Agenda item

This report updates the Committee on the Council’s Draft Statement of Accounts 2024/25.

Mr Kaycee Ikegwu Head of Finance (Housing & Chief Accountant) introduced the report.

The Committee heard:

·         In relation to the exceptional financial support, in the year 2024/25, the Council had approached Government for about £28 million, but ended up needing only £10 million. By the end of 2025/26, the Council would find out exactly how much of the £37 million it would require.

·         The £10 million from the previous year was what was needed to utilise the £28 million that had been agreed in principle from Government for 2024/25. The £37 million related to 2025/26 and that was what the Council estimated its pressures to be. This would include the pressures that were coming through for 2024/25. It was not necessarily £10 million plus £37 million, because when the Council set the balance budget in March 2025, it had anticipated some of the pressures that were coming through from 2024/25. The Council was keeping a close eye on it with monthly monitoring. The first quarter report would be presented to Cabinet and then to the Overview and Scrutiny Committee in September 2025. This would provide a better indication.

·         In relation to housing benefit overspend, although this was quite unusual, it tended to be money received in grant that then got redistributed as part of housing benefit. The Council had some historic overpayments that it was trying to recover. The Council had overpaid some benefit claimants and these remained outstanding. The Council was looking to take a realistic and prudent assumption about how much of that was achievable. There were also issues around supported exempt accommodation. The amount of housing benefit that people were entitled to if they were in supported accommodation was different if they lived in normal private rented accommodation, for example. There had been some errors in some of those calculations. Overspending was largely driven by an increase in bad debt provision relating to housing benefit. The management reporting on the outturn position was set out in the report that had been submitted to the Overview and Scrutiny Committee.

·         In relation to the increase of approximately £300 million on the pensions fund, the audit report was based on what had been observed. It discussed the 2022 or 2023 position because those reports would have been written later. In examining the 2023 position, there was a net asset position. It was a net asset position of £87 million. These were done every year and assisted by actuaries. The current assessment found a liability of £300 million. Prior years had movements of about £100 million. Although £300 million seemed large, the reference really being made was about future liabilities. It was not referring to an actual spend in a year. In actual fact, assets outweighed liabilities, but under accounting rules, the Council could not benefit from it. There was something which took effect called the ‘asset ceiling’. The way local government pension schemes worked was it was only possible to recognise a surplus if the Council was able to extract it in the form of a refund at any point in time. Local government pension scheme funds prevented the Council from doing that. The Council was not allowed to recognise the surplus it had over the assets. Therefore, all it would be left with was a series of liabilities associated with things like unfunded liabilities. For example, where the Council over the years may have paid pension strain into the pension fund, that would sit as an unfunded liability, so the Council could not be allowed to offset the assets against it. In order to look at the more general health of the pension fund, the Council was probably better off looking at the reported position of the fund at any point in time and not purely what was visible in the accounts.

·         The triannual valuation of the pension fund took place every three years and the Council was currently going through this process. This was for the valuation as at March 2026. Two and a half years ago, the pension fund was valued at 124%. Work was being done to look at the current triannual valuation. Pension fund surpluses may have increased, but the process the Council was going through would complete towards the end of the year and the actuary would presenting an update in terms of the work that they had done to take to Pensions Committee and Board in the coming week. In relation to the triannual valuation, the pensions fund was reported to every Pensions Committee and Board and had not gone into deficit. It was still in surplus. The Council was just looking at how the surplus compared to what was reported in 2022/23.

·         In relation to savings, the Council had improved at being able to monitor savings. As part of its monthly budget monitoring, it reported on the progress of savings and the progress of savings would be reported to Cabinet on a quarterly basis. The upcoming report would show a strict compliance in the savings that the Council needed to achieve. The report would also go to the Overview and Scrutiny Committee. The Audit Committee would have sight of the progress of savings as part of financial sustainability risk. The Committee could always reference the report that went to Cabinet and the Overview and Scrutiny Committee, but bringing the full report to the Audit Committee could only really be done as update on the on the risk register. The Corporate Risk Register that the Council had happened to have that particular risk highlighted. In future reports, it would be possible to capture information about where the Council was with the delivery of savings.

·         A series of debts totalling £337 million outlined on page 132 of the agenda papers did not seem to outline if they were recoverable. A written response would be provided to the Committee. 

RESOLVED:

To note the contents of the report and the Draft Statement of Accounts.