Agenda item

Members asked for an explanation of the treatment of the transformational payments on page 62 of the report. The Corporate Finance Manager stated that the Council has used the flexibility given to it by the Secretary of State to use capital receipts to capitalise transformational spend (£13m).  Separately the Council had transferred £5m to the exit and transition fund as part of the one-off funding required by the MTFS report in February.

Members asked for an explanation of the rate of the Lender Option Borrower Option (LOBO) as compared with borrowing from government. The Head of Treasury and Pensions explained that the Council had a portfolio of loans that cost an average interest rate of around 4% p.a.  When the LOBO loans were taken out the Council always made sure that the structure of the loan at the back end was around the PWLB (Public Works Loan Board) rate and at the time this was 4.5%.  There would be some loans that are less than the PWLB at the time they were taken out.  There was a profit to be made at the time the Council borrowed them but given where interest rates are currently they are more expensive that where the market could borrow them today. However, to get out of them there would be a large penalty, so it made financial send to leave them as they were.

Members asked if the Council charged a handling fee for managing education endowments and trust funds.  The Head of Treasury and Pensions explained that in the main the Council did not charge a handling fee.  Some were land only and if a fee was charged for these small endowments or trust funds they would have no income to pay for such charges.

Members stated that they observed that Reserves had increased at a time when services had been cut and this may appear inconsistent to local residents.  The County Treasurer explained that pages 63-64 set out details regarding the movement of reserves.  A variety of funding was received for capital schemes, but if the Council did not deliver on those schemes, the money was carried forward.  In respect of international standards, the Council was required to recalculate the way in which we charge out those loans, so there was a windfall benefit in the first instance as a consequence, that then gets charged out over the next 30 years.  The reserve is a mechanism to equalise this.  Balances went up by the amount of the underspend £3.5m. on the general fund.

Members asked about the unpaid debt with Stoke City Council, and the amount owed to the Council from Entrust of £0.9m (page 147) and asked when these debts would be repaid.  The Corporate Finance Manager stated that the debt with Stoke City Council was historic and went back to 1997. Stoke City Council do pay the costs of servicing that debt and they paid it off over time.  The debt with Entrust just represented a snapshot as at 31 March 2019.

Note by Clerk:  The external audit of the draft statement of accounts for the year ended 31 March 2019 has not yet been completed by the external auditors, EY LLP, due to a small number of audit procedures still due to be concluded upon. This situation is allowed for by Regulation 10, paragraph (2a) of the Accounts and Audit Regulations 2015. Therefore, this notification explains, as per paragraph (2a), that the County Council are not yet able to publish their audited 2018/19 final statement of accounts in line with deadline of 31^st July 2019, as per paragraph (1). The accounts published on the Council’s website are those being audited and once the audit opinion is received the final audited accounts will be published.

RESOLVED – a) That Members approve the 2018/19 Statement of Accounts b) that Members approve the letters of representation from the County Treasurer c) that Members delegate authority to the County Treasurer and the Chairman to make any final amendments to the accounts as deemed necessary by the external auditors.