CABINET 9TH December 2014
MTFP OVERVIEW PAPER
ANNUAL REVIEW OF RESERVES
(A) EARMARKED REVENUE RESERVES
Detail
Amount
£000’s
Balance 1st April 2014
(20,608)
Budget 2014/15
(amount used to underpin expenditure in excess of budgeted income)
Programme spend 2014/15
(Sept forecast of expenditure being drawndown in-year to support programmes)
Forecast Total Earmarked Reserves 31 March 2014
1,254
2,464
(16,890)
Financial Planning Reserve
(amount previously set aside via MTFP and Star Chamber process to underpin
2015/16, 2016/17 and 2017/18 budgets)
4,952
Financial Planning Reserve – Additional Contribution (see section B)
(amount now being proposed to be transferred from previous other earmarked
reserves to further support the MTFP)
2,918
Additional Reserves Supporting the MTFP – Includes;
-
-
£338k being the final instalment of the 2013/14 budget being used to underpin
the 2015/16 budget.
£192k being used to support one-off pressures in the MTFP most notably the
cost of the 2015 local election.
Sub Total - Forecast Total Earmarked Reserves
530
(8,490)
NHS Partnership Reserves
(amount supporting jointly agreed programmes with the National Health Service
(NHS) such as the reablement service. Strategy is that these will be used in
mitigation of the assumed 2015/16 £1m Better Care Fund contribution if contribution
not confirmed)
1,747
Reserves held in Partnership with other external organisations - includes
-
Schools
Dorset Adult Learning operational balance
Local Enterprise Partnership
Stour Valley and Poole Partnership (SVPP)
Flippers Nursery
Joint Bournemouth & Poole Team 14 to 19 year Olds
1,167
Reserves required by Statute – Includes;
-
£100k Building Control Account
£917k Grants received in advance of spend which accounting guidance requires
to be held as earmarked reserves
Sub Total - Forecast Total Earmarked Reserves
1,017
(4,559)
Appendix E - RESERVES
Forecast
Amount
31.3.2015
£000’s
Detail
Forecast Balance brought forward
(4,559)
Re-organisation Reserve
Required as part of going concern concept reflecting ability of the organisation to
manage the exceptional costs associated with the delivery of the residual financial
gap in the MTFP – redundancy costs have been as follows;
2013/14 - £901k (49 posts)
2012/13 - £835k (39 posts)
2011/12 - £420k (27 posts)
2010/11 - £1.28m (71 posts)
1,282
Business Rates Reserve
The Council is exposed to the first £1.1m of any reduction in business rates in each
st
year up to the 2020 reset. As at the 31 March 2014 the Business Rates Collection
Fund had a deficit of £2.8m of which £692k is factored into the 2014/15 Budget and
the balance will need to be factored into the distribution calculation for 2015/16 and
beyond. As part of this process, this reserve is also covering the cost of historic
appeals lodged before April 2013 not provided for within the Government’s
calculations. The reserve will also need to be used to support the timing differences
created by the Government’s measurers to compensate for various business rate
reliefs that it has granted since the introduction of the new system.
1,538
Planning Reserves
-
-
£240k Local Development Plan reserve - enables the one-off cost of these plans
to meet and the cost of the planning enquiries to be managed over a number of
years.
£85k Hearing and Enforcement cost reserve – as per Economy Overview and
Scrutiny committee enables unpredictable planning hearing and enforcement
costs to be managed.
325
Reserves supporting Council Priorities and Programmes
See Appendix A attached – includes;
-
£407k Corporate ICT Investment Plan Reserve
£317k Corporate Accommodation Strategy
£145k Procurement Improvements (Concessionaries)
£185k Upton Park Farm
£112k Carbon Management Programme Board
£80k Corporate Maintenance
£76k Staff car Parking Business Case implementation costs
£32k Poole zone software
£15k Magna Academy
£14k Cultural Services service improvements to support MTFP
£13k Targeted services (Children & Young People)
£7k Service Unit specific ICT improvements
£6k Technology Forge Development
£5k Staff Mandatory Training Programme
1,414
Balance
0
Appendix E - RESERVES
(B) £2.918m - Additional transfer to the Financial Planning Reserve has been
realised via the following transfers;
£1.419m
£0.500m
£0.207m
£0.160m
£0.126m
£0.125m
£0.065m
£0.050m
£0.045m
£0.037m
£0.036m
£0.034m
£0.032m
£0.030m
£0.020m
£0.016m
£0.016m
Insurance Premium reserve
Re-organisation reserve
Building Schools for the future revenue cost reserve
Age of Transfer reserve
Grant Related reserve (public health and social fund)
Planning Viability assessments reserve
Planning hearing and Enforcement costs reserve
PCT Local Initiative reserve
Strategic review of Car Parking reserve
Technology Forge developments reserve
Service Unit ICT specific Investment Plan reserve
Business Resilience improvement reserve
Human Resources Mandatory Training Fund
Day Care Review
Corporate Maintenance reserve
Countryside Rights of Way
Community Rights
(C) UNEARMARKED RESERVES
£5.75m
Value as at 1 April 2014
Used to cover operational risks both known and unknown. The known risks were
assessed in February 2014 at £25.3m
Current coverage
- 2% of turnover to cover operational risks based on total Council business of circa
£288m. This provides coverage of just over a week based on daily expenditure
- Reserves to cover operational risks are normally in the range 2% to 5% (5% being the
previously advised CIPFA benchmark level)
Risks now being transferred
 Insurance Risks (Shoppers 2, Shoppers 1, etc.)
 Ordinary Residence claims with other Local Authorities stretching back as far as
the final settlement with Bournemouth (provisions only cover the period to the date of the
claim).
 Any unbudgeted impact of School Academy programme on the Council’s
Education Services Grant.
 Revenue contingency related items
 Items charged to capital, which on review at year end, fail to met necessary
technical requirements (previously covered by the RCCO).
 Costs of the Care Act not covered by an assumed New Burden Grant.
 Possibility of further in-year 2015/16 Government Grant cuts post the General
Election (with specific attention to the £2.483m New Homes Bonus Grant).
To mitigate these increased risks which will now be referenced into unearmarked
reserves, £500k of the £1.112m which is now being released from provisions is
being transferred into unearmarked reserves – new balance now £6.25m.
Appendix E - RESERVES
The remaining balance of £612k now being released from provisions is being further
added to the financial planning reserve to increase the additional transfer to £3.530m
(£2.918m + £0.612m) which on the principle of a 3 year draw down provides
£1.176m to support the 2015/16 budget and MTFP.
(D)
£1.112m Amounts released from Provisions
 £1.082m Ordinary Residence claims
 £0.030m Dilapidations estimates Crown and St John’s House
Appendix E - RESERVES