursue.  Officers were forecasting around £13m worth of council tax and business rates could be at risk but would continue to be monitored.

 

In response to a concern about the under estimated spend in Adults and Children, the Executive Director explained that demand forecasting was something the team were working on.  There was a huge degree of volatility in these areas and when setting up for Dorset Council there clearly wasn’t enough put in for Adults and Children and officers were working on this.

 

The Executive Director for Children reminded colleagues the service just had a SEND visit which reflected very positively on a number of areas. She highlighted the need to really profile carefully in budget setting. The Acting Director for Commissioning added that projections were quite difficult at times especially with regard to self-funders. There had been a lot of work with Public Health around different sets of data which gave officers an insight into areas of future need.

 

One member felt that it seemed every year there were overspends in Children’s and Adults Services and the external auditor’s report highlighted Children’s Services in their value for money section which she felt appeared more qualitive rather than quantative.  The officer from Deloitte advised that the report was a backward looking report, looking at the arrangements and tracking the expenditure. Deloitte looked at the financial and non financial arrangements. This was not unusual or unique to Dorset, forecasting demand was a concern for a number of local authorities.

 

The Vice-Chairman highlighted that previously in the County Council estimating was very difficult and demand led and this still seemed to be an issue. He queried if demand led budgets needed to be separated somehow.  The Executive Director advised that the budget in Adults was £114m although there was lots of detail that sat behind that.  The volatility was around the commissioning and the level of detail was monitored by officers. The key point was the need to find a way of meeting the demand when it was there.

 

Following a question about whether there were any plans to increase borrowing in the future, the Service Manager for Treasury and Investments advised that long term borrowing was inherited from the predecessor councils. The council borrowed from a range of counter parties and if opportunities arose to refinance or repay officers would look at these. At times it was difficult to get out of some long-term liabilities as there could be penalties incurred. There were no immediate plans to take out any further long- term borrowing.  Short term borrowing was an area of consideration. It was suggested that the Committee looked at borrowing at a future meeting. 

 

The Chairman made reference quite a lot of money being saved by managing staff vacancies and asked for further details of savings in this regard.  The Executive Director undertook to provide further information on this outside of the meeting.  He added that the Cabinet in October made reference to the removal of a number of posts.

 

It was noted that in the Deloitte report there was mention about where the council could improve and the Chairman asked how this could be tracked or brought forward.  The Executive Director advised there was a tracker set up for such action for Internal Audit and something similar could be set up for External Audit.

 

Following a question about a couple of high value exit packages that were not compulsory, the Executive Director advised that redundancies were made as a consequence of bringing the councils together, and these included the cost of the pension strain.  The Corporate Director for Finance and Commercial undertook to check that the analysis was correct and update the Chairman further outside of the meeting.

 

The Chairman thanked all the Finance team and Deloitte for all their work in putting the accounts together.

 

Decision

That members noted:-

1. the outturn position for Dorset Council for its first year of operation;

2. the impact this had on the Council’s general fund and other reserves;

3. the Auditor’s qualified opinion on arrangements for securing economy, efficiency and effectiveness in Children’s Services;

4. the content of the Auditor’s ISA260 report (separate report);

5. to delegate authority to the Chairman of the Audit and Governance Committee and the Section 151 Officer to approve and sign the financial statements for the period ending 31 March 2020, once the external audit has been concluded.  If the external audit identifies the requirement for any material amendments to the statements these should be reported to the Audit Committee prior to signature.

 

Reason for Decision    

Under the Accounts and Audit (Coronavirus) (Amendment) Regulations 2020, the statement of accounts and annual governance statement (AGS) must be approved by the Council, or a committee to which the Council has delegated authority by 30 November. It was also important for the Committee to understand any issues that need to continue to be monitored, challenged or scrutinised in future.