State of Accounts 2002-03

STATEMENT

OF ACCOUNTS

2002/2003

REDCAR AND CLEVELAND

BOROUGH COUNCIL

RIVER TEES PORT

HEALTH AUTHORITY

R RICHARDSON BEd (Hons) MA CPFA

DIRECTOR OF FINANCE, PERFORMANCE AND PROCUREMENT

- 80 -

Accountancy/2002-03 State of Accounts

Last Updated 23 December, 2003

STATEMENT OF ACCOUNTS

2002/03

CONTENTS

PAGE

REDCAR AND CLEVELAND BOROUGH COUNCIL

Explanatory Foreword

2 - 5

General Statistics

6

Statement on the System of Internal Financial Control

7 9

Statement of Responsibilities for the Statement of Accounts

10

Auditors Certificate and Opinion

11 - 12

Statement of Accounting Policies

13 19

Consolidated Revenue Account

20 - 30

Housing Revenue Account

31 35

Consolidated Balance Sheet

36 64

Cash Flow Statement

65 69

Collection Fund Accounts

70 74

RIVER TEES PORT HEALTH AUTHORITY

RTPHA

Explanatory Foreword

1

Statement of Responsibilities for the Statement of Accounts

2

Auditors Report and Opinion

3

Statement of Accounting Policies

4

Summary Revenue Account

4 - 5

Balance Sheet

6

Cash Flow Statement

6 - 7

GLOSSARY

G1 - G11

REDCAR AND CLEVELAND BOROUGH COUNCIL

STATEMENT OF ACCOUNTS 2002/2003

EXPLANATORY FOREWORD

1.INTRODUCTION

1.1The Councils Statement of Accounts for the year ending 31 March, 2003 is set out on Pages 13 to 74. The accounts are presented in the format laid down in the Code of Practice on Local Authority Accounting in Great Britain (The SORP - Statement of Recommended Practice) issued by the Chartered Institute of Public Finance and Accountancy (CIPFA), as supplemented by the various Financial Reporting Standards (FRSs) and the Best Value Accounting Code of Practice (BVACOP), and franked as a Statement of Recommended Practice (SORP) by the ASB (Accountancy Standards Board). The statements include:-

a)The General Fund;

b)The Housing Revenue Account;

c)The Consolidated Balance Sheet;

d)The results of the Direct Labour Organisations, Direct Service Organisations and other Trading Activities;

e)The Cash Flow Statement

f)The Collection Fund Accounts.

The Accounts are supported by a Statement of Accounting Policies and various Notes to the Accounts.

2.THE FOREWORD

2.1This foreword provides a brief explanation of the financial aspects of the Councils activities and draws attention to the main characteristics of the Councils financial position.

3.GENERAL FUND: COMPARISON OF ACTUAL SPEND TO BUDGET

3.1The main components of the Budget for 2002/2003 and how these compare with the actual results are set out as follows:

REVISED

BUDGET

ACTUAL

DIFFERENCE

000

000

000

Gross Expenditure on Services

315,603

281,942

(33,661)

Income

140,891

112,801

(28,090)

Net Cost of Services

174,712

169,141

(5,571)

Local Government Reorganisation Deferred Charges

673

673

0

Parish Precepts

390

390

0

175,775

170,204

(5,571)

Trading Accounts

512

749

237

Late Rating Adjustments

(151)

(144)

7

Discretionary Rate Relief

104

108

4

Transfer to/(from) Asset Management Revenue Account

(11,372)

(11,356)

16

Provision for Bad Debts

150

(262)

(412)

Bank and Investment Income

(1,279)

(1,462)

(183)

Contribution to Funds in Lieu of Interest

370

251

(119)

Ex CCC Insurance Fund Adjustment

(263)

(263)

0

N Yorks Moors National Park Levy

146

146

0

Flood Defence Levies

327

327

0

Designated Authority Costs

360

360

0

Additional Housing Benefit Subsidy

(288)

(288)

0

Private Finance Initiative Grant

(1,542)

(1,542)

0

Management Fee from Coast & Country Housing on Disposal of Houses

(380)

(380)

0

Provision for Early Severance

500

512

12

LSVT Capitalisation of Rent Allowance

(463)

(463)

0

LSVT Other Adjustments

(233)

(233)

0

Write Off Old Credit Balances

0

(20)

(20)

Transfer to/(from) Housing Revenue Account

0

625

625

Contribution from Revenue Provision

643

643

0

Capital Charges Adjustment Account

(10,094)

(4,785)

(5,309)

Total Expenditure

152,822

152,727

(95)

Direct Revenue Funding* (See Note below)

672

674

2

School Balances

0

202

202

Sub-Total

153,494

153,603

109

Revenue Support Grant

(69,144)

(69,144)

0

NNDR

(41,955)

(41,955)

0

Precept on Collection Fund

(41,726)

(41,726)

0

Collection Fund Transfer of Deficit

85

85

0

(Surplus)/Deficit for Year

754

863

109

(Surplus)/Deficit brought forward

(5,012)

(5,012)

0

(Surplus)/Deficit carried forward

(4,258)

(4,149)

109

* The total Direct Revenue Funding for the Authority is:

General, as above

672

674

2

Housing Revenue Account (Page 31)

0

0

0

672

674

2

3.2The table below shows how actual spending in 2002/2003 compared with the Budget.

ORIGINAL BUDGET

REVISED BUDGET

ACTUAL EXPENDITURE

000

000

000

000

000

000

Department requirements

152,387

152,461

152,570

Contributions to/(from) funds

643

643

Net Council Expenditure

152,387

153,104

153,213

Parish Precept

390

390

390

Collection Fund Deficit/Surplus

85

475

85

475

85

475

152,862

153,579

153,688

Met by:

Precept on Collection Fund

(41,726)

(41,726)

(41,726)

NNDR

(41,955)

(41,955)

(41,955)

Revenue Support Grant

(69,144)

(69,144)

(69,144)

(152,825)

(152,825)

(152,825)

(Surplus)/Deficit

37

754

863

3.3The General Fund Revenue Account showed a deficit of 863,000 compared to a planned budget deficit of 754,000, an adverse variation of 109,000. The main reasons may be summarised as follows:

000

Section 117 Mental Health Act Residential Placements

270

Adult Support Personal Care

244

Street Cleansing

244

Highways Structural Costs Drainage/Cleansing

151

Fostering Services

(148)

Residential Placements

(149)

Highways Safety Maintenance

(149)

Housing Benefits Additional Income

(220)

Adult Support Home Care

(253)

Balance All Other Items (Adverse)

119

109

It should be noted that some individual differences (especially within rechargeable support services), such as Computer Leases, would feed through to the major Service Providers.

4.CAPITAL

4.1Capital expenditure during the year amounted to 25,940,000 (2001/2002 26,227,000). This expenditure can be analysed as follows:

2002/03

000

Housing

Improvements to Council Houses

2,158

Compulsory Purchases for South Bank SRB Scheme

170

Improvement Grants

540

LSVT Section 25 Grant

3,136

LSVT Set-up Costs

1,240

Grangetown Renewal

451

Other Housing Expenditure

161

Environmental Improvements

589

8,445

Other Services

Administrative Buildings

124

Schools

5,025

Social Services Homes etc.

549

Saltburn Pier and Revitalisation

419

Computer Equipment

754

Coast Protection

220

Highways

1,894

Skelton and Brotton Bypass

285

Loftus Bank

200

Other Highways and Bridges

166

Local Transport Plan

2,621

Skelton and Brotton Compensation Payments

1,407

Libraries

132

Community Facilities

798

Single Regeneration Budget (Non-Housing Miscellaneous Schemes)

294

Conservation and Environmental Improvements

596

Baths and Leisure Centres

(7)

Other Non-Housing Expenditure

2,018

Total Non-Housing Expenditure

17,495

Total Capital Expenditure

25,940

4.2The capital expenditure was financed as follows:

2002/03

2001/02

000

000

Temp. Finance Awaiting Grant B/Fwd

(2,260)

(2,635)

Adjustment to Temp. Finance B/Fwd

0

(6)

Capital Creditors B/Fwd

(478)

(897)

Capital Receipts

6,597

1,115

Capital Grants

7,572

17,586

Major Repairs Reserve

2,165

-

Loans

9,164

6,692

Direct Revenue Funding (DRF)

649

1,407

Insurance Contribution

119

227

Temp Finance Awaiting Grant C/Fwd

2,026

2,260

Capital Creditors C/Fwd

386

478

25,940

26,227

5.ACCOUNTING POLICIES

5.1The accounting policies adopted by the Council comply with the relevant recommended accounting practice, with certain exceptions to which specific reference is made later. The Councils policies are explained fully in the notes to the accounts which are set out on Page 13 onwards.

GENERAL STATISTICS 2002/2003

2002/2003

2001/2002 **

Area, Population and Other Data

Area of Borough (Hectares)

24,490

24,490

Population (Register General Mid Year Estimate) *

139,166

139,166

Persons per Hectare

5.68

5.68

Number of Dwellings

60,766

60,834

Relevant Number of Properties (Band D Equivalent)

41,239

41,149

Road Length (Kilometres)

691

684

Rateable Value:

Non Domestic Rateable Value at Year End

104,945,758

101,727,242

Rates:

National Non Domestic Rate in Levied

43.7p

43.0p

Council Tax:

Council Tax for Band D Borough

1,002.34

1,002.34

Cleveland Police

96.13

69.51

1,098.47

1,071.85

Loan Debt at Year End:

Loan Debt for which Council is responsible

52,884,891

125,168,386

Loan Debt per head of population

380.01

899.42

Fixed Assets held at Year End:

Total Value net of depreciation

254,780,282

428,011,232

Value per Head of Population

1,830.77

3,143.30

Loan Debt as % of Net Value of Fixed Assets

20.7%

29.2%

Current population figures are not available. As with Performance Indicators published elsewhere, the previous years data is used for 2002/2003.

* The 2001/2002 figure has been restated following the release of the 2001 Census. (Previously 136,400). The Registrar Generals estimates proved to be understated.

** Some 2001/2002 figures are restated due to revised population and other data.

STATEMENT ON THE SYSTEM OF INTERNAL FINANCIAL CONTROL

1.This statement is given in respect of the Statement of Accounts for the Redcar and Cleveland Borough Council. I acknowledge my responsibility for ensuring that an effective system of Internal Financial Control is maintained and operated in connection with the resources concerned.

GENERAL

2.The system of Internal Financial Control can provide only reasonable and not absolute assurance that assets are safeguarded, that transactions are authorised and properly recorded, and that material errors or irregularities are either prevented or would be detected within a timely period.

3.The system of Internal Financial Control is based on a framework of regular management information, financial procedure rules, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by managers within the Council and employees of Liberata, the Councils Strategic Partner, from May 2003. In particular, the system includes:

comprehensive budgeting and reporting systems;

regular reviews of financial reports which indicate actual financial performance against the forecasts and approved budgets;

setting targets to measure financial and other performance as set out in the Councils Best Value Performance Plan;

clearly established capital expenditure guidelines; and

formal project management disciplines for major investment projects.

INTERNAL AUDIT

4.The Internal Audit Service carries out a statutory function under the Accounts and Audit Regulations 2003 that the Council has delegated to the statutory Chief Financial Officer (Director of Finance, Performance and Procurement).

The Internal Audit Service operates in accordance with Terms of Reference for the Internal Audit Service, which were approved by the Audit Committee in June 2002.

The scope of internal audit allows for an unrestricted range of coverage of the Authoritys operations and activities and unrestricted access to all personnel, records and assets deemed by the Chief Internal Auditor to be necessary in the course of the audit. In addition, Internal Audit has unrestricted access to the Chief Executive, Members (and, in particular, the Audit Committee), individual Chief Officers and all authority employees, and freedom to report to Chief Executive, Members (and, in particular, the Audit Committee) and individual Chief Officers.

The Chief Internal Auditor:

prepares an audit needs assessment and a rolling risk-based Strategic Audit Plan, linked to Council objectives, in consultation with departmental senior management, for formal approval by the Audit Committee.

translates the Strategic Audit Plan into Annual Plans for formal approval by the Audit Committee.

prepares for the information of the Audit Committee, regular reports, at a summary level, on audits, investigations and Value For Money (VFM) studies undertaken.

prepares and presents to the Audit Committee detailed reports on significant issues arising from the work and findings of internal audit.

prepares an annual audit report on audits, investigations and VFM studies undertaken, a comparison of actual and planned internal audit performance and how improvements are to be progressed, for presentation to Members and Senior Managers of the authority.

Audit assignments are the subject of formal reports issued by the Chief Internal Auditor. Draft reports are sent to management responsible for the area under review for agreement to the factual accuracy of findings, for consideration of any audit recommendations therein and in order that a plan of action to address any agreed recommendations may be formulated. After agreement, the reports are issued to the head of the department under review with copies sent to relevant managers and to the Director of Finance, Performance and Procurement. School reports are also sent to the Chair of the governing body.

Reports, or summaries of reports, may be presented to the Chief Executive, Members in general and to members of the Audit Committee. The purpose, responsibilities, role and workload of the Audit Committee were approved by the Overarching Overview and Scrutiny Committee in June 2002.

Any refusal to implement significant audit recommendations is reported to an appropriate level of seniority, which may include Members.

In addition, Internal Audit follow up agreed action plans to ascertain whether agreed action has been taken in respect of reports issued. The results are reported to the Audit Committee.

The External Auditor to the Council is the Audit Commission and there is an established protocol between Internal Audit and the Audit Commission in order to avoid duplication of work. Formal meeting are held with the Audit Commission on a monthly basis, by the Director of Finance, Performance and Procurement, to discuss current issues. Additionally there is informal contact on a regular basis to discuss specific items that require resolution. The Audit Commission has its own annual audit and inspection plan and regularly issues reports to the Council. These reports are then considered by the Cabinet and Audit Committee.

Each year the Chief Internal Auditor provides an independent opinion to the Chief Financial Officer and the Council on the adequacy and effectiveness of the system of Internal Financial Control.

The Chief Internal Auditor has confirmed that no major issues have come to light as a result of the audits carried out on the major financial systems in respect of 2002-03.

SUPPORTING EVIDENCE

5.My review of the effectiveness of the system of Internal Financial Control is informed by:

the work of managers within the Council;

the work of the internal auditors as described above; and

the external auditors in their annual Audit Letter and other reports.

AREAS OF WEAKNESS AND CONCERN

6.The Benefits Fraud Inspectorate (BFI) undertook work in May to June 2003 in relation to the 2002/2003 financial year. The report was critical of the Authority in a number of areas. The key area concern was around the levels of staffing within the Benefits Section and backlog of claims. The issues are being addressed with our Strategic Partner and an action plan produced.

The Audit Commission has undertaken a review of Internal Audit with a remit of testing our compliance with the CIPFA Draft Code of Practice on Internal Audit in July 2003. Concerns have been raised on the adequacy of internal audit arrangements in the following areas:

Resourcing of Internal Audit and Coverage of the Audit Plans.

Training and Professional Development of Staff

Governance Arrangements and the level of Member involvement in the process of financial control.

These issues will be addressed in an action plan to be placed before the Audit Committee and the Council.

OPINION

Despite these concerns the financial controls of the Key Financial Systems are sound. My overall opinion is that the Councils system of financial control is satisfactory and has no fundamental weaknesses.

(Signed)

(Chief Financial Officer)

(Dated) ..

STATEMENT OF RESPONSIBILITIES FOR

THE STATEMENT OF ACCOUNTS & APPROVAL FOR AUDIT

The Authoritys Responsibilities

The Authority is required:

*To make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Director of Finance, Performance and Procurement.

*To manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

*To approve the Statement of Accounts.

Director of Finance, Performance and Procurements Responsibilities

The Director of Finance, Procurement and Performance is responsible for the preparation of the Authoritys Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in Great Britain (The SORP), as supplemented by the Best Value Code of Accountancy Practice (first introduced 1 April, 2000), is required to present fairly the financial position of the Authority at the accounting date and its income and expenditure for the year to 31 March, 2003.

In preparing this statement of accounts, the Director of Finance, Performance and Procurement has:

*Selected suitable accounting policies and then applied them consistently.

*Made judgements and estimates that were reasonable and prudent.

*Complied with the Code of Practice.

The Director of Finance, Performance and Procurement has also:

*Kept proper accounting records which were up to date.

*Taken reasonable steps for the prevention and detection of fraud and other irregularities.

R Richardson

Director of Finance, Performance and Procurement

Date:

AUDITORS REPORT TO REDCAR AND

CLEVELAND BOROUGH COUNCIL

We have audited the financial statements on Pages 20 to 74, which have been prepared in accordance with the accounting policies applicable to Local Authorities as set out on Pages13to19.

This report is made solely to Redcar and Cleveland Borough Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 54 of the Statement of Responsibilities of Auditors and of Audited Bodies, prepared by the Audit Commission.

Respective Responsibilities of the Director of Finance, Performance and Procurement and Auditors

As described (on Page 10), the Director of Finance, Performance and Procurement is responsible for the preparation of the financial statements in accordance with the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2002. Our responsibilities, as independent auditors, are established by statute, the Code of Audit Practice issued by the Audit Commission and our professions ethical guidance.

We report to you our opinion as to whether the financial statements present fairly the financial position of the Council and its income and expenditure for the year.

We review whether the statement on pages 7-9 reflects compliance with the requirements of the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2002. We report if it does not meet the requirements specified by CIPFA/LASAAC or if the statement is misleading or inconsistent with other information we are aware of from our audit of the financial statements. We are not required to consider whether the statement on internal financial control covers all risks and controls, or to form an opinion on the effectiveness of the Authoritys system of internal financial control. Our review was not performed for any purpose connected with any specific transaction and should not be relied upon for any such purpose.

We read the other information published with the statement of accounts and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the statement of accounts.

Basis of Audit Opinion

We conducted our audit in accordance with the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission, which requires compliance with relevant auditing standards issued by the Auditing Practices Board.

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Council in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Councils circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion, the financial statements present fairly the financial position of Redcar and Cleveland Borough Council at 31 March 2003 and its income and expenditure for the year then ended.

Certificate

We certify that we have completed the audit of accounts in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice Issued by the Audit Commission.

Signature:

Date:

Name:Rodney Walker

Address:

STATEMENT OF ACCOUNTING POLICIES

1.GENERAL

The 2002/2003 accounts have been prepared, with certain exceptions to which specific reference is made later (Notes 2, 7 and 8 below), in accordance with the Code of Practice on Local Authority Accounting, The Statement of Recommended Practice (SORP), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the application of accounting standards (SSAPs), as supplemented by the Best Value Code of Accounting Practice (first introduced 1 April, 2000). It constitutes a proper practice under Part IV of the Local Government and Housing Act 1989.

SSAPs are Statements of Standard Accounting Practice which are the general practices that are to be followed in the preparation of accounts and are agreed collectively by all of the Chartered Bodies of Accountants and Auditors in the UK, including CIPFA.

The Consolidated Revenue Account incorporates the Housing Revenue Account; the Collection Fund Accounts are incorporated within the Consolidated Balance Sheet.

2.FIXED ASSETS

From 1 April, 1994, all expenditure on the acquisition, creation or enhancement of fixed assets has been capitalised on an accruals basis in the accounts. Expenditure on fixed assets has been capitalised, provided that the fixed asset yields benefits to the Authority and the services it provides, for a period of more than one year. This excludes expenditure on routine repairs and maintenance of fixed assets, which has been charged direct to service revenue accounts.

During the year, there were the following de minimis levels of capital expenditure:

Land acquisition and building and development works

20,000

Vehicles, Plant and Equipment

10,000

Grants

10,000

IT Equipment

10,000

Items held by Schools

3,000

Fixed assets are valued on the basis recommended by CIPFA and in accordance with the Statements of Asset Valuation Principles and Guidance Notes issued by the Royal Institution of Chartered Surveyors (RICS). During the year, Fixed Assets have been valued internally and externally under the supervision of the Councils Chief Valuer, Caroline Blackburn, who is an Associate of the Society of Valuers and Auctioneers. Fixed assets are classified into the groupings required by the 2001 Code of Practice on Local Authority Accounting on the following basis:

*Land, operational properties and other operational assets are included in the balance sheet at the lower of net current replacement cost and net realisable value.

*Non-operational assets, including investment properties and assets that are surplus to requirements, are included in the balance sheet at the lower of net current replacement cost and net realisable value. In the case of investment properties, this is normally open market value.

*Infrastructure assets and community assets are included in the balance sheet at historical cost, net of depreciation.

Any surpluses arising on the revaluation of fixed assets are credited to the fixed asset restatement reserve. Subsequent revaluations of fixed assets are planned at five yearly intervals, although material changes to asset valuations will be adjusted in the interim period, as they occur.

Assets acquired under deferred purchase schemes have been included in the balance sheet at their fair value.

Assets transferred from the former Cleveland County Council were previously recorded at the values held in the County Balance Sheet at 31 March, 1996.

*Infrastructure and community assets were valued at historical cost.

*Other assets transferred from Cleveland County Council were previously revalued at the end of 1995/96.

Council Houses were last revalued as at the end of 1999/2000. Following a favourable vote by the tenants in August 2001, the Boroughs Council Houses have been transferred under a Large Scale Voluntary Transfer Scheme (LSVT) in July 2002. This being so, then the Borough did not revalue the Council House Stock as required by FRS15 and by the new Resource Accounting requirements under the Housing Accounting rules which came into force as of 1 April, 2001.

Following the introduction of FRS15 and the BVACOP, Buildings are now subject to Depreciation where their useful lives are 50 years or less.

The Valuers have prepared a rolling-programme so that all assets are reviewed on a timely basis, including impairment reviews. Meantime, valuations are carried out of capital work done in the year, and where this is in respect of additions to/modification of existing assets these assets are also revalued. The sums involved are included in the Balance Sheet as usable capital receipts.

3.DEFERRED CHARGES

Deferred charges represent expenditure which may properly be capitalised, but which do not represent tangible fixed assets. At 1 April, 1994, deferred charges in respect of assets transferred or sold were written off to the Fixed Asset Restatement Reserve. Deferred charges are amortised to revenue over an appropriate period.

4.BASIS OF CHARGES FOR CAPITAL

The Council maintains a Consolidated Loans Pool in the exercise of its powers under Part IV of the Local Government and Housing Act 1989. In accordance with these powers, all loans raised by the Authority are paid into the Pool.

Provision is made for the repayment of debt by the set aside of the Minimum Revenue Provision, which for the Housing Revenue Account is 1,481,542 and General Fund Services 2,314,861. An aggregate of 3,796,403 (2001/2002 1,518,004; 2,059,261 and 3,577,265).

This is calculated by reference to 2% of HRA and 4% of Non-HRA debt. Expenditure capitalised by a direction of the Secretary of State under Section 40(6) of the Housing & Local Government Act 1989 is amortised over seven years commencing the year after the expenditure is incurred. Section 40(6) expenditure on re-organisation assets is amortised over seven years but repayment only commenced four years after the expenditure was incurred.

Special redemption arrangements are made in respect of Housing advances where debt is redeemed equal to the repayments made by borrowers.

External charges for capital financing costs are charged to the Asset Management Revenue Account, a subsidiary account in the Consolidated Revenue Account. This account is also credited with the capital financing charges debited to services so that these notional charges are reflected in the real costs of services but have no implication on the amount required to be raised from local taxation.

The Council in its service revenue accounts makes capital charges based on asset rentals. The capital charge covers provision for depreciation plus interest charged on the asset value. Depreciation is provided using the straight-line method for all fixed assets with a finite useful life (which can be determined at the time of acquisition or revaluation) according to the following policy:

-With the introduction of FRS15 and the BVACOP, depreciation is now to be charged on buildings where the useful life is 50 years or less, subject to an Impairment Review.

-Infrastructure is depreciated over a number of years depending on the nature of the asset, as are vehicles, plant, furniture and equipment.

Notional Interest Rates applied for calculation of capital charges:

2002/2003

2001/2002

Operational and Non-Operation Assets

6.00%

6.00%

Infrastructure and Community Assets

6.00%

6.00%

5.PREMATURE REPAYMENT OF DEBT

The Council treats the premature repayment of debt in accordance with the Code of Practice dealing with Capital Accounting Arrangements under Part IV of the Local Government and Housing Act 1989.

(a)Where loans are redeemed and replaced (exchanged) at a discount or premium, the discount or premium is written to the revenue account over the residual life of the loan replaced.

(b)Where loans are redeemed and not replaced, any discount or premium, which is an assured profit or loss will be written to the revenue account in the year in which the premium or discount arises.

During the year 72.277 million of debt was repaid from monies received as a result of the transfer of the Housing Stock to Coast & Country Housing. This attracted a Premium of 7.361 million which was amortised in the year. See Balance Sheet Notes 12 and 17, Pages 46 and 50.

6.CAPITAL RECEIPTS

Capital receipts from the disposal of assets are used to finance other capital expenditure or are set aside as a provision for credit liabilities. Interest on capital receipts unapplied is credited to the General Fund, and the interest on the reserved part of receipts set aside as a provision for credit liabilities is credited to the appropriate Services Accounts in accordance with proper accounting practices.

7.DEBTORS AND CREDITORS

Generally, the Councils revenue accounts are maintained on an accruals basis in that they contain provision for all known amounts which were owed by, or to, the Council on 31 March, 2003. Exceptions to this are as follows:

(i)Periodical payments in respect of gas, electricity and telephone charges have not been accrued; the accounts, however, do include a full years expenditure in respect of these items.

(ii)

Salaries, Wages and Expenses to 30 March

2002/03

2001/02

s

s

Accruals made

DLOs/DSOs: Wages, Salaries and Expenses to 30 March

41,351

0

Not Accrued

Wages to 31 March:

Education

73,492

45,542

Health and Social Care

116,059

97,508

189,551

143,050

31 March: Other Services (inc. DLO/DSOs)

40,869

0

230,420

143,050

(iii)Overtime for March, in respect of salaried staff, has not been accrued and amounts to 115,496 (2001/2002 63,900).

8.STOCKS AND WORKS IN PROGRESS

Stocks in Neighbourhood Services, Economic Development and DLO/DSOs are valued at latest notified price. Work in progress is valued at cost, other than DLO work, which is included on the basis of DLO valuation.

These treatments differ from the requirements of SSAP9 which requires stocks to be shown at the lower of actual cost or net realisable value. It is considered that this difference in treatment does not have a material effect on the accounts.

9.COST OF SUPPORT SERVICES

All costs of support services have been fully allocated to services. The bases of allocation used for the main cost of support services to best reflect the service provided by each section are outlined below:

Service

Basis of Allocation

Central and Technical Departments

Actual time spent by staff/Actual usage of service by departments.

Administrative Buildings

Area occupied on an individual building basis.

ICT/Computing

Actual use of IT devices.

Democratic Processes

Analysis of Member and Officer attendance at Member meetings.

Facilities Management

Based on an agreed budgeted amount as per the Service Level Agreements.

Service Level Agreements (SLAs) are now in place between most providers/users agreeing levels of service to be provided and the basis of charges to be made. These incorporate the principles outlined above.

10.PROVISIONS

Provisions are made from Revenue Accounts for any liabilities or losses which are likely to be incurred, or certain to be incurred, but uncertain as to the amounts or dates on which they will arise.

When expenditure is incurred for which there is a Provision, it is charged directly against the Provision in the Balance Sheet.

Details of Provisions held are shown as Note 15 to the Consolidated Balance Sheet.

11.TRUST FUNDS

Trust Funds administered by the Council have not been included in the Consolidated Balance Sheet as ownership does not vest with the Borough. The extent and nature of any Trust Fund is, however, disclosed as Note 16a to the Consolidated Balance Sheet.

12.RESERVES

The Council maintains certain Revenue Reserves to meet general, rather than specific, future expenditure. The details of the Councils Revenue Reserves are detailed in Note 22 to the Consolidated Balance Sheet.

From 1 April, 1994 the system of capital accounting has required the establishment of two Reserve Accounts in the Consolidated Balance Sheet.

(i)The Fixed Asset Restatement Reserve, which represents principally the balance of the surpluses or deficits arising on the periodic revaluation of fixed assets.

(ii)The Capital Financing Reserve, which represents amounts set aside from revenue resources or capital receipts to finance expenditure on fixed assets or for the repayment of external loans and certain other capital financing transactions.

13.INTERNAL INTEREST

Interest is credited to a number of minor Trust Funds based on the level of their balances. The amounts are calculated using the seven day average interest rate (3.95% for 2002/2003: 4.66% for 2001/2002).

For other Reserves and Provisions, e.g. Insurance Fund and Commutation Adjustment Account, a contribution is made from the General Fund equivalent to interest earned had these funds been externally invested.

14.INVESTMENTS

Investments are shown in the Consolidated Balance Sheet at Book Value. See Note4 to the Consolidated Balance Sheet on Pages 40 to 43.

15.REVENUE AND CAPITAL GRANTS

Grants are allocated to the service which has generated the grant.

Revenue and Capital Grants are accounted for on an accruals basis and credited to income in the same period in which related expenditure is charged. Capital grants have been allocated to the Capital Grants Deferred Account.

16.PENSIONS

Employees are entitled to join either the Teesside Local Government Superannuation Scheme or Teachers Pension Scheme as appropriate. Details of contributions made are given in Note 11 to the Consolidated Revenue Account.

17.LEASES

Sums payable are charged to revenue on an accruals basis i.e. in respect of the sum relating to the year in question. Sums not yet paid are accrued for, and pre-payments are treated as payments in advance.

CONSOLIDATED REVENUE ACCOUNT 2002/2003

2002/2003

2001/2002

Gross

Spend

Income &

Recharges

Net

Spend

Net

Spend

000

000

000

000

EXPENDITURE ON SERVICES(Note 1)

Central Services to the Public

25,035

14,519

10,516

11,656

Cultural, Environmental and Planning Services

28,097

6,357

21,740

21,154

Education Services

109,991

28,184

81,807

78,818

Highways, Roads and Transport Services

18,687

1,352

17,335

16,459

Housing Services

43,708

34,622

9,086

2,657

Social Services

42,962

13,241

29,721

28,458

Corporate and Democratic Services

2,380

248

2,132

1,991

Unapportionable Central Overheads

2,738

0

2,738

2,145

Local Government Reorganisation

673

0

673

677

NET COST OF GENERAL FUND SERVICES

274,271

98,523

175,748

164,015

HOUSING REVENUE ACCOUNT

13,653

14,278

(625)

273

NET COST OF SERVICES

287,924

112,801

175,123

164,288

PRECEPTS

Precepts in respect of Parish Councils

390

376

175,513

164,664

(Surplus)/Deficit on Trading Undertakings(Note 2)

749

(179)

Late Rating Adjustments(Note 4)

(144)

(492)

Discretionary Rate Relief(Note 5)

108

94

Transfer to/(from) Asset Management Revenue Account(Note 10)

(11,356)

(14,209)

Provision for Bad Debts

(262)

150

Bank and Investment Income

(1,462)

(1,720)

Contribution to Internal Funds in Lieu of Interest

251

319

Ex CCC Insurance Fund Adj.

(263)

-

N Yorks Moors National Park Levy

146

127

Flood Defence Levies

327

285

Designated Authority Costs

360

389

Cleveland Police Council Tax Subsidy Limitation Recovery

-

(78)

Additional Housing Benefit Subsidy

(288)

(192)

Contribution to Asylum Seekers Reserve

-

410

Private Finance Initiative Grant

(1,542)

-

Management Fee from Coast & Country Housing on Disposal of Houses

(380)

-

Provision for Early Severance

512

-

LSVT Capitalisation of Rent Allowances

(463)

-

LSVT Other Adjustments

(233)

-

Write-Off Old Credit Balances

(20)

-

NET OPERATING EXPENDITURE

161,553

149,568

APPROPRIATIONS

HRA Surplus/(Deficit) transferred to HRA Balances

625

(273)

Contribution from Revenue Provisions

643

(1,620)

MRP Adjustment(Note 13)

(1,542)

845

Commutation Adjustment(Notes 13 and 14)

14

0

Deferred Charges

(8,566)

(2,419)

Direct Revenue Funding

674

1,784

School Balances(BS Note 24)

202

(12)

AMOUNT TO BE MET FROM GOVERNMENT GRANTS & LOCAL TAXATION

153,603

147,873

SOURCES OF FINANCE

Revenue Support Grant (Central Government Grant)

(69,144)

(68,899)

Contribution from Non-Domestic Rate Pool

(41,955)

(38,559)

Precept demanded from the Collection Fund

(41,726)

(41,622)

Collection Fund transfer of deficit/surplus

85

(1,290)

NET GENERAL FUND (SURPLUS)/DEFICIT

863

(2,497)

BALANCE ON GENERAL FUND BROUGHT FORWARD

(5,012)

(2,515)

BALANCE ON GENERAL FUND CARRIED FORWARD

(4,149)

(5,012)

NOTES TO THE CONSOLIDATED REVENUE ACCOUNT 2002/2003

NOTE 1 BEST VALUE MANDATORY DIVISION

Departmental accounts have been prepared to comply with the Best Value Accounting Code of Practice (BVACOP) requirements for the use of various mandatory divisions and grouping together various activities for CRA purposes.

NOTE 2 BEST VALUE ACCOUNTING CODE OF PRACTICE TRADING ACCOUNTS

Trading Accounts are to be maintained where services are provided on a basis other than a straightforward recharge of costs, or on a cash limited vote basis. The configuration of service delivery will determine the scope of a Trading Account. Trading Operations are services provided to Users on a basis other than a straightforward recharge of costs, such as a quoted price or a Schedule of Rates.

2002/2003

2001/2002

Income

Expenditure

Surplus/

(Deficit)

Income

Expenditure

Surplus/

(Deficit)

000

000

000

000

000

000

Ex 1980 Act DLOs and 1988 Act DSOs

Detailed Results

DLOs & DSOs

Highways and Sewer Maint.

6,184

6,124

60

5,372

5,364

8

Housing Maintenance

3,273

3,272

1

18,088

17,987

101

Catering

3,650

3,734

(84)

3,481

3,628

(147)

Building and Other Cleaning

1,521

1,539

(18)

1,427

1,426

1

Building maintenance *

5,857

5,875

(18)

0

0

0

Cleansing

2,307

2,372

(65)

2,206

2,205

1

Grounds Maintenance

1,443

1,428

15

1,305

1,300

5

Vehicle Maintenance

1,022

1,011

11

1,050

1,024

26

Total Direct Services

25,257

25,355

(98)

32,929

32,934

(5)

Other Trading Accounts

Civic Halls

50

179

(129)

0

Fleet Management

4,750

4,740

10

4,481

4,455

26

Industrial Estates

124

267

(143)

300

451

(151)

Markets

55

48

7

52

33

19

Business Centres

277

616

(339)

Sub-Total

5,256

5,850

(594)

4,833

4,939

(106)

1Supported Services to Schools

409

409

0

404

404

0

2Car Parking

981

855

126

1,017

531

486

3Print Room

62

66

(4)

82

97

(15)

4CCTV

452

628

(176)

315

450

(135)

5Homecall

221

224

(3)

850

842

8

Other Trading Accounts

7,381

8,032

(651)

7,501

7,263

238

Overall Total

32,638

33,387

(749)

40,430

40,197

233

HRA Activity

0

54

General Fund

(749)

See Note 2A Below

179

Total

(749)

233

It is a requirement under BVACOP that the surpluses/(deficits) from DLO/DSO trading in respect of Housing Revenue Account activities are separately identified and reported as part of the HRA accounts.

The activities broke-even as shown below:

2002/2003

2001/2002

000s

000s

Housing Maintenance

0

39

Building Maintenance *

0

0

Grounds Maintenance

0

1

Vehicle Maintenance

0

7

Fleet Management

0

7

Total

0

54

(All of the above zeroes are intentional as they round to less than 1,000).

*With the LSVT transfer of the Housing Stock, the Maintenance of Public Buildings has been carried out by a new DSO, and accounted for separately. The Housing Maintenance activity passed to Coast and Country Housing in July 2002. Work by other Direct Services also ceased or was substantially reduced.

NOTE 3 BUILDING CONTROL ACCOUNT

A note on Building Control is a requirement introduced under the SORP as per the Building Act 1984 and the Local Authority Building Control charges Regulations (SI 1998/3129).

Building Control refers to the regulation, control, monitoring and remedials in respect of the Planning function regarding work on buildings. The activity is now to be run as a Trading Activity in that the income generated from fees is to cover costs.

The results are recorded as follows:

2002/2003

2001/2002

000s

000s

Employment Costs

135

121

Other Costs

118

71

253

192

Income

221

221

(Surplus)/Deficit

32

(29)

The review of the fee-structure is an ongoing process, and adjustments have been made for 2003/2004.

NOTE 4 LATE RATING ADJUSTMENTS

This is the amount of general fund rating adjustments arising from rating revaluations prior to 1 April, 2002. Amounts relating to 2002/2003 are credited or debited to the relevant service account.

NOTE 5 DISCRETIONARY RATE RELIEF

The Council in exercise of its powers under the Local Government Finance Act 1998 has awarded discretionary rate relief to qualifying applicants within the Borough. Part of the relief is funded by the Central Government NNDR pool and part by the Local Authority. The table below shows the various reliefs given, listed by sections empowering under the Act.

2002/2003

2001/2002

NNDR

Pool

Local

Authority

Total

Total

S.47(2)(a) Charitable Occupation

26,179

78,537

104,716

94,395

S.47(2)(b) & (c) Non Profit making bodies

67,759

22,586

90,345

75,176

S.47(3)(b) Rural Shops and Post Offices Relief Granted in Year

4,675

1,558

6,233

6,403

S.49 Hardship

16,450

5,483

21,933

9,797

Net Total

115,063

108,164

223,227

185,771

NOTE 6 SECTION 137 EXPENDITURE

Section 137 of the Local Government Act 1972 as amended by Section 36 of the Housing and Local Government Act 1989 enabled a Local Authority to spend up to 3.80 per head of population i.e. 528,831 for 2002/2003 (2001/2002 518,320) for the benefit of people in their area as activities or projects not specifically authorised by other powers.

This power was replaced during October 2000 by a general power to promote the general wellbeing of the community.

Expenditure in 2002/2003 amounted to 113,598 (2001/2002 107,628).

NOTE 7 MEMBERS ALLOWANCES

The cost of Basic Allowances, Attendance Allowances and Special Duties Allowances paid to Elected Members in 2002/2003 was 442,206 gross. The net sum paid was 406,089 and National Insurance paid thereon was 36,117 (2001/2002 428,311; 393,915; 34,396).

During the year, the Authority has had a total of 59 elected Members 58 to 59 at any one time. One vacancy arose during 2002/2003, for which a by-election was held in July 2002.

On 1 May 2003 there were the four-yearly elections for the whole Borough Council.

NOTE 8 1970 GOODS AND SERVICES ACT

The Borough has undertaken work for private individuals and other bodies, as empowered by the 1970 Goods and Services Act.

In the main, this has been for Tees Valley Leisure Limited and Coast and Country Housing and was mainly for ICT and Payroll Services:

000

CCH

000

TVLL

000

Total

Cashiers

21

15

36

CCTV

47

-

47

ICT

124

10

134

Insurance Services

22

-

22

Payroll

78

13

91

Wardens

135

-

135

427

38

465

No separate record was prepared in respect of 2001/2002. In addition, Payroll preparation work and/or Financial advice has been provided to a number of supported bodies mainly on a free of charge basis. These bodies include the River Tees Port Health Authority, FROG, Tom Leonard Mining Museum and Citizens Advice Bureau.

Work was also carried out by the Direct Services and a note of this is given below.

2002/2003

Inc. CCH

2001/2002

000

000

000

Housing Maintenance

2

-

0

Building Maintenance

51

-

-

Highways

180

84

155

Catering

6

-

0

0

Cleaning

43

-

42

Cleansing

141

141

0

Grounds

139

135

19

Vehicle Maintenance

38

12

12

Fleet Management

638

626

17

1,238

998

245

NOTE 9 PUBLICITY AND ADVERTISING

Section 5 of the Local Government Act 1986 requires Local Authorities to keep a separate account for expenditure on Publicity. The Council employs a Press and Publicity Section and the total cost of this is included below.

The expenditure on publicity and advertising made by the Council is:

GENERAL

FUND

DLOs/

DSOs

HRA

2002/2003

TOTAL

20012002

TOTAL

000

000

000

000

000

Advertising Staff Vacancies

198

0

0

198

140

River, Coast and Country Magazine

28

0

0

28

25

Industrial Promotion

316

0

0

316

322

Leisure and Recreation

40

0

0

40

33

Public Relations Officer

49

0

0

49

53

Tourism Promotions Officer

28

0

0

28

22

LSVT (Included as Capital Expenditure)

2

-

-

2

-

Other Advertising and Publicity

180

5

1

186

274

Total 2002/2003

841

5

1

847

869

2001/2002

810

8

51

869

The expenditure for River, Coast and Country Magazine is net of advertising income received of 51,047 (2001/2002 48,384).

NOTE 10 ASSET MANAGEMENT REVENUE ACCOUNT

This account comprises:-

2002/2003

2001/2002

000

000

000

INCOME

Capital Charges General Fund/DLO and DSO

23,981

23,850

Capital Charges Housing Revenue Account

2,678

6,362

26,659

30,212

Transfer from government grants deferred account

692

692

551

27,351

30,763

EXPENDITURE

Provision for Depreciation

7,740

5,064

External Interest Charges

8,255

11,490

15,995

16,554

Balance to the Consolidated Revenue Account

11,356

14,209

NOTE 11 - PENSIONS COSTS

The Various Pension Contributions made are recorded below:

Scheme/Contributions

2002/2003

2001/2002

000s

%

000s

%

Teesside Local Government Scheme

Employer Contributions

Basic is 13.8% of Pensionable Pay

6,953

13.80

7,221

13.80

Additional Lump Sum to address shortfalls

950

1.89

942

1.80

Payments relating to former staff

for added years and subsequent increases (based

on actual sums due, not a percentage levy)

1,442

2.86

1,390

2.66

Total

9,345

18.55

9,553

18.26

Teachers Scheme

Basic Contribution

2,947

8.35

2,600

7.4

Payments relating to former staff for

added years and subsequent increases

NIL

-

NIL

-

The latest full valuation of the LGPS fund/scheme was as at 31 March, 2001. This was carried out by the funds actuaries (Hymans Robertson) and published in February 2002. Using the Projected Unit Method of valuation the Pension Fund was reported in 2001 as being 94% funded (Assets: Future Liabilities). Whilst in deficit, this meets the normal Pension Fund funding requirement of at least 90%. The next triennial valuation is due to take place during 2004. A further valuation was made as at 31 March 2003 for FRS17 purposes.

The removal of the Advance Corporation Tax credit on dividend income (ACT) and reductions in interest rates relating to investments, together with a rise in Early Retirements if not addressed would lead to the funding-level falling. Therefore in earlier years, 3.6% of the LGPS contributions was required to address the shortfall as against 100% funding. For 2002/2003 a lump sum of 950,000 was levied in addition to a 1.8% contribution. These costs are allocated as an Unapportionable Overhead.

See Consolidated Balance Sheet Note 29 on Page 60 for the data required under FRS 17 regarding Pension Fund deficits.

NOTE 11a COSTS OF EARLY RETIREMENTS

There is a requirement under the SORP, to record the Capital Value of Pension Fund payments for employees who have retired early and the total on-going costs of discretionary early retirements. The latter are additional payments to the Pension Fund as a result of decisions made in relation to requests for early retirement. Early retirements may take place to achieve ongoing operational efficiency savings, or be due to ill health.

Capital Costs

2002/2003

2001/2002

Number of employees in year who retired early.

26

9

000s

000s

Additional Lump Sum Payments

101

4

Capital Costs, to be paid over next 5 years

797

175

Ongoing Costs

In year Commitment to Ongoing Costs

31

37

Total Commitments for Future Years

8,550

7,896

NOTE 12 OFFICERS EMOLUMENTS

As required by the SORP and the 1998 Audit & Accounting Regulations (Section 6(2)) the number of employees, including teachers, whose remuneration was 50,000 or over are listed below in incremental bands of 10,000.

Remuneration, for this purpose, means all taxable amounts paid to, or receivable by, an employee, and includes sums due by way of expense allowances and, were there any, the estimated money value of any benefit received by an employee otherwise than in cash.

Of the Councils some 7,700 employees, 121, including teaching staff, require disclosure.

Remuneration Band ()

2002/03

Numbers of Employees

2001/02

Number of Employees

40,000 up to 50,000 *

101

30

50,000 up to 60,000

9

11

60,000 up to 70,000

9

1

70,000 up to 80,000

1

1

80,000 up to 90,000

1

0

Total

121

43

The remuneration of the Senior Officers was as follows:

2002/03

000

Chief Executive

89

Assistant Chief Executive (Finance & I.T.)

59

Assistant Chief Executive (Legal & Democratic Services)

51

Assistant Chief Executive (Human Resources)

60

Director of Development

64

Director of Education

74

Director of Neighbourhood Services

66

Director of Health and Social Care

74

* The 40,000 up to 50,000 Band is only given for comparative purposes and will be dropped next year as is no longer a requirement to be disclosed.

NOTE 13 MINIMUM REVENUE PROVISION ADJUSTMENT ACCOUNT

2002/03

2001/02

000

000

Statutory Provision

3,796

3,577

Provision for Depreciation

(7,048)

(4,513)

Transfer to Commutation Adjustment Account (see Note 14 below)

14

0

(3,238)

(936)

74

Designated Authority (for Cleveland County Council i.e.

Middlesbrough Borough Council)

1,710

1,781

Total

(1,528)

845

See Note 4, Page 15 for the background behind the calculation of the 3,796,403 Statutory Provision.

NOTE 14 GRANT COMMUTATION EQUALISATION ACCOUNT

The Capital spend on improvement grants, slum clearance and urban programme prior to 1992 was funded by borrowing. The Government paid a revenue subsidy on debt charges of 75%.

In 1992 the payment of Government contribution to these schemes was changed to part borrowing and part Capital Grant. In order to close-down the previous system the Government made a commuted payment to Local Authorities to redeem debt on loans and ceased payment of revenue subsidy. 14,900,000 was received being the Net Present Value of grants which would have been received until the loans were repaid.

The Government accepted that some Authorities would make revenue losses arising from reduced revenue grant. These losses were to be offset by allowing Local Authorities to reduce their MRP contributions. The formula based calculation meant that Local Authorities could also make gains on commutation. The general understanding was that these gains would be disregarded. However, revised guidance indicates that commutation gains will need to be offset by an increase in MRP.

In the early years there are losses from commutation but from 2005 to 2011 there will be substantial gains.

On 1 April, 1997 a fund was created (the Grant Commutation Equalisation Account), which will hold MRP savings made in the early years to offset future MRP increases. The fund at 1 April, 1998 was 1,706,000. For 2001/2002 the years set-aside from revenue was not made as other Local Authorities are known not to have adopted the same approach. For 2002/03 the years set aside was 13,450 (2001/2002: Nil). For 2002/2003 the revised sum budgeted was 13,450 (2001/2002: 340,000). At the end of the year after crediting a further contribution of 114,780 in lieu of interest on the balance, the final balance is 3,020,609 (2001/2002 Nil: 171,000: 2,892,000).

NOTE 15 LEASES

The policy is generally to acquire vehicles and equipment through Operating Leases. The value of assets acquired under lease during 2002/2003 was 1,037,584 and the total value of lease arrangements at 31 March 2003, 10,576,815 (2001/2002 358,214; 12,501,292). Lease payments for the year amounted to 1,860,291 (2001/2002 2,347,142).

NOTE 16 THE EURO

A Working Party has been set up to monitor the situation relating to the Euro. Plans are being prepared to deal with the implications of the Euro being adopted, in particular ensuring that all necessary systems can accommodate the Euro.

NOTE 17 RELATED PARTY TRANSACTIONS

In accordance with FRS 8, the financial statements should contain a disclosure necessary to draw the attention to the possibility that the reported financial position of the Authority may have been affected by the existence of related parties and by material transactions within them. In accordance with the requirement, set out in this note are those related parties.

Elected Members and Chief/Second-tier officers have provided details of any related party transactions, as required by the latest Statement of Recommended Practice (SORP). There are no items declared that are material.

The Boroughs Director of Finance, Performance and Procurement/Section 151 Officer is the Treasurer for the River Tees Port Health Authority and the Chief Legal Officer for the Borough is also the Chief Legal Officer for the River Tees Port Health Authority.

There were no significant transactions with related companies.

Grants from Central Government, the European Community and other bodies are included in the column headed Income & Recharges shown in the Consolidated Revenue Account (CRA) on page20.

Also identified in the CRA are payments made to other Services, including Cleveland Fire Brigade, Coroners, Probation Services, Magistrates Courts, North York Moors National Park and the Northumberland and Yorkshire Flood Defence Committees.

Some services are provided to bodies which seek to advance aims which the Council would support such as community development, economic regeneration, charitable purposes and the like. Some of these services, such as payroll preparation and professional advice and support are provided without charge but the total cost involved is not significant.

NOTE 18 BORROWING ARRANGEMENTS

As a result of the LSVT transfer of Houses, Receipts were generated which financed the repayment of some 72.277 million of debt. A premium of some 7.361 million was levied in respect of this.

NOTE 19 AGENCY AGREEMENTS

There was no Income or Expenditure in relation to Agency Agreements.

NOTE 20 CHILDRENS FUND

There is now a requirement to identify Childrens Fund activity. Income and expenditure for the year was as shown below.

2002/03

000

000

Income

Grant Income

107

Development Fund

20

127

Expenditure

Employees

36

Premises

1

Transport

2

Supplies and Services

15

Third Party Payments

73

127

0

NOTE 21 POOLED BUDGETS

The Borough and the Langbaurgh and Middlesbrough Primary Care Trusts have a Pooled Budget of some 52,600 in respect of Learning Disabilities and Neighbourhood Renewal Funding. During the year some 56,686 was spent, mainly for Persons Centred Planning (23,400) and Modernising Day Services (24,800). All of the Budget available is from the Primary Care Trusts.

HOUSING REVENUE ACCOUNT 2002/03

Local Housing Authorities are required by the Local Government and Housing Act 1989 to keep a Housing Revenue Account (HRA) unless the Secretary of State has consented to their not doing so. the Account, which does not impact upon the general fund revenue account, must show credits and debits arising from the Authoritys activities as landlord, under powers in Part II of the Housing Act 1985. This account demonstrates the cost of financing, managing and maintaining the Councils housing stock. The total cost is met by income from rents, charges and Government subsidies. The Local Government and Housing Act 1989 ring-fenced the HRA, thereby preventing any cross subsidisation from the General Fund.

Following a favourable vote by tenants, the housing stock was transferred under a Large Scale Voluntary Transfer (LSVT) arrangement 15 July, 2002 (some 3 months into the year) to Coast and Country Housing, a Registered Social Landlord (RSL).

2002/2003

2001/2002

000

000

Income

Dwelling rents (gross)(Note 2)

7,821

26,110

Non-dwelling rents (gross)(Note 2)

190

583

Charges for services and facilities

9

21

Contributions towards expenditure

79

77

Housing Revenue Account subsidy receivable (including MRA)

6,044

16,242

Housing Benefits Transfers

0

0

Credits from Housing Repairs Account

0

0

Reduced provision for bad or doubtful debts

0

0

TOTAL INCOME

14,143

43,033

Expenditure

Repairs and maintenance

1,370

6,465

Supervision and Management

1,732

5,405

Rents, Rates, Taxes and Other Charges

175

714

Rates Rebates

5,447

17,957

Negative Subsidy Transferable to the General Fund

0

0

Increased Provision for Bad and Doubtful Debts

13

134

Cost of Capital Charge

2,974

10,716

Depreciation and Impairments of Fixed Assets

1,667

5,915

Amortisation of Deferred Charges

0

0

Debt Management Costs

78

94

TOTAL EXPENDITURE

13,456

47,400

SUB-TOTAL NET COST OF SERVICES

(687)

4,367

Net HRA income or expenditure on the asset management revenue account

(1,661)

(5,809)

Transfers from General Fund as directed by Secretary of State

0

0

Amortised Premiums and Discounts

374

372

HRA Investment Income (including mortgage interest and interest on notional cash balances)

(130)

(114)

SUB-TOTAL NET OPERATING EXPENDITURE

(2,104)

(1,184)

Revenue Contribution to capital expenditure (DRF)

0

0

HRA Contribution to Minimum Repayment Provision

1,482

1,518

Transfer to/from Major Repairs Reserve

(3)

(7)

(625)

327

Surplus from Trading Activities *

(0)

(54)

SUB-TOTAL

(625)

273

(SURPLUS)/DEFICIT BROUGHT FORWARD

(1,017)

(1,290)

(SURPLUS)/DEFICIT CARRIED FORWARD

(1,642)

(1,017)

*See Note 2 on Page 21

NOTES TO HOUSING REVENUE ACCOUNT 2002/2003

With the 2002/2003 introduction of new Resource Accounting certain information is required to be disclosed by way of Notes.

NOTE 1 HOUSING STOCK

The Council was responsible for managing an average of 11,737 dwellings during 2002/2003, up to 14 July, 2002, (2001/2002: 11,969). The stock at the year end was made up as follows:

2002/03

2001/2002

Nos.

Nos.

Houses

0

7,212

Flats

0

2,093

Bungalows

0

2,432

Other Shared Ownership Properties

0

23

(31 March, 2003 = Nil)

0

11,760

The value of assets held at the year end can be summarised as follows:

31 March 03

31 March 02

000

000

Operational Assets:

Dwellings

0

168,224

Other Land and Buildings

0

3,828

Other Shared Ownership Properties

0

172,052

Non-Operational Assets

0

2,047

Total

0

174,099

2002/2003

2001/2002

000

000

Stock at 1 April

11,382

11,760

Less Sales, Demolitions etc. and Transfer to CCH

(11,382)

(378)

Add New Buildings/Conversions and Acquisitions

0

-

Stock at 31 March

0

11,382

NOTE 2 RENTAL INCOME/VACANT DWELLINGS

Total rental income due for the year after allowing for voids amounted to 8,011,167 (3months)(2001/2002 26,692,177) and was made up as follows:

2002/2003

2001/2002

Dwellings

7,820,985

26,109,895

Garages

97,540

331,501

Other

92,642

250,781

8,011,167

26,692,177

During the year 2.40% of lettable properties were vacant; (2001/2002 3.57%). Average rents were 46.38 per week in 2002/2003, an increase of 2.91 (6.69%) over the previous year (2001/2002 43.47: 1.37: 3.25%)

2002/93

2001/02

000

000

The value of vacant dwellings held

0

6,072

NOTE 3 MAJOR REPAIRS RESERVE

2002/2003

2001/2002

000

000

Brought Forward 1 April

(501)

0

Transfers to MRR in year

(1,667)

(5,916)

Transfers from MRR to Housing Revenue Account in Year

3

6

Relating to Capital Expenditure for HRALand

0

Dwellings

2,165

5,377

Other Property

32

Carried Forward 31 March

0

(501)

NOTE 4 CAPITAL EXPENDITURE

i)Capital expenditure on Land, Houses and Other Properties within the Housing Revenue Account during the year was funded as follows:

2002/2003

2001/2002

000

000

Borrowing

0

1,582

Usable Capital Receipts

0

0

Direct Revenue Funding

0

4

Other Grants

0

3

Major Repairs Reserve

2,158

5,409

Total

2,158

6,998

ii)Capital receipts from the disposal of Land, Houses and Other Properties within the HRA during the year.

2002/2003

2001/2002

000

000

Land

-

Houses

393

4,660

Other properties

-

12

Total

393

4,672

LSVT

60,218

60,611

Transfer costs of some 5.266 million were met from the 60.218 million, leaving some 54.952 million to redeem debt. After Redemption Premium costs of 7.361 million were met, the net debt redeemed was 47.591 million.

NOTE 5 CAPITAL CHARGES AND THE CAPITAL CHARGES ADJUSTMENT ACCOUNT

See Note 4 on Page 15 for a general explanation of Capital Charges. Resource Accounting now includes Capital, Impairment and Deferred Charges in the net cost of services to show the cost of capital tied up in housing assets. However, they do not impact on the amount of income to be generated to achieve a balanced budget (i.e. in rents from Council tenants), as they are reversed out, with the HRA continuing to bear its share of an Authoritys debt financing and management costs up to 14 July, 2002. This reversing adjustment is known as the Capital Asset Charges Accounting Adjustment.

NOTE 6 DEPRECIATION

The Depreciation charged during the year was as follows:

2002/2003

2001/2002

000

000

Dwellings

1,664

5,909

Other Land and Buildings

3

3

Total Operational Assets

1,667

5,912

Non-Operational Assets

0

3

1,667

5,915

NOTE 7 IMPAIRMENT

The cost of impairment to the HRA assets during 2002/2003 was 0. (2001/2002 :0).

NOTE 8 DEFERRED CHARGES

See Note 3 on Page 14 for an explanation of Deferred Charges.

The sum charged to the HRA during 2002/2003 was 0. (2001/2002: 0).

NOTE 9 HRA SUBSIDY

The sum payable during 2002/2003 was made up as follows:

2002/2003

2001/2002

000

000

Maintenance and Management

(2,532)

(8,899)

Charges for Capital

(3,458)

(7,081)

Tenant Participation Compacts

(22)

Resource Accounting

(55)

Major Repairs Allowance

(1,664)

(5,909)

Interest on Receipts

49

67

Guideline Rent Income

6,980

23,918

Total Housing Element

(625)

2,019

Rent Rebate Element

(5,419)

(18,261)

Total HRA Subsidy

(6,044)

(16,242)

NOTE 10 RENT ARREARS

During the year 2002/2003, gross rent arrears as a proportion of gross rent income has increased slightly from 2.95% of the amount due, to 10.2%. The figures are as follows:

2002/2003

2002/2003

2001/2002

Gross Arrears14 July

817,653

Gross Arrears31 Mar

0

798,312

Payments in Advance14 July

(176,851)

Payments in Advance31 Mar

(0)

165,367

Net

640,802

0

(165,367)

Payments in Advance to Coast & Country Housing

176,851

Transfer of Arrears to Coast & Country Housing

(300,750)

516,903

Written Off as Bad Debts

(516,903)

0

Amounts written-off during the year amounted to 677,468 (2001/2002 701,205).

The SORP now requires that the Rent Arrears and Bad Debt Provision are reported for current and former Tenants.

2002/2003 (Transferred to CCH)

2001/2002

Current

Former

Total

Rent Arrears

-

-

-

798,312

Bad Debt Provision

-

-

-

(507,078)

Net

0

0

0

291,234

Percentage Provision

0.0%

0.0%

0.0%

63.5%

31 March 2002

275,218

16,016

291,234

40.6%

95.2%

63.5%

NOTE 11 EXCEPTIONAL/PRIOR YEAR ITEMS

An LSVT arrangement with Coast & Country Housing Limited came into effect in July 2002.

CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2003

31 March, 2003

31 March, 2002

000

000

000

000

FIXED ASSETS

Notes 1 & 2

Operational Assets:

-Council Dwellings

0

168,183

-Other Land and Buildings

152,210

157,061

-Infrastructure etc.

81,136

79,618

-Vehicles, Plant and Equipment

3,083

2,317

-Community Assets

9,869

9,832

Non-operational Assets:

-Other Land and Buildings

8,483

11,000

254,781

428,011

Deferred Charges

Note 3

2,991

4,119

Investments

Notes 4 & 5

3,440

3,599

Long-term Debtors

Note 6

1,014

1,113

Loan Premium/Discount Account

Note 17

2,101

2,534

11,365

Private Finance Deferred Consideration

Note 28 a

370

9,916

TOTAL LONG-TERM ASSETS

264,697

439,376

Current Assets

-Stocks and Work in Progress

Note 7

267

606

-Debtors

Note 8

21,557

12,888

-Short-Term Investments

Note 9

18,915

27,931

-Cash in Hand

Note 10

100

287

TOTAL CURRENT ASSETS

40,839

41,712

Current Liabilities

-Creditors

Note 11

(24,906)

(25,403)

-Temporary Loans

(9)

(9)

-Short-Term Borrowing

0

(9)

-Cash Overdrawn

Note 10

(978)

(1,913)

TOTAL CURRENT (LIABILITIES)

(25,893)

(27,334)

TOTAL ASSETS LESS CURRENT LIABILITIES

279,643

453,754

Long-term Borrowing

Note 12

52,876

125,150

Deferred Capital Receipts

Note 13

434

588

Capital Grants Deferred Account

Note 14

16,393

14,002

Provisions

Note 15

3,841

3,423

Earmarked Reserves

Note 16

854

219

74,398

143,382

TOTAL ASSETS LESS LIABILITIES

205,245

310,372

Fixed Asset Restatement Reserve

Note 18

(23,183)

157,747

Capital Financing Reserve

Note 19

162,568

88,974

Usable Capital Receipts Reserve

Note 20

7,087

2,296

Major Repairs ReserveHRA Account Page 33 Note 3

0

501

Insurance Fund

Note 21

2,482

2,580

Revenue Balances

Note 22

7,044

6,956

Reorganisation Capital Adjustment

Note 23

42,565

44,275

LMS Schools Balances

Note 24

3,242

3,444

Shares Reserve

Note 25

3,440

3,599

TOTAL EQUITY

Note 27

205,245

310,372

R Richardson

Director of Finance, Performance and Procurement

Date:

NOTES TO THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2003

NOTE 1 FIXED ASSETS

Movements in fixed assets during the year were as follows:

Council

Dwellings *

Operational

Land

and

Buildings

Infra-

structure

Assets

Vehicles

Plant and

Equipment

Community

Assets

Non-

Operational

Land and

Buildings

Total

000

000

000

000

000

000

000

ASSETS

Gross Book Value 31.3.2002

174,099

162,110

99,088

5,935

9,866

11,144

462,242

Category Transfers

0

Revaluations & Restatements

0

0

0

0

0

0

0

Value 1.4.2002

174,099

162,110

99,088

5,935

9,866

11,144

462,242

Activity In Year

Revaluations & Adjustments

0

1,448

0

0

(223)

(170)

1,055

Category Transfers

(353)

0

0

(15)

368

0

Acquisitions

371

1,531

1,057

293

3,252

Disposals

(176,257)

(4,078)

(48)

0

0

(2,688)

(183,071)

Enhancements

2,158

956

3,688

493

0

7,295

Gross Book Value 31.3.2003

0

160,454

104,259

7,485

9,921

8,654

290,773

DEPRECIATION

Balance 1.4.2002

5,916

5,049

19,470

3,618

34

144

34,231

Activity In Year

Depreciation for Year

1,664

3,214

3,653

784

18

27

9,360

Depn on Assets Transferred

0

0

Depn on Assets Sold

(7,580)

(19)

0

(7,599)

Depreciation 31.3.2003

0

8,244

23,123

4,402

52

171

35,992

Net Book Value 31.3.2003

0

152,210

81,136

3,083

9,869

8,483

254,781

Net Book Value 31.3.2002

168,183

157,061

79,618

2,317

9,832

11,000

428,011

*Transferred 14 July 2002 to Coast and Country Housing. Other asset categories land and buildings previously held within HRA were transferred to other departments.

**Revaluations adjustments are in accordance with the 5 year revaluation rolling programme.

The main items capital expenditure excluding deferred charges were:

2002/2003

2001/2002

000

000

Council Dwellings

2,158

6,891

Council Offices

113

214

Schools

4,767

7,089

Social Services Homes etc.

549

371

Libraries

132

126

Other Housing

717

563

Eston Sports Academy

0

(44)

Non-Housing Single Regeneration Budget

184

288

Skelton and Brotton By-pass

285

520

Loftus Bank

200

155

Saltburn Pier and Revitalisation

419

1,086

Other Highways and Bridges

166

181

Local Transport Plan

2,421

826

LSVT Section 25 Grant/Loan

3,136

-

LSVT Set-Up Costs

1,240

-

Other

616

3,897

Total Expenditure on Fixed Assets

17,103

22,163

The capital expenditure was financed as follows:

2002/2003

2002/2003

000

000

Temp Finance Awaiting Grant B/Fwd

(2,260)

Capital Creditors B/Fwd

(478)

Fixed Assets

17,103

Capital Receipts

6,597

Deferred Charges

8,837

Capital Grants

7,572

Major Repairs Reserve

2,165

Loans

9,164

Direct Revenue funding (DRF)

649

Insurance Contribution

119

Temp Finance Awaiting Grant C/Fwd

2,026

Capital Creditors C/Fwd

386

25,940

25,940

2001/2002

26,227

2001/2002

26,227

An analysis of fixed assets by type is:

31 Mar 03

31 Mar 02

Council Dwellings *

0

11,760

Schools

65

65

Main Council Offices

2

3

Depots and Workshops

2

2

Off Street and On Street Car Parks

31

Leisure Centres and Pools

5

5

Libraries

13

13

Museums

2

2

Youth & Community Centres

10

10

Elderly Peoples Homes

5

5

Childrens Homes

3

4

Day Centres **

12

6

Other Social Services Premises

7

8

Formal Parks

11

12

Markets

2

2

Cemeteries

8

8

Total number of properties held

147

11,936

*Following a favourable vote by tenants, Council Dwellings were transferred 14 July 2002 to Coast and Country Housing, a Registered Social Landlord (RSL), under a Large Scale Voluntary Transfer (LSVT).

**Arising from the general review of properties as part of the Valuers rolling programme, it has become apparent that some properties used as Day Centres were not recognised as such in the prior years analysis.

Voluntary Aided Schools

Within the Borough there are some 11 Voluntary Aided Schools (Church Schools). These are owned by the Churches to which they are affiliated, not the Borough, and standing on land which is owned by them. The surrounding land used by the schools, such as playing fields, are owned by the Borough and are included in its assets identified above.

These schools are largely maintained by the Borough, such expenditure being written off as incurred. The value of these schools has been estimated by the Boroughs Valuer in the sum of some 27.692 million, made up of 10.111m for the land and 17.581m for the school buildings thereon. The owners do not carry a value in their own accounts as the schools are dedicated buildings, used only for the purposes of being a school and there are no intentions to change the use.

MAJOR CAPITAL COMMITMENTS AT 31 MARCH, 2003

The Council has certain contractual commitments on capital schemes at 31 March, 2003. The major projects are listed below:

Scheme

000

Sports & Arts (4 Schools)

1,864

Grangetown Demolition Work

533

Sure Start Lakes Primary School

235

Private House Refurbishment South Bank SRB

154

Warrenby Amenity Site/Waste Disposal

110

Carlin Howe Civic Amenity Site

101

2,997

31 March 2002

823

NOTE 2 LEASES

The Councils policy is generally to acquire vehicles and equipment through Operating Leases. No sums are included in the Balance Sheet as only assets acquired through Finance Leases are required to be capitalised. See CRA Note 15 on page 29.

NOTE 3 DEFERRED CHARGES

Expenditure on deferred charges during year has been charged to service revenue account as the benefit of the expenditure does not extend beyond the year. This financing adjustment however does not impact upon net expenditure.

2002/2003

2001/2002

Improvement

Grants

Section

40(6)

Other

Total

Total

000

000

000

000

000

Balance at 1 April

5

2,932

1,182

4,119

4,354

Expenditure during 2002/2003

540

463

7,834

8,837

4,064

Grant offset to Capital Grants Deferred Account

(240)

(1,159)

(1,399)

(1,880)

Written off to Revenue Accounts and Capital Financing Reserve

(305)

(673)

(7,588)

(8,566)

(2,419)

Written off to Capital Financing Reserve only (HRA)

0

0

Balance at 31 March

0

2,722

269

2,991

4,119

NOTE 4 INTERESTS IN COMPANIES

The Authority has a number of shareholdings in various companies and/or the ability to appoint one or more Directors. In all cases, except for those of Teesside International Airport Ltd. and Cleveland Waste Management Ltd. the extent of control, or the size of operations, is not significant, and no recognition of these additional interests has been made in these accounts, other than to note them hereunder.

Interests in companies fall into one of six categories:

A)Controlled Companies

B)Arms Length Controlled Companies

C)Regulated due to influence Companies

D)Unregulated but influenced Companies

E)Minority interest Companies

These go from full/majority control through lessening degrees of influence.

F)Exempt from regulations

Companies in which the Borough had interests during 2002/2003 are listed below:

1.CADCAM Centre (Company Registration Number 01616754). Category E. Limited by guarantee of the four Cleveland Area Unitary Authorities. Computer Aided Design training and technology support. See also Note 26 on Page 57.

2.Cleveland Building Preservation Trust. Category F. Protection/renovation of historic buildings at risk in the Tees Valley area (Cleveland area plus Darlington). Exempt from Part V of Local Government and Housing Act.

3.Cleveland Innovations. (02114550). Category E. Limited by guarantee of the four Cleveland Area Unitary Authorities. Technical support for new business start-ups.

4.Cleveland Waste Management Ltd. Category E. Waste disposal in Cleveland area.

5.Future Steps Ltd. (3031855). Category E. Limited by guarantee of the four Cleveland area Unitaries. Careers advice and guidance.

6.North East Museums, Libraries and Archives Council (NEMLAC) (4159174). Category E. This company is limited by guarantee and covers the whole of the North East and is owned by the County Councils, Tyne and Wear Metropolitan Unitary Councils, Tees Valley Unitary Councils and other Public Bodies in the Region. This company replaces the previous companies Information North (for Libraries), and the North Eastern Museums Service, which were similarly owned companies limited by guarantee.

7.Redcar and Cleveland Development Agency Ltd. (2328553). Category C. 50% owned. To manage Redcar and South Bank Business Centres.

8.Tees Forest Development Ltd (03327239). Category E. To develop the Tees Valley Forest area. The Tees Valley Authorities can jointly appoint 1of 8 Directors.

9.Tees Valley Development Co. Ltd. (2933986). Category E. Limited by Guarantee. Can appoint 2 of 21 Directors. Marketing and Promotion of Tees Valley as destination for inward investment and tourism.

10.Teesside International Airport (2020423). Category F. Operates Teesside Airport.

The classification of the various companies is given as per the available information currently held by the Tees Valley Unitary Authorities.

CADCAM is jointly owned by the four Cleveland Unitary Authorities, and has Middlesbrough as the Lead Authority. Details have not been given regarding their shareholdings etc., but Redcar and Cleveland are likely to exercise about one quarter control.

Under the provision of FRS9, where interests in companies are material, either individually or in total, the companies results are to be consolidated into the Authoritys own accounts by way of separate Group Accounts. The interests in these companies have been reviewed as required by FRS9, and are not considered material, as the degree of control/ownership or the sums involved are minimal.

The only holding believed to be of any great value is that in Teesside Airport where less than 16% is held, worth about 3 million as shown hereunder, and this is excluded from FRS9 provisions by virtue of Part II of the 1986 Airports Act.