Agenda and minutes

(a)          This meeting is to be webcast;

(b)        Members are reminded of the need to activate their microphones before speaking; and

(c)        the Chairman will read the following announcement:

“I would like to remind everyone present that this meeting will be broadcast live to the Internet and will be capable of subsequent repeated viewing, with copies of the recording being made available for those that request it.

By being present at this meeting, it is likely that the recording cameras will capture your image and this will result in your image becoming part of the broadcast.

You should be aware that this may infringe your human and data protection rights. If you have any concerns then please speak to the Webcasting Officer.

Please could I also remind Members to activate their microphones before speaking.”

The Chairman reminded everyone present that the meeting would be broadcast live to the Internet and that the Council had adopted a protocol for the webcasting of its meetings.

(Director of Governance) To report the appointment of any substitute members for the meeting.

The Cabinet Committee noted that there were no substitute members for this meeting.

(Director of Governance) To declare interests in any item on this agenda.

There were no declarations of interest pursuant to the Council’s Code of Member Conduct.

To confirm the minutes of the last meeting of the Committee held on 21 June 2018 (previously circulated).

            RESOLVED:

That the minutes held on 21 June 2018 be taken as read and signed by the Chairman as a correct record.

Section 100B(4)(b) of the Local Government Act 1972, requires that the permission of the Chairman be obtained, after prior notice to the Chief Executive, before urgent business not specified in the agenda (including a supplementary agenda of which the statutory period of notice has been given) may be transacted.

That, as agreed by the Chairman of the Cabinet Committee and in accordance with Section 100B(4)(b) of the Local Government Act 1972, the following items of urgent business be considered following the publication of the agenda:

·         Annual Governance Report; and

·         Financial issues Paper.

To consider the attached report (FPM-008-2017/18) and appendices.

The Assistant Director (Accountancy) presented a report regarding the Annual Governance Report. The International Standard on Auditing 260 required the External Auditor to report to those charged with governance on certain matters before they gave an opinion on the Statutory Statements of Accounts. The audit of the Council’s Statutory Statement of Accounts for 2017/18 would be presented to the Audit and Governance Committee on 30 July 2018.

The audit report highlighted the key findings of the financial statements of the Council for the year ending 31 March 2018, and had only been received today as the audit was still ongoing and had been tabled for information.

The Assistant Director (Accountancy) advised the Cabinet Committee that the key findings were;

(a)          That no additional significant audit risks had been identified during the course of the external audit procedures subsequent to the Audit Plan on 19 January 2018;

(b)          That the final materiality was £2,000,000, which had not required reassessment;

(c)          That there were no significant changes to the planned audit approach nor were any restrictions placed on the audit;

(d)          That the audit identified the following material misstatements:

• Upon transfer of the Langston Road Retail Park from Assets Under Construction to Investment Properties, the Revaluation Reserve balance was not removed via the Capital Adjustment Account. The revaluation reserve was therefore overstated by £6.503 million and this had been adjusted in the revised financial statements;

• The St John’s Road site was classified as an asset held for sale within current assets at £6.139 million in the draft financial statements. However, planning permission had not yet been granted on the site and therefore the site should have been classified as a surplus asset within non-current assets. Surplus assets were consequently understated by £6.139m and this had been adjusted in the revised financial statements; and

• The Essex Pension Fund actuary reissued its IAS19 actuarial valuation report in June 2018 following publication of the Council’s draft financial statements as there had been a significant movement in the estimate used in the actuarial calculation and the actual fund value at the year end of £111 million. The impact for the Council was that the pension scheme liability had increased by £2.859 million to £74.860 million and this had been adjusted in the revised financial statements.

(e)          That there had been no unadjusted audit differences;

(f)           That the audit identified no significant deficiencies in internal controls;

(g)          That following the receipt of the draft accounts, the Pension Actuary had  issued an updated IAS19 report and the audit was in progress;

(h)          That a number of presentational changes had been made to the draft financial statements as a result of the audit;

(i)            That management reported at the end of the year a General Fund balance of £6.7 million, which was an improved position compared to the opening balance of £0.5 million predominantly due to a change in accounting treatment. Management were planning for reserves to be 37% of the Council’s net funding requirement by  ...  view the full minutes text for item 18.

To consider the attached report (FPM-001-2018/19).

The Assistant Director (Accountancy) advised that the report provided a framework for the Budget 2019/20 and updated Members on a number of financial issues that would affect the Authority in the short to medium term.

He advised that following the General Election on 8 June 2017, a formal date had now been set for leaving the EU on 29 March 2019; the economy had endured low interest rates for nearly a decade with further rate increases yet to materialize; the Consumer Prices Index (CPI) had fallen to 2.3%; and firmly remained within the tolerance set by Government. It was hoped that the Autumn budget would provide more clarity on the two big issues of the Fair Funding Review and Business Rates Retention and it was unlikely that any improvement in District Council funding would be seen in the near future.

The Assistant Director (Accountancy) advised that the following issues represented the greatest areas of current financial uncertainty and risk to the Authority;

Central Government Funding – The Settlement Funding Assessment (SFA) had reduced over the four year period by £2.48m or over 45%.  Consequently, resulting in a negative Revenue Support Grant of £0.28 million in 2019/20 and an additional tariff to be paid to Central Government. Currently no information had been provided on the settlement for 2019/20, although the Fair Funding Review (FFR) would affect allocations and distributions between local authorities from 2020/21 onwards. It had been assumed that the FFR would affect New Homes Bonus, Housing Benefit Admin grant and how Business Rates retention was going to evolve over the next few years.

The Council had increased Council Tax in 2018/19 by 2.48% to provide for additional policing for three years and the MTFS had assumed that the police contribution would cease after the three years with Council tax reverting to its former level. The Local Council Tax Support (LCTS) funding would also be phased out by 2019/20.

Business Rates Retention - There was very little growth anticipated after 2017/18 despite the building of the retail park and other known likely developments within the district with particular caution required over the estimates for 2017/18 and beyond. The new rating list was being used and there was still no data available. The complexity around the introduction of the new list had been made worse by changes to transitional relief and the appeals system; however there were still around 100 outstanding appeals from the previous list including the one property in the south of the district which had a rateable value approaching £6 million. The total provision against appeals was currently £3.39m.

This time last year the Government announced 100% local retention of business rates which has since been amended to 75% with a view for implementation in 2020/21. In addition, a proposal within the FFR formula suggested that the average Council Tax be used to calculate the assumed amount a Council could raise from the Council Tax and that the Council Tax be set in line with the average for  ...  view the full minutes text for item 19.