Agenda item

The Senior Accountant presented a report explaining the criteria for maintaining individual Reserves and Provisions, following the closure of the 2014/15 accounts and therefore as at 31 March 2015. She explained that Provisions were required for any liability of uncertain timing or amount that had been incurred. They were recognised when:

·           The local authority has a present obligation (legal or constructive) as a result of a past event;

·           It is probable that a transfer of economic benefit will be required to settle the obligation; and

·           A reliable estimate can be made of the amount of the obligation

Reserves were amounts set aside for specific policy purposes and balances which represented resources set aside for purposes such as general contingencies and cash flow management. Generally they were:

·           A working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing - this forms part of general reserves

·           A contingency to cushion the impact of unexpected events or emergencies - this also forms part of general reserves

·           A means of building up funds, often referred to as earmarked reserves, to meet known or predicted requirements.

The report included an estimate for each reserve/provision for 2016. A drop in reserves was shown in the region of £2 million. However, whilst this position could improve, the Committee would be updated after the issue of the External Auditor’s annual report. It was noted that reserves were not used to meet any revenue shortfalls.

In the course of discussion, the following was highlighted in relation to individual reserves and provisions:

(i)            Atrium S106/Atrium Art – The Atrium S106 reserve was generated when the Atrium was built and had been used, mainly, for CCTV. The Atrium Reserve would be used to maintain the artwork in place.

(ii)           Blackwater Valley & Developer Contributions – Members requested details of specific expenditures going forward.

(iii)          Chobham and Town Team Partnership – Members noted that whilst some reserves attracted interest, other did not. The Senior Accountant indicated that funds generated by community groups tended to have interest added, whilst reserves generated by Government or Council funds did not, with interest going to the General Fund Working Balance.

(iv)         Community Fund – Although £75,000 was budgeted for, expenditure was rarely above £30,000 and this was reflected in the reserve. Councillor Josephine Hawkins reported that Community Fund Grants came within her Portfolio and that the deadlines for applications were the end of June and end of September each year. No monies were paid until works were completed.

(v)          Commuted Sums – These sums were allocated for maintenance on specific projects and could not be used for other purposes.

(vi)         Insurance Reserve – Members queried the level of this reserve. It was confirmed that the funds were being held against potential costs in connection with the rundown of Municipal Mutual Insurance. It was expected that the actual costs would become clearer shortly, with a supreme court judgement expected in the near future.

(vii)        Land Drainage – In response to a Member query on funding for the Frimley Fuel Allotments land, the Executive Head of Regulatory noted that the Council could only expend drainage funds on Council owned land.

(viii)       Remediation Fund – Although it had not been used since 2002, this fund had been established to cover the remediation costs of land damaged by traveller incursions. Members recommended that the purpose be changed to include preventative work. Clarification was also sought on the cost of incursions in Heatherside and how the remediation thereof would be funded.

(ix)         Repairs and Maintenance – The level of this reserve was based on the value of all the Council’s assets and the likely cost if all repairs/maintenance had to be done in this financial year. This gave an anticipated annualised cost of work. Members requested a breakdown of expected costs in 2015/16.

(x)          Suitable Alternative Natural Green Space (SANGS) – An Interest free loan had been secured from the Enterprise M3 Local Enterprise Partnership to purchase SANGs. This would be recouped by a charge against developers offsetting new developments. The SANGs had to be maintained in perpetuity. Councillor McClafferty agreed to review projected SANGS maintenance costs with the Executive Head of Regulatory.

(xi)         Bagshot Library – Members sought details on what works were planned for this Council owned building.

(xii)        General Fund Working Balance – Members sought clarification on the significant reduction in this fund projected from 2015 to 2016.

Resolved, that

(i)            the report be noted; and

(ii)           the Executive be advised to consider changing the purpose of                        the Remediation Fund, to include preventative work.