Minutes:
The Committee considered a report of the Director of
Resources presenting the Statement of Accounts for 2005/06. A copy of the
report marked ‘B’ is filed with these minutes. The Head of Finance in his
introduction highlighted some minor changes to the accounts arising from
further work completed on the new
Arising from discussion, the following points were raised:
(i) Job Evaluation
The Committee was
advised that the Statement of Accounts would be amended in light of the outcome
of the recent Court of Appeal decision against the County Council in relation
to the implementation of Job Evaluation.
Members queried
whether the provision of £4.5m would be adequate to meet the costs of
implementing the Tribunal decision. The Committee was advised that there was
some uncertainty as to how this should be calculated and it was felt that the
provision of £4.5m would be sufficient to cover the worst case scenario.
(ii) Landfill
Allowance
In response to a question, the Committee was informed that landfill allowances were issued to local
authorities to allow waste to be put to landfill. In 2005/06 Leicestershire
County Council had been allocated an allowance of £3.7m and it was anticipated
that £3m of this would be utilised. The balance of £700,000 had been set aside
and was presented on the balance sheet as a non cash
backed reserve.
Over time landfill
allowances would reduce whilst at the same time it was expected that waste
production would increase. It was expected that with the reserves there would
be sufficient allowances up to 2008/09 but there would be a major problem for
2009/10 unless action was taken.
(iii)
Members sought clarification as to the adequacy of the level
of
Members queried what sort of risks the Authority needed to take into account in this calculation and were informed that the biggest financial risk that the Authority faced was in regard to demand led budgets, particularly in respect of Learning Disability services. Other risks which might lead to a shortfall included pooled budgets with health authorities and savings not being achieved.
(iv) Pooled Budgets
Members queried risks surrounding pooled budgets with the NHS and were informed that in respect of last years accounts contributions had been agreed and no major problems were expected. Moving forward joint arrangements with the NHS was considered a risk and would be kept under review.
(v)
Borrowing
Members questioned the large increase in long term borrowing and were informed that advantage had been taken of historically low interest rates to borrow for the 2006/07 programme. When deciding to borrow the County Council took advice from its Treasury Management advisor, SECTOR. There was no negative impact in respect of the Authorities revenue account as the advance borrowing would earn interest until it was utilised.
A query was raised about whether the County Council’s average long term borrowing rate was favourable compared with other authorities. It was explained that this was difficult to assess because interest rate statistics ignored premia on debt rescheduling. The view from SECTOR was that our debt portfolio compared favourably with their many other local authority clients.
RESOLVED:
That the Statement of Accounts for 2005/06 be approved.
Supporting documents: