Apologies were received from Councillor Diane Neil Mills and Councillor Suzanne Grocott.

Noted.

Caroline Holland, Director of Corporate Services, outlined the format and content of the report. This report will be presented to general Purposes Committee on 26 June 2013 – the external auditors (Ernst and Young) will be at the meeting and may be invited to comment on their findings so far.

Caroline Holland said that the accuracy of the outturn predictions had improved this year in respect to the revenue accounts, though less so on predicting movements in reserves, and had deteriorated in relation to the capital programme.

All officers present provided additional information in response to questions on the detail of the report. These are set out below.

Revenue outturn and variance analysis

Client income for adult social care was higher than expected and this contributed to the underspend in Community and Housing – paragraph 3.8 of the report. Sutton and Wandsworth councils also had an underspend on adult social care.

The government definition of capital expenditure has been clarified and this resulted in some items (such as temporary classroom buildings) being moved from capital to revenue expenditure. (paragraph 3.7)

The pension strain referred to in paragraph 3.10 relates to early payment of pensions for over 55’s being made from the General Fund and not the Pension Fund.

Brain Thompson, Head of Accountancy, said that the outturn variance on recharges (shown in Table 1) is a residual balance of central support costs that haven’t been reallocated to departments. The net impact on the accounts is zero.

Reserves and balances

In response to a question about whether the level of General Fund reserves could be justified, Caroline Holland said that it is in the middle of a range identified as acceptable in a report to Cabinet. She added that the level of General Fund balances is kept under review and that updates on the use of reserves will be included in the quarterly monitoring reports that will be received by the task group during 2013/14.

Caroline Holland described each of the categories of reserves (set out in the table at paragraph 6.1) and the level of spend during the year.

Caroline Holland said that a close eye is kept on earmarked reserves and money is transferred back to revenue if it is not going to be used for the specified purpose.

The Council Programme Board monies will spent on investment, including work associated with implementation of the customer contact strategy and a new electronic document management system.

Capital outturn

The capital budget underspend was considerably more than predicted and wil result in the re-profiling of the capital programme for future years.

Caroline Holland confirmed that there is a limit to the Council’s capacity to spend capital and that the most spent in a previous year was £42m so it is unlikely that the £57m capital programme will be spent in 2013/14. In response to a question, she added that if there was a need for a larger capital spend, for example for a new secondary school or expansion of an existing  ...  view the full minutes text for item 3.

To be confirmed at the meeting of the Overview and Scrutiny Commission on 16 July 2013.