Brighton & HoveCity Council

Statement Of Accounts2001/02

Contents

Page No.

Financial Review and Explanatory Foreword

1 Audit Opinion

2 Statement of Responsibilities

3 Statement of Accounting Policies

Accounting Statements

6 Consolidated Revenue Account

8 Asset Management Revenue Account

9 Notes to the Consolidated Revenue Account

13 Housing Revenue Account Operating Account

14 Notes to the Housing Revenue Account

20 Consolidated Balance Sheet

22 Notes to the Consolidated Balance Sheet

34 The Statement of Total Movement in Reserves

35 Notes to The Statement of Total Movement in Reserves

36 Trust Funds

37 Notes to the Trust Funds

38 Collection Fund

40 Notes to the Collection Fund

42 Cash Flow Statement

44 Notes to the Cash Flow Statement

46 Glossary of Terms

Financial Review and Explanatory Foreword

The Council’s Statement of Accounts for the year 2001/02 is set out on pages 6 to 47. It consists of :-

Consolidated Revenue Account - the Council’s main revenue account covering income andexpenditure on all services.

Housing Revenue Account Operating Account - which shows income and expenditure oncouncil housing and the change to the working balance.

Consolidated Balance Sheet - which sets out the financial position of the Council as at 31st March 2002.

Statement of Total Movement in Reserves

Trust Funds

Collection Fund - which shows receipts of Council Tax, National Non Domestic Rates, payments madeto the General Fund and precepts to the Sussex Police Authority.

Cash Flow Statement - which summarises the total movement of the Council’s funds.

These accounts are supported by the Statement of Accounting Policies, which follows this foreword, andvarious notes to the accounts.

This foreword provides a brief explanation of the financial aspects of the Council’s activities and drawsattention to the main characteristics of the Council’s financial position.

1. Revenue

Financing the Budget Estimate Actual Variance£’000 £’000 £’000

Expenditure on Services 235,589 238,098 2,509

Funded ByRevenue Support Grant (96,123) (96,123) 0Redistributed NNDR (72,600) (72,600) 0Redistribution of Collection Fund surplus 371 371 0Council Tax and Precepts (67,728) (67,728) 0Use of / (contribution to) reserves (491) 2,018 2,509

Expenditure on Services shows an overspending of £2.509m. Details of the Council’s Revenue and Incomeare shown in the Consolidated Revenue Account on pages 8 and 9.

2. Capital

Despite limited capital resources the Council has managed to deliver a significant capital investmentprogramme by working in partnership with a wide range of external bodies and developing successful bidsfor Government, Lottery and European funding.

3. Accounting Policies

The accounting policies adopted by this Council comply with the relevant recommended accountingpractices. The Council’s policies are explained fully in the notes to the accounts.

4. Further Information

Further information about the accounts is available from the Corporate Finance Section, CorporateServices, King’s House, Hove. In addition, interested members of the public have a statutory right toinspect the accounts and their availability is advertised in the local press.

I certify that the accounts present fairly the financial position of Brighton & Hove City Council as at 31stMarch 2002.

Signed

Chief Finance Officer

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Auditor’s Report to Brighton & Hove City Council

Audit of Accounts 2001/02

We have audited the statement of accounts on pages 3 to 49, which has been prepared in accordance with theaccounting policies applicable to local authorities as set out on pages 4 to 6.

Respective Responsibilities of Chief Finance Officer and Auditors

As described on page 3 the Chief Finance Officer is responsible for the preparation of the statement ofaccounts. Our responsibilities as independent auditors are established by statute, the Code of Audit Practiceissued by the Audit Commission and our profession’s ethical guidance.

We report to you our opinion as to whether the statement of accounts presents fairly the financial positionand results of operations of the Council. We read the other information published with the statement ofaccounts and consider the implications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the statement of accounts.

Basis of opinion

We carried out our audit in accordance with the Audit Commission Act 1998 and the Code of Audit Practiceissued by the Audit Commission, which requires compliance with relevant auditing standards. Our audit included examination, on a test basis, of evidence relevant to the amounts and disclosures in thestatement of accounts. It also included an assessment of the significant estimates and judgements made by theauthority in the preparation of the statement of accounts and of whether the accounting policies areappropriate to the authority’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considernecessary in order to provide us with sufficient evidence to give reasonable assurance that the statement ofaccounts is free from material misstatement, whether caused by fraud or other irregularity or error. Informing our opinion we also evaluated the overall adequacy of the presentation of information in thestatement of accounts.

Opinion

In our opinion the Statement of Accounts presents fairly the financial position of Brighton & Hove CityCouncil as at 31st March 2002 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 AuditCommission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

Signed

P.J. ARKELLDistrict Auditor

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Statement of Responsibilities for the Statement of Accounts

The Council’s Responsibilities

The Council is required:

(i) to make arrangements for the proper administration of its financial affairs and to secure that one of itsofficers has the responsibility for the administration of those affairs. In Brighton & Hove that officer isthe Chief Finance Officer.

(ii) to manage its affairs to secure economic, efficient and effective use of resources and to safeguard itsassets.

The Chief Finance Officer’s Responsibilities

The Chief Finance Officer is responsible for the preparation of the Council’s Statement of Accounts which, interms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in Great Britain (“the Code”),is required to present fairly the financial position of the Council at the accounting date and its income andexpenditure for the year ended 31st March 2002.

In preparing the Statement of Accounts the Chief Finance Officer has:

(i) selected suitable accounting policies and then applied them consistently

(ii) made judgements and estimates that were reasonable and prudent

(iii) complied with “the Code”.

The Chief Finance Officer has also:

(i) kept proper records that were up to date

(ii) taken reasonable steps for the prevention and detection of fraud and other irregularities.

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Statement of Accounting Policies

1. General

The Accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting,issued in 2002 by the Chartered Institute of Public Finance and Accountancy (CIPFA), and also with guidancenotes issued by CIPFA on the application of Statements of Recommended Practice (SORPs).

2. Fixed Assets

The Code of Practice on Local Authority Accounting in Great Britain, which has been adopted by Brighton &Hove City Council, requires each local authority to value its land and property. These assets should bemaintained in a register and the total value presented within the authority’s balance sheet. The Code ofPractice requires the authority to charge its revenue services with a capital financing charge which comprises adepreciation charge (the extent to which the asset has been worn out or used up during the year) and anotional interest charge that reflects the benefit that the service received from the Council’s decision to tie upcapital resources in its particular assets.

Local authorities are required to distinguish between “operational” and “non-operational” fixed assets whichdetermines the method of valuation.

• Operational assets are held and used by the authority in the direct delivery of services or used forfunctions, which are directly related to the support of such services. They have been included in thebalance sheet at the lower of net current replacement cost and the net realisable value in existing use.

• Non-operational assets, such as commercial or investment property, have no direct link with theperformance of the authority’s statutory services and functions. These have been included in the balancesheet at the lower of net current replacement cost and net realisable value (represented by open marketvalue).

The asset values presented in the Accounts are based upon a certificate issued by the Council’s EstatesManager as at 1st April 1996 and amended by subsequent revaluations. Additions since that date are includedin the Accounts at their cost of acquisition.

All expenditure on the acquisition, creation or enhancement of fixed assets has been capitalised on an accrualsbasis.

The freehold and leasehold properties, which comprise the authority’s property portfolio, have been valued asat 1st April 1996 by the Council’s Estates Manager and external valuers. The values have been determined inaccordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Manual except that:

• not all properties were inspected. This was neither practicable nor considered to be necessary for thepurpose of the valuation. Inspections were carried out for specific valuations or during the course of theyear for normal management purposes.

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• there is a schedule of standard exclusions, definitions and reservations applied by the external valuers.

Fixed plant and machinery, such as lifts and central heating, are included in the valuation of buildings.

The Authority has a policy of revaluing its assets on a cyclical basis over 5 years (20% each year). In 2001/02the Council fully re-valued its housing stock.

All other property will be valued in accordance with the R.I.C.S ‘Red Book’ under the direction of theCouncil’s Estates Manager so that all property will be revalued within the five year programme.

It is a requirement of the 2002 Statement of Recommended Practice that all assets should have been revaluedwithin five years from April 1994. This has not proved possible mainly due to the effects of Local GovernmentReorganisation. The value of the assets not revalued is £22.4 million. It is intended that all outstandingvaluations will be completed within the next year, i.e. by the end of 2002/03.

For the 2001/02 accounts, depreciation has been charged on Housing Revenue Account (HRA) assets inaccordance with the requirements of HRA Resource Accounting.

3. Deferred Charges

Deferred charges are payments of a capital nature where no fixed asset is created, but which may properly befinanced over a period of years. These charges must be written out of the Council’s accounts over the periodin which the authority benefits and any balance should reflect the continuing value to the Council at theBalance Sheet date. It is the Council’s policy to write out of its accounts Deferred Charges in the year duringwhich the Capital Expenditure was incurred unless there is reason to write them out over a longer period.

4. Charging for Capital

Service departments receive a financing charge, which represents depreciation on the assets used by thatdepartment and a notional interest charge based on the net book value of the asset. Financing charges havebeen calculated in accordance with the Local Government and Housing Act 1989. Regulations prescribe theminimum amount of debt repayment to be charged in the revenue accounts as 4% and 2% of net outstandingdebt for the General Fund and the Housing Revenue Account respectively.

Further regulations prescribe the amount of interest to be charged to the Housing Revenue Account. For2001/02 the average rate payable was 5.55%. In addition debt management expenses have been allocated tothe Housing Revenue Account at a rate of 0.09%.

5. Capital Receipts

Capital Receipts from the disposal of assets are held in the Capital Receipts Unapplied Account and theCapital Financing Reserve (CFR). The amount held in the CFR is determined by legislation and is used in thecalculation of net debt outstanding.

Sums available in the Capital Receipts Unapplied Account are available to finance capital expenditure. Interestearned on amounts invested externally is credited to the General Fund Revenue Account. For 2001/2002 theaverage investment rate was 4.68%.

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6. Debtors and Creditors

The Revenue Accounts of the Council are maintained on an accruals basis in accordance with the AccountingCode of Practice and Financial Reporting Standard (FRS) 18. Any significant sums due to or from the Councilduring the year are included whether or not the cash has actually been received or paid in the year. Anexception to this principle relates to electricity and similar quarterly payments which are charged at the dateof meter reading rather than being apportioned between financial years. This policy is applied consistentlyeach year and thus does not have a material effect on the year’s Accounts.

7. Stocks and Work in Progress

Stocks are valued in accordance with the Accounting Code of Practice and SSAP 9 which states that stocksshould be shown at the lower of cost and net realisable value. Work in progress is valued at cost including anallocation of overheads.

8. Provisions

The Council sets aside provisions for specific future expenses which are likely or certain to be incurred butthe amount of which cannot yet be determined accurately. The operation of these and other Funds isdescribed in Note 9 to the Consolidated Balance Sheet.

9. Reserves

The Council maintains certain reserves to meet future expenditure not covered by provisions. Reserves maybe earmarked for a specific purpose, and can be either Capital or Revenue. Capital Reserves representamounts earmarked to finance future capital expenditure. The Fixed Asset Restatement Reserve reflects thebalance of surpluses and deficits arising from the ongoing revaluations of fixed assets, and the Capital FinancingReserve represents the amounts set aside from revenue or capital receipts to finance expenditure on fixedassets or for the repayment of loans or other transactions of a capital financing nature. Neither the FixedAsset Restatement Reserve nor the Capital Financing Reserve are backed by cash resources and thus cannotbe called on to support spending. The main Capital and Revenue Reserves are shown in the Statement ofTotal Movement in Reserves and in Note 13 to the Consolidated Balance Sheet.

Movements to and from Reserves are made through the Appropriations section of the Consolidated RevenueAccount. An exception to this is the treatment of notional interest on internally invested reserves where theCouncil credits interest directly to the Reserve.

10. Cost of Support Services

The costs of both centrally and departmentally provided support services have been fully recharged to servicesincluding an amount to Corporate and Democratic Core. These costs have been apportioned using the mostappropriate base including employee numbers, accommodation areas, gross or net service expenditure.

The definition of Corporate and Democratic Core has been refined in the Best Value Accounting Code ofPractice and now consists of Democratic Representation and Management Costs and Corporate ManagementCosts.

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Consolidated Revenue Account

Year ended31st March

2001

Year ended 31st March 2002

NetExpenditure

£’000

Operations

GrossExpenditure

£’000Income£’000

NetExpenditure

£’0004,731 Central Services to the Public 40,773 36,133 4,640

48,196 Cultural, Environmental and PlanningServices

*88,351 *34,477 53,874

108,745 Education Services 167,213 50,438 116,775

9,921 Highways, Roads and Transport Services 20,702 10,884 9,818

428 Housing Revenue Account 83,232 60,301 22,931

19,128 Housing General Fund 85,454 64,376 21,078

61,110 Social Services 95,595 30,932 64,663

6,292 Corporate and Democratic Core 7,020 205 6,815

1,491 Unapportionable Central Overheads 2,079 626 1,453

260,042 Net Cost of Services (Note 1) 590,419 288,372 302,047

9,640 Precepts and Levies 10,000

596 Council Tax Benefit Subsidy Limitation 574

100 Net (Surplus)/Deficit from Trading Operation (Note 2) (1)

(26,731) AMRA (GF) (28,555)

0

0

AMRA (HRA)

HRA Amortised Premiums / Investment Income

(28,564)

330

(2,729) Interest and Investment Income (2,148)

240,918 Net Operating Expenditure 253,683

* Gross Expenditure & Income include the purchase of Preston Barracks funded by a £4m grant fromSouth East Economic Development Agency.

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Year ended31st March

2001£’000

AppropriationsYear ended31st March

2002£’000

(428) Surplus/(Deficit) transferred to H.R.A. balances (549)21 Transfer to/(from) DSO Repairs & Renewals 0

(100) Transfer to/(from) Airport Reserves 11,352 Contribution to LMS Reserves 140

110

Transfer to Portslade Adult Education ReserveTransfer to/(from) LEA Budget

(5)577

Transfers to/(from) Earmarked Reserves(200) Use of Previous Year’s Carry Forward 516

Carry Forward of Under/(Over)spends27 - Policy & Communications 0

(122) - Culture & Regeneration 0(276) - Environment & Housing 0

7 - Social Care & Health 0(152) - Education & Lifelong Learning 0

Transfers to/(from) Earmarked Reserves583 - Corporate Budgets (211)

(157) - Culture & Regeneration 47157 - Performance & Resources (325)

3 - Environment & Housing 69(257) Contributions to/(from) General Reserves (227)

Contributions to/(from) Capital Reserves :-1,640 - Transfer to Capital Financing Reserve – H.R.A. 0

351 - Transfer to Capital Reserve 02,007 - Revenue Contributions to Capital 1,732

(12,013) - Transfer to/(from) Capital Financing Reserve (12,463)(9,311)

0 - Deferred Charges Written Down - Contributions to/(from) HRA Capital

(10,739)5,852

224,061 Amount To Be Met From Government Grant AndLocal Tax Payers 238,098

(63,557) Collection Fund Demand (67,710)(16) Parish Precepts from the Collection Fund (18)(32) Transfers from the Collection Fund 371

(87,136) Government Grant (96,123)(73,682) Distribution from National Non Domestic Rate Pool (72,600)

(362) (Surplus) / Deficit For The Year 2,018

(10,129) General Fund Balance at 1st April (10,491)

(362) (Surplus) / Deficit for the Year 2,018

(10,491) General Fund Balance at 31st March (8,473)

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Transactions On The Asset Management Revenue Account

2000/01 2001/02

£’000 £’000 £’000

Income

(44,420) Capital Charges - General Fund (49,432)(8,756) - Housing Revenue Account (42,582)

Expenditure(92,014)

13,96100

Provision for Depreciation – General FundProvision for Depreciation – Housing Revenue AccountGovernment Grants and External Contributions Written Down

16,8788,208

(2,734)12,285 External Interest Charges 12,332

137 Debt Management Expenses 11315 Finance Lease Interest 3 34,800

0 Transferred to Housing Revenue Account 28,564

47 Included within the results of Trading Operations 95

(26,731) Balance To Consolidated Revenue Account (28,555)

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Notes to the Consolidated Revenue Account

1. Gross Expenditure includes Support Service Charges and Capital Finance Charges.

2. Trading Operations

The Council has the following service, which is classified as a Trading Operation and is shown below:-

2000/01 2001/02

NetExpenditure

TotalExpenditure

TotalIncome

NetExpenditure

£’000 £’000 £’000 £’000

100 Shoreham Airport 2,147 2,148 (1)

100 Total 2,147 2,148 (1)

3. Section 137 Expenditure

Section 137 of the Local Government Act 1972, as amended by Sections 36 and 37 of the Local Governmentand Housing Act 1989 enables a unitary authority to spend up to £3.80 per head of the resident population,equivalent to £ 987,673 in 2001/02 for the benefit of people in their area on activities or projects notspecifically authorised by other powers.

2000/01 2001/02

£ £

260,513 Equalities 276,040

618,418 Advice Agencies & Community Events 652,969

12,700 Miscellaneous 5,025

891,631 Total 934,034

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4. Publicity

Under Section 5 of the Local Government Act 1986 a local authority is required to keep a separate account ofits expenditure on publicity. Publicity is defined in the Act as “any communication, in whatever form,addressed to the public at large or to a section of the public”.

2000/01 2001/02

£ £843,624 Recruitment advertising 794,135

447,899 Other advertising 420,987

691,960 Publicity and Marketing 464,481

1,983,483 Total 1,679,603

5. Local Authorities (Goods & Services) Act 1970

The Council carries out certain services for other public bodies, including district and parish councils andhealth authorities, under the provisions of Section 1 of the above Act. The scale of these operations, whichrelate to Legal Services, Music Tuition and OFSTED inspections are not material in relation to the Council’sexpenditure generally.

6. Minimum Revenue Provision

The Authority is required by statute to set aside a minimum revenue provision for the redemption of externaldebt. The method of provision is defined by statute. For 2001/02 the amount is £3,391m (2000/2001£3,292m) The provision has been charged to the following Service Revenue Accounts.

2000/01 2001/02 £’000 £’000

1,640 Housing Revenue Account 1,701

1,652 General Fund 1,690

3,292 Statutory Minimum Revenue Provision 3,391

13,961 Amount charged by way of Depreciation excluding HRA 14,202

(10,669) Adjustment to Consolidated Revenue Account (10,811)

3,292 Statutory Minimum Revenue Provision 3,391

7. Members Allowances

The gross amount paid by way of Members Allowances during the year amounted to £804,523 (2000/2001£777,896).

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8. Disclosure of Executive Remuneration

Number of Staff Remuneration Band Number of Staff2000/01 2001/02

84 £40,000 - £49,999 12126 £50,000 - £59,999 39

4 £60,000 - £69,999 10

0 £70,000 - £79,999 1

4 £80,000 - £89,999 3

010

£90,000 - £99,999£100,000 - £109,999£110,000 - £119,999

200

The Council appointed a new Chief Executive midway through 2001/02.

9. Pension Costs

The Council provides for the pensions of its past and present employees by way of contributions to theDepartment for Education and Skills in respect of teachers pensions costs and to the East Sussex CountyCouncil Superannuation Fund for other employees. The cost of these contributions shown in the Council’saccounts is as follows:-

2000/01 2001/02

£’000% of

pensionable pay

£’000% of

pensionable pay

3,141 7.40 Teachers primary contributions 3,477 8.35Other employer’s primary contributions

7,021 11.10 - Non Airport 8,857 12.7063 15.50 - Airport 69 16.00

Discretionary payments and added years benefits1,944 3.07 -Non Airport 2,043 2.92

5 1.12 -Airport 5 1.09

The Funds Actuary has advised that the pension costs that it would be necessary to provide for in the year, inaccordance with SSAP 24, are £8.718m representing 12.5% of Non-Airport pensionable pay and £0.068m,representing 15.8% of Airport pensionable pay.

The capital cost of any discretionary increases in pension payment (e.g. discretionary added years) agreed byBrighton & Hove City Council, or one of the three previous authorities is as follows:a) in year, £845,966b) in earlier years for which payments are still being made, £35,045,046 funded by the authority.

The corresponding figures for Teachers are:a) £512,663b) £2,410,362

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10. Related Party Transactions

In accordance with Financial Reporting Standard (FRS) 8, material transactions with related parties notdisclosed elsewhere in this statement of accounts are detailed below. The Council has taken steps to identifypotential material transactions with officers and members and has determined that there are none.

2000/01 2001/02Government Grants(Amounts represent grant received in year) £’000 £’000Department for Education and Skills Student Awards 2,524 1,066Department for Education and Skills Standards Fund 5,194 7,062Department for Education and Skills

Early Years DevelopmentGrant 2,211 2,464

Department of Health Partnership Grant 1,315 2,353Department for Transport, LocalGovernment and the Regions Single Regeneration Budget 4,341 4,673Department for Transport, LocalGovernment and the Regions New Deal for Communities 0 531

Precepts and Levies 2000/01 2001/02£’000 £’000

East Sussex Fire Authority 7,327 7,915Environment Agency 1,530 1,678East Sussex Probation Service 387 0Other 396 407Total 9,640 10,000

The East Sussex Probation service is now funded by the National Probation Service.

11. Single Regeneration Budget

The Council acts as the Accountable Body in respect of all the Single Regeneration Budget (SRB) projects inBrighton & Hove. As a result of this role the Council receives and distributes SRB grant in respect of allprojects. An independent Partnership is responsible for the award of SRB grants to projects. Thesetransactions have no net impact on the Council’s accounts and are not therefore reflected in the ConsolidatedRevenue Account.

12. Building Control Trading Account

The Local Authority Building Control Regulations require the disclosure of information regarding the settingof charges for the administration of the building control function. However, certain activities performed by theBuilding Control Unit cannot be charged for, such as providing general advice and liaising with other statutoryauthorities. The statement below shows the expenditure and income divided between the chargeable and non-chargeable activities.

2000/01 2001/02£’000 £’000 £’000 £’000

Chargeable Non-Chargeable Total1,068 Expenditure 525 541 1,066(598) Income (578) (21) (599)470 Net (Surplus)/Deficit (53) 520 467

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Housing Revenue Account Operating Account

Year Ended YearEnded

31st March2001

31st March2002

£’000 £’000 Income

(32,383)(894)

Gross Rental Income Dwellings Rent (gross) Non-dwelling Rents

(32,982)(883)

(1,884) Charges for Services and Facilities (2,037)(16,981) HRA Subsidy Receivable (including Major Repairs Allowance – MRA) (24,211)

(92) Contributions Towards Expenditure (73)(106) Housing Benefit Transfers from General Fund (115)

(52,340) Total Income (60,301)

ExpenditureRepairs, Maintenance & Management

9,1139,306

Repairs and Maintenance Supervision and Management

8,7779,980

165 Rents, Rates, Taxes and Other Charges 18320,697 Rent Rebates 20,744

221 Provision for Bad or Doubtful Debts 7996,497 Cost of Capital 34,374

0 Deferred Charges 106

00

Depreciation of Fixed Assets On Dwellings On Other Assets

7,917291

54 Debt Management Expenses 61

46,053 Total Expenditure 83,232

(6,287) Net Cost of Services 22,931

0 Transfer from Asset Management Revenue Account (AMRA) (28,564)450 Amortised Premiums and Discounts 414(93) Investment Income/Mortgage Interest, etc (84)

(5,930) Net Operating Expenditure (5,303)

Appropriations4,154 Revenue Contributions to Capital 3,8892,204 HRA Contribution to Minimum Revenue Provision 2,254

0 Transfer to Major Repairs Reserve (291)428 (Surplus)/Deficit for the Year 549

(3,459) Balance Brought Forward (3,031)

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(3,031) Balance Carried Forward (2,482)

Notes to the Housing Revenue Account (HRA)

The Housing Revenue Account records revenue income and expenditure relating to the Council’s ownhousing stock. This includes the cost of managing and repairing the dwellings, rent rebates and capital financingcosts as well as rental income from tenants and the HRA subsidy from central government. The account is“ring fenced” as there are statutory controls over the transfers which can be made between the HRA and theCouncil's General Fund.

1. Housing Stock The Council was responsible for managing 13,098 dwellings at 31st March 2002. The stock was made up asfollows:-

Bedsit 1 Bed 2 Bed 3 Bed 4+ Bed TotalFlats 888 3,742 3,303 289 6 8,228Houses 0 13 1,727 2,570 268 4,578Bungalows 0 204 64 24 0 292Total 888 3,959 5,094 2,883 274 13,098

The change in stock can be summarised as follows:-

2000/01 2001/0213,334 Stock at 1st April 13,224

(118) Sales (125)(3) Demolition 0

0 Other (3)13,213 13,096

0 New Buildings 01 Acquisitions/conversions 0

10 Other 213,224 Stock at 31st March 13,098

The total gross book values of HRA assets (before depreciation) are as follows:

Asset ClassificationOpening Balance

1 April 2001£’000

Closing Balance31 March 2002

£’000Operational AssetsHousing Stock 333,140 559,746Other Land and Buildings 2,866 9,341Vehicles, Plant, Furniture and Equipment 449 449Non-Operational AssetsInvestment Properties 3,360 3,360

Total 339,815 572,896

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The Council’s housing stock and car spaces were subsequently re-valued as at the 1st April 2001 by theDistrict Valuer. The opening balances as at the 1st April 2001 were increased by : Council Dwellings £219.5m(up to £552.6m) and Other Land and Buildings were increased by £1.403m for car spaces and £5.071m forgarages (up to £934.1m).

The vacant possession value for the dwellings in the HRA as at 1st April 2001 was £1,023.4m as valued by theDistrict Valuer, compared with the value of £552.6m for its existing use as social housing. The difference of£470.8m represents the cost to the government of providing council housing at less than open market rents.

2. Major Repairs Reserve

The transactions on the Major Repairs Reserve in 2001/02 were as follows:

£’000

Balance as at 1st April 2001 0

Depreciation on Housing Stock (Major Repairs Allowance) 7,917Depreciation on Other HRA Property 291

Total 8,208

Contributions to Capital Expenditure on Housing Stock (7,917)Appropriation to the HRA (Depreciation on Other HRA Property) (291)

Balance as at 31st March 2002 0

3. Housing Repairs Account

The Council does not operate a Housing Repairs Account as repairs and maintenance costs are charged directto the Housing Revenue Account.

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4. HRA Capital Expenditure and Financing

The following table summarises the capital expenditure incurred in 2001/02 and how it was financed:

Land,Housing

and OtherProperty

£’000

CashIncentiveScheme

£’000

ICTEquipment

£’000

Total

£’000Total Capital Expenditure 13,047 96 9 13,152Less Expenditure Not Funded Until 2002/03 (534) (26) 0 (560)

Capital Expenditure Funded in 2001/02 12,513 70 9 12,592

Funded by:Basic Credit Approval 757 70 9 836External Contributions 191 0 0 191Major Repairs Allowance/Reserve 7,917 0 0 7,917Direct Revenue Funding 3,648 0 0 3,648

Total Funding 12,513 70 9 12,592

The direct revenue funding charged to the HRA in 2001/02 was £3.889m, compared with £3.648m shown inthe table above. The difference of £0.241m will be used to fund capital expenditure accrued for in 2001/02where the works were not actually paid for until 2002/03.

The expenditure of £560,000 not funded in 2001/02 shown above relates to accruals and also grant funding tobe received in 2002/03.

Summary of total capital receipts from disposals:

£’000

Right to Buy Sales of Houses and Flats 5,299Sale of Land and Other Property 463Mortgages Repayments 213Other Sales 15

Total 5,990

5. Cost of Capital Charges

The HRA in 2001/02 was debited with a cost of capital charge of £34.374m representing the cost of capitaltied up in council housing. The figure is based on an interest charge of 6% (as prescribed by the Government)on the balance sheet value of the housing stock.

The HRA was also charged with depreciation to reflect the consumption of HRA assets over their useful life(housing stock £7.917m; other property £0.291m). The charge of £7.917m was funded from the MajorRepairs Allowance, which forms part of the HRA subsidy paid to the Council by the Government.

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In addition the HRA was debited with a deferred charge of £106,000 in respect of capital expenditure whichdid not result in the acquisition, creation or enhancement of a tangible fixed asset (Cash Incentive Scheme£96,000; ICT Equipment £10,000). In accordance with proper accounting practices, the HRA is charged withthe deferred charge although the expenditure would be financed from capital resources.

Capital Asset Charges Accounting Adjustment:

The cost of capital and deferred charges are included in the net cost of service in the HRA, showing the costof capital tied up in housing assets. However, they do not impact on tenants’ rents as they are reversed out,leaving the HRA continuing to bear its share of the Council’s debt financing and management costs. Thiscapital asset charges accounting adjustment is achieved by means of the Asset Management Revenue Account(AMRA), as shown below:

£’000

Cost of Capital (6% Charge) 34,374Deferred Charges 106

34,480Less Transfer from AMRA to the HRA (28,564)

Actual Interest borne by the HRA 5,916

6. Depreciation Charges for Operational/Non Operational Assets

Depreciation Charge2001/02

£’000Operational AssetsCouncil Dwellings 7,917Other Land and Buildings 33Vehicles, Plant, Furniture and Equipment 90Non Operational AssetsInvestment Properties 168

Total Depreciation 8,208

7. Impairment

Impairment relates to physical damage or deterioration in the quality of the service provided by a fixed asset.There are no impairment charges in 2001/02 relating to fixed assets.

8. Deferred Charges

Deferred charges represent a transfer of resources from capital to revenue. This is to fund capitalexpenditure that does not create or enhance the life or value of a fixed asset. The deferred charges in2001/02 are £96,153 for the Cash Incentive Scheme and £9,386 for Computer Equipment (see note 5 above).

18

9. HRA Subsidy Payable

The Housing Revenue Account Subsidy is a central Government grant to local authorities with councilhousing in order to assist them to bridge the gap between income and expenditure on their Housing RevenueAccounts.

The HRA subsidy system subsidises the council in meeting the costs of running the housing stock andpayments of rent rebates (Housing benefit) to council housing tenants.

HRA subsidy payable to the council for the year ended 31st March 2002 is as follows:

HRA Subsidy Elements £’000

Housing ElementIncomeRental Income (Notional) (30,009)Interest on Receipts (61)Total Income (30,070)ExpenditureRepairs, Maintenance and Management (Notional) 15,981Major Repairs Allowance 7,917Charges for Capital 9,934Other Items of Reckonable Expenditure 4Tenant Participation Compacts 23Resource Accounting Allowance 63Total Expenditure 33,922Rent Rebate ElementRent Rebates 20,375

Summary £’000

Housing Element Income (30,070)Housing Element Expenditure 33,922Net Expenditure - Housing Element Subsidy 3,852Rent Rebate Subsidy 20,375

Total HRA Subsidy Due 2001/02 24,227

Subsidy Adjustment For 2000/01 (16)

Subsidy Outturn 2001/02 24,211

19

10. Rent Arrears

At 31st March 2002, arrears of dwellings rent (excluding housing benefit overpayments) amounted to£2,531,797 (2001 £2,199,358). This represents an increase in arrears as a proportion of gross rental incomefrom 6.79% to 7.68%.

The Provision for uncollectable debts is as follows:

2000/01 2001/02£’000 £’000

963 Provision as at 1st April 1,033221 Change in Provision charged to the HRA. 799

(151) Rent Arrears and other bad debts written off (185)1,033 Provision for Bad Debts at 31st March 1,647

20

Consolidated Balance Sheet

At 31stMarch 2001

At 31st March 2002

£’000 £’000

Fixed Assets (Notes 1 and 2)

Operational Assets335,500 Council Dwellings 552,979365,524 Other Land & Buildings 442,41420,282 Vehicles, Plant, Furniture & Equipment 17,30749,569 Infrastructure Assets 52,1737,023 Community Assets 6,461

Non Operational Assets99,522 Investment Properties 108,8284,910 Work in Progress 8,137

882,330 Total Fixed Assets 1,188,299

57,373 Deferred Charges (Note 3) 01,131 Long Term Investments (Note 4) 1,0552,186 Long Term Debtors 8,797

943,020 Total Long Term Assets 1,198,151

Current Assets28,025 Investments 24,492

823 Stocks & Work in Progress (Note 5) 80538,190 Debtors (Note 6) 44,498 69,79567,038

Current Liabilities(10,221) Borrowing repayable in less than 12 months (7,430)(36,563) Creditors (45,070)(10,311) Bank Overdraft (8,658) (61,158)(57,095)

952,963 Total Assets Less Current Liabilities 1,206,788

(112,700) Long Term Borrowing (Note 7) (180,199)(56,837) Deferred Liabilities (Note 8) 0(3,444) Provisions (Note 9) (3,583)(1,093) Deferred Credits (Note 10) (880)

(28,979) Government Grants Deferred (Note 11) (32,090) (216,752)(203,053)

749,910 Total Assets Less Liabilities 990,036

21

At 31st March2001

At 31st March 2002

£’000 £’000

(591,388) Fixed Asset Restatement Reserve (821,151)(121,729) Capital Financing Reserve (137,121)

(1,787) Usable Capital Receipts Reserve (Note 12) (1,469)(272) Minority Interest - Shoreham Airport (240)

Funds Balances & Reserves(23,221) Earmarked Reserves (Note 13) (17,929)(5,135) General Fund & General Reserves (4,484)

(207) Collection Fund (1,303)(3,140)

0LMS Reserves (Note 14)Standards Fund LEA Budget

(3,280)(577)

(3,031) Housing Revenue Account (2,482) (30,055)

(749,910) Total Net Worth (990,036)

22

Notes to the Consolidated Balance Sheet

1. Fixed Assets

Movements in Fixed Assets during the year were:-

CouncilDwellings

Land &Buildings

Vehicles, Plant,

Furniture&

Equipment

InfrastructureAssets

Comm-unity

Assets

InvestmentProperties

Work inProgress Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Gross Book Valueat 1st April 2001

335,503 375,132 26,226 52,598 7,087 99,661 4,910 901,117

Additions 13,047 12,030 1,539 5,342 187 325 3,226 35,696Disposals (5,959) (543) (50) 0 0 (32) 0 (6,584)Recategorisation (1,186) 1,181 0 0 0 0 5 0Revaluations 219,518 69,997 (32) (189) (749) 9,173 (4) 297,714

Gross Book Valueat 31st March 2002 560,923 457,797 27,683 57,751 6,525 109,127 8,137 1,227,943AccumulatedDepreciation at 1stApril 2001 3 9,608 5,944 3,029 64 139 0 18,787Depreciation thisyear

7,941 9,940 4,482 2,555 0 168 0 25,086

Depreciationwritten out on assetmovements 0 (4,165) (50) (6) 0 (8) 0 (4,229)AccumulatedDepreciation at 31stMarch 2002 7,944 15,383 10,376 5,578 64 299 0 39,644

Net Book Value31st March 2002 552,979 442,414 17,307 52,173 6,461 108,828 8,137 1,188,299

Depreciation is calculated on a straight-line basis over the expected life of the asset, on the differencebetween the book value and any estimated residual value. Depreciation is charged on all assets except land,community assets and work in progress.

Each type of asset has a set life. Operational buildings are set at 50 years, furniture and equipment is 5-10years depending on the nature of the asset. Infrastructure is 10-20 years depending on the nature of the asset.

The Council’s Fixed Assets include the following:

23

At 31st March2001

At 31st March 2002

13,224 Council Dwellings 13,098

Operational Assets

7 Cemeteries 71 Crematorium (Woodvale) 16 Off-Street car-parks leased to NCP 69 Off-Street pay & display car-parks Council run 72 On-Street Parking (Norton Road) 13 Museums 34 Principal Administrative Offices 44 Swimming Pools - indoor 41 Swimming Pools - outdoor 14 Paddling pools 45 Leisure Centres 51 Brighton Centre 11 Dome Complex 11 Preston Manor 11 Royal Pavilion 11 Volk's Railway 11 West Blatchington Windmill 11 Foredown Tower 1

44km Principal Roads 44km527km Other Roads 530km

60 Public Conveniences 60152 Park Buildings 15217 Libraries 172 Nurseries 2

75 Schools (including Aided) 7311 Tutorial & Special Units 113 Town Halls 31 Town Hall Annexe 15 Children and Family Centres 5

18 Centres/Homes for people with learning difficulties 185 Centres for older people 55 Centres for people with Mental Health problems 51 Sheltered Workshop 1

14 Playlink, other Social Care and Health Centres and Offices 14Community Assets

1,293 hect. Parks & Open Spaces 1,293 hect.2,329 plots Allotment - Units 2,520 plots

3 Mini-Golf Courses 33 Golf Courses 3

24

2. Leases

Finance Leases

Finance leases are those involving the transfer of the risks and rewards of ownership of the asset to the lessee.The capital cost of the asset so transferred is included in the Council’s Fixed Assets, and the interest elementis charged to revenue in the year in which it is incurred.

There was no capital value outstanding on finance leases as at 31st March 2002 (£0.011m at 31st March 2001).At the same date there were no further lease rental obligations (£0.168m at 31st March 2001). Lease rentalpayments totalled £0.032m during 2001/02 (£0.177m during 2000/01). No new finance leases were enteredinto during 2001/02 (none in 2000/01).

Operating Leases

Operating leases are those where the Council obtains the use of an asset while not purchasing the asset.Operating lease costs are charged to revenue in the year in which they are incurred.

The original capital value of assets acquired under operating leases totalled £3.196m as at 31st March 2002(£2.459m at 31st March 2001). The outstanding lease rental obligations at that date amounted to £1.783m(£1.535m at 31st March 2001). Lease rental payments totalled £0.545m during 2001/02 (£0.412m in 2000/01).The value of new operating leases entered into during 2001/02 totalled £0.829m (£0.458m during 2000/01).

In addition, under Local Government Reorganisation regulations, the Council has a liability to reimburse EastSussex County Council for certain operating leases entered into by East Sussex County Council prior to April1997. The capital value of these assets amounted to £0.192m at 31st March 2002 (£0.192m at 31st March2001). There were no outstanding lease rental obligations at 31st March 2002 (£0.037m at 31st March 2001).Lease rental payments totalled £0.071m in 2001/02 (£0.173m in 2000/01).

3. Deferred Charges

These represent items on the Balance Sheet where no tangible asset is created. The debt is now managed in-house.

31st March 2001 31st March 2002

£’000 £’00057,173 ESCC Transferred Debt 0

200 Other 0

57,373 Total 0

25

4. Long Term Investments

31st March 2001 31st March 2002£’000 £’000

21 Local Authority Mutual Investment Trust -Maintenance of graves

1

1,110 Sussex Innovation Centre 1,054

1,131 Total 1,055

5. Stocks and Work in Progress

31st March 2001 31st March 2002£’000 £’000

0 Work in Progress 0

113 Rechargeable works 42113 42710 Stocks 763

823 Total 805

6. Debtors

31st March 2001 31st March 2002£’000 £’000

3,048 Housing Rents 3,348210 Commercial Rents 452

17,624 Collection Fund 17,4083,056 SRB / NDC & URBAN 5,935

26,079 Sundry Debtors* 30,61150,017 57,754

(11,827) Provision for Doubtful Debts (13,256)

38,190 Total 44,498

*The Housing Benefits overpayments income currently included within the Council’s accounts relatesonly to those payments actually received from debtors and not to the total invoiced income for thefinancial year. FIRST, which is the Council’s new Housing Benefit database, has required developmentwork to complete its implementation. That work has had to be prioritised, with core systems andprocesses taking precedence, it is intended that the income system will be addressed in 2002/03.

26

7. Long Term Borrowing

Total Outstanding

TotalOutstanding

31st March 2001 31st March 2002£’000 £’000

Source of Loan

(99,700)0

Public Works Loans Board (PWLB) – MaturityPWLB – Equal Instalments of Principal

(149,196)(3)

(12,000) Money Market – Fixed (30,000)(1,000) Money Market – Variable (1,000)

0 Mortgage Loans 00 Other 0

(112,700) Total (180,199)

Analysis of Loan by Maturity

0 Maturity within 1-2 years (7,003)(9,000) Maturity within 2-5 years (1,000)

(13,500) Maturity within 5-10 years (4,500)(22,000) Maturity within 10-15 years (18,656)(68,200) Maturity in more than 15 years (149,040)

(112,700) Total (180,199)

The PWLB – Equal Instalments of Principal loans have been taken as repayable within 1 year.

8. Deferred Liabilities

These are liabilities which by arrangement are payable beyond the next year at some point in the future or arepaid off by an annual sum over a period of time. Examples include the debt taken over from former councilson reorganisation where the loan management rests with another body or local authority, and outstandingfinance lease obligations. The debt is now managed in-house.

31st March 2001 31st March 2002

£’000 £’000(12) Finance Leases 0

0 Other 0

348 Premiums on premature debt repayments 0

(57,173) ESCC Transferred Services Debt 0

(56,837) Total 0

27

9. Provisions

Amounts set aside by the Council for certain or likely future expenses, the amount of which cannot bedetermined accurately.

Receipts Payments1st April 2001 in Year in Year

31st March 2002

£’000 £’000 £’000 £’000Redundancy & Early Retirement (455) 0 455 0Council Tax / H B System (513) 0 513 0Maintenance of Graves (548) (192) 5 (735)Waste Disposal (250) 0 0 (250)Insurance (64) 0 0 (64)Portland Gate (35) (2) 0 (37)Restructure Redundancy (850) (3,478) 2,298 (2,030)Information Technology (150) 0 150 0Sundry LGR Issues (550) (39) 153 (436)Other (29) (4) 2 (31)

Total (3,444) (3,715) 3,576 (3,583)

10. Deferred Credits

Deferred credits are amounts derived from sales of assets which will be received in instalments over agreedperiods of time. They arise from mortgages on sales of council houses and are part of mortgages shownunder long term debtors in the Balance Sheet.

Balance at 31st March 2001

£’000

Balance at 31st March 2002

£’000(307) General Fund (307)(786) Housing Revenue Account (573)

(1,093) (880)

28

11. Government Grants Deferred

Government grants deferred represents grants that have been used to purchase fixed assets. As the value ofthe asset is reduced by depreciation, so the value of the "Government Grants Deferred" account reduces tooffset that depreciation charge.

12. Usable Capital Receipts Reserve

Proceeds from the sale of a fixed asset, for example, land or building. Capital receipts can be used to financenew capital expenditure, within rules set down by the Government, but they cannot be used to finance day today spending.

A. Capital Receipts

2000/01 2001/02£’000 £’000

(2,623) Balance at 1st April (395)(13,086)

0Usable Capital ReceiptsOther Receipts

(13,973)0

(15,709) (14,368)8,011

351Transfer to Debt Redemption ReserveApplied to fund Expenses

8,760339

6,952 Applied to fund Capital Expenditure 5,092

(395) Sub-total at 31st March (177)

B. Capital Grants/Contributions

Grants and contributions received towards Capital Projects

2000/01 2001/02

£’000 £’000

(380) Balance as at 1st April (1,392)(5,477) Government Grants (7,700)(4,268) Other Grants (3,513)

(84) External Contributions (411)(10,209) (13,016)

8,817 Applied to fund Capital Expenditure 11,724

(1,392) Sub-total at 31st March (1,292)

(1,787) Balance at 31st March (1,469)

29

13. Earmarked Reserves

Balance at 31stMarch 2001

Balance at 31stMarch 2002

£’000 £’000

(11,517) Capital Reserves (9,442)(3,052) Section 106 Receipts (2,575)

(294) Central Library (304)516 Departmental Carry-forwards 0

(5,845) Insurance Reserves (5,388)(3,029) Other Earmarked Reserves (220)

(23,221) Total (17,929)

14. Local Management of Schools (LMS) Reserves

2000/01£

2001/02£

1,544,306 Primary Schools 1,973,7331,262,373 Secondary Schools 1,177,479

333,557 Special Schools 129,273

3,140,236 Total 3,280,485

These balances are carried forward by each individual school and are used to provide education to the pupilsof that school. They are not used for any other purpose.

15. Euro

The Council is currently reviewing the viability of accepting euro coinage at a number of its commercialoutlets and cash offices. The review (which is due for completion later in the year) covers, amongst otherthings, the implications on the Council’s cash and banking systems and treasury management.

Until a decision is made as to whether the UK should enter the economic and monetary union and adopt thesingle currency, the Council will meet the costs associated with euro implementation from within existingbudgetary provision. No expenditure has been committed for euro conversion and it is not yet possible toestimate total costs.

16. Related Companies

The Council has the majority interest in Shoreham Airport, for which a separate Statement of Accounts ispublished. The Council also has an interest in ADC (Properties) Ltd, The Sussex Innovation Centre, theBrighton City Centre Business Forum (previously known as the Town Centre Business Forum) and theBrighton Dome & Museum Development Company.

30

17. Provision for Credit Liabilities (PCL)

In accordance with statutory requirements the Council is required to set aside sums as a provision to repayexternal loans, credit arrangements and other limited purposes. The Council does not keep an account withinthe accounting records for the PCL, as there is no need to do so, but maintains a memorandum account,which is set out below:

2000/01 2001/02£’000 £’000

0 Amount brought forward at 1st April 08,011 Reserved Capital Receipts in Year 8,760

363 Repayment of Transferred Debt 3603,292 Minimum Revenue Provision 3,391

3 Credit Arrangements 211,669 12,513

Less 0 Applied to fund Credit Approvals 0

(11,649) Applied to repay debt (12,493)(20) Applied to Credit Arrangements (20)

0 Balance at 31st March

0

18. Capital Commitments

The Council has sufficient capital resources to meet all its capital commitments. It is anticipated that capitalschemes starting in or before 2001/02 will involve future capital payments of about £6.14m, the major itemsover £250,000 being:

Scheme 2001/02£’000

Hove Museum Refurbishment 485Industrial Grants 2Devolved Capital to SchoolsHousing Stock – Structural WorksHousing Stock – Kitchen and Bathroom Refurbishment

400400450250

Cliff Falls on Undercliff WalkRestoration of Preston Park

450421

19. Contingent Liabilities and Assets

A Contingent liability or asset is a possible loss or gain which is not recognised in the accounts because itcannot be accurately estimated or because the event giving rise to the possible loss or gain is not consideredsufficiently certain. This item is disclosed by way of a note to the accounts.

The following Contingent Liabilities were identified at 31 March 2002:

(i) Chalky Road/Fox Way

£10,000 in respect of Chalky Road/Fox Way Land Compensation Act claims.

31

(ii) London Road Traffic Improvement Scheme:

(a) Belmont Street Housing Development - Claim for additional costs incurred £18,550.

(b) Due to the London Road Traffic Improvement Scheme there could be possible Part 1 compensation claimsand Compulsory Purchase Orders claims. These are currently unquantifiable. Claims could be considered up toAugust 2004.

(iii) Appeals against the refusal of Planning Permission

£31,000 in respect of a possible award against the Council following an appeal against the refusal of planningpermission.

(iv) S117 (after care services) Mental Health Act Backpayments

Subject to Appeal the Council has a potential liability of £20,000 to £30,000 regarding S117 (after care services)Mental Health Act backpayments to overcharged users.

(v) Portland Street

Planning inquiry claim £12,000.

(vi) Blatchington Mill School Access Road

2 properties claiming £15,000 each.

(vii) Ditchling Road

4 claims for compensation, under part 1 of the Land Compensation Act 1973, amounting to £8,000.

(viii) Land at Jubilee Street

A potential claim from interested parties seeking further compensation based on the valuation of the land atthe new library site.

No contingent assets were identified at 31 March 2002.

20. Disclosure of Net Pensions Asset/Liability

As part of the terms and conditions of employment of its staff, Brighton & Hove City Council offersretirement benefits. Although these will not actually be payable until employees retire, the Council has a commitment to make the payments and this needs to be disclosed at the time that employees earn theirfuture entitlement.

The Council participates in two pension schemes:

• The Local Government Pension Scheme, administered by East Sussex County Council, which is a fundedscheme, meaning that the Council and employees pay contributions into a fund, calculated at a levelestimated to meet the pensions liabilities with investment assets;

• The Teachers’ Superannuation Scheme, administered by the Department for Education and Skills

32

In 2001/02 pension costs have been charged to the consolidated revenue account on the basis of contributionspayable for the year to the East Sussex County Council pension scheme (based on a formal actuarial valuationas at 31st March 1998). The scheme was subsequently valued as at 31st March 2001. However, at 31 March2002 the Council had the following overall assets and liabilities for pensions that have not been included in thebalance sheet:

£’000Estimated Liabilities in the Scheme 265,507Estimated Assets in the Scheme 261,737 Net Asset/(Liability) (3,770)

Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of thepensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc.The East Sussex Pension Fund liabilities have been assessed by Hymans Robertson, an independent firm ofactuaries. The main assumptions used in their calculations at 31st March 2002 are;

Price Increases 2.8%Salary Increases 4.3%Pension Increases 2.8%Rate of Discounting Scheme Liabilities 6.4%

Assets in the County Council Pension Fund are valued at fair value, principally market value for investments,and consist of the following categories, by proportion:

31st March 2002Equity Investments 72%Bonds 14%Property 11%Cash 3%

100%

Teachers Pensions

Brighton & Hove City Council will account for the contributions to the Teachers’ Superannuation Scheme,which is a defined benefit scheme, but the Council is unable to identify its share of the underlying assets andliabilities.

21. Post Balance Sheet Events

• In March 2002 the City Council signed a 25 year contract for the provision of services at 4 of the City’ssecondary schools under the Private Finance Initiative with Brighton & Hove City Schools ServicesLimited. The contract provides for the construction of new accommodation, the refurbishment of someexisting accommodation and a number of facilities management services. Payments by the council underthe contract are projected to commence in April 2003, the cost to the council over the period of thecontract, assuming an annual inflation rate of 2.5%, is estimated at £105.2 million. On the expiry of thecontract the assets will transfer back to the City Council at no cost.

• The preferred bidder for the Waste Management PFI has been identified as Onyx Aurora.

33

Statement of Total Movement in Reserves

2000/01£’000

2001/02£’000

Surplus/(deficit) for the year:362 - General Fund (2,018)

(428) - Housing Revenue Account (549)3,159 Movements on specific revenue reserves 4,6793,093 Total increase/(decrease) in revenue resources 2,112

(2,228) Increase/(decrease) in usable capital receipts (218)1,012 Increase/(decrease) in unapplied capital grants and contributions (100)

(1,216) Total increase/(decrease) in realised capital resources (note 1) (318)96,111 Gains/(losses) on revaluation of fixed assets 237,658

0 Impairment losses on fixed assets due to general change in prices 0(19,390) Capital expenditure written off (1,421)76,721 Total increase/(decrease) in unrealised value of fixed assets

(note 2)236,237

(6,014) Value of assets sold, disposed of or decommissioned (note 3) (6,474)14,763 Capital receipts set aside 13,630

(10,669) Revenue resources set aside (12,748)6,519 Surplus/(deficit) for the year 25,355

(8,427) Deferred charges written down (10,845)2,186 Total increase/(decrease) in amounts set aside to finance

capital investment (note 4)15,392

74,770 Total recognised gains and losses 246,949

34

Notes to the Statement of Total Movements in Reserves

1. Movement in realised capital resources Usable capitalreceipts £’000

Amount receivable in 2001/02 25,775Surplus/(deficit) for the year (9,102)Amounts applied to finance new capital investment in 2001/02 (16,673)Total increase/(decrease) in realised capital resources in 2001/02 (318)Balance brought forward at 1st April 2001 1,787Balance carried forward at 31st March 2002 1,469

2. Movement in unrealised value of fixed assets Fixed Asset Restatement Reserve£’000

Gains/losses on revaluation of fixed assets in 2001/02 237,658Impairment losses on fixed assets due to general changes in prices in 2001/02 0Capital expenditure written off (1,421)Total increase/(decrease) in unrealised capital resources in 2001/02 236,2373. Value of assets sold, disposed of or decommissionedAmounts written off fixed asset balances for disposals in 2001/02 (6,474)Total movement on reserve in 2001/02 229,763Balance brought forward at 1st April 2001 591,388Balance carried forward at 31st March 2002 821,151

4. Movement in amounts set aside to finance capital investment Capital FinancingReserve £’000

Capital receipts set aside in 2001/02- Reserved Receipts 8,760- Usable receipts applied 4,870Total receipts set aside in 2001/02 13,630Revenue resources set aside in 2001/02- Capital expenditure financed from revenue (12,748)- Reconciling amount for provisions for loan repayment 0Total revenue resources set aside in 2001/02 (12,748)Surplus/(deficit) for the year 25,355Deferred Charges written down (10,845)Total increase/(decrease) in amounts set aside to finance capitalinvestment

15,392

Total movement on reserve in 2001/02 15,392Balance brought forward at 1st April 2001 121,729Balance carried forward at 31st March 2002 137,121

35

Trust Funds

The Council acts as trustee for various Trust Funds. The balances on these accounts are excluded from theCouncil’s Consolidated Balance Sheet. The main trusts and their purposes are summarised below: -

Capital Net Revenue RevenueMarket Current Balance Income Expenditure BalanceValue Assets Trust Fund 1st April

20012001/02 2001/2002 31st

March Note 1 Note 2 2002

£’000 £’000 £’000 £’000 £’000 £’000

864 108Brighton Fund Gifts to the aged poor 53 31 43 41

507780

(6)Gorham’s GiftDistribution and expensesLand and Buildings (Note 3) (3) 16 31 (18)

545 83

Hedgecock Bequest (Note 4)Grants to charity 11 23 33 1

233 20Oliver & Johannah BrownEducation 8 9 5 12

23647

6838

Other TrustsEducationMusic Trust (Note 5)

6035

133

70

6638

45 119Other Trusts (Note 4)Various 79 8 1 86

0 475Friends of the Royal Pavilion 319 166 10 475

3,257 905 Total 562 269 130 701

36

Notes to the Trust Fund Accounts: -

1. Capital Market Value shows the valuation of Charities Official Investment Fund (COIF) shares and otherinvestments at the Mid Point Market Prices as at 31st March 2002.

2. Net Current Assets equals cash plus investments in Brighton & Hove City Council.

3. Land and Buildings for Gorham’s Gift are shown at the market valuation as at 12th March 1999. The accounts for Gorham’s Gift are subject to independent examination.

4. The assets of the Dupree Chess Charity formerly included under the heading “Other Trusts – Various”was incorporated into the Hedgecock Bequest as agreed by the Charity Commissioners.

5. The Brighton & Hove Music Trust was set up following the disaggregation of the East Sussex CountyCouncil Music Trust.

6. The Council acts as the sole trustee in respect of all the funds listed with the exceptions of Gorham’s Giftand Friends of the Royal Pavilion.

7. The opening balances are not the same as the closing balances disclosed in the Statement of Accounts2000/01. This is due to prior period adjustments.

37

Collection Fund Account

Year EndedYear Ended31st March 2001 31st March 2002

£’000 £’000 £’000 £’000Collection FundIncome

(83,287) Income from Council Tax (88,866)11,991 Benefits 11,5644,070 Allowances 4,3329,396 Discounts 9,866(366)

(58,196)Voids/Bankruptcies (261)

(63,365)

(596)

Contributions:Compensation for Council Tax Benefitsubsidy limitation (574)

Transfers from General Fund(11,395) - Council tax benefits (10,990)

(54)(11,449)

- Discretionary rate relief (49)(11,039)

(66,367) Income Collectable from Business Rates (69,856)8,468 Allowances 7,335(133) Movement on Provisions (613)

295 Interest on refunds 82(57,737) (63,052)

(127,978) Total Income (138,030)

38

Year EndedYear Ended31st March 2001 31st March 2002

£’000 £’000 £’000 £’000Collection FundExpenditure

Precepts and Demands63,574 - Brighton & Hove City Council 67,7284,866

68,440- Sussex Police Authority 5,207

72,935

Business Rate57,343 - Payment to National Pool 62,663

44957,792

- Costs of Collection 43863,101

Bad/Doubtful Debts888 - Write Offs 1,107654 - Provision for uncollectable amounts 567

1,542 1,674

Redistribution of council tax surplus32 - Brighton & Hove City Council (371)

Redistribution of council tax surplus3 - Sussex Police Authority (28)

127,809 Total Expenditure 137,311

(169) Movement on Fund Balance (719)

(37) Balance 1 April (Surplus) / Deficit (206)

(169) Movement on Fund Balance (719)

(206)Balance 31 March (Surplus) /Deficit

(925)

39

Notes to the Collection Fund Account

Note 1. Collection Fund

This account reflects the statutory requirements for billing authorities to maintain a separate Collection Fundto account for transactions in relation to non-domestic rates, council tax and precept demands. TheCollection Fund is consolidated with other accounts of the authority and has been prepared on an accrualsbasis.

Note 2. Council Tax

Council tax income derives from charges raised according to the value of residential properties, which havebeen classified into eight valuation bands estimating 1st April 1991 values for this specific purpose. Individualcharges are calculated by estimating the amount of income required to be taken from the Collection Fund bySussex Police Authority and the Council for the forthcoming year and dividing this by the council tax base.

The Council’s tax base was calculated as follows:

Band Estimated no. ofTaxable Properties

Band Ratio Band DEquivalentDwellings

Band A 18,826 0.6667 12,550Band B 21,636 0.7778 16,828Band C 27,647 0.8889 24,575Band D 15,800 1.0000 15,800Band E 9,133 1.2222 11,162Band F 3,688 1.4444 5,327Band G 2,312 1.6667 3,853Band H 116 2.0000 232

90,327Less provisions forappeals and noncollection

2,252

Tax Base For 2001/02 88,075

Tax Base For 2000/01 87,636

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Note 3. National Non Domestic Rates (NNDR)

NNDR is organised on a national basis. The government specifies an amount (43.0p in 2001/2002) and,subject to the effects of transitional arrangements, local businesses pay rates calculated by multiplying theirrateable value by that amount. The Council is responsible for collecting rates due from ratepayers in its areabut pays the proceeds into an NNDR pool administered by the Government. The Government redistributesthe sums paid into the pool back to local authorities' General Funds on the basis of a fixed amount per head ofpopulation.

The NNDR income (after reliefs and provisions) of £63.101m for 2001/02 (£57.792m for 2000/01) was basedon an average rateable value for the Council’s area of £155.948m for 2001/02 (£156.942m for 2000/01). Theyear-end rateable value for NNDR amounted to £157.543m for 2001/02 (£157.975m for 2000/01).

Note 4. Precepting Authorities

The major authorities precepting on the Collection Fund in 2001/02 and their respective amounts were:

2001/02 2000/01

Sussex Police Authority £5,207,868 £4,866,407Brighton & Hove City Council £67,727,764 £63,573,521

The Brighton & Hove City Council precept includes £17,500 for Rottingdean Parish Council (£16,500 in2000/2001)

Note 5. Contributions to Collection Fund Surpluses and Deficits Upon the transition to council tax in April 1993 the Council is entitled to receive the full benefit of theadjustment to community charges made in 1993/1994 and subsequent years. The balance on the CollectionFund attributable to community charges as at 31st March 2002 totalled £25,098. This amount will be used bythe Council to reduce the amount of council tax in future years.

Similarly £900,585 of the surplus of £925,683 on the Collection Fund as at 31st March 2002 not accounted forby residual Community Charge transactions will be distributed in subsequent financial years to Sussex PoliceAuthority and the Council in proportion to the value of the respective precept and demand by the twoauthorities on the Collection Fund.

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Cash Flow Statement

Year to31st March 2001

Year to 31st March 2002

£’000 £’000 Revenue Activities £’000 £’000

Cash Outflows

156,918 Cash paid to & on behalf of employees 167,106180,744 Other operating cash payments 212,45063,90362,619

Housing Benefit paid outNNDR Payments to National PoolPrecepts

72,93458,0575,207

464,183Cash Inflows

515,754

(12,189) Rents (after rebates) (44,023)(47,597) Council Tax receipts (73,210)

375 Community Charge receipts 0(87,136) Revenue Support Grant (96,224)(56,409) NNDR Receipts (72,411)(73,682) NNDR receipts from national pool (63,052)(67,677) DSS grants for benefits (66,376)(41,433) Other government grants (113,286)(65,209) Cash received for goods & services (1,990)(19,650) (470,606) Other operating cash receipts (23,615) (554,187)

(6,423) Net cash (inflow)/outflow fromrevenue activities (Note 1)

(38,433)

Returns on Investments andServicing of FinanceCash Outflows

10,763 Interest paid 14,890

94Interest element of finance lease rentalpayments 0Cash Inflows

(1,756) Interest received (9,339)

Capital ActivitiesCash Outflows

35,615 Purchase of fixed assets 39,9580 Deferred Charges 10,668

Cash Inflows(11,974) Sale of fixed assets (9,459)(5,972) Capital grants received (3,884)(4,186) 22,585 Other capital cash receipts (1,252) 41,582

16,162 Net cash (inflow)/outflow 3,149

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Management of Liquid Resources

5,355 Liquid Resources (3,533)

Financing

Cash Outflows

195,701 Repayments of amounts borrowed 150,0822,840 Payment to ESCC 0

0Capital element of deferred purchasepayment 0

162Capital element of finance lease rentalpayment 0

Cash Inflows

(363) Payment from ESCC 0(220,601) (22.261) New loans raised (151,351) (1,269)

(744)(Increase)/decrease in cash (Note 2) (1,653)

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Notes to the Cash Flow Statement

1. Revenue Activities Net Cashflow

Year to 31stMarch 2001

Year to 31st

March 2002£’000 £’000

(362) Deficit/(surplus) as per CRA 2,018(169) Deficit/(surplus) as per Collection Fund (719)

(2,002) Interest 5,552

(11,246) Add non-cash transactions (43,067)

Add items accrued in accounts:-(2) Increase/(decrease) in stocks (18)

196 (Increase)/decrease in creditors (8,507)7,162 Increase/(decrease) in debtors 6,308

(6,423)Net Cash (inflow)/outflow from revenueactivities (38,433)

2. Movements in Cash

Year to 31stMarch 2001

Year to 31st

March 2002£’000 £’000

(744) (Increase)/decrease in cash (1,653)(744) (Increase)/decrease in cash (1,653)

3. Reconciliation of items under the Financing and Management of Liquid Resourcessections to the opening and closing balance sheets

1st April 2001 Movement in Year 31st March 2002£’000 £’000 £’000

Short Term Investments 28,025 (3,533) 24,492

28,025 (3,533) 24,492

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4. Analysis of government grants

Year to 31st

March 2002£’000

Education Support & Training Grant (GEST) 5,683DfES Schools Income (non LEA) 2,265EC Milk Products SubsidyIntervention Board Milks Subsidy for under 5’sHealth Authority – Milk for under 5’sGrant IncomeDfES – Early Years Development GrantOther Government GrantsRevenue Improvement GrantsSingle Regeneration Budget GrantNNDR Administration GrantVerification Framework set up GrantOffice of National Statistics GrantD.S.S. - Training Support ProgrammeD.O.H. - Mental Illness Specific GrantD.O.H. - Aids Support GrantD.O.H. - Drug / Alcohol Specific GrantD.O.H. - Asylum SeekersD.O.H. - Partnership GrantD.O.H. - Prevention GrantD.O.H. - Carers GrantChildren Services GrantChildren’s Fund GrantHousing GrantsDrugs Action Team Development Fund GrantURBAN GrantNew Deal for Communities GrantBellwin DTLR GrantNeighbourhood Renewal Fund GrantNew Opportunities Fund GrantDfES Other Grants

21910

9302,404

21360

517438124

7346

1,167431140

1,6682,007

346439

1,67720

26,2874731

822(221)

2317745

48,232

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Glossary of Terms

• AccrualA sum included in final accounts to cover income or expenditure attributable to the accounting period forgoods received or work done, but for which payment has not been made or income received by the end ofthe period.

• Agency ServicesThe provision of services by one authority on behalf of another reimbursed by the authority responsible forthe cost of the work carried out.

• BudgetA statement of the authority’s plans for net revenue and capital expenditure over a specified period of time.

• Capital ExpenditureExpenditure on the acquisition of fixed assets which will be of use to the Council for more than one year, e.g.land, buildings, roads.

• Collection FundAll receipts of Council Tax and National Non Domestic Rates are paid into this fund. The Council uses thismoney to pay its precepts to East Sussex County Council and the demand by the Council’s General Fund,which finances the Councils day to day expenditure.

• Community ChargeA flat rate tax levied by a local authority on all residents aged 18 or over, apart from a few exempt categories.It operated between April 1990 and March 1993 as a replacement for Domestic Rates.

• Consolidated Revenue Account Main revenue account of the authority which summarises the cost of all the services provided by the Councilwhich are paid from National Non Domestic rates, Council Tax, government grants and other income.

• Council Tax The current method of collecting local authority taxation introduced from April 1993. For full details pleaserefer to the notes to the Collection Fund on pages 42 to 45.

• CreditorsAmounts owed by the Council but not paid at the date of the balance sheet.

• Current AssetsAn asset which will be consumed or realised in the next accounting period e.g. debtors, stocks, short-terminvestments.

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• Current Liability An amount which will be payable or could be called in within the next accounting period e.g. creditors, cashoverdrawn, temporary loans.

• Debtors Amounts owed to the Council but not paid at the balance sheet date.

• Deferred ChargeAn item of expenditure reflected in the balance sheet, which does not result in a tangible asset e.g.improvement grants.

• General Fund HousingThis includes assisting homeless persons as well as services for private sector housing such as administeringimprovement grants and working with housing associations to provide more homes for rent.

• National Non Domestic RatesA rate set by Central Government and paid by all businesses. All receipts are paid into a central pool andthen redistributed to local authorities on a per capita basis.

• Revenue AccountAn account that records day to day expenditure and income on such items as salaries and wages, runningcosts of services and financing costs of capital expenditure.