statement of movement on general fund balance committee... · for the year, taking into account the...

STATEMENT OF MOVEMENT ON GENERAL FUND BALANCE

34

The Income and Expenditure Account shows the Council’ s actual financial performance for the year, measured in terms of the resources consumed and generated over the last twelve months. However, the Council is required to raise Council Tax on a different accounting basis, the main differences being: • Capital investment is accounted for as it is financed, rather than when the fixed assets are

consumed. • Retirement benefits are charged as amounts become payable to pension funds and pensioners,

rather than as future benefits are earned. The General Fund Balance compares the Council’ s spending against the Council Tax that it raised for the year, taking into account the use of reserves built up in the past and contributions to reserves earmarked for future expenditure. This reconciliation statement summarises the differences between the outturn on the Income and Expenditure Account and the General Fund Balance.

2007/08 2008/09 £000 £000

12,096 Deficit for the Year on the Income and Expenditure Account 55,406

(13,822) Net additional amount required by statute and non statutory proper

practice to be debited or credited to the General Fund Balance for the year (Note 20)

(54,278)

(1,726) (Increase)/Decrease in General Fund Balance for the Year 1,128

(8,791) General Fund Balance brought forward (10,517)

(10,517) General Fund Balance carried forward (Note 40) (9,389)

(7,796) Amount of County Fund Balance held by schools under local management schemes

(7,139)

(2,721) Amount of General Fund Balance generally available for new expenditure (2,250)

(10,517) (9,389)

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

35

This statement brings together all the gains and losses of the Council for the year and shows the aggregate increase in its net worth. In addition to the surplus generated on the Income and Expenditure Account, it includes gains and losses relating to the revaluation of fixed assets and re-measurement of the net liability to cover the cost of retirement benefits.

2007/08 2008/09 £000 £000

12,096 (Surplus)/deficit for the Year on the Income and Expenditure Account 55,406

(105,455) (Surplus)/deficit arising on revaluation of fixed assets (60,208)63,613 Actuarial (gains)/losses on pension fund assets and liabilities (12,764)

(29,746) (17,566)

8,088 Exceptional Additional Loss arising from the Write off of Overhanging

Premiums (Note 35) 0

(21,658) Total recognised (gains)/losses for the year (17,566)

BALANCE SHEET

36

The Balance Sheet summarises the year end balances on the County Council's accounts. Inter-directorate balances have been eliminated. The balances on the Pension Fund and Trust Accounts are not available for the Council's use and have also been excluded.

2007/08 Restated 2008/09 £000 £000 £000 £000 142 Intangible Assets (Note 22) 128 142 128 Fixed Assets (Note 22 and 23) Operational 280,326 Land 271,029 342,643 Buildings 373,401 247,149 Infrastructure 261,214 3,618 Vehicles, Plant and Equipment 3,755 18 Community 599 Non-Operational 7,596 Investment Assets 9,210 6,650 Surplus Assets 12,696 3,778 Assets Under Construction 5,796 891,778 Total Fixed Assets 937,700 6,390 Long Term Debtors (Note 31) 7,047

0 Deferred premiums on the early repayment of debt (Note 27) 0

898,310 Total Long Term Assets 944,875 Current Assets 510 Stocks (Note 30) 520 22,736 Debtors (Note 31) 21,950 64,945 Temporary Investments (Note 29) 65,070 721 Landfill Usage Allowances (Note 38) 0 88,912 87,540 987,222 1,032,415 Current Liabilities (226) Temporary Loans (Note 32) (151) (50,328) Creditors (Note 37) (58,307) (318) Liability to DEFRA for Landfill Usage (Note 38) 0 (1,603) Cash Overdrawn (Note 39) (4,623) (52,475) (63,081) 934,747 Total Assets Less Current Liabilities 969,334 Long Term Liabilities (253,094) Long Term Loans (Note 32) (253,115) (3,821) Provisions (Note 49) (4,311) (75,774) Government grants deferred (Note 47) (94,030) (788) Deferred premiums on early repayment of debt

(Note 27) (777)

(162,367) Pensions Liability (Note 11) (160,632) (495,844) (512,865) 438,903 Total Assets Less Liabilities 456,469

Financed by: 103,000 Revaluation Reserve (Note 42) 157,420 478,685 Capital Adjustment Account (Note 43) 440,070 (7,773) Financial Instruments Adjustment Account (Note

35) (7,458)

1,390 Usable Capital Receipts Reserve (Note 41) 9 (162,367) Pensions Reserve (Note 11) (160,632) 15,451 Reserves (Note 49) 17,672 10,517 General Fund Balance (Note 40) 9,388 438,903 Total Equity 456,469

CASH FLOW STATEMENT

37

This statement provides a link between the Balance Sheet at the beginning of the year, the Income and Expenditure Account for the year and the Balance Sheet at the end of the year. It looks at where the money came from and how it was spent for both revenue and capital activities, and therefore reflects the changes in the financial structure of the County Council during the year.

2007/08 Revenue Activities 2008/09 £000 £000 £000

Outflows 230,850 Payments to & on behalf of employees 246,203 213,776 Other operating accounts 231,629 444,626 477,832

Inflows (7,927) Revenue Support Grant (7,755)

(47,235) Non-Domestic Rate Income (55,705) (104,718) Council Tax Precept (109,544) (139,415) Dedicated Schools Grant (143,866)

(63,026) Government Grants (Note 55) (64,278) (58,972) Other Grants and Reimbursements (65,390) (55,692) Sale of Goods and Services (60,310)

(476,985) (506,848)(32,359) Net inflow on Revenue Activities (Note 50) (29,016)

Servicing of Finance Outflows

12,328 Interest paid 12,541 Inflows

(4,082) Interest received (3,418) 8,246 9,123

Capital Activities Outflows

47,165 Purchase of fixed assets & Other Capital cash payments 46,693 Inflows

(5,664) Sale of Fixed Assets (1,811) (22,574) Capital Grants (Note 55) (20,160)

(3,178) Other Capital Income (1,769) (31,416) (23,740)

(8,364) Net Cash Outflow Before Financing (Notes 51 and 52) 3,060

Management of Liquid Resources (Note 54)

28,691 Net increase/(decrease) in short term deposits (126)

Financing (Note 53) Outflows

12 Repayments of amounts borrowed 87 Inflows

(24,126) New Loans Raised (1) (24,114) (86)

(3,787) (Increase)/Decrease in Cash (Notes 39, 51 and 52) 3,020

CASH FLOW STATEMENT

38

This statement reports all of the real cash transactions within the Council. This is different to the Income and Expenditure Account (I&E) because it does not include all of the accounting adjustments made to reflect where cash has not yet actually been paid or received but it is due to be paid or received

This statement looks interesting. I can see exactly what the Council has been spending its cash on, but isn’t it the same as the Income and Expenditure Account?

NOTES TO THE CORE FINANCIAL STATEMENTS

39

1. SERVICE ANALYSIS 2008/09 The Best Value Accounting Code of Practice was issued in 2000 by CIPFA, which established a mandatory requirement on Local Authorities to present a service analysis in a standard form. BVACoP Divisions of Service

Children & Young People’s Services

Community Services

Economy & Environment

Res, CEX, L&DS and

Corporate*

Total

£000 £000 £000 £000 £000 Central Services 0 0 390 11,671 12,061 Court Services 0 0 0 398 398 Cultural, Environmental &

Planning Services 288 11,837 17,206 228 29,559

Education Services 44,394 163 545 79 45,181 Highways, Roads & Transport

Services 0 0 28,279 0 28,279

Housing Services 0 335 0 149 484 Social Services 21,381 66,896 155 0 88,432 66,063 79,231 46,575 12,525 204,394 * Resources, Chief Executive’s Office, Legal & Democratic Services and Corporate

2007/08

£000 Central Services 2008/09

£000 Corporate & Democratic Core:

1,559 Democratic Representation & Management 1,6253,424 Corporate Management 3,5884,983 5,213

Central Services to the Public: Local Council Tax 19 Elections 45

216 Registration of Births, Deaths & Marriages 359426 Emergency Planning 222

2,415 Other Services 1,8343,057 2,479

Other Operating Income and Expenditure: 126 Precepts & Levies 113

4,542 Non Distributed Costs 4,256

12,708 12,061

2007/08 £000

Court Services 2008/09£000

393 Coroners’ Court Services 3980 Other Court Services 0

393 398

2007/08 £000

Cultural, Environmental and Planning Services 2008/09£000

Cultural and Related Services: 1,553 Culture & Heritage 2,292

240 Recreation & Sport 2581,864 Open Spaces 2,057

350 Tourism 3445,319 Library Service 6,4629,326 11,413


40

Environmental Services: 9,431 Waste Disposal 9,522

533 Community Safety 712167 Agricultural Services (Smallholdings) 194

1,232 Consumer Protection 1,43411,363 11,862

Planning and Development Services: 0 Development Control 226

293 Planning Policy 705523 Environmental Initiatives 479580 Economic Development 4,840724 Community Development 34

2,120 6,284

22,809 29,559

2007/08 £000

Education Services 2008/09£000

6,636 Primary Schools 11,16210,106 Secondary Schools 20,008

7,370 Special Schools 8,4592,812 Non School Funding 5,552

26,924 45,181

2007/08

£000 Highways, Roads and Transport Services 2008/09

£0001,178 Transport Planning, Policy & Strategy 1,8803,190 Highways/Roads (Structural) 3,4394,324 Highways/Roads (Routine) 4,4466,675 Construction 7,1531,449 Winter Maintenance 2,9751,602 Street Lighting 1,631

846 Traffic Management & Road Safety 2,124(304) Parking Services (166)3,505 Public Transport 4,797

22,465 28,279

2007/08 £000

Housing Services 2008/09£000

0 Housing strategy, advice and enabling 76192 General Fund Housing – Traveller’ s Sites 149

18 Supporting People 259210 484

2007/08

£000 Social Services 2008/09

£000385 Service Strategy 410

18,268 Children & Families Services: 21,34530,686 Older People (Aged 65 or over) including Older Mentally Ill 36,309

6,432 Adults Aged Under 65 with a Physical Disability or Sensory Impairment 8,051

14,585 Adults Aged Under 65 with Learning Disabilities 17,0273,046 Adults Aged Under 65 with Mental Health Needs 4,458

742 Other Adult Services 844116 Supported Employment (including sheltered employment) (12)


41

74,260 88,432 2. EXPENDITURE INCURRED UNDER THE LOCAL GOVERNMENT ACT 1986 - PUBLICITY

ACCOUNT Section 5 of the Local Government Act 1986 requires all Local Authorities to maintain a specific

memorandum account in which all expenditure on staff advertising and promotional advertising mentioning either specific parts or the whole of Shropshire or any such similar expenditure is charged. In 2008/09, £1,590,000 was charged to this account for such publicity compared with £1,221,000 in 2007/08. This expenditure is shown in the Income and Expenditure Account within the various services. An analysis of this expenditure is provided below:

2007/08

£000 2008/09

£000 213 Recruitment Advertising 402 312 Other Advertising 361 696 Other Publicity 827

1,221 1,590 3. LOCAL AUTHORITY (GOODS & SERVICES) ACT 1970

The Council is empowered by this Act to provide goods and services to other public bodies. In 2008/09, the expenditure and matching income relating to such provisions have been as follows:

2007/08

£000 2008/09

£000 Expenditure

767 Provision of administrative, professional & technical services 848 6,546 Provision of training 9,014 1,896 Provision of catering & cleaning 2,014

136 Maintenance of land & buildings 427 9,345 12,303

Income 842 Provision of administrative, professional & technical services 874

6,547 Provision of training 9,017 1,986 Provision of catering & cleaning 2,077

144 Maintenance of land & buildings 445 9,519 12,413

The main public bodies to which goods and services have been supplied under this Act are the Borough of Telford & Wrekin, Shropshire District Councils, Shrewsbury College of Art & Technology, Telford College of Arts & Technology, Shropshire & Wrekin Fire Authority, Job Centre Plus, schools outside of Shropshire and the Learning Skills Council.


42

4. DISCLOSURE OF OFFICERS’ EMOLUMENTS

The Accounts and Audit Regulations 2006 require disclosure of the numbers of officers whose remuneration in 2008/09 exceeded £50,000, analysed into bands of £10,000.

2007/08 No. of Employees

Salaried Remuneration Band 2008/09 No. of Employees

£000 95 50 to 59 128 29 60 to 69 37 15 70 to 79 16 7 80 to 89 5 3 90 to 99 1 - 100 to 109 1 2 110 to 119 1 1 120 to 129 2 - 130 to 139 1 - 140 to 149 - - 150 to 159 - 1 160 to 169 -


Remuneration Band Including One Off Redundancy and Lump Sum

Retirement Payments


£000 1 50 to 59 6 - 60 to 69 2 - 70 to 79 1 1 80 to 89 1 - 90 to 99 2 1 100 to 109 2 1 110 to 119 2

5. REDUNDANCY COSTS Included within Non-Distributed Costs are the costs associated with redundancy and early retirement for employees leaving the county council as a result of the unitary process. For Shropshire County Council these are £1,118,604.35 for redundancy and £488,326.94 for pension fund strain. These costs have been fully funded by the Voluntary Early Retirement Reserve. 6. MEMBERS’ ALLOWANCES

The total of members’ allowances paid in 2008/09 amounted to £840,000 compared with £763,000 in 2007/08.

7. EXPENDITURE INCURRED UNDER SECTION 137 OF THE LOCAL GOVERNMENT ACT 1972

Section 137 of the Local Government Act 1972, as amended, empowers local authorities to make contributions to certain charitable funds and not-for-profit bodies providing a public service in the United Kingdom. The Council’ s expenditure under this power was £320,000 in 2008/09, this was mainly on contributions to charities and other bodies working in the local area (£322,000 in 2007/08).


43

8. POOLED BUDGETS

During 2008/09, the Council (SCC) hosted the Intermediate Care pooled budget with Shropshire Primary Care Trust as shown below. The services covered by the pooled budget contribute to our aim of "creating and protecting a healthy, independent and safe way of life for all". The Council was not involved in any pooled budgets hosted by other partners.

Learning Disability Development Fund with Shropshire County Primary Care Trust (SCPCT)

2007/08 Total £

2008/09Total £

Gross Funding 226,000 SCPCT 0

0 SCC 0226,000 TOTAL 0

226,000 Expenditure 0

0 (Surplus)/Deficit 0

Intermediate Care with SCPCT and Shrewsbury and Telford Hospital Trust

2007/08 Total £

2008/09Total £

Gross Funding 1,362,146 SCPCT 991,807

271,982 SCC 242,2621,634,128 Total 1,234,069

1,634,128 Expenditure 1,234,069

0 (Surplus)/Deficit 0

9. ECONOMIC DEVELOPMENT ACTIVITIES The County Council provides a number of workshops and industrial/commercial land and buildings

to meet the demand from existing local businesses as well as attracting inward investment. Income from lettings in 2008/09 amounted to £364,000 which offset running expenses of £223,000. The figures for 2007/08 were income of £342,000 and running expenses of £195,000.

10. LEASES

a. Operating Leases

Vehicles – The amount paid under the terms of operating leases in 2008/09 was £487,000 compared with £528,000 in 2007/08. Furniture & Equipment – The amount payable under the terms of operating leases in 2008/09 was £72,000 compared with £103,000 in 2007/08. Land & Buildings – The amount payable under the terms of operating leases in 2008/09 was £952,000 compared with £791,000 in 2007/08.


44

The Council was committed at 31 March 2009 to making payments of £1,660,900 in 2008/09 under operating leases comprising the following elements:

Land & Buildings

£

Plant & Equipment

£

Vehicles

£

TOTAL

£ Leases expiring in 2009/10

18,000 600 45,000 63,600 Leases expiring between 2011/12 and 2014/15

408,000 76,200 525,900 1,010,100

Leases expiring after 2014/15

578,000 - 9,200 587,200

1,004,000 76,800 580,100 1,660,900

b. Finance Leases There are no outstanding undischarged finance leasing obligations as at 31 March 2009.

11. ACCOUNTING FOR PENSION COSTS – FRS17 Defined Benefit Pension Schemes As part of the terms and conditions of employment of its officers and other employees, the

Council offers retirement benefits. Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement. The Council participates in two different pension schemes which meet the needs of employees in particular services. Both schemes provide members with defined benefits related to pay and service. Local Government Pension Scheme:

The Local Government Pension Scheme, administered by Shropshire County Council is a funded scheme. This means that the Council and employees pay contributions into a fund, which is invested in accordance with the Local Government Pension Scheme Regulations. We recognise the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against council tax is based on the cash payable in the year, so the real cost of retirement benefits is reversed out in the Statement of Movement in the General Fund Balance. The following transactions have been made in the Income and Expenditure Account and Statement of Movement in the General Fund Balance during the year:


45

Local Government Pension Scheme 2007/08

As restated 2008/09 £000 £000Net Cost of Services: - current service cost (14,469) (15,687) - past service gain/(cost) (3,723) (26) - curtailment gain/(cost) (65) (946) (18,257) (16,659)Net Operating Expenditure: - interest cost (22,517) (29,549) - expected return on assets in the scheme 20,396 20,254 (2,121) (9,295) Net Charge to the Income and Expenditure Account

(20,378) (25,954)

Statement of Movement in the General Fund Balance - reversal of net charges made for retirement

benefits in accordance with FRS17 20,378 25,954

Actual amount charged against the General Fund Balance for pensions in the year: - employers’ contributions payable to scheme (12,512) (14,925)

In 2008/09 the County Council paid an employer’s contribution of £14,925,000 representing 14.2% of employee’s pensionable pay, into the Pension Scheme. The figures for 2007/08 were £12,512,000 and 12.6%. In 2008/09 the County Council paid pension strain and augmentation of £488,000 compared to £482,000 for 2007/08. In addition, the County Council is responsible for all pension payments relating to added years’ benefits it has awarded together with the related increases. In 2008/09 these amounted to £1,442,000, representing approximately 1.65% of pensionable pay. The figures for 2007/08 were £1,394,000 and 2%. In addition to the recognised gains and losses included in the Income and Expenditure Account, actuarial gains of £12,764,000 (loss of £63,585,000 2007/08 as restated) were included in the Statement of Total Recognised Gains and Losses. The cumulative amount of gains and losses recognised in the Statement of Total Recognised Gains and Losses is a loss of £116,955,000. Assets and Liabilities in relation to Retirement Benefits Reconciliation of present value of the scheme liabilities: Local Government Pension Scheme 2007/08 2008/09 £000 £000

1 April (414,147) (482,166) Current Service Cost (14,469) (15,687) Interest Cost (22,517) (29,549) Contributions by scheme participants (4,736) (5,548) Actuarial gains and (losses) (36,056) 104,298 Benefits paid 13,547 16,752 Past service costs (3,788) (972) 31 March (482,166) (412,872)


46

Reconciliation of fair value of the scheme assets: Local Government Pension Scheme 2007/08

As restated 2008/09 £000 £000

1 April 323,231 319,799 Expected rate of return 20,396 20,254 Actuarial gains and losses (27,529) (91,534) Employer contributions 12,512 14,925 Contributions by scheme participants 4,736 5,548 Benefits paid (13,547) (16,752) 31 March 319,799 252,240

The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on equity investments reflect long term real rates of return experienced in the respective markets. The actual return on scheme assets in the year was a loss of £71,280,000 (2007/08 loss of £7,704,000). Scheme History

2004/05* 2005/06* 2006/07 2007/08 2008/09 As restated As restated

£000 £000 £000 £000 £000

Present value of liabilities (351,834) (405,967) (414,147) (482,166) (412,872) Fair value of assets 242,412 304,799 323,231 319,799 252,240 Surplus/(deficit) in the scheme (109,422) (101,168) (90,916) (162,367) (160,632)

*The council has elected not to restate fair value of scheme assets for 2004/05 and 2005/06 as permitted by FRS17 (as revised). The liabilities show the underlying commitments that the authority has in the long run to pay retirement benefits. The total liability of £160,632,000 has a substantial impact on the net worth of the authority as recorded in the Balance Sheet, resulting in a overall balance of £456,469,000 However, statutory arrangements for funding the deficit mean that the financial position of the Council remains healthy. The deficit on the Local Government scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary.

Basis for Estimating Assets and Liabilities

Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years is dependent on assumptions about mortality rate, salary levels and other variables. The County Council element of the Fund liabilities has been assessed by Mercer Human Resource Consulting Limited, an independent firm of actuaries. Estimates for the County Council element of the Fund are based on the latest full valuation of the scheme as at 31 March 2007.


47

The principal assumptions used in their calculations have been:

Local Government Pension Scheme

2007/08 2008/09 Long term expected rate of return on assets in the scheme:

Equity investments 7.50% 7.50% Government Bonds 4.60% 4.00% Other Bonds 6.10% 6.00% Other 6.40% 4.80% Mortality assumptions: Longevity at 65 for current pensioners: Men 21.1 21.2 Women 24.0 24.0 Longevity at 65 for future pensioners: Men 22.2 22.2 Women 25.0 25.0 Rate of inflation 3.60% 3.30% Rate of increase in salaries 5.35% 5.05% Rate of increase in pensions 3.60% 3.30% Rate for discounting scheme liabilities 6.10% 7.10% Take up of option to convert annual pension into retirement lump sum

50.00% 50.00%

Assets in the Shropshire County Pension Fund consist of the following categories, by proportion

of the total assets held by the Fund:

31 March 2008

31 March 2009

% %

Equity investments 65.2 60.7 Government Bonds 13.6 14.6 Other Bonds 12.0 11.6 Other assets 9.2 13.1

100.0 100.0

Experience Gains and Losses

The actuarial gains identified as movements on the Pensions Reserve in 2008/09 can be analysed into the following categories, measured as a percentage of assets or liabilities at 31 March 2009:

2004/05* 2005/06* 2006/07 2007/08 2008/09 As restated As restated

% % % % %

Differences between the expected and actual return on assets 2.3 13.9 (0.6) (8.6) (36.3) Experience gains and losses on liabilities (0.7) 0.0 0.0 2.6 0.0


48

Teachers’ Pension Scheme Teachers employed by the Council are members of the Teachers’ Pension Scheme, administered by the Teachers’ Pensions Agency (TPA). It provides teachers with defined benefits upon their retirement, and the Council contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries. In 2008/09, the County Council paid £10,962,000 to the Pensions Agency for teachers’ retirement benefits, representing 14.1% of pensionable pay. The figures for 2007/08 were £10,757,000 and 14.1%. In addition the County Council is responsible for all the pension payments relating to added years it has awarded, together with the related increases. In 2008/09 these amounted in total to £2,022,000 representing 2.43% of pensionable pay. This covers all added years costs incurred for people retiring in 2008/09 and previous years. The figures for 2007/08 were £1,864,000 and 2.44%.

The Scheme is a defined benefit scheme, administered by the TPA. Although the scheme is unfunded, the TPA uses a notional fund as the basis for calculating the employers’ contribution rate paid by Local Education Authorities (LEAs). However, it is not possible for the Council to identify a share of the underlying liabilities in the scheme attributable to its own employees. For the purposes of this statement of accounts it is therefore accounted for on the same basis as a defined contribution scheme. The Council is responsible for the costs of any additional benefits awarded upon early retirement outside of the terms of the Teachers’ scheme.

12. DISCLOSURE OF AUDIT COSTS

In 2008/09 Shropshire County Council incurred the following fees relating to external audit and inspection.

2007/08

£000 2008/09

£000 • Fees payable to the Audit Commission with regard to external audit

services carried out by the appointed auditor 194 210

• Fees payable to the Audit Commission for statutory inspection 77 15 • Fees payable to the Audit Commission for the certification of grant

claims and returns 25 56

13. PRIVATE FINANCE INITIATIVE SCHEMES

The County Council has two Private Finance Initiative (PFI) schemes: The Quality in Community Services (QICS) PFI, signed on 21 May 2005, and the waste PFI contract, signed on 29 September 2007. a. The Quality in Community Services (QICS) Project On 21 May 2005 the County Council entered into a 30 year contract with Integrated Care Solutions to supply and maintain six buildings: Three Resource Centres A Nursing Home A Joint Service Centre An Intermediate Care Hub

The contract was a Private Finance Initiative under the Capital Finance Regulations. The County Council was awarded a PFI credit of £20,400,000.


49

The Accounting View – FRS5 or SSAP 21 Accounting Treatment As the County Council’s officers and advisors are of the opinion that the risks and benefits, for the duration of the thirty year contract, lie with the operator, Integrated Care Solutions, in accordance with FRS5, the buildings are classified as assets of the operator and not the County Council and they are not recognised on the Council’s Balance Sheet. The County Council will revisit this accounting treatment periodically, and if there are any significant changes to accounting practice, to the contract or in the risk profile of the transaction. Unitary Charge and PFI grant The Council pays an annual unitary charge (in monthly instalments) for the buildings and services under the contract. All the buildings are operational. The Council receives PFI grant from the Government which contributes towards the unitary charge. To date the Unitary Charge and government PFI grant receipts have been as follows:

Years Unitary Charge (£000) Grant Received (£000)

2005/06 Nil Nil

2006/07 2,142 1,459

2007/08 2,838 1,523

2008/09 2,882 1,523 Fixed assets: treatment of existing assets The new buildings replace and add to the Council’s existing provision. Former buildings were removed from the fixed asset register following their demolition. The land, which will return to the County Council at the end of the contact, continues to be recorded in the fixed asset register. Treatment of assets constructed under the PFI contract Debtors: amounts falling due after more than one year Each year an element of the unitary charge is capitalised in order to build up a long term debtor on the Balance Sheet which will reflect the residual value of the assets that will transfer to the Council’s ownership in 2037. In 2008/09 the capitalised element amounted to £729,000. From 2008/09 onwards the discount begins to unwind. In 2008/09 the discount, calculated by applying a 3.5% discount rate to the brought forward debtor balance, amounted to £49,000 which has also been capitalised as a long term debtor, taking the total amount capitalised to £778,000.

Year ended 31 March 2008 (£000)

Long Term Debtor Balance Year ended 31 March 2009 (£000)

680 Brought forward 1,408

704 Amount capitalised in the year 729

24 Unwinding of Discount 49

1,408 Balance Carried Forward 2,186 Commitments under the contract Payments under the contract can vary according to availability and performance and are also linked to the Retail Price Index (RPIx) and Average Earnings Index (AEI). Using an assumed 3.0% RPIx, 4.25% AEI and no performance deductions, the future commitments under the contract are as follows:


50

Years Payments

(£000) Amounts falling due within one year 2,915

Amounts falling due within 2 – 5 years 12,124




Amounts falling due after 20 years 32,043

b. The Waste PFI

On 29 September 2007, Shropshire County Council, in its capacity as Contracting Authority for the Shropshire Waste Partnership, entered into a 27 year waste contract with Veolia ES Shropshire Limited. Services under the contract commenced on 1 October 2007. On 20 October 2008 Shrewsbury & Atcham Borough Council joined the partnership and the contract with Veolia for the remaining 26 years. The contract is a Private Finance Initiative (PFI) contract and is part funded by £40,800,000 of PFI credits which are paid as an annual PFI grant. There are two separable elements to the contract: a collection and recycling element and a waste treatment services element. The collection and recycling element comprises the kerbside collections of recycling and waste, the operation of the Integrated Waste Management Facilities (comprising the household recycling centres and transfer stations) and waste treatment and disposal other than the operation of the proposed Energy Recovery Facility. The contract is an output based contract but proposed waste infrastructure that will be used to deliver services under this element of the contract includes upgrades of the existing Craven Arms and Whitchurch recycling facilities, the development of Integrated Waste Management Facilities to service the Oswestry and Bridgnorth areas and the development of an In Vessel Composting Facility. The waste treatment element is also an output based contract. Veolia is proposing to deliver this element of the contract by developing and operating a 90,000 tonne per annum Energy Recovery Facility.

The Accounting View – FRS5 or SSAP 21 Accounting Treatment As County Council’s officers and advisors are of the opinion that the risks and benefits, for the duration of the 27 year contract, lie with the operator, Veolia ES Shropshire Ltd, in accordance with FRS5, the waste management facilities, once constructed, will be classified as assets of the operator and not the County Council and they will not be recognised on the Council’s Balance Sheet. The County Council will revisit this accounting treatment periodically, and if there are any significant changes to accounting practice, to the contract or in the risk profile of the transaction. Unitary Charge and PFI grant The Council pays an annual unitary charge (in monthly instalments) for the facilities and services provided under the contract. The Council receives PFI grant from the Government which contributes towards the unitary charge. To date the unitary charge and Government PFI grant receipts have been as follows:

Years Unitary Charge (£000)

Grant Received (£000)

2007/08* 5,848 1,459

2008/09 14,371 3,186 * from 1 October 2007


51

Fixed assets: treatment of existing assets

The County Council has made existing waste infrastructure assets available to the contractor on a peppercorn lease. In its capacity as Contracting Authority for the Waste Partnership, the County Council purchased some refuse collection vehicles, using pooled grant funding. The vehicles were passed on to Veolia, free of charge, at the start of the contract. Debtors: amounts falling due after more than one year Deferred Consideration A prepayment for services receivable under the PFI contract has been established to reflect the value of the assets made available to Veolia. The prepayment relates to Deferred Consideration for the value of the assets transferred to Veolia. The Deferred Consideration Balance will be written down (charged) to waste costs within the Income and Expenditure Account over the life of the contract to show the full value of the service received each year. The charge is, however, a notional charge which is reversed out in the Statement of Movement on General Fund Balance to remove any impact on Council Tax. The value of the Deferred Consideration arising on the transfer of assets and its amortisation is shown in the table below.

Year ended 31 March

2008

(£000)

Debtors: amounts falling due after one year Deferred consideration

Year ended 31 March

2009

(£000)

4,998 Value of assets transferred to Veolia 4,884

(289) Less: amortisation of balance (289)

175 Plus: unwinding of discount on deferred consideration 171

4,884 Balance carried forward 4,766 Once the assets have been constructed under the contract, an element of the unitary charge will be capitalised each year in order to build up a long term debtor on the Balance Sheet which will reflect the residual value of the assets that will transfer to the Council’s ownership at the end of the contract. There was no build up of balance in the 2008/09 accounts as none of the proposed waste infrastructure has been constructed. Commitments under the Waste PFI contract The payments under the contract may vary according to the availability of services and facilities and the contractor’s performance in delivering the service. Payments are also linked to the Retail Price Index (RPIx). Using an assumed 2.5% RPIx, and no performance or unavailability deductions, the future commitments for the unitary charge payable under the contract are as follows:

Years Commitments

(£000)

Amounts falling due within one year 21,441




Amounts faling due within 16 – 20 years 191,101

Amounts falling due after 20 years 237,906


52

14. SHROPSHIRE WASTE PARTNERSHIP (SWP)

Background to the Shropshire Waste Partnership Shropshire Waste Partnership is a Joint Committee formed by Shropshire County Council, Oswestry Borough Council and Bridgnorth, North Shropshire and South Shropshire District Councils. Shropshire County Council acts as Contracting Authority for the Joint Committee. The Constitution of the Joint Committee was approved at the inaugural meeting of the Shropshire Waste Partnership on 3 August 2004. On 29 September 2007, Shropshire County Council, in its capacity as Contracting Authority for the Shropshire Waste Partnership, entered into a 27 year integrated waste management contract with Veolia ES Shropshire Limited (“Veolia”). The contract is part funded by £40,800,000 of PFI credits. Services under the contract commenced on 1 October 2007. The contract is funded from the waste budgets of SWP member authorities which have been pooled since 1 October 2007. On 20 October 2008 Shrewsbury and Atcham Borough Council entered the partnership and signed up to the contract with Veolia for the remaining 26 years. Shropshire County Council, as Contracting Authority, employs the SWP staff responsible for managing the Veolia contract and funds the day to day activities of the partnership. With the creation of the unitary council of Shropshire on 1 April 2009 the Shropshire Waste Partnership will cease to exist and all activities will pass to the Development Services Directorate of the unitary council. Accounting Treatment FRS 9 defines a Joint Arrangement that is not an Entity as a contractual arrangement under which participants engage in joint activities that do not create an entity because it would not be carrying on a trade or business of its own. FRS 9 also states that a contractual arrangement where all significant matters of operating policy are predetermined does not create an entity because the policies are those of its participants and not of a separate entity. FRS 9 requires participants in a joint arrangement that is not an entity to account for their own assets, liabilities and cash flows, measured according to the terms of the agreement governing the arrangement. Shropshire County Council’s core financial statements include the County Council’s share of costs incurred in respect of the Shropshire Waste Partnership. This note provides detail of the full costs of the Shropshire Waste Partnership. Extracts from the accounts of the Shropshire Waste Partnership Shropshire Waste Partnership’s 2008/09 accounting statements pull together the costs and income recorded in the individual partner accounts to give an overview of the overall cost and financing of the SWP Waste PFI contract. The 2008/09 Statement of Accounts for the Shropshire Waste Partnership report the 2008/09 waste costs funded from pooled SWP waste budgets. These include costs and budgets arising from the entry of Shrewsbury and Atcham Borough Council to the contract on 20 October 2009. The budget to deliver the waste service was set out in the 2007/08 Business Plan that was approved by the Joint Committee on 13 November 2007. This was updated in 2009. The service has been delivered within budget and a £265,000 budget underspend has been transferred to the SWP general reserve account.


53

SHROPSHIRE WASTE PARTNERSHIP INCOME & EXPENDITURE ACCOUNT

FOR THE YEARS ENDED 31 MARCH 2008 and 2009

2007/08 Net

expenditure

2008/09 Gross

expenditure

2008/09 Income

2008/09 Net

expenditure

£000 £000 £000 £000 Expenditure on continuing service

(156) Fees and charges for services - 284 (284)(32) Other grants and reimbursements - 25 (25)

(1,459) PFI credits - 3,186 (3,186)(34) Balance of 2007/08 Waste Performance

and Efficiency Grant - - -

- WRAP Funding (Love Food Hate Waste) 85 85 -(791) Allocations of historic pooled grants - - -

976 Contract procurement and mobilisation costs

- - -

664 Client and non-contract costs 1,472 - 1,4727,534 Contract payment costs 17,812 - 17,812

149 Amortisation of deferred consideration net of unwinding of discount

434 257 177

199 Service support and FRS 17 pension charges

483 - 483

7,050 Net cost of service before partner contributions

20,286 3,837 16,449

Contributions from partners: (7,898) Cash funding 17,015 (17,015)

Non-cash contributions:

(378) Amortisation of Deferred Consideration 434 (434)

229 Unwinding of discount on Deferred

Consideration (257) 257(149) 177 (177)

(997) Net cost of service 20,286 21,029 (743)

(997) Net operating expenditure (743)

(997) Surplus for the year (743)

STATEMENT OF TOTAL GAINS AND LOSSES

No Statement of Total Gains and Losses is included in the Statement of Accounts as the surplus on the Income & Expenditure Account equals the Total Realised Gains for the year as there is no surplus or loss arising from the revaluation of fixed assets and no actuarial gains or losses on Pension Fund assets and liabilities.


54

SHROPSHIRE WASTE PARTNERSHIP STATEMENT OF MOVEMENT ON GENERAL FUND BALANCE

The Income and Expenditure Account shows the Partnership’s actual financial performance for the year, measured in terms of the resources consumed and generated over the last 12 months. However, partner Councils are required to raise Council Tax on a different accounting basis, one of the main differences being that capital investment is accounted for as it is financed, rather than when the assets are consumed. The General Fund Balance compares the Council’s spending against Council tax that is raised for the year, taking into account the use of reserves build up in the past and contributions to reserves earmarked for future expenditure. The reconciliation statement summarises the differences between the outturn on the Income & Expenditure Fund and the General Fund balance.

2007/08

£000 2008/09

£000 (997) Surplus for the year on the Income & Expenditure Account (743)

Transfers to or from the General Fund Balance that are required to be

taken into account when determining the movement of the General Fund Balance for the year

647 Transfer to earmarked reserves 393350 Transfer to PFI smoothing reserve 350

0 Increase/Decrease in general fund balance for the year 0

0 General Fund balance brought forward 00 General Fund balance carried forward 0

SHROPSHIRE WASTE PARTNERSHIP

BALANCE SHEET AS AT 31 MARCH 2009 and 2008

31 March

2008 31 March

2009 £000 £000

Current Assets 853 Debtors due within one year 150997 Temporary Investments 1,740

1,850 1,890 Current Liabilities

(853) Creditors falling due within one year (150)

997 Net liabilities 1,740 Financed by

997 Contribution from Shropshire County Council 1,740


55

SHROPSHIRE WASTE PARTNERSHIP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2009

This statement provides a link between the Balance Sheet at the beginning of the year, the Income & Expenditure Account for the year and the Balance Sheet as at the end of the year. It looks at where the money came from and how it was spent for both revenue and capital activities, and therefore reflects the changes in the financial structure of the Partnership during the year.

2008/09 £000 £000Revenue activities Outflows Employee related client costs 630 Non-employee related client and non-contract costs 927 FRS 17 and support costs charged to SWP 483 Contract payments 17,812 19,852Inflows Budget contributions from SWP partners (17,015) Fees and charges (309) PFI grant (3,186) Other grants (Love Food Hate Waste) (85) (20,595) Net inflow on revenue activities (743) Servicing of finance 0 Capital activities 0 Net cash inflow before financing (743) Management of liquid resources (743) Increase in cash 0


56

15. DEDICATED SCHOOLS GRANT The Council’s expenditure on schools is funded by grant monies provided by the DCSF, the

Dedicated Schools Grant (DSG). DSG is ring-fenced and can only be applied to meet expenditure properly included in the Schools’ Budget. The Schools’ Budget includes elements for a restricted range of services provided on a Council-wide basis and for the Individual Schools’ Budget (ISB), which is divided into a budget share for each school. Overspends and underspends on the two elements are required to be accounted for separately.

Details of the use of DSG for 2008/09 are as follows:

Schools’ Budget Funded by DSG Central

Expenditure ISB Total £000 £000 £000 Original grant allocation to Schools’ Budget

for the current year in the Council’s budget 18,520 125,284 143,804

Funding of 2007/08 deficit b/fwd 12 50 62DSG receivable for the year 18,532 125,334 143,866Actual expenditure for the year 18,532 126,228 144,760(Over)/underspend for the year 0 (894) (894)Planned top-up funding of ISB from Council

resources 0 0 0

Use of schools’ balances brought forward 0 8,446 8,446(Over)/underspend carried forward to

2009/10 0 7,552 7,552

Final DSG allocations were notified to Local Authorities in June 2008. There was a reduction to

Shropshire’s estimate due to non-schools’ pupil number final adjustments by the Department for Children, Schools & Families. This reduction only related to Central Expenditure budgets and was able to be managed within the 2008/09 accounts. The deficit brought forward from 2007/08 was also managed within both Individual Schools’ Budgets and Central Expenditure budgets allocated for 2008/09.

The level of Schools’ Balances reported in the Balance Sheet is detailed in note 40 to the Core

Financial Statements, this figure is reconciled below:

£000

DSG underspend carried forward to 2009/10 as reported above 7,552Sum carried forward as a Government Grant Debtor to be Repaid in 2009/10 0Schools’ underspend carried forward to 2009/10 7,552

Less External balances held by Foundation Schools (173) IT Financing (240) (413)

Schools’ Balances as Reported in the Balance Sheet (note 40) 7,139


57

16. GENERAL GOVERNMENT GRANTS

The Council’s expenditure is partly funded through General Government Grants such as the Revenue Support Grant, Area Based Grant and other grants that are awarded for the general expenditure of the authority. The Area Based Grant was introduced in 2008/09 as a non-ringfenced grant to replace the Local Area Agreement Grant that the Council had previously received in support of the Local Area Agreement. This has enabled the Council to have full local control as to how this funding can be most effectively and efficiently spent. The total allocation of Area Based Grant received in 2008/09 was £14,794,000. In 2008/09 the funding received through General Government Grants was as follows:

2007/08 £000

2008/09 £000

7,927 Revenue Support Grant 7,755

- Area Based Grant 14,794105 Local Authority Business Growth Initiative 546

8,032 TOTAL 23,095


58

17. SHIRE SERVICES operates as a trading organisation within the Council, delivering catering and cleaning services. Shire Services provides catering services to schools in Shropshire, Worcestershire, Telford and North Wales, as well as to a range of non-school sites in Shropshire. Cleaning services are provided to schools and other Council premises in Shropshire.

Shire Services outturn position for 2008/09 is a net operating surplus of £63,000. FRS17 charges for the year amounted to £33,000. FRS17 costs are outside the control of Shire Services and should be ignored when assessing the actual trading position, which for 2008/09 is a surplus of £96,000. This has been transferred to Reserves and will be allocated in 2009/10. The Catering service ended the year with a surplus of £76,000, the Cleaning service ended the year with a surplus of £20,000. For Catering there has been an increase in income across the service, though this has been tempered by increases in running costs, in particular provisions costs. Food standards will be introduced in Secondary schools in 2009/10 and Shire Services will work towards ensuring that this does not have an adverse impact on income levels. For Cleaning the outturn position reflects an arrangement regarding the cleaning management staff using some of their time to manage Shirehall Services. Pressures within the service regarding employee costs will be monitored closely in 2009/10.

SHIRE SERVICES CATERING - Trading Account 2008/09

2007/08 2008/09 Total

£000

Statutory School

Catering £000

Other Catering

£000

Total

£000

Income 8,446 Sales and Other Income 6,351 2,837 9,188 778 Education Services 835 0 835 9,224 Turnover 7,186 2,837 10,023

Expenditure 5,331 Employees 3,789 1,314 5,103 3,011 Provisions 2,316 1,158 3,474 296 Heavy Equipment 192 111 303 192 Fuel Costs 204 0 204 693 Other Expenses 598 304 902 9,523 7,099 2,887 9,986

(299) Net Operating Income/(Expenditure) 87 (50) 37 (3) Transfers from/(to) Efficiency Reserves 0 0 0 177 Transfer from Central Reserves 0 15 15 (125) Net Profit/(Loss) In Year 87 (35) 52

64 FRS17 Adjustment 18 6 24

(61) Net Profit/(Loss) After FRS17 Adjustment (Transferred to Reserves)

105 (29) 76

SHIRE SERVICES CLEANING - Trading Account 2008/09

2007/08 £000

2008/09 £000

Income 2,567 Charges 2,615

Expenditure 2,315 Employees 2,377 216 Other Expenses 227 2,531 2,604

36 Net Operating Income/(Expenditure) 11 0 Transfers from Reserves 0 36 Net Profit/(Loss) In Year 11

20 FRS17 Adjustment 9 56 Net Profit/(Loss) After FRS17 Adjustment (Transferred to

Reserves) 20


59

18. SHROPSHIRE COUNTY TRAINING has operated as a trading organisation within the Council since 1st September 2004. The principal activity of County Training is the provision of training to enable people of all abilities to gain skills and qualifications required to meet the needs of the local labour market and so help employers to benefit from a better trained or more experienced work force. Up until 31 August 2004, these activities were delivered through Shropshire County Training Ltd., a separate company in which Shropshire County Council owned 100% of the issued share capital.

This is the fifth full year of trading of Shropshire County Training since returning to the Council.

The business continues to expand on a regional basis to meet the requirements of their main customers the Learning & Skills Council and Job Centre Plus.

County Training traded in 2008/09 and finished the year with a deficit of £542,000. Due to a

number of technical accounting adjustments, e.g. FRS17, and additional budget being allocated to the business unit to offset the costs incurred following job evaluation, the overall position for County Training is a surplus of £3,000 compared with a surplus in 2007/08 of £84,000 (after taking account of technical accounting adjustments of £83,000). The technical accounting adjustments are outside the control of County Training and should be ignored when assessing the trading position. Income for 2008/09 at £7,690,000 increased by £956,000 over the previous year. Expenditure at £8,232,000 was £1,499,000 higher than the previous year, which reflects the increased business during the year.

SHROPSHIRE COUNTY TRAINING – Trading Account 2008/09

2007/08 2008/09 £000 £000 Income 6,734 Sales and Other Income 7,690 Expenditure 4,355 Employees 6,101 1,394 Training Costs 954 902 Premises and Equipment Costs 1,070 82 Other Expenses 107 6,733 8,232 1 Net Operating Income/(Expenditure) (542) 0 Transfers from/(to) Efficiency Reserves 0 1 Net Profit/(Loss) In Year (542) 83 Technical Accounting Adjustments 37 0 Job Evaluation 508 84 Net Profit/(Loss) Technical Accounting

Adjustments 3


60

19. MINIMUM REVENUE PROVISION

The Council is required by statute to set aside a minimum revenue provision (MRP) for the redemption of external debt.

2007/08

£000 2008/09

£000 8,096 MRP – Supported Borrowing 8,362 1,262 MRP – Telford & Wrekin Council, Probation and Magistrates 1,176

288 MRP – Unsupported Borrowing 296 9,646 Total MRP 9,834

As a result of the new Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 the calculation of the Minimum Revenue Provision (MRP) has changed to reflect these new requirements. In the new regulation 28, the previous detailed rules have been replaced with a simple duty for an Authority to make an amount of MRP which it considers to be “prudent” each year. The operative date of the change was 31 March 2008 and as such these changes were first applied in 2007/08. The Council has calculated MRP for supported borrowing (i.e. borrowing that is funded by Central Government grant) in accordance with option 1, the Regulatory Method. This starts with the opening Capital Financing Requirement which is then adjusted for the variance between the former credit ceiling and the capital financing requirement as at 1 April 2004 (known as adjustment “A”) when the prudential borrowing system was first introduced. The adjustment “A” total is £2,070,000, for information this reduces the Councils MRP by £83,000. For new unsupported borrowing under the Prudential system (i.e. borrowing for which no Government grant is received which is therefore self-financed) the Council has calculated MRP in accordance with option 3, Asset Life Method. Therefore the Council makes provision over the estimated life of the asset for which the borrowing is undertaken. The outstanding period of estimated life for such assets has been used. 2006/07 was the first year in which unsupported borrowing took place. Due to MRP being calculated based on the previous years Capital Financing Requirement, MRP for unsupported borrowing was included in 2007/08 for the first time.


61

20. NOTE TO THE STATEMENT OF MOVEMENT ON GENERAL FUND BALANCE The Income and Expenditure Account shows the Council’ s actual financial performance for the year, measured in terms of the resources consumed and generated over the last twelve months. However, the Council is required to raise Council Tax on a different accounting basis, the main differences being: • Capital investment is accounted for as it is financed, rather than when the fixed assets are

consumed. • Retirement benefits are charged as amounts become payable to pension funds and pensioners,

rather than as future benefits are earned. The General Fund Balance compares the Council’ s spending against the Council Tax that it raised for the year, taking into account the use of reserves built up in the past and contributions to reserves earmarked for future expenditure. The Statement of Movement on General Fund Balance on page 34 provides a reconciliation of the differences between the outturn on the Income and Expenditure Account and the General Fund Balance. That statement includes a figure for the net additional amount required by statute and non statutory proper practice to be debited or credited to the General Fund Balance for the year, an analysis of that figure is provided below.

2007/08 2008/09 £000 £000

Amounts included in the Income and Expenditure Account but required by statute to be excluded when determining the Movement on the General Fund Balance for the year.

(35) Amortisation of intangible fixed assets (41)

(24,438) Depreciation and impairment of fixed assets (40,240)

4,365 Government Grants Deferred amortisation 4,294

(1,979) Write down Revenue Expenditure Funded from Capital Under Statute (3,792)

(1,214) Net (loss)/surplus on sale of fixed assets (see note below) (19,142)

(114) Amortisation of Deferred Consideration – Waste PFI (118)

(20,358) Net charges made for retirement benefits in accordance with FRS17 (25,953)(43,773) (84,992)

Amounts not included in the Income and Expenditure Account but required to be included by statute when determining the Movement on the General Fund Balance for the year.

9,646 Minimum revenue provision for capital financing (Note 19) 9,834

2,308 Capital expenditure charged in year to the General Fund Balance 2,641

728 Capitalisation of Quality in Community Services – PFI 778

0 Write off of overhanging premiums (Note 35) 0

315 Amortisation of Financial Instrument Adjustment Account (Note 35) 315

12,512 Employer's contributions payable to Shropshire County Pension Fund and retirement benefits payable direct to pensioners

14,925

25,509 28,493

Transfers to or from the General Fund Balance that are required to be taken into account when determining the Movement on the General Fund Balance for the year

4,442 Net transfer to or from earmarked reserves 2,2214,442 2,221

(13,822) Net additional amount required to be debited or credited to the General Fund Balance for the year (54,278)


62

Additional information on the Net (loss)/surplus on sale of fixed assets The net loss on the sale of fixed assets in 2008/09 was £19,142,000. This figure was significantly higher than in previous years as this included the transfer of ownership of 10 schools to the Diocese required as a legal obligation under Education legislation (Education Act 1946 or Schools Standards and Framework 1998). The Statement of Recommended Practice requires that where an authority is required to surrender assets without compensation, possibly following a transfer of responsibilities to another part of the public services, the current value of the asset should be written out as a loss on disposal. The transfer of the 10 schools resulted in a loss of £19,111,000 based on their current value; this was added to a loss on the sale of other assets of £31,000, resulting in the net loss of £19,142,000.

21. RESTATING THE 2007/08 BALANCE SHEET

In December 2006 the Accounting Standards Board (ASB) made a number of changes to FRS17 Accounting for Pension Costs. This included a requirement for Pension Fund assets to be valued at bid values rather than mid market values. In accordance with the requirement of the standard, the 2007/08 asset values have been restated to reflect the bid value.

2007/08

Movement in relation to new

FRS17 requirements

2007/08 Restated

£000 £000 £000 Long Term Liabilities: Pensions Liability (162,051) (316) (162,367) Funding: Pensions Reserve 162,051 316 162,367

22. ASSETS – INTANGIBLE AND FIXED ASSETS The figures below provide information on the movement of fixed assets held by the Council

during 2008/09. Following the introduction of capital asset accounting the fixed assets are now shown at their current value.

Intangible

Assets

£000

Land

£000

Buildings

£000

Vehicles Plant &

Equipment £000

Infra- structure

£000

Community Assets

£000

Total

£000 Cost or valuation

Balance b/f 01/04/08 177 280,761 369,849 9,914 297,861 453 959,015

Additions 27 2,302 13,425 2,260 22,003 1,140 41,157 Disposals 0 (9,899) (10,755) 0 0 0 (20,654) Reclassifications 0 876 204 15 60 0 1,155 Revaluations 0 (2,617) 34,515 0 0 0 31,898

GBV at 31/03/09 204 271,423 407,238 12,189 319,924 1,593 1,012,571 Depreciation and Impairments Balance b/f 01/04/08 (35) (435) (27,206) (6,296) (50,712) (435) (85,119) Charge for 2008/09 (41) (17,248) (21,485) (2,138) (7,998) (559) (49,469) Disposals 0 0 852 0 0 0 852 Reclassifications 0 0 94 0 0 0 94 Revaluations 0 17,289 13,908 0 0 0 31,197 Balance at 31/03/09 (76) (394) (33,837) (8,434) (58,710) (994) (102,445)

NBV 31/03/09 128 271,029 373,401 3,755 261,214 599 910,126

NBV 01/04/08 142 280,326 342,643 3,618 247,149 18 873,896


63

Non-

Operational Investment

£000

Non-Operational

Surplus

£000

Non-Operational

Asset Under Construction

£000

Total

£000

Total Intangible & Operational

£000

Overall Total

£000 Cost or valuation (As previous page)

Balance b/f 01/04/08 7,596 6,650 3,792 18,038 959,015 977,053 Additions 247 0 5,530 5,777 41,157 46,934 Disposals 0 (1,159) 0 (1,159) (20,654) (21,813) Reclassifications (164) 2,521 (3,512) (1,155) 1,155 0 Revaluations 1,531 4,780 0 6,311 31,898 38,209 GBV at 31/03/09 9,210 12,792 5,810 27,812 1,012,571 1,040,383 Depreciation and Impairments Balance b/f 01/04/08 0 0 (14) (14) (85,119) (85,133) Charge for 2008/09 (1,650) (1,653) 0 (3,303) (49,469) (52,772)

Disposals 0 7 0 7 852 859 Reclassifications (31) (63) 0 (94) 94 0 Revaluations 1,681 1,613 0 3,294 31,197 34,491 Balance at 31/03/09 0 (96) (14) (110) (102,445) (102,555)

NBV 31/03/09 9,210 12,696 5,796 27,702 910,126 937,828

NBV 01/04/08 7,596 6,650 3,778 18,024 873,896 891,920

Included in the above balances for operational land and buildings are 9 primary schools which have not yet transferred ownership to the Diocese. There is a legal obligation to transfer ownership under Education legislation (Education Act 1946 or Schools Standards and Framework 1998). Work commenced on the transfers in 2008/09, this included the preparation and checking of plans, sites visits and meetings with Head Teachers. This detailed work is necessary because in many circumstances the schools are now physically different and it is necessary to ensure that the transfers relate purely to the school function and not other uses which may now be on site. Instructions have been passed to Legal Services for the completion of the transfers and transfers were completed for 10 other schools due to transfer by 31 March 2009. The remaining 9 are awaiting formal legal completion.

The total net book value for the 9 schools based on current market value is £14,516,900.


64

23. Valuations of fixed assets carried at current value The following statement shows the progress of the Council’s rolling programme for the

revaluation of fixed assets. The valuations are carried out by the Council’s internal valuation unit. The basis for valuation is set out in the statement of accounting policies. All values are on a net present value basis.

Operational Land &

Buildings

£000

Vehicles, Plant &

Equipment£000

Intangible Assets

£000

Community Assets

£000

Infra-stucture

£000

Total

£000

Valued at Historic Cost 0 3,755 128 599 261,214 265,696

Valued at Current Value in: 2004/05 0 0 0 0 0 0 2005/06 99,674 0 0 0 0 99,674 2006/07 98,988 0 0 0 0 98,988 2007/08 168,261 0 0 0 0 168,261 2008/09 277,507 0 0 0 0 277,507 CV Total 644,430 0 0 0 0 644,430

Total 644,430 3,755 128 599 261,214 910,126

Non Operational Investment

£000

Surplus

£000

Assets Under

Construction

£000

Total

£000

Total Operationa

l

£000

Total

£000

Valued at Historic Cost 0 0 5,796 5,796 265,696 271,492

Valued at Current Value in: 2004/05 0 0 0 0 0 0 2005/06 0 0 0 0 99,674 99,674 2006/07 175 0 0 175 98,988 99,163 2007/08 0 0 0 0 168,261 168,260 2008/09 9,035 12,696 0 21,731 277,507 299,238 CV Total 9,210 12,696 0 21,906 644,430 666,336

Total 9,210 12,696 5,796 27,702 910,126 937,828


65

24. CAPITAL EXPENDITURE AND FINANCING The figures below provide information on the financing of capital expenditure. This note complies

with the requirements of the Prudential Code.

2007/08 £000

2008/09 £000

233,377 Opening Capital Financing Requirement 240,753

Capital investment

43,461 Operational assets 41,404 3,024 Non-operational assets 5,530 8,272 Revenue Expenditure Funded from Capital under Statute 13,375

728 Long Term Debtor – Quality in Community Services (QICS) PFI 778 Sources of finance

(4,330) Capital receipts (3,194) (31,097) Government grants and other contributions (32,134

) (3,036) Direct Revenue Financing (Including PFI) (3,419) (8,384) Minimum Revenue Provision (8,658) (1,262) Minimum Revenue Provision – TWC & Probation & Magistrates (1,176)

240,753 Closing Capital Financing Requirement 253,259

Explanation of movements in year

7,624 Increase in underlying need to borrowing (supported by Government financial assistance)

10,802

(248) Increase in underlying need to borrow (unsupported by Government financial assistance)

1,704

7,376 Increase/(decrease) in Capital financing requirement 12,506


66

25. STATEMENT OF FIXED ASSETS The following table gives an analysis of assets owned by the Council and assets used to carry

out the County Council services.

As At 31 March 2009 As At 31 March 2008

Asset Owned by SCC

Leased by SCC

Leased to Other Bodies

Owned by Other Bodies

Total

141 Primary Schools 65 5 0 70 14022 Secondary Schools 21 0 0 1 222 Special Schools 2 0 0 0 2

26 Community Homes 1 21 0 4 26

25 Learning Disabilities/Physically Handicapped Centres and Offices 10 14 1 0 25

9 Mental Health Homes/Centres 3 3 0 3 98 Homes for Older People 1 0 7 0 85 Highways Depots 4 1 0 0 55 Waste Management Sites 3 1 0 1 5

13 Registrars' Offices 7 5 0 1 1322 Libraries 15 7 0 0 22

3 Shirehall and other administrative centres 2 2 0 0 4

26 Smallholdings 21 4 0 0 253 Cottages (Smallholdings) 3 0 0 0 33 Adult and Community Learning 3 0 0 0 38 Learning and Training Services 6 2 0 0 8

3 C&YPs Professional Training Centres 1 0 0 2 3

7 Youth Centres 5 2 0 0 74 Youth Offices 2 2 0 0 4

8 Tuition, Medical and Behaviours Support Services 4 2 0 2 8

3 Surestart 17 1 0 0 185 Connexions 4 1 0 0 54 Gypsy Sites 3 0 1 0 49 Older People’s Services 2 3 0 4 9

13 Children’ Social Services 6 6 1 0 136 Museums 2 3 1 0 6

The main reasons for changes to asset numbers since 31 March 2008 are:

• The closure of Childs Ercall CE Primary School in July 2008. This school was a Shropshire County Council maintained Church of England primary school and the property has now been returned to the Diocese.

• The new lease for the Ptarmigan administrative building. • The disposal of Green Farm, Minsterley smallholding. • The additional inclusion of 15 Surestart centres provided within Primary School premises.

26. FOUNDATION SCHOOLS The School Standards and Framework Act 1998 changed the status of Grant Maintained

Schools to Foundation Schools maintained by the Local Education Authority. The change for funding purposes took effect from 1 April 1999. In this Council there are four Foundation schools. There are no opening or closing balances for current assets and liabilities controlled by Foundation schools in this Balance Sheet. The four Foundation schools have an estimated fixed asset valuation of £16,661,500 as at 31 March 2009. (This is based on the last Property Services valuation undertaken as at 1st April 2008). These fixed assets are not included in the fixed asset valuation.


67

27. DEFERRED PREMIUMS ON THE EARLY REPAYMENT OF DEBT In 2006/07 three market loans were rescheduled, unlike PWLB loans the premium is wrapped up

in the rate of the new loan and no physical cash payment is made, as a result the Council had a liability of £800,000 relating to this deferred premium. This will be charged to the Income and Expenditure Account, and credited against the Financial Instruments Adjustment Account (FIAA), over the life of the replacement loan of 70 years. The charge to the Income and Expenditure Account in 2008/09, and therefore the credit against the FIAA, was £11,000.

28. TRUST ACCOUNTS Funds held in Trust Accounts are not available for the Council's use. The Council supports the

work of a number of trusts including:

Trust Purpose Balance as at 31 March 2009

£000 Shropshire Youth Foundation

Supports the development of under 25 year old residents in Shropshire through their leisure time activities.

165

Shropshire Schools Jubilee Trust

General fund to support the learning needs of children and young people either living or studying in Shropshire.

103

Rosalie Inskip Music Trust

Supports excellence in music for young people living in Shropshire.

172

Priory Educational Trust

Charitable trust to support ex-pupils of Priory Boys School.

31

Lyneal Trust

A charity that offers canal and canal side holidays for people with disabilities, their family and friends.

402

Shropshire Voluntary Association for the Blind

A charity that helps and supports blind and visually impaired people in Shropshire and Telford & Wrekin

417

Accounts are prepared and published for these organisations, Shropshire County Council is not

the only trustee and turnover is not material.

Trusts deliver great benefit into the local community and make a valuable contribution but the County Council itself does not derive benefit from them.

29. TEMPORARY INVESTMENTS (Loans and Receivables)

Investments are shown at amortised cost. As at 31 March 2009, £65,070,000 was placed with highly credit rated banks, building societies, other Local Authorities and the UK Debt Management Office (DMO) for periods of up to 365 days. The accrued interest related to investments, that is included in this figure, amounts to £664,000. Further details on the new requirements relating to accounting for accrued interest are provided at note 33.

30. STOCK Stocks are shown at the lower of cost price or net realisable value.

2007/08 £000

2008/09 £000

234 Road Materials 218 42 Visitor Centres and TIC Retail Stock 63

177 Shire Services 184 57 Other 55

510 520


68

31. DEBTORS These are sums of money due to the Council but unpaid at 31 March 2009.

2007/08 £000

2008/09 £000

4,076

Amounts falling due within one year: Government Departments

4,637

15,879 General Debtors 16,060 3,747 Payments in Advance 2,609 (966) Provision for Bad Debts (1,356)

22,736 21,950 Amounts falling due after one year:

98 Loans (including Car Loans) 96 1,408 QICS PFI Long Term Debtor (see page 133) 2,185 4,884 Waste PFI Deferred Consideration(see page 136) 4,766 6,390 7,047

29,126 28,997

The loans of £96,000 included under long term debtors comprise outstanding car loans to staff

and loans to external bodies repayable after a period of more than 12 months. 32. LOANS (Financial Liabilities) Loans outstanding represent the net amount owing to external lenders. The loans are detailed

below with a profile of their maturity.

2007/08 2008/09 £000 £000

Temporary Loans 226 Maturing within 1 year 151

Long Term Loans

2,177 Maturing within 1 year (accrued interest, see note 33) 4,197 2,000 Maturing in 1 - 2 years 1,000 3,000 Maturing in 2 - 5 years 7,000

29,800 Maturing in 5 - 10 years 30,800 216,117 Maturing in more than 10 years 210,118 253,094 253,115

253,320 253,266

33. ACCRUED INTEREST Previously accrued interest on borrowing (financial liabilities) and investments (loans and

receivables) was shown as a short term creditor or debtor on the balance sheet. This presentation was based on the optional treatment allowed under FRS4. The latest SORP incorporates the requirements of FRS25, FRS26 and FRS29 and therefore the optional treatment under FRS4 is no longer permitted. Instead the Authority is now required to report accrued interest for loans and receivables and financial liabilities as part of the carrying value of the borrowing/investment.


69

34. FINANCIAL INSTRUMENTS BALANCES

The borrowings and investments disclosed in the Balance Sheet are made up of the following categories of financial instruments: Long Term Current 31 March 08

£000 31 March 09

£000 31 March 08

£000 31 March 09

£000 Financial Liabilities at Amortised Cost

253,094 253,115 226 151

Financial Liabilities at Fair Value through Profit and Loss

0 0 0 0

Total Borrowings 253,094 253,115 226 151 Loans and Receivables 0 0 64,945 65,070 Available for Sale Financial Assets

0 0 0 0

Unquoted Equity Investment at Cost

0 0 0 0

Total Investments 0 0 64,945 65,070 The financial instrument balances in the above table include accrued interest. The amount

included within financial liabilities is £2,198,000. The amount included within loans and receivables amounts to £664,000. Further information on accounting for accrued interest is provided at note 33.

35. FINANCIAL INSTRUMENTS GAINS AND LOSSES The gains and losses recognised in the Income and Expenditure Account and Statement of Total

Recognised Gains and Losses (STRGL) in relation to financial instruments are made up as follows:

Financial

Liabilities; Measured at Amortised

Cost

Financial Assets; Loans

and Receivables

Total

£000 £000 £000 Interest Expense (12,565) 0 Losses on Derecognition 0 0 Impairment Losses 0 0 Interest Payable and Similar Charges (12,565) 0 (12,565) Interest Income 0 3,768 Gains on Derecognition 0 0 Interest and Investment Income 0 3,768 3,768 Net Gains/(Loss) for the Year (12,565) 3,768 (8,797)

Soft Loans Following a review in this area it has been identified that interest free loans with a nominal value of £732,000 are advanced to clients receiving residential/nursing care who following assessment are required to pay the full cost of their care. As all of the clients funds are tied up in the property they own, a legal charge is made against the property and when the property is sold the outstanding debts are cleared and the legal charge removed. In addition, clients who are required to make adaptations to their homes to maintain their independence are also given interest free loans, the nominal value of these loans is £344,000. A legal charge is again placed against the property and when the property is sold the amount of the loan is repaid and the legal charge removed.


70

The deferred charges loans are part of the Charging Residential Accommodation Guide (CRAG) assessment and the adaptation loans are part of Disabled Facilities Grant legislation, which means they are part of national agreements. These loans are not part of the Councils internal policies and therefore are not classified as soft loans. Fair Value Calculations In accordance with the 2008 SORP each class of financial asset and liability should be disclosed at their fair value as a note to the Statement of Accounts. In addition, the methods used in determining such fair values should also be disclosed. The purpose of the fair value calculation is primarily to provide a comparison with the carrying value in the Balance Sheet. The methods used to calculate the fair value of the Authority’s outstanding debt has been based on the PWLB rates that applied to new loans as at 31 March 2009. These rates are then matched, as appropriate, to the duration remaining on an existing loan maturity. The market debt has been based on the equivalent LOBO rates as at 31 March 2009. For financial assets the fair value is determined by calculating the Net Present Value of future cash flows, which provides an estimate of the value of payments in the future in today’s terms. The discount rate used in the calculation is equal to the current rate in relation to the same instrument from a comparable lender. The Authority’s investments are all at fixed rates and have therefore been calculated using the comparable fixed deposit rates as at 31 March 2009. The balances held in call accounts are shown as cash. The summary portfolio position of financial assets and financial liabilities as at 31 March 2009 is as follows: Financial Assets Nominal/Principal Fair Value Cash £7,000,000 £7,000,000 Fixed Term Deposits £57,405,000 £58,185,385 Further details about these assets are provided at note 27. Financial Liabilities Market Loans - LOBO £32,200,000 £32,079,215 PWLB Maturity Loans £218,717,693 £253,835,558 Further details about these liabilities are provided at note 32. Premiums & Discounts A review has been carried out of all outstanding premiums and discounts on the Balance Sheet as at 31 March 2009. Changes in accounting policy in 2007/08 meant that premiums and discounts arising from the early repayment of debt are no longer shown as “deferred” on the Balance Sheet. The treatment now falls into one of two categories: • Where the repayment falls under the terms of a loan extinguishment any premiums or

discounts arising need to be charged/credited to the Income and Expenditure Account in year. These charges/credits are then reversed in the Statement of Movement on General Fund Balance and transferred to the Financial Instruments Adjustment Account. The balance held in the Financial Instruments Adjustment Account is then written down via the Statement of Movement on the General Fund Balance, over the longer of the remaining life of the loan repaid or the replacement loan. Discounts are credited over the shorter of the remaining life of the loan repaid or 10 years.

• Where the repayment falls under the terms of a loan modification any premium or discount

arising needs to be subtracted or added to the carrying value of the loan and charged/credited over the life of the loan.


71

As premiums and discounts are no longer able to be shown as deferred the £8,088,000 of deferred premiums reported in the 2006/07 Balance Sheet had to be written off during 2007/08. To ensure that there was no impact on the Council Tax payer the £8,088,000 was written down into the Statement of Movement on General Fund Balance, this sum was then reversed in the Statement of Movement on General Fund Balance and transferred to the Financial Instruments Adjustment Account. The £7,773,000 balance of the premiums held in the Financial Instrument Adjustment Account will continue to be amortised over the life of the replacement loans under regulation. This is a continuation of the Authority’s existing policy. The total value of this amortisation in 2008/09 was £315,000, this sum was charged to the Statement of Movement on General Fund Balance and credited to the Financial Instrument Adjustment Account. As a result the balance on the Financial Instrument Adjustment Account stands at £7,458,000. Further details of the premiums are provided below: • In 2006/07 a £800,000 premium was paid due to the restructuring of some market loans. As

the original loans were classified as extinguishments under the SORP this amount is being amortised over the life of the replacement loan under Statutory Instrument 573. Further details are provided at note 27.

• All other premiums related to restructuring prior to 2006, the total sum amortised relating to these premiums was £303,000.

There were no premiums paid or discounts received in 2008/09.

36. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS

The identification, understanding and management of risk are, by necessity, a major part of the County Council’s treasury management activities. To avoid the County Council suffering loss as a result of its treasury management activities a number of risk management procedures have been put in place. The purpose of these procedures is to manage the risks arising from the use of financial instruments down to acceptable and agreed levels. These procedures are based on the concept that firstly security of principal is paramount, secondly that there is a need to maintain liquidity and finally earning a rate of return commensurate with the first two concepts. The management of risks associated with the use of financial instruments is undertaken by a central treasury management team. The team works within policies approved by Full Council prior to the start of the year as part of the Treasury Management Strategy. The Authority has written procedures for overall risk management, as well as written policies covering specific areas, such as credit risk, liquidity risk, interest rate risk and the investment of surplus cash which are updated by the treasury team and approved by the Director of Resources each year. The County Council adopted CIPFA’s Treasury Management Code of Practice in February 2002. It has also set treasury management indicators to control the key risks associated with financial instruments in accordance with CIPFA’s Prudential Code for Capital Finance in Local Authorities. Credit Risk Exposure Credit and counterparty risk is the failure by a third party to meet its contractual obligations under an investment, loan or other commitment, especially due to deterioration in its creditworthiness. As a holder of public funds, Shropshire County Council regards it a prime objective of its treasury management activities to be the security of the principle sums it invests. The enhancement of returns is a secondary consideration to the reduction or minimisation of risk. Accordingly, the Council ensures that its counterparty lists and limits reflect a prudent attitude towards organisations with whom funds may be deposited.


72

The main criteria for determining the suitability of investment counterparties will be the institutions credit rating. Minimum credit ratings and recommended limits for investments are set as part of the Annual Investment Strategy. The Council’s lending list is reviewed continuously in conjunction with its treasury advisor and formally updated monthly. Additions to, and deletions from, the list are approved by the Director of Resources. The total permitted investment in any one organisation at any one time varies with the strength of the individual credit rating. For the highest rating the maximum amount is currently limited to £10,000,000. Due to the continued uncertainty in financial markets and the problems with Icelandic Banks (which the authority had no funds deposited with) the authority carried out a full review of its lending list in 2008/09. Following the review, with the exception of Building Societies who must have a minimum long term rating of A and short term rating of F1, the minimum ratings for all other institutions was increased from a long term rating of A to AA-. In addition, with security of capital the main priority, an account was also set up with the UK Government via the Debt Management Office (DMO) and lending to Nationalised and part Nationalised Institutions also increased due to deposits effectively being made with the UK Government. In addition to credit ratings the Authority also continually monitors the financial press and removes institutions from its approved lending list immediately if appropriate. In conjunction with our treasury advisor, countries sovereign ratings are also taken into account when placing deposits and institutions credit default swap rates are monitored on a weekly basis and action taken to remove an institution from the approved lending list if required. The analysis below summarises the County Council’s potential maximum exposure to credit risk, based on the experience of default and non recovery over the last five financial years, adjusted to reflect current market conditions. Amount deposited

at 31 March 09 £000

Loans and receivables held with counterparties having a default rating of:

AAA 760 AA 40,825 A 11,330 Other Local Authorities 11,490 Debtors (Customers) 11,554

The Authority generally allows its customers 30 days credit. Of the £11,554,000 outstanding from customers £3,821,000 is past its due date for payment. This past due amount is analysed by age as follows: Age of Debt £000 Less than 3 months overdue 824 3 to 6 months overdue 915 7 months to 1 year overdue 962 More than 1 year overdue 1,120 3,821

No credit limits were exceeded during the reporting period and the authority does not expect any losses from non-performance by any of its counterparties in relation to deposits. Liquidity Risk Exposure Liquidity risk is the risk that cash is not available when required. This can jeopardise the ability of the Council to carry out its functions or disrupt those functions being carried out in the most cost effective manner. The Council therefore has sufficient standby facilities to ensure that there is always sufficient liquidity to deal with unexpected circumstances.


73

As the Authority has ready access to borrowings from the Public Works Loan Board, there is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. Instead, the risk is that the Authority will be bound to replenish a significant proportion of its borrowings at a time of unfavourably high interest rates. The authority’s strategy therefore is to ensure that no more than 15% of loans mature in any one financial year. The maturity analysis of the authority’s financial liabilities is provided at note 32. In addition, all of the Council’s short term liquidity requirements can be satisfied through short term borrowing and bank overdraft facilities. Interest Risk Exposure Interest rate risk is the risk that unexpected changes in interest rates expose the Council to greater costs or a shortfall in income than have been budgeted for. The Council minimises this risk by seeking expert advice on forecasts on interest rates from its Treasury Management consultants, and agreeing with them the strategy for the forthcoming year for the investment and debt portfolios. Movement of actual interest rates against these expectations is monitored continuously with advice from our treasury advisor. Interest rate exposure limits and other prudential limits are set through the Annual Treasury Strategy. The limit for variable rate debt is 50% of the total debt portfolio however the Council works to a more prudent level and maximises its exposure to 25%. As borrowings are not carried at fair value, nominal gains and losses on fixed rate borrowings do not impact on the Income and Expenditure Account or Statement of Recognised Gains and Losses (STRGL). As at 31 March 2009 the Council’s total outstanding debt (excluding accrued interest) amounted to £250 918,000 of which none of these loans were at stepped interest rates. Out of this balance £218,718,000 relates to fixed rate Public Works Loan Board (PWLB) loans and £32,200,000 relates to Lenders Option Borrower Option (LOBO) market loans. As the LOBO loans have a call option where the lender can increase the rate of the loan at predetermined dates these loans are classified as variable rate loans. Had long term interest rates been 1% higher than they actually were, and all other circumstances been the same, this would result in an increase in interest payable of £322,000. If the lender increases the interest rate at the predetermined date then the Council has the option to repay the loan in full thereby offering the potential for the Council to avoid this increase in interest payable. The majority of the Council’s investments are fixed rate deposits however, investments in Call Accounts are classified as variable rate investments. As at the end of March 2009, £7,000,000 was held in a Call Account. If interest rates throughout the year had been 1% higher this would have increased the amount of interest earned on these investments by £70,000. The impact of a 1% fall in interest rates would be a £70,000 loss. The internal Treasury Team’s aim is to outperform the 7 day LIBID investment benchmark. Interest rate risk is ameliorated by the fact that a proportion of Government grant payable on financing costs will normally move with prevailing interest rates, or the authority’s cost of borrowing, and provides some compensation for a proportion of any higher costs. Price Risk The Authority does not invest in equity shares therefore is not exposed to losses arising from movements in the prices of shares. Foreign Exchange Rate Exposure The Authority has no financial assets or liabilities denominated in foreign currencies and therefore has no exposure to loss arising from movements in exchange rates.


74

37. CREDITORS These are amounts owed by the Council for work done, goods received or services rendered

which had not been paid by 31 March 2009.

2007/08 £000

2008/09 £000

16,112 Government Departments 16,233 31,275 General Creditors 37,579

0 Collection Fund 1,130 2,941 Receipts in Advance 3,365

50,328 58,307 38. LIABILITY TO DEFRA FOR LANDFILL USAGE Allowances to use landfill at a specified level (the cap) are allocated free of charge to Waste

Disposal Authorities (Authorities) by DEFRA. The Landfill Allowance Trading Scheme (LATS) operates for 15 annual compliance periods and runs from 1 April 2005 to 31 March 2020. In order that Authorities can plan for the future and establish a market in landfill allowances, the allowances for all the 15 annual compliance periods were notified to Authorities on 2 February 2005. Authorities are able to contract with other Authorities to buy and sell allowances for both the current and future compliance periods. The Council carried forward a verified balance of 80,616 allowances at the end of 2007/08, valued at £403,000 equal to £5.00 per allowance. The value of allowances is notified by CIPFA at the end of each compliance period, however in the absence of an active market, a reliable estimate of fair value could not be arrived at for 31 March 2008 and so the value of the allowances has been written down to zero.

Allowance

s Rate Value

No. £ £000 Balance of LATS Reserve as at 1 April 2008 80,616 5.00 403 Adjust for Changes to 2007/08

Impairment of Allowances Transferred to Reserve 80,616 (5.00) (403)

Changes during Reconciliation Period (925) 0.00 0 Net Impact on Reserve 79,691 0

2008/09 Allowances

Allowances Issued by DEFRA 80,133 0.00 0

Total Allowances Prior to 2008/09 Utilisation 159,824 0.00 0

Allowances Utilised in Year (52,000) 0.00 0 Balance of Reserve as at 31 March 2009 (Pre Reconciliation Period) 107,824 0.00 0

39. CASH

2007/08 £000

2008/09 £000

(998) Cheques issued but unpresented (818) (605) Net bank and petty cash balances (3,805)

(1,603) (4,623)


75

40. GENERAL FUND BALANCE This represents the combined accumulated surplus of income over expenditure against the

General Fund and Schools’ budgets, these sums are separately identifiable and an analysis is provided below:

2007/08

£000 2008/09

£000

2,721 General Fund 2,250 Schools’ Balances

5,763 Revenue Balances 5,3052,205 Invested Balances 2,074

120 Foundation Schools (using the Council’s bank account) 0 (292) IT Financing (240) 7,796 7,139

10,517 9,389

Following consultation with the Schools’ Forum and Headteachers, an element of schools’

balances have been used to purchase IT equipment for schools, the cost of this equipment is then recharged to schools over the life of that equipment, effectively operating as an internal leasing arrangement. In addition to the schools balances held by the Council a further £173,000 of balances are held by individual Foundation schools who hold their own bank accounts.

41. USABLE CAPITAL RECEIPTS RESERVE The table below shows the capital receipts in hand at 31 March 2009 along with the movements

in capital receipts that have taken place during the year.

2007/08 £000

2008/09 £000

90 In hand at 1 April 1,390

5,630 Net Receipts in year 1,813 (4,330) Capital Receipts applied to capital expenditure (3,194)

1,300 (1,381)

1,390 In hand at 31 March 9

I see that there is money held in the General Fund Balance, does this mean Council Tax will be reduced in the future?

The general fund balance is available for use within the Council’s budget and one of the options could be to help reduce Council Tax. However, the balance is small in terms of the Council’s budget and it is prudent and sensible to retain this sum as a contingency to protect the Council’s financial standing. The schools’ balances element has to be ring-fenced for use by schools.


76

42. REVALUATION RESERVE The Revaluation Reserve was created in the 2007/08 Statement of Accounts. The closing

balance of £103,000,000 on the Reserve at 31 March 2008 therefore only showed the net impact of the revaluation gains accumulated since 1 April 2007. The Revaluation Reserve has increased by £54,420,000 in 2008/09 resulting in a closing balance of £157,420,000.

2007/08

£000 2008/09

£000 0 Opening Balance 103,000

105,455 Revaluations 70,942 (1,282) Depreciation (2,301) (1,077) Disposals (2,476)

(96) Impairment (11,745) 103,000 Balance at 31 March 157,420

43. CAPITAL ADJUSTMENT ACCOUNT The system of capital accounting requires the establishment and maintenance of a Capital

Adjustment Account, this is set out below:

Balance at 1 April 2008

£000

Movements in 2008/09

£000

Balance at 31 March 2009

£000 Write-down of deferred Government Grants 35,736 4,294 40,030 Write-down Revenue Expenditure Funded from Capital Under Statute

(36,989) (3,792) (40,781)

Capital Receipts set aside used to repay debt

8,132 0 8,132

Capital Finance - Capital Receipts Applied 74,278 3,194 77,472 - Revenue Contributions 63,170 2,641 65,811 - Capitalisation of Quality in Community

Services PFI – Revenue Contribution 1,408 778 2,186

- Amortisation of Deferred Consideration – Waste PFI

(114) (118) (232)

- Movements on Fixed Assets 347,205 (33,885) 313,320 MRP (less Depreciation & Amortisation provision)

(14,141) (11,727) (25,868)

478,685 (38,615) 440,070

44. CONTINGENT LIABILITIES As part of the Finance Protocol between Shropshire CC and the then Wrekin District Council, a

number of contingent liabilities have been identified, the costs will be shared should they arise. A capital contribution of £370,000 received in 2000/01 and applied to finance a capital project, at

Severndale Special School, is repayable (in full or in part) if the terms of the contribution are breached before 2031.

Work on Job Evaluation is still in progress, as a result there is the possibility that the Council

may incur costs relating to previous years should backdated pay be agreed. There is an insurance claim, estimated at £250,000, which remains outstandinguntil a final

settlement figure has been agreed. There is also a race relation claim that it is anticipated will be settled in 2009/10.


77

There remains the possibility that some employees of the County Council (and former

employees who bring a claim within six months of leaving) may bring a claim against the Council to seek retrospective membership of the pension scheme. This would only apply to employees who were employed on a part time basis in the past and as a result were prevented at a particular time from being able to join the Local Government Pension Scheme. The Council has received a significant number of such claims over recent years but the vast majority have now been dealt with either by the Employment Tribunal or by way of settlement. The likelihood of further claims is low but if they were made they could result in the authority incurring costs. It is not possible to be precise as to what the cost might be in any particular case, as it would depend on the employment period being claimed for. However, such claims would not be material to the accounts as they would relate to prior years.

The County Council has provided guarantees to a number of Community Bodies that have been

admitted to the Shropshire Pension Scheme, to fund any potential pension liabilities. These few bodies are Relate and MENCAP, Relate has just one member of staff, whilst MENCAP has 4 active members of the Shropshire County Pension Fund, 3 Pensioners and 1 Deferred Member. These do not therefore represent a significant potential liability for the County Council.

45. POST BALANCE SHEET EVENTS The Director of Resources authorised the Statement of Accounts for issue on x September 2009.

This date has been used for the purposes of determining any Post Balance Sheet Events. No such events have been identified for 2008/09.

46. RELATED PARTY TRANSACTIONS The Council is required to disclose material transactions with related parties, that is bodies or

individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of any transactions allows a view to be taken on the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another body or individual’s ability to bargain freely with the Council.

Central Government has effective control over the general operations of the Council, being

responsible for the statutory framework within which the Council operates, provides the majority of its funding through the payment of grants and prescribes the terms of many of the transactions that the Council has with other parties. Details of transactions with Government departments appear in other parts of the Statement of Accounts.

Members of the Council have direct control over the Council’s financial and operating policies.

Certain senior officers may also be in a position to influence policies, particularly those who form the Council’s management team. All Council members and senior officers have been written to, advising them of their obligations and asking for any declarations of related party transactions to be disclosed. Members are also asked to confirm that their entries in the Register of Clubs and Societies are correct. For 2008/09 Councillor Nutting declared that he is a Board Member of Severnside Housing. In 2008/09 the Council paid Severnside Housing £1,312,702 for accommodation associated with the Supporting People programme. There are no other material reported related party transactions between the Council and its members or senior officers.

Details of any exceptional transactions with other public bodies should be disclosed where they

are material and may involve the ability for one party to influence another. Precepts from District Councils are identified elsewhere in the Statement of Accounts. There are no exceptional and material transactions to disclose.

The Council has made payments to a number of outside organisations on which it is represented

by members. The total amount of payments to these bodies in 2008/09 was £11,426,000 compared with £10,102,000 for 2007/08.

As administrator for the pension fund, the Council has control of the fund within the overall

statutory framework. During the year the pension fund had an average cash balance of £1,477,000 in the County Council Accounts for which interest of £41,000 was paid by the


78

Council. The Council also received £1,022,000from the pension fund for the costs of administration it provided compared with £970,000 for 2007/08.

47. GOVERNMENT GRANTS DEFERRED Grants and other external contributions towards capital expenditure are written off to the revenue

account as the assets to which they relate are depreciated. The balance on the Government Grants deferred account of £94,030,000 represents grants not yet written off.

48. CAPITAL ACCOUNT SUMMARY

2007/08 Actual

2008/09 Actual

£000 £000 Expenditure 4,319 Community Services 4,843 23,370 Children & Young People’s Services 23,023 Economy & Environment Services 23,358 Highways 21,683 3,142 Other 9,467

568 Resources, Chief Executive’s Office and Legal & Democratic Services 1,293

54,757 60,309 Sources of Finance 16,982 Borrowing (Supported) 20,340 40 Borrowing (Unsupported) 2,000 25,494 Government Capital Grants 23,074 3,296 Other Capital Grants 7,170 2,307 External Contributions 1,890 4,330 Capital Receipts 3,194 2,308 Revenue 2,641 54,757 60,309 Capital expenditure is, by definition, on assets whose useful life is greater than the financial year in which the payment took place. Expenditure generally considered to be capital includes payments on the: • purchase and reclamation of land. • purchase, construction, replacement or enhancement of roads and buildings. • purchase, replacement or enhancement of vehicles and equipment. Capital transactions are recorded on an accruals basis. Accruals for invoices of £75,000 or above are included in the capital expenditure this complies with the CIPFA Statement of Recommended Practice and the accounting policy.

Why do we need this statement, why aren’t these figures included in the Income and Expenditure Account?

Capital is spent on big projects that result in some form of asset being improved or created, e.g. a building. Expenditure of this type is largely funded by borrowing, the cost of this borrowing is what appears in the Income and Expenditure Account, rather than the actual amount spent on the asset


79

Capital Expenditure Capital expenditure in 2008/09 totalled £60,309,000. The expenditure was incurred on:

£000 %

Land 2,456 4Construction 27,359 45Furniture, Equipment & Vehicles 6,209 10Infrastructure 17,909 30Grants 489 1Professional Charges 5,887 10

60,309 100 The professional charges relate to work on infrastructure and construction. Commitments under Capital Contracts Capital contractual commitments as at 31 March 2009 were £30,745,000. Supported Capital Expenditure (Revenue) The Council received a Supported Capital Expenditure allocation, borrowing for which debt charges are supported through the Revenue Support Grant from Central Government, of £20,340,000. This was fully applied to finance capital expenditure in 2008/09. Capital Receipts Capital receipts of £1,813,000 were generated during the year. These combined with the capital receipts in hand from previous years £1,390,000, provided usable capital receipts of £3,203,000 of which £3,194,000 was used as part of the Council’s overall financial strategy. The balance of £9,000 is being carried forward within the Usable Capital Receipts Reserve. The Directorates/services generating receipts in 2008/09 were: £000Smallholdings 681Economic Development 534Other Economy & Environment Services 190Children & Young People’s Services 198Community Services 0Resources 210 1,813

49. RESERVES AND PROVISIONS The County Council has created a number of specific reserves and provisions as permitted under

the provisions of the Local Government and Housing Act 1989. These are to provide for known or anticipated future liabilities, and to assist in protecting essential services. Contributions, charged to the revenue account, are made either on a regular basis, or by appropriation from the Revenue Account when this is considered necessary.


80

Balance at

31 March 2008 £000

Expenditure in 2008/09

£000

Income in 2008/09

£000

Balance at 31 March 2009

£000 Reserves

503 Advisory Service 453 - 50- Area Based Grant - 2,167 2,167

219 Building Maintenance 1,002 861 78293 Connexions Legacy 83 231 441665 Council Tax on Second Homes 665 - -415 County Council Elections 1 - 414402 CYPS Directorate 459 652 595

(714) Decriminalised Parking - 714 -

61 Economic Development Workshops

Major Maintenance - 18 79838 Education – Staff Sickness Insurance - 113 951129 Education – Theft Insurance - 15 144

1,417 Fire Liability - 284 1,701403 Landfill Allowance Trading Scheme 403 - -57 Legal Disbursements 55 57 59

100 Local Government Review 492 392 -

599 Local Authority Business Growth

Incentive 639 547 507123 Major Planning Inquiries 66 4 61129 Motor Insurance 33 54 150

196 PFI Buildings Equipment

Replacement 7 60 2491,000 Resources Efficiency 806 97 291

2,809 Revenue Commitments for Future

Capital Expenditure 1,520 491 1,780

101 Schools Building Maintenance

Insurance 101 - -83 School Meals – Academic Year - - 8368 Section 117 68 - -

- Severe Weather - - -

(5) Shire Catering and Cleaning

Efficiency 56 152 912,745 Shropshire Waste Partnership

(Smoothing Reserve) - 4,865 7,610

647 Shropshire Waste Partnership (General Reserve)

- 265 912

379 TMO Vehicle Replacement 40 349 688432 Transport – Academic Year 702 270 -

1,740 Voluntary Early

Retirement/Severance 2,678 1,157 219435 Waste Management - - 43554 Youth Service Vehicle Replacement - 4 58

16,323 10,329 13,819 19,813 Directorates Carry Forwards

(178) • Community Services - 178 -(122) • Economy & Environment Services - 159 37

(1,005) • Economy & Environment - Highways 2,386 1,005 (2,386)

433

• Resources, Legal & Democratic Services, Chief Executive’s Office and Corporate

433 208

208

(872) 2,819 1,550 (2,141)

15,451 Total of Reserves 13,148 15,369 17,672

Provisions 3,821 Liability Insurance 11 501 4,311

3,821 11 501 4,31119,272 TOTAL 13,159 15,870 21,983


81

An explanation of the reserves and provisions shown on the previous page is provided below. RESERVES Advisory Service – established from prior years’ unapplied retained Standards Fund grant balances, where matched funding requirements were provided through base budget provision. This reserve will be used to apply to future revenue account matched grant funding requirements, and to support base budget pressures, particularly variations to schools' income subscription levels. Area Based Grant - established from unapplied Area Based Grant balances. Commitments have been made against these balances in 2009/10. Building Maintenance – this was established from an underspend within Property Services and slippage in the repairs and maintenance programme for county council buildings. In 2008/09 this reserve has been used to fund planned repairs and maintenance on the buildings and the building works associated with the accommodation works for preparation for the unitary council. Connexions Legacy – established from the process of liquidating the old external Connexions Company with effect from 31 March 2007. The Agreement to transfer the assets of the old Company to Shropshire County Council stipulates that “the Distributable Funds shall only be applied for the benefit of young persons and for no other purpose whatsoever”. Council Tax on Second Homes – this reserve was fully committed in 2008/09 and was used to fund local initiatives undertaken with the District and Borough Councils to fund local initiatives. The budget was originally set up following the additional income raised from the change in council tax on second homes. County Council Elections – established to meet the periodic cost of Council Elections which take place every four years. This reserve is fully committed in 2009/10 to help meet the costs of the Unitary elections. CYPS Directorate – established from overall directorate underspends of £1,633,000, approved as a carried forward from the closedown of the 2004/05 accounts. This reserve has been applied to one-off spending initiatives which are time-limited and not covered by base budget provision. It was also used in 2007/08 and 2008/09 to support the directorate's base budget overspends, and has been earmarked to contribute towards any overspending pressures in 2009/10 and future years. Decriminalised Parking – was established to cover the set up costs associated with the establishment of a decriminalised parking regime within Shropshire. The deficit balance carried forward from 2007/08 has been offset by a contribution from the general fund balance. Economic Development Workshops Maintenance – set up to meet the costs of major maintenance of Economic Development Workshops. Education – Staff Sickness Insurance – schools’ self help insurance for staff sickness with premiums met from delegated budgets. Any surplus generated is used to benefit contributing schools. Education – Theft Insurance – this is the schools’ self help insurance scheme to cover equipment damage and losses. Any surplus generated is used to benefit contributing schools. Fire Liability – see Liability Insurance Provision and Fire Liability Reserve under Provisions below. Landfill Allowance Trading Scheme – this reserve has been set up to recognise the notional surplus generated because the council’s liability for waste disposal tonnage since 2005/06 has been less than the allowances allocated by DEFRA. As this represents a notional surplus it cannot be spent. This reserve has only been set up because the accounting guidelines require it. Cash would only be generated if the surplus LATS credits were sold to another authority.


82

Balances have been written down to zero, reflecting both the absence of an active market, and that 2009/10 is the first target year of the scheme where no banking from previous years is permitted. Legal Disbursements – this helps to meet extraordinary legal costs incurred by service directorates over and above budgets. Local Government Review – this reserve was set up to fund any one-off costs that arose as a result of the transition to the new Unitary Council for Shropshire. This reserve has been fully spent in 2008/09. Local Authority Business Growth Incentive – this reserve has been established using grant from the Department for Communities and Local Government. The reserve will be spent on schemes that will benefit business development within Shropshire. Major Planning Inquiries – this reserve is used to meet the one-off costs of major planning inquiries, and is a corporate reserve; £66,024 was used during 2008/09. The annual contribution of £50,000 was removed as part of the 2005/06 Budget Strategy savings. There are a number of inquiries pending which under the current arrangements will exhaust the fund by the end of 2009/10 Motor Insurance – an internally operated self-insurance reserve to meet costs not covered by the Council’s Motor Insurance Policy. PFI Buildings Equipment Replacement – this was established in 2007/08 to fund replacement equipment in PFI buildings. This relates to low level equipment not covered by the PFI contract, that the council are responsible for maintaining. Resources Efficiency – established for investment in new developments, particularly information technology, that client directorates would not be expected to meet from their internal service level agreements for support services. This reserve is used for corporate developments such as the development of the server room and electronic data management infrastructure. The reserve is fully committed in 2009/10. Revenue Commitments for Future Capital Expenditure – this reserve comprises underspends against budgeted revenue contributions available for capital schemes. The underspends have arisen due to slippage in capital schemes or because other funding streams were utilised during the year. This sum is available to fund commitments against capital schemes in 2009/10. Schools’ Building Maintenance Insurance – the schools building maintenance insurance scheme is a service provided by Property Services for schools. In return for an annual sum all structural repairs and maintenance responsibilities previously identified as the "authority’s responsibility" are carried out at no additional charge to the school. In broad terms this includes annual contract maintenance, programmed structural repairs, mechanical and electrical contract maintenance and reactive essential maintenance works. The unspent balance from 2007/08 was fully spent in 2008/09. School Meals - Academic Year – established from an underspend in 2004/05 due to there being fewer than average school days in that financial year. The fund increased by £44,000 in 2007/08, reflecting a lower number of trading days within the financial year (185 against standard budgeted provision of 190). The reserve is held to support financial years when there is a higher than average number of school days. Section 117 – Section 117 of the Mental Health Act 1983 places a duty on the County Council to provide after-care services for certain patients discharged from detention under the Act. All known backdated claims have now been settled. Severe Weather – the reserve is maintained to meet unbudgeted costs arising from the damage caused by severe weather. The policy of the Council is to budget for an average year’s expenditure in the revenue accounts and transfer any underspend to the reserve or fund any overspend from the reserve. As the County Council has a statutory obligation to keep roads


83

clear any future expenditure incurred following severe weather that cannot be covered by the reserve will have to be contained within the revenue budget for Highways maintenance with consequent reductions in the planned programme. Shire Catering and Cleaning Efficiency – this is built up from trading surpluses to invest in new initiatives, to meet exceptional unbudgeted costs or cover any trading deficits. During 2008/09 Shire Services’ overall trading position was a surplus of £96,000, which will be carried forward for 2009/10. Shropshire Waste Partnership (Smoothing Reserve) – the PFI smoothing reserve reflects the budgeted contributions in the early years of the Waste PFI contract that will be used to smooth the step up in the Unitary Charge once additional facilities come on line. The PFI smoothing reserve will ensure that the Shropshire Waste Partnership does not pay for services in advance of receiving them but that once costs are increased in line with the contract money is available to meet those costs. The District partners have funded £350,000 of the PFI smoothing reserve and the County Council £2,395,000. The SWP Business Plan anticipated the PFI smoothing reserve earning interest at 5% per annum. Interest of £127,917 has been added in 2008/09; applying an interest rate of 4.66% which reflects the average rate the Council has earned on its balances throughout the year.

Shropshire Waste Partnership (General Reserve) - the general reserve arises from SWP underspends and this will be earmarked towards future capital and revenue pressures in the budget. TMO Vehicle Replacement – this reserve was set up to meet the costs of replacement vehicles by the Integrated Transport Unit. An additional £349,631 was added in 2008/09, which included £145,981 of Bus Services Operators Grant (BSOG), and contributions for the replacement of existing vehicles of £203,650. Expenditure of £40,343 was incurred on the acquisition of vehicles. Transport – Academic Year – established from an underspend in 2004/05 due to there being fewer than average school days in that financial year. The Reserve is held to support financial years when there is a higher than average number of school days, or to support transport base budget spending pressures. Voluntary Early Retirement/Severance – used to help meet one-off costs arising from approved staffing reductions, allowing the full approved savings in salaries or wages to reach the revenue account. During 2008/09 this reserve has been used to fund the one-off voluntary early retirement/severance costs associated with the Unitary Council. Waste Management – to meet potential claims from our contractors. Contractual claims for 2005/06, 2006/07, 2007/08 and 2008/09 are still outstanding. Youth Service Vehicle Replacement – this reserve was established to meet the costs of purchasing specialist vehicles for the Youth Service. Directorate Carry Forwards – this represents the net overspend on Directorates’ budgets at the end of the year. Under devolved financial arrangements for directorates any underspend is available for use in 2009/10 or alternatively an overspend must be recovered. PROVISIONS Liability Insurance Provision and Fire Liability Reserve – the “Liability Insurance Provision” and the “Fire Liability Reserve” are treated as one overall combined balance (as approved by Cabinet on 8 July 2003 as per the “Reserves, Provisions and Balances” report, recommendation C). This sum is now available to meet the cost of excesses on all Council properties as well as the cost of excesses relating to Public and Employers’ Liability Claims on or after 1 April 1998. Amounts over the excess are funded by the Council’s external insurers. For 2008/09 this cover was provided by Zurich Municipal, Galaxy House, Southwood Crescent, Farnborough, Hampshire, GU14 0NJ.


84

50. RECONCILIATION OF NET SURPLUS/DEFICIT ON THE INCOME & EXPENDITURE ACCOUNT TO THE MOVEMENT ON REVENUE ACTIVITIES IN THE CASH FLOW STATEMENT

2008/09 £000 £000

(Surplus)/Deficit for year per Income & Expenditure Account 55,406

Add items not resulting in cash flows Depreciation (40,280) Govt Grants Deferred Amortisation 4,294 Net loss on sale of fixed assets (19,142) Net charges made for retirement benefits (11,029) (66,157) (10,751)Add/deduct movements in working capital Increase/(decrease) in stocks and work in progress 10 Increase/(decrease) in revenue debtors (1,628) (Increase)/decrease in revenue creditors (7,360) (Increase)/decrease in provisions (490) (9,468) (20,219)Add Revenue costs of financing Net Interest (8,797) Net (Inflow)/Outflow on Revenue Activities (29,016)

51. RECONCILIATION OF NET CASH FLOW IN THE CASH FLOW STATEMENT TO MOVEMENT

IN NET DEBT

2007/08 2008/09£000 £000

3,787 Increase/(decrease) in cash in the period (3,020)28,691 Cash inflow/(outflow) from increase/(decrease) in liquid resources (126)

(24,114) Cash inflow/(outflow) from increase/(decrease) in debt financing 86

8,364 Movement in net debt in the period (3,060)

(197,367) Net debt at 1 April 2008 (189,003)

0 Deferred Premium on Early Repayment of Debt (non-cash item) 0

(189,003) Net debt at 31 March 2009 (192,063) 52. ANALYSIS OF NET DEBT

Balance as at 1 April

2008

Cash Flow Balance as at 31 March

2009 £000 £000 £000

Cash Overdrawn (1,603) (3,020) (4,623)Short Term Investments 64,531 (126) 64,405Cash from Borrowing (Note 53) (251,143) 75 (251,068)Deferred Premium on Early Repayment of Debt (balance represent non-cash items)

(788) 11 (777)

(189,003) (3,060) (192,063)


85

53. ANALYSIS OF CHANGES IN FINANCING INCLUDED IN THE CASH FLOW STATEMENT

31 March 31 March 2008 2009 Movement

£000 £000 £000 Borrowing: Temporary Loans (226) (151) 75 Long Term Loans (218,717) (218,717) 0 Money Market (32,200) (32,200) 0 (251,143) (251,068) 75Long Term Liabilities: Deferred Premiums on early repayment of debt (788)

(777)

11

(251,931) (251,845) 86

54. LIQUID RESOURCES The Council considers Liquid Resources to be:

• Current asset investments that are readily disposable (i.e. within 365 days), into known amounts of cash at or close to the amount of the investment, or traded in an active market, e.g. Gilts, Certificates of Deposit etc.

• Temporary investments of cash available within 365 days.

55. ANALYSIS OF GOVERNMENT GRANTS INCLUDED IN THE CASH FLOW STATEMENT

2008/09 £000

Revenue Support Grant 7,755

Non Domestic Rate Income 55,705

Dedicated Schools Grant 143,866

Other Revenue Grants: Standards Fund 20,963 Supporting People 6,565 ABG 14,794 Sure Start 4,894 Rural Bus Challenge 1,083 LABGI 547 Schools Formula Capital 5,236 Standards Fund 2,506 QICS – PFI Credits 1,523 SWP – PFI Credits 3,186 Bellwin Emergency Assistance 818 Other 2,163 Total Other Revenue Grants 64,278

Capital Grants Schools Formula Capital 457 Standards Fund 11,370 Sure Start 190 LTP Capital Grant 3,599 Waste Infrastructure 509 Department of Health 342 Other 3,693 Total Capital Grants 20,160


86

56. RESTATING THE 2007/08 CASHFLOW STATEMENT

The 2007/08 Cash Flow Statement has been restated to take account of the change in accounting policy in relation to Revenue Expenditure funded from Capital under Statute, previously Deferred Charges. The expenditure and any grants in relation to this are now reported under revenue activities. The impact of this change is summarised below:

2007/08

Cash Flow Statement

Net Impact of Restated

Figures

2007/08 Comparatives in Cash Flow

Statement £000 £000 £000 Other operating accounts 205,503 8,273 213,776 Government Grants (56,732) (6,294) (63,026) Purchase of fixed assets & Other

Capital cash payments 55,438 (8,273) 47,165

Capital Grants (28,868) 6,294 (22,574) 57. ACCOUNTING FOR SUSTAINABILITY In order to set meaningful targets for reducing our own impact on the environment in the future

we need to ascertain a baseline which includes the current districts. The unitary authority will have a big impact for instance with regards to our building ownership, and therefore the overall carbon emissions from said buildings. Work has been ongoing to gather data from all six councils on carbon emissions, including transport, and a baseline will be established in August 2009 in order to set future targets to achieve.

statement of movement on general fund balance committee... · for the year, taking into account the...

Documents