The Director of Finance and IT will submit Document “L” which presents the Council’s 2020-21 draft statement of accounts. These accounts are subject to approval from external audit.

The report also briefly details the salient financial implications from the accounts. A further report on the accounts will be presented at the meeting of the Committee on the 21 October 2021. It is also anticipated that the final 2020-21 accounts will be presented on this date.

Recommended -

That the financial results from the 2020-21 Draft Statement of Accounts detailed in Document “L” be noted.

                                                                        (Chris Chapman – 01274 433656)

The Director of Finance and IT submitted Document “L” which presented the Council’s 2020-21 draft statement of accounts. These accounts were subject to approval from external audit.

The report also briefly detailed the salient financial implications from the accounts.

It was reported that the key financial implications as at 31 March 2021 from the draft 2020-21 statement of accounts were:

·         Covid – The accounts for the financial year 2020-21 reflected the nature of the activity that had been undertaken to respond to the pandemic but also to continue to provide essential services. The financial pressures of the increased and new activity were supported by substantial additional Government grant and other funding, meaning that the additional Covid related costs and losses were mitigated in the financial year 2020-21.

·         Useable reserves (excluding Capital Grants Unapplied) stood at £299.4m (Council £256.5m, and Schools £42.9m), compared to £238.9m at the end of 2019-20, representing a £60.5m increase in total useable reserves. The main reason for the increase was Covid related, with the Council holding Covid grants received but not yet spent (including Collection fund related funding) at 2020-21 year end, with the expectation that these will be fully used in 2021-22. Unallocated reserves were £10.7m, and General Fund reserves stood at £15m. The General Fund Balance was held in accordance with statute; the purpose was as a safety net against unexpected variations in the Council’s annual expenditure – this was £1.2 billion as shown in the cost of services in the Comprehensive Income and Expenditure Statement. Earmarked reserves were held to protect against specific risks and commitments.

·         The Council spent £63.9m on long term assets, as part of its Capital Programme.

·         The Council held £38.3m of grants provided by external public sector bodies, which would be used in the future to finance the Capital Programme. £4.8m from the sale of property was both received and used to fund capital spend during the 2020-21 year.

·         The Council had £698.8m remaining of borrowing for past spend on capital investment. £154m of this borrowing was in the form of contractual Private Finance Initiative liabilities. £3.5m mainly related to miscellaneous historical debt. £205.3m was temporarily borrowed from the Council’s own cash held in earmarked reserves, reducing interest payments. The remaining £336m was actual borrowing from the Public Works Loan Board and LOBO’S (Lender Option Borrower Option – long term loan).

·         Against the £698.8m of borrowing, the Council had £1,022m of land, buildings, equipment and other infrastructure. The value of the Council’s long-term property was therefore significantly higher than the outstanding debt relating to it.

·         The 2020-21 balance sheet value of the Council’s non-current assets (including current assets held for sale) was £1,022m. This had decreased by £8.7m from the 2019-20 value of £1,030.7m. Capital enhancements to the value of £49.3m were made to these assets during 2020-21 and Assets to the value of £16.5m were disposed of during the year. Also Non-current assets were depreciated by £33.824m during 2020-21

·         The Council’s estimated pension fund deficit had increased to £1,254.6m, based on an estimate made in accordance with accounting rules. The overall defined benefit obligation had increased and this had been primarily due to a re-measurement of the fair value of assets following actuarial losses caused by changes in financial assumptions.

·         The Council maintained a separate fund for Business Rates and Council Tax, from which it distributed pre-agreed shares to itself, the Government, West Yorkshire Fire and Rescue Authority and the Police and Crime Commissioner. Overall the fund ended 2020-21 with a deficit position for both Business Rates and Council Tax. The Council’s own share was a £29m deficit on Business Rates, with the Government holding a £30m deficit. The significant Collection Fund deficit for 2020-21 had arisen largely in relation to reductions being applied to business rates. These reductions reflected central government’s support for businesses, in response to the COVID-19 pandemic, by awarding expanded retail discounts and nursery reliefs, meaning that less rates were billed and therefore collectable in 2020-21. The business rates reductions were funded by central government through Section 31 Grants. The compensation was not included in the Collection Fund but was reimbursed to the Council through the General Fund account. Further relief was provided by central government through the '75% Tax Income Guarantee compensation scheme' which compensated councils for 75% of council tax and business rates irrecoverable losses. The compensation funded by S31 grants, was not included in the Collection Fund, but was reimbursed to the Council's general fund which included £2.546m towards Council Tax losses and £4.582m for Business Rates losses.

Members sought further clarification in relation to the pension fund deficit and the estimation made in accordance with accounting rules and the position relating to the Council’s net revenue budget. They were advised that the deficit was not, in the context of the Council’s revenue budget, significant.

In response to a Member’s question it was reported that the underspend highlighted in the net revenue budget was mainly due to vacancies not being filled.

Resolved -

That the financial results from the 2020-21 Draft Statement of Accounts detailed in Document “L” be noted.