Members were led through the report of the Principal Accountant that discussed the main issues affecting the Council’s draft Statement of Accounts 2021/22 and provided a commentary on the core financial statements.  At the current time, the Council’s external auditors, Grant Thornton, were yet to commence their  audit of the accounts for 2021/22 but would report on the outcome of their work later in the year in line with the revised national timescales, if possible. The draft accounts included the Annual Governance Statement as amended and approved by the Committee at its meeting in July 2022

The following salient points were highlighted for Members’ attention:

•           The Code of Practice had required no major changes in the presentation of the accounts for this year.

•           The Movement in Reserves statement showed the movement in the year on the different reserves held by the Council (analysed between ‘usable’ and unusable). The surplus of £0.688m (£1.174m deficit in 2020-21) on the provision of services line shows the true economic cost of providing the authority’s services. 

•           The net change of £3.856m before transfers from Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers from earmarked reserves was made by the Council.

•           The Balance Sheet showed the balances and reserves at the Council’s disposal, its long-term indebtedness, the net current assets employed in its operations and summarised information on the fixed assets held. The net worth of the Council has increased by £16.127m,  largely due to a decrease in the Pension Fund liability (£11.3m), decrease in the Collection Fund deficit (£2.3m), increase in the value of investment in property funds (£1.3m) and increases in the capital grants in the usable reserves (£1.4m).

•           The Pension Fund liability of £11.3m was a long-term financial assessment of a possible shortfall based on its current performance and therefore no immediate action was required. 

•           Overall, the Collection Fund balance at year end was a deficit of £4.094m; this balance was made up of both Council Tax and Business Rates.  For Council Tax, the Fund was in surplus by £0.96m, with East Sussex County Council entitled to the majority of this amount.  For Business Rates, the Fund was in deficit of £5.054m with the Government receiving the highest amount followed by this Council. The deficit arose mainly due to the amount of business rate reliefs announced by Central Government relating to 2021/22, which would have been offset by additional section 31 grant payments to the Council.

The Balance Sheet showed that, overall, the financial position of the Authority remained sound with an adequate amount of reserves in place to meet short term needs. The COVID-19 pandemic had exacerbated the financial pressure on the Council both in 2020/21 and 2021/22 and the worsening economic climate was likely to add to the pressures and affect reserves balances. It was therefore essential that in the medium term, the Council continued to deliver the target savings set out in the Medium-Term Financial Plan as well as the Financial Stability Programme in order for the Council to balance its budget.

Members were given the opportunity to ask questions and the following points were noted during the discussions:

•           although the Pension Fund did not impact the Council’s cash position, it was important for Members to have an understanding of its principles;

•           officers would share with Members more detailed information from the Pension Fund report;

•           Business Rates reliefs had been largely covered by Section 31 grant funding received from central Government; and

•           Members thanked the Chief Finance Officer and Principal Accountant for the recent training delivered on interpreting the Council’s Statement of Accounts.

RESOLVED: That the Council’s draft 2021/22 Statement of Accounts be noted.

(Councillor J. Barnes declared a Personal Interest in this matter as Vice-Chairman and Company Executive Director for Rother DC Housing Company Ltd and Vice-Chair of Etchingham Trust for Sports and Recreation and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Courtel declared a Personal Interest in this matter as the Council’s representative for the Hastings Furniture Service and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillors Drayson and Madeley each declared a Personal Interest in this matter as committee members of Light Up Bexhill and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Patrick Farmer declared a Personal interest in this item as Trustee and Treasurer of the Hastings and Rother Mediation Service and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillors Langlands and Thomas each declared a Personal interest in this item as Company Executive Directors and Chair respectively for Rother DC Housing Company Ltd. and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).