To note and approve the annual earmarked reserves review.

The leader of the council introduced the report. He highlighted that Herefordshire had an appropriate level of reserves as a percentage of expenditure, as shown in the comparison with other similar councils. The leader drew attention to the supplement that had been published for this item, which included recommendations for two new earmarked reserves. The first was to undertake research on housing options while the second was to bring forward edge of care services ahead of the current plans.

A minor correction was noted to the supplementary information on the proposed edge of care service – the final sentence should refer to a previously planned introduction from April 2020 rather than 2021.

The chief finance officer explained a number of points in relation to the report namely that:

·         Reserves were held for a number of reasons;

·         School reserves were held on behalf of council run schools;

·         The financial resilience reserve had been established a few years earlier in recognition of the difficulty of projecting future council income and was being topped up each year through the minimum revenue provision;

·         Reserves could also be called on to fund invest to save programmes that could not be delivered through day to day budgets;

·         The pension risk reserve represented an adequate reserve with the pension fund having had a good run on investment returns and being over 90% funded;

·         The government had indicated that roll out of business rate retention would be delayed for at least another year so the business rates smoothing reserve would help to deal with unknowns and guard against successful business rate appeals which could result in significant costs to the council;

·         Unused grants would be examined to see if they could be spent, depending on any conditions attached;

·         Unused schools grants included the devolved schools grant which was held centrally for schools, £400k for high needs and other small grants that the schools forum would determine how to spend;

·         The settlement monies reserve related to an ongoing dispute and would be available once the legal process was concluded;

·         Reserves were reviewed annually and reported to cabinet, in some cases figures were based on estimates of what was required while others related to actual grants received.

The cabinet member housing, regulatory services and community safety explained the background to the proposal to create an earmarked reserve to explore options for delivery of housing in the county. She highlighted that:

·         Residents were facing difficulty in finding suitable housing across the board;

·         There were a number of ways in which the council could deliver additional housing and all would be considered;

·         The investigation would support a business case that would inform consideration of further investment.

The chief finance officer reminded cabinet members that the current proposal would create the new reserves and set out what the money was to be spent on. How it was to be spend would be subject to a further decision at a later date.

Cabinet members were keen to explore all avenues and to consider  ...  view the full minutes text for item 100