Agenda item

“From the Statement of Accounts 2023/24 update presented to Audit Committee on 15 January 2025, it can be noted that long term assets, current assets, net assets, cash and cash equivalents and total reserves have all reduced significantly as at 31 March 2024 compared to 31 March 2023. Can the Executive member for Finance provide an explanation for the changes in all of these key figures and provide a list of all assets whose value has decreased including their value as at 31 March 2023 versus their value as at 31 March 2024?”

Response from Councillor Lynch:

“Long term assets

Long term assets are the council’s property, plant and equipment, and the overall value has gone down by about 1% from £320m to £317m, which is not really significant on a property holding of that size. The reasons, as explained by officers on the night of the Audit Committee, were due to a mix of disposals, depreciation and revaluations, all of which are explained in note 11 to the accounts. In short, that note informs the reader that there were £10.8m of additions, £9.6m of revaluations and £3.1m of disposals, also £1.2m of net depreciation movements, which gives the £m movement.

Current assets

The current assets section of the balance sheet covers all working capital from short term investment to provisions, so there are many areas of change one year to another. The main single change was that short term investments had moved from £14m to £7m. This is due to the timing of cash receipts and payments, but as we need to borrow and repay loans it is expected that there may be less to invest. It has been reported to members that we are under-borrowed and will need to begin to borrow as cash comes under pressure for having to repay HRA debt and cope with increasing expenditure pressure. Also, investment and borrowing activity is reported to Finance & Performance Scrutiny quarterly, so those reports may help with the understanding of the position should they be read.

Net assets

Net assets is the sum of all the items on the balance sheet, but the above comments on property, plant and equipment and working capital cover some of it. One of the other main movements is in relation to “other long term liabilities” which went from £8.1m to £26.6m on the balance sheet. This is covered in note 36 to the accounts and is mainly caused by the “asset ceiling actuarial adjustment”, which is a technical adjustment based on actuarial calculations. This relates to the present value of any economic benefits available from refunds from the plan or reductions in future contributions to the plan. Quite a technical accounting amendment which is not unusual for pension calculations, as they are based on actuarial estimates that have many complex considerations to go over when valuing the longer terms liabilities of our share of the pension fund.

Cash and cash equivalents

The notes to the accounts 24, 25 and 26 give the detail of movements in the cashflow. As noted above, there are changes merely to do with the timing of payments and receipts and when amounts are needed. The balance sheet is a snapshot in time on a single day, but also noted above is the explanation that cashflows are under a little more pressure, which will reduce the amount available to place in investments. As there was £127m placed in investments and £135m coming back in from investments during 2023/24, the timing of placements and cashflow around the year end is quite key to the movement.

Total reserves

This reflects the values of the factors that have affected the reset of the balance sheet that produce movements in the reserves, hence the movement on total reserves matches the movement on total assets. However, a detailed analysis of the movements is in the “movement in reserves statement” in the accounts and its linked note 6 of the accounts.

List of all assets whose value has decreased including their value as at 31 March 2023 versus their value as at 31 March 2024

The main reduction comes from the change in valuation of our housing stock, which is not valued at open market value but at a discount so is at “market value subject to tenancy”. This means it gets valued downward from market value to about 42% of its open market value. Therefore dwellings are the main area of reduction in value as per the accounts. The relevant note from the accounts is given below and shows a £12m downward valuation in council dwellings.”

In the absence of Councillor Surtees, the question was not put.