- Section 1:Narrative ReportJump to Section
- Section 2:Statement on Annual Governance StatementJump to Section
- Section 3:Statement of Responsibilities for the Statement of AccountsJump to Section
- Section 4:Comprehensive Income and Expenditure StatementJump to Section
- Section 5:Movement in Reserves Statement 2022/23Jump to Section
- Section 6:Movement in Reserves Statement 2021/22Jump to Section
- Section 7:Balance SheetJump to Section
- Section 8:Cashflow StatementJump to Section
- Section 9:Notes to the core financial statementsJump to Section
- Section 10:Firefighters Pension Fund Account and Net Assets StatementJump to Section
- Section 11:Glossary of TermsJump to Section
Section 1: Narrative Report
The Lancashire Combined Fire Authority (CFA) (the Authority) was established as a free-standing body from 1 April 1998.听 It sets its own budget, holds its own reserves, raises its own council tax and receives funding direct from the Government and through business rates.
The Authority must prepare and publish a Statement of Accounts annually.听 Its purpose is to give electors, local taxpayers, Fire Authority Members, employees and other interested parties clear information about the Fire authority鈥檚 finances.
The aim is to provide information on:
the cost of providing Fire Authority services in the financial year 2022/23;
how these services were paid for;
what assets the Fire Authority owned at the end of the financial year; and
what was owed, to and by, the Fire Authority at the end of the financial year.
This narrative report gives a guide to the most important matters included in the Statement of Accounts.
Contents of this Statement of Accounts
This Statement of Accounts covers the financial year ended on 31 March 2023 (referred to as 2022/23).听 It has been prepared in accordance with the Accounts and Audit Regulations 2015 as amended by the Accounts and Audit (Amendment) Regulations 2021 and the Code of Practice on Local Authority Accounting in the United Kingdom.听 The Statement contains:
Statement on Annual Governance Arrangements 鈥 Sets out the Authority鈥檚 responsibilities regarding the system of internal control and corporate governance.
Independent Auditor鈥檚 Report to the Members of Lancashire Combined Fire Authority 鈥 The Auditor's report to the CFA on the accounts for 2022/23, which are set out in the sections shown below.
Statement of Responsibilities for the Statement of Accounts 鈥 Sets out the responsibilities of the Authority and the Treasurer with regards to the statement of accounts.
Comprehensive Income & Expenditure Statement - This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation.听 The Fire Authority raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost.听 The taxation position is shown in the Movement in Reserves Statement.
Movement In Reserves Statement 鈥 This statement shows the movement in year on the different reserves held by the Fire Authority analysed between usable and other reserves.听 The surplus or (deficit) on the Provision of Services line shows the true economic cost of providing the Fire Authority鈥檚 services, more details of which are shown in the Comprehensive Income and Expenditure Statement.
Balance Sheet 鈥 This shows information on the financial position of the Fire Authority as at the 31听March听2023, including the level of balances and reserves at the Fire Authority鈥檚 disposal, its long-term indebtedness and the value of the assets held by the Fire Authority.
Cash Flow Statement 鈥 This shows the cash and cash equivalent movements in and out of the Fire Authority due to transactions with third parties for revenue and capital purposes.
Fire Fighters Pension Fund Account and Net Assets Statement 鈥 Shows the financial position of the fire fighters pension fund account, showing whether the Authority owes, or is owed, money by the Government in order to balance the account, together with details of its net assets.
Review of the Year
We have remained financially secure and are in a strong position not only to face future challenges but to lead innovation and improvements in our sector. We have continued to invest in people, training and equipment; prioritised operational effectiveness and efficiency to meet the challenges of an increasingly complex environment; embedded clear values and strong leadership throughout the organisation; and looked for new ways to collaborate to improve services for local people.
Last year we set out to strengthen community safety in respect of emerging risks affecting Lancashire. Climate change in particular is having a significant impact on homes, businesses and environments, and the risk of flooding and wildfires has increased.
In response, we invested in wildfire personal protective equipment (PPE) for every firefighter in the Service plus additional equipment for specialist wildfire units. Two new all-terrain Hagglund vehicles were added to our fleet to make it easier to access rural areas during extreme weather events. These vehicles have already proved their worth in multiple incidents across the county.
Collaboration with other emergency services continued to deliver improved public services. We attended more incidents to gain entry to homes where there was a medical emergency and assist in searching for missing people than the previous year.
These partnerships enable us to use our skills and experience to keep people safe in diverse ways. A new collaboration with North West Ambulance Service on their community first responder initiative has already seen a Lancashire resident benefit from life-saving first aid from one of our staff responding from the workplace.
Business Fire Safety Checks is a new service delivered by operational crews to help small and lower risk businesses comply with fire safety laws, following significant changes to legislation. This means our dedicated fire safety inspection teams can focus on premises where occupants are at a higher risk of harm.
Thank you to everyone who took part in our emergency cover consultation which reviewed fire engines and crewing arrangements alongside community risks. The improvements identified reflect the most effective and efficient use of resources for the whole of Lancashire. All 39 fire stations and 58 fire appliances have been maintained and we are increasing the number of firefighters employed.
An innovation that is already benefitting Lancashire as part of the review is the introduction of dynamic cover software to deploy resources. It provides visual data on community risks and emergency cover in real-time to inform decision-making. This means we can position firefighters and fire engines with greater precision and has improved emergency cover and response times in communities during several periods of high demand.
Behind all these achievements are dedicated people with the highest levels of skills and expertise. From saving lives on the frontline to supporting behind the scenes, we are united in our determination to make Lancashire safer.
The 2022/23 Financial Overview
The Authority鈥檚 spending is planned and controlled by an annual budget process, which leads to the setting of its budget requirement.听 Expenditure on the day-to-day running costs of the service is determined through the Revenue Budget and is recorded in the Comprehensive Income and Expenditure Statement.
In setting its budget the Authority aims to balance the public鈥檚 requirement for and expectations of our services with the cost of providing this.听 As such the revenue budget focuses on the need to:
deliver services as outlined in the Risk Management Plan and other plans;
maintain future council tax increases at reasonable levels;
continue to deliver efficiencies in line with targets;
continue to invest in improvements in service delivery and facilities;
set a robust budget that takes account of known and anticipated pressures; and
maintain an adequate level of reserves.
The Authority agreed a gross revenue budget of 拢63.0m and a council tax of 拢77.27. This represented a 拢5 increase in council tax, in line with the Council Tax referendum limit. Based on this the budget was considered affordable, prudent and sustainable, whilst ensuring that the Authority was able to deliver against its corporate priorities.
The net revenue position shows an overall overspend of 拢1.7m, with the main variances relating to higher than budgeted pay awards and inflation related costs, which is partly offset by higher than budgeted investment income. This has resulted in a drawdown from General Reserves to support the budget.听
A summarised comparison of the Fire Authority鈥檚 expenditure for the year compared with budget is set out below:
Expenditure in 拢'000 | Budget | Spend | (Under) / Overspend |
---|---|---|---|
Employees: pay costs | 48,795 | 49,680 | 885 |
Other employee related costs | 1,493 | 1,736 | 243 |
Premises | 3,473 | 4,217 | 744 |
Transport | 1,948 | 2,031 | 84 |
Supplies & services | 8,710 | 8,192 | (518) |
Capital financing costs & other items | 6,584 | 6,921 | 337 |
Total Expenditure | 71,003 | 72,777 | 1,774 |
Other Income | (7,986) | (7,865) | 121 |
Budget requirement | 63,017 | 64,911 | 1,895 |
Funded by: | |||
Council tax | (35,111) | (35,111) | - |
Business rates | (19,074) | (19,296) | (222) |
Government grant | (8,832) | (8,832) | - |
Total | (63,017) | (63,239) | (222) |
Net Overspend | 1,673 | 1,673 |
The following reconciliation shows the comparison between the revenue budget position, as set out above, and the Total Comprehensive Income and Expenditure figure reported in the accounts.
听厂耻尘尘补谤测 | 拢鈥000 |
---|---|
Revenue Outturn | 1,673 |
Remove Capital Contributions and transfers to / from reserves | (3,825) |
Adjustments for Capital Purposes | 4,214 |
Net change for Pensions Adjustments | 12,868 |
Other Differences | 416 |
Deficit on provision of services | 15,347 |
(Surplus)/Deficit on revaluation of fixed assets | (21,735) |
Actuarial (gains)/losses on pension fund assets | (276,694) |
Total Comprehensive Income and Expenditure | (283,082) |
The Authority鈥檚 general fund balance at the start of the year was 拢6.04m, the overspend of 拢1.67m has been transferred to the reserve reducing the balance to 拢4.37m (this is above the minimum level of reserves approved by the Authority at its budget meeting in 2023. Note the General Fund Balance including our share of North West FireControl general reserves is 拢4.89m.
The Authority also holds an additional 拢9.3m of earmarked revenue reserves and 拢22m of capital reserves and receipts.听 The Capital reserves and receipts are fully utilised within the medium-term financial strategy, reducing to zero in 2027. It is also worth noting that over half of the earmarked reserve relates to the Authority鈥檚 two PFI schemes, whereby monies are set aside in the early years of the schemes to meet future costs, thus smoothing out the impact of inflationary pressures.
The Authority has continued to invest in its asset base, with capital expenditure incurred in the year totalling 拢1.6m, with the main contributors to this being set out over the page:-
听Capital expenditure | 拢尘 |
---|---|
Vehicles
| 听 0.4 |
Operational Equipment
| 听 0.2 |
ICT Equipment
| 听 0.4 |
Buildings
| 听 0.6 |
Total | 1.6 |
The Balance Sheet shows that the Authority鈥檚 Total Net Liabilities reduced from (拢754m) to (拢471m).听 This reflects the Authority鈥檚 compliance with International Accounting Standards and in particular the requirement to show the full pensions liability in the accounts. Whilst the liability on the Local Government Pension Scheme is partly funded the Fire-fighters Pension Scheme is unfunded, i.e. there are no assets from which future liabilities will be paid, and hence the Authority鈥檚 overall pension liability of (拢639m) is extremely large.听 If this liability was excluded the Authority鈥檚 Total Net Assets would be 拢168m.听 There was a significant reduction in the fire-fighters Pension Scheme liability of 拢237m; a reduction of over a quarter. The change is due to several changes in actuarial assumptions, the most significant impact being a higher discount rate which is used to calculate the present value of future pension liabilities. As the discount rate increases, the pension liability decreases. The pension liability includes estimated costs in relation to the McCloud judgement.
Long-term assets have increased slightly in value to 拢132m, reflecting the investment in our asset base and the impact of revaluations.
Future Financial Plans
Due to economic uncertainty the anticipated 4-year Spending Review was again reduced to a single year review, covering 2023/24, with a multi-year settlement anticipated for next year. Again, the outcome of the Fair Funding review, which looked to re-assess the methodology under which funding was allocated to individual authorities, and the implementation of a 75% Business Rates Retention Scheme, have been put on hold. The 2023/24 Local Government Finance Settlement showed an increase in the Governments Settlement Funding Assessment of 6%.
The Government again amended the council tax referendum principles for 2023/24, allowing Fire Authorities to increase council tax levels by 拢5 resulting in a council tax of 拢82.27 per band D property. Raising council tax by the maximum permissible still only increases the overall council tax bill by 拢5 but generates 拢2.3m of funding for the Authority. This increase provides an opportunity to address the two year pay award agreed during 2022/23.
The Authority therefore agreed a revenue budget of 拢68.5m, allowing for inflationary pressures. Based on this the budget, as presented, is considered affordable, prudent, and sustainable, whilst ensuring that the Authority can deliver against its corporate priorities.
Given economic uncertainty, the longer term implications of Brexit, the potential impact of the Fair Funding Review and the roll out of greater local retention of Business rates, it is extremely difficult to anticipate what funding will look like beyond the existing settlement, hence for the purpose of medium term financial strategy we had assumed that the funding will increases broadly in line with inflation, at 5.0% in 2024/25 and 2% thereafter. Based on this we have been able to set a balanced budget in future years, after allowing for council tax increases in line with forecast inflation.
The capital budget continues to invest in our asset base, in particular vehicle replacement, new operational equipment, new IT requirements and refurbishment/replacement of stations/buildings. This gives rise to a capital program of 拢42m over the next five years.
We will continue to invest to ensure that our staff have the best equipment available, our vehicle programme sees us investing in enhanced aerial capability, whilst our operational equipment investment includes the replacement of our Breathing Apparatus sets and telemetry, and our cutting/extrication equipment.
When the national Emergency Services Mobile Communications Programme (ESMCP) progresses to a stage where we can purchase replacement radio and mobilising equipment, we will upgrade our current provision.听 This project has incurred delays and is outside of our control. It is assumed that any costs to the Authority will be funded by specific capital grant.
Most of the capital programme relates to planned enhancements to our building stock, including the potential replacement of Service HQ and Preston Fire Station, together with enhancements to our training props at our Service Training Centre.
The capital programme shows the Authority utilising all its capital reserves and receipts part way through 2026/27, meaning that the remainder of the capital programme will need to be met from either capital grant (if available), additional revenue contributions or from new borrowing.听 Any borrowing will impact the revenue budget as capital financing (interest payable and Minimum Revenue Provision - MRP) charges. As we have already set aside funds (prepaid MRP) to offset our existing 拢2.0m of PWLB borrowing we would need to take out new borrowing of 拢11m. This has a significant impact on the revenue budget, in terms of interest payments and setting aside a sum equivalent to the Minimum Revenue Provision (MRP) and is reflected in our Medium-Term Financial Strategy.
The following significant financial risks have all been assessed and the Treasurer feels that these are adequately covered within the budget estimates or within the level of reserves currently held:-
Reductions in funding levels over and above those forecast;
Reduction in funding via Business Rates retention scheme;
Reduction in council tax funding due to changes in collection rates, localisation of council tax support, reducing tax base and/or council tax referendum limits;
Higher than anticipated inflation;
Larger increases in future pension costs/contributions;
Significant changes in retirement profiles;
Increase in costs arising from demand led pressures, i.e., increasing staff numbers, overtime due to spate conditions or major equipment replacement requirements;
Inadequacy of insurance arrangements.
Accounting Changes
The accounts have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting in the United Kingdom听2022/23 (the Code).听
Section 2: Statement on Annual Governance Statement
Scope of Responsibility
Lancashire Combined Fire Authority (the Authority) is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently, and effectively.听 The Authority also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
In discharging this overall responsibility, the Authority is responsible for putting in place proper arrangements for the governance of its affairs facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.
The Authority approved and adopted an updated Local Code of Corporate Governance in 2018 and this was reviewed by the Audit Committee in July 2023. It aligns with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government Framework 2016.听 Included within the Code are the following core principles:-
Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law
Ensuring openness and comprehensive stakeholder engagement
Defining outcomes in terms of sustainable economic, social, and environmental benefits
Determining the interventions necessary to optimise the achievement of the intended outcomes
Developing the entity鈥檚 capacity, including the capability of its leadership and the individuals within it
Managing risks and performance through robust internal control and strong public financial management
Implementing good practices in transparency, reporting, and audit to deliver effective accountability
(A copy of the code, setting out the core and supporting principles, what the Authority commits itself to do and how it will do this can be found on our website)
This statement explains how the Authority has complied with the code and also meets the requirements of regulation 6(2) of the Accounts and Audit Regulations 2015 in relation to the publication of a statement on internal control.
The Purpose of the Governance Framework
The governance framework comprises the systems and processes, and culture and values, by which the Authority is directed and controlled and its activities through which it accounts to, engages with and leads the community.听 It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.
The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level.听 It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness.听 The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of the Authority鈥檚 policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively, and economically.
The governance framework has been in place at the Authority for the year ended 31听March 2023 and up to the date of approval of the 2022/23 Statement of Accounts.
The Governance Framework
The Authority鈥檚 Local Code of Corporate Governance set out its framework for corporate governance. The key elements of the systems and processes that comprise the Authority鈥檚 governance arrangements in accordance with the seven principles of the Local Code of Corporate Governance include:-
The Community Risk Management Plan (CRMP) sets out the direction of the Service and how we will make Lancashire safer. It is informed by the greatest risks to the people and communities of Lancashire which are identified in our strategic assessment of risk (opens in a new tab). The plan describes our aim, priorities, equality objectives and values, alongside how we will prevent, protect and respond to the risks in Lancashire. The current plan covering 2022-2027 can be found on our website.
The Strategic Assessment of Risk鈥 (SAoR) seeks to underpin our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. This document can be found on our website;
The Annual Service Plan details the activities we will undertake to deliver the strategy set out in our CRMP. The current plan was approved this year and can be found on our website;
A Communication Strategy and the Consultation Strategy;
A comprehensive performance management framework, with the Performance Committee and Service Management Team receiving regular reports on performance against targets and any corrective action taken to address any variances.听 On an annual basis the Authority publishes an Annual Service Report;
A Corporate Programme Board provides oversight across 5 areas:-
Business Process Improvement Programme
Service Delivery Change Programme
Capital Projects Programme.
People Strategy
Risk Management
All major projects and reviews follow similar format and report to the Corporate Programme Board;
The Authority operates a Committee Structure aligned to strategic objectives, within agreed Terms of Reference, as follows:-
The Audit Committee - To advise on the adequacy and effectiveness of the Authority's Internal and External Audit Service and risk management arrangements, which operates in line with the core functions identified in CIPFAs Audit Committees 鈥 Practical Guidance for Local Authorities;
The Resources Committee - To consider reports and make decisions relating to financial, human resources and property related issues.
The Planning Committee - To consider reports and make decisions relating to all aspect of planning arrangements, including consultation and communication arrangements.
The Performance Committee - To consider reports and make recommendations on all aspects of performance management.
The Appeals Committee - To hear relevant appeals, grievances and complaints.
Clear management structure within the Service. The Executive Board, comprising the Chief Fire Officer (head of paid service), and 4 Executive Directors, is responsible for determining policy, monitoring performance and developing service plans in line with the Authority鈥檚 overall strategic objectives and is assisted in this process by the Service Management Team;
The Combination Scheme Order, Standing Orders, Terms of Reference of individual Committees, Scheme of Delegation and Financial Regulations establish overall arrangements for policy setting and decision making and the delegation of powers to members and officers;
Comprehensive suite of strategies and policies in place and regularly reviewed;
Codes of Conduct for members and officers, and member/officer protocol, which set out clear expectations for standards of behaviour;
Both the Monitoring Officer and Treasurer are involved in the Authority鈥檚 decision-making process, and ensure compliance with established policies, procedures, laws and regulations; All Authority reports are considered for human resource, financial, business risk, environmental and equality and diversity implications in order to identify key issues;
The Treasurer鈥檚 role and financial management arrangements align with requirements set out in CIPFAs Statement on the Role of the Chief Financial Officer in Local Government and CIPFAs Financial Management Code;
Well publicised arrangements for dealing with complaints and whistleblowing, and for combating fraud and corruption;
A Risk Management Strategy and framework which ensures that risks to the Service鈥檚 objectives are identified and appropriately managed;
Comprehensive Business Continuity arrangements in place, and tested on a regular basis;
A framework to review potential partnership arrangements utilising set criteria prior to entering into such arrangements;
Compliance with data transparency requirements, including publication of all key documents, committee agenda and minutes, pay policy and publication scheme on the internet;
Regular assessment of training & development needs of both members and officers, including appropriate appraisal system. Sufficient budget to meet relevant training requirements; and
Comprehensive service review process in place, comprising external views in the form of HMICFRS Inspection review, External Audit reviews, Internal Audit reviews and internal reviews undertaken by our own staff. Ultimately these culminate in the production, and publication, of an Annual Assurance Statement.
Review of effectiveness
The Authority has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control.听 The review of effectiveness is informed by the work of the executive managers within the Authority who have responsibility for the development and maintenance of the governance environment, the Internal Auditors annual report, and by comments made by the external auditors and other review agencies and inspectorates.
A statement of assurance was approved by the Authority in December 2022, it sets out the effectiveness of the governance arrangements for which it is responsible, including the system of internal control. The statement of assurance covers all the principles set out in the Authority鈥檚 Code of Corporate Governance. The statement of assurance reveals no areas of weakness in the Authority鈥檚 corporate governance arrangements; the arrangements are in all cases at least adequate and in most areas good.
In maintaining and reviewing the effectiveness of the Authority鈥檚 governance arrangements the following have been considered:-
A review of minutes of the Executive Board, Audit Committee and Authority to ensure that periodic monitoring and reviews are being reported appropriately and governance issues are addressed.
We updated our Strategic Assessment of Risk that underpins our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. We undertook an emergency cover review (ECR) to ensure that its emergency response remains effective and efficient, and that the Service is well equipped to respond to future challenges.
Her Majesty鈥檚 Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) reported the outcome of their second full inspection in July 2022; the focus was on the service they provide to the public, and the way they use the resources available. The HMICFRS reported that the Service is performing exceptionally well and has been recognised as 鈥榦utstanding鈥 for promoting values and culture. As well as being rated 鈥榦utstanding鈥 for culture and values, the service was rated as 鈥榞ood鈥 in the other 10 categories and there were no areas that 鈥榬equire improvement.鈥 The results mirror those of the service鈥檚 first full inspection in 2018, with the new report highlighting that the service has improved in almost all areas since then.
A new Annual Service Plan has been published, providing clarity, both internally and externally, on our priorities set out in the CRMP and describes what our ambitions are for each priority, as well as setting out the projects and actions that will be delivered, developed, or reviewed during the coming year against each of our priorities. This is supported by Local Delivery Plans.
Statement of Intent: Enhanced Collaboration agreed between LFRS, Lancashire Constabulary and North West Ambulance Services. Collaboration group established with regular reports to Members.
An Operational Assurance Team. The newly formed Organisational Assurance team under Planning, Performance and Assurance, will now have a broader reference than just a focus on operational assurance. The team has the responsibility for HMICFRS liaison, operational preparedness and will undertake internal audits/ assurance across the whole organisation based on trends, themes, and emerging needs. The team will identify and share good practice as well as areas for improvement, items will be tracked through to completion. The Organisational Assurance team will work closely with the Operational Assurance team (under Training and Operational Review) who have the responsibility for operational learning and response. The Operational Assurance team will continue to create the operational assurance performance summary which is published quarterly. A programme of preparedness visits will be managed by the Organisational Assurance team which has expanded on the operational audits undertaken previously.
Performance appraisal incorporating values is undertaken throughout the Service.
Internal Audit services were provided by Lancashire County Council, who comply with CIPFA鈥檚 Code of Internal Audit Practice. The service is designed to give assurance that the Authority maintains adequate systems of internal control and to make recommendations on ways to enhance these were felt necessary. The Assurance mapping exercise, with our Internal Auditors, has confirmed that a strong assurance framework is in place. As part of the 2022/23 internal audit plan the auditors undertook various reviews and gave the overall opinion that they can 鈥減rovide substantial assurance regarding the adequacy of design and effectiveness in operation of the organisation's frameworks of governance, risk management and control.鈥
The Authority鈥檚 external auditors are Grant Thornton, they are required to consider whether the service has put in place proper arrangements to secure economy, efficiency, and effectiveness in is use of resources. Their conclusions are set out below:
Financial Sustainability 鈥 鈥淣o significant weaknesses in arrangements identified but two improvement recommendations made鈥.
Governance 鈥 鈥淣o significant weaknesses in arrangements identified鈥.
Improving economy, efficiency, and effectiveness - 鈥淣o significant weaknesses in arrangements identified鈥.
On 30 November 2022 Grant Thornton gave an unqualified opinion on the Authority鈥檚 finance statements ended 31 March 2022.听
Last year鈥檚 Annual Governance Statement identified several areas for improvement, and progress against these are set out below:听
Area for Improvement | Action to date | Complete/On-going | Owner |
---|---|---|---|
A project to replace the existing Performance Management System will commence | Two projects have been initiated which will replace our data warehouse and performance reporting dashboards. A new data warehouse has been built and the first three service level KPI鈥檚 have been delivered including a front end PowerBi reporting dashboard. A scoping exercise is underway to determine the requirements for the wider performance management dashboards with a focus on service delivery performance reporting initially. 听 | On-going. Due to complete March 2024 | Head of Service Improvement |
An upgraded Finance system will be implemented in April 2022, as part of that we will review and implement improvements to the monthly budget monitoring process, making greater use of additional functionality provided. 听 | The upgraded Finance System was implemented in 2022/23. Improvements to the monthly budget monitoring processes is taking place in 2023 and further development work to improve functionality is also taking place in 2023. | On-Going. 听 Due to complete March 2024. | Head of Finance |
Embed the Core Code of Ethics into our corporate policy, and recruitment and promotion process | The ethical principles in the national Code of Ethics have been built into the Services corporate policies, human resources policies and job descriptions. Recruitment and promotion assessment of candidates incorporates the Services values and the Code of Ethics. 听 | Complete | 听 |
Significant governance issues
Based on the review of the sources of assurance set out in this statement, we are satisfied that Lancashire Combined Fire Authority and SM重口 has in place a satisfactory system of internal control which facilitates the effective exercise of its functions, and which includes arrangements for the management of risk.
Whilst no significant governance issues were identified, the following new areas for improvement, are listed below:
Identify a mechanism to report to Members of the CFA our response to national recommendations made by the HMICFRS during the year. Due to complete March 2024.
We propose over the coming year to take steps to address the above matter to further enhance our governance arrangements.听 We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and will monitor their implementation and operation as part of our next annual review.
Approved
County Councillor and Chair of The Combined Fire Authority, David O'Toole
Chief Fire Officer Justin Johnston
Treasurer of The Combined Fire Authority, Steven Brown
Section 3: Statement of Responsibilities for the Statement of Accounts
The Authority鈥檚 Responsibilities
The Authority is required:
To make arrangements for the proper administration of the financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs.听 In this Authority that officer is the Treasurer to the Fire Authority.
To manage its affairs to secure economic, efficient, and effective use of resources and safeguard its assets.
To approve the Statement of Accounts.
The Treasurer鈥檚 Responsibilities
The Treasurer is responsible for the preparation of the Authority鈥檚 Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting (鈥榯he Code鈥), is required to present a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year ended 31 March 2023.
In preparing this Statement of Accounts, the Treasurer has:
Selected suitable accounting policies and then applied them consistently;
Made judgements and estimates that were reasonable and prudent;
Complied with the Code.
The Treasurer has also:
Kept proper accounting records which were up-to-date;
Taken reasonable steps for the prevention and detection of fraud and other irregularities.
Approved and signed by Steven Brown and County Councillor John Shedwick, Chair of the Audit Committee.
Section 4: Comprehensive Income and Expenditure Statement
This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount funded from taxation.听 Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in both the Expenditure and Funding Analysis and the Movement in Reserves Statement.
Notes | Continuing Operations | GrossExpenditure2022/23 拢000 | GrossIncome2022/23 拢000 | NetExpenditure2022/23 拢000 | GrossExpenditure2021/22 拢000 | GrossIncome2021/22 拢000 | NetExpenditure2021/22 拢000 |
---|---|---|---|---|---|---|---|
Service Delivery | 听33,911 | (2,110) | 31,801 | 听32,756 | (2,364) | 听30,391 | |
Strategy and Planning | 听12,389 | (847) | 11,542 | 听11,912 | (984) | 听10,928 | |
People and Development | 听2,334 | - | 2,334 | 听1,921 | (1) | 听1,920 | |
Corporate Services | 听6,285 | (65) | 6,220 | 听4,802 | (149) | 听4,653 | |
Fire-fighters Pensions | 听1,141 | - | 1,141 | 听1,259 | (19) | 听1,240 | |
Overheads | 听6,757 | (4,863) | 1,894 | 听6,429 | (5,211) | 听1,217 | |
Net Cost of Services | 听62,817 | (7,885) | 听54,932 | 听59,078 | (8,729) | 听50,349 | |
听 | Gain on disposal of non-current assets | 听 | 听 | (9) | 听 | 听 | (3) |
听 | Financing & investment income & expenditure | 听 | 听 | 听 | 听 | 听 | 听 |
Interest payable and similar charges | 听 | 听 | 1,388 | 听 | 听 | 1,408 | |
Pensions interest cost and expected return on pensions assets | 听 | 听 | 23,246 | 听 | 听 | 17,648 | |
Interest receivable and similar Income | 听 | 听 | (837) | 听 | 听 | (206) | |
听 | Taxation and non-specific grant income | 听 | 听 | 听 | 听 | 听 | 听 |
听 | Council tax | 听 | 听 | (34,968) | 听 | 听 | (33,160) |
听 | Revenue Support Grant | 听 | 听 | (9,642) | 听 | 听 | (8,570) |
听 | Non-domestic rates redistribution | 听 | 听 | (15,559) | 听 | 听 | (14,786) |
听 | Business rates S31 grant | 听 | 听 | (2,951) | 听 | 听 | (1,360) |
听 | Business rates S31 grant 鈥 additional reliefs | 听 | 听 | - | 听 | 听 | (1,101) |
听 | Local taxation Income Guarantees | 听 | 听 | - | 听 | 听 | (4) |
听 | Capital grant income | 听 | 听 | (253) | 听 | 听 | (253) |
听 | Deficit on the provision of services | 听 | 听 | 15,347 | 听 | 听 | 9,962 |
听 | Surplus on revaluation of non-current assets | 听 | 听 | (21,735) | 听 | 听 | (10,610) |
Actuarial (gains)/losses on pensions assets and liabilities | 听 | 听 | (276,694) | 听 | 听 | (13,400) | |
听 | Other comprehensive income & expenditure | 听 | 听 | (298,429) | 听 | 听 | (24,009) |
听 | Total Comprehensive Income and Expenditure | 听 | 听 | (283,082) | 听 | 听 | (14,047) |
Section 5: Movement in Reserves Statement 2022/23
This statement shows the movement in the year on the different reserves held by the Authority, analysed into 鈥楿sable Reserves鈥 (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves.听 The Surplus or (Deficit) on the provision of services line shows the true economic cost of providing the Authority鈥檚 services, more details of which are shown in the Comprehensive Income and Expenditure Statement.听 These are different from the statutory amounts required to be charged to the General Fund Balance and the Comprehensive Income and Expenditure Statement for council tax setting purposes.听 The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Authority.
Summary | General fund 拢鈥000 | Earmarked reserves 拢鈥000 | Total General Fund Balance 拢鈥000 | Capital fundingreserve 拢鈥000 | Capital grant unapplied reserve 拢鈥000 | Capital receipt reserve 拢鈥000 | Total usable reserves 拢鈥000 | Unusable reserves 拢鈥000 | Total Authority reserves 拢鈥000 |
---|---|---|---|---|---|---|---|---|---|
Balance at 31 March 2023 carried forwards | 听6,536 | 听9,742 | 听16,278 | 17,672 | 听40 | 听1,683 | 听35,673 | (789,359) | (753,686) |
Movement in reserves during 2022/23 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 |
Surplus/(Deficit) on provision of services | (15,347) | 听 | (15,347) | 听 | 听 | 听 | (15,347) | 听-听听 | (15,347) |
Other comprehensive income and expenditure | 听 | 听 | 听-听听 | 听 | 听 | 听 | 听-听听 | 听298,429 | 听298,429 |
Total comprehensive income and expenditure | (15,347) | 听-听听 | (15,347) | 听-听听 | 听-听听 | 听-听听 | (15,307) | 听298,429 | 听283,082 |
Adjustments between accounting basis and funding basis under regulations | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 |
Charges for depreciation and impairment of non-current assets | 听5,859 | 听 | 听5,859 | 听 | 听 | 听 | 听5,859 | (5,859) | 听-听听 |
Amortisation of intangible assets | 听94 | 听 | 听94 | 听 | 听 | 听 | 听94 | (94) | 听-听听 |
Disposal of assets | (9) | 听 | (9) | 听 | 听 | 听9 | 听-听听 | 听-听听 | 听-听听 |
Capital grants unapplied | 听42 | 听 | 听42 | 听 | (42) | 听 | 听-听听 | 听-听听 | 听-听听 |
Provision for the repayment of debt | (487) | 听 | (487) | 听 | 听 | 听 | (487) | 听487 | 听-听听 |
Capital expenditure charged against General Fund Balance | (4,300) | 听 | (4,300) | 听 | 听 | 听 | (4,300) | 听4,300 | 听-听听 |
Amount by which the Code and the statutory pension costs differ | 听12,879 | 听 | 听12,879 | 听 | 听 | 听 | 听12,879 | (12,879) | 听-听听 |
Amount by which the Code and the statutory collection fund income differ | (983) | 听 | (983) | 听 | 听 | 听 | (983) | 听983 | 听-听听 |
听Total | 13,095 | 听-听听 | 听13,095 | 听-听听 | (42) | 听9 | 听13,062 | (13,062) | 听-听听 |
Net increase/decrease before transfers to earmarked reserves | (2,252) | 听-听听 | (2,252) | 听-听听 | (42) | 听9 | (2,285) | 听285,367 | 283,082 |
Transfers (to)/from earmarked reserves | 听484 | (484) | 听-听听 | 听 | 听 | 听 | 听-听听 | 听-听听 | 听-听听 |
Transfers (to)/from capital funding reserve | 听 | 听 | 听-听听 | 听2,672 | 听 | 听 | 听2,672 | (2,672) | 听-听听 |
Transfers (to)/from accumulated absences adjustment account | 听118 | 听 | 听118 | 听 | 听 | 听 | 听118 | (118) | 听-听听 |
Adjustments to NWFC 21/22 balances following audit | 听 | 听 | 听 | 听 | 听29 | 听 | 听29 | 听 | 29 |
Net (to)/from earmarked reserves | 听602 | (484) | 听118 | 2,672 | 听29 | 听-听听 | 听2,819 | (2,790) | 29听听 |
Increase/(Decrease) in the year | (1,650) | (484) | (2,134) | 2,672 | (13) | 听9 | 听534 | 282,577 | 283,111 |
Balance at 31 March 2023 carried forwards | 听4,887 | 听9,258 | 听14,145 | 20,344 | 听27 | 听1,692 | 听36,208 | (506,782) | (470,574) |
Section 6: Movement in Reserves Statement 2021/22
This statement shows the movement in the year on the different reserves held by the Authority, analysed into 鈥楿sable Reserves鈥 (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves.听 The Surplus or (Deficit) on the provision of services line shows the true economic cost of providing the Authority鈥檚 services, more details of which are shown in the Comprehensive Income and Expenditure Statement.听 These are different from the statutory amounts required to be charged to the General Fund Balance and the Comprehensive Income and Expenditure Statement for council tax setting purposes.听 The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Authority.
Summary | General fund 拢000 | Earmarked reserves 拢000 | Total General Fund Balance 拢000 | Capital funding reserve 拢000 | Capital grant unapplied reserve 拢000 | Capital receipts reserve 拢000 | Total usable reserves 拢000 | Unusable reserves 拢000 | Total Authority reserves 拢000 |
---|---|---|---|---|---|---|---|---|---|
Balance at 31 March 2021 carried forwards | 听6,463 | 听10,769 | 听17,232 | 听17,966 | 听101 | 听1,680 | 听36,979 | (804,713) | (767,734) |
Movement in reserves during 2021/22 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 |
Surplus/(Deficit) on provision of services | (9,962) | 听 | (9,962) | 听 | 听 | 听 | (9,962) | 听-听听 | (9,962) |
Other comprehensive income and expenditure | - | - | - | - | - | - | - | 听24,009 | 听24,009 |
Total comprehensive income and expenditure | (9,962) | 听 | (9,962) | 听 | 听 | 听 | (9,962) | 听24,009 | 听14,047 |
Adjustments between accounting basis and funding basis under regulations | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 | 听 |
Charges for depreciation and impairment of non-current assets | 听4,863 | 听 | 听4,863 | 听 | 听 | 听 | 听4,863 | (4,863) | - |
Amortisation of intangible assets | 听158 | 听 | 听158 | 听 | 听 | 听 | 听158 | (158) | 听-听听 |
Disposal of assets | (3) | 听 | (3) | 听 | 听 | 听3 | 听-听听 | 听-听听 | 听-听听 |
Capital grants unapplied | 听61 | 听 | 听61 | 听 | (61) | 听 | 听-听听 | 听-听听 | 听-听听 |
Provision for the repayment of debt | 听(458) | 听 | 听(458) | 听 | 听 | 听 | 听(458) | 458 | 听-听听 |
Capital expenditure charged against General Fund Balance | (2,373) | 听 | (2,373) | 听 | 听 | 听 | (2,373) | 听2,373 | 听-听听 |
Amount by which the Code and the statutory pension costs differ | 听9,130 | 听 | 听9,130 | 听 | 听 | 听 | 听9,130 | (9,130) | 听-听听 |
Amount by which the Code and the statutory collection fund income differ | (1,585) | 听 | (1,585) | 听 | 听 | 听 | (1,585) | 听1,585 | 听-听听 |
听 | 听9,793 | 听-听听 | 听9,793 | 听-听听 | (61) | 听3 | 听9,735 | (9,735) | - |
Net increase/decrease before transfers to earmarked reserves | 听(169) | 听-听听 | 听(169) | 听-听听 | (61) | 听3 | (228) | 听14,275 | 听14,047 |
Transfers (to)/from earmarked reserves | 听690 | (690) | 听-听听 | 听 | 听 | 听 | 听-听听 | 听-听听 | 听-听听 |
Transfers (to)/from capital funding reserve | (346) | (337) | (683) | (294) | 听 | 听 | (977) | 听977 | 听-听听 |
Transfers (to)/from accumulated absences adjustment account | (102) | 听 | (102) | 听 | 听 | 听 | (102) | 听102 | 听-听听 |
Net tfr (to)/from earmarked reserves | 听242 | (1,027) | (785) | (294) | 听-听听 | 听-听听 | (1,079) | 听1,079 | 听-听听 |
Increase/(Decrease) in the year | 听73 | (1,027) | (954) | (294) | (61) | 听3 | (1,306) | 听15,351 | 听14,047 |
Balance at 31 March 2022 carried forwards | 听6,536 | 听9,742 | 听16,278 | 听17,672 | 听40 | 听1,683 | 听35,673 | 听(789,359) | (753,686) |
Section 7: Balance Sheet
The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority.听 The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority.听 Reserves are reported in two categories, usable reserves are those that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example capital receipts may only be used to fund capital expenditure).听 The second category is unusable reserves and includes reserves that hold unrealised gains and losses (e.g. the revaluation reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 鈥楢djustments between accounting basis and funding basis under regulations.听
听
听Notes | Summary听 | At 31 March 2023 拢000 | At 31 March 2022 拢000 |
---|---|---|---|
听 | Long-Term Assets | 听 | 听 |
Property, Plant & Equipment | 听125,717 | 108,637 | |
Intangible Assets | 听906 | 523 | |
Long-Term Investments | 听- | 5,000 | |
听 | 听 | 听126,623 | 114,160 |
听 | Current Assets | 听 | 听 |
听 | Inventories | 听310 | 257 |
Short-Term Investments | 听15,000 | 10,000 | |
Short-Term Debtors | 听16,671 | 12,888 | |
Cash & Cash Equivalents | 听16,317 | 17,896 | |
听 | 听 | 听48,298 | 41,041 |
听 | Current Liabilities | 听 | 听 |
Other Short-Term Liabilities | (558) | (492) | |
Short-Term Creditors | (10,166) | (9,296) | |
听 | 听 | (10,724) | (9,788) |
听 | Long-Term Liabilities | 听 | 听 |
Provisions听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 | (1,239) | (1,447) | |
Long-Term Borrowing | (2,000) | (2,000) | |
Other Long-Term Liabilities | (631,532) | (895,652) | |
听 | 听 | (634,771) | (899,099) |
听 | 听 | 听 | 听 |
听 | Net Liabilities | (470,574) | (753,686) |
Revenue Reserves | (14,145) | (16,278) | |
Capital Funding Reserve | (20,344) | (17,672) | |
Capital Grants Unapplied Account | (27) | (40) | |
Usable Capital Receipts Reserve | (1,692) | (1,683) | |
Usable Reserves: | (36,208) | (35,673) | |
Revaluation Reserve | (75,306) | (56,221) | |
Capital Adjustment Account | (38,281) | (39,469) | |
Pension Reserve | 听619,619 | 883,434 | |
Collection Fund Adjustment Account | (207) | 776 | |
Accumulated Absences Adjustment Account | 听957 | 839 | |
Unusable Reserves: | 听506,782 | 789,359 | |
听 | Total Reserves | 听470,574 | 753,686 |
This Statement of Accounts is that upon which the Auditor should enter his certificate and opinion.听 It presents a true and fair view of the financial position of the Authority at 31 March 2023 and its income and expenditure for the year then ended.
Section 8: Cashflow Statement
The cash flow statement shows the changes in cash and cash equivalents of the Authority during the reporting period.听 The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities.听 The amounts of net cash flows arising from operating activities is an indicator of the extent to which the operations are funded by way of taxation and grant income or from the recipients of services provided by the Authority.听 Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority鈥檚 future service delivery.听 听
|
Section 9: Notes to the core financial statements
听1听听听听听 Expenditure and Funding Analysis听听听听听听听 听
The objective of the Expenditure and Funding Analysis is to demonstrate to council taxpayers how the funding available to the Authority (i.e. Government grants, council tax and business rates) for the year has been used in providing services in comparison with those resources consumed or earned by the Authority in accordance with generally accepted accounting practices.听 The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the Authority鈥檚 directorates.听 Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.
2022/23
Summary | As reported for resource management 拢000 | Adjustment to arrive at the amount chargeable to the General Fund (Note 1a) 拢000 | Net chargeable to the General Fund 拢000 | Adjustments between the Funding and Accounting basis (Note 1a) 拢000 | Net Expenditure in the Comprehensive Income and Expenditure Statement 拢000 |
---|---|---|---|---|---|
Service Delivery | 41,946 | - | 41,946 | (10,145) | 31,801 |
Strategy and Planning | 12,211 | - | 12,211 | (669) | 11,542 |
People and Development | 1,934 | - | 1,934 | 400 | 2,334 |
Corporate Services | 6,240 | - | 6,240 | (20) | 6,220 |
Firefighters Pensions | 1,141 | - | 1,141 | - | 1,141 |
Overheads | 1,440 | - | 1,440 | 454 | 1,894 |
Net cost of Services | 64,912 | - | 64,912 | (9,980) | 54,932 |
Other income and expenditure | (63,239) | - | (63,239) | 23,654 | (39,585) |
Surplus on provision of services | 1,673 | - | 1,673 | 13,674 | 15,347 |
Opening General Fund balance | 听 | 听 | (6,536) | 听 | 听 |
Surplus on provision of services | 听 | 听 | 1,673 | 听 | 听 |
NWFC recognise 25% surplus on provision of services | 听 | 听 | (24) | 听 | 听 |
Closing General Fund balance | 听 | 听 | (4,887) | 听 | 听 |
听2021/22
Summary | As reported for resource management 拢000 | Adjustment to arrive at the amount chargeable to the General Fund (Note 1a) 拢000 | Net chargeable to the General Fund 拢000 | Adjustments between the Funding and Accounting basis (Note 1a) 拢000 | Net Expenditure in the Comprehensive Income and Expenditure Statement 拢000 |
---|---|---|---|---|---|
Service Delivery | 38,712 | - | 38,712 | (8,321) | 听30,391 |
Strategy and Planning | 11,159 | - | 11,159 | (230) | 听10,928 |
People and Development | 1,608 | - | 1,608 | 311 | 听1,920 |
Corporate Services | 4,506 | - | 4,506 | 147 | 听4,653 |
Firefighters Pensions | 1,239 | - | 1,239 | - | 听1,239 |
Overheads | 1,678 | - | 1,678 | (461) | 听1,217 |
Net cost of Services | 58,902 | - | 58,902 | (8,553) | 听50,349 |
Other income and expenditure | (59,234) | - | (59,234) | 18,847 | (40,387) |
Surplus on provision of services | (332) | - | (332) | 10,294 | 9,963 |
Opening General Fund balance | 听 | 听 | (6,464) | 听 | 听 |
Surplus on provision of services | 听 | 听 | (332) | 听 | 听 |
Transfer to Capital Funding Reserve | 听 | 听 | 331 | 听 | 听 |
NWFC recognise 25% surplus on provision of services | 听 | 听 | (73) | 听 | 听 |
听1a. Note to the Expenditure and Funding Analysis听
2022/23 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts | Transfer to/(from) Earmarked Reserves 拢000 | Transfer to/(from) Capital Reserves 拢000 | Total to arrive at amount charged to the General Fund 拢000 | Adjustments for Capital Purposes (1) 拢000 | Net change for Pensions Adjustments (2) 拢000 | Other Differences (3) 拢000 | Total adjustment between funding and accounting basis 拢000 |
---|---|---|---|---|---|---|---|
Service Delivery | - | - | - | - | (10,923) | 778 | (10,145) |
Strategy and Planning | - | - | - | - | (436) | (233) | (669) |
People and Development | - | - | - | - | 400 | - | 400 |
Corporate Services | - | - | - | - | 252 | (272) | (20) |
Firefighters Pensions | - | - | - | - | - | - | - |
Overheads | - | - | - | 4,214 | 329 | (4,089) | 454 |
Net cost of Services | - | - | - | 4,214 | (10,378) | (3,816) | (9,980) |
Other income and expenditure | - | - | - | - | 23,246 | 408 | 23,654 |
Total | - | - | - | 4,214 | 12,868 | (3,408) | 13,674 |
听
2021/22 Adjustmentsfrom General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts | Transfer to/(from) Earmarked Reserves 拢000 | Transfer to/(from) Capital Reserves 拢000 | Total to arrive at amount charged to the General Fund 拢000 | Adjustments for Capital Purposes (1) 拢000 | Net change for Pensions Adjustments (2) 拢000 | Other Differences (3) 拢000 | Total adjustment between funding and accounting basis 拢000 |
---|---|---|---|---|---|---|---|
Service Delivery | - | - | - | 133 | (8,884) | 430 | (8,321) |
Strategy and Planning | - | - | - | (41) | (367) | 177 | (230) |
People and Development | - | - | - | - | 311 | - | 311 |
Corporate Services | - | - | - | - | 277 | (130) | 147 |
Firefighters Pensions | - | - | - | - | - | - | - |
Overheads | - | - | - | 2,144 | 145 | (2,750) | (461) |
Net cost of Services | - | - | - | 2,236 | (8,518) | (2,272) | (8,553) |
Other income and expenditure | - | - | - | - | 17,648 | 1,199 | 18,847 |
Total | 15 | 348 | 363 | 2,598 | 13,584 | (539) | 15,643 |
Note 1 鈥 Adjustments for capital purposes 鈥 this column adds in depreciation, impairments and revaluation gains and losses.听 It also adjusts for capital disposals with a transfer of the income on the disposal and the amounts written off.听 MRP is deducted because it is not chargeable under generally accepted accounting practices.听 Adjustments are also made to recognise capital grant income.
Note 2 鈥 Pensions Adjustments - This shows which lines have been affected by the removal of pension contributions and replaced with IAS19 debits and credits.
Note 3 鈥 Other Differences - This column adjusts for timing differences on the amounts chargeable for Business Rates and Council Tax under Statute and the Code and transfers to reserves.
2听听听听听听听听听 Fire Authority Costs
听In 2022/23 Fire Authority costs amounted to 拢0.332m (2021/22: 拢0.317m), analysed as follows:听
听Costs | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Members allowances/expenses | 140 | 136 |
Statutory officers | 123 | 111 |
Others | 69 | 70 |
Total | 332 | 317 |
3听听听听听听听听听 Employees Emoluments
Details of the Authority鈥檚 employees, out of an estimated 1135 employees, who have received pay and benefits of more than 拢50,000 are:听
听Salary band | 2022/23 | 2021/22 |
---|---|---|
拢75,000 - 拢79,999 | 2 | 1 |
拢70,000 - 拢74,999 | 2 | 3 |
拢65,000 - 拢69,999 | 8 | 6 |
拢60,000 - 拢64,999 | 20 | 7 |
拢55,000 - 拢59,999 | 51 | 41 |
拢50,000 - 拢54,999 | 65 | 59 |
听Total | 148 | 117 |
The above table excludes Senior Officers, who are disclosed individually in the following tables.
Senior Officers Remuneration
During the year, Senior Officers received remuneration packages as detailed below 鈥 these employees are also excluded from the table above.听
Post holder information (post title and name) 听 2022/23 | Salary (拢) 听 听 听 听 听 听 | Allowances 听 听 | Total Remuneration excluding pension contributions (拢) 听 听 | Pension contributions accrued at the standard employer rate for all senior officers (拢) | Total Remuneration including pension contributions (拢) 听 听 |
---|---|---|---|---|---|
Chief Fire Officer 鈥 Justin Johnston 听 | 153,121 | - | 153,121 | 44,099 | 197,220 |
Director of Service Delivery 鈥 John Charters 听 | 120,377 | - | 120,377 | 34,669 | 155,046 |
Director of Strategy & Planning 鈥 Steve Healey 听 | 141,769 | - | 141,769 | 40,829 | 182,598 |
Director of People & Development 鈥 Robert Warren 听 | 108,678 | - | 108,678 | 18,584 | 127,262 |
Director of Corporate Services 鈥 Keith Mattinson | 94,344 | - | 94,344 | 16,133 | 110,477 |
听Total | 618,289 | - | 618,289 | 154,314 | 772,603 |
听
Post holder information (post title and name) 听 2021/22 | Salary 听(拢) 听 听 听 听 听 | Allowances (拢) 听 听 | Total Remuneration excluding pension contributions 听(拢) 听 | Pension contributions accrued at the standard employer rate for all senior officers (拢) | Total Remuneration including pension contributions (拢) 听 听 |
---|---|---|---|---|---|
Chief Fire Officer 鈥 Justin Johnston 听 | 152,425 | - | 152,425 | 43,898 | 196,324 |
Director of Service Delivery 鈥 Steve Healey (1 April to 31 December) 听 | 104,554 | - | 104,555 | 22,584 | 127,138 |
Director of Strategy & Planning 鈥 Steve Healey (1 January 22 to date) 听 | 34,851 | - | 34,851 | 7,528 | 42,379 |
Director of Strategy & Planning 鈥 Ben Norman (1 April to 31 December) 听 | 89,671 | - | 89,671 | 25,825 | 115,496 |
Director of Service Delivery 鈥 Jon Charters (1 January 22 to date) | 29,040 | - | 29,040 | 8,364 | 37,404 |
Director of People & Development 鈥 Robert Warren 听 | 108,277 | - | 108,277 | 18,515 | 126,792 |
Director of Corporate Services 鈥 Keith Mattinson | 90,244 | - | 90,244 | 15,432 | 105,675 |
听Total | 609,062 | - | 609,062 | 142,146 | 761,246 |
听Exit Packages
听There were no exit packages in 2022/23 or 2021/22.
听4. External Auditors Fees
听In 2022/23, the Fire Authority paid a total of 拢0.044m to its external auditors, Grant Thornton (2021/22: 拢0.044m), as follows:
Summary | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Audit fees 鈥 Grant Thornton | 44 | 44 |
听5. Related Parties Transactions
The Authority is required to disclose material transactions with related parties 鈥 bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by the Authority.听 Disclosure of these transactions allows readers to assess the extent to which the Authority might have been constrained in its ability to operate independently or might have secured the ability to limit another party鈥檚 ability to bargain freely with the authority. Consideration must be given to materiality from both the viewpoint of the Authority and the related party.
Central Government
Central government has effective control over the general operations of the Authority 鈥 it is responsible for providing the statutory framework within which the Authority operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Authority has with other parties (e.g. council tax bills).听
Members
Members of the Authority have direct control over the Authority鈥檚 financial and operating policies.听 The total of members鈥 allowances paid in 2022/23 is shown in Note 2. As required under Section 81 of the Local Government Act 2000, members鈥 outside interests are recorded in a formal register and the Code of Conduct operated by the Authority requires members to declare any related interests they have, and to take no part in meetings or decisions on issues concerning those related interests.
In addition, a survey of the related party interests of members and their immediate family members was carried out in preparing the Statement of Accounts. This survey showed that members have outside interests in bodies that have transactions with the Authority, such as:
roles as members of Lancashire County Council, the district and unitary authorities;
roles with voluntary organisations;
There is no evidence in these cases of control of one party by the other, however material transactions of 拢1.003m spend with Lancashire County Council requires disclosure in this note. Most of this sum relates to maintenance of the Authority鈥檚 vehicle fleet, in addition to services provided under Service Level Agreements.
Officers
In 2022/23 one Senior Officer declared a family relationship with a Senior Officer who worked across two of our major billing authorities (in 2021/22 the same officer declared the same family relationship, covering three of our billing authorities).听 Although there are significant transactions between the parties in relation to business rates (拢0.461m received from the billing authorities, 2021/22: 拢0.669m from the three relevant authorities), and council tax (拢5.772m received from the billing authorities, 2021/22: 拢7.852m from the three relevant authorities), the administration of these is strictly defined by a statutory framework.
6. Property, Plant & Equipment
Details on policies can be seen in Note 29, Accounting Policies.
Movements during the Year
The table below summarises the movements in Property, Plant and Equipment during the year.听 Land and buildings, vehicles, plant, furniture, and equipment are all disclosed at their net current value.听 All additions (i.e. new expenditure) are shown at cost.
Movements in Property, Plant and Equipment analysed into their different categories for 2022/23 are:
Movement during the year | Other Land & Buildings 拢000 | PFI Assets 鈥 land & buildings 拢000 | Vehicles, Plant & Equipment 拢000 | Total Property, Plant & Equipment 拢000 |
---|---|---|---|---|
Cost or valuation | 听 | 听 | 听 | 听 |
At 1 April 2022 | 听69,114 | 听31,175 | 听24,160 | 听124,449 |
Additions | 听473 | 151 | 580 | 1,204 |
Disposals | 听-听听 | 听-听听 | (32) | (32) |
Impairment losses recognised in the Revaluation Reserve | (279) 听 | (269) | 听-听听 | (548) |
Impairment losses recognised in the CIES Deficit on the Provision of Services | 听 (271) 听 | 听听听 | 听 听 听 听 | 听 (271) 听 |
Revaluations | 12,838 | 听5,375 | 听-听听 | 18,213 |
As at 31 March 2023 | 听81,875 | 听36,432 | 24,708 | 听143,015 |
Depreciation and impairments | 听 | 听 | 听 | 听 |
At 1 April 2022 | - | 听-听听 | (15,812) | (15,812) |
Depreciation charge for 2022/23 | (3,034) | (1,016) | (1,538) | (5,588) |
Disposals | 听-听听 | 听-听听 | 听32 | 听32 |
Revaluations | 3,054 | 1,016 | - | 4,070 |
As at 31 March 2023 | 20听听 | 听-听听 | (17,318) | (17,298) |
Balance sheet at 31 March 2023 | 81,895 | 36,432 | 7,390 | 125,717 |
Balance sheet at 31 March 2022 | 听69,114 | 31,175 | 听8,348 | 听108,637 |
Nature of asset holding | 听 | 听 | 听 | 听 |
Owned | 听81,895 | 听-听听 | 听7,387 | 听89,282 |
Finance lease | -听 | 听-听听 | 3 | 3 |
PFI | 听-听听 | 36,432 | 听-听听 | 36,432 |
听 | 81,895 | 听36,432 | 听7,390 | 听125,717 |
Carried at historical cost | 听-听听 | 听-听听 | 7,390 | 7,390 |
Valued at current value as at: | 听 | 听 | 听 | 听 |
31 March 2023 | 听81,895 | 36,432 | 听-听听 | 118,327 |
31 March 2010 | 听-听听 | 听-听听 | 听-听听 | 听-听听 |
Total cost or valuation | 听81,895 | 听36,432 | 听7,390 | 听125,717 |
On 31 March 2023 the Authority undertook a full revaluation review on approximately one fifth of its land and buildings, and in addition carried out a desktop revaluation exercise on the remainder, which resulted in a net revaluation gain of 拢22.283m (2021/22: net gain of 拢12.340m).听
Revenue Leases are included in the quinquennial asset valuation programme to meet IFRS 16 requirements however are considered on a desktop basis only this year. All will be valued as full asset valuations from commencement of the 2023-24 financial year, in line with CIPFA Code of Practice.
The comparative figures detailing the movement during 2021/22:
Movement during the year | Other Land & Buildings 拢000 | PFI Assets 鈥 land & buildings 拢000 | Vehicles, Plant & Equipment 拢000 | Total Property, Plant & Equipment |
---|---|---|---|---|
Cost or valuation | 听 | 听 | 听 | 听 |
At 1 April 2021 | 听60,814 | 听29,200 | 听24,150 | 听114,164 |
Additions | 听2,865 | 听- | 听487 | 听3,352 |
Disposals | 听-听听 | 听-听听 | (405) | (405) |
Impairment losses recognised in the Revaluation Reserve | (1,004) | (726) | 听-听听 | (1,730) |
Impairment losses recognised in the Deficit on the Provision of Services | 听 | 听-听听 | (72) | (72) |
Revaluations | 听6,439 | 听2,701 | 听-听听 | 听9,140 |
As at 31 March 2022 | 听69,114 | 听31,175 | 听24,160 | 听124,449 |
Depreciation and impairments | 听 | 听 | 听 | 听 |
At 1 April 2021 | (30) | 听-听听 | (14,596) | (14,626) |
Depreciation charge for 2021/22 | (2,416) | (753) | (1,622) | (4,791) |
Disposals | 听-听听 | 听-听听 | 听405 | 听405 |
Revaluations | 听2,446 | 听753 | 听-听听 | 听3,200 |
As at 31 March 2022 | 听-听听 | 听-听听 | (15,812) | (15,812) |
Balance sheet at 31 March 2022 | 听69,114 | 听31,175 | 听8,348 | 听108,637 |
Balance sheet at 31 March 2021 | 听60,783 | 听29,200 | 听9,555 | 听99,538 |
Nature of asset holding | 听 | 听 | 听 | 听 |
Owned | 听68,844 | 听-听听 | 听8,305 | 听77,149 |
Finance lease | 听270 | 听-听听 | 听43 | 听313 |
PFI | 听-听听 | 听31,175 | 听-听听 | 听31,175 |
听 | 听69,114 | 听31,175 | 听8,348 | 听108,637 |
Carried at historical cost | 听-听听 | 听-听听 | 听8,348 | 听8,348 |
Valued at current value as at: | 听 | 听 | 听 | 听 |
31 March 2022 | 听69,114 | 听31,175 | 听-听听 | 听100,289 |
31 March 2010 | 听-听听 | 听-听听 | 听-听听 | 听-听听 |
Total cost or valuation | 听69,114 | 听31,175 | 听8,348 | 听108,637 |
听Heritage Assets
The Authority holds several heritage assets, in the form of both fire memorabilia such as antique fire extinguishers, and two vintage fire appliances.听 Due to the nature of these assets, it is not possible to market test the value of these, therefore they are not included in the Property, Plant and Equipment note.
Capital Expenditure
The total capital expenditure in 2022/23 is shown in the table below, together with the resources that have been used to finance it.听 Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Authority that has yet to be financed.听 The CFR is analysed in the second part of this note.
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Opening Capital Financing Requirement | 12,770 | 13,225 |
Capital investment: | 听 | 听 |
Property, Plant & Equipment* | 1,203 | 3,352 |
Intangible assets* | 432 | 31 |
Sources of Finance: | 听 | 听 |
Capital Reserves | - | (977) |
Revenue contributions to capital* | (1,635) | (2,404) |
MRP | (487) | (457) |
Closing Capital Financing Requirement | 12,283 | 12,770 |
Explanation of movements in year | 听 | 听 |
(Decrease)/Increase in underlying need to borrow (supported by Government financial assistance) | (487) | (457) |
Assets acquired under finance lease | - | 2 |
听Total | (487) | (455) |
*听听听听听 Includes NWFC balances.
听Details of Assets Held
听The number of main assets held by the Authority are shown below:听
听Assets | 2022/23 | 2021/22 |
---|---|---|
Headquarters | 1 | 1 |
Fire Stations (including Area Headquarters) | 39 | 39 |
Training School | 1 | 1 |
Fire houses | 1 | 1 |
听Capital Commitments
Capital projects often take several years to complete, which means that the Authority is committed to capital expenditure in following years arising from contracts entered into at the Balance Sheet date, but on which all or part of the capital work has yet to be undertaken. The estimated capital expenditure committed at 31 March 2023 is 拢4.704m (2021/22: 拢3.747m).听
7. Intangible Assets
The Authority accounts for its software as intangible assets.听 All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Authority.听听
Movement during | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Cost or valuation | 听 | 听 |
At 1 April | 2,422 | 2,380 |
Additions | 477 | 42 |
As at 31 March | 2,899 | 2,422 |
Amortisation & impairment | 听 | 听 |
听At 1 April | (1,899) | (1,741) |
Amortisation charge for the year | (94) | (158) |
As at 31 March | (1,993) | (1,899) |
Balance sheet at 31 March 2023 | 听 906 | 听 523 |
Balance sheet at 31 March 2022 | 523 | 639 |
8. Financial Instruments
A financial instrument is a contract which gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.听 No-exchange transactions such as those relating to taxes and government grants do not give rise to financial instruments.听
Financial assets 鈥 balances
A financial asset is a right to future economic benefits controlled by the Authority that is represented by cash, equity instruments or a contractual right to receive cash or other financial assets or a right to exchange financial assets and liabilities with another entity that is potentially favourable to the Authority.听 The financial assets held by the Authority during the year are all accounted for under the amortised cost, comprising:
o听听 Investments, which are loans to other local authorities.
o听听 Cash in hand and bank current and deposit accounts.
o听听 Trade receivables for goods and services provided.
The financial assets disclosed in the Balance Sheet are analysed across the following categories:
听厂耻尘尘补谤测 | Long-Term 拢000 | Current 拢000 | ||
---|---|---|---|---|
听Date | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 |
Investments | - | 5,000 | 15,000 | 10,000 |
Cash & cash equivalents | - | - | 16,317 | 17,896 |
Other trade receivables | - | - | 1,555 | 1,570 |
听Financial liabilities 鈥 balances
听A financial liability is an obligation to transfer economic benefits controlled by the Authority and can be represented by a contractual obligation to deliver cash or financial assets or an obligation to exchange financial assets and liabilities with another entity that is potentially unfavourable to the Authority.
听All the Authority鈥檚 financial liabilities held during the year are measured at amortised cost, and comprise:
o听听 Long-term loans from the Public Work Loans Board.
o听听 Private Finance Initiative (PFI) contracts, detailed in Note 14.
o听听 Lease payables.
o听听 Trade payables for goods and services received.
听厂耻尘尘补谤测 | Long-Term 拢000 | Current 拢000 | ||
---|---|---|---|---|
听Date | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 |
听 Borrowings | 2,022 | 2,022 | - | - |
听 PFI and finance lease arrangements | 11,913 | 12,434 | 522 | 492 |
听 Trade payables | - | - | 3,891 | 3,568 |
Financial Instruments - Gains and Losses
The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments consist of the following:
听厂耻尘尘补谤测 | 2022/23 | 2021/22 |
---|---|---|
Financial Liabilities at amortised cost | 拢000 | 拢000 |
Interest payable relating to PFI | 1,294 | 1,312 |
Interest payable relating to Borrowing | 90 | 90 |
Interest payable relating to finance leases | 4 | 6 |
Total expense in Deficit on the Provision of Services | 听 1,388 | 听 1,408 |
Financial Assets at amortised cost | 听 | 听 |
Interest income | (837) | (206) |
Total income in Deficit on the Provision of Services | 听 (837) | 听 (206) |
Net gain/(loss) for the year | 听 551 | 听 1,202 |
Fair Values of Financial Instruments
In accordance with IFRS 9, financial liabilities, financial assets represented by investments and long-term creditors, are carried in the Balance Sheet at amortised cost.听 Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions:
Estimated ranges of interest rates at 31 March 2023 of 4.48% to 4.49% for loans from the PWLB.
The fair values of PWLB loans have been discounted at the market rates for similar instruments with similar remaining terms to maturity.
Where an instrument will mature in the next 12 months, carrying amount is assumed to approximate to fair value.
The fair value of trade and other receivables is taken to be the invoiced amount.
The fair value of the PFI liabilities has been calculated by discounting the contractual cash flows (excluding service charge elements) at the appropriate AA-rated bond yield rates.
The fair values calculated are as follows:
听厂耻尘尘补谤测 | 31 March 2023 | 31 March 2022 | ||
---|---|---|---|---|
听 | Amortised Cost 拢000 | Fair Value 拢000 | Amortised Cost 拢000 | Fair Value 拢000 |
Loans from the Public Works Loan Board | 2,000 | 3,134 | 2,000 | 2,403 |
PFI Liabilities | 12,351 | 13,509 | 12,795 | 15,941 |
Without the addition of accrued interest, the actual Public Works Loan Board debt outstanding at 31 March 2023 is 拢2.000 million (2021/22: 拢2.000m) and it is due for repayment as shown in the following table:
Summary听 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Over 10 years | 2,000 | 2,000 |
听Total | 2,000 | 2,000 |
9听听听听听听听听听 Debtors
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Trade debtors | 2,005 | 2,680 |
VAT | 791 | 246 |
Local taxation debtors | 4,325 | 3,951 |
Other debtors | 9,550 | 6,011 |
听Total | 16,671 | 12,888 |
10听听听听听听听 Cash & Cash Equivalents
The balance of cash & cash equivalents is made up of the following elements:
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Cash held by the Authority | 67 | 54 |
Cash held by North West FireControl (25% share) | 89 | 117 |
Call account balance | 16,161 | 17,725 |
Total | 16,317 | 17,896 |
The call account balance is placed with Lancashire Country Council. Interest on these balances is paid to the Authority.听 The investments have an amortised cost at 31 March 2023 equal to their nominal value.听
11听听听听听听听 Creditors
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Goods and services creditors | 2,676 | 2,734 |
PAYE/NI 听 | 1,499 | 964 |
VAT | 27 | - |
Local taxation creditors | 3,457 | 3,873 |
Other creditors | 2,507 | 1,726 |
Total | 10,166 | 9,296 |
听12听听听听听听听 Provisions
The Authority has the power to establish provisions for any liabilities of uncertain timing or amount that have been incurred.
The Authority has established an Insurance Liabilities Provision to meet liabilities, the precise cost of which is uncertain, but which are not reimbursable from insurers as they fall below individual excess clauses and the annual self-insured limits.听听听
The Authority has also recognised a provision in relation to its share of the Business Rates Collection Fund outstanding appeals, which is calculated and provided by billing authorities based on their assumptions of outstanding appeal success rates.
The balances set aside, together with the movement on the provisions, is shown below:听
听厂耻尘尘补谤测 | Insurance Liabilities | Business rates appeals | Total | |||
---|---|---|---|---|---|---|
听 | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 |
听 | 拢000 | 拢000 | 拢000 | 拢000 | 拢000 | 拢000 |
Balance at 1 April | 593 | 500 | 854 | 898 | 1,447 | 1,398 |
Amounts utilised | (89) | (97) | - | - | (89) | (97) |
Unused amounts reversed | (130) | (37) | (229) | (85) | (359) | (122) |
Additional provision | 205 | 227 | 35 | 41 | 240 | 268 |
Balance at 31 March | 579 | 593 | 660 | 854 | 1,239 | 1,447 |
13听听听听听听听 Other Long-Term Liabilities
Other long-term liabilities comprise the following:
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Finance Lease Liability | - | 33 |
PFI Liability (see Note 14) | 11,868 | 12,351 |
PFI Contractor Loan (see Note 14) | 45 | 50 |
Pension Liability (see Note 15) | 619,619 | 883,218 |
Total | 631,532 | 895,652 |
听14听听听听听听听 PFI Schemes
The Authority operates two PFI schemes with separate Private Sector Partners (PSP), details of which are as follows:
PFF Lancashire Limited
The Authority signed a contract in May 2002 with a Private Sector Partner (PSP), a consortium known as PFF Lancashire Limited, under the Government's Private Finance Initiative, for two fire stations at Morecambe and Hyndburn.
Under the contract the Authority pays an annual unitary charge to PFF Lancashire Limited for serviced accommodation over the life of the 30-year contract, commencing in 2003/04. The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration.听听听 The estimated capital value of the scheme at the point of financial close was 拢3.500m.听
Under the contract PFF Lancashire Limited contributed 拢0.150m towards the development costs, which is repaid through the annual unitary charge on the life of the 30-year contract commencing in 2005/06.听 In accordance with recommended accounting practice, the reimbursement has been classed as a loan and the liability reflected as such in the Authority鈥檚 accounts. At 31听March 2023 the total outstanding loan was 拢0.050m (2021/22: 拢0.055m).
Fire and Rescue NW Limited
The Authority is also involved in a second PFI project, with Merseyside Fire and Rescue Authority and Cumbria County Council to deliver 16 new fire stations, 4 of which will be in Lancashire.听 Contracts were signed with Balfour Beatty Fire and Rescue NW Limited in February 2011, with phased construction beginning in 2011/12 and completing in 2013/14.
Balfour Beatty sold its鈥 interest in the PFI scheme in July 2021 to BBGI, a company who already operates several PFI schemes in the UK including within the emergency services sector.听 BBGI undertook a refinancing deal in December 2021, resulting in a one-off saving of 拢0.9m for the three authorities, of which Lancashire鈥檚 share was 拢0.2m.
Under the contract the Authority pays an annual unitary charge to Fire and Rescue NW Limited for serviced accommodation over the life of the contract, which runs for 25 years from initial handover of each station commencing in March 2011/12 for the Authority.听听听 The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration.听听听 The estimated capital value of the total scheme at the point of financial close was 拢47.886m, and for the Authority was 拢12.161m.
All PFI Schemes听
All PFI stations are recognised on the Authority鈥檚 Balance Sheet from the date of initial handover.听 Movements in their value over the year are detailed in the analysis of the movement on Property, Plant & Equipment balance in Note 6.
Payments made under the contracts are performance related, so deductions are made if parts of the building are not available or if service performance (including maintenance) falls below an agreed standard.听 The Authority makes an agreed payment each year which is increased by inflation and can be reduced if the contractor fails to meet availability and performance standards in any year but is otherwise fixed.听 In addition, the Authority receives Government Grant to offset some of these costs.听
Payments remaining to be made under both PFI contracts and Government Subsidies to be received at 31 March 2023 are as follows:
听厂耻尘尘补谤测 | Payment for Services 拢000 | Reimbursement of Capital Expenditure 拢000 | Interest 拢000 | Total 拢000 | Government Subsidy 拢000 |
---|---|---|---|---|---|
Payable in 1 year | 听853 | 听483 | 听1,263 | 听2,599 | 听1,734 |
Payable within 2-5 years | 听3,647 | 听2,410 | 听4,658 | 听10,715 | 听6,935 |
Payable within 6-10 years | 听5,160 | 听4,620 | 听4,199 | 听13,979 | 听8,648 |
Payable within 11-15 years | 听3,552 | 听4,580 | 听1,989 | 听10,122 | 听6,256 |
Payable within 16-20 years | 听275 | 听258 | 听13 | 听545 | 听365 |
Total | 听13,487 | 听12,351 | 听12,122 | 听37,960 | 听23,938 |
听Although the payments made to the contractor are described as unitary payments, they have been calculated to compensate the contractor for the fair value of the services they provide, the capital expenditure incurred and interest payable over the life of the contract. The liability outstanding to pay the contractor for capital expenditure incurred is as follows:
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Balance outstanding at the start of the year | 12,795 | 13,202 |
Payments during the year | (444) | (407) |
Balance outstanding at year end | 12,351 | 12,795 |
15听听听听听听听 Net Liability Related to Local Government and Firefighters鈥 Pensions Schemes
Pensions听
During the year the Authority made contributions to the cost of pensions for all employees (except for those who chose not to be members of the scheme) as required by statute.
The Authority participates in two pension schemes:
i)听听听听听听听听听 Uniformed Firefighters are covered by an unfunded, defined benefit scheme, meaning that there are no investment assets built up to meet the pensions liabilities and that cash must be generated by the Authority to meet actual pensions payments as they fall due.听
ii)听听听听听听听听 Other staff pensions are provided from the Lancashire County Pension Fund.听 This is a funded scheme, meaning that the Authority and employees pay contributions into a fund calculated at a level intended to balance the pensions liabilities with the investment assets.
Transactions Relating to Post-employment Benefits听
We recognise the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions.听 However, the charge we are required to make against council tax is based on the cash payable in the year, so the real cost of post employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement.听 The following transactions have been made in the Comprehensive Income & Expenditure Statement and the General Fund Balance Fund via the Movement in Reserves Statement during the year:
Summary 听 | Local Government Pension Scheme | Uniformed Firefighters鈥 Pension Scheme | ||
---|---|---|---|---|
听 | 2022/23 | 2021/22 | 2022/23 | 2021/22 |
听 | 拢000 | 拢000 | 拢000 | 拢000 |
Comprehensive Income & Expenditure Statement | 听 | 听 | 听 | 听 |
Cost of Services: | 听 | 听 | 听 | 听 |
路听 Current service cost | 2,900 | 2,553 | 13,640 | 15,840 |
路 Administrative expenses | 41 | 34 | - | - |
路听听Past service cost | - | - | - | - |
听 | 2,941 | 2,587 | 13,640 | 15,840 |
Financing and Investment Income and Expenditure: | 听 | 听 | 听 | 听 |
路听 Interest cost | 2,343 | 1,742 | 23,040 | 17,330 |
路 Interest on scheme assets | (2,137) | (1,425) | - | - |
听 | 206 | 317 | 23,040 | 17,330 |
Total post employment benefit charged to the deficit on provision of services | 听 3,147 | 听 2,904 | 听 36,680 | 听 33,170 |
Other post employment benefit charged to the Comprehensive Income and Expenditure Statement | 听 | 听 | 听 | 听 |
路听Actuarial (gains) and losses | (30,174) | 2,023 | (246,520) | 3,020 |
Total post employment benefit charged to the Comprehensive Income and Expenditure Statement | 听 听 (27,027) | 听 听 4,927 | 听 听 (209,840) | 听 听 36,190 |
Movement in reserves statement | 听 | 听 | 听 | 听 |
路听听听听听听听听听听 Reversal of net charges made to the deficit on provision of services in accordance with the code | 听 听 (2,799) | 听 听 (4,583) | 听 听 (10,080) | 听 听 (9,590) |
Actual amount charged against the General Fund Balance for pensions in the year: | 听 | 听 | 听 | 听 |
Employers鈥 contributions payable to the scheme | (348) | (344) | - | - |
Net retirement benefits payable to pensioners | - | - | (26,600) | (26,600) |
The change in the net pensions liability is analysed into seven components:
Current service cost 鈥 the increase in liabilities as a result of years of service earned this year 鈥 allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked.
Past service cost/(gain) 鈥 the increase/(decrease) in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years 鈥 debited/(credited) to the deficit on the provision of services in the Comprehensive Income and Expenditure Statement.听
Interest on liabilities 鈥 the expected increase in the present value of liabilities during the year as they move one year closer to being paid.
Interest on assets 鈥 the average rate of return expected on the investment assets held by the pension scheme.听
Actuarial (gains) and losses 鈥 changes in the net pension liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions 鈥 (credited)/debited to the pensions reserve.听
Employers鈥 contributions 鈥 the payments made into the pension scheme by the Authority during the year in respect of current employees.听
Retirement benefits payable to pensioners 鈥 the net payments made in respect of the Firefighter pension scheme.听 Note, the fund also received a top up grant of 拢17.794m (2021/22: 拢16.045m) in addition to these, which can be seen in the Firefighters Pension Fund Account on page 62.听
A full set of audited accounts for the Lancashire County Pension Fund, together with information relating to membership, actuarial and investment policy, and investment performance, are published in the 鈥楲ancashire County Pension Fund Annual Report鈥, available from the administering authority, Lancashire County Council, on request.听
Assets and Liabilities in Relation to Post-employment Benefits
Reconciliation of present value of the scheme liabilities (defined benefit obligation):
听厂耻尘尘补谤测 | Funded Liabilities: Local Government Pension Scheme 拢000 | Unfunded Liabilities: Uniformed Firefighters鈥 Pension Scheme 拢000 | ||||
听 | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 | ||
Opening balance at 1 April | (84,201) | (83,632) | (875,936) | (872,386) | ||
Current service cost | (2,900) | (2,553) | (13,470) | (15,750) | ||
Interest on liabilities | (2,343) | (1,742) | (23,040) | (17,330) | ||
Contributions by scheme participants | (492) | (412) | (3,560) | (3,330) | ||
Remeasurements (liabilities): | 听 | 听 | 听 | 听 | ||
Experience (gain)/loss | (6,669) | (208) | (49,430) | (7,270) | ||
Gain/(Loss) on financial assumptions | 听 34,604 | 听 1,901 | 听 (295,950) | 听 10,290 | ||
Gain/(Loss) on demographic assumptions | 听 1,885 | 听 644 | 听 - | 听 - | ||
Benefits/transfers paid | 1,633 | 1,801 | 29,990 | 29,840 | ||
Past service cost | - | - | - | - | ||
Closing balance at 31 March | (58,483) | (84,201) | (639,496) | (875,936) |
Reconciliation of the fair value of the scheme assets:听
听厂耻尘尘补谤测 | Funded Liabilities: Local Government Pension Scheme 拢000 | Unfunded Liabilities: Uniformed Firefighters鈥 Pension Scheme 拢000 | ||
---|---|---|---|---|
听 | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 |
Opening balance at 1 April | 76,703 | 68,314 | - | - |
Interest on scheme assets | 2,137 | 1,425 | - | - |
Remeasurements (assets) | 354 | 8,043 | - | - |
Administrative expenses | (41) | (34) | - | - |
Employer contributions | 348 | 344 | 26,510 | 26,510 |
Contributions by scheme participants | 492 | 412 | 3,330 | 3,330 |
Benefits paid | (1,633) | (1,801) | (29,840) | (29,840) |
Closing balance at 31 March | 78,360 | 76,703 | - | - |
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy.听 Expected yields on fixed interest investments are based on gross redemption yields at the Balance Sheet date.听 Expected returns on equity investments reflect long-term rates of return experienced in the respective markets. The actual return on scheme assets in the year was a gain of 拢2.305m (2021/22: gain of 拢9.240m).听
Scheme history
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 | 2020/21 拢000 | 2019/20 拢000 | 2018/19 拢000 听 |
---|---|---|---|---|---|
Present value of liabilities: | 听 | 听 | 听 | 听 | 听 |
Local Government Pension Scheme (LGPS) | (58,483) | (84,201) | (83,631) | (69,102) | (69,436) |
Firefighters Pension Scheme | (639,496) | (875,936) | (872,386) | (805,506) | (857,236) |
Fair value of assets in LGPS | 78,360 | 76,703 | 68,314 | 61,932 | 61,783 |
Surplus/(Deficit) in the scheme: | 听 | 听 | 听 | 听 | 听 |
Local Government Pension Scheme (LGPS) | 19,877 | (7,498) | (15,318) | (7,170) | (7,653) |
Firefighters Pension Scheme | (639,496) | (875,936) | (872,386) | (805,506) | (857,236) |
Total | (619,619) | (883,434) | (887,704) | (812,676) | (864,889) |
The liabilities show the underlying commitments that the Authority has in the long鈥憈erm to pay post-employment benefits.听 The total liability of both schemes, 拢619,619m, has a substantial impact on the net worth of the Authority, as recorded in the Balance Sheet. However, statutory arrangements for funding the liability mean that the financial position of the Authority remains healthy:
Whilst there is a surplus on the LGPS scheme any future deficits that may arise will sought to be recovered by annual repayments from/to the fund, as assessed by the scheme actuary, throughout the agreed surplus recovery period.听 听听
Finance is only required to be raised to cover fire fighter pensions when the pensions are actually paid.听
Estimated contributions expected to be paid by the Authority into each scheme during the next financial year:
听厂耻尘尘补谤测 | Local Government Pension Scheme* 拢000 | Firefighters鈥 Pension Scheme** 拢000 | Total 拢000 |
---|---|---|---|
Estimated contributions | 1,204 | 8,295 | 8,953 |
*LGPS contributions shown are gross of both the surplus recovery and prepayment referred above.
** Firefighters contributions are partly funded by 拢3.1m government grant
Basis for Estimating Assets and Liabilities
Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels etc.听听
The Firefighters鈥 Scheme has been assessed by GAD (the Government Actuarial Department), an independent firm of actuaries. Estimates for the Firefighters pension scheme are based on a 鈥榬oll forward approach鈥 which updates the last full valuation on 31 March 2020, taking account of any significant changes since this.听 The Local Government Fund liabilities have been assessed by Mercer Resource Consulting Limited, an independent firm of actuaries.听 The last full valuation was as at 31 March 2022.听
The principal assumptions used by the actuary have been:
听厂耻尘尘补谤测 | NWFC Local Government Pension Scheme | LCFA Local Government Pension Scheme | Uniformed Firefighters鈥 Pension Scheme | |||
---|---|---|---|---|---|---|
Mortality assumptions: | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 |
Longevity at 65 for current pensioners: | 听 | 听 | 听 | 听 | 听 | 听 |
Men | 21.2 | 21.2 | 21.5 | 22.3 | 21.2 | 21.5 |
Women | 23.8 | 23.8 | 23.8 | 25.0 | 21.2 | 21.5 |
Longevity at 65 for future pensioners: | 听 | 听 | 听 | 听 | 听 | 听 |
Men | 21.2 | 21.2 | 22.8 | 23.7 | 21.2 | 23.2 |
Women | 25.5 | 25.5 | 25.6 | 26.8 | 21.2 | 23.2 |
Rate of CPI inflation | 3.15% | 3.15% | 2.70% | 3.30% | 2.60% | 3.00% |
Rate of increase in salaries | 3.85% | 3.85% | 4.20% | 4.80% | 3.85% | 4.75% |
Rate of increase in pensions | 3.15% | 3.15% | 2.80% | 3.40% | 2.60% | 3.00% |
Rate for discounting scheme liabilities | 2.75% | 2.75% | 4.80% | 2.80% | 4.65% | 2.65% |
Take up of option to convert annual pension into retirement lump sum | 50% | 50% | 50% | 50% | 50% | 50% |
The Firefighters鈥 Pension Scheme has no assets to cover its liabilities.听 The Local Government Pension Fund鈥檚 assets consist of the following categories, by proportion of the total assets held by the Fund:
听厂耻尘尘补谤测 | Quoted in active market | Assets at 31 March 2023 | Assets at 31 March 2022 | ||
---|---|---|---|---|---|
听 | 听 | Fair Value | % | Fair Value | % |
听 | 听 | 拢000 | 听 | 拢000 | 听 |
Equities | Y | 1,645 | 2.1 | 1,571 | 2.1 |
Bonds | Y | 1,325 | 1.7 | 1,861 | 2.4 |
Property | N | 1,553 | 2.0 | 1,491 | 1.9 |
Cash/Liquidity | N | 695 | 0.9 | 1,971 | 2.6 |
Other | N | 73,142 | 93.3 | 69,448 | 91.0 |
听Total | 听 | 78,360 | 100.0 | 76,342 | 100.0 |
16听听听听听听听 Usable Reserves听
Movements in the Authority鈥檚 usable reserves are detailed in the Movement in Reserves Statements, on pages 19 and 20.
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 | ||
---|---|---|---|---|
Revenue Reserves: | 听 | 听 | 听 | 听 |
General Fund | 听 | (4,887) | 听 | (6,536) |
Earmarked Reserves | (4,101) | 听 | (4,675) | 听 |
PFI Equalisation Reserve | (5,157) | 听 | (5,067) | 听 |
Total Earmarked Reserves | 听 | (9,258) | 听 | (9,742) |
Total Revenue Reserves | 听 | (14,145) | 听 | (16,278) |
Capital Reserves: | 听 | 听 | 听 | 听 |
Capital Funding Reserve | 听 | (20,344) | 听 | (17,672) |
Capital Grants Unapplied | 听 | (27) | 听 | (40) |
Usable Capital Receipts | 听 | (1,692) | 听 | (1,683) |
Total Usable Reserves | 听 | (36,208) | 听 | (35,673) |
17听听听听听听听 Transfers (to)/from Earmarked Reserves
听厂耻尘尘补谤测 | Balance at 31.3.21 拢000 | Transfers in 2021/22 拢000 | Transfers out 2021/22 拢000 | Balance at 31.3.22 拢000 | Transfers in 2022/23 拢000 | Transfers out 2022/23 拢000 | Balance at 31.3.23 拢000 |
General fund | (6,463) | (404) | 331 | (6,536) | (24) | 1673 | (4,887) |
Earmarked Reserves | 听 (6,175) | 听 (2,035) | 听 3,535 | 听 (4,675) | 听 (1,207) | 听 1,781 | 听 (4,101) |
PFI Equalisation Reserves | 听 (4,594) | 听 (632) | 听 159 | 听 (5,067) | 听 (90) | 听 - | 听 (5,157) |
Total Earmarked Reserves | 听 (10,769) | 听 (2,667) | 听 3,694 | 听 (9,742) | 听 (1,297) | 听 1,781 | 听 (9,258) |
Capital funding reserve | 听 (17,967) | 听 (3,055) | 听 3,350 | 听 (17,672) | 听 (4,300) | 听 1,628 | 听 (20,344) |
Capital grants unapplied | 听 (101) | 听 - | 听 61 | 听 (40) | 听 - | 听 13 | 听 (27) |
Usable capital receipts | 听 (1,680) | 听 (3) | 听 - | 听 (1,683) | 听 (9) | 听 - | 听 (1,692) |
Total Usable Reserves | 听 (36,980) | 听 (6,129) | 听 7,436 | 听 (35,673) | 听 (5,630) | 听 5,095 | 听 (36,208) |
18听听听听听听听 Unusable Reserves听
The total Unusable Reserves are shown in the Movement in Reserves Statement, and details of each reserve and the movements are shown in the following tables: 听
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Revaluation Reserve | (75,306) | (56,221) |
Capital Adjustment Account | (38,281) | (39,469) |
Pensions Reserve | 619,619 | 883,434 |
Collection Fund Adjustment Account | (207) | 776 |
Accumulated Absences Adjustment Account | 957 | 839 |
Total Unusable Reserves | 506,782 | 789,359 |
Revaluation Reserve听
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Balance at 1 April | (56,221) | (47,400) |
Upward revaluation of assets | (22,283) | (12,342) |
Downward revaluation of assets and impairment losses not charged to Net cost of Services | 听 548 | 听 1,730 |
Difference between fair value depreciation and historical cost depreciation | 听 2,648 | 听 1,791 |
Amount written off to the Capital Adjustment Account | 听 - | 听 - |
听Total | (75,306) | (56,221) |
The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment.听 The balance is reduced when assets with accumulated gains are:
Revalued downwards or impaired and the gains are lost.
Used in the provision of services and the gains are consumed through depreciation, or
Disposed of and the gains are realised.
The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created.听听 Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.
Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition under statutory provisions.听 The account is debited with the cost of acquisition as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement.听 The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition.
In addition, the account contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains.
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 | ||
---|---|---|---|---|
Balance at 1 April | 听 | (39,469) | 听 | (38,893) |
Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement: | 听 | 听 | 听 | 听 |
| 听 2,938 | 听 | 听 3,002 | 听 |
| 听 271 | 听 | 听 72 | 听 |
| 94 | 听 | 158 | 听 |
听 | 听 | 3,303 | 听 | 3,232 |
Disposal of assets via the Comprehensive Income & Expenditure Statement | 听 | 听 - | 听 | 听 - |
Adjusting amounts written out of the Revaluation Reserve 听 | 听 | 听 - | 听 | 听 - |
Net amount written out of the cost of non-current assets consumed in the year | 听 | 听 3,303 | 听 | 听 3,232 |
Capital financing applied in the year: | 听 | 听 | 听 | 听 |
| 听 听 听 听 - | 听 | 听 听 听 听 - | 听 |
| 听 听 (487) | 听 | 听 听 (448) | 听 |
| 听 听 - | 听 | 听 听 (10) | 听 |
听 | 听 - | 听 | 听 (977) | 听 |
| 听 (1,628) | 听 | 听 (2,373) | 听 |
听 | 听 | (2,115) | 听 | (3,808) |
Balance as at 31 March | 听 | (38,281) | 听 | (39,469) |
Pensions Reserve
The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions.听 The reserve relates to both the LGPS and Firefighters pension schemes, and the large negative value of the reserve reflects the unfunded nature of the Firefighters pension scheme.听
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Balance at 1 April | 883,434 | 887,704 |
Actuarial (gains) or losses on pensions assets and liabilities | (276,694) | (13,400) |
Reversal of items relating to retirement benefits debited or credited to Net Cost of Services in the Comprehensive Income & Expenditure Statement | 39,827 | 36,074 |
Net payments to pensioners payable in the year | (26,600) | (26,600) |
Employers pension contributions | (348) | (344) |
听Total | 619,619 | 883,434 |
Collection Fund Adjustment Account听
The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and business rates income in the Comprehensive Income and Expenditure Statement as it falls due from council tax and business rates payers compared with the statutory arrangements for paying across amounts to the General Fund.
听厂耻尘尘补谤测 | Council Tax 拢000 | Business Rates 拢000 | Total 拢000 | |||
---|---|---|---|---|---|---|
听Year | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 |
Balance at 1 April | (139) | 372 | 915 | 1,989 | 776 | 2,361 |
Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different from council tax income calculated for the year in accordance with statutory requirements | 听 听 听 144 | 听 听 听 (511) | 听 听 听 - | 听 听 听 - | 听 听 听 144 | 听 听 听 (511) |
Amount by which business rates income credited to the Comprehensive Income and Expenditure Statement is different from business rates income calculated for the year in accordance with statutory requirements | 听 听 听 - | 听 听 听 - | 听 听 听 (1,127) | 听 听 听 (1,074) | 听 听 听 (1,127) | 听 听 听 (1,074) |
Balance at 31 March | 5 | (139) | (212) | 915 | (207) | 776 |
Accumulated Absences Adjustment Account
The Accumulated Absences Adjustment Account manages the differences arising from the recognition of accrued employee costs in the Comprehensive Income and Expenditure Statement compared with the statutory arrangements for paying across amounts to the General Fund.听
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Balance at 1 April | 839 | 941 |
Amount by which remuneration charged on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements | 听 听 118 | 听 听 (102) |
Balance at 31 March | 957 | 839 |
听19听听听听听听听 Contingent Liability
听There are no contingent liabilities.
听20听听听听听听听 Post Balance Sheet Events听
As at the date of signing of the draft accounts, 28th July 2023, there have been no events either adjusting on non-adjusting.听
21听听听听听听听 Nature and Extent of Risks Arising from Financial Instruments
The Authority鈥檚 activities expose it to a variety of financial risks:
Credit risk 鈥 the possibility that other parties might fail to pay amounts due to the Authority.
Liquidity risk 鈥 the possibility that the Authority might not have funds available to meet its commitments to make payments.
Market risk 鈥 the possibility that financial loss might arise for the Authority because of changes in such measures as interest rates and stock market movements.
Risk management is carried out by Lancashire County Council鈥檚 Treasury Management Team, under policies approved by the Authority in the annual Treasury Management Strategy.听 The strategy provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk and the investment of surplus cash.听
Credit Risk
Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Authority鈥檚 customers.
This risk is minimised through the Annual Investment Strategy, which states that any investment counterparty must have a minimum actual or implied credit rating of AA- to be eligible. The Authority will also have regard to recent banking reform legislation which provides for creditor 'bail-in' rather than state 'bail-out' of banks should the bank fail. The effect of this legislation is that a local authority is likely to lose a higher proportion of any assets caught up in a credit event than almost any other type of institution. Credit risk control therefore means that unsecured bank deposits are, unless for very short duration, not suitable as an investment instrument in the future.听
In the context of credit risk, trade debtors are treated as financial instruments.
Trade debtor credit risk
The Authority does not generally allow credit for customers, such that 拢0.409m of the 拢0.707m balance is past due date for payment.听 On a prudent basis the Authority has created a provision for expected credit losses to cover any potential loss arising from this, which currently stands at 拢0.033m which is considered sufficient for this purpose.
The past due amount can be analysed by age as follows:
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
0 to 30 days | 298 | 13 |
31 to 60 days | 23 | 62 |
61 to 90 days | 154 | 8 |
91 to 180 days | 1 | 6 |
Over 180 days | 231 | 15 |
Total听 | 707 | 104 |
听Liquidity Risk
The Authority has a comprehensive cash flow management system (administered by Lancashire County Council鈥檚 Treasury Management Team) that seeks to ensure that cash is available as needed.听 If unexpected movements happen, the Authority has ready access to borrowings from Lancashire County Council at current market rates.听 There is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments.听
The maturity profile of our remaining debt as at 31 March 2023 is shown in the table below听
Year 听 | Loan value 拢000 |
---|---|
2035 | 650 |
2036 | 650 |
2037 | 700 |
Total | 2,000 |
Market risk
The Authority is exposed to risk in terms of its exposure to interest rate movements on its borrowings and investments.听 Movements in interest rates have a complex impact on the Authority.听 For instance, a rise in interest rate movements would have the following effects:
Borrowings at fixed rates 鈥 the fair value of the liabilities borrowings will fall.
Investments at variable rates 鈥 the interest income credited to the deficit on the provision of services will rise.
We hold fixed rate financial liabilities (borrowings) and variable rate financial assets (investments).听
Borrowings are not carried at fair value, so nominal gains and losses on fixed rate loans would not impact on the Deficit on the Provision of Services or Other Comprehensive Income and Expenditure.听 Instead, the effect of changes in market interest rates is to change the fair value of the liabilities reported in the notes to the balance sheet.听 Fair values represent the amount due if debt is repaid before its maturity date. When the loans finally mature, they will be repayable at their nominal values.
Our financial assets are the cash deposits placed in a call account with Lancashire County Council. Interest received on them is linked to the base rate. Each working day the balance on the Authority's Call Account is invested to ensure that the interest received on surplus balances is maximised. The average balance within this account throughout the year was 拢26.6 million and, with no change in that level of balances, a 1% increase in the market rate of interest, if sustained over the whole year would give rise to additional interest earned of 拢266,000 and a 1% fall would give a reduction of the same amount.
22听听听听听听听 Local Authority Controlled Company 鈥 NW FireControl Limited
NW FireControl Limited is a company limited by guarantee with the responsibility for Fire and Rescue Service mobilisation for the North West region. The Company has four members which are Cheshire, Cumbria, Greater Manchester, and Lancashire Fire & Rescue Authorities (FRAs). The liability of each member in the event of the company being wound up is limited and shall not exceed 拢1. Each member of the company has the right to appoint 2 directors, who are Councillors appointed to their respective FRAs.听 All directors have equal voting rights.
During May 2014 all four services transferred their Control Room functions into the regionalised service provided by NW FireControl Limited. The cost of the service is charged out to the four FRAs on an agreed pro rata basis agreed by a Service Level Agreement. The implementation phase continued to be funded by a section 31 grant from the Department for Communities and Local Government plus an ongoing grant to fund 66% of the lease costs for the building. The grant is paid to Greater Manchester Fire & Rescue Authority as lead authority for the North West region and released to the company as required. From 8th May 2017 Greater Manchester Fire and Rescue Service transferred into the Greater Manchester Combined Authority and the ownership of NW FireControl Limited therefore also transfers.
An assessment for Group Accounting requirements has taken place during 2022/23 in respect of NW FireControl Limited. This is in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom Based on International Financial Reporting Standards (IFRS 10, 11 & 12).听
It has been determined that the company is governed by Joint Control since unanimous consent exists for key decisions and each Authority has equal voting rights. This joint arrangement has been deemed to be a Joint Operation as the parties have rights to the assets, and obligations for the liabilities relating to the arrangement, and on this basis, the Authority鈥檚 25% share of the transactions and balances of NW FireControl Limited have been recognised within the accounts. See note 28 Critical judgements.
Below shows the key Information from the Draft Financial Statements of NW FireControl Limited:
Key Information | Year ended 31 March 2023 拢000 | Year ended 31 March 2022 拢000 |
---|---|---|
Total assets less Current Liabilities | 351 | 321 |
Net assets* | 638 | (4,864) |
(Loss) Before Taxation | (627) | (803) |
(Loss) After Taxation | (634) | (803) |
Debtor Balance (LFRS) | 10 | - |
Creditor Balance (LFRS) | - | - |
Invoices raised by NW FireControl to LFRS | 1,424 | 1,298 |
Invoices raised by LFRS to NW FireControl | - | - |
*Net assets includes the future pension liabilities under IAS19 reported by the Cheshire Pension Fund actuaries.
All figures are shown net of VAT.
Transactions between LFRS and NW FireControl Limited include Invoices Raised by NW FireControl to LFRS for the Control Room service and use of facilities in the building.
The Company鈥檚 Financial Statements can be obtained from Companies House with the deadline for submission as 31/12/2023 for the final audited 2022/23 accounts.
23听听听听听听听 Adjust net surplus/(deficit) on the provision of services for non-cash movements
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Depreciation | 5,588 | 听4,791 |
Impairment & downwards valuations | 271 | 听72 |
Amortisation | 94 | 听158 |
Increase/(decrease) in provisions | 听(207) | 听48 |
Increase/(decrease) in creditors | 906 | (2,670) |
(Increase)/decrease in debtors | (3,783) | (2,003) |
(Increase)/decrease in stock | 听(53) | 听21 |
(Increase)/decrease in LGPS pension liability | 听216 | 听208 |
Movement in pension liability | 听12,879 | 听9,130 |
NWFC 21/22 Capital Grants Unapplied Adj | 29 | 听 |
听Total | 15,940 | 9,805 |
24听听听听听听听 Adjust for items included in the net surplus/(deficit) on the provision of services that are investing and financing activities听
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Interest received | (667) | (67) |
Interest paid | 1,366 | 1,386 |
Interest paid includes interest payments in respect of both finance leases and PFI schemes (see accounting policy Note 29, section j)听
25听听听听听听听 Reconciliation of liabilities arising from financing activities
听厂耻尘尘补谤测 | Long-Term borrowings 拢000 | Short-Term borrowings 拢000 | Lease liabilities 拢000 | Total 拢000 |
---|---|---|---|---|
1 April 2022 | 14,350 | 444 | 76 | 14,870 |
Cash flows: | 听 | 听 | 听 | 听 |
Repayment | (483) | 40 | (43) | (447) |
Proceeds | - | - | 听 | - |
Non-cash: | 听 | 听 | 听 | 听 |
Acquisition | - | - | 1 | 1 |
31 March 2023 | 13,867 | 484 | 33 | 14,383 |
26听听听听听听听 Assumptions made about the future and other major sources of estimation and uncertainty
The Statement of Accounts contains estimated figures that are based on assumptions made by the Authority about the future or that are otherwise uncertain.听 Estimates are made considering historical experience, current trends and other relevant factors.听 However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.
The items in the Authority鈥檚 Balance Sheet at 31 March 2023 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:
Item | Uncertainties | Effect if actual results differ from assumptions |
---|---|---|
Property, Plant & Equipment 听 Carrying value 拢126m (2021/22: 拢108.93m) | As at the valuation date, the RICS valuer notes continued market uncertainties in the wake of Brexit and Covid-19, and although materials costs remain high.听 | Most of the Authorities Property assets are valued under the Depreciated Replacement Cost (DRC) method, as specialised assets.听 There is the possibility that DRC valuations will increase due to shortages of raw materials and labour.听 It is estimated that a 1% increase in DRC valuations would increase the assets values by 拢1.3m. |
Fair Value Measurements 鈥 PFI schemes 听 Liability carrying value: 拢12.3m (2021/22: 拢12.8) 听 Fair value 拢13.5m (2021/22: 拢15.9m) | The liability initial carrying value is calculated from the present value of the future payments due and grant received for the life of the PFI scheme.听 This carrying value is then updated each year to reflect any inflationary increases and any repayments made.听 The fair value is calculated using the forecast payments and grant income for the remaining life of the scheme and applying a discount rate (we use the current AA rated bond yield rate forecast) to arrive at the fair value.听 The Fair Value is the estimated price at which the Authority would transfer the liability to another body. 听 The bond yield rate forecasts have increased since last year end, reflecting the increase in expected future Bank of England base rate forecasts.听 The reduction in the fair value of the liability, is a product of both the underlying reduction in the liability because of repayments made during the year, and the increase in the future interest rates. 听 | The Authority uses the Discounted Cash Flow (DCF) model to measure the fair value of its PFI liabilities. 听 Fair value is calculated using the bond yield rates against the annual net cash flows.听 听 It is estimated that a 1% decrease in the discount rate would increase the fair value by 拢0.12m. 听 |
Pension Liability 听 Carrying value 拢619.6m (2021/22: 拢883.4) | Estimation of the net liability to pay pensions depends on several 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.听 Consulting actuaries are engaged to provide the Authority with expert advice about the assumptions to be applied to each scheme. | It is estimated that, for both pension schemes combined, a 0.5% increase in the discount rate would decrease the liability by 拢47m (2021/22: 拢84.5m), a 1% increase in pay growth would increase the liability by 拢13m (2021/22: 拢11m).听 In addition, a 1-year increase in the assumed life expectancy would increase the liability by 拢17m (2021/22: 拢33.5m).听 |
This list does not include assets and liabilities that are carried at fair value based on a recently observed market price.
27听听听听听听听 Expenditure and Income Analysed by Nature
The Authority鈥檚 expenditure and income is analysed as follows:
听厂耻尘尘补谤测 | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Expenditure | 听 | 听 |
Employee benefits expenses | 42,073 | 40,247 |
Other services expenses | 13,980 | 13,811 |
Support service recharges | - | - |
Depreciation, amortisation, and impairment | 5,953 | 5,020 |
Interest payments | 24,634 | 19,056 |
Gain on disposal of fixed assets | (9) | (3) |
Total expenditure | 86,631 | 78,131 |
Income | 听 | 听 |
Fees, charges, and other service income | (2,542) | (2,271) |
Interest and investment income | - | (206) |
Income from council tax, business rates and revenue support grant | (59,611) | (56,515) |
Government grants and contributions | (9,131) | (9,177) |
Total Income | (71,284) | (68,168) |
Surplus on the provision of services | 15,347 | 9,962 |
听28听听 Critical Judgements
Joint Operation 鈥 North West FireControl
An assessment for Group Accounting requirements has taken place during 2022/23 in respect of NW FireControl Limited. This is in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom Based on International Financial Reporting Standards (IFRS 10, 11 & 12).听
It has been determined that the company is governed by Joint Control due to the fact that unanimous consent exists for key decisions and that each Authority has equal voting rights. This joint arrangement has been deemed to be a Joint Operation as the parties have rights to the assets, and obligations for the liabilities relating to the arrangement, and on this basis, the Authority鈥檚 25% share of the transactions and balances of NW FireControl Limited have been recognised within the accounts.
29听听听听听听听 Accounting Policies
听a听听听听听听听听听 General Principles
The Statement of Accounts summarises the Authority鈥檚 transactions for the 2022/23 financial year and its position at the year end of 31 March 2023.听 The Authority is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2015, as amended by the Accounts and Audit (Coronavirus)(Amendment) Regulations 2021, which those regulations require to be prepared in accordance with proper accounting practices.听 These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 鈥 2022/23, supported by International Financial Reporting Standards (IFRS).听
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.听听
b听听听听听听听听听 Accruals of income and expenditure听
Activity is accounted for in the year that it takes place, not simply when cash payments are made or received.听 In particular:
路听听听听听听听听 Supplies are recorded as expenditure when they are consumed 鈥 where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.
路听听听听听听听听 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.
路听听听听听听听听 Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure based on the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.
路听听听听听听听听 Where income and expenditure have been recognised but cash has not been received or paid, a debtor or a creditor for the relevant amount is recorded in the Balance Sheet.听 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.听
c听听听听听听听听听 Cash & cash equivalents听
Cash is represented by cash in hand and deposits repayable without penalty on notice of not more than 24 hours.听 Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.听
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 Authority鈥檚 cash management.听听听听听听听听听听听
d听听听听听听听听听 Charges to Revenue for Non-Current Assets听
Services, support services and trading accounts are debited with the following amounts to record the cost of holding fixed assets during the year:
路听听听听听听听听 Depreciation attributable to the assets used by the relevant service.
路听听听听听听听听 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
路听听听听听听听听 Amortisation of intangible fixed assets attributable to the service.听
The Authority is not required to raise council tax to cover these charges.听 However, it is required to make an annual contribution from revenue (Minimum Revenue Provision (MRP)) towards the reduction in its overall borrowing requirement equal to either an amount calculated on a prudent basis determined by the Authority in accordance with statutory guidance, or a minimum of 4% of the previous years鈥 Capital Financing Requirement balance.听 In addition to the statutory MRP calculated, the Authority may also make voluntary MRP contributions in line with approved budgets and to reduce the ongoing borrowing requirement.听 Depreciation, impairment and impairment losses and amortisations are therefore replaced by the 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.听
e听听听听听听听听听 Employee Benefits听
Benefits Payable During Employment听
Short-term employee benefits are those due to be settled within 12 months of the year end.听 They include such benefits as wages and salaries, paid annual leave and paid sick leave and non-monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Authority.听 An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. time off in lieu) earned by employees but not taken before the year end which employees can carry forward into the next financial year.听 The accrual is made at the wage and salary rates applicable in the current financial year (the best estimate of future rates at the time of the accounts).听 The accrual is charged to the surplus or deficit on 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.听
Post Employment Benefits听
Employees of the Authority are members of two separate pension schemes:
路听听听听听听听听 The Firefighters Pension Scheme, administered by Lancashire County Council.
路听听听听听听听听 The Local Government Pension Scheme, administered by Lancashire County Council.
Both schemes provided defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Authority.
The Firefighters鈥 Scheme听
Under IAS19 the future costs of retirement benefits must be recognised in the accounts at the point at which the Authority becomes committed to paying them (the point when the benefits have been earned by the employee), even if the actual payment of benefits will be many years in the future.听听
This obligation to pay pensions benefits in the future is recognised as a liability in the Authority鈥檚 Balance Sheet.听 In the service costs part of the Comprehensive Income and Expenditure Statement, transactions are recorded that indicate the change over the year in the pension liability.听 These are principally the future costs of pensions earned by Firefighters in service during the year.听 The transactions are not cash-based but, are actuarially-calculated amounts that reflect more closely the true changes in the scheme鈥檚 long-term liabilities.听听
In calculating the liability for 2022/23, the actuary based the valuation on a roll forwards approach.听
Top up grant received during the year from the Home Office to cover the pension costs of the above scheme are recognized in the Comprehensive Income and Expenditure Statement via adjustments in respect of the actuarial valuation.
The Local Government Pension Scheme听
The same basic principles apply to the local government scheme with the difference being that, because this is a funded scheme (i.e. is backed by a portfolio of investments in equities, property etc), there are transactions recorded in the revenue account to reflect changes in the expected return on these assets.听 Like the transactions referred to above, these too, are actuarially-calculated figures.听
On the Balance Sheet, the liability to pay future pensions is balanced, although at the moment not fully, by the fund鈥檚 investment assets.听
In calculating the liability for 2022/23, the actuary based the valuation on a roll forwards approach.听
In valuing the pension scheme assets for 2022/23, the actuaries used fair value basis for both derivatives and investments.听
f听听听听听听听听听听 Financial Liabilities听
Financial liabilities are initially measured at fair value and carried at their amortised cost.听 For all of the borrowings the Authority has, this means that the amount presented in the Balance Sheet is the outstanding principle repayable plus accrued interest and the interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.
听g听听听听听听听听听 Financial Assets measured at amortised cost听
The Authority holds only one type of financial asset, loans, and receivables.听 These are its cash investments and debtors - assets that have fixed or determinable payments but are not quoted in an active market.听
Investments are initially measured at fair value and carried at their amortised cost.听 For all the investments that the Authority has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable.听 The interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year under the terms of the deposit agreement.听
h听听听听听听听听听 Government Grants & Contributions听
Government grants and donations are recognised as due to the Authority when there is reasonable assurance that:
路听听听听听听听听 The Authority will comply with the conditions attached to the payments, and
路听听听听听听听听 The grants or contributions will be received.听
Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached have been satisfied.听 When conditions have been satisfied, the grant is credited to the non-specific grant income line in the Comprehensive Income and Expenditure Statement.听
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.听
i听听听听听听听听听听 Non-Current Assets听
Non-current assets are included in the Balance Sheet at the estimated current value of the asset.听 They comprise:听
路听听听听听听听听 Property, plant & equipment - These are assets that have a physical substance which are used continuously to provide services or for administrative purposes.
路听听听听听听听听 Intangible assets 鈥 Assets that do not have a physical substance but can be separately identified and controlled by the Authority (for example, software licenses). Spending on these assets is capitalised if the asset will bring benefit to the Authority for more than one financial year.听
i)听听听听听听听听听 Recognition听
All capital expenditure over the value of 拢10,000 on the acquisition or enhancement of non-current assets is capitalised in the accounts on an accruals basis, in accordance with the relevant statute, with the exception of fleet vehicles, which are capitalised providing the cost is over 拢5,000 and the asset life is over 5 years.听
ii)听听听听听听听听 Measurement听
Land and buildings are revalued on a rolling five-year basis by a suitably qualified surveyor. As at 31 March 2023, Amcat Limited, an external organisation, using surveyors qualified by the Royal Institution of Chartered Surveyors, carried out revaluations on the identified properties. All valuations are based on depreciated replacement cost, except for one property used as offices, valued at Existing Use Value.听
All other non-current assets are valued at historic cost.听
The Revaluation Reserve contains revaluation gains recognised since 1 April 2007, the date of its formal implementation. The Revaluation Reserve was created with effect from 31 March 2007 with a zero-opening balance.听 Gains arising before 1 April 2007 have been consolidated into the Capital Adjustment Account.听
iii)听听听听听听听听 Impairment听
The Combined Fire Authority's non-current assets are considered for impairment at the end of each year by appropriately qualified Property Consultants.听
iv)听听听听听听听听听听 Disposals听
When an asset is disposed of the value of asset in the balance sheet is written off to the Comprehensive Income and Expenditure Statement (CIES) as part of the gain or loss on disposal.听 Receipts from disposals are credited to capital receipts, with the sale proceeds being recognised in the CIES.听 This treatment results in the netting off receipts against the carrying value of the asset.听听
v)听听听听听听听听听听听 Depreciation
Depreciation is charged on those assets which have a finite useful life, in the year after acquisition:听
路听听听听听听听听听听听听听听听听听听听 Intangible assets are assessed over their estimated useful life, 5 years.
路听听听听听听听听听听听听听听听听听听听听 Land is assessed as having an infinite life, and therefore is not depreciated.
路听听听听听听听听听听听听听听听听听听听 Building assets are assessed for an appropriate property life by property professionals, in 10-year bands up to a maximum of 50听years.
路听听听听听听听听听听听听听听听听听听听听 Equipment is depreciated over their estimated useful life, ranging from 5 to 20 years.
路听听听听听听听听听听听听听听听听听听听听 Vehicles are depreciated over their estimated useful life, ranging from 5 to 15 years.听听
The charges are based on the opening net book value of assets at the start of the financial year and the estimated useful life of the asset, and are calculated in such a way as to give an equal charge to the revenue account in each of the years the asset is used.听
vi)听听听听听听听 Componentisation
From 1 April 2010, the Authority is required to separately recognise, depreciate and de-recognise significant components of assets, where the significant component has a different useful life to the remainder of the asset.听 Assets with a carrying value of less than 拢1.0m will not be subject to componentisation rules, and a significant component is one of over 25% of the asset carrying value.听 Components will only be recognised on assets valued after 1 April 2010.听
vii)听听听听听听 Derecognition听
Assets will be derecognised when no further economic benefits are expected from the asset鈥檚 use or disposal 鈥 i.e. when the economic benefits inherent in the asset have been used up.听
j听听听听听听听听听听 Private Finance Initiative (PFI) and similar contracts听
Current Status听
The Authority has two existing PFI arrangements:
路听听听听听听听听 With PFF Lancashire for Hyndburn and Morecambe fire stations, which is a continuing commitment for 30 years from May 2003; and
路听听听听听听听听 With Fire and Rescue NW Limited to replace four fire stations in Lancashire as part of a wider scheme to replace 16 in total in conjunction with Merseyside Fire and Rescue Authority and Cumbria County Council.听 The contract will run for 25 years from the date of the final station being handed over during 2013/14.听听
Revenue transactions relating to the above schemes are explained in Note 14.听听
Accounting for PFI听
PFI contracts are agreements to receive services, where responsibility for making available the non-current assets to provide services passes to the PFI contractor. The PFI scheme is accounted for on a consistent basis to IFRIC 12.听
Recognition of assets and liabilities听
Fire stations provided under PFI contracts are recognised as non-current assets of the Authority.听 A related liability is also recognised.听 The asset and liability are recognised when the asset is made available for use.听 The related liability is initially measured at the value of the related asset and subsequently calculated using the same actuarial method used for finance leases.听
Once on the balance sheet the PFI assets will be treated in the same way as all other non-current assets of the same type including depreciation, impairment, and revaluation.听
Minimum Revenue Provision (MRP)听
Assets acquired under a PFI that are recognised on the balance sheet are subject to MRP in the same way as assets acquired using other forms of borrowing.听 The amounts of MRP are calculated in accordance with the appropriate regulations and statutory guidance.听 MRP is equal to that element of the unitary charge which is applied to repay the outstanding liability.
Unitary Payment听
The unitary payment is a monthly charge payable to the PFI contractor in return for the services provided.听 This payment is analysed into elements for the fair value of services, capital and revenue lifecycle (planned maintenance), contingent lease rentals, the repayment of the outstanding liability and interest payable on the outstanding liability.听 The fair value of the services and the revenue lifecycle element are charged to the revenue account.听 The capital lifecycle element is charged to the non-current assets and funded by a revenue contribution.听 The contingent lease rentals and interest payable are recorded in the 鈥渋nterest payable and similar charges鈥 account outside the net cost of services but within net operating expenditure in the income and expenditure account.听
Deductions from the Unitary Payment听
The PFI contracts provide for deductions from the unitary payment in the case of substandard performance or when the facilities are unavailable.听 Deductions for substandard performance are accounted for as a reduction in the amount paid for the affected services.听 Deductions arising from the unavailability of the property are apportioned pro rata to the proportions of the service and property elements of the unitary payment:
路听听听听听听听听 A reduction for part or all the property being unavailable for use 鈥 this will first be accounted for as an abatement of the contingent lease rentals, then finance costs if contingent rents are insufficient; and
路听听听听听听听听 A reduction in the price paid for services whilst services are not being provided accounted for as a reduction in the amount paid for the affected services.听
Deductions of either type are accounted for when the Authority鈥檚 entitlement has been established and it is probable that the Authority will be able to make the deduction.听
k听听听听听听听听听 PFI Equalisation Reserve听
The Authority holds two PFI equalisation reserves for the purpose of smoothing out, within the revenue account, the annual net cost to the Authority of payments under PFI contracts:听
路听听听听听听听听 In 2003/04 the Authority established a PFI equalisation reserve for the PFI contract with PFF Lancashire Limited.听 The contract relates to the provision and maintenance by PFF Lancashire Limited of two fire stations at Morecambe and Hyndburn; and
路听听听听听听听听 In 2011/12 the Authority created a new PFI equalisation reserve in relation to the Authority鈥檚 share of the PFI contract with Fire and Rescue NW Limited.听听 The contract relates to the provision and maintenance of Blackburn, Burnley, Chorley, and Fleetwood fire stations.听
An annual revenue contribution in lieu of interest will be made to the reserve.听 The reserve balance will be reviewed each year at which time the amount of any revenue contribution to or from the reserve will be determined.听听
l听听听听听听听听听听 Provisions听
Provisions are made where an event has taken place that gives the Authority a legal or constructive obligation that probably requires settlement by a transfer of economic benefits, and a reliable estimate can be made of the amount of the obligation.听 Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement when the Authority has an obligation and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, considering relevant risks and uncertainties.听
When payments are eventually made, they are charged to the provision carried in the balance sheet.听 Estimated settlements are reviewed at the end of each financial year, and where it becomes less 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 line.听
Details of the Authority鈥檚 provisions are given in Note 12 to the Balance Sheet, and currently comprise insurance liabilities and business rates appeals.听
m听听听听听听听听 Reserves听
The Authority sets aside specific amounts as reserves for future policy purposes or to cover contingencies.听 Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement.听听 When expenditure to be financed from a reserve is incurred, it is charged against the net cost of services in that year in the Comprehensive Income and Expenditure Statement.听 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.听
Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments, retirements and employee benefits and do not represent usable resources for the Authority.听
n听听听听听听听听听 Contingent liabilities听
A contingent liability arises where an event has taken place that gives the Authority 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 Authority.听 Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.听
o听听听听听听听听听 Going Concern听
These accounts are prepared on a going concern basis, on the assumption that the Authority鈥檚 functions will continue in operational existence for the foreseeable future.听 Our current Medium Term Financial Strategy (MTFS) shows a healthy reserves position, and a balanced budget in the short and medium term.听 We await the outcome of the multi-year settlement to clarify our estimates within our MTFS.听
p听听听听听听听听听 Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors听
Prior period adjustments may arise due to a change in accounting policies or to correct a material error.听 Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment.听
Changes in accounting policies are only 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 Authority鈥檚 financial position or financial performance.听 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.听 Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.听
q听听听听听听听听听 Accounting Standards issued but not yet adopted听
The Authority is required to disclose the impact of an accounting change required by a new accounting standard that has been issued on or before 1 January but not yet adopted by the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). There have been no amendments to the code since 2021/22.听
Accounting of Leases (IFRS 16) implementation has been delayed until 1st April 2024 as agreed by CIPFA/LASAAC in spring 2022. However, both the 2022-23 and the 2023-24 codes allow for early adoption should an authority consider early implementation. Under the new standard, a right of use asset and lease liability will be recognised on the balance sheet. The depreciation of leased assets and interest on lease liabilities will go through the CIES. These are accounting changes and will not impact the cost of leasing to the organisation.听
r听听听听听听听听听听 Joint Operations听
Joint operations are arrangements where the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement.听 The activities undertaken by the Authority in conjunction with other joint operators involve the use of the assets and resources of those joint operators.听听听 The Authority has one joint operation, North West FireControl Ltd (see note 22 for details), and recognises:听
路听听听听听听听听 its assets, including its share of any assets held jointly.
路听听听听听听听听 its liabilities, including its share of any liabilities held jointly.
路听听听听听听听听 its revenue from the sale of its share of the output arising from the joint operation.
路听听听听听听听听 its share of the revenue from the sale of the output by the joint operation.
its expenses, including its share of any expenses incurred jointly.
Section 10: Firefighters Pension Fund Account and Net Assets Statement
Fund Account | 2022/23 拢000 | 2021/22 拢000 |
---|---|---|
Income to the fund | 听 | 听 |
Contributions receivable: | 听 | 听 |
-听听听听听听 From employer | 听 | 听 |
-听听听听听听 contributions in relation to pensionable pay | (7,631) | (8,815) |
-听听听听听听 other contributions | (166) | (278) |
-听听听听听听 Members contributions | (3,448) | (4,330) |
Transfers in: | 听 | 听 |
-听听听听听听 Individual transfers from other schemes | (182) | (210) |
Total Income to the Fund | (11,427) | (13,633) |
Spending by the fund | 听 | 听 |
Benefits payable: | 听 | 听 |
-听听听听听听 Pension payments | 23,170 | 22,394 |
-听听听听听听 Commutations of pensions and lump-sum retirement benefits | 6,041 | 7,284 |
Transfers out: | 听 | 听 |
-听听听听听听 Individual transfers out to other schemes | - | - |
-听听听听听听 Refunds of contributions | - | - |
Total Spending by the fund | 29,211 | 29,678 |
Net amount receivable for the year before top up grant receivable from central government | 17,784 | 16,045 |
Top up grant receivable from central government | (17,784) | (16,045) |
Net amount receivable for the year | - | - |
Net Assets Statement | 2022/23 | 2021/22 |
Net current assets and liabilities: | 听 | 听 |
- pensions top up grant receivable from central government | (5,996) | (5,086) |
- other current assets and liabilities (other than liabilities and other than benefits in the future) | 5,996 | 5,086 |
Net current assets at the end of the year | - | - |
听Firefighters Pension Fund Notes
The four firefighters pension schemes (1992 scheme, 2006 scheme, special members of the 2006 scheme and 2015 scheme) are unfunded defined benefits schemes, meaning that there are no investment assets built up to meet the pensions liabilities, and cash must be generated to meet the actual pension payments as they fall due.听 The Authority makes employers contributions into the schemes and the balance of funding required after pension payments are made is received from central government.
The above statement shows the financial position of the total fire fighters pension fund account, showing that as at 31 March 2023 the Authority is owed 拢5.996m (2021/22: 拢5.086m) by the Home Office in order to balance the account.听 The fund statements do not take account of liabilities after the period end, the Authority鈥檚 long-term pension obligations can be found in the Authority鈥檚 main statements and Note 15 to the accounts.听 The fund was established under the Firefighters鈥 Pension Scheme (Amendment) (England) Order 2006.听 The statement was prepared according to International Financial Reporting Standards (IFRS).
The note has been prepared in line with general accounting policies set in Note 29 鈥 accounting policies, in particular section e.
Contribution Rates听
To remove future discrimination and ensure equal treatment, all remaining protected members in the 1992 and 2006 scheme were transferred to the 2015 scheme on the 1st April 2022. For the 2015 Firefighter pension scheme employer contributions are 28.8% and employees contribute between 11.0% and 14.5% dependent on salary.
These contribution levels are set nationally by the Government and are subject to triennial revaluations by the Government Actuary鈥檚 Department.听 One ill health retirement was recognised during 2022/23, and one in 2021/22.听
Benefits Paid
Pensions are paid to retired officers, their survivors and others who are eligible for benefits under new and existing pension schemes.听
Home Office Grant
There are no investment assets, and the fund is balanced to zero each year by receipt of a top up grant from the Home Office, if contributions are insufficient to meet the cost of pension payments, or by paying over any surplus grant.听
Future Liabilities
The firefighters pension fund financial statements do not take account of liabilities to pay pensions and other benefits after the period end, however details of the firefighters pension fund long-term pension obligations are recognised in the Authorities financial statements, details can be found in Note 15.
Section 11: Glossary of Terms
Accrual
A sum included in the accounts to cover income or expenditure attributable to the accounting period covered by the accounts but for which payment had not been received/made at the Balance Sheet date.
Amortised cost
Amortised cost is a valuation basis for financial instruments that, in the case of this Authority鈥檚 assets and liabilities, is equal to their nominal value plus any interest accrued to the balance sheet date.
Budget
A statement which reflects the Authority鈥檚 policies in financial terms, and which quantifies its plans for spending over a specified period.听 The Revenue Budget (i.e. spending other than capital expenditure) is normally finalised and approved in February prior to the commencement of the financial year.
Capital Expenditure
Payments made for the acquisition or provision of assets which will be of relatively long-term value to the Authority e.g. land, buildings and equipment.听 Also referred to as capital spending, capital outlay, or capital payments.听 The resulting capital assets are referred to as 鈥渇ixed assets鈥.
Capital Receipts
Proceeds from the sale of capital assets.听 Such income may only be used for capital purposes, i.e. to repay existing loan debt, or to finance new capital expenditure in proportions determined by the Government.听 Any receipts which have not yet been utilised as described are referred to as 鈥渃apital receipts unapplied鈥.
Comprehensive Income & Expenditure Statement
An account which records an authority鈥檚 day to day expenditure and income on items such as salaries and wages, running costs of services and the financing charges in respect of capital expenditure.
Creditors
Amounts owed by the Authority for work done, goods received, or services rendered but for which payment had not been made at the date of the Balance Sheet.
Debtors
Sums of money due to the Authority in the relevant financial year but not received at the Balance Sheet date.
Fair Value
Fair value is a valuation basis for financial instruments that represents the amount at which the instruments could be exchanged in an open market transaction. If no market for a specific instrument exists, fair value can be estimated by a technique that is based on a comparison of the interest rate on the instrument with interest rates on similar instruments that are available in financial markets.
Financial Instrument
A financial liability or asset such as a borrowing or an investment.听
Financial Year
The period of twelve months for which the accounts are comprised.听 For Fire Authorities the financial year (or accounting period as it is also known) commences on 1 April and finishes on the 31 March of the following year.
Financing Charges
Annual charges to the Authority鈥檚 Comprehensive Income and Expenditure Statement to cover the interest on and the repayment of loans raised for capital expenditure.听 Annual lease rental payments are also included.听
Premiums and Discounts
Premiums are payable and discounts receivable when loans are repaid to the Public Works Loan Board (PWLB) in advance of their contracted maturity date. The premium or discount is calculated with reference to the interest rate on the loan being repaid and the interest rate for similar new loans on the repayment date.听
Public Works Loan Board (PWLB)
A government agency which provides longer-term loans to local authorities at interest rates only slightly higher than those at which the government itself can borrow.听
Revenue Contribution to Capital Outlay
The financing of capital expenditure by a direct contribution from revenue account, rather than by means of loan or other forms of finance.听
Revenue Expenditure
The day-to-day expenditure of the Authority, which is charged to the Comprehensive Income & Expenditure Statement, comprising mainly salaries and wages, running costs, and financing charges.