The purpose of this report is for Cabinet to consider and approve:

a.         The final outturn position for 2008/09.

b.         The creation of new reserves in the 2008/09 accounts.

The Cabinet Member Resources, Councillor H Bramer, presented the report of the final revenue and capital outturn for 2008/09 which provided the Council’s overall performance for the financial year and which outlined the creation of new reserves in the accounts.

Members were advised of the positive overall summary for the Directorate budgets with a net under spend on the revenue account of £42,000 on a net budget of £132m.  Whilst overall Directorate positions did contain some over and under spends Members were advised that sufficient reserves had been available to cover overspends in areas had they been required.

The final overall position for the authority taking account of the Directorate position and corporate items such as cash management and other activities undertaken centrally, provided an overall underspend of £249,000 on the Council’s net budget of £132m.  Councillor Bramer stated that this was a sound position and demonstrated strong financial management within the Council.

The Cabinet Members Resources outlined to Members the proposed creation of new reserves at a time when future funding of local government would come under pressure and during which the economic recession would affect the local economy.  It was proposed that a £346,000 economic development reserve be created to support Herefordshire’s economy during this difficult time.  A further £500,000 would be added to the Council’s waste disposal reserve and the overall £249,000 underspend on the revenue account would be added to the existing social care reserve bringing it to a level of £926,000. 

Members were informed that the Council had not been affected by the collapse of the Icelandic Banks during 2008/09 and the overall management of cash balances by the Treasury Management Team contributed £483,000 to the overall position.  During the year, borrowing had been re-scheduled, which would minimise the amounts that impacted the Council’s revenue account in the future

The Cabinet Members Resources stated that the Council had responsibility for a significant capital programme and in 2008/09 capital expenditure totalled just over £48m against an original budget of £57.9m.  Significant capital schemes in excess of £500,000 were outlined in the report and the wide ranging schemes demonstrated the extent of the Council’s involvement in activities to support service provision in Herefordshire.  It was recognised that whilst there had been some slippage in the programme it was noted that this would not a result in the loss of funding and the Council would carry forward any unused funding for capital schemes into 2009/10 financial year.

Heather Foster, Acting Head of Financial Services outlined to Members some additional points for consideration.

The current economic conditions had reduced local government income and had a significant detrimental impact on both the Deputy Chief Executive’s and Regeneration Directorates in respect of reduced search fees and planning receipts respectively.  Members were informed that there had also been a reduction in car parking fees, however this loss had been contained in the Environment Directorate’s overall outcome.

In relation to general reserves, the Acting Head of Financial Services stated that whilst the overall level had reduced by £338,000 to £6.39million, the amount of reserves was in excess of the minimum required within the council’s medium term financial strategy of £4.5million, and demonstrated the authority’s healthy position in relation to both general reserves (outlined in page 33 of the report), together with specific reserves which equated to £16.06million (as outlined in page 34/35 of the report).  Cabinet was advised that the Council had used £8.2million in prudential borrowing, with a further £2.5million of budgeted prudential borrowing to be allocated to schemes at the end of 2008/09 which was used to fund the capital bids for 2009/10.  Members were informed of the capital receipts reserves, the commitments for which over the next three years included the funding of corporate accommodation, strategic housing, smallholdings improvement and the provision of a cattle market.

Responding to a question posed by the Independent Group Leader regarding the number of school positions that would become redundant during the year and would be funded through the Schools Redundancy Special Reserve, the Cabinet Member for ICT, Education and Achievement, Councillor PD Price stated that 15 new head teachers had been appointed during the year, however no information was available regarding redundancies. Councillor Price emphasised that there would be no school closure in the context of agreed Council policy.  More detailed information would be provided to the Independent Group Leader in due course.  The Deputy Leader informed Cabinet that it was important to acknowledge that some schools were working closely and constructively together to consider possible merger options, as a consequence some redundancies may arise, however no specific details were currently available.

The Cabinet Member Highways and Transportation, Councillor DB Wilcox, responding to a question regarding the finishing costs of the Rotherwas Access Road stated that as with all major schemes the finishing element of completed projects were accounted for and were not unexpected. 

Responding to a question regarding the setting of borrowing limits, the Acting Head of Financial Services stated that, as in line with CIPFA guidance (introduced in 2004), the Council itself considered what was prudent to borrow and determined its own borrowing limits, which were currently well within the limit set by the authority.  Members were informed that all authorities determined their borrowing limits which took account of affordability (income/expenditure) and prudence.  No change to the current CIPFA guidance was anticipated.

The Cabinet commended all Council staff and the Resources Team on the production of an overall exceptional set of figures and for prudent financial management in what had been a difficult financial year.

RESOLVED that Cabinet

(a)   Approve the final outturn position for 2008/09.

(b)   Approve the creation of new reserves in the 2008/09 accounts.