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STATEMENT OF ACCOUNTS

Contents                                                                                                                                Page

 

NOTES INDEX.. ii

NARRATIVE REPORT. v

INDEPENDENT AUDITOR’S REPORT. 2

STATEMENT OF ACCOUNTS.. 8

STATEMENT OF RESPONSIBILITIES.. 9

MAIN FINANCIAL STATEMENTS.. 11

Comprehensive Income and Expenditure Statement 12

Movement in Reserves Statement 13

Balance Sheet 16

Cash flow Statement 17

NOTES TO THE MAIN FINANCIAL STATEMENTS.. 18

OTHER STATEMENTS.. 114

HOUSING REVENUE ACCOUNT. 115

COLLECTION FUND.. 126

ANNUAL GOVERNANCE STATEMENT. 131

GLOSSARY.. 165

 

 


NOTES INDEX

NOTES INDEX.. ii

NARRATIVE REPORT. v

STATEMENT OF ACCOUNTS.. 8

STATEMENT OF RESPONSIBILITIES.. 9

MAIN FINANCIAL STATEMENTS.. 11

Comprehensive Income and Expenditure Statement 12

Movement in Reserves Statement 13

Balance Sheet 16

Cash flow Statement 17

NOTES TO THE MAIN FINANCIAL STATEMENTS.. 18

1.    ACCOUNTING POLICIES. 19

2.    ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT NOT YET ADOPTED.. 39

3.    CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES.. 40

4.    ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY.. 41

5.    MATERIAL ITEMS OF INCOME AND EXPENSE.. 41

6.    EVENTS AFTER THE REPORTING PERIOD.. 41

7.    ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS   42

8.    TRANSFERS TO/FROM EARMARKED RESERVES.. 46

9.    OTHER OPERATING EXPENDITURE.. 47

10.  FINANCING AND INVESTMENT INCOME AND EXPENDITURE.. 48

11.  TAXATION AND NON SPECIFIC GRANT INCOME.. 48

12.  PROPERTY, PLANT AND EQUIPMENT. 49

13.  HERITAGE ASSETS.. 52

14.  INVESTMENT PROPERTY. 54

15.  INTANGIBLE ASSETS.. 55

16.  FINANCIAL INSTRUMENTS.. 57

17.  INVENTORIES.. 64

18.  TRUST FUNDS.. 65

19.  DEBTORS.. 65

20.  LONG TERM DEBTORS.. 66

21.  CASH AND CASH EQUIVALENTS.. 66

22.  ASSETS HELD FOR SALE.. 66

23.  CREDITORS.. 67

24.  PROVISIONS.. 67

25.  USABLE RESERVES.. 68

26.  UNUSABLE RESERVES.. 68

27.  CASH FLOW STATEMENT – OPERATING ACTIVITIES.. 74

28.  CASH FLOW STATEMENT – INVESTING ACTIVITIES.. 75

29.  CASH FLOW STATEMENT - FINANCING ACTIVITIES.. 75

30.  EXPENDITURE AND INCOME ANALYSED BY NATURE.. 77

31.  ACQUIRED AND DISCONTINUED OPERATIONS.. 77

32.  TRADING OPERATIONS.. 77

33.  AGENCY SERVICES.. 77

34.  ROAD CHARGING SCHEMES.. 78

35.  POOLED BUDGETS.. 78

36.  MEMBERS ALLOWANCES.. 79

37.  OFFICERS’ REMUNERATION.. 80

38.  EXTERNAL AUDIT COSTS.. 84

39.  DEDICATED SCHOOLS GRANT. 84

40.  GRANT INCOME.. 85

41.  RELATED PARTIES.. 87

42.  CAPITAL EXPENDITURE AND FINANCING.. 91

43.  LEASES.. 92

44.  PFI AND SIMILAR CONTRACTS.. 94

45.  IMPAIRMENT LOSSES.. 96

46.  CAPITALISATION OF BORROWING COSTS.. 97

47.  TERMINATION BENEFITS.. 97

48.  PENSIONS SCHEMES ACCOUNTED FOR AS DEFINED CONTRIBUTION SCHEMES.. 97

49.  DEFINED BENEFIT PENSION SCHEMES.. 98

50.  CONTINGENT LIABILITIES.. 103

51.  CONTINGENT ASSETS.. 104

52.  NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS.. 104

53.  EXPENDITURE AND FUNDING ANALYSIS (EFA) 111

OTHER STATEMENTS.. 114

HOUSING REVENUE ACCOUNT. 115

COLLECTION FUND.. 126

ANNUAL GOVERNANCE STATEMENT. 131

GLOSSARY.. 165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NARRATIVE REPORT

 

1.     INTRODUCTION

 

These accounts set out the financial results of the City of York Council activities for the year ending 31st March 2021.  They are prepared in accordance with the Chartered Institute of Public Finance & Accountancy (CIPFA) Code of Practice on Local Authority Accounting (the Code) which requires that the accounts show a true and fair view of the financial position of the Council.  Suitable accounting policies have been adopted and applied consistently.  Where necessary judgements and estimates have been made which comply with the Code.

 

This narrative report explains the main information included in the accounts, gives an overview of the Council as at 31st March 2021 and provides  further information about the most significant matters reported in the accounts, along with an analysis of the pressures and risks that may impact on future financial performance. 

 

The structure of the accounts is as follows:

 

Statement of Responsibilities

 

This discloses the respective responsibilities of the Council and the Chief Finance Officer in relation to the proper administration of the Council’s financial affairs.

 

Comprehensive Income and Expenditure Statement

 

This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practice, rather than the amount to be funded from taxation.  Councils raise taxation to cover expenditure in accordance with regulations and this may be different from the accounting cost.  The taxation position is shown in the Movement in Reserves Statement.

 

Movement in Reserves Statement

 

This statement shows the movement in the year on the different reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves and other unusable reserves. 

 

Balance Sheet

 

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council.  The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. 

 

Cash Flow Statement

 

This statement shows the changes in cash and cash equivalents of the Council during the reporting period.

 

Notes and Accounting Policies

 

The notes to the financial statements are important in the overall presentation of the accounts. They aim to assist understanding and have 3 key roles;

 

 

Expenditure and Funding Analysis (EFA)

 

The objective of the EFA is to demonstrate to council tax payers how the funding available to the authority (i.e. government grants, rents, council tax and business rates) for the year has been used in providing services in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices.

 

The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the authority’s services. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.

 

Housing Revenue Account Income and Expenditure Statement

 

The HRA Income and Expenditure Statement shows the economic cost in the year of providing housing services in accordance with generally accepted accounting practices, rather than the amount to be funded from rents and government grants.

                                                         

Movement on the Housing Revenue Account Statement

 

This statement shows how the surplus or deficit on the Housing Revenue Account Income and Expenditure Account for the year reconciles to the movement on the Statutory Housing Revenue Accounts balance for the year.

 

Collection Fund

 

This fund is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Collection Fund.  The statement shows the transactions of the Council in relation to the collection from taxpayers and distribution to the Council, the Police and Crime Commissioner for North Yorkshire, North Yorkshire Fire and Rescue Authority, parish councils and central government of council tax and national non-domestic rates.

 

Annual Governance Statement (AGS)

 

This statement gives assurance that the Authority has conducted a review of the effectiveness of its systems of internal control and that the appropriate mechanisms are in place for the maintenance of good governance across the activities of the Authority.

 

Glossary

 

This is included to explain the technical terms used in the financial statements.

 

 

 

 

 

2.     ABOUT THE COUNCIL

The policies of the Council are directed by the political leadership and implemented by the Corporate Management Team and officers of the Council.  There are 47 Councillors who are elected every four years by local residents on a ward by ward basis.  The May 2019 elections resulted in a new administration when the Liberal Democrats and the Green Party formed a partnership to lead the council and councillors from both parties sit on the ruling Executive. 

Our Council Plan 2019 – 2023 sets out our priorities over the coming years and details what steps we'll take to ensure York continues to make history and build communities.  We've focused our plan on eight key outcomes (seven of which will improve the quality of life for all residents, and one will enhance the way we work):

·         good health and wellbeing

·         well paid jobs and an inclusive economy

·         getting around sustainably

·         a better start for children and young people

·         a greener and cleaner city

·         creating homes and world-class infrastructure

·         safe communities and culture for all

·         an open and effective council

 

It’s really important that we have capable, confident people, working positively for York. Therefore we all share a set of values, to help guide what we do and how we engage with our communities, our residents and each other.  Our three values are:

·         We work together

·         We improve

·         We make a difference

 

The people plan for 2016-2020 sets out the high level plan, to ensure we will have the right workforce in place to achieve the objectives set out in the Council Plan. The plan focuses on five key areas:

·         Performance and Change

·         Resourcing

·         Pay Reward & Recognition

·         Skills and Behaviours Development

·         Wellbeing & Engagement

 

 

 

 

 

 

 

 

 

 

3.     REVIEW OF THE FINANCIAL POSITION

Funding Context and Financial Planning

At the start of 2020/21 York had the 4th lowest band D council tax out of 55 unitary councils in England. All aspects of the public sector were already facing challenging times and in recent years the Council has had to deal with large reductions in funding, combined with a range of significant pressures.  The added pressure of additional expenditure and loss of income from fees and charges due to the COVID-19 pandemic that dominated 2020/21, and continues to have an impact in 2021/22, has added to an already difficult financial position for local government as a whole.

The Council’s Medium Term Financial Strategy is set within a robust and well established planning framework and is based on an analysis of the key influences on the financial position and an assessment of the main financial risks facing the Council.  This framework has enabled the Council to deliver significant performance improvements in many areas, whilst maintaining effective control and use of its limited financial resources.   As part of the financial strategy, consideration is given to the likely savings required in future years and services are actively working to develop plans which will change the way services are provided, and deliver budget reductions in the future.

However, the council will need to continue to secure further savings and to manage cost pressures effectively. In doing so, the council will also need to provide capacity for additional investment in unavoidable costs and priorities.  The continued development of the Medium Term Financial Strategy will ensure that the Council prepares effectively for these challenges. 

Locally demand for council services continues to increase, with an ageing population and increased complex needs in respect of elderly care and there is continued pressure on many of the council’s income budgets. There are also significant challenges in the health sector, including challenging financial positions for health partners which are in turn a significant financial risk to the Council.

In shaping the budget all the issues are carefully considered to ensure a budget that is both prudent and protects vulnerable people.  Ensuring that there is the capacity to invest is a critical part of the budget deliberations.  In relation to council tax, the 2020/21 budget included a council tax increase in of 1.99%, plus an additional increase of 2% in line with the Government’s Social Care precept.

The medium term strategy will continue to focus on a transformational approach, particularly in the area of adult social care and a significant amount of savings will be delivered by restructuring services.  As outlined elsewhere in the narrative report, the impact of the pandemic has been significant and the strategy has been refreshed to reflect this changing context.

Revenue Outturn 2020/21

The Council’s General Fund budget for its own net expenditure was set at £127m.  To this sum the parish precepts added a further £0.8m.  Band D Council Tax, including both Police and Fire Authority precepts, was set at £1,721.79.  This was a 3.9% increase on the previous year. 

Comprehensive revenue and capital budget monitoring is carried out during the year and is supplemented by quarterly combined finance and performance reports presented to the Executive.  This robust financial management has helped the Council to maintain good financial health, despite the continuing pressures on the public sector. 

As outlined in reports to Executive throughout the year, the COVID-19 pandemic has had a significant impact on the Council’s financial position and adversely affected performance against a number of indicators. The financial effect is complicated, with various grant funds being received from numerous Government departments. Overall, it is estimated the gross additional costs total £26m during the year along with a loss of income from fees and charges of c£8m. Much of the impact has been mitigated by General Government grants, including the Contain Outbreak Management Fund, Winter Pressures and additional funding for business grants along with funding from the CCG for hospital discharge.

Despite these additional funding streams, an ongoing impact in future years is still expected due to a range of issues, including the longer term impacts on individual residents leading to an increase in the cost of care. In addition, a potential loss of both Council Tax and Business Rates income is to be expected as some businesses struggle to recover, resulting in an increase in unemployment which in turn may leave some residents unable to pay Council Tax.

In addition to the direct financial consequences of the pandemic, in terms of additional expenditure and lost income, staff time and effort throughout the year has been dedicated to supporting residents and communities. This has resulted in attention being diverted away from more business as usual activity, including the actions needed to deliver savings and manage some of the underlying budget pressures being experienced in social care. We are also seeing an increase in social care costs directly as a result of the pandemic. These are national issues that are not unique to York and the combination of increased costs and delays in achieving savings is having a detrimental impact on the public sector.

As expected, the year-end position is an overspend and there remain considerable financial challenges looking ahead into 2021/22 and beyond. The financial impact of COVID-19, alongside the delivery of £8m of budget savings outlined in the February 2021 budget council report, as well as dealing with underlying issues experienced during 2020/21, will again require careful monitoring.

The outturn position proposes the use of a small amount from both earmarked reserves and the general reserve.

Overall, the net outturn shows an over spend of £1.3m which has been funded through the release of earmarked reserves, use of the contingency and use of some of the general reserve.  A review of earmarked reserves was carried out in March and this identified some £0.4m that could be released to support the position.  Full details on the individual service areas position for 2020/21 will be reported to Executive in June 2021. The use of the general reserve to fund the remaining overspend is considered appropriate given the unprecedented financial situation caused by the pandemic

The overall outturn position for the Council is shown below (note that + indicates an overspend against budget);

 

Directorate

2020/21

Net Budget

2020/21

Net expenditure

Variation

 

£'000

£’000

£'000

Children, Education & Communities

24,664

28,465

+3,801

Economy & Place

18,932

18,818

-114

Customer & Corporate Services

20,539

20,142

-397

Health, Housing & Adult Social Care

49,755

48,537

-1,218

Central budgets

13,334

12,590

-744

Sub Total

127,224

128,552

1,328

Contingency

 

-364

-364

Review of Reserves

 

-463

-463

Use of general reserve

 

-501

-501

TOTAL

 

127,224

0

 

 

 

 

 

Reserves

At the end of the financial year 2020/21 the useable reserves stood at £163m, compared to £118m at the end of 2019/20.  This increase is primarily due to an increase in earmarked reserves as a result of the formation of an NNDR reserve.  Further details can be found in note 8.  The table below summarises the position on useable reserves (note brackets indicate a reduction in reserve):

 

Opening Balance

Net movement in year

Closing Balance at 31.3.21

 

£’000

£’000

£’000

General Fund balance

9,843

1,315

11,158

Earmarked General Fund Reserves

21,825

55,430

77,255

Housing Revenue Account

26,400

2,432

28,832

Earmarked Housing Revenue Account Reserves

12,759

(4,317)

8,442

Major Repairs Reserve

4,720

(943)

3,777

Capital Receipts Reserve

15,421

(9,896)

5,525

Capital Grants Unapplied

26,828

1,513

28,341

Total

117,796

45,534

163,330

 

The Council takes a risk based approach to the management of useable reserves and as part of setting the annual budget, the s151 Officer undertakes a review of risks and known commitments to calculate a minimum level for the General Fund reserve, and this was incorporated into the Council budget reports.  For 2020/21, it was determined that a level of £6.4m remained an appropriate figure.  However in light of the risks facing the council, in particular the scale of future reductions on top of those already made, it was also considered that headroom should remain above the minimum level.  This has therefore allowed a draw on reserves without the immediate breach of the minimum level.  Taking all this into account, the year-end balance was £6.9m.

The General Fund reserve balance of £11.1m in the table above also includes individual school balances of £4.2m.  These earmarked reserves are not for Council use and the level of reserve, in accordance with the Code, forms part of the Movement in Reserves Statement.  In compliance with the Education Reform Act 1988, individual school balances will be carried forward into 2020/21.   The increase in the general fund balance from £9.8m to £11.1m is due to an increase in these balances held by schools. 

The other usable reserves are set aside to cover future expenditure, including capital schemes.  Capital grants unapplied are grants received but not yet used and the capital receipts reserve holds the balance of receipts from the disposal of assets.  These funds are considered in the annual capital programme report presented to Executive and Full Council in February each year.

The Housing Revenue Account, Major Repairs Reserve and Earmarked Housing Revenue Reserves are considered as part of the business planning process and are held for future use on maintaining existing council homes, as well as investment in developing new build schemes.

Risks and opportunities

The single largest issue during the year has, of course, been the financial impact of the COVID-19 pandemic which has been significant and is likely to last for a number of years.  At the time of writing the vaccination programme is well underway and we are slowly returning to every day life.  However, a range of uncertainties remain, not least the continued recovery of the economy and the impact on the city of the changing way residents choose to live their lives.  At this stage we do not know whether previously seen levels of car parking and other income will return to pre pandemic levels or what the impact of long COVID will be on the cost of adult social care and mental health in particular. 

The longer term financial impact of the pandemic is as yet uncertain but it could potentially impact on interest and inflation rates, property and rental values as well as the local business economy.

Through the 2021/22 budget setting process the council continued to support economic growth, recognising the significant financial benefits in the form of retained business rates, and creation of jobs. Ensuring that there is a strong link between the capital and revenue budgets to support the delivery of council priorities is essential. The Capital Strategy sets out continuing significant capital investment, and details regarding some of the major capital schemes that will impact on the economy of the city.

At a time of significant reductions in grants and rising demand it is absolutely essential to set a prudent, stable and achievable budget. Many councils across the country are now experiencing very severe financial challenges. Whilst the challenges for this council are significant, through sound financial planning, and in year management, the council retains strong financial health. In response to a shift in demand led expenditure pressures and reductions in grant funding, the council is taking steps to enable itself, residents and communities to work together as equal partners to meet their future needs and priorities.

In terms of investment, the council spends a significant amount of its budget on protecting vulnerable people through its social care services.  In 2020/21 the net cost of adult social care was £48.5m, 38% of the council’s net budget.

The scale of future budget reductions required will inevitably affect all services and all residents to some extent. In considering what savings can be made we have taken long term approaches to the development of future services and this approach will help to protect the needs of the most vulnerable people in York.

The budget process adopted a risk based approach, and in particular prioritises statutory services to vulnerable adults and children, and key frontline services. Whilst all areas are asked to consider the long term implications of up to a 30% reduction in their net spend over a 4 year period, assessment of options, risks, and links with priorities took place in formulating the final proposals.  

Alongside the revenue budget, there are proposals for further major investment in a variety of schemes. These continue the council’s approach to prioritise investment in the economy, housing, transport, and to invest to save.  In addition, the council is continuing to make a significant investment in Information and Communications technology (ICT), recognising that the need for high quality technology will be crucial to delivering services in the most effective manner in the future, particularly in relation to continued remote working as a result of the pandemic.  

Key performance indicators

The Executive for the Council Plan (2019-23) agreed a core set of indicators to help monitor the council priorities and these provide the structure for performance updates in this report. The indicators have been grouped around the eight outcome areas included in the Council Plan

Further detailed performance information is provided on a quarterly basis via www.yorkopendata.org.uk

 

4.     HOUSING REVENUE ACCOUNT (HRA)

In April 2012 the Localism Act introduced a significant change to the way that council housing is financed by replacing the old HRA subsidy system with a new system of self-financing. This resulted in a number of changes which have had a significant impact on the Council’s HRA business plan and its stock retention strategy and involved the Council borrowing £122m to pay central government. This was a one off payment and in return the Council obtained greater independence and responsibility for the management of its housing stock as it now has the ability to actively manage the debt and its financial impact on the HRA. 

 

2020/21 saw the first year on rental increases following 5 years of 1% reduction year on year, with the CPI being slightly lower than that forecast in the HRA Business Plan.  However the COVID-19 pandemic brought its own challenges to the HRA with a spike in rent arrears seen following the first lockdown and lost rent through voids as the teams moved to working in a more Covid-secure way.  The 2019/20 underspend of £539k was carried forward to 2020/21 to deal with the pandemic and support the recovery plan across the HRA.

 

The 2020/21 HRA budget was a deficit of £825k and the year end position was an underspend of £3,257k.  Expenditure was significantly lower than budget, primarily because of delays in the capital programme resulting in a reduced revenue contribution of £2.3m.  Other significant variances included an underspend of £400k on repairs and maintenance, savings of £209k on general management, reduced income from rents of £223k and whilst the bad debt provision had increased, this was lower than the budget by £119k.

 

5.     BUSINESS RATES AND COUNCIL TAX

 

The main aim of the Business Rates scheme is to give Councils a greater incentive to grow business in their area.  However, it also increases financial risk to the Council through additional liabilities in respect of backdated appeals and risks from non-collection.

The Council is a member of the North and West Yorkshire Business Rates Pool. The pool is a voluntary arrangement which allows local authorities to retain locally a proportion of any growth in business rates income. The pool was established on 1st April 2020 with the aim of furthering economic development activities across the region. It is funded from “levies” on business rates growth which would otherwise be paid over to central government. In this scheme the pool retain 50% of retained business rates.

The operation of the pool is governed by a formal agreement between the authorities. The pool is led by a Joint Committee made up of the leaders from some of the authorities and is administered by Leeds City Council.  The Joint Committee is responsible for making decisions about the use of pool receipts.

At the end of 2020/21 the pool was revoked and a new pool of the Leeds City Region was established in 2021/22, retaining 50% of business rates.

As outlined in the introduction, the Collection Fund is an agent’s statement.  The Council is required by statute to maintain this separate fund for the collection and distribution of amounts due in respect of Council Tax and Business Rates.

The account shows a deficit on Council Tax and Business Rates at 31 March 2021. The impact of Covid-19 has reduced the amount billed and in year collection rates, which has contributed to the deficit position. This is covered in further detail in the Collection Fund notes section of the Accounts. 96.4% of the total sum collectable for 2020/21 Council Tax bills was received in the year. Similarly, the recovery on Business Rates was 90.0% of the 2020/21 bills.

 

 

 

6.     CAPITAL EXPENDITURE

 

Capital expenditure for the year totalled £92.397m (2019/20 £85.707m).  This was funded by capital receipts, internal borrowing, Government Grants and other contributions and revenue contributions.

 

A summary of where the money was spent in 2020/21 and how it was funded is shown below:

 

2020/21  Outturn

£m

Capital Expenditure

Children, Education & Communities

10.792

Health, Housing & Adult Social Care  – Adult Social Care

2.603

Health, Housing & Adult Social Care – Housing & Community Safety

35.622

Economy & Place – Transport, Highways & Environment

22.963

Economy & Place – Regeneration & Asset Management

16.727

Community Stadium

1.349

Corporate Schemes

0.354

IT Development Plan

1.987

Total expenditure

92.397

Funding

 

Prudential Borrowing

33.511

HRA & RTB Receipts

17.403

Capital Receipts

1.873

Grants and other contributions

25.860

Earmarked Reserves

13.750

Total Funding

92.397

 

Over the last year there has been significant progress made on a number of major projects.

The new Community Stadium was completed in late 2020 and the new facilities handed over from the builder to our site leisure operator Greenwich Leisure Limited (GLL). The facilities include an 8,000 seat stadium that will be the home of York City Football Club and York City Knights Rugby League Football Club. The site also houses a new gym, fitness studio and 25 metre swimming pool, and facilities for partners including the NHS, York Explore, York Against Cancer and Little Gym. The total cost of the scheme was £47.3m funded from s106 contributions council borrowing capital receipts and other contributions.

York Central is one of the largest brownfield sites in northern England. The 45ha development site will deliver: up to 2500 new homes; the potential for 6500 jobs, in grade A commercial office space; a transformation of the National Railway Museum with a new Central Gallery. The creation of new public spaces and community facilities directly linked to an improved Railway Station are also key project outcomes. The enabling works to prepare the site have now commenced. IP1 works are underway to demolish the former Unipart, Freightliner and Concrete Works buildings, site clearance and track lifting ahead of IP2 works to construct the access spine road and Boulevard, add the pedestrian deck to the Severus Bridges, build the access bridge over the East Coast Main Line( ECML) reroute utilities and undertake works to Millennium Green. Despite the challenges we still face with the ongoing Covid 19 pandemic, we are poised to finally deliver on the city’s long held ambition to develop York Central.

In August 2020 the Government announced the £77.1m would be provided to Homes England / Network Rail as landowners which is leading to a change in the delivery mechanism with the landowners taking a lead on the delivery of infrastructure. The council will continue to have a major role in the scheme not least as Planning Authority, Highways Authority but also as a landowner and funder through the Enterprise Zone.

In November 2020 Members agreed to the progressing of the Station Gateway scheme which includes the removal of Queen Street Bridge and rebuilding of the inner ring road, the removal of Parcel Square buildings to create space to relocate the Taxi rank, passenger drop-off and short stay car park and redevelopment of the areas to the front of the station to create improved public transport interchange facilities. The funding for the scheme £25.7m is primarily coming from the West Yorkshire Transport Fund and Transforming Cities Fund.

The council continues its Housing Delivery Programme with the first phase of Lowfield Green development completing and the first sales completing in Spring 2021. The schemes at Duncombe Barracks and Burnholme both received planning permission during the year and are due to be procured in 2021/22. These sites are proposed to be Passivhaus / net zero carbon and where 40% of the homes will be affordable.

The £20m Guildhall scheme continued to be redeveloped through 2020 despite the pandemic and is due to be completed in Autumn 2021. The project safeguards the future of the historic building whilst delivering a business venue to be managed by York University and to provide enhanced civic and community access to the new facilities.

The Castle Gateway scheme progresses with both the apartments at Castle Mills and Multi Storey Car Park at St George’s Field receiving planning permission during the year. A report will be taken forward in late summer 2021 to determine whether to proceed with the construction of the infrastructure and to determine the replacement of the public realm at Castle Car Park.

The programme also includes the dualling of the York Outer Ring Road between A19 Rawcliffe roundabout and A64 Hopgrove junction funded from DfT grant and the West Yorkshire Transport Fund. In 2020/21 the council undertook public consultation over the scheme and it is anticipated that the results of this will be considered by Executive in the summer prior to submission for planning. There has been concurrent activity on finalising the design, acquisition of land and updating the business case for funders

 

 

7.     TREASURY MANAGEMENT


The Council‘s year end treasury debt position for
2020/21 compared to 2019/20 is summarised in the table below:

 

Debt

31/03/2021

£000

31/03/2020

£000

Balance brought forward

257,483

245,432

Reversal of previous years carrying value

(1,018)

(2,967)

Add new loans taken

51,500

20,000

Less loans matured in year

(10,000)

(6,000)

Total debt as per Treasury Management Outturn Report

297,965

256,465

In year carrying value adjustment

1,123

1,018

Total Debt at 31st March

299,088

257,483

 

Nine new PWLB loans were taken during the year totalling £51.5m with interest rates on the loans ranging from 1.50% to 2.38% and maturities ranging from 10.31 years to 21.29 years.  Two PWLB loans totalling £10m were repaid during the year.

The Council maintained an average investment balance of £15.690m in 2020/21 compared to £48.699m in 2019/20.  The surplus funds earned an average rate of return of 0.17% in 2020/21 compared to 0.74% in 2019/20.  The average investment balance has decreased during the year as cash has been used to fund capital investment as outlined in the capital budget report approved by Council in February 2020.  

 

 

8.     PENSIONS

The cost of pensions to the Council continues to increase year on year and remains a major item of expenditure.  The Council is a member of the North Yorkshire Pension Fund (NYPF) and the last full actuarial valuation of the fund was carried out as at 31st March 2019.  This has been updated by independent actuaries to take account of the requirements of International Accounting Standard 19 in order to assess liabilities as at 31st March 2021. 

The Council’s overall pension liability is £157.293m (an increase from £142.400m in 2019/20). The overall defined benefit obligation has increased and this has been primarily due to a remeasurement of the fair value of assets following actuarial losses caused by changes in financial assumptions. Further details can be found in Note 49, Defined Benefit Pension Schemes

 

9.     NON CURRENT ASSETS

The council holds various non current assets which are categorised as follows:

·         property, plant and equipment (PPE) – this includes council dwellings, land & buildings, infrastructure assets, community assets, surplus assets, assets under construction and tangible plant, vehicle and equipment assets

·         intangible assets

·         heritage assets

·         investment property

·         assets held for sale

The accounting standard IFRS 13 Fair Value Measurement was adopted by the council in 2015/16.  In accordance with this accounting standard, the council’s Investment Properties and Surplus Assets are valued at fair value and measured at their highest and best use.  Assets Held for Sale are measured at the lower of the carrying value on reclassification to this category, or the fair value less costs to sell.  The fair value measurements are carried out in accordance with IFRS 13.

All other property, plant and equipment assets, with the exception of assets under construction, community assets and infrastructure assets, are carried at current value.  Further details of the measurement bases used are provided in the accounting policies section.  Infrastructure and community assets are measured at depreciated historic cost, whilst assets under construction are measured at historic cost.  Heritage assets are measured at market value where this exists, or replacement cost.  Intangible assets are measured initially at cost and then usually carried at amortised cost.

The Valuation techniques adopted for each category of non current assets are in accordance with the requirements set out in the CIPFA Code of Practice.

The 2020/21 balance sheet value of the council’s non current assets (including current assets held for sale) is £1,267.227m.  This has increased by £64.282m from the 2019/20 value of £1,202.945m.

Capital enhancements to the value of £82.238m were made to these assets during 2020/21 and Assets to the value of £8.156m were disposed of during the year.  

Non current assets were depreciated by £23.105m during 2020/21.  This figure includes amortisation of intangible assets.

Valuations on the council’s properties are carried out by qualified valuers within the council’s Asset and Property Management Team.  A revaluation programme exists which set out when each category of Asset will be valued and during 2020/21 this programme included car, cycle and coach parks, commercial properties, and Stray operational and non-operational properties.  In addition, Allerton Waste Recycling Plant was revalued by external valuers during 2020/21, providing values for the land, buildings and component parts.

The council’s housing stock normally has a full revaluation every 5 years, and desktop revaluations are undertaken on the interim years.  The last full revaluation was undertaken in 2017/18.  In 2020/21, a desktop revaluation was undertaken.  The value of the council’s housing stock decreased by £0.426m as a result of the desktop revaluation this year.

The HRA has increased the type of housing offered with the Shared Ownership Programme.  In total, 58 properties have been purchased to date, including 27 in 2020/21.  As at 31st March 2021, 57 properties have been sold, with customers purchasing on average a 60% share of their property.  In addition, one customer has now purchased a second share in their property.  The budget for this scheme is modelled on 50% of each home being funded by the HRA and resources from Homes England funding. The matched funding is received as a capital receipt when the purchaser buys an equity share of the property, as such the receipts from the sale of the shared ownership homes are required to be reinvested back in to programme.  The budget for this programme is currently £2.169m.

The revaluation of some investment properties led to a decrease in their valuation of £1.379m.  This is reflected in note 14 and in the Comprehensive Income and Expenditure statement.

The council’s heritage assets increased in value by £0.035m during 2020/21.  This is mainly due to an increase in the annual insurance valuations.  This increase is reflected in note 13 and also in note 26.

 

10.  COVID-19 ISSUES

For the whole of 2020/21 the UK was either in a national lockdown or under severe restrictions which has had a significant negative impact on local residents and businesses.  At the time of writing some restrictions remain and this brings inevitable financial consequences, such as a loss of income from services and cost pressures to support both the ongoing response and to accelerate economic recovery from the pandemic.

Whilst the national vaccination programme is well underway and the government has published a roadmap for recovery, there remains significant uncertainty as to whether the key dates will trigger a relaxation of restrictions as expected or if there will be any further waves of the virus or its variants.

The Council has therefore had to continue to be prepared for a range of possible scenarios with strong public health advice being at the heart of everything we do.

During the year the Council approved a 1 year Recovery and Renewal Strategy, along with a 1 year Transport and Place Strategy, Business Support Plan, Skills and Employment Plan and a Tourism Marketing Plan.

 

The Recovery and Renewal Strategy sets the following principles upon which we will build our response:

a)    Prioritise the health and wellbeing of our residents, against the immediate threat of coronavirus and the consequences of changes to the way we live. Public Health guidance will be paramount in all the decisions we make.

b)    Support the economic recovery of the City, helping to create a strong, sustainable and inclusive economy for the future. Learning lessons from the challenges of coronavirus, promote a system that utilises the strengths of our city and region to the benefit of all York’s residents and businesses.

c)     Protect and prioritise the City’s environment and reinforce our work to mitigate and adapt to climate change.

d)    Pursue improvements in service delivery where they have been identified as part of the Response phase, creating a more efficient and resilient system.

e)    Reinforce and restore public confidence in the resilience of public agencies and resilience to future challenges and emergencies.

 

The pandemic has altered how we live and work, with working from home being a new experience for many employees across the UK.  Many have enjoyed some of the benefits it has to offer; from increased flexibility and autonomy to reduced travel time. Anecdotal evidence from Make it York suggests that the vast majority of employees and company leaders recognise the need for a productive, collaborative space, away from home, to reconnect with colleagues and help build and sustain an inclusive company culture. With the role of the office becoming more important, we expect to see an influx of employees return, as soon as the government permits it. However, only a small proportion of workers are likely to return to the office five days a week.

 

This increased demand for flexibility – in time, place and space, plus the ongoing demand for talent, will mean employers must offer flexible arrangements and diversified workspace if they want to attract and retain the best talent. We have seen this already locally with the reconfiguring of Westminster Place, York Business Park, to a more flexible leasing arrangement and Hiscox moving to use their York premises as a hub for staff returning to the office on a part time basis and continuing to work part of the week remotely. This enables them to recruit from a wider catchment area. Siemens have adopted a similar practice, taking a smaller space to allow staff to work part-time remotely. We expect to see other firms in the city doing the same, embracing a hybrid mix of office and home working.

 

Our own commercial estate is currently close to capacity, with strong demand for small office, studio and workshop space. As larger occupiers look to reduce their office footprint and switch to more flexible arrangements, the existing quantum of business space across the city will be able to accommodate more businesses. York continues to attract plaudits as a great city to live and work in, and we can look towards the post-Covid recovery with some optimism. Office space in York continues to be sought-after, and the range of businesses looking at our city as a potential location continues to expand.

 

Recognising the potential for staff to begin to return to office-based working over the coming months, the council is looking at how this can be done safely and efficiently, whilst retaining benefits of flexible working where it makes sense to do so. The safety of staff and residents will remain paramount.

 

At the end of April, the High Court dismissed a challenge which would have allowed Councils to continue to hold meeting virtually. The conclusion was that parliament should determine this particular element of policy rather than the courts. This meant that, from 6 May 2021, public council meetings have had to be held in person and the council has delivered this in a Covid-safe way. The Government is also consulting on this, with the potential to legislate in future, should they decide it of benefit to permit virtual meetings in future


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENT AUDITORS REPORT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent auditor’s report to the members of City of York Council

Report on the audit of the financial statements

 

Opinion on the financial statements

We have audited the financial statements of City of York Council (“the [Council]) for the year ended 31 March 2021, which comprise the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet, the Cash Flow Statement, Housing Revenue Account, Collection Fund and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21.

In our opinion, the financial statements:

·         give a true and fair view of the financial position of the Council as at 31st March 2021 and of its expenditure and income for the year then ended; and

·         have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities section of our report. We are independent of the Council in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Chief Financial Officer’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Council's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Chief Financial Officer with respect to going concern are described in the relevant sections of this report.

Other information

The Chief Financial Officer is responsible for the other information. The other information comprises the Annual Governance Statement and information included in the Statement of Accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

 

Responsibilities of the Chief Financial Officer for the financial statements

As explained more fully in the Statement of the Chief Financial Officer’s Responsibilities, the Chief Financial Officer is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21, and for being satisfied that they give a true and fair view. The Chief Financial Officer is also responsible for such internal control as the Chief Financial Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Chief Financial Officer is required to comply with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 and prepare the financial statements on a going concern basis on the assumption that the functions of the Council will continue in operational existence for the foreseeable future. The Chief Financial Officer is responsible for assessing each year whether or not it is appropriate for the Council to prepare its accounts on the going concern basis and disclosing, as applicable, matters related to going concern.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the Council, we identified that the principal risks of non-compliance with laws and regulations related to the Local Government Act 2003 (and associated regulations made under section 21), the Local Government Finance Acts of 1988, 1992 and 2012, and the Accounts and Audit Regulations 2015, ‘the Local Government and Housing Act 1989’ and we considered the extent to which non-compliance might have a material effect on the financial statements.

We evaluated the Chief Financial Officer’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimate and significant one-off or unusual transactions.

 

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:

·         discussing with management and the Audit and Governance Committee the policies and procedures regarding compliance with laws and regulations;

·         communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and

·         considering the risk of acts by the Council which were contrary to applicable laws and regulations, including fraud.

 

Our audit procedures in relation to fraud included but were not limited to:

·         making enquiries of management and the Governance and Audit Committee on whether they had knowledge of any actual, suspected or alleged fraud;

·         gaining an understanding of the internal controls established to mitigate risks related to fraud;

·         discussing amongst the engagement team the risks of fraud; and

·         addressing the risks of fraud through management override of controls by performing journal entry testing.

 

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management and the Governance and Audit Committee. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

We are also required to conclude on whether the Chief Financial Officer’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. We performed our work in accordance with Practice Note 10: Audit of financial statement and regularity of public sector bodies in the United Kingdom, and Supplementary Guidance Note 01, issued by the National Audit Office in April 2021. 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

 

Report on the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources

Matter on which we are required to report by exception

We are required to report to you if, in our opinion, we are not satisfied that the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2021.

We have not completed our work on the Council’s arrangements. On the basis of our work to date, having regard to the guidance issued by the Comptroller and Auditor General in April 2021, we have identified the following significant weaknesses in arrangements for the year ended 31 March 2021.

 

 

 

 

 

Significant weaknesses in arrangements

Recommendations

We issued a Public Interest Report on 19 April 2021 including recommendations to address the following significant weaknesses we identified in the Council’s arrangements in respect of the severance of the former Chief Executive:

·         elements of the exit package, described in both the business case considered by Members and in the financial statements as contractual, were paid at the discretion of the Council and were not contractual entitlements;

·         the business case considered by Members did not include sufficient facts, both in terms of financial analysis and background information, to make an informed decision;

·         decision records that document the use of public funds under the scheme of delegation were not maintained; and 

·         safeguards to prevent conflicts of interest and demonstrate the Council applies the principles and values of sound governance were not applied.

  • The Council should adopt and apply appropriate standards for business case preparation in relation to exit and pension discretions to improve information supporting decisions.
  • Decision notes should be maintained that document the factors that explain the case for the use of public funds under the scheme of delegation such as where payments exceed contractual entitlements.
  • The Council should review the design of its governance policies and procedures to manage conflicts of interest (including self-interest threats). This should include updating the Council’s constitution and scheme of delegation.
  • The Council should ensure all members fully understand the requirements of the Code of Conduct in relation to declaration of interests.
  • The Council should review its policies and procedures to reflect Government guidance in the use of non-disclosure agreements.

 

 

We will report the outcome of our work on the Council’s arrangements in our commentary on those arrangements within the Auditor’s Annual Report. Our audit completion certificate will set out any further matters which we are required to report by exception.

Responsibilities of the Council

The Council is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

Auditor’s responsibilities for the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We are required under section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

 

We have undertaken our work in accordance with the Code of Audit Practice, having regard to the guidance issued by the Comptroller and Auditor General in April 2021.

Matters on which we are required to report by exception under the Code of Audit Practice

We are required by the Code of Audit Practice to report to you if:

·         we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;

·         we make a recommendation under section 24 of the Local Audit and Accountability Act 2014; or

·         we exercise any other special powers of the auditor under sections 28, 29 or 31 of the Local Audit and Accountability Act 2014.

 

We have nothing to report in these respects.

Use of the audit report

This report is made solely to the members of City of York Council, as a body, in accordance with part 5 of the Local Audit and Accountability Act 2014 and as set out in paragraph 44 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the members of the Councilthose matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the members of the Council, as a body, for our audit work, for this report, or for the opinions we have formed.

Delay in certification of completion of the audit

We cannot formally conclude the audit and issue an audit certificate until we have completed:

·         the work necessary to issue our assurance statement in respect of the Council’s Whole of Government Accounts consolidation pack; and

·         the work necessary to satisfy ourselves that the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

 

Mark Kirkham

Partner
For and on behalf of Mazars LLP

5th Floor

3 Wellington Place

Leeds

LS1 4AP

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF ACCOUNTS


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF RESPONSIBILITIES

 

 

 


 

1.   THE COUNCIL’S RESPONSIBILITIES


The Council is required to:

·       Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs.  In this Council that officer is the Chief Finance Officer Services (section 151 officer).

·       Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

·       Approve the Statement of Accounts.

 

2.   THE SECTION 151 OFFICER’S RESPONSIBILITIES


The
Section 151 officer is responsible for the preparation of the Council’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Council Accounting in the United Kingdom (the Code).

In preparing this Statement of Accounts, the
Section 151 officer has:

 

·         Selected suitable accounting policies and then applied them consistently

·         Made judgements and estimates that were reasonable and prudent

·         Complied with the code.

The Section 151 officerhas also:

 

·         Kept proper accounting records that were up to date

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


3.   CERTIFICATION OF THE ACCOUNTS


I certify that the Statement of Accounts presents fairly the position of the City of York Council at 31 March 2021 and its income and expenditure for the year ended 31 March 2021.  These audited accounts replace the un-audited statement of accounts previously published on 14 June 2021

 

 

 

              Signed ............................................                                         Dated  

              Debbie Mitchell, ACMA

              Chief Finance Officer

4.   APPROVAL OF THE ACCOUNTS


I certify that the Statement of Accounts has been approved by a resolution of the Audit & Governance Committee of City of York Council in accordance with the Accounts and Audit Regulations 2015.

The Statement of Accounts was approved by Audit and Governance Committee on:

 

            Signed .........................................................                                   Dated

Cllr  Pavlovic

            Chair, Audit and Governance Committee


 

 

 

 

 

 

 

 

 

 

 

 

MAIN FINANCIAL STATEMENTS

 

 

                                                                   

 


Comprehensive Income and Expenditure Statement

2020/21

2019/20

Gross

Net

Gross

Net

Exp.

Income

Exp.

Exp.

Income

Exp.

Restated

 

Note

£000's

£000's

£000's

 

£000's

£000's

£000's

Service Costs

Customer and Corporate Services

81,480

(52,962)

28,518

81,698

(48,585)

33,113

Childrens and Education Services

128,614

(95,284)

33,330

119,263

(92,450)

26,813

Communities and Equalities

9,431

(2,879)

6,552

9,195

(3,194)

6,001

Housing Revenue Account

33,159

(37,181)

(4,022)

28,335

(39,028)

(10,693)

Adult Social Care

106,101

(40,884)

65,217

95,425

(32,053)

63,372

Housing and Community Safety

16,318

(13,295)

3,023

14,885

(9,991)

4,894

Public Health

8,416

(14,448)

(6,032)

9,721

(9,187)

534

Economy and Place

63,937

(26,349)

37,588

65,536

(45,086)

20,450

Cost of Services

 

447,456

(283,282)

164,174

 

424,058

(279,574)

144,484

Other Operating Expenditure

(9)

(363)

7,392

Financing and Investment Income and Expenditure

(10)

        14,251

        12,184

Taxation and Non-Specific Grant Income

(11)

(184,390)

(162,673)

 

 

 

 

 

 

 

(Surplus)/Deficit on Provision of Services

(30)

 

 

(6,328)

 

 

 

1,387

Revaluation (gains) on non current assets

(26)

(17,858)

(93,687)

Impairment losses on non current assets

  -       

  -       

Surplus or deficit from investments in equity instruments designated at fair value through other comprehensive income

(16)

275

236

Re-measurement of net defined benefit/ liability

(49)

(60)

(11,367)

 

 

 

 

 

 

Other Comprehensive Income and Expenditure

 

 

 

(17,643)

 

 

 

(104,818)

Total Comprehensive Income and Expenditure

 

 

 

(23,971)

 

 

 

(103,431)

 

This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practice, rather than the amount to be funded from taxation.  Councils raise taxation to cover expenditure in accordance with regulations and this may be different from the accounting cost.  The taxation position is shown in the Movement in Reserves Statement.

 


Movement in Reserves Statement

 

This statement shows the movement in the year on the different reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves and other unusable reserves. 

 

2020/21

General Fund Balance

Earmarked General Fund Reserves

Housing Revenue Account

Earmarked HRA Reserves

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Total Usable Reserves

Unusable Reserves

Total Authority Reserves

Note

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

Balance at 1 April 2020

 

(9,843)

(21,825)

(26,400)

(12,759)

(4,720)

(15,421)

(26,828)

(117,796)

(646,855)

(764,651)

Reporting of Schools Budget Deficit to new Adjustment Account at 1 April 2020

(4,865)

(4,865)

4,865

Restated balance at 1 April 2020

(9,843)

(26,690)

(26,400)

(12,759)

(4,720)

(15,421)

(26,828)

(122,661)

(641,990)

(764,651)

Movement in Reserves during 2020/21

(Surplus) /Deficit on Provision of Services

(5,353)

  -       

(975)

  -       

  -       

  -       

  -       

(6,328)

  -       

(6,328)

Other Comprehensive Income and Expenditure movement

  -       

  -       

  -       

  -       

  -       

  -       

  -       

  -       

(17,643)

(17,643)

Total Comprehensive Expenditure and Income

 

(5,353)

  -       

(975)

  -       

  -       

  -       

  -       

(6,328)

(17,643)

(23,971)

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments between accounting basis & funding basis under regulations

7

(46,527)

  -       

2,860

  -       

943

9,896

(1,513)

(34,341)

34,341

  -       

 

 

 

 

 

 

 

 

 

 

 

 

Net Increase/Decrease before Transfers to Earmarked Reserves

 

(51,880)

  -       

1,885

  -       

943

9,896

(1,513)

(40,669)

16,698

(23,971)

Transfers to/from Earmarked Reserves

8

50,565

(50,565)

(4,317)

4,317

  -       

  -       

  -       

  -       

  -       

  -       

Increase/Decrease in Year

 

(1,315)

(50,565)

(2,432)

4,317

943

9,896

(1,513)

(40,669)

16,698

(23,971)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 March 2021 carried forward

(11,158)

(77,255)

(28,832)

(8,442)

(3,777)

(5,525)

(28,341)

(163,330)

(625,292)

(788,622)

 

 

 

2019/20:

2019/20

General Fund Balance

Earmarked General Fund Reserves

Housing Revenue Account

Earmarked HRA Reserves

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Total Usable Reserves

Unusable Reserves

Total Authority Reserves

Note

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

Balance at 1 April 2019

(10,115)

(35,475)

(24,497)

(17,310)

(4,346)

(18,858)

(27,297)

(137,898)

(523,322)

(661,220)

Movement in Reserves during 2019/20

(Surplus) /Deficit on Provision of Services

8,517

  -       

(7,130)

  -       

  -       

  -       

  -       

1,387

  -       

1,387

Other Comprehensive Income and Expenditure movement

  -       

  -       

  -       

  -       

  -       

  -       

  -       

  -       

(104,818)

(104,818)

Total Comprehensive Expenditure and Income

 

8,517

  -       

(7,130)

  -       

  -       

  -       

  -       

1,387

(104,818)

(103,431)

Adjustments between accounting basis & funding basis under regulations

7

5,405

  -       

9,778

  -       

(374)

3,437

469

18,715

(18,715)

  -       

Net Increase/Decrease before Transfers to Earmarked Reserves

 

13,922

  -       

2,648

  -       

(374)

3,437

469

20,102

(123,533)

(103,431)

Transfers to/from Earmarked Reserves

8

(13,650)

13,650

(4,551)

4,551

  -       

  -       

  -       

  -       

  -       

  -       

Increase/Decrease in Year

 

272

13,650

(1,903)

4,551

(374)

3,437

469

20,102

(123,533)

(103,431)

Balance at 31 March 2020 carried forward

(9,843)

(21,825)

(26,400)

(12,759)

(4,720)

(15,421)

(26,828)

(117,796)

(646,855)

(764,651)

 


 

 

Split of General Fund Balance between Schools and GF

31-Mar-21

31-Mar-20

 

 

 

 

 

 

 

 

£000's

£000's

Amount of General Fund Balance held by governors under schemes to finance schools

(4,217)

(2,274)

Amount of General Fund Balance generally available  for new expenditure

(6,941)

(7,569)

Total General Fund Balance

 

 

 

 

 

 

 

(11,158)

(9,843)

 

 

 


Balance Sheet

Note

31 March

31 March

2021

2020

 

 

£000's

 

£000's

Property, Plant and Equipment

(12)

1,098,814

1,038,906

Investment Property

(14)

65,149

60,260

Intangible Assets

(15)

2,880

3,060

Heritage Assets

(13)

99,594

99,559

Long - Term Investments

(16)

4,996

5,271

Long - Term Debtors

(20)

5,084

 

5,170

LONG - TERM ASSETS

 

1,276,517

 

1,212,226

Assets Held for Sale

(22)

790

1,160

Inventories

(17)

412

417

Short-Term Debtors

(19)

91,004

49,378

Cash and Cash Equivalents

(21)

9,254

11,430

CURRENT ASSETS

 

101,460

 

62,385

Short-Term Borrowing

(16) / (52)

(8,750)

(11,698)

Provisions due to be settled within 12 months

(24)

(867)

(1,192)

Short-Term Creditors

(23)

(81,450)

(45,940)

Other Short-Term Liabilities

(23)

(4,749)

(4,628)

CURRENT LIABILITIES

 

(95,816)

 

(63,458)

Provisions

(24)

(2,157)

(13,395)

Long-Term Borrowing

(16) / (52)

(290,083)

(245,489)

Other Long-Term Liabilities

(16)

(44,006)

(45,218)

Liability related to Defined Benefit Pension Scheme

(26) / (49)

(157,293)

(142,400)

LONG-TERM  LIABILITIES

 

(493,539)

 

(446,502)

NET ASSETS

 

788,622

 

764,651

RESERVES

Usable Reserves

Capital Receipts Reserve

(5,525)

(15,421)

General Fund Balance

(11,158)

(9,843)

Housing Revenue Account Reserve

(28,832)

(26,400)

Major Repairs Reserve

(3,777)

(4,720)

Capital Grants Unapplied

(28,341)

(26,828)

Earmarked Reserves

(8)

(85,697)

(34,584)

 

MIRS

(163,330)

 

(117,796)

Unusable Reserves

Revaluation Reserve

(399,087)

(386,182)

Capital Adjustment Account

(434,150)

(406,525)

Financial Instruments Adjustment Account

1,225

1,309

Financial Instruments Revaluation Reserve

(2,376)

(2,651)

Dedicated Schools Grant Adjustment Account

9,940

0

Pensions Reserve

157,293

142,400

Collection Fund Adjustment Account

38,326

1,274

Employee Benefit Adjustment Account

 

3,537

3,520

 

(26)

(625,292)

 

(646,855)

 

 

TOTAL RESERVES

 

(788,622)

 

(764,651)

 

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council.  The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council


Cash flow Statement

Note

2020/21

2019/20

Restated

 

 

 

£000's

 

£000's

Net (Surplus)/Deficit on the provision of Services

(6,328)

1,387

Adjustments to the Net (Surplus)/Deficit on the Provision of Services for non-cash movements

(27)

(32,215)

(34,458)

Adjustments for items included in the Net (Surplus)/Deficit on the Provision of Services that are investing and financing activities

(27)

 

37,869

 

41,915

Net Cash Flows from Operating Activities

(674)

8,805

Investing Activities

(28)

43,343

34,947

Financing Activities

(29)

 

(40,493)

 

(13,826)

Net (Increase)/Decrease in Cash and Cash Equivalents

2,176

29,926

Cash and Cash Equivalents at the beginning of the reporting period

(21)

(11,430)

(41,356)

Cash and Cash Equivalents at the end of the reporting period

(21)

 

(9,254)

 

(11,430)

 

This statement shows the changes in cash and cash equivalents of the Council during the reporting period.

 

 

 

 

 

 

 


                                   

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE MAIN FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 


1.     ACCOUNTING POLICIES

 

 

 I.    General

The Statement of Accounts summarises the Council’s transactions for the 2020/21 financial year and its position at the year-end of 31 March 2021.  The Council is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2015, which those Regulations require to be prepared in accordance with proper accounting practices.  These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 supported by International Financial Reporting Standards (IFRS) and statutory guidance issued by government.

The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

II.    Accruals of Income and Expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received.  In particular:

·       Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when the goods or services are transferred to the service recipient in accordance with the performance obligations in the contract.

·       Supplies are recorded as expenditure when they are consumed.  Where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.

·       Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made.

·       Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.

·       Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet.  Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.

 

 

III.   Cash and Cash Equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.  Cash equivalents are highly liquid investments that mature in no more than 30 days or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management.

IV.    Exceptional Items

When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Council’s financial performance.

 

 

V.   Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors

Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, ie in the current and future years affected by the change and do not give rise to a prior period adjustment.

In 2020/21 two none material changes were made to prior year 2019/20 figures on the notes set out below. One was a presentational adjustment and another amending category lines. Neither change were material errors, nor did they change the overall total figures on the notes listed. The amendments were made to ensure consistency and comparability with current year.

A change and restatement for prior year has been made to the Debtor and Creditor figures affecting the Financial Instruments within Notes 16, 19, 23 and 52. The overall Debtor and Creditor totals have not changed but the categorisation of Collection Fund Debtors and Creditors within these totals has been changed so they are shown in ‘Other Receivables’ / ‘Other Payables’ rather than ‘Trade Receivables’ / ‘Trade Payables’, as they are non-contractual, non-exchange transactions as per the Code guidance 7.1.2.26. This is to be consistent with the 20/21 presentation of figures.

A change and restatement for prior year has been made for the presentation of the Financial Instruments revaluation figure in the Comprehensive Income and Expenditure Statement (CIES). The Financial Instruments revaluation figure reflects the gain or loss of financial assets measured at fair value, (as shown in Note 26 Financial Instruments Revaluation Reserve and Note 16 Financial Instruments), and is now shown in the CIES within Other Comprehensive Income and Expenditure under ‘Surplus or deficit from investments in equity instruments designated at fair value through other comprehensive income’, rather than within Surplus/Deficit on Provision of Services under ‘Financing and Investment Income and Expenditure’. The presentation of the Cash Flow Statement, Note 10 Financing and Investment Income and Expenditure, and Note 27 Cash Flow Statement – Operating Activities, have also been updated and restated to reflect the presentational change. This is to be consistent with the code guidance 7.2.6.5 and the 20/21 presentation of figures

Changes in accounting policies are made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or financial performance.  Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied.

Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

VI.    Charges to Revenue for Non-Current Assets

Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year:

·       depreciation attributable to the assets used by the relevant service,

·       revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off,

·       amortisation of intangible non-current assets attributable to the service.

The Council is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisations.  However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis determined by the Council in accordance with statutory guidance.  Depreciation, revaluation and impairment losses and amortisations are therefore replaced by the Minimum Revenue Provision (MRP) contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

VII.    Employee Benefits

Benefits Payable during Employment

Short-term employee benefits are those due to be settled within 12 months of the year-end.  They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits (eg cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Council.  An accrual is made for the cost of holiday entitlements (or flexi-leave) earned by employees but not taken before the year-end which employees can carry forward into the next financial year.  The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit.  The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination Benefits

Termination benefits are amounts payable as a result of a decision by the Council to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the appropriate service in the Comprehensive Income and Expenditure Statement at the earlier of when the authority can no longer withdraw the offer of those benefits or when the authority recognises costs for a restructuring.

Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards.  In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end.

Post Employment Benefits

Employees of the Council are members of three separate pension schemes:

·       The Teachers’ Pension Scheme, administered by Capita Teachers’ Pensions on behalf of the Department for Education (DfE).

·       The NHS Pensions Scheme, administered by NHS Pensions.

·       The Local Government Pensions Scheme, administered by North Yorkshire County Council.


All schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Council. 

However, the arrangements for the teachers’ and NHS schemes mean that liabilities for these benefits cannot ordinarily be identified specifically to the Council.  These schemes are therefore accounted for as if they were a defined contribution scheme and no liability for future payments of benefits is recognised in the Balance Sheet.  The Children’s and Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to Teachers’ Pensions in the year. The Public Health Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to the NHS Pension Scheme in the year.

The Local Government Pension Scheme

The Local Government Scheme is accounted for as a defined benefits scheme:

 

·       The liabilities of the North Yorkshire Pension Fund (NYPF) attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method – ie an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc, and projections of projected earnings for current employees.  Further information can be found in NYPF's Annual Report that is available upon request from Financial Services, County Hall, Northallerton, DL7 8AL.

·       Liabilities are discounted to their value at current prices, using a discount rate of 2.1% as at 31st March 2021.    

·       The assets of the NYPF attributable to the Council are included in the Balance Sheet at their fair value:

-        quoted securities – current bid price

-        unquoted securities – professional estimate

-        unitised securities – current bid price

-        property – market value.

·       The change in the net pensions liability is analysed into the following components:

-        current service cost – the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked

-        past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement

-        net interest on the defined benefit liability ie net interest expense for the Council  – the change during the period in the net defined benefit liability that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement.  This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability at the beginning of the period, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments.

-        Re-measurement comprising

o    the return on plan assets – excluding amounts included in net interest on the net defined benefit liability charged to the Pensions Reserve as Other Comprehensive Income and Expenditure

o    actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Pensions Reserve

o    contributions paid to the NYPF – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. 

In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards.  In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end.  The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees.

Discretionary Benefits

The Council also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements.  Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the NYPF.

VIII.   Events After the Balance Sheet Date

 

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue.  Two types of events can be identified:

·       those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events

·       those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.


Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts

 

 


IX.    Fair Value Measurement

 

The Council measures some of its non-financial assets such as surplus assets, investment properties and assets held for sale and some of its financial instruments at fair value at each reporting date.  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

a)    In the principal market for the asset or liability, or

b)    In the absence of a principal market, in the most advantageous market for the asset or liability.

The Council measures the fair value of an asset or liability using the assumptions that market participants would use when pricing the asset or liability, assuming the market participants act in their economic best interest.

When measuring the fair value of a non-financial asset, the Council takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Council uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the Council’s financial statements are categorised within the fair value hierarchy, as follows:

·         Level 3 – unobservable inputs for the asset or liability

X.   Financial Instruments

 

In the 2018/19 Statement of Accounts the Council transitioned to the accounting standard IFRS 9 Financial Instruments which introduced new classifications and measurement of financial assets along with a new model for impairing financial assets based on expected credit loss. The accounting policy that follows recognises the IFRS 9 standard and further information detailing the judgements and classifications for the Council’s Financial Instrument assets can be found in note 16.

 

Financial Liabilities

Financial liabilities are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument. Such instruments are initially measured at fair value and are carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised.

 

For the majority of the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest); and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement.

 

Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate.

 

Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain or loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.

 

For loans taken out at concessionary rates, either interest free or at less than prevailing market rates, the effective interest rate is calculated. The value of the loan is discounted using a prevailing market rate at the date of drawdown to reflect the benefit obtained by the Council. The fair value of the loan is taken to the Financial Instruments Adjustment Account and amortised based on the assumed interest rate per annum. The balance on the Financial Instruments Adjustment Account is written down annually in line with the loan amortisation until the value of the loan at redemption equals the value of the loan originally drawn down. Notional interest is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement reflecting the prevailing market rate used to discount the loan, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. The reconciliation of amounts between the Comprehensive Income and Expenditure Statement and Balance Sheet is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.

Financial Assets

Financial assets are classified based on a classification and measurement approach that reflects the business model for holding the financial assets and their cashflow characteristics. There are three main classes of financial assets measured at:

 

·       Amortised Cost

·       Fair Value through Profit or Loss (FVPL), and

·       Fair Value through Other Comprehensive Income (FVOCI)

The authority’s business model is to hold investments to collect contractual cash flows. Financial assets are therefore classified as amortised cost, except for those whose contractual payments are not solely payment of principal and interest (i.e. where the cash flows do not take the form of a basic debt instrument).

Financial Assets Measured at Amortised Cost

Financial assets measured at amortised cost are recognised on the Balance Sheet when the authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the financial assets held by the authority, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement.

For loans made at less than market rates (soft loans) a loss is recorded in the Comprehensive Income and Expenditure Statement (debited to the appropriate service) for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal.

Interest is credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement at a marginally higher effective rate of interest than the rate receivable, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. Statutory provisions require that the impact of soft loans on the General Fund Balance is the interest receivable for the financial year – the reconciliation of amounts debited and credited to the Comprehensive Income and Expenditure Statement to the net gain required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.

 

Any gains and losses that arise on the derecognition of an asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.


Expected Credit Loss Model

The authority recognises expected credit losses on all of its financial assets held at amortised cost, either on a 12-month or lifetime basis. The expected credit loss model also applies to lease receivables and contract assets. Only lifetime losses are recognised for trade receivables (debtors) held by the authority.

Impairment losses are calculated to reflect the expectation that the future cash flows might not take place because the borrower could default on their obligations. Credit risk plays a crucial part in assessing losses. Where risk has increased significantly since an instrument was initially recognised, losses are assessed on a lifetime basis. Where risk has not increased significantly or remains low, losses are assessed on the basis of 12-month expected losses.

 

For financial assets carried at amortised cost impairment and expected credit loss is netted off from the gross value of the asset to reduce its carrying amount in the balance sheet and a charge is made to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement.

Financial Assets Measured at Fair Value through Profit of Loss

Financial assets that are measured at FVPL are recognised on the Balance Sheet when the authority becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Fair value gains and losses are recognised as they arrive in the Surplus or Deficit on the Provision of Services.

Fair value of an asset is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The fair value measurements of the financial assets are based on the following techniques:

·       instruments with quoted market prices – the market price

·       other instruments with fixed and determinable payments – discounted cash flow analysis.

 

The inputs to the measurement techniques are categorised in accordance with the following three levels:

·       Level 1 inputs – quoted prices (unadjusted) in active markets for identical assets that the authority can access at the measurement date.

·       Level 2 inputs – inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

·       Level 3 inputs – unobservable inputs for the asset.

 

Any gains and losses that arise on the derecognition of the asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

 

Fair Value through Other Comprehensive Income

 

Financial assets that are measured at FVOCI are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Fair value gains and losses are recognised as they arise in other comprehensive income.

 

IFRS 9 permits equity instruments not held for trading to be considered for designation to Fair Value through Other Comprehensive Income. The decision to designate is based on which accounting treatment and presentation of fair value best reflects the Council’s reason for investment and the business model for holding the investment. Designation can only be made at initial recognition and the decision to designate an equity instrument is irrevocable.

 

For equity instruments designated at Fair Value through Other Comprehensive Income the Council holds these at fair value on the Balance Sheet. The fair value measurements of the financial assets are based on the following techniques:

·       instruments with quoted market prices – the market price

·       other instruments with fixed and determinable payments – discounted cash flow analysis

·       equity shares with no quoted market prices – IFRS 13 Adjusted Net Asset Value method.

 

The fair value is measured annually with increases and decreases credited or debited to Other Comprehensive Income and Expenditure in the Comprehensive Income and Expenditure Statement. In order that gains and losses from movements in fair value are not reflected in the General Fund Balance, the movement in fair value is balanced off in the Financial Instruments Revaluation Reserve Account in the Movement in Reserves Statement.

When an equity instrument is derecognised the fair value is reversed out of the Financial Instruments Revaluation Reserve Account and transferred to the General Fund balance.

Further information on designated equity at Fair Value though Other Comprehensive Income can be found in the Financial Instruments section of the Statement of Accounts under note 16.

 

 

XI.    Government Grants and Contributions


Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that:

Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied
Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor.

Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors.  When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income (non-ring fenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.

Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement.  Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied reserve.  Where it has been applied, it is posted to the Capital Adjustment Account.  Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

XII.    Heritage Assets

The Council’s Heritage Assets are grouped into four main areas:

(a)   Heritage properties

(b)   Art Collection

(c)   Mansion House Collection and Civic Regalia

(d)   Museum Collections

All categories of heritage assets increase the knowledge, understanding and appreciation of the Council’s history and local area.  Heritage Assets are recognised and measured (including the treatment of revaluation gains and losses) in accordance with the Council’s accounting policies on property, plant and equipment.  However, some of the measurement rules are relaxed in relation to heritage assets, further detail is provided below.

The accounting policies in relation to intangible heritage assets are not included in this document as no intangible heritage assets have been identified.  All heritage assets are tangible.

Records for Heritage Properties are maintained by the Council’s Asset & Property Management team, whilst records for the contents of the Art Gallery are held by York Museums Trust.  Items from the Museum, Art Gallery and Mansion House collections are on view for members of the public to see at these sites.

The Council’s collections of heritage assets are accounted for as follows.

Heritage properties – assets are valued in accordance with the property RICS guidance and for heritage assets where a market value exists, the assets are valued at fair value market value. Where no market value exists, the value stated is replacement cost.  All valuations are recorded on a valuation certificate.

The code recognises that it may not be possible to value all heritage assets due to their size and unique historical importance. Four such assets have been identified and are consequently not included in the council’s balance sheet:

(a)   Medieval City Walls

(b)   Yorkshire Museum and Gardens and Hospitium

(c)   Abbey Walls – Marygate and Bootham

(d)   Roman Multangular Tower and adjoining Walls

 

Art Collection - including paintings (both oil and watercolour) and sketches, is reported in the Balance Sheet at insurance valuation which is based on market values.  The art collection is deemed to have indeterminate life and a high residual value, hence the Council does not consider it appropriate to charge depreciation.

 The collection is relatively static and acquisitions and donations are rare.  If acquisitions did occur they would initially be recognised at cost and donations would be recognised at valuation provided by external valuers and with reference to appropriate commercial markets for the paintings using the most relevant and recent information from sales at auctions.

Mansion House Collection and Civic Regalia –are recorded on the 2020/21 balance sheet using the valuations provided by a fine art external valuation expert who revalued the assets in the collection in March 2018.   The Regalia and items in the Mansion House are deemed to have indeterminate lives and the Council does not consider it appropriate to charge depreciation.  The policy for acquisitions, made by purchase or donation, is the same as for the art collection.

Museum Collections – both Castle Museum and Yorkshire Museum are held in Trust but the collections are insured by the Council.  For Castle Museum, the collection is of social history value and therefore has a relatively low insurance valuation which is included on the balance sheet.

Yorkshire Museum, the Council considers that obtaining valuations for the vast majority of items and artefacts exhibited within the museum would involve a disproportionate cost in comparison to the benefits to the users of the Council’s financial statements. This is because of the diverse nature of the assets held and the lack of comparable values.  The Council does not recognise this collection of heritage assets on the Balance Sheet.  The Council does not consider that reliable cost or valuation information can be obtained for items held as a result of archaeological investigations.  The diverse nature of the assets held, the lack of comparable market values, the length of time the items have existed results in the Council not recognising these assets on the balance sheet.  The Council does not (normally) make any purchases of archaeological items.

Acquisitions are again initially recognised at cost or, if bequeathed or donated at nil consideration, at valuation.

Heritage Assets – General

Impairment: The carrying amounts of heritage assets are reviewed and where there is evidence of impairment e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity, it is recognised and measured in accordance with the Council’s general policies on impairment – see section on impairment in PPE note XX in this summary of accounting policies.

Disposal: disposal of heritage assets are accounted for in accordance with the Council’s general provisions relating to the disposal of property, plant and equipment.  Heritage asset disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and capital receipts (again see note XX in this summary of accounting policies).

 

XIII.          Intangible Assets

Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council.

Internally generated assets are capitalised where it is demonstrable that the project is technically feasible and is intended to be completed (with adequate resources being available) and the Council will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset.  Expenditure is capitalised where it can be measured reliably as attributable to the asset and is restricted to that incurred during the development phase (research expenditure cannot be capitalised).

Expenditure on the development of websites is not capitalised if the website is solely or primarily intended to promote or advertise the Council’s goods or services.

Intangible assets are measured initially at cost.  Amounts are only revalued where the fair value of the assets held by the Council can be determined by reference to an active market.  In practice, no intangible asset held by the Council meets this criterion, and they are therefore carried at amortised cost.  The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) in the Comprehensive Income and Expenditure Statement.  An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.

Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance.  The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve.

XIV.    Interests in Companies and Other Entities

 

An assessment of the Council’s interests has been carried out during the year, in accordance with the Code of Practice, to determine the group relationships that exist. Inclusion in the group is dependent upon the extent of the Council’s control over the entity demonstrated through ownership, such as a shareholding in an entity or representation on an entity’s board of directors. The Council does have a number of interests in companies and other entities, the majority of which are not material and thus the production of group accounts is not required for these interests. The main Council interests relate to CYT Ltd which, whilst material, is fully disclosed within the Related Parties disclosure rather than group accounts.

The Council has interests in companies and other entities that have the nature of subsidiaries, associates and joint ventures but, due to the values involved, these do not require the Council to prepare Group Accounts.  Further detail on all these arrangements can be found within the Related Parties note 41.

XV.    Joint Arrangements

 

Joint arrangements are arrangements by which two or more parties have joint control bound by contract. A Joint Arrangement can be classified as follows:

 

·         A Joint Venture

·         A Joint Operation

 

Joint Venture

 

A joint Venture is an arrangement under which two or parties have contractually agreed to share control, such that decisions about the activities of the arrangement are given unanimous consent from all parties.

 

 

Joint Operation

 

A Joint Operation is an arrangement by which the parties that have joint control of the arrangement have the rights to the assets and obligations for the liabilities relating to the arrangement. All parties have joint control with decisions of the activities of the arrangement requiring unanimous consent from all parties. The Council recognises on its Balance Sheet the assets that it controls and the liabilities that it incurs and debits and credits the Comprehensive Income and Expenditure Statement with the expenditure it incurs and the share of income it earns from the activity of the operation.

 

 

XVI.    Inventories and Long Term Contracts

Inventories are included in the Balance Sheet at the lower of cost and net realisable value.

Long term contracts are accounted for on the basis of charging the Surplus or Deficit on the Provision of Services with the value of works and services received under the contract during the financial year.

XVII.   Investment Property



Investment properties are those that are used solely to earn rentals and/or for capital appreciation.  The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale.

Investment properties are measured initially at cost and subsequently at fair value, based on the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.  As a non-financial asset, investment properties are measured at highest and best use.  Properties are not depreciated but are reviewed annually by the Council’s Property and Asset Management team (Royal Institute of Chartered Surveyors registered valuer) according to market conditions at the year-end.  Properties over £0.5m are revalued annually whilst properties below this level are revalued under the rolling programme or in the intervening periods if there is considered to be a material difference between the carrying value and the fair value of the property reflecting market conditions at the balance sheet date. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.  The same treatment is applied to gains and losses on disposal.

Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance.  However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance.  The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve.

XVIII.   Leases

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee.  All other leases are classified as operating leases.

Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification.

Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

The Council as Lessee

Finance Leases

Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower).  The asset recognised is matched by a liability for the obligation to pay the lessor.  Initial direct costs of the Council are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability.  Contingent rents are charged as expenses in the periods in which they are incurred.

Lease payments are apportioned between:

·       a charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and

·       a finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

Property, Plant and Equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life (where ownership of the asset does not transfer to the Council at the end of the lease period).

The Council is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets.  Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements.  Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

Operating Leases

Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment.  Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease).

The Council as Lessor

Finance Leases

Where the Council grants a finance lease over a property or an item of plant or equipment, the relevant asset is written out of the Balance Sheet as a disposal.  At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal.  A gain, representing the Council’s net investment in the lease, is credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (ie netted off against the carrying value of the asset at the time of disposal),matched by a lease (long-term debtor) asset in the Balance Sheet.

Lease rentals receivable are apportioned between:

·       a charge for the acquisition of the interest in the property – applied to write down the lease debtor (together with any premiums received), and

·       finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

The gain credited to the Comprehensive Income and Expenditure Statement on disposal is not permitted by statute to increase the General Fund Balance and is required to be treated as a capital receipt.  Where a premium has been received, this is posted out of the General Fund Balance to the Capital Receipts Reserve in the Movement in Reserves Statement.  Where the amount due in relation to the lease asset is to be settled by the payment of rentals in future financial years, this is posted out of the General Fund Balance to the Deferred Capital Receipts Reserve in the Movement in Reserves Statement.  When the future rentals are received, the element for the capital receipt for the disposal of the asset is used to write down the lease debtor.  At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve.

The written-off value of disposals is not a charge against council tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing.  Amounts are therefore appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

Operating Leases

Where the Council grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet.  Rental income is credited to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.  Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement of the lease).  Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income.

XIX.    Overheads and Support Services


The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 20/21 (SeRCOP).  The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exception of costs relating to the Council’s status as a multifunctional, democratic organisation which are charged under Corporate and Customer Services in the Comprehensive Income and Expenditure Statement.

XX.    Property, Plant and Equipment


Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment.

Recognition

Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably.  Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (ie repairs and maintenance) is charged as an expense when it is incurred.

The Council has a de minimis level of £10k for Property assets.  Any properties valued at less than this are not generally added to the Council’s balance sheet.  The exception to this is when capital money has been used to buy the property, and it would then be included on the balance sheet.

The Council recognises schools in line with the provisions of the Code of Practice, consequently schools are recognised on the balance sheet only if the future economic benefits or service potential associated with the school will flow to the Council. The Council regards that the economic benefits or service potential of a school flows to the Council where the Council has the ability to employ the staff of the school and is able to set the admission criteria.

The 9 Voluntary Aided and 10 Voluntary Controlled schools are not recognised within the Councils financial statements as the Council does not exercise sufficient influence on the governing bodies to warrant recognition.  The Council does, however, include the playing fields where these are owned by the Council and have not been included in any Academy conversion.

All elements of the 17 Local Authority controlled schools are shown in the Council’s financial statements.

Measurement

Assets are initially measured at cost, comprising:

The Council does not capitalise borrowing costs incurred whilst assets are under construction.

The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition does not have commercial substance (ie it will not lead to a variation in the cash flows of the Council).  In the latter case, where an asset is acquired via an exchange, the cost of the acquisition is the carrying amount of the asset given up by the Council.

Donated assets are measured initially at fair value.  The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally.  Until conditions are satisfied, the gain is held in the Donated Assets Account.  Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement.

Assets are then carried in the Balance Sheet using the following measurement bases:

 

 Where there is no market-based evidence of current value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value.

Where non-property assets that have short useful lives or low values (or both), depreciated historical cost basis is used as a proxy for current value.

Assets included in the Balance Sheet at current value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains.  Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.

Where decreases in value are identified, they are accounted for by:

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation.  Gains arising before that date have been consolidated into the Capital Adjustment Account.

Componentisation

All Property assets containing a building are split into two components - Land and Buildings. The buildings are then further reviewed to assess if there are additional components which should be recognised. This assessment is based on the value of the building and the value of the components. A materiality level has been set, below which this additional review will not be done. Only buildings with a valuation greater than £1m will be considered for componentisation, which accounts for approximately 79% of depreciation charged to the Comprehensive Income & Expenditure Account for buildings. The cost of the component should be at least 20% of the value of the building.

Components whose value is under this level will be considered if the circumstances are deemed appropriate. Componentisation will only be done either at the full 5 yearly valuations or when major capital improvements are undertaken.

Impairment

Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired.  Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.

Where impairment losses are identified, they are accounted for by:

 

Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.

Depreciation

Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives.  An exception is made for assets without a determinable finite useful life (ie freehold land and certain Community Assets) and assets that are not yet available for use (ie assets under construction).

Depreciation is calculated on the following bases:

 

Where an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components will be depreciated separately.

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.

Disposals and Non-current Assets Held for Sale

When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale.  The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell.  Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.  Gains in fair value are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on Assets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale; adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell.

Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.  When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal.  Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (ie netted off against the carrying value of the asset at the time of disposal).  Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.

Amounts received for a disposal in excess of £10,000 are categorised as capital receipts.  A proportion of receipts relating to a housing disposal is payable to the Government.  The balance of receipts is required to be credited to the Capital Receipts Reserve, and can then only be used for new capital investment or set aside to reduce the Council’s underlying need to borrow (the capital financing requirement). 

The written-off value of disposals is not a charge against council tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing.  Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

XXI.    Private Finance Initiative (PFI) and Similar Contracts

PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor.  As the Council is deemed to control the services that are provided under its PFI schemes, and as ownership of the property, plant and equipment will pass to the Council at the end of the contracts for no additional charge, the Council carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment.

The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment.  For the Schools PFI, the liability was written down by an initial capital contribution of £4.2m.  Four schools are incorporated in the PFI scheme – Hob Moor Primary, Hob Moor Oaks, St Barnabas Primary and St Oswalds Primary.  St Barnabas and St Oswalds Primaries belong to the Church of England Diocese and were never included on the LAs balance sheet.  However the two Hob Moor schools was previously owned by the council and were recognised as assets.  These two schools became Academies during 2018/19, therefore the accounting treatment is now the same as the two other schools and they are no longer included as assets.

The amounts payable to the PFI operators each year are analysed into five elements:



XXII.   Provisions, Contingent Liabilities and Contingent Assets


Provisions

Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation.  For instance, the Council may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation.

Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Council becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet.  Estimated settlements are reviewed at the end of each financial year – where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service.

Where some or all of the payment required to settle a provision is expected to be recovered from another party (eg from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Council settles the obligation.

Contingent Liabilities

A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council.  Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.

Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.

Contingent Assets

A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council.

Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential.

XXIII.   Reserves


The Council sets aside specific amounts as reserves for future policy purposes or to cover contingencies.  Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement.  When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement.  The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure.

The category of Unusable Reserves includes those reserves that are kept to manage the accounting processes for non-current assets, financial instruments, and retirement and employee benefits and do not represent usable resources for the Council – these reserves are explained in the relevant notes.

Earmarked Reserves

Amounts set aside for purposes falling outside the definition of provisions, e.g. for future policy purposes or to cover contingencies, have been accounted for as reserves.  In line with the code the creation of a reserve is shown by an appropriation entry on the Movement in Reserves.  When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service revenue account  in that year, and shown in the Net Cost of Services in the Income and Expenditure Account.  The use of the reserve is then appropriated back into the General Fund Balance statement so that there is no net charge against council tax for the expenditure.

The earmarked reserves held by the Council are shown in the Core Statements and detailed in note 8.

 

 

Usable Reserves

In addition to those funds under the Earmarked Reserves classification there are a number of usable reserves for specific and non specific purposes.

Councils are required by the Accounts and Audit Regulations 2015 to maintain the Major Repairs Reserve (MRR), which controls an element of the capital resources required to be used on HRA assets or for capital financing purposes. Under the new arrangements in the self-financing HRA, to establish the resources available on an annual basis in the Major Repairs Reserve, the regulations require the MRR to be credited with an amount equivalent to the total depreciation charges for all HRA assets.

Unusable Reserves

Certain reserves are kept to manage the accounting processes for non-current assets and retirement benefits and that do not represent usable resources for the Council. These reserves are shown in Note 26.

XXIV.    Revenue Expenditure Funded from Capital under Statute


Expenditure incurred during the year that may be capitalised under statutory provisions but that does not result in the creation of a non-current asset has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year.  Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of council tax.

XXV.    Value Added Tax (VAT)


The Comprehensive Income and Expenditure Account excludes amounts relating to VAT and will be included as an expense only if it is not recoverable from Her Majesty's Revenue and Customs.  VAT receivable is excluded from income within the Council’s income and expenditure account.

2.     ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT NOT YET ADOPTED



Under the Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 (the Code), the Council is required to disclose information setting out the impact of an accounting change required by a new accounting standard that has been issued but not yet adopted by the Code.

At the balance sheet date, the following new standards have been published but not yet adopted by the Code of Practice:

Definition of a Business: Amendment to IFRS 3 Business Combinations - provides clarity on the definition of a business. WE are not expecting this to affect our accounts when this is implemented from 1st April 2021.

Interest Rate Benchmark Reform phase 1 and phase 2: Amendments to IFRS 9, IAS39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmark reform is expected to affect hedge accounting and therefore we are not expecting this to affect our accounts when this is implemented from 1st April 2021.

 

3.     CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES


In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events.

 

Future levels of funding for local government – the main critical judgement made in the statement of accounts is regarding the high degree of uncertainty about future levels of funding for local government.  There remains no firm date set by Government for the move to 75% business rates retention and changes to how funding is distributed between councils under the fair funding review.  Therefore whilst this uncertainty continues it is highly likely that there will be no immediate change to the level of funding

Pensions - The Council has made estimates of net pay liability to pay pensions which depend on a number of complex judgements and projections supported by the actuary, which include; the discount rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected future returns on Pension Fund Assets

Accounting for schools – Consolidation - In line with the requirements of the Code of Practice on Group Accounts, all maintained schools are now considered to be entities controlled by the Council. Rather than prepare group accounts however, the income, expenditure, liabilities, reserves and cash flows of each schools are recognised in the Council’s single entity accounts.

Accounting for schools – Balance sheet recognition – The Council recognises schools in line with the provisions of the Code of Practice, consequently schools are recognised on the balance sheet only if the future economic benefits or service potential associated with the school will flow to the Council. The Council regards that the economic benefits or service potential of a school flows to the Council where the Council has the ability to employ the staff of the school and is able to set the admission criteria. The Council has undertaken a detailed review to assess the level of control it exercises in relation to both the VA & VC schools. The analysis undertaken considered the governing bodies majority appointment rights and concluded that in all cases the Council did not exercise sufficient influence to warrant recognition of assets in relation to the schools on its balance sheet.

Accounting for schools – Transfer to Academy status – When a school that is held on the Council’s balance sheet transfers to Academy status the Council accounts for this as a disposal and subsequent creation of a finance lease (at nil consideration) on the date that the school converts to Academy status.

Further information on the treatment of Voluntary Aided and Voluntary Controlled schools can be found under Accounting Policies point XX.

Group Accounts Boundaries – The Councils group boundaries have been assessed using the criteria outlined in the Code of Practice, which has confirmed the Council has a number of interests in other entities which therefore fall within the boundary. However the Council’s interests in aggregate are not sufficiently material to warrant producing consolidated financial statements when reviewing both quantitative and qualitative information. The Council therefore considers that the reader of the accounts is better served by expanding the related party disclosure note in respect of these interests rather than completing separate group accounts statements. The enhanced related parties note can be found at Note 41.

Allerton Waste Recycling Plant – Componentisation and Depreciation – The Council holds a share in Allerton Waste Recycling Plant which is included in the Council’s accounts in Other Land and Buildings (Note 12).  Following an external valuation of the site in 2020/21, a judgement was made to continue show the whole asset, including the mechanical and electrical components, under Other Land and Buildings as it is felt that components are an integral part of the site.  However, within the Other Land and Buildings header, the asset is split into land, building, and mechanical and electrical component for the purpose of depreciation to reflect their different useful economic lives.  The various mechanical and electrical components identified in the valuation have been grouped together as one component for depreciation purposes as this has a minimal impact on the depreciation figure.  The accounting treatment for Allerton Waste Recycling Plant will be reviewed regularly to ensure the accuracy of depreciation.

 

4.     ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY

 

The Statement of Accounts contains estimated figures based on assumptions made by the Council about the future or that are otherwise uncertain.  Estimates are made taking into account historical experience, current trends and other relevant factors.  However, as balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.


The items in the Council’s Balance Sheet at 31 March 2021 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:

 

Pensions

 

Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. Variations in the key assumptions would have the following impact on the net liability:

 

Property, Plant & Equipment including Investment properties

 

Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets.  The current economic climate makes it uncertain that the Council will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets. If the useful life of assets is reduced, depreciation increases and the carrying amount of the assets falls.  The closing Net Book Value of these assets at 31 March 2021 is £1,098.814m for Property, Plant & Equipment and £65.149m for Investment Properties.

 

5.     MATERIAL ITEMS OF INCOME AND EXPENSE

 

In 2020/21 there has been a material change in how services have been able to operate and how income is generated due to the pandemic. To compensate the Council has received additional Government grants, which are reflected in Note 40.

6.     EVENTS AFTER THE REPORTING PERIOD


The Statement of Accounts was authorised for issue by the Chief Finance Officer on 11 June 2021. 
Events taking place after this date are not reflected in the financial statements or notes.  Where events taking place before this date provided information about conditions existing at 31 March 2021, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.

 

Adjusting Events:

Adjusting events after the balance sheet date are those that are indicative of conditions that arose after the reporting period. The Code sets out that where material the financial statements should be amended to reflect the impact of these events.

 

Non- adjusting Events:

Non Adjusting events after the balance sheet date are those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect these events however material items are disclosed in terms of the nature of the events and their financial effects.

 

There are no adjusting or non-adjusting events after the balance sheet in 2020/21.

7.     ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS


This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Council in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Council to meet future capital and revenue expenditure.  The movement in reserves statement includes the totals shown in this note.

 

Adjustments between Accounting Basis and Funding Basis under Regulations – 2020/21

2020/21

General Fund Balance

Housing Revenue Account

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£000

£000

£000

£000

£000

£000

Adjustments primarily involving the Capital Adjustment Account:

Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement:

Charges for depreciation and impairment of non-current assets

(13,714)

(8,408)

  -  

  -  

  -  

22,122

Revaluation losses on Property Plant and Equipment

1,139

(4,300)

  -  

  -  

  -  

3,161

Movements in the market value of Investment Properties

(1,410)

31

  -  

  -  

  -  

1,379

Amortisation of intangible assets

(979)

(3)

  -  

  -  

  -  

982

Capital grants and contributions applied

22,965

2,894

  -  

  -  

  -  

(25,859)

Revenue expenditure funded from Capital under statute

(10,163)

  -  

  -  

  -  

  -  

10,163

Amounts of non-current assets written off on disposal or sale as part of the gain/ loss on disposal to the Comprehensive Income and Expenditure Statement

(1,706)

(6,450)

  -  

  -  

  -  

8,156

Insertion of items not debited or credited to the Comprehensive income and Expenditure Statement:

Statutory provision for the financing of capital investment

9,182

  -  

  -  

  -  

  -  

(9,182)

Capital expenditure charged against the General Fund and HRA balances

187

4,904

  -  

  -  

  -  

(5,091)

Adjustments primarily involving the Capital Grants Unapplied Account:

Capital grants and contributions unapplied credited to the Comprehensive Income and Expenditure Statement

8,773

  -  

  -  

  -  

(8,773)

  -       

Application of grants to capital financing transferred to the Capital Adjustment Account

(7,260)

  -  

  -  

  -  

7,260

  -  

 

General Fund Balance

Housing Revenue Account

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£000

£000

£000

£000

£000

£000

Adjustments primarily involving the Capital Receipts Reserve:

Transfer of cash sale proceeds credited as part of the gain/ loss on disposal to the Comprehensive Income and Expenditure Statement

2,795

7,702

  -  

(10,497)

  -  

  -       

Transfer of cash loan repayment to the Capital Receipts Reserve

  -  

  -  

  -  

(100)

  -  

100

Use of the Capital Receipts Reserve to finance new capital expenditure

  -  

  -  

  -  

19,254

  -  

(19,254)

Contribution from the Capital Receipts Reserve towards revenue costs under Capital Receipts flexibility

  -  

  -  

  -  

  -  

  -  

  -       

Contribution from the Capital Receipts Reserve to finance the payments to the Government Capital receipts pool

  -  

(1,179)

  -  

1,179

  -  

  -       

Contribution from the Capital Receipts Reserve to finance disposal costs

  -  

(60)

  -  

60

  -  

  -       

Contribution from the Capital Receipts Reserve to finance repayment of 141 RTB receipts

  -  

  -  

  -  

  -  

  -  

  -       

Adjustment primarily involving the Major Repairs Reserve:

Reversal of Major Repairs Allowance credited to the HRA

  -  

8,408

(8,408)

  -  

  -  

  -       

Use of the Major Repairs Reserve to finance new capital expenditure 

  -  

  -  

9,351

  -  

  -  

(9,351)

Adjustment primarily involving the Financial Instruments Adjustment Account:

Amount by which finance costs charged to the Comprehensive Income and Expenditure Statement are different from finance costs chargeable in the year in accordance with statutory requirements

83

  -  

  -  

  -  

  -  

(83)

Adjustments primarily involving the Financial Instruments Revaluation Reserve

Movement in fair value of Financial Instruments

  -  

  -  

  -  

  -  

  -  

  -  

Adjustment primarily involving the Pensions Reserve:

Employer's pensions contributions and direct payments to pensioners payable in the year

14,504

646

  -  

  -  

  -  

(15,150)

Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement

(28,777)

(1,326)

  -  

  -  

  -  

30,103

Adjustments primarily involving the Collection Fund Adjustment Account:

Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different form council tax income calculated for the year in accordance with statutory requirements

(37,052)

  -  

  -  

  -  

  -  

37,052

Adjustments primarily involving the Dedicated Schools Grant Adjustment Account:

Transfer of deficit in respect of schools budget

(5,075)

  -  

  -  

  -  

  -  

5,075

Adjustment primarily involving the Accumulated Absences Account:

Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

(18)

  -  

  -  

  -  

  -  

18

Total Adjustments:

(46,526)

2,859

943

9,896

(1,513)

34,341

 

 

Adjustments between Accounting Basis and Funding Basis under Regulations – 2019/20

2019/20

General Fund Balance

Housing Revenue Account

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£000

£000

£000

£000

£000

£000

Adjustments primarily involving the Capital Adjustment Account:

Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement:

Charges for depreciation and impairment of non-current assets

(12,889)

(8,381)

  -  

  -  

  -  

21,270

Revaluation losses on Property Plant and Equipment

10,658

(853)

  -  

  -  

  -  

(9,805)

Movements in the market value of Investment Properties

44

25

  -  

  -  

  -  

(69)

Amortisation of intangible assets

(1,053)

(23)

  -  

  -  

  -  

1,076

Capital grants and contributions applied

28,133

5,373

  -  

  -  

  -  

(33,506)

Revenue expenditure funded from Capital under statute

  -  

  -  

  -  

  -  

  -  

  -       

Revenue expenditure funded from Capital under statute - Prior Year Reversal

(6,736)

  -  

  -  

  -  

  -  

6,736

Amounts of non-current assets written off on disposal or sale as part of the gain/ loss on disposal to the Comprehensive Income and Expenditure Statement

(6,120)

(6,908)

  -  

  -  

  -  

13,028

Insertion of items not debited or credited to the Comprehensive income and Expenditure Statement:

Statutory provision for the financing of capital investment

9,745

  -  

  -  

  -  

  -  

(9,745)

Capital expenditure charged against the General Fund and HRA balances

82

6,958

  -  

  -  

  -  

(7,040)

Adjustments primarily involving the Capital Grants Unapplied Account:

Capital grants and contributions unapplied credited to the Comprehensive Income and Expenditure Statement

1,777

  -  

  -  

  -  

(1,777)

  -       

Application of grants to capital financing transferred to the Capital Adjustment Account

(2,246)

  -  

  -  

  -  

2,246

  -  

Adjustments primarily involving the Capital Receipts Reserve:

Transfer of cash sale proceeds credited as part of the gain/ loss on disposal to the Comprehensive Income and Expenditure Statement

510

8,368

  -  

(8,878)

  -  

  -       

Transfer of cash loan repayment to the Capital Receipts Reserve

  -  

  -  

  -  

(100)

  -  

100

Use of the Capital Receipts Reserve to finance new capital expenditure

  -  

  -  

  -  

9,850

  -  

(9,850)

Contribution from the Capital Receipts Reserve towards revenue costs under Capital Receipts flexibility

  -  

  -  

  -  

  -  

  -  

  -       

Contribution from the Capital Receipts Reserve to finance the payments to the Government Capital receipts pool

  -  

(1,179)

  -  

1,179

  -  

  -       

Contribution from the Capital Receipts Reserve to finance disposal costs

  -  

(75)

  -  

75

  -  

  -       

 

 

 

General Fund Balance

Housing Revenue Account

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£000

£000

£000

£000

£000

£000

Contribution from the Capital Receipts Reserve to finance repayment of 141 RTB receipts

  -  

(1,311)

  -  

1,311

  -  

  -       

Adjustment primarily involving the Major Repairs Reserve:

Reversal of Major Repairs Allowance credited to the HRA

  -  

8,380

(8,380)

  -  

  -       

Use of the Major Repairs Reserve to finance new capital expenditure 

  -  

  -  

8,006

 

  -  

(8,006)

Adjustment primarily involving the Financial Instruments Adjustment Account:

Amount by which finance costs charged to the Comprehensive Income and Expenditure Statement are different from finance costs chargeable in the year in accordance with statutory requirements

89

  -  

  -  

  -  

  -  

(89)

Adjustments primarily involving the Financial Instruments Revaluation Reserve

Movement in fair value of Financial Instruments

  -  

  -  

  -  

  -  

  -  

  -  

Adjustment primarily involving the Pensions Reserve:

Employer's pensions contributions and direct payments to pensioners payable in the year

15,320

664

  -  

  -  

  -  

(15,984)

Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement

(28,596)

(1,260)

  -  

  -  

  -  

29,856

Adjustments primarily involving the Collection Fund Adjustment Account:

Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different form council tax income calculated for the year in accordance with statutory requirements

(3,188)

  -  

  -  

  -  

  -  

3,188

Adjustment primarily involving the Accumulated Absences Account:

Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

(126)

  -  

  -  

  -  

  -  

126

Total Adjustments:

5,404

9,778

(374)

3,437

469

(18,714)

 

 

 

 

 

 

 

 

 

8.     TRANSFERS TO/FROM EARMARKED RESERVES


This note sets out the amounts set aside from the General Fund and HRA balances in earmarked reserves to provide financing for future expenditure plans and amounts posted back from earmarked reserves to meet General Fund and HRA expenditure in 2020/21:

 

 

 

Transfers Out

Transfers In

Net mov't

Balance at

Balance at

During Year

During Year

During Year

31-Mar-21

31-Mar-20

 

£000

£000

£000

£000

£000

General Fund

Developers Contributions Unapplied

3,853

(3,960)

(107)

(8,553)

(8,446)

Venture Fund

  -       

(258)

(258)

(4,238)

(3,980)

Public Health COMF Funding reserve

  -       

(2,401)

(2,401)

(2,401)

  -       

Waste Management Reserve

478

(576)

(98)

(2,031)

(1,933)

Better Care Fund

  -       

(1,541)

(1,541)

(1,541)

  -       

Yearsley Pool Reserve

8

  -       

8

(1,413)

(1,421)

Mental Health Accomodation Programme

  -       

(926)

(926)

(926)

  -       

NNDR reserve

  -       

(43,004)

(43,004)

(43,004)

  -       

Miscellaneous

32,594

(39,696)

(7,102)

(13,148)

(6,046)

Subtotal General Fund

36,933

(92,362)

(55,429)

(77,255)

(21,826)

HRA

53rd Week Rent

103

  -       

103

103

  -       

HRA Investment Reserve

4,213

  -       

4,213

(8,545)

(12,758)

Subtotal HRA

4,316

  -       

4,316

(8,442)

(12,758)

Total Earmarked Reserves

41,249

(92,362)

(51,113)

(85,697)

(34,584)

 

Reserves

The most significant item held within Developers Contributions relates to the Community Stadium. 

Venture Fund - This fund was established with an initial capital balance of £4m.  The fund makes monies available for Council projects that have the ability to generate expenditure savings or increased income.  Advances from the fund are required to be repaid over an appropriate life of the project in relation to the life of the asset

Public Health Contain Outbreak Management Fund – The Contain Outbreak Management Fund (COMF) is funding provided by the Government to Support the additional Public Health Costs incurred dealing with the Covid 19 pandemic. The funding is provided for expenditure incurred in areas such as testing, contact tracing, communications and marketing of public health messages, enforcement measures, support for vulnerable people, support of commercial areas and rough sleepers. Funding has been provided throughout the year and is available to cover expenditure up to 31st March 2022

Waste Management Reserve – When the Long Term Waste Contract was agreed by Council, it was agreed to set aside additional funds in order to build up sufficient budget to fund the contractual obligations. These increased budgets have funded waste contractual increases such as Landfill Tax and the balance has been added to a Waste Reserve. This reserve has funded and will continue to fund one off costs relating to the Waste Project such as s106 obligations, highway improvements and lease payments.

Better Care Fund – The Better Care Fund is a pooled budget between City of York Council and Vale of York Clinical Commissioning Group for the provision of certain aspects of health and social care. The s75 agreement governing this arrangement provides the legal mechanism to carry forward any uncommitted resource in this reserve

Yearsley Pool Reserve – This reserve was created following a Council decision in February 2015 to approve a sum of £1.5m over a 5 year period towards support for maintaining Yearsley Pool, to be funded from unallocated New Homes Bonus monies

Mental Health Accommodation Programme - Mental Health Accommodation Programme.  This reserve holds the Tees, Esk & Wear Valleys NHS Foundation Trust’s initial contribution to the development of specialist mental health housing and support for people with multiple and complex needs in York.  The programme was agreed by the Executive in August 2020, with work expected to start in 2021/22

NNDR reserve - The NNDR Reserve was created to account for ‘timing differences’ between NNDR receipts in the Collection Fund and General Fund, which occur mainly due to S31 grants. When central government provide a discount on a business sector’s NNDR liability, central government compensates the Council by providing a S31 grant equivalent to the discount given, which is allocated to the General Fund. This ‘discount’ results in a deficit on the Collection Fund and a corresponding surplus on the General Fund. The surplus on the General Fund is transferred to the NNDR earmarked reserve to use in the following year against the Collection Fund deficit. In 2020/21 Central Government support for businesses’ NNDR liability significantly increased due to Covid-19. This resulted in a significant increase in the NNDR reserve in 2020/21.

Miscellaneous reservesinclude a range of earmarked reserves to hold monies over the year end period pending investment, such as Care Act funds and the York Financial Assistance Scheme.

In 2012 the Localism Act introduced a significant change to the way that Council Housing is financed by dismantling the previous system of HRA subsidy and introducing self financing.  As part of the self financing HRA Business Plan a reserve was created for HRA investment in new build / redevelopment opportunities.

9.     OTHER OPERATING EXPENDITURE

2020/21

2019/20

 

 

£'000's

£'000's

Parish council precepts

799

752

Payments to the Government Housing Capital Receipts Pool - Prior Year Repayments

  -       

1,311

Payments to the Government Housing Capital Receipts Pool

1,179

1,179

Gains/losses on the disposal of non-current assets

 

(2,341)

4,150

Total

 

(363)

7,392

 

 

 

10.  FINANCING AND INVESTMENT INCOME AND EXPENDITURE

2020/21

2019/20

 

 

 

Restated

 

 

£'000's

£'000's

Interest payable and similar charges

13,890

13,733

Net interest on the net defined benefit liability

3,105

3,140

Interest receivable and similar income

(84)

(329)

Income and expenditure in relation to investment properties

  and changes in their fair value

(2,209)

(3,963)

Other investment income

 

(451)

(397)

Total

 

14,251

12,184

 

11.  TAXATION AND NON SPECIFIC GRANT INCOME

2020/21

2019/20

 

 

£'000's

£'000's

Council tax income

(92,794)

(90,803)

Non domestic rates

2,314

(30,431)

Non-ring fenced or government grants

(74,276)

(17,033)

Capital grants and contributions

(19,634)

(24,406)

Total

 

(184,390)

(162,673)