Thanet District Council: position on financial reserves
In a Budget Strategy report, being discussed by Cabinet tonight (Thursday 17 November), Thanet District Council has outlined the low level of reserves it holds.
The following information has been provided to explain what the current situation is and to provide reassurance about the financial situation.
A reserve fund is there to help deal with unexpected events and situations, as well as to provide resources to capitalise on opportunities to improve quality of life in Thanet through for example, regeneration.
It is supposed to have ‘adequate’ reserves but there is no set or statutory level.
Within its Budget Strategy report, the council identified a figure of £20 million.
This figure came following a CIPFA (The Chartered Institute of Public Finance and Accountancy) benchmarking exercise with other councils across the country and reflects an indicative average across the country - it includes councils that are far wealthier than Thanet.
It was included to be open and honest about Thanet’s relative position in relation to its reserves. The council is projected to have £6.6 million in reserve but as a council that cares about good financial stewardship, we would like this figure to be higher.
Not at all.
The 2015-16 accounts were signed off this September and would not have been approved by our external auditors if they felt the level of reserves were too low.
Over the last four years Thanet District Council has had to manage a reduction of nearly 40% in revenue support grant from Government.
At the same time there have been substantial costs and liabilities associated with historic decisions.
However we have stabilised the financial position and are working hard to ensure our reserves are replenished.
We will aim to replenish our reserves by generating additional income and becoming more efficient in developing and improving how we deliver services to provide the best value for money to our residents.
As part of the budget setting procedure, we shall be consulting with residents and business and seeking their views on the 2017-18 budget so that funds can be prioritised effectively and efficiently.
Our existing Medium Term Financial Strategy is to increase council tax by 2% each year. This is common amongst most local authorities, who are also facing reduced Government funding.
If we didn’t increase Council Tax we would have to bridge the funding gap in some other way, with an adverse impact on services.
“This council has been subject to a reduction of nearly 40% in revenue support grant over the last four years. Additionally, there have been substantial costs and liabilities associated with historic decisions. In this context, a benchmarking exercise was undertaken to understand Thanet’s relative position regarding its reserves. Whilst our projected level for 2017-18 is £6.6m, we are in the process of developing an updated four-year Medium Term Financial strategy to continue the process of replenishing our reserves by generating additional income and becoming more efficient.
“We are continuing to develop and improve the way we deliver services to provide the best value for money to our residents and have applied to Government for a four-year settlement to help provide further certainty for our funding until 2020.
“This council has a solid track record of sound financial management, its accounts received a clean audit for 2015-16 from its external Auditors and delivered the £1.2m savings required to balance the 2016-17 budget. The budget strategy for 2017-18 also sets the framework to deliver a further projected £1.7m savings.
“Making improvements to the council’s finances continue to be a priority which is why it is more important than ever for residents and businesses to share their views during the current public consultation on the 2017-18 budget so funds can be prioritised effectively and efficiently.”