Longparish Parish Council

Financial Reserves Policy

Policy Statement

Longparish Parish Council is required to maintain adequate Financial Reserves to meet the needs of the Parish Council. The purpose of this policy is to set out how the Council will determine and review the level of Reserves. Sections 32 and 43 of the Local Government Finance Act 1992 require local authorities to have regard to the level of Reserves needed for meeting estimated future expenditure when calculating the budget requirement.

The Council will hold reserves for three main purposes:

  • • A working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing
  • • A contingency to cushion the impact of unexpected events or emergencies
  • • A means of building up funds, to meet known or predicted requirements

There is no specified minimum level of Reserves that an authority should hold, and it is the responsibility of the Clerk/Responsible Finance Officer to advise the Council about the level of Reserves and to ensure that there are procedures for their establishment and use.

Scope

Types of reserve - Reserves may be categorised as General or Specific.

GENERAL RESERVES are funds that do not have restrictions as to their use. These Reserves can be used to smooth the impact of uneven cash flows, or can be held in case of unexpected events or emergencies. The level of the General Reserve for the forthcoming year will be based upon the budget approved by the Parish Council, and should be equivalent to no less than six months’ expected expenditure for the financial year.  This amount will be adjusted annually in line with the approved budget (agreed in January annually).

Where the Reserve amount has arisen because of excess funds through cancelled or obsolete activities, the Council may elect to use these funds for another purpose for which no other budget is available.

GENERAL RESERVE 2022/23

AMOUNT

PURPOSE

£11,000.00 (unchanged from 2021/22)

PC EXPENDITURE FOR SIX MONTHS AS PER 2022/23 BUDGET*

APPROVED 10 JANUARY 2022

* EXCLUSIVE OF COST OF PWLB LOAN REPAYMENTS FOR THE PLOUGH INN AS THESE ARE COVERED BY RENT FROM LCPL

SPECIFIC RESERVES can be held for several reasons and shall be used only for the purpose for which they are created.

  • • Renewals – to enable services to plan and finance an effective programme of equipment replacement and planned property maintenance. Since a modest change in the budget in any one year may have a disproportionate effect on the precept, these reserves are a mechanism to smooth expenditure so that a sensible replacement programme can be achieved without the need to vary budgets dramatically from year to year.
  • • Carry forward of underspend - expenditure committed to a project but not spent in the budget year. Reserves can be used as a mechanism to carry forward this resource.
  • • Developers Contributions – proceeds from developers that can only be used for specified purposes.
  • • Other Specific Reserves may be set up from time to time to meet known or predicted liabilities.

Where the purpose of a Specific Reserve becomes obsolete, or where there is an over-provision of funds, the excess may on the approval of the Council be transferred to other budget headings within the revenue budget or to General Reserves or to one or more other Specific Reserves.

Procedure for adding to the Reserve during the Financial Year

  1. The Parish Council may decide to set aside further Reserve amounts for specific purposes
  2. All decisions to create a new Reserve will be voted upon at a full council meeting, and this will be Minuted by the Clerk
  3. The agreed amount will be transferred to the Parish Council Reserve account by the Clerk, and detailed in the accounts
  4. Details of new Reserves will be listed in this Policy
  5. All Reserve amounts will be reviewed annually

Procedure for removing funds from the Reserve

  1. The Parish Council may decide to withdraw Reserve amounts for specific purposes
  2. All decisions to withdraw Reserve funds will be voted upon at a full council meeting, and this will be Minuted by the Clerk
  3. The agreed amount will be transferred to the Parish Council current account by the Clerk, and detailed in the accounts
  4. Amended amounts of Reserves will be listed in this Policy

Details of Reserves held (20 MAY 2022):

PURPOSE/DESCRIPTION

AMOUNT

FOR GENERAL RESERVE

£11,001

FOR PLAYGROUND RESERVE

£1,015

FOR PLOUGH INN CONTINGENCY FUND & RENT DEPOSIT

£25,000

FOR REVIEW OF VILLAGE DESIGN STATEMENT

£500

FOR IT EQUIPMENT FOR THE CLERK

£500

OPEN SPACES CONTINGENCY

£2,500

FOOTPATH LEAFLETS

£500

WEBSITE RE-DESIGN

£3,126

REPLACEMENT NOTICEBOARDS

£1,800

SAFER ROADS

£663

INTEREST ACCUMULATED

£18

TOTAL

£46,623