Aliquam ac Crimen LEGATUS pro Surr - Decision faciens Record
Report Title: General and Earmarked Reserves Strategy
Decernitur numerus: 35/2021
Author and Job Role: Kelvin Menon – Chief Financial Officer
Protective Vestigium: MAGISTRATUS
Executive Notes:
This report provides information on the Usable Reserves, the Strategy for setting the level of General Reserves as well as estimated balances up to 2024/25.
Background
Local authorities, including police bodies, are directed to have regard to the level of reserves when considering their budget requirement. Consequently, reserves are a recognised and intrinsic part of financial planning and budget setting. The assessment of ‘adequate’ and ‘necessary’ levels of reserves is a local decision for the PCC to determine. It is the responsibility of the Chief Finance Officer to advise the PCC on the appropriate level of reserves.
Revenue and Capital Reserves are an important resource for both day to day and medium term financial planning despite being one-off in nature. The Chartered Institute of Public Finance and Accountancy (CIPFA) consider that PCCs should establish reserves based on the advice of their chief finance officers, making their own judgements and considering all relevant local circumstances to assess the appropriate level of reserves and balances to be held.
All reserves are under the control and preserve of the Police and Crime Commissioner (PCC) and will remain so subject to some flexibility in respect of usable reserves.
Attached to this decision is a detailed report which provides further information on the Usable reserves including future projections.
Issues for Consideration
The PCC needs to ensure that sufficient usable reserves are maintained over the medium to longer term to ensure that future planned and unplanned expenditure i.e. emergency operations or one off events, can be funded without having a detrimental impact on normal day to day operational activities.
The paper (available on request) sets out the use and level of general, earmarked and capital reserves.
Financial Comments
The PCC’s policy is to maintain General Reserves at about 3% of Net Revenue Budget for the 4 year financial planning period. This is considered to be a reasonable level taking risks and other factors in to account.
Earmarked Reserves are maintained for specific purposes and these are detailed in the attached paper. These range from £11.4m to £6.1m over the Medium Term Strategy planning period as reserves are used and replaced.
Capital Reserves totalled £1.863m but these will be used during the year on a number of different projects. Any future capital expenditure will then need to be funded by borrowing, revenue, assets sales or grants.
Censeo:
The Police and Crime Commissioner is asked to approve the Reserves Strategy as attached.
Aliquam ac Sceleri LEGATUS Approbatio
Commendationem probo(s);
Subscriptio: Lisa Townsend (infectum exemplum available in OPCC signature)
Date: 19th August 2021
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Areas considerationis
consultatio
non requiratur
Financial effectus
These are set out in the attached paper (available on request)
Legal
These are set out in the attached paper (available on request)
periculum
These are covered in the attached paper (available on request)
Aequalitas et diversitas
Omnia
Pericula ad iuribus humanis
Omnia