Agenda item

To review and note the draft Statement of Accounts for 2021/22.

Members considered the Statement of Accounts 2021-22 report presented by Mark Saunders, Chief Accountant.

Members made comments, asked questions, and received responses as follows:

·       Councillor Booth stated that with regards to long term investments there is a figure detailed against that entry within the accounts and he asked whether that is in relation to the properties in Wisbech, which details a sum of £230,000? Mark Saunders explained that the figure relates to two long term investments in property funds that were taken out at the end of the year, and he stated that the expectation is that when dealing with property funds they should normally be in place for around five years in order to try and benefit from any potential rise in capital and the annual rental interest payments. Councillor Booth stated that as it is a new area for the Council to be involved in, the risks need to be reviewed and monitored closely.

·       Councillor Booth referred to the Public Works Loan Board and stated that there appears to be one loan which is due to reach maturity in the next five or six years and he asked whether they should be listed including the end dates so there is a clear picture understanding? Mark Saunders stated that the two loans from the Public Work Loan Board are reviewed very closely in terms of where the interest rates are going for repayment purposes and he explained that the Council’s Treasury Advisors have recently provided a detailed breakdown of what the impact, penalties and benefits would be of early repayment. He added that if it becomes viable to repay it then in terms of the Council’s Capital Programme it will be necessary to take out new loans in the future and at the moment due to interest rates it does not make sense to do so.

·       Councillor Booth questioned what advice the Council’s Treasury Advisors have provided with regards to interest rates for the short-term investments that the Council holds? Mark Saunders stated that the current advice is that the interest rates are likely to increase, and any short investments should be kept reasonably short until interest rates start to level out and the opportunity to plan a bit further ahead can be considered. He added that currently the rates over a 12-month period are not that much different to a rate over a few months, but the decision has been taken to keep any investments up to a three-to-six-month period so that the Council can take advantage of anything that takes place in the future. Mark Saunders explained that interest rates have increased quite significantly since this time last year and at that time the rate was very low where now the rate is between two and three per cent.

·       Councillor Booth asked for clarity that the Council is not currently taking out any new investments for a twelve-month period due to the unknown financial situation? Mark Saunders confirmed that is the case and added that there needs to be some certainty because the Council has now invested quite significantly with the two property funds which need to be tied in with the cash flow requirements and consider what the situation will be over the next twelve months. He added although there are funds in the bank at the moment, there are a number of large projects which are taking place imminently which will have an impact on the funds the Council currently hold and there needs to be a certainty that the Council can still invest for that period of time.

·       Councillor Mrs Davis stated that she reviewed the report where it makes reference to the pandemic, and there has been no news that the Government are planning to provide further funding, but all local authorities will be struggling due to the funding gap. She questioned whether there is any knowledge on what the impact will be for the Council? Mark Saunders explained that there are certain factors underway which will assist him in being able to look at the figures and at the moment as part of the budget setting exercise the overall finances and budget of the Council is being reviewed to see how they culminate. He added that a draft budget report is due to go to Cabinet in December and a great deal of work will be undertaken to see what impact that will have but it is likely to be significant and it is likely that the Government will not provide any further money to our part of the public sector. Mark Saunders explained that if the Government maintain the levels of funding as they did in the 2021 spending review for the period, that will effectively be a cut in the amount received due to the fact that inflation is increasing towards 10% and pay awards are rising significantly higher than what had been budgeted for. He added that if there are no more additional resources received from the Government then it will be a significant challenge for all local authorities.

Members AGREED to note the contents of the draft Statement of Accounts for the financial year ended 2021/2022.