Minutes:
REVIEW OF RESERVES
The report was submitted by Cllr. Peredur Jenkins.
It was seconded by Cllr. Mair Rowlands.
DECISION
1. To approve the Council’s Policy on Reserves as follows -
1.1 The Council holds a number of reserves as part of its
strategy to prudently manage resources. These reserves are used for specific
purposes for the benefit of the communities of Gwynedd. The use of reserves
supports the achievement of service delivery and improvements in the county, as
outlined in the corporate strategic plan.
1.2 Specific reserves (or earmarked reserves) are retained
either under delegated authority given to chief officers, or by the Cabinet.
1.3 In order to define “reserves”, it is necessary to note
the treatment of “provisions”. Provisions are incurred in the accounts in order
to settle an estimate of obligations arising from past events.
1.4 Reserves are amounts set aside for specific purposes, or
funds built up to meet predicted liabilities.
1.5 For each reserve established, the purpose / usage
(reason for creating / how it can be used) is defined, and the basis of
transaction (which chief officer has delegated authority to spend) is
identified.
1.6 Meaningful judgements about reserves can only be made
locally, and decisions will be taken by elected members having due regard to
information and advice provided by the Chief Finance Officer.
1.7 Reserves held by individual departments or corporate
reserves are used to smooth pressure over years (e.g. the emergency severe
weather reserve for the Highways service).
1.8 During continuing austerity, there will be an increased
need for service areas to change and adapt to become more efficient. Efficiency
schemes involve changes with one-off costs, and the Council’s reserves policy
recognises this, with Departments holding balances for use in accordance with
overall principles agreed by the Chief Finance Officer and the Cabinet.
1.9 Departmental reserves will be established from resources
underspent in-year, and the relevant Cabinet Member will oversee use of
reserves on proposed projects. Where in-year service pressures cannot be met
within departments’ annual budgets, then departmental reserves may be used to
address the net pressure.
1.10 Corporate reserves will be established / used by the
Chief Finance Officer and Cabinet, based on need and planned / anticipated
requirements.
1.11 Unavoidable unforeseen or emergency expenditure may be
financed from general balances, but only with Cabinet approval.
1.12 The Chief Finance Officer has a personal statutory duty
(under section 25 of the Local Government Act 2003) to ensure proper
stewardship of reserves, hence he will undertake a continuous review of their
adequacy and use. The annual budget report to Council will include the Chief
Finance Officer’s opinion on reserves in the context of the medium term
financial strategy. Also, significant amendments to reserves will be reported
to the Cabinet for approval.
1.13 External auditors review arrangements to ensure that
the Council’s financial standing is sound, and this will include reporting on
the level of reserves, in the context of their knowledge of the authority’s
financial performance. However, it is not the responsibility of auditors to
prescribe the optimum or minimum level of reserves / balances.
1.14 The Council takes a risk-based approach to maintaining
an adequate level of balances and reserves to meet future spending needs. When
considering the annual budget and medium term financial strategy, the Council
will set out its intention regarding the level of general balances and
reserves, in the context of all relevant risks, provision for inflation,
demography, etc. in the budget.
2. Due to the significant financial challenge facing the Council during 2015/16 - 2017/18, the Cabinet is asked to approve the sums to be yielded from various reserves following the review (list submitted to meeting) and to transfer £2.9m to the Redundancy Reserve and £1.5m to the Transformation / Invest to Save Fund.
Supporting documents: