Purpose of Report

To present the draft 2020/21 Statement of Accounts (the Accounts) to Members and to seek delegation of the approval of the final audited version to the Executive Panel at its meeting on 26 July 2021.

EXECUTIVE SUMMARY

The Authority approved a revenue budget of £35.9m at its meeting on 16 December 2019. The final outturn position is an underspend of £0.06m.

The Authority approved a capital budget of £4.1m on 16 December 2019. This was reviewed and revised to £0.1m by the Authority on
9 November 2020. However, further delays were experienced due to Covid-19 and the capital plan was deferred to 2021/22.

The Authority maintains earmarked reserves to provide financial contingency for future events or risks. As at 31 March 2021 a total of £3.46m is held in earmarked reserves.

No bad debts were written off in 2020/21.

RECOMMENDATIONS

 Members are asked to:

(i)       note the draft revenue and capital outturn positions as detailed within the 2020/21 Statement of Accounts;

(ii)      delegate approval of the final audited 2020/21 Statement of Accounts to the Executive Panel, at its meeting on 26 July 2021;

(iii)      approve the earmarked reserves; and

(iv)     note that no bad debts have been written off in 2020/21.

OBSERVATIONS FROM EXECUTIVE PANEL/AUDIT COMMITTEE

This report has not previously been considered by members.

Background

This report provides information on the final revenue and capital expenditure outturn position for the 2020/21 financial year. The report also provides a summary of key balance sheet items including the maintenance of earmarked reserves.

Grants that have been awarded in year are detailed within this report.

Information 

REVENUE BUDGET

The table below sets out the final revenue outturn position for the 2020/21 financial year. This details an underspend of £0.063m against the budget of £35.942m and includes the contributions to the earmarked reserves.

Employee Costs

For the 2020/21 financial year, the budget for expenditure relating to employees was £27.069m which represents 71% of expenditure. Due to Covid-19 restrictions, delays in recruitment were experienced and there is a budget underspend at year end. Recruitment has re-commenced and will be closely monitored during 2021/22.

Premises

The budget for premises was £2.475m and the outturn was an overspend of £0.166m. There were utility savings of £0.021m, compared with last year’s costs. The overspend includes a charge for business rates arising from a backdated valuation amendment and costs required to ensure that our buildings fully complied with government guidance in relation to the Covid-19 pandemic.

A significant number of minor works have been delayed due to Covid-19 and therefore £0.340m has been included in the earmarked reserve to ensure funding is available to complete this work.

Transport

The expenditure for transport related costs was £0.924m which is £0.080m under budget. This underspend includes a reduction in fuel costs (£0.131m) for non-emergency vehicles resulting from the Covid-19 pandemic, which was offset by increased costs for repairs.

Supplies and Third Party Payments

The expenditure on supplies amounted to £5.656m which is an overspend of £0.511m against budget. There has been significant investment in relation to computer licences and equipment to ensure that staff could work from home, as well as starting improvements in ICT systems in order to support a more agile workforce. An earmarked reserve of £0.502m has been set up to ensure that there is funding available for this work to continue.

There has also been increased expenditure on personal protection equipment as a result of the Covid-19 pandemic.

Capital Financing 

The capital financing budget was £2.836m. The capital financing costs include the charge to revenue for depreciation and also the cost of borrowing. The underspend of £0.352m reflects a reduction in interest rates as well as a reduction in the need to borrow.

Income

The income budget was £0.378m. Income (excluding grants) was £0.607m. The increase in income is due to claims submitted to Welsh Ambulance Service NHS Trust for the recovery of staff costs and money claimed from the Welsh Government’s Covid-19 Hardship Fund during the first half of 2020/21.

Revenue Grant Funding

A breakdown of grant funding received, for 2020/21, is detailed below.

Although a number of activities funded by grants were impacted by Covid-19 restrictions significant action was taken to develop remote activities and adapt service delivery.

CAPITAL PROGRAMME

The Authority approved a capital programme of £4.1m. The capital programme was reviewed in year to take account of the restrictions relating to the Covid-19 pandemic. Although it was initially anticipated that some works could have been completed in the second half of the year this was not possible due to further lockdown measures. Consequently, no capital expenditure has been incurred in 2020/21.

Projects in relation to building works and fire appliances which have been delayed due to the Covid-19 pandemic have been rescheduled for 2021/22.

Some ICT schemes have been delayed due to the reprioritisation of the work of the ICT team in order to manage the transition to remote working. Other schemes are under review and it is anticipated that all deferred schemes will commence in 2021/22.

BALANCE SHEET  

The Balance Sheet provides further information on the Authority’s long term financial position and includes both assets and liabilities.

Fixed Assets and Borrowing

Fixed assets relate to items with a cost in excess of £5,000 which are expected to be used over a period exceeding 12 months. The Authority’s fixed assets include land and buildings, vehicles, operational equipment and ICT equipment and software costs. The estimated value as at 31 March 2021 is £40.6m (2019/20: £45.9m).

All land and buildings were revalued in 2020/21 and this resulted in a reduced valuation of £2.21m. The Authority’s land and buildings account for 78% of total assets with a net book value of £31.6m as at 31 March 2021.

The Authority is permitted to enter into borrowing arrangements to fund the purchase of fixed assets. At as 31 March 2021 the value of borrowing was £26.2m (2019/20: £30.9m). The capital financing costs within the revenue position include £0.380 relating to interest payments on borrowing.

Current Assets and Current Liabilities

The Authority must maintain adequate resources to ensure that it is able to meet its obligations. This is achieved through the management of cash alongside debtor and creditor balances. As at the balance sheet date the Authority recorded a balance of £6.3m relating to cash and debtors. This is offset by £5.5m relating to amounts owed by the Authority to creditors.

Pension Liabilities

The Authority is required to account for the estimated liabilities relating to its pension schemes. The Authority has two schemes; the Firefighters’ Pension Scheme and the Local Government Pension Scheme. The value of future liabilities is calculated by the actuary for each scheme and estimated to be £337.3m as at 31 March 2021 (2019/20: £312.1m). This valuation includes the actuarial assessment of the costs of national legal challenges including the McCloud judgment relating to age discrimination in public sector pension schemes.

Useable Reserves

The Authority’s reserves as at 31 March 2021 amount to £4.91m. This includes £3.46m of earmarked reserves and £1.45m of general reserves.

An earmarked reserve is created for specific items which are known about at the balance sheet date and may create a future liability. The Authority’s earmarked reserves are detailed in the table below.

Bad debts

A review of balances due to the Authority was undertaken at the year-end. All amounts are deemed to be recoverable and it was not necessary to write off any bad debts during 2020/21.

IMPLICATIONS