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Agenda item
Reserves Policy 2023-24
(Kit Wheeler, Chief Finance Officer & S151 Officer)
Decision:
1) Cabinet recommends that Full Council agrees the updated Reserves Policy.
2) Cabinet recommends to Full Council that the minimum General Reserve balance be reduced from £6m to £4m.
Minutes:
The Chief Finance Officer presented a report that updates the Council’s approach to Reserves in preparation of its Medium Term Financial Strategy and as part of the budget setting process for 2024-25. The recommendation is that the minimum General Reserve balance be reduced from £6m to £4m. This would continue to be reviewed. If risks increase a revision will be brought forward.
Councillor Haffenden asked why the guidance has changed from £6m. The Chief Finance Officer explained the £6m was a previous calculation. The new calculation is £4m.
Councillor Batsford asked regarding risks. The Chief Finance Officer answered there are earmarked reserves.
The Councillors debated and highlighted the need to keep to the £4m reserve balance and how a full review of all reserves is underway.
Proposed by Councillor Barnett and seconded by Councillor Willis
RESOLVED (unanimously):
1) Cabinet recommends that Full Council agrees the updated Reserves Policy.
2) Cabinet recommends to Full Council that the minimum General Reserve balance be reduced from £6m to £4m.
Reasons:
1. Sections 31A, 32 42A and 43 of the Local Government Finance Act 1992 require billing and precepting authorities in England and Wales to have regard to the level of reserves needed for meeting estimated future expenditure when calculating the budget requirement.
2. Hastings Borough Council, like many others at the current time finds itself under considerable financial duress. To ensure that Councils do not fall fail of overcommitting themselves financially there are several safeguards in place to prevent this from occurring.
These include;
• All Councils must set a balanced budget as set out in sections 31A, 42A of the
Local Government Finance Act 1992, as amended.
• The Chief Finance Officers duty to report on the robustness of estimates and
adequacy of Reserves (section 25 of the Local Government Act 2003) when the
Council is considering its budget requirement.
• Section 151 of the Local Government Act 1972 states as part of the legislation that
each Local Authority must make arrangements for the proper administration of their
financial affairs and that the Chief Finance Officer / proper officer has responsibility
for the administration of those affairs.
3. The above requirements are reinforced by Section 114 of the Local Government Finance Act 1988 which requires the Chief finance Officer in England and Wales to report to Council if there is or is likely to be unlawful expenditure or an unbalanced budget. This would include situations where reserves have become seriously depleted and it is forecast that the authority will not have the resources to meet its expenditure in a particular financial year.
4. Within the existing statutory and regulatory framework, it is the responsibility of the Chief Financial Officer to advise the Council about the level and nature of reserves to be held. In assessing the adequacy of unallocated general reserves the Chief Financial Officer will take account of the strategic, operational, and financial risks facing the authority. The Chief Financial Officer will also ensure that there are clear protocols for their establishment and use.
Supporting documents:
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