West Devon Borough Council

Audited Statement of Accounts

2021/2022

Contents                                                                                                      

 

                                                                                                                                                                                                                          Page

 

 

Section 1 – Narrative Statement                                                                 3 - 26

 

·          Introduction

·          Review of the Year – the Revenue Budget

·          Key areas to note from the 2021/22 Statement of Accounts      

·          Financial needs and resources

·          Looking forward to the future and next steps

·          Corporate Performance for 2021/22

·          Principal risks and uncertainties           

 

Section 2 - Core Financial Statements                                                       27 - 32

 

·          A. Comprehensive Income and Expenditure Statement 

·          B. Movement in Reserves Statement                 

·          C. Balance Sheet

·          D. Cash Flow Statement                                     

 

Section 3 - Notes to the Financial Statements                                          33 - 113

 

Section 4 - Collection Fund                                                                         114 - 118

 

Section 5 - Statement of Responsibilities/Approval of the Accounts    119 - 120

 

Section 6 - Auditors’ Report                                                                       121 - 126

 

Section 7 - Glossary of Terms                                                                    127 – 130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 1

 

 

Narrative Statement

 

 

 

 

 

 

 

Introduction to the 2021/22 Statement of Accounts by Councillor Neil Jory, Leader of West Devon Borough Council

I am very pleased to welcome you to the 2021/22 Statement of Accounts for West Devon Borough Council which summarises the work the Council has been involved in over the past year.

The Council has delivered on many of the targets within ‘The Plan for West Devon’. This also highlights both our ambitions and the manner in which West Devon has responded to recent events, as it works its way out of the Covid-19 pandemic and into the emerging problems of a post-Covid World. This has been complicated by the spectre of a major war in Europe.

I am immensely proud of the way that our Borough as a whole has responded over the past couple of years. Residents have supported each other, their local communities and local businesses throughout the period. The manner of that response has made our jobs as Councillors, at County, Borough, Town and Parish levels, that little bit easier despite the difficulties we all faced. I am also appreciative of the work of officers of the Council who have continued to adapt to ways of working and efficiently and effectively distributed millions of pounds of support to businesses, via a plethora of different schemes, at a time when they most needed it.

One major boost for the Borough and Okehampton, was the reintroduction of regular rail services to the town’s station. We are sure that this project will give an economic boost to the area, the rest of the Borough and beyond. We are grateful to all those that worked with Devon County Council, Great Western Rail, Network Rail, West Devon, Okehampton Town Council and the OkeRail Group to bring this about. We continue to work with our partners to provide additional access via a proposed West Devon Transport Hub to that line, in order to enhance the service still further.

Our contracted Waste and Recycling Service has also performed admirably for most of that period. I have the utmost admiration for the staff there, the job they do and the manner in which they carry it out. However, that service has suffered from the national shortage of HGV drivers and resourcing difficulties which have resulted in some collection problems. We continue to work with the contractor to find ways to meet the high performance standards to which we aspire.

Despite all the difficulties and problems, there were many positive achievements over the year and the Council will report a balanced budget. The next few years will continue to be challenging – we need to deliver more around our climate change and biodiversity targets, respond to the housing crisis, provide assistance to residents struggling with high cost of living increases, welcome refugees to the Borough under the Homes for Ukraine scheme and so on.

I am pleased to report a small surplus for the 21/22 year of £196,000 (2.7% of the net budget of £7.3m).  This demonstrates the Council’s financial resilience and actions taken to maintain longer term stability in service delivery going forward. This surplus will go into the Council’s unearmarked reserves, with a view to it being reinvested in our core services and The Plan for West Devon.

Councillor N Jory, Leader of the Council

Foreword by the Chief Executive

 

I have been incredibly impressed by the efforts of staff across the Council to support our residents and communities. We began the year continuing with our response to the global pandemic and as we ended the year, teams from across the Council were stepping up to support the Homes for Ukraine scheme. While our staff have continued to work from home throughout the pandemic, we have started to see a return to a form of normality, bringing our office staff together and working face to face.

 

I have to say, personally it has been fantastic to begin meeting colleagues in the office for the first time in over two years! I’ve also been pleased to have been able to begin joining local Members in their Towns and Parishes, experiencing first hand the incredibly positive work being delivered across the Borough. I look forward to being able to carry out many more of these insightful visits in the coming year.

 

It is great achievement that West Devon Borough Council and South Hams District Council won the Gold award at the iESE Public Sector Transformation Awards in 2022. The Councils installed software called Liberty Create which enabled both Councils to quickly set up an online system for businesses to apply for emergency Government business grants. The software saved the Councils time and money (£450,000) and also helped us to respond to the needs of our business community when they needed us most. In West Devon, £33m in COVID business support grants have been awarded by the Council over the last two years, providing a vital lifeline across West Devon’s business sectors.

 

The Borough Council has also been highly commended at the 2022 Local Land Charges Awards for Excellence. Typically the Council handles about 2,000 searches per year and aims for a 5 day turn around on all searches submitted to them. I am proud of the team for consistently providing timely, accurate property searches to conveyancers, especially during the challenging property market of the last 12 months. This reward is particularly unique, as the commendations are given by the customers who use the service.

 

Yet again, the Council has managed to balance its budget exceptionally well while continuing to provide a level of good service to residents of the Borough. Time and again, our staff have impressed me with their efforts to support the people and communities of West Devon. There are ongoing challenges presented by COVID-19 and we continue to work with our waste contractor to find ways to meet the high performance standards to which we aspire. We’re responding to new challenges that continue to appear, like making sure we offer adequate support to our Ukrainian guests through the Homes for Ukraine scheme, but I have no doubt that our teams will continue to rise to those challenges

We know that the year ahead will be challenging for many across the Borough, as the cost of living continues to provide day to day challenges. We will do all we can to support our residents and businesses by delivering the essential support you need.

Andy Bates, Chief Executive

 

Message from the Section 151 Officer and Corporate Director for Strategic Finance - Lisa Buckle

The Statement of Accounts has been prepared in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA). The aim of the Accounts is to enable members of the public, Council Members, partners, stakeholders and other interested parties to:

·         Understand the financial position of the Council as at 31 March 2022 and how the Council has performed against the budget set for 2021/22

·         Be assured that the financial position of the Council is secure, with a degree of resilience.

This Narrative Statement provides information about West Devon Borough Council, including the key issues affecting the Council and its Accounts. It is very important to us to provide residents and other stakeholders with the confidence that the public money for which we are responsible has been properly accounted for.

 

Prudent financial management in the past, has meant that the Council was in a relatively healthy position financially before the pandemic hit. When Councillors set the Budget for 2020/21 in February 2020, no-one could have foreseen how our future finances and everyday lives were about to be impacted. The pandemic has also changed the world we operate in. Across the Council, staff have been called upon to continue the efforts to help local communities against the impact of the pandemic.

 

The management of risk and promoting financial resilience is a key principle of our budget strategy and this has helped facilitate our response. Key to the authority’s financial resilience are our reserves, which are at a prudent level.

 

The recent challenges presented by the war in Ukraine with its broader implications along with the current ‘cost of living crisis’ will have an impact on the Council’s finances as well as the finances of the residents of the Borough. The Council’s approach to delivering services remains steadfast.

 

The financial standing of the Council is secure in the immediate future, but there is still much work to do to ensure the long term financial sustainability of the Council.

 

There is no indication yet of the detailed local government funding levels for 2023/24 and beyond and therefore there are many uncertainties in preparing for the challenges we know we will face in the near future. These include the review of local authority funding as part of the Government’s fair funding review, the business rates baseline reset and changes to the New Homes Bonus scheme. We will continue to assess the impacts on our finances and our communities through long term strategic financial planning.

 

Mrs Lisa Buckle BSc (Hons), ACA

Corporate Director for Strategic Finance (S151 Officer)

NARRATIVE STATEMENT – INTRODUCTION

 

1.         Each year West Devon Borough Council publishes a Statement of Accounts that incorporates all the financial statements and disclosure notes required by statute. The Statement of Accounting Policies summarises the framework within which the Council’s accounts are prepared and published.

REVIEW OF THE YEAR – THE REVENUE BUDGET

 

2.         The 2021/22 budget for West Devon was £7.30 million. A surplus of £196,000 means that the actual spend was 2.7% less than the budget. This saving will go into the Council’s Unearmarked Reserves which now stand at £1.49 million. The main components of the General Fund budget for 2021/22 and how these compare with actual income and expenditure are set out below:

	Estimate £000	Actual £000	Difference Cost/ (Saving) £000
Cost of services	7,405	7,099	(306)
Parish Precepts	1,763	1,763	-
Interest and Investment income	(105)	(35)	70
Amount to be met from Government grants and taxation	9,063	8,827	(236)
Financed from:
Business Rates (baseline funding level)	(1,648)	(1,648)	-
Business Rates (achieved over baseline funding level)	(25)	(25)	-
Business Rates Pooling Gain - See Note* below	(40)	-	40
Council Tax	(6,653)	(6,653)	-
Deficit on Collection Fund	10	10	-
Rural Services Delivery Grant	(487)	(487)	-
Lower Tier Services Grant	(70)	(70)	-
Budgeted Earmarked Reserve Contributions	(150)	(150)	-
UNDERSPEND FOR 2021/22	-	(196)	(196)

 

Note* - The 2021/22 Business Rates Pooling Gain of £127,000 has been transferred to the Business Rates Retention Earmarked Reserve and has therefore not been used to support the cost of services in 2021/22.

 

3.         The movement in the General Fund Balance is shown in the Movement In Reserves Statement in Section 2B and can be summarised as follows:

	£000
General Fund Balance (un-earmarked revenue reserve) at 1 April 2021	(1,294)
Surplus for the 2021/22 financial year	(196)
General Fund Balance (un-earmarked revenue reserve) at 31 March 2022	(1,490)

*On including the earmarked reserves, Total General Fund Reserves are £10.68 million.

 

4.         The surplus on the General Fund Balance of £196,000 is essentially a break-even position and represents less than 0.9% of the Council’s gross turnover in 2021/22 of £23 million.

 

5.         The table below shows a reconciliation of the position shown on the bottom of the Comprehensive Income and Expenditure Statement and the underspend for 21/22.

	£000
Total Comprehensive Income and Expenditure Statement	(5,373)
Surplus on the revaluation of Property, Plant and Equipment	767
Deficit on the revaluation of Financial Instruments	83
Remeasurements of the net defined benefit pension liability	4,038
Transfers to earmarked reserves	248
The detail of the items below are shown in Note 7 ‘Adjustments between Accounting Basis and Funding Basis under Regulations’ in the General Fund Balance column.
Adjustments primarily involving the Capital Adjustment Account	(1,001)
Adjustments primarily involving the Capital Grants Unapplied Account	237
Adjustments primarily involving the Capital Receipts Reserve	13
Adjustments primarily involving the Pensions Reserve	(1,116)
Adjustments primarily involving the Council Tax Collection Fund Adjustment Account	258
Adjustments primarily involving the Business Rates Collection Fund Adjustment Account	1,653
Adjustments primarily involving the Accumulated Absences Account	(3)
Underspend for the 2021/22 financial year	(196)

6.         A summary of the main differences from budget in 2021/22 is provided below:

ANALYSIS OF VARIATIONS (% column shows variation against budget)	£000	% variation
Reductions in expenditure/additional income
Recycling Credits and Dry Recycling - additional income (transferred to the Waste Earmarked Reserve as shown below)	(250)	75.8%
Housing Benefit payments – mainly unbudgeted Housing Benefit overpayment recoveries	(82)	-
Salaries – mainly vacancy savings	(81)	1.9%
Homelessness – savings in Homelessness prevention expenses	(77)	82.8%
Savings on staff and Member travel and expenses	(30)	33.0%
Trade Waste – additional income	(28)	186.7%
Street Cleaning – mainly an underspend on cleansing contract costs	(24)	5.0%
Garden Waste – additional income	(17)	6.9%
Land Charges – additional income	(13)	13.7%
Compensation from the Government income guarantee scheme for sales, fees and charges for April to June 21 – mainly for car parking income (£44k)	(46)	-
Increases in expenditure/reduction in income
Car Parking income – net loss is £82,000 after taking into account the Government sales, fees & charges compensation for April to June 21 of £44k	126	11.0%
COVID-19 expenditure - extra housing costs, ICT and remote working, waste, cleaning costs and community support costs.	123	-
Investment income - shortfall in treasury management investment income due to low base rates	70	66.7%
ICT software and support contracts – additional costs from above inflation increases, increased number of users on the Council’s network and disability access legislation compliance.	58	11.6%
Waste & Recycling – the three weekly waste collection trials were not extended to the whole of the Borough due to significant structural changes in the waste industry and other external pressures such as the national LGV driver shortage. Therefore the additional income target in 2021/22 of £50,000 was not achieved.	50	-
Joint Local Plan contribution	25	-
Council Tax Collection – shortfall in budgeted income from summons costs	13	12.7%
Other small variances	7	-
Sub Total	(176)
Less: Transfer to the Waste and Cleansing Options Review Earmarked Reserve: (Additional recycling credits and dry recycling income transferred to the waste earmarked reserve) – Council CM42 4th December 2018	250	-
Add: Transfer from the COVID Earmarked Reserve: (This is Government funding that was used to support the cost of Covid-19 expenditure and net losses on car parking income in 2021/22) – Council CM39 28th Sept 2021	(190)	-
Add: Transfer from the Salary Savings Earmarked Reserve: (to support salary costs) – Council CM57 15th February 2022	(80)	-
TOTAL UNDERSPEND FOR 2021/22	(196)	(2.7%)

The 2021/22 budget for West Devon was £7.30 million but the actual spend was 2.7% lower, providing an underspend of £196,000 as shown above.

 

 

KEY AREAS TO NOTE FROM THE 2021/22 STATEMENT OF ACCOUNTS

 

Pension Liability

 

7.         International Accounting Standard 19 (IAS19) requires local authorities to recognise pension assets and liabilities within their accounts. The overall impact on the General Fund of the IAS 19 entries is neutral.

 

8.         The Actuary has estimated a net deficit on the funded liabilities within the Pension Fund as at 31 March 2022 of £24.2 million, which compares to a deficit of £27.1 million as at 31 March 2021. The deficit is derived by calculating the pension assets and liabilities at 31 March 2022. See Note 36 for further information.

 

Business Rates

 

9.         The Local Government Finance Act 2012 introduced a Business Rates Retention Scheme (BRRS) that enabled local authorities to retain a proportion of the business rates generated in their area, with effect from 1 April 2013. There is a risk of volatility in the system because Councils are exposed to any loss of income if businesses go into decline or if a Council’s income from business rates falls due to successful business rates appeals.

 

10.      Provision is made for likely refunds of business rates as a result of appeals against the rateable value of business properties. The provision is based on the total value of outstanding appeals at the end of the financial year as advised by the Valuation Office Agency. Using this information, an assessment was made about the likely success rate of appeals and their value.

 

11.      In 2021/22 there has been an £86,000 increase in the provision for appeals within the Collection Fund. The balance on the Business Rates Collection Fund at 31 March 2022 is a deficit of £3.09 million (£7.21 million in 2020/21). West Devon Borough Council’s share of the deficit is 40% (£1.23 million).

 

12.         Monies are set aside in the Business Rates Retention Earmarked Reserve to mitigate the impact of volatility in Business Rates income due to the complex accounting arrangements for Business Rates. In 2021/22 the balance of the Business Rates Retention Scheme (BRRS) earmarked reserve reduced by £0.17m to £1.09m as at 31 March 2022 (£1.26m at 31 March 2021). Some of this additional business rates income is due to timing differences in the way the Collection Fund operates and part of the funding will be needed to meet future years’ budgets for business rates, in particular when business rates baselines are due to be re-set in the future.

 

13.      In addition, a new earmarked reserve was created in 2020/21 called the S31 Compensation Grant (Business Rates) Reserve to hold the S31 grant (£2.46m) received in 2020/21 to offset the business rate reliefs given to businesses during the pandemic and the Tax Income Guarantee S31 grant for Business Rates (£0.15m). The balance on this reserve as at 31 March 2021 was £2.61m. Under current Collection Fund accounting rules, the S31 grants received will not be discharged against the Collection Fund deficit until the following year. In 2021/22 further S31 grants were transferred to the S31 Compensation Grant (Business Rates) Reserve (£1.39m) and S31 grant received in 2020/21 was discharged to the Business Rates Collection Fund (£2.37m). This compensation grant will continue to be applied to the Collection Fund over the next three years to smooth the impact of the Business Rates deficit. The balance on this reserve as at 31 March 2022 is £1.63m.

 

Trading Company

 

14.      West Devon Borough Council and South Hams District Council set up a trading company, Servaco Limited, on 4th September 2014. This is a company limited by shares. The company has not traded in 2021/22 and a set of statutory dormant Accounts will be filed with Companies House for the period 1 April 2021 to 31 March 2022.  The future of Servaco Limited will be reviewed during 2022/23.  

 

Borrowing

 

15.      In 2021/22 the long term borrowing of the Council decreased from £28,342,000 (20/21) to £27,726,000. Short term borrowing increased from £603,000 to £615,000.

 

 

Capital Spending

 

16.      The Council spent £1.1 million on capital projects in 2021/22. The main areas of expenditure were as follows:

 

·         Housing renovation grants including disabled facilities grants (£0.6m)

 

·         IT schemes (£0.2m)

 

·         Purchase of property (£0.2m)

 

The capital programme is funded from capital receipts, capital grants, external contributions, earmarked reserves and internal borrowing (please see Note 33).

 

 

 

Financial Instruments – IFRS9 Election to treat Equity Instruments as Fair Value through Other Comprehensive Income

 

17.      In February 2017, the Council made the decision to invest £500,000 in the CCLA Local Authority Property Fund, with the investment being placed in April 2017.

 

18.      Upon transition to IFRS 9 – Financial Instruments on 1 April 2018, and in accordance with paragraphs 5.7.5 and 7.2.8 (b) of IFRS9, West Devon Borough Council made an irrevocable election to present in other comprehensive income, changes in the fair values of its equity instruments. These investments are eligible for the election because they meet the definition of equity instruments in paragraph 11 of IAS32 and are neither held for trading (the Council holds this investment as a long term strategic investment) nor contingent consideration recognised by an acquirer in a business combination to which IFRS3 applies. They are not considered to be puttable instruments because the Council does not have a contractual right to put the instrument back to the issuer for cash.

 

19.      A summary of the position of these equity instruments as at 31 March 2022 is shown below:

 

	Purchase cost	Fair Value at 31 March 2022	Movement in Financial Instruments Revaluation Reserve 2021/22
	£000	£000	£000
Equity Instrument
CCLA Local Authorities Property Fund	500	553	82

 

 

FINANCIAL NEEDS AND RESOURCES

 

20.      The Council maintains both capital and revenue reserves.  The provision of an appropriate level of balances is a fundamental part of prudent financial management, enabling the Council to build up funds to meet known and potential financial commitments. 

21.      General Fund reserves (which include earmarked reserves) have increased by £0.44m from the preceding year and stand at £10.68m at 31 March 2022.  This reflects the 2021/22 surplus of £196,000 and an increase in earmarked reserves of £248,000.

 

 

22.      The total Earmarked Reserves balance at 31 March 2022 of £9.2m includes £1.6m held in the Business Rates s31 Compensation Grant Reserve. This is due to a technical accounting adjustment where Councils were compensated for the business rates holidays that were announced by the Government for the retail, hospitality and leisure sectors in 2020/21 and 2021/22 (this funding is in the S31 Compensation Grant Reserve). This temporary increase in reserves will reverse back out again in the 2022/23 Accounts, to fund the deficit on the Collection Fund. Therefore this is not money which is available for the Council to spend and it is important that this is not misinterpreted in the Accounts, as this is a national issue.

23.      The General Fund Balance (un-earmarked reserve) has increased by £196,000 in 2021/22 and totals £1.490m. Revenue reserves may be used to finance capital or revenue spending plans. The level of Reserves are assessed as adequate for the Council’s operations.

24.      Capital Reserves are represented by capital receipts and capital contributions unapplied. The balance at 31 March 2022 amounts to £0.409m, compared to £0.377m at the end of the previous year.

25.      There are a number of Unusable Reserves which include the Revaluation Reserve, Capital Adjustment Account and Pensions Reserve which are subject to complex accounting arrangements. The Revaluation Reserve and Capital Adjustment Account are used primarily to account for changes in fixed asset values associated with revaluations and new capital expenditure and as such cannot be used to finance capital or revenue expenditure. In addition the Financial Instruments Revaluation Unusable Reserve was created in 2018/19 following the implementation of IFRS9 Financial Instruments on 1 April 2018.

 

26.      When reviewing the amount of overall reserves held, consideration should be given to the possible implications of the Pension Fund deficiency disclosed within the notes to the balance sheet.  The requirement to recognise the net pension liability in the balance sheet has reduced the reported net worth of the Authority by £24.2 million at 31 March 2022.  This disclosure follows the implementation of the International Accounting Standards (IAS 19).  This standard requires local authorities and other businesses to disclose pension assets and liabilities within the balance sheet.

27.      It is important to gain an understanding of the accounts to appreciate the nature of this reported deficiency, which is based on a “snapshot” of pension assets and liabilities at the year end.  This is quite different from the valuation basis used for the purposes of establishing the employer’s contribution rate and fund shortfall, which are calculated using actuarial assumptions spread over a number of years. 

 

 

 

 

 

Annual Governance Statement (AGS)

 

28.      The Council’s Annual Governance Statement sets out the arrangements for governance which the Council has in place. The AGS is published alongside the Accounts for 2021/22.

 

Housing Crisis

 

29.      In February this year, the Council declared a housing crisis. This called for recognition of the current difficulties in the housing market and the effect on the affordability of good quality housing within the Borough.

 

30.      House prices in West Devon are the least affordable in Devon with average housing costs at over 12 times the average salary. An almost complete lack of long term rented accommodation is one of the leading problems contributing to the crisis, alongside the increasing trend for people to move to the area from urban locations. Whilst the Joint Local Plan is working well and we are beating the targets for new houses, this national initiative is not enough to match our current local situation. The Council has identified 15 core actions to help resolve the crisis. This will be a key focus for us in the coming year.

 

A Plan for West Devon

 

31.      During the year we continued the development of a new corporate strategy for the Council, now known as ‘A Plan for West Devon’.

 

32.      A Plan for West Devon was developed over 12 months in response to the impacts of Covid-19 and a post-Brexit UK. A series of workshops were held with our Councillors and a wide range of partner organisations were consulted to shape our focus for the next three years. The strategy is underpinned by a detailed delivery plan setting out specific actions that we will undertake in each of the years.

 

33.      Each meeting of the Overview and Scrutiny committee now considers a detailed update on one of the themes. Furthermore, we have implemented a quarterly ‘Integrated Performance Management Report’ process to highlight progress and key risks related to the strategy to our Hub Committee.   

 

 

 

Annual Report of Achievements

 

34.      The Council has prepared an Annual Report of Achievements setting out the key activities it has been involved in during the year.

 

 

35.      The Annual Report was considered by Hub Committee at their meeting on 7^th June 2022 and can be found on our Website.

 

 

LOOKING FORWARD TO THE FUTURE AND NEXT STEPS

 

Continuing to respond to the housing crisis

 

36.      A significant focus for us during 2022/23 will be on delivering our action plan to address the Housing Crisis in West Devon. We will be pressing ahead with our action plan while continuing to deliver on our longer-term housing strategy,

37.      We have already committed to increasing capacity within the Housing Team and recruitment to these roles will be carried out in the coming year.

 

Climate Emergency Response

38.      This year will be the third year of delivering of our Climate and Biodiversity Emergency Action Plan. We will be continuing to deliver on those actions including ensuring the Council delivers on commitments including progressing plans for an electric vehicle fleet and continuing with our wild flowering on Council land.

 

Homes for Ukraine

39.      As the conflict in Ukraine continues, we will be ensuring that the Borough Council develops a package of support for our Ukrainian guests and those residents stepping up to offer them a safe space to live. We’ll be working closely with the voluntary sector to ensure wrap-around support and to ensure that as many host/sponsor placements as possible are maintained as they come towards the end of the initial 6-month term.

 

Levelling up

 

40.      A significant focus for the Council in the coming 12 months will be submitting bids for Levelling Up funding and the Shared Prosperity Fund. We’ll be identifying and working up bids for projects that can make a positive difference to the lives of our communities and businesses in the future.

 

Our financial future

 

41.      The financial standing of the Council is secure in the immediate future, but there is still much work to do to ensure the long term financial sustainability of the Council. In his speech to the Local Government Association (LGA) conference on 28 June 2022, the Secretary of State, Michael Gove MP, promised to give local authorities greater “financial certainty”. It was confirmed that a 2-year financial settlement will be introduced.  The proposal for a 2-year settlement suggests that there will be rollover settlements in both 2023/24 and 2024/25, meaning financial settlements that are broadly similar to 2022/23.  The Fair Funding Review, business rates baseline reset, and other funding reforms now look set to be pushed back to 2025/26.  It also suggests that the 2021 Census might not be reflected in funding allocations until 2025/26. In addition, the timing of the cessation of the current New Homes Bonus scheme is not clear, but if it does continue, it will be smaller in value with no historic legacy payments.

 

42.      Pushing these major changes back to 2025/26 means that they can be aligned with the next spending review period (the current spending review runs to 2024/25). 2025/26 now looks like it is shaping up to be a very significant financial year for local government, incorporating a new spending review, the 2021 Census and funding reforms. 

 

 Going Concern

 

43.      As highlighted above there is a high degree of uncertainty about future levels of funding for local government. However, the S151 Officer is keeping a close watch on developments and planning for this longer-term uncertainty. For example, the Council has a Financial Stability earmarked reserve to help secure financial stability for the longer term. This will include addressing any future financial pressures from changes in local government funding levels. The balance on the Financial Stability earmarked reserve at 31 March 2022 is £0.454m.

 

44.      Based on the S151 Officer’s management assessment (which has included consideration of the Government support available, the Council’s current level of reserves, the level of working capital including cash and investments, a sensitivity analysis on forecast cashflows, income from local taxation and borrowing headroom etc.), there is no material uncertainty and as a result the Accounts for 2021/22 are prepared on a going concern basis.

 

Issue of the Accounts

 

45.      The Corporate Director for Strategic Finance (Section 151 Officer) authorised the audited Statement of Accounts 2021/22 for issue on 22 November 2022. Events taking place after this date are not reflected in the financial statements or notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORPORATE PERFORMANCE FOR 2021/22

 

The Council adopted its Plan for West Devon in September 2021 and regularly reports on the performance of the delivery plan to both Overview and Scrutiny and the Hub Committee. At the end of the year, the performance for the priorities within the strategy is as set out below. Overall, positive progress has been made across all themes. Each theme has a lead officer and lead Member who meet regularly to monitor progress. Performance against each theme is also considered by an Advisory Group consisting of 6-8 Councillors.

 

 

 

The performance by theme is as set out below.

 

Strengthening Communities 

 

From awarding funding to support community schemes to ensuring we’ve continued to deliver leisure facilities within the Borough.

 

 

Community Wellbeing

Ensuring the wellbeing of our residents has continued to be a major focus for the Council and we’ve made positive progress on this front.

 

Improving Homes

We know that having a decent, safe home is essential for the wellbeing of all residents. This year we’ve taken the step of declaring a Housing Crisis in West Devon to highlight the significant shortage of homes within the Borough.

 

Thriving Economy

2021/22 continued to see sectors within our economy impacted by the Covid-19 pandemic, but we’ve taken positive steps to support West Devon businesses into the future.

 

Natural Environment

During the year we have continued to progress delivery of our ambitious Climate and Biodiversity Action Plan as well as delivering on our wider commitments for our Natural Environment.

 

Built Environment

During the year we were able to support a number of events across the Borough that celebrated our heritage and also took steps to ensure that our Planning Service adapts to meet the needs of residents. We were also ‘Highly Commended’ at the 2022 Land Data Local Land Charges awards.

 

Inclusive Services

During 2021/22 we’ve continued implementing systems that improve our online access for residents. We had 534,600 visits to our website in 12 months and were pleased to be ranked 22^nd out of all Local Authorities for the accessibility of our online pages.

 

 

Maximising Resources

During  the year our ICT transformation programme was recognised at a national level when we won Gold for implementation of customer friendly ICT.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

A risk and opportunity management strategy is in place to identify and evaluate risks. There are clearly defined steps to support better decision making through the understanding of risks, whether a positive opportunity or a threat and the likely impact. The latest update was presented to the Audit Committee on 9^th December 2021 and a high-level summary considered by Hub Committee as part of the quarterly Integrated Performance Management Reports.

 

 

 

Risk Title	Description	Latest update to Audit (November 2021)
Adherence to Medium Term Financial Strategy	Failure to sustain a robust on-going medium term financial strategy in WDBC with adequate reserves to meet unforeseen circumstances, due to cost pressures and reduced income, council decisions, changes in Government policy with regard to business rates and affordable housing; Potential impact on delivering the MTFS, particularly if national/regional businesses successfully appeal against business rate valuations or litigation proceedings / legal challenges / planning appeals, etc.	The Council has closed its Accounts for 2020/21 and the Audited Accounts were published on 2nd November 2021. The Council reported a small surplus for the 20/21 year of £75,000 (1%) against the Council's total net budget of just over £7million. The Council has to be entirely independent to fund all of its services, as the Borough Council no longer receives any main Government Grant (Revenue Support Grant). The Council has had a reduction in core Government funding of £3million per year since 2010. The Council prepared its Medium-Term Financial Strategy for the period covering 2022/23 to 2024/25 and this was presented to the Hub Committee at its September 2021 meeting. The Council will continue to respond to national funding consultations and lobby alongside other Devon Councils and national organisations such as the District Councils' Network for a multi-year financial settlement, to aid long term strategic financial planning. The Fair Funding Review and the re-setting of the Business Rates baseline will be deferred until at least 2023/24. The Council is also awaiting further Government announcements on the New Homes Bonus funding. The Budget Gap over the next two years is predicted to be in excess of £0.5million and work is already underway to address this. Much will also depend on the next Government financial settlement for the three year period from 2022/23 and confirmation on funding items like Negative Revenue Support Grant, which has been assumed in the modelling to start impacting in 2023/24 onwards.
Covid-19 Impact on Services	The risk is that Covid-19 (Coronavirus) will impact on the ability for the Council to deliver its services leading to a drop in operational performance and customer satisfaction. There is the potential for additional financial implications due to increased demand for services or a reduction in income.	Our office based staff continue to work from home in order to mitigate the risk of spreading Covid 19 and in turn reducing the capacity of our workforce. Our frontline staff continue to employ safety measures to reduce the risk of transmission of Covid with risk assessments continually being updated.   Member meetings have resumed face to face for many months and with the exception of wearing facemasks when moving around the building and maintaining social distancing, other safety measures have been removed. This has not so far resulted in any significant outbreaks. We will continue to monitor the impact on services (particularly given Omicron variant developments) over the winter but overall the impact on services to this point has not been significant.
Inadequate Staffing Resource	The risk is that the Council fails to have sufficient staffing arrangement resulting in a loss of staff morale, and inadequate resources for training and reskilling in an ongoing period of change. Failure to engage staff resulting in uncertainty regarding changes in working practices and job security. Particular risk in relation to future terms and conditions. Cost and time of retraining/up-skilling staff. Unrealistic expectations in relation to staffing capacity.	Good progress has been made in reducing this risk. - Planning (Development Management) Review has identified a requirement for additional planning officers. This has been approved by Members and recruitment underway. - Extended Leadership Team has been realigned to better support delivery of our priorities and also to ensure an even spread of management across the organisation which will enable improved support for staff across the Council. - New performance management and appraisal process has begun to be rolled out which will ensure we enhance our understanding of training and development requirements for staff. - A Plan for West Devon is now guiding the work planning and in turn enabling better resource planning.
Organisational Commitment to Change	The risk is that there is a lack of on-going organisational commitment to support changes needed for ongoing financial sustainability & community resilience.	In September 2021, Council unanimously adopted ‘A Plan for West Devon’ its longer-term plan for the Council and Borough as a whole. Developed over many months and with full Member engagement through workshops, it is now underpinned by detailed delivery plans. This is a positive step and will guide the work of the Council, its resource allocations and its priorities for lobbying and partnership working. We will also soon have much greater certainty around funding with proposals for a three year financial settlement from government. This will further enhance our future financial planning capabilities.
Health and Wellbeing (Leisure) Service Provision	Covid-19 has a significant impact on Leisure provision given the nature of activities and hygiene requirements. The risk is that as leisure centres make adjustments to reduce the risk of Covid-19 to both staff and customers, the capacity of the centres is significantly reduced while many overheads and operating costs remain the same.	At their meeting on 2nd November 2021, Hub Committee considered a report on the Leisure Services provision as a result of the pandemic. The report set out that following their reopening (from lockdown) on 12th April 2021, and with more activities able to take place from 19th July as restrictions were eased, centre participation has increased across both Fusion operated leisure centres in the Borough. Meadowlands participation has increased by 67% and Parklands has increased by 63%. The report also set out some actions that Fusion are taking to further increase participation including launching a new tourist membership and extending hours to increase uptake where demand and revenue growth has allowed. The report set out options to Members in respect of the contract management fee for delivery of the leisure services. Further work is planned to consider this and a decision will be taken by Members In the new year.
Business Continuity	The risk is that we do not develop and keep maintained robust processes to ensure business continuity in the event of a significant event occurring, e.g. Failure to ensure the continuous availability of critical IT systems leading to inability to deliver key council services.	While we still find ourselves in the 'response' phase of the pandemic however focus in now changing to refining our broader business continuity plans to cover other scenarios. Our ability to work online is fundamental to our ongoing delivery of services and this is therefore a key focus for our Business Continuity Planning. We are aware of rising incidents of cyber attacks on local authorities and are monitoring their learning closely in order to refine our own response plans. Where cyber attacks on those have been successful (i.e. not prevented by their systems and processes) they have been without core operating systems for many months and with the cost of recovery being in the several millions of pounds. As a result of this learning we have increased the financial impact score to 5. Additionally, our Waste collection service continues to be impacted by the national HGV driver shortages and while out of our control, does represent an increase in the risk of further impacts to delivery of that service (particularly as we get into the typical flu season and with added Covid risk). We have commissioned external advice to support us in updating our ICT Business Continuity Plans with this work aiming to complete in January 2022. Following this we can update our other service business continuity plans. A group of core officers will be recommencing a dedicated work stream to reduce this risk to acceptable level
Emergency Response	The risk is that the council fails to meet the high public expectation in relation to supporting communities during storm damage/flooding/ other events, as well as engagement in longer term recovery, in particular assumptions about capital investment to restore assets. The risk relates to how best to support dispersed communities, e.g. with filling, transporting and laying sandbags as well as providing workforce on site, given limited resources and expectations during an event.	The Council continues to engage with the Local Resilience Forum and is keeping its emergency response plans up to date. Winter plans are developed and in place. Most of our emergency response support will be provided by the Environmental Health Team who are also the team that are involved in supporting any requirements to respond to Covid-19. To support their ability to respond to any other emergencies through the winter, we have extended the contract of the covid-19 support officers until end of March 2022.
Maximising the use of Government economic support funds	The risk is that the Council does not maximise the use of government high street support funding and business grants which in turn support the economic recovery of the area leading to a longer-term negative impact as we begin to recover from Covid-19.	As part of its Plan for West Devon, the Council has placed a significant emphasis on the support to the economy of West Devon with a clear delivery plan in place for the next three years. One aspect of supporting project activity is funded by ERDF monies. The Council has recently been notified that its first claim for funding was successful and payment is being processed. We were able to demonstrate through the claim process our compliance with the requirements of the scheme. It is a requirement of the scheme that the funding scheme is included on the Councils strategic risk register. This funding has enabled to support projects in all of our key towns and we have plans for further promotional and marketing activities over the Christmas period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 2

 

 

Core Financial Statements

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. 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.

 

    2020/21                                                                                          2021/22

Gross Expenditure	Gross Income	Net Expenditure	Segment	Gross Expenditure	Gross Income	Net Expenditure
£000	£000	£000		£000	£000	£000
19,260	(14,114)	5,146	Customer Service & Delivery	17,959	(13,130)	4,829
477	(50)	427	Strategic Finance	519	(89)	430
3,556	(2,885)	671	Place and Enterprise	3,306	(3,066)	240
3,660	(644)	3,016	Governance & Assurance	3,858	(1,210)	2,648
26,953	(17,693)	9,260	Cost of Services	25,642	(17,495)	8,147
		1,659	Other operating expenditure (Note 9)			1,785
		(785)	Financing and investment income and expenditure (Note 10)			779
		(11,626)	Taxation and non-specific grant income (Note 11)			(11,196)
		(1,492)	(Surplus) or Deficit on Provision of Services			(485)
		(1,724)	(Surplus) or deficit on revaluation of Property, Plant and Equipment			(767)
		4,787	Remeasurements of the net defined benefit liability			(4,038)
		3	(Surplus) or deficit from investments in equity instruments designated at fair value through other comprehensive income			(83)
		3,066	Other Comprehensive Income and Expenditure			(4,888)
		1,574	Total Comprehensive Income and Expenditure			(5,373)

 

 

 

 

 

 

 

 

Movement in Reserves Statement

 

This statement shows the movement from the start of the year to the end on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other ‘unusable reserves’. The Movement in Reserves Statement shows how the movements in year of the Authority’s reserves are broken down between gains and losses incurred in accordance with generally accepted accounting practices and the statutory adjustments required to return to the amounts chargeable to council tax for the year. The Increase/Decrease in Year line shows the statutory General Fund Balance movements in the year following these adjustments.

 

2021/22	General Fund Balance   £000	Earmarked General Fund Reserves £000	Total General Fund Reserves £000	Capital Receipts Reserve   £000	Capital Grants Unapplied   £000	Total Usable Reserves   £000	Unusable Reserves     £000	Total Authority Reserves 2021/22 £000
Balance at 31 March 2021 carried forward	1,294	8,941	10,235	158	219	10,612	(9,748)	864
Movement in Reserves during Year
Total Comprehensive Income & Expenditure	485	0	485	0	0	485	4,430	4,915
Adjustments between accounting basis & funding basis under regulations (Note 7)	(41)	0	(41)	(102)	134	(9)	9	0
Transfers to/from Earmarked Reserves (Note 8)	(248)	248	0	0	0	0	0	0
Increase/ (Decrease) in Year	196	248	444	(102)	134	476	4,439	4,915
Balance at 31 March 2022 carried forward	1,490	9,189	10,679	56	353	11,088	(5,309)	5,779

 

2020/21 Comparatives	General Fund Balance   £000	Earmarked General Fund Reserves £000	Total General Fund Reserves £000	Capital Receipts Reserve   £000	Capital Grants Unapplied   £000	Total Usable Reserves   £000	Unusable Reserves     £000	Total Authority Reserves 2020/21 £000
Balance at 31 March 2020 carried forward	1,219	4,984	6,203	159	208	6,570	(4,132)	2,438
Movement in Reserves during Year
Total Comprehensive Income & Expenditure	1,492	0	1,492	0	0	1,492	(3,066)	(1,574)
Adjustments between accounting basis & funding basis under regulations (Note 7)	2,540	0	2,540	(1)	11	2,550	(2,550)	0
Transfers to/from Earmarked Reserves (Note 8)	(3,957)	3,957	0	0	0	0	0	0
Increase/ (Decrease) in Year	75	3,957	4,032	(1)	11	4,042	(5,616)	(1,574)
Balance at 31 March 2021 carried forward	1,294	8,941	10,235	158	219	10,612	(9,748)	864

 

 

 

 

 

 

 

 

 

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves 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 the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example 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 ‘Adjustments between accounting basis and funding basis under regulations’.
31 March 2021		Notes		31 March 2022
£000				£000
25,594	Property, Plant & Equipment	12		25,285
19,830	Investment Property	13		19,120
200	Intangible Assets			285
471	Long Term Investments	14		553
46,095	Long Term Assets			45,243
6,500	Short Term Investments	14		17,200
6,283	Short Term Debtors	15		3,732
12,760	Cash and Cash Equivalents	17		10,011
25,543	Current Assets			30,943
(11,138)	Short Term Creditors	18		(14,602)
(603)	Short Term Borrowing	14		(615)
(689)	Revenue Grants in Advance	31		(125)
(886)	Provisions	19		(921)
(13,316)	Current Liabilities			(16,263)
(179)	Long Term Creditors	18		(184)
(28,342)	Long Term Borrowing	14		(27,726)
(27,142)	Pension Fund Liabilities	36		(24,220)
(1,795)	Capital Grants Receipts in Advance	31		(2,014)
(57,458)	Long Term Liabilities			(54,144)
864	Total Net Assets			5,779
10,612	Usable Reserves	20		11,088
(9,748)	Unusable Reserves	21		(5,309)
864	Total Reserves			5,779

 

The notes on pages 33 to 113 form part of these financial statements. The unaudited accounts were issued on 29 July 2022. The audited accounts were issued on 22 November 2022.

 

Lisa Buckle BSc (Hons), ACA

Corporate Director of Strategic Finance (Section 151 Officer)

The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Authority are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Authority.

 

2020/21 £000		2021/22 £000
(1,492)	Net (surplus) or deficit on the provision of services	(485)
(4,580)	Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 22)	(4,802)
669	Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities (Note 23)	754
(5,403)	Net cash flows from Operating Activities	(4,533)
2,111	Net increase/(decrease) in Investing Activities (Note 24)	10,107
1,009	Net cash outflow/(inflow) from Financing Activities (Note 25)	(2,825)
(2,283)	Net (increase) or decrease in cash and cash equivalents	2,749
10,477	Cash and cash equivalents at the beginning of the reporting period	12,760
12,760	Cash and cash equivalents at the end of the reporting period (Note 17)	10,011

 

 

 

 

 

 

 

 

 

 

 

 

Section 3

 

 

Notes to the

Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the Financial Statements
1	Assumptions Made about the Future and Other Major Sources of Estimation Uncertainty
2	Material Items of Income and Expenditure
3	Events After the Reporting Period
4 5	Expenditure and Funding Analysis Note to the Expenditure and Funding Analysis
6	Expenditure and Income Analysed by Nature
7	Adjustments between Accounting Basis and Funding Basis under Regulations
8	Transfers to/from Earmarked Reserves
9	Other Operating Expenditure
10	Financing and Investment Income and Expenditure
11	Taxation and Non-Specific Grant Income
12 13	Property, Plant and Equipment Investment Properties
14	Financial Instruments
15 16	Debtors Debtors for Local Taxation
17	Cash and Cash Equivalents
18	Creditors
19	Provisions
20	Usable Reserves
21	Unusable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Available for Sale Financial Instruments Reserve Financial Instruments Revaluation Reserve Council Tax Collection Fund Adjustment Account Business Rates Collection Fund Adjustment Account Accumulated Absences Account
22	Cash Flow Statement – Adjustments to Net Surplus or Deficit on the Provision of Services for Non-Cash Movements
23	Cash Flow Statement – Adjustments to Net Surplus or Deficit on the Provision of Services that are Investing and Financing Activities
24	Cash Flow Statement – Investing Activities
25	Cash Flow Statement – Financing Activities
26	Trading Operations – Building Control
27	Business Improvement Districts
28	Members’ Allowances
29	Officers’ Remuneration
30	Payments to External Auditors
31	Grant Income
32	Related Parties
33	Capital Expenditure and Capital Financing
34	Leases
35	Exit Packages and Termination Benefits
36	Defined Benefit Pension Schemes
37	Contingent Liabilities
38	Nature and Extent of Risks Arising from Financial Instruments
39	Accounting Policies
40	Accounting Standards that have been Issued but have not yet been Adopted
41	Critical Judgements in Applying Accounting Policies

 

 

 

1. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR

SOURCES OF ESTIMATION UNCERTAINTY 

 

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

 

The items in the Authority’s Balance Sheet at 31 March 2022 for which there are significant risks of material adjustment in the forthcoming financial year are as follows:

 

Item	Uncertainties	Effect if Actual Results Differ from Assumptions
Property, Plant and Equipment	Asset valuations are based on market prices and are periodically reviewed to ensure that the Council does not materially misstate its non-current assets.   Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets.  The current economic climate makes it uncertain that the Authority will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets.   The carrying value of Property, Plant and Equipment as at 31 March 2022 is £26million.	A reduction in the estimated valuations would result in reductions to the Revaluation Reserve and / or a loss recorded as appropriate in the Comprehensive Income and Expenditure Statement. If the value of the Council’s operational properties were to reduce by 10%, this would result in an impact on the financial statements of approximately £2.6m.   An increase in estimated valuations would result in increases to the Revaluation Reserve and / or reversals of previous negative revaluations to the Comprehensive Income and Expenditure Statement and / or gains being recorded as appropriate in the Comprehensive Income and Expenditure Statement.   If the useful life of assets is reduced, depreciation increases and the carrying amount of the asset falls. If the depreciation lives of the assets were to change by 1 year across all assets, this would have a £205,000 impact on the Council’s finances.
Pensions Liability	Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets.  A firm of consulting actuaries is engaged to provide the Authority with expert advice about the assumptions to be applied. The value of pension assets is estimated based upon information available at the Balance Sheet date, but these valuations may be earlier than the Balance Sheet date. The actual valuations at the Balance Sheet date, which may not be available until sometime later, may give a different value of pension assets, but this difference is not considered to be material.   The Pension Fund’s Actuary has provided updated figures for the year based on the last valuation in 2019. This valuation is based upon cash flow and assets values as at 31 March 2022. Contributions are set every 3 years as a result of the actuarial valuation of the Fund required by the Regulations. The next actuarial valuation of the Fund will be carried out during 2022/23 (as at 31 March 2022) and will set contributions for the period from 1 April 2023 to 31 March 2026. The carrying value of the Pensions Liability as at 31 March 2022 is £24.2 million.   Movements in the value of investments due to current economic uncertainty will affect the valuation of the pension liability. This will include the impact on the value of Investment Properties held by the Local Government Pension Scheme on behalf of West Devon Borough Council.	The effects on the net pension liability of changes in individual assumptions can be measured.  For example, a 0.1% increase in the discount rate assumption would result in a decrease in the pension liability of £1 million. The assumptions interact in complex ways. For example, in 2021/22, the Authority’s actuaries advised that the pension liability has decreased by £2 million as a result of a change in “financial assumptions” and had not changed as a result of a change in "demographic assumptions".   Please refer to Note 36 for further information about the assumptions used by the actuaries.   If the value of investments is found to have changed from the estimates used by the actuaries, it will impact the overall value of the pension liability. For instance, a 5% increase in the pension liability would have an impact of £1.2m on the financial statements.   The Council’s share of these Pension Fund property investments would be material to the Council’s net liability, this would also present a material uncertainty on the valuation of the Council’s pension assets and liabilities as at 31 March 2022.

2. MATERIAL ITEMS OF INCOME AND EXPENDITURE

 

There are no material items of income and expense in 2020/21 or 2021/22.

 

 

3. EVENTS AFTER THE REPORTING PERIOD

 

The draft Statement of Accounts (SOA) for 2021/22 was approved for issue by the Section 151 Officer & Corporate Director for Strategic Finance on 29 July 2022. The Statement of Accounts were then reviewed by the Audit Committee on 6 September 2022 and the audited accounts were authorised for issue on 22 November 2022. This is also the date up to which events after the reporting period have been considered. There are no events which took place after 31 March 2022 which require disclosure.

 

 

4. EXPENDITURE AND FUNDING ANALYSIS

 

The objective of the Expenditure and Funding Analysis is to demonstrate to council tax payers 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. The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the Authority’s service areas. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement in Section 2A. The Expenditure and Funding Analysis also fulfils the requirement to report by segments.

 

2021-2022	Net Expenditure Chargeable to the General Fund £000	Adjustments between Funding and Accounting Basis (Note 5) £000	Net Expenditure in the Comprehensive Income and Expenditure Statement £000
Customer Service and Delivery	3,827	1,002	4,829
Strategic Finance	430	0	430
Place and Enterprise	(120)	360	240
Governance and Assurance	1,810	838	2,648
Net Cost of Services	5,947	2,200	8,147
Other income and expenditure	(6,391)	(2,241)	(8,632)
(Surplus)/Deficit on Provision of Services	(444)	(41)	(485)

 

 

 

 

 

	General Fund Balance £000	Earmarked Reserves   £000	Total General Fund Reserves   £000
Opening Balance at 31 March 2021	(1,294)	(8,941)	(10,235)
(Increase)/decrease in year	(196)	(248)	(444)
Closing Balance at 31 March 2022	(1,490)	(9,189)	(10,679)

 

2020-2021 Comparatives	Net Expenditure Chargeable to the General Fund £000	Adjustments between Funding and Accounting Basis (Note 5) £000	Net Expenditure in the Comprehensive Income and Expenditure Statement £000
Customer Service and Delivery	4,435	711	5,146
Strategic Finance	427	0	427
Place and Enterprise	444	227	671
Governance and Assurance	2,292	724	3,016
Net Cost of Services	7,598	1,662	9,260
Other income and expenditure	(11,630)	878	(10,752)
(Surplus)/Deficit on Provision of Services	(4,032)	2,540	(1,492)

 

	General Fund Balance £000	Earmarked Reserves   £000	Total General Fund Reserves   £000
Opening Balance at 31 March 2020	(1,219)	(4,984)	(6,203)
(Increase)/decrease in year	(75)	(3,957)	(4,032)
Closing Balance at 31 March 2021	(1,294)	(8,941)	(10,235)

 

 

 

 

 

 

 

 

 

 

 

5. NOTE TO THE EXPENDITURE AND FUNDING ANALYSIS

 

This note explains the main adjustments from net expenditure chargeable to the general fund balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement (CIES).

 

Adjustments between Funding and Accounting Basis
2021/22	Adjustments for capital purposes   (Note A) £000	Net change for the pensions adjustments (Note B) £000	Other Differences     (Note C) £000	Total adjustments       £000
Customer Service & Delivery	613	386	3	1,002
Place and Enterprise	248	112	0	360
Governance & Assurance	772	66	0	838
Net Cost of Services	1,633	564	3	2,200
Other income and expenditure from the Expenditure & Funding Analysis	(882)	552	(1,911)	(2,241)
Difference between the General Fund surplus or deficit, and the surplus or deficit on the provision of services in the CIES	751	1,116	(1,908)	(41)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments between Funding and Accounting Basis
2020/21 Comparatives	Adjustments for capital purposes   (Note A) £000	Net change for the pensions adjustments (Note B) £000	Other Differences     (Note C) £000	Total adjustments       £000
Customer Service & Delivery	677	32	2	711
Place and Enterprise	215	12	0	227
Governance & Assurance	715	9	0	724
Net Cost of Services	1,607	53	2	1,662
Other income and expenditure from the Expenditure & Funding Analysis	(2,455)	519	2,814	878
Difference between the General Fund surplus or deficit, and the surplus or deficit on the provision of services in the CIES	(848)	572	2,816	2,540

 

Note A: Adjustments for Capital Purposes

Adjustments for capital purposes reflect:

For services this column adds in depreciation and impairment and adjusts for revenue expenditure funded from capital under statute.

Other income and expenditure from the Expenditure and Funding Analysis – this adjusts for statutory charges for capital financing i.e. Minimum Revenue Provision and other capital contributions. It also adjusts for capital disposals with a transfer of the income on the disposal and the amounts written-off.

Note B: Net Change for the Pensions Adjustments

Net changes for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension related expenditure and income:

For services this represents the removal of the employer pension contributions made by the Authority as allowed by statute and the replacement with current service costs and past service costs.

For other income and expenditure from the Expenditure and Funding Analysis – the net interest on the defined benefit liability is charged to the CIES.

Note C: Other Differences

Other differences between amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable/receivable to be recognised under statute:

For services reflects the change in the annual leave accrual when compared with the previous year.

For other income and expenditure from the Expenditure and Funding Analysis represents the timing difference between what is chargeable under statutory regulations for Council Tax and Business Rates that was projected to be received at the start of the financial year, and the income recognised under generally accepted accounting practices.

 

6. EXPENDITURE AND INCOME ANALYSED BY NATURE

 

The Expenditure and Income Analysed by Nature note shows the amounts that make up the surplus or deficit on the provision of services on the CIES, but here they are categorised by nature instead of by service segment.

Expenditure and Income Analysed by Nature	2020/21 £000	2021/22 £000
Employee Benefits Expenses	7,099	8,102
Other Service Expenses*	18,267	15,935
Depreciation, Amortisation and Impairment	1,606	1,633
Interest Payments	758	746
Pension Fund Administration Expenses	19	18
Net Interest on the net defined benefit liability	498	534
Losses/(Gains) from fair value adjustments	(826)	714
Total Expenditure	27,421	27,682
Fees, Charges and Other Service Income**	(5,773)	(6,765)
Interest and Investment Income	(37)	(35)
Income from Council Tax and Business Rates***	(3,188)	(5,036)
Revenue Grants and Contributions****	(19,246)	(15,576)
Capital Grants and Contributions	(659)	(741)
Other Income	(10)	(14)
Total Income	(28,913)	(28,167)
(Surplus) or Deficit on Provision of Services	(1,492)	(485)

 

* Other Service Expenses

Other Service Expenses have reduced by £2.3m in 2021/22. This mainly reflects the reduction in payment of business grants paid out on behalf of Central Government during the pandemic.

 

**Fees, Charges and Other Service Income

The increase in fees and charges income in 2021/22 reflects the detrimental impact of the pandemic on the Council’s income in 2020/21. For example, car parking income was over £400,000 lower in 2020/21.

 

*** Income from Council Tax and Business Rates

The increase in income from Council Tax and Business Rates in 2021/22 mainly reflects the impact of the accounting treatment of the Business Rates S31 compensation grant. During 2020/21 local authorities received S31 grants to offset the business rate reliefs given to businesses during lockdown. Under current Collection Fund accounting rules, the S31 grants received in 2020/21 were not discharged against the Collection Fund deficit until 2021/22 onwards. This has resulted in an increase in Business Rates Receivable from £4.6m in 2020/21 to £8.1m in 2021/22.

The figure for Council Tax and Business Rates in this statement is shown net of expenditure (precepts to other bodies).

 

****Revenue Grants and Contributions

The overall reduction in grant income between 2020/21 and 2021/22 of £3.7 million mainly relates to the S31 Business Rate Relief Grants. The larger share of this funding was received in 2020/21. This S31 compensation grant was awarded to local authorities to offset the business rate reliefs given to businesses during the pandemic.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS

 

This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year, in accordance with proper accounting practice, to the resources that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure.

 

 

	Usable Reserves
2021/22	General Fund Balance £000	Capital Receipts Reserve £000	Capital Grants Unapplied £000	Movement in Unusable Reserves £000
Adjustments primarily involving the Capital Adjustment Account (CAA):
Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES):
Charges for depreciation and impairment of non-current assets	929			(929)
Movements in the market value of Investment Properties	710			(710)
Amortisation of Intangible Assets	81			(81)
Capital grants and contributions applied	(504)			504
Revenue expenditure funded from capital under statute (REFCUS)	623			(623)
Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal	4			(4)
Insertion of items not debited or credited to the CIES:
Statutory provision for the financing of capital investment	(623)			623
Capital expenditure charged against the General Fund	(96)			96
Revenue Contribution to Capital Outlay - RCCO	(123)			123
Adjustments primarily involving the Capital Grants Unapplied Account:
Capital grants and contributions unapplied credited to the Comprehensive Income and Expenditure Statement	(237)		237	0
Application of grants to capital financing transferred to the Capital Adjustment Account			(103)	103
	Usable Reserves
2021/22	General Fund Balance £000	Capital Receipts Reserve £000	Capital Grants Unapplied £000	Movement in Unusable Reserves £000
Adjustments primarily involving the Capital Receipts Reserve:
Transfer of unattached capital receipts	(13)	13
Use of the Capital Receipts Reserve to finance new capital expenditure		(115)		115
Adjustments primarily involving the Pensions Reserve:
Reversal of items relating to retirement benefits debited or credited to the CIES (see Note 36)	2,047			(2,047)
Employer’s pension contributions and direct payments to pensioners payable in the year	(931)			931
Adjustments primarily involving the Council Tax Collection Fund Adjustment Account:
Amount by which Council Tax income credited to the CIES is different from Council Tax income calculated for the year in accordance with statutory requirements	(258)			258
Adjustments primarily involving the Business Rates Collection Fund Adjustment Account*:
Amount by which Business Rates income credited to the CIES is different from Business Rates income calculated for the year in accordance with statutory requirements	(1,653)			1,653
Adjustment primarily involving the Accumulated Absences Account:
Amount by which officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements	3			(3)
Total Adjustments between the Accounting Basis and Funding Basis under regulations in 2021/22	(41)	(102)	134	9

*The large adjustment in 2021/22 regarding the Business Rates Collection Fund Adjustment Account reflects the reduced deficit on the Business Rates Collection Fund at 31 March 2022 (£3.1m compared to £7.2m at 31 March 2021). During 2020/21 local authorities received S31 grants to offset the business rate reliefs given to businesses during lockdown. Under current Collection Fund accounting rules, the S31 grants received in 2020/21 are being discharged against the Collection Fund deficit in 2021/22 onwards. Further S31 grants were also received in 2021/22 which will have a similar impact on the Business Rates Collection Fund in future years.

	Usable Reserves
2020/21 Comparatives	General Fund Balance   £000	Capital Receipts Reserve   £000	Capital Grants Unapplied   £000	Movement in Unusable Reserves £000
Adjustments primarily involving the Capital Adjustment Account (CAA):
Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES):
Charges for depreciation and impairment of non-current assets	894			(894)
Movements in the market value of Investment Properties	(826)			826
Amortisation of Intangible Assets	54			(54)
Capital grants and contributions applied	(556)			556
Revenue expenditure funded from capital under statute (REFCUS)	658			(658)
Insertion of items not debited or credited to the CIES:
Statutory provision for the financing of capital investment	(610)			610
Capital expenditure charged against the General Fund	(199)			199
Revenue Contribution to Capital Outlay - RCCO	(150)			150
Adjustments primarily involving the Capital Grants Unapplied Account:
Capital grants and contributions unapplied credited to the Comprehensive Income and Expenditure Statement	(103)		103	0
Application of grants to capital financing transferred to the Capital Adjustment Account			(92)	92
	Usable Reserves
2020/21 Comparatives	General Fund Balance   £000	Capital Receipts Reserve   £000	Capital Grants Unapplied   £000	Movement in Unusable Reserves £000
Adjustments primarily involving the Capital Receipts Reserve:
Transfer of unattached capital receipts	(10)	10		0
Use of the Capital Receipts Reserve to finance new capital expenditure		(11)		11
Adjustments primarily involving the Pensions Reserve:
Reversal of items relating to retirement benefits debited or credited to the CIES (see Note 36)	1,473			(1,473)
Employer’s pension contributions and direct payments to pensioners payable in the year	(901)			901
Adjustments primarily involving the Council Tax Collection Fund Adjustment Account:
Amount by which Council Tax income credited to the CIES is different from Council Tax income calculated for the year in accordance with statutory requirements	(51)			51
Adjustments primarily involving the Business Rates Collection Fund Adjustment Account*:
Amount by which Business Rates income credited to the CIES is different from Business Rates income calculated for the year in accordance with statutory requirements	2,866			(2,866)
Adjustment primarily involving the Accumulated Absences Account:
Amount by which officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements	1			(1)
Total Adjustments between the Accounting Basis and Funding Basis under regulations in 2020/21	2,540	(1)	11	(2,550)

*The large adjustment in 2020/21 regarding the Business Rates Collection Fund Adjustment Account reflects the deficit position on the Business Rates Collection Fund at 31 March 2021.During 2020/21 local authorities received S31 grants to offset the business rate reliefs given to businesses during lockdown. Under current Collection Fund accounting rules, the S31 grants received in 2020/21 were not discharged against the Collection Fund deficit until 2021/22 onwards. Therefore there was a deficit on the Business Rates Collection Fund Adjustment Account at 31 March 2021.

8. TRANSFERS TO/ FROM EARMARKED RESERVES

This note details the amounts set aside from the General Fund balances in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund expenditure in 2021/22. The purpose of some of the more significant earmarked reserves are shown below:

 

Car Parking Maintenance – In line with the Council’s car parking strategy, a car parking maintenance reserve is held to ensure that major planned works on car parks can be carried out at the appropriate time, in line with a cyclical programme of maintenance and repairs.

New Homes Bonus – This reserve was established to show how New Homes Bonus funding has been used on an annual basis.

Business Rates Retention Scheme – The business rates reserve covers any possible funding issues from the new accounting arrangements and also smooths the volatility in business rates income over a number of years.

Revenue Grants Reserve – This reserve holds revenue grants with no repayment conditions that have not been used during the year.

S31 Compensation Grant (Business Rates) Reserve – This is a new reserve set up to hold the business rates S31 grants received in 2020/21 to offset the business rate reliefs given to businesses during lockdown. The S31 grants received in 2020/21 and 2021/22 will not be discharged against the Collection Fund deficit until 2021/22 and 2022/23 onwards respectively.

 

Financial Stability Reserve – This reserve was set up to help secure financial stability for the longer term.

Maintenance, Management and Risk Mitigation Reserve – Every year the Council sets aside 10% of rental income from commercial property into this reserve to cover any longer-term maintenance issues.

 

Strategic Waste Reserve – This reserve is used to support any unforeseen future waste cost pressures relating to market changes. Additional income from increased recycling credits and dry recycling income has been transferred to this reserve. In addition, the reserve also holds the value of the 2021/22 contractual performance deductions, to contribute to the contracted costs and capital outlay.

*The total Earmarked Reserves balance at 31 March 2022 of £9.2m includes £1.6m held in the Business Rates s31 Compensation Grant Reserve. This is due to a technical accounting adjustment where Councils were compensated for the business rates holidays that were announced by the Government for the retail, hospitality and leisure sectors in 2020/21 and 2021/22 (this funding is in the S31 Compensation Grant Reserve). This temporary increase in reserves will reverse back out again in the 2022/23 Accounts, to fund the deficit on the Collection Fund. Therefore this is not money which is available for the Council to spend and it is important that this is not misinterpreted in the Accounts, as this is a national issue.

 

The table below shows the earmarked reserve balances at 31 March 2022 and the movement during 2021/22.

2021/22 EARMARKED RESERVES	Balance at 31.3.2021	Transfers Out	Transfers In	Balance at 31.3.2022
	£000	£000	£000	£000
Car Parking Maintenance	484	-	50	534
ICT Development	39	(39)	25	25
JSG Future Options	5	-	-	5
Planning Policy & Major Developments	147	(1)	-	146
16/17 Budget Surplus Contingency	86	-	-	86
Members Sustainable Community Fund	6	-	-	6
Innovation Fund (Invest to Earn)	399	(21)	-	378
Outdoor Sports & Recreation	16	-	-	16
Strategic Waste	176	-	482	658
Leisure Services	58	(10)	-	48
Support Services Trading	31	(27)	16	20
Environmental Health Initiatives	20	-	-	20
Financial Stability	454	-	-	454
Maintenance, Management & Risk Mitigation (Investment Properties)	302	(3)	119	418
Grounds Maintenance	48	-	30	78
Invest to Save	12	-	-	12
Elections	20	-	14	34
DCC Localism Support Officer	5	-	-	5
Neighbourhood Planning Grants	10	(23)	60	47
Cannons Meadow	5	(2)	-	3
DCC Public Health	6	-	-	6
Revenue Grants	912	(53)	558	1,417
Business Rates Retention Scheme	1,260	(173)	-	1,087
COVID-19	221	(249)	282	254
Town Teams & Economic Grants	26	-	-	26
Flood Works	15	-	-	15
New Homes Bonus	452	(239)	293	506
Homelessness	173	(19)	90	244
Strategic Change	67	-	-	67
Planning Enforcement	5	-	-	5
Maintenance Fund	242	-	119	361
Salary Savings Reserve	80	(80)	-	-
Recovery Plan & Corporate Strategy	200	(18)	-	182
Broadband Community Support	50	-	-	50
S106 Monitoring	-	(6)	6	-
S106 Technical Support	2	(2)	-	-
Vehicle Replacement	298	(20)	50	328
Tree Maintenance	-	-	17	17
SUBTOTAL EARMARKED RESERVES	6,332	(985)	2,211	7,558
Business Rates S31 Compensation Grants*	2,609	(978)	-	1,631
TOTAL EARMARKED REVENUE RESERVES (See note above on the S31 Grant)	8,941	(1,963)	2,211	9,189
2020/21 Comparatives EARMARKED RESERVES	Balance at 31.3.2020	Transfers Out	Transfers In	Balance at 31.3.2021
	£000	£000	£000	£000
Car Parking Maintenance	464	(23)	43	484
ICT Development	66	(52)	25	39
JSG Future Options	5	-	-	5
Planning Policy & Major Developments	122	-	25	147
16/17 Budget Surplus Contingency	196	(110)	-	86
Members Sustainable Community Fund	-	(3)	9	6
Innovation Fund (Invest to Earn)	432	(33)	-	399
Outdoor Sports & Recreation	18	(2)	-	16
Strategic Waste	104	(8)	80	176
Leisure Services	204	(146)	-	58
Support Services Trading	8	-	23	31
Environmental Health Initiatives	20	-	-	20
Habitats Reserve	3	(3)	-	-
Financial Stability	454	-	-	454
Joint Local Plan	20	(20)	-	-
Maintenance, Management & Risk Mitigation	190	(6)	118	302
Grounds Maintenance	18	-	30	48
Invest to Save	12	-	-	12
Elections	-	-	20	20
DCC Localism Support Officer	14	(9)	-	5
Neighbourhood Planning Grants	16	(27)	21	10
Cannons Meadow	8	(3)	-	5
DCC Public Health	6	-	-	6
Revenue Grants	508	(67)	471	912
Business Rates Retention Scheme	904	(2,875)	3,231	1,260
COVID-19	-	-	221	221
Town Teams & Economic Grants	23	(18)	21	26
Flood Works	15	-	-	15
New Homes Bonus	401	(297)	348	452
Homelessness	115	-	58	173
Strategic Change	67	-	-	67
Planning Enforcement	5	-	-	5
Maintenance Fund	170	-	72	242
Salary Savings Reserve	-	-	80	80
Recovery Plan & Corporate Strategy	-	-	200	200
Broadband Community Support	-	-	50	50
S106 Monitoring	-	(4)	4	-
S106 Technical Support	-	(6)	8	2
Vehicle Replacement	396	(149)	51	298
SUBTOTAL EARMARKED RESERVES	4,984	(3,861)	5,209	6,332
Business Rates S31 Compensation Grants*	-	-	2,609	2,609
TOTAL EARMARKED REVENUE RESERVES	4,984	(3,861)	7,818	8,941

Note* - Business Rates S31 Compensation Grant Earmarked Reserve

Earmarked Reserves increased by £3.957m in 2020/21. This was mainly due to the creation of a new earmarked reserve in 2020/21 called the S31 Compensation Grant (Business Rates) Reserve. During 2020/21 local authorities received S31 grants to offset the business rate reliefs given to businesses during lockdown in the retail, hospitality and leisure sectors (business rates holidays). Under current Collection Fund accounting rules, the S31 grants received in 2020/21 will not be discharged against the Collection Fund deficit until 2021/22 onwards. Therefore this S31 grant (£2.46m) together with the Tax Income Guarantee S31 grant for Business Rates of £0.15m were transferred to the S31 Compensation Grant (Business Rates) Earmarked Reserve. This compensation grant will be applied to the Collection Fund over the next three years (2021/22 onwards) to smooth the impact of the Business Rates deficit. The balance on this reserve as at 31 March 2021 was £2.609m. This is not money which is available for the Council to spend and it is important that this is not misinterpreted in the Accounts, as this is a national issue.

 

 

9. OTHER OPERATING EXPENDITURE

 

2020/21				2021/22
£000				£000
1,640		Parish council precepts		1,763
0		(Gains)/losses on the disposal of non-current assets		4
19		Pension administration expenses		18
1,659		Total		1,785

 

 

 

10. FINANCING AND INVESTMENT INCOME AND EXPENDITURE

 

2020/21				2021/22
£000				£000
759		Interest payable and similar charges		746
(37)		Interest receivable and similar income		(35)
(10)		Other investment income		(14)
498		Net interest on the net defined benefit liability		534
(1,995)		Investment properties (Note 13)		(452)
(785)		Total		779

 

 

 

 

 

 

 

 

11. TAXATION AND NON-SPECIFIC GRANT INCOME

 

2020/21				2021/22
£000				£000
		Council Tax
(6,437)		Income		(6,653)
(112)		Collection Fund adjustment		(257)
(6)		Collection Fund - distribution of surplus		10
		Business Rates
(4,067)		Income		(4,250)
3,230		Tariff		3,230
1		Pooling administration costs		1
(163)		Pooling gain		(127)
127		Levy payment		344
2,599		Transfer of Collection Fund deficit/(surplus)*		903
		Non ring - fenced Government Grants:
(3,740)		S31 Business Rate Relief Grants*		(2,323)
(347)		New Homes Bonus Grant		(293)
(464)		Rural Services Delivery Grant		(487)
0		Lower Tier Services Grant		(70)
		Non ring – fenced Government Grants: COVID-19
(797)		LA Response Grant		(282)
(436)		Sales, Fees and Charges Compensation		(70)
(355)		New Burdens Admin Support Grant		(131)
(659)		Capital grants and contributions		(741)
(11,626)		Total		(11,196)

 

*The S31 Business Rate Relief Grants received in 2020/21 and 2021/22 include the S31 compensation grant that local authorities were awarded to offset the business rate reliefs given to businesses during the pandemic. Under current Collection Fund accounting rules, the S31 grants are not discharged against the Collection Fund deficit until the following year onwards. Therefore there is a deficit on the Business Rates Collection Fund Adjustment Account at 31 March 2021 and 31 March 2022 which is reflected in the transfers of the Collection Fund deficit above. The S31 compensation grant is held in an earmarked reserve and will be applied to the Collection Fund over the next three years to smooth the impact of the Business Rates deficit.

 

 

 

 

 

 

 

 

12.  PROPERTY, PLANT AND EQUIPMENT

 

Movements in 2021/22:

 

	Land and Buildings     £000	Vehicles, Plant & Equipment   £000	Infra-structure Assets   £000	Community Assets     £000	Assets Under Construction     £000	Total Property, Plant and Equipment £000
Cost or Valuation
At 1 April 2021	23,327	2,799	1,074	0	0	27,200
Additions	208	102	4			314
Revaluation increases/(decreases) recognised in the Revaluation Reserve	50					50
De-recognition - Disposals		(19)				(19)
At 31 March 2022	23,585	2,882	1,078	0	0	27,545
Accumulated Depreciation and Impairment at 1 April 2021	312	858	436	0	0	1,606
Charge for 2021/22	569	331	29			929
Depreciation written out to the Revaluation Reserve	(259)					(259)
De-recognition - Disposals		(16)				(16)
At 31 March 2022	622	1,173	465		0	2,260
Balance Sheet amount at 31 March 2022	22,963	1,709	613	0	0	25,285
Balance Sheet amount at 31 March 2021	23,015	1,941	638	0	0	25,594

 

 

 

 

 

 

 

 

 

 

Comparative Movements in 2020/21:

 

	Land and Buildings     £000	Vehicles, Plant & Equipment   £000	Infra-structure Assets   £000	Community Assets     £000	Assets Under Construction     £000	Total Property, Plant and Equipment £000
Cost or Valuation
At 1 April 2020	22,405	2,628	1,074	0	0	26,107
Additions		171				171
Revaluation increases/(decreases) recognised in the Revaluation Reserve	922					922
At 31 March 2021	23,327	2,799	1,074	0	0	27,200
Accumulated Depreciation and Impairment at 1 April 2020	559	543	412	0	0	1,514
Charge for 2020/21	555	315	24			894
Depreciation written out to the Revaluation Reserve	(740)					(740)
Depreciation Adjustment (re 19/20)	(62)					(62)
At 31 March 2021	312	858	436	0	0	1,606
Balance Sheet amount at 31 March 2021	23,015	1,941	638	0	0	25,594
Balance Sheet amount at 31 March 2020	21,846	2,085	662	0	0	24,593

 

 

Depreciation

 

The Council provides for depreciation on all assets other than freehold land and community assets. The provision for depreciation is made by allocating the cost (or revalued amount) of the assets over the accounting period expected to benefit from their use. The straight line method of depreciation is used. Assets are depreciated in the year following acquisition and in the year of disposal.

 

Asset lives are reviewed regularly as part of the property revaluation and annual impairment review. Where the useful life of an asset is revised the carrying amount of the asset is depreciated over the revised remaining life.

Capital Commitments

 

As at 31 March 2022 the Authority has entered into one contract for the construction or enhancement of Property, Plant and Equipment.  This commitment relates to:

 

·         Tavistock Temporary Accommodation  £0.85 million

 

As a comparison, as at 31 March 2021 the Authority had not entered into any contracts for the construction or enhancement of Property, Plant and Equipment.

 

Revaluations

 

All material freehold land and buildings which comprise the Authority’s property portfolio are revalued by the Council’s Valuer on a rolling basis.

 

Valuations of land and buildings were carried out in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors.

 

Assets are valued in accordance with a five year rolling programme (with ad hoc valuations taking place, for example where assets have been enhanced). In addition, a formal impairment review of the entire holding of land and buildings is undertaken at the end of each financial year, to ensure the carrying value reflects the fair value at the Balance Sheet date.  The basis of valuation is set out in the Statement of Accounting policies in Note 39.

 

 

	Land and buildings	Vehicles, plant furniture & equipment	Total
	£000	£000	£000
Valued at historical cost	0	1,709	1,709
Valued at current value in:
2021/22 2020/21 2019/20 2018/19	6,139 16,238 491 95	0 0 0 0	6,139 16,238 491 95
Total	22,963	1,709	24,672

 

Impairment Losses

 

Impairment losses and impairment reversals charged to the Surplus or Deficit on the Provision of Services and to Other Comprehensive Income and Expenditure, are summarised in the preceding movements table, reconciling the movement over the year in the Property, Plant and Equipment balances. No impairment losses other than those relating to revaluation losses were incurred.

 

13. INVESTMENT PROPERTIES

 

The following items of income and expense have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement:

 

A. Income & Expenditure Account	2020/21        £000	2021/22        £000
Rental income from investment properties	(1,180)	(1,190)
Direct operating expenses arising from investment properties	(815)	739
Net (gain)/ loss	(1,995)	(451)

 

 

The following table summarises the movement in the fair value of investment properties over the year:

 

B. Movement in fair value	2020/21        £000	2021/22        £000
Balance at start of the year	19,004	19,830
Net gains/(losses) from fair value adjustments	826	(710)
Balance at end of the year	19,830	19,120

 

There are no restrictions on the Authority’s ability to realise the value inherent in its investment property or on the Authority’s right to the remittance of income and the proceeds of disposal.

 

The Code requires that Investment Properties are measured annually at fair value. The fair value valuation was £19.1 million as at 31 March 2022.

 

There has been a net loss on the fair value valuations of the four Investment properties of £710,000 in 2021/22. This predominantly relates to one investment property in Bristol and the reduction in value is caused by a softening of the yield. The accommodation is open plan and as such is set up for a single occupier. The office market is witnessing a trend towards good quality, smaller office suites, which better suit the new hybrid ways of working.

 

The Code confirms that movements in fair value are debited to the provision of services and are not proper charges to the General Fund. They are reversed out to the Capital Adjustment Account in the Movement in Reserves Statement. Therefore this change in valuation does not impact on the Council’s ‘bottom line’ of the Income and Expenditure account, as it is reversed out through the Capital Adjustment Account.

 

 

 

Fair Value Measurement of Investment Property

 

Observable Inputs – Level 2

 

The commercial land and buildings are measured using in the income approach, by means of the discounted cash flow method, where the expected cash flows from the properties are discounted using a market-derived discount rate to establish the present value of the net income stream. The approach has been developed using the Council’s own data factoring in assumptions such as duration and timing of cash inflows and outflows, rent growth, occupancy levels, bad debt levels and maintenance costs.

 

The Council’s commercial land and buildings are therefore categorised as Level 2 based on assumptions on observable inputs in the fair value hierarchy as the measurement technique uses observable inputs to determine the fair value measurements.

 

Highest and Best Use of Investment Properties

 

In estimating the fair value of the Council’s Investment Properties, it has been established that their current use is the highest and best use of the properties.

 

Valuation Techniques

 

There has been no change in the valuation techniques used during the year for Investment Properties.

 

 

14. FINANCIAL INSTRUMENTS

 

Categories of Financial Instruments

 

Financial instruments are recognised on the Balance Sheet when the Council becomes party to the contractual provisions of a financial instrument. They are classified based on the business model for holding the instruments and their expected cash flow characteristics.

 

Financial Liabilities

 

Financial liabilities are initially measured at fair value and subsequently measured at amortised cost. For the Council’s borrowing this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus outstanding interest payable).

 

Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument.

 

 

 

 

Financial Assets

 

To meet the code requirements, financial assets are now classified into one of three categories:

 

·         Financial assets held at amortised cost – These represent loans and loan-type arrangements where repayments or interest and principal take place on set dates and at specific amounts. The figure presented in the Balance Sheet represents the outstanding principal received plus accrued interest. Interest credited to the Comprehensive Income and Expenditure Statement (CIES) is the amount receivable as per the loan agreement.

 

·          Fair Value Through Other Comprehensive Income (FVOCI) – These assets are measured and carried at fair value. All gains and losses due to changes in fair value (both realised and unrealised) are accounted for through a reserve account, with the balance debited or credited to the CIES when the asset is disposed of.

 

·         Fair Value Through Profit and Loss (FVTPL) – These assets are measured and carried at fair value. All gains and losses due to changes in fair value (both realised and unrealised) are recognised in the CIES as they occur.

Allowances for impairment losses have been calculated for amortised cost assets, applying the expected credit loss method. Changes in loss allowances (including balances outstanding at the date of recognition of an asset) are debited/credited to the Financing and Investment Income and Expenditure line in the CIES. Changes in the value of assets carried at fair value are debited/credited to the Financing and Investment Income and Expenditure line in the CIES as they arise.

 

The value of debtors and creditors reported in the table below are solely those amounts meeting the definition of a financial instrument. The balances of debtors and creditors reported in the Balance Sheet and Notes 15 and 18 also include balances which do not meet the definition of a financial instrument, such as tax-based debtors and creditors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Financial Instruments

 

The following categories of financial instrument are carried in the Balance Sheet:

 

	Long term			Current
	31 March 2021 £000	31 March 2022 £000		31 March 2021 £000	31 March 2022 £000
Financial Assets at Amortised Cost
Investments*	0	0		6,500	17,200
Cash and Cash Equivalents	0	0		12,760	10,011
Debtors	0	0		1,562	1,307
Fair Value through Other Comprehensive Income – Financial Assets
Investments – Local Authorities’ Property Fund	471	553		0	0
Total Financial Assets	471	553		20,822	28,518
Financial Liabilities at Amortised Cost
Borrowing	(28,342)	(27,726)		(603)	(615)
Creditors	(179)	(184)		(6,127)	(8,394)
Total Financial Liabilities	(28,521)	(27,910)		(6,730)	(9,009)

 

*The increase in investments as at 31 March 2022 of £10.7m partly relates to the timing of the Council Tax energy rebate grant (£2.99m) which was received at the end of 2021/22 and the payments are being made on behalf of Central Government at the beginning of 2022/23. The Council also administered various Business Grants on behalf of Central Government and part of this increase relates to unapplied funding due to be repaid to Central Government.

 

Designated to Fair Value Through Other Comprehensive Income

 

At 31 March 2022 the Council had a £0.5 million investment with the CCLA Property Fund and up to 31 March 2018 this was held as an ‘Available for Sale Financial Asset’ and measured at fair value each year. Any change in fair value was posted to Other Comprehensive Income and Expenditure and accumulated gains and losses have been held in an Available for Sale Financial Instruments Reserve.

 

Following the adoption of accounting standard IFRS 9 Financial Instruments in 2018/19, the ‘Available for Sale Financial Asset’ category is no longer available. The new standard requires that investments in equity to be classified as fair value through profit and loss unless there is an irrevocable election to designate the asset as fair value through other comprehensive income.

 

The Council has elected to designate the CCLA investment as fair value through other comprehensive income. These investments are eligible for the election because they meet the definition of equity instruments in paragraph 11 of IAS32 and are neither held for trading (the Council holds this investment as a long term strategic investment) nor contingent consideration recognised by an acquirer in a business combination to which IFRS3 applies. They are not considered to be puttable instruments because the Council does not have a contractual right to put the instrument back to the issuer for cash.

 

This election means there is no impact on the revenue budget. Any gains or losses on the valuation of the CCLA investment will therefore be transferred to a Financial Instruments Revaluation Reserve until they are realised.

 

Statutory Override on Pooled Investments

 

As a result of the change in accounting standards for 2018/19 under IFRS 9, the Ministry for Housing, Communities and Local Government (MHCLG) have agreed a temporary override to allow English Local Authorities time to adjust their portfolio of all pooled investments by announcing a statutory override to delay implementation of IFRS 9 for five years commencing from April 2018. The Council will use the statutory override to account for any changes in the fair value on its pooled investments. For the Council’s Money Market Fund investments the change in fair value was immaterial in 2021/22.

 

 

Investments in Equity Instruments Designated at Fair Value Through Other Comprehensive Income

 

The Council had the following investments in equity instruments at 31 March 2022:

 

Investment	Nominal	Fair Value March 2022	Change in Fair Value During 2021/22
	£000	£000	£000
CCLA Property Fund	500	553	83

 

 

 

 

 

 

 

 

 

 

Net Gains and Losses on Financial Instruments

 

The following gains and losses have been recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments:

 

	2020/21	2021/22
	£000	£000
Net gains/losses on: Financial Assets measured at fair value through other comprehensive income	(3)	83
Total Net Gains/(Losses)	(3)	83

 

 

 

Fair Value of Financial Instruments

 

The following financial asset is measured in the Balance Sheet at fair value on a recurring basis:

 

Recurring Fair Value Measurements	Input Level in Fair Value Hierarchy	Valuation Technique Used to Measure Fair Value	31 March 2021 Fair Value	31 March 2022 Fair Value
			£000	£000
Fair Value Through Other Comprehensive Income   CCLA Property Fund	Level 2	Inputs other than quoted market prices that are observable for the asset or liability	471	553
TOTAL			471	553

 

 

 

 

 

 

 

 

 

 

Except for the financial assets carried at fair value, all other financial liabilities and financial assets represented are carried forward on the Balance Sheet at amortised cost. Their fair values are as follows:

 

	31 March 2021		31 March 2022
	Carrying amount	Fair Value	Carrying amount	Fair Value
	£000	£000	£000	£000
PWLB Debt – Maturity	(5,692)	(7,255)	(5,692)	(6,646)
PWLB Debt – Annuity	(23,252)	(24,906)	(22,649)	(22,483)
Long Term Creditors	(179)	(179)	(184)	(184)

 

 

15. DEBTORS

 

31.3.2021				31.3.2022
£000				£000
		Short Term
795		Central Government bodies		584
524		Other Local Authorities		354
		Other debtors
811		Council Tax		503
3,115		Business Rates*		1,192
1,038		Other entities and individuals		1,099
6,283