Lisa Taylor, Director of Financial Management and Shaheena Kabir, Interim Head of Financial Reporting and Controls, updated the Committee.

The draft accounts were published on the Council website on 31^st May and  are not subject to external audit. Ms Taylor explained that the audited accounts would be presented to the Committee at the meeting scheduled for 23^rd September 2024 and the auditors would attend that meeting.

The Council’s application for the Council’s capitalisation direction was accepted and the Council has been given approval to borrow up to £75 million. Provision was created within the Accounts 2021/22 accounts for £41 million. This was allocated against reserves as the Government had not approved the Council’s request. Following approval, the Council repaid to the reserves the value of the provision. The Council has not yet fully drawn down the £75 million and may not need to do so. 

The Committee discussed the assumptions used in calculating the accounts and discussed the pension fund noting that a one-off reduction in contributions for the period of the current tri annual valuation has been made and will used to pay back some of the capital direction costs. Ms Taylor indicated that further reductions would arise if considered appropriate by the actuaries as part of the tri annual valuation. The Committee sought and received clarification on the budget stabilisation reserve and that it was included in the ‘Movements in Reserves’ section.

The Committee examined data relating to the pension fund. Julia Stevens, Pensions Fund Manager, clarified that the data is based on demographic assumptions drawn up by the actuary and applies to the Local Government Pension Scheme (LGPS) and is not connected to the Council. Ms Stevens added that the actuary uses variables relating to life expectancy, the effect of Covid-19 and any other relevant data. Further discussion took place on the effect of life expectancy and Mr Rowe and Ms Stevens highlighted that life expectancy varied from region to region. The pension fund was open ended, including employees just starting their career as well as those nearing retirement. This required a long-term approach to investing funds and investment policy was to be cautious when it came to contribution rates.

Ms Stevens and Mr Rowe also addressed questions relating to investment managers noting that the Investment Committee oversaw the funds that the Council invested in. There were 86 pension funds across the UK and, addressing Committee questions relating to economies of scale, Mr Rowe said that funds were pooled, and the Council would invest in funds that match the Council’s investment strategy.

The Annual Governance Statement was discussed including the implementation of Oracle, which is due to go live in April 2025, which the Committee noted was complicated. Ms Taylor said that the project was being closely monitored and that projects of this nature do carry risk adding that she was the responsible officer and that Mike Curtis, Executive Director of Resources, was the sponsor. The Chair asked that a briefing on Oracle be prepared.

Action: A briefing on Oracle to be prepared for the Committee

In relation to budgetary pressures, the Council was undertaking a savings and transformation programme. Reports had been considered by Leadership Team and the Overview and Scrutiny Committee. Given its enormity, Grenfell was included in the statement as well.

Ms Taylor, also said that, at the time of the meeting, there was no indication that the schedule for signing off the accounts required to be modified.

The Chair thanked the presenters, and the Committee noted the report.