Agenda item

Consideration was given to report of the Chief Officer Resources.

The Chief Officer Resources advised that the report provided the forecast reserves position for 2020/2021 as at Quarter 3 and noted the statutory requirements concerning Local Authority Reserves as detailed in the report.

The Chief Officer Resources referred to Section 6 of the report which detailed the overall summary of the forecast financial position in relation to the balances in general and earmarked reserves at 31^st March, 2021. The Chief Officer outlined Table 1 which showed the increased forecast position for the general reserve at year-end 2020/2021. The balance represented 5.28% of net revenue expenditure which was above the 4% target level of £5.414m. This indicated further progress towards strengthening the financial resilience of the Council and provided a buffer to deal with unexpected future issues.

The Chief Officer Resources reported that the forecast increase in general reserves was the result of a number of factors which included a forecast net portfolio underspends of £0.552m and an agreed budget contribution in 2020/21 of £0.200m. This supported medium term financial planning and strengthened the Council’s financial resilience. The Chief Officer Resources also noted the forecast level of earmarked reserves as at 31^st March 2021 which was anticipated to be £9.189m which was an in year increase of £0.917m and the Chief Officer noted that further details of earmarked reserve movements was outlined in Appendix 1.

The Chief Officer Resources advised that the level and adequacy of reserves are regularly reviewed and monitored through regular outturn/forecast reporting. However, in comparison to other Welsh Authorities, Blaenau Gwent still had one of the lowest levels of general and earmarked reserves. In order to meet the Welsh average, general and earmarked reserves would need to increased significantly to approximately £26.4m.

The Chief Officer noted that failure to increase reserves would attract criticism from regulators.

In response to a question raised around the level of reserves, the Chief Officer Resources advised that £1m monies had been planned to put into ear marked reserves for next year as part of the budget setting process, however this report details the 2020/2021 position.

Another Member raised concerns around the level of monies agreed to be placed into reserves for the next financial year and strongly disagreed to this course of action whilst the residents of Blaenau Gwent have had a great deal of hardship during the previous year.

The Member further referred to the overspends in some Portfolios and asked if monies would be taken from reserves to ensure these budgets are balanced.

The Chief Officer Resources advised that no monies would be taken from reserves as the Council forecast a favourable position, subject to no significant issues. The Chief Officer added that in most instances overspending budgets are offset by underspends in other areas and there would be no need to use reserves to balance an in-year budget.

The Member felt it was important that budgets are realistic to prevent overspends. The Chief Officer Resources added that if budget holders felt that their budget was not realistic they had an opportunity to raise these concerns and Council would give consideration to this request as part of the budget setting process. The Authority’s reserves can only to be used once.