2011/2012 audited annual accounts - Falkirk Council

FALKIRK COUNCIL
The Council’s General Fund balance has therefore decreased to £32.2m. The table at Note 1 sets out the
composition of the General Fund balance including a range of funds which have been earmarked for specific
purposes. The resultant uncommitted general fund balance of £15.557m is greater than the level of uncommitted
General Fund reserves of between £6.9m and £9.9m referred to in the Council’s Reserves Strategy. However, it
should be noted that around £3.4m of balances has been applied as part of the Budget for 2012/13.
The Council made payments totalling £2.784m in respect of backdated equal pay claims and it received
government consent to borrow £1m towards this cost. Whilst the eventual cost of settling these claims cannot be
fully quantified at this time, it is considered appropriate to retain a provision of £5.2m in the 2011/12 accounts.
The sum of £1m referred to above, along with the £2m required to bring the provision for equal pay to the £5.2m
also referred to above, are shown as Exceptional Items in the CIES.
Housing Revenue Account
In order to comply with accounting requirements, the Housing Revenue Income and Expenditure Statement,
which is shown as note 36 to the Core Finance Statements, includes depreciation and impairment on housing
assets totalling £27.641m. The Movement on the HRA Statement adjusts this amount by a corresponding credit
which is part of the amount required by statute to be debited or credited to the Housing balance for the year.
Compared to a budgeted deficit of £0.924m, the overall position was a net surplus of £1.320m. This was
transferred to the earmarked Housing Revenue Account balance resulting in a cumulative balance going forward
of £7.712m (see Note 37). It should be noted that around £2.6m of balances has been earmarked to restrict house
rent levels in 2012/13.
Capital Expenditure
The Council has set its capital expenditure limits in accordance with the Prudential Code. The objective of the
Code is to ensure that all capital spending is affordable, prudent and sustainable. In 2011/12, the Council
incurred capital expenditure of £23m on areas such as Education, Social Work, Leisure, Economic Development
and Roads infrastructure and a further £27m on Council Housing. Major investment by the Council included:
• £9m on school buildings
• £6m on roads and infrastructure in the Falkirk area
• £5m on the Council’s commercial property portfolio and other community assets
• £2m on vehicle, plant and equipment purchases
• £1m on various Social Work properties
• £7m on new build housing
The Council’s investment programme was funded from capital grants and other contributions (£21m), capital
receipts including sale of assets (£2.5m), borrowing (£24m) and funding from revenue (£2.5m). At the end of the
year, Council borrowing totalled £152.270m as shown in note 23. The external borrowing figures remain within
the limits set by the Council in line with the Prudential Code requirements.
Ratio Analysis and the Prudential Code
The Prudential Code was developed by CIPFA, as a professional code of practice to support local authorities in
taking their capital investment decisions. It applies to all local authorities, including police and fire boards. The
objectives of the Prudential Code are to ensure, within a clear framework, that the capital investment plans of
local authorities, including police and fire boards, are affordable, prudent and sustainable. In order to
demonstrate that the Council has fulfilled these objectives, a number of Prudential Indicators are calculated,
details of which are as follows:-
Capital Financing Requirement
General Fund £320.6m
Housing Revenue Account £ 56.4m
Total £377.0m
This indicator reflects the Council’s underlying need to borrow for a capital purpose. It increases as capital
expenditure is incurred but reduces when the expenditure is funded from capital receipts/grants etc and is further
reduced by loans fund repayments.
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