Bedford Borough Council Annual Statement of Accounts 2008/2009 · The Statement of Accounts is...

Bedford Borough Council Annual Statement of Accounts 2008/2009

Contents Page No Explanatory Foreword and Financial Review 1 Statement of Accounting Policies 5 Statement of Responsibilities for the Statement of Accounts 9 Income & Expenditure Account 10 Statement of Movement on General Fund 11 Statement of Total Recognised Gains & Losses 12 Balance Sheet 13 Cash Flow Statement 14 Notes to the Accounts 15 Collection Fund 37 Direct Labour Organisation – Memorandum Account 39 Group Accounts 41 Group Income and Expenditure Account 42 Group Statement of Total Recognised Gains & Losses 43 Group Balance Sheet 44 Group Cash Flow Statement 45 Notes to Group Accounts 46 Glossary of Terms 47 Annual Governance Statement 49 Independent Auditor’s Report 80

1

Introduction • General Welcome to the 2008/2009 accounts of Bedford Borough Council which are the last as a District Council. From 1 April 2009 Bedford Borough Council became a Unitary Authority by assuming the responsibilities of Bedfordshire County Council in the Borough area. During 2008/2009 the Council undertook the preparatory work to become a Unitary Authority. The legal requirement for the Statement of Accounts to be prepared and audited is contained in section 2 of the Audit Commission Act 1998. The accounts for 2008/2009 have been prepared in accordance with the ‘Code of Practice on Local Authority Accounting in the United Kingdom 2008: A Statement of Recommended Practice’ (SORP) and the ‘Best Value Accounting Code of Practice 2008’ (BVACOP) published by the Chartered Institute of Public Finance and Accountancy (CIPFA). These documents set out the proper accounting practices required by section 21(2) of the Local Government Act 2003 and Regulation 7 of the Accounts and Audit Regulations 2003. The accounting policies that have been adopted are contained in the Statement of Accounting Policies. The Statement of Accounts is designed to give electors, Members of the Council, employees, other interested parties and also those subject to the locally levied taxes and charges clear information regarding Bedford Borough Council finances. • Changes in Presentation and Accounting Policy Changes to Local Government accounting In 2006/2007 the Chartered Institute of Public Finance & Accountancy (CIPFA) formally adopted the Generally Accepted Accounting Practice (UK GAAP) as the basis of the CIPFA Local Government Accounting Code of Practice (ACOP), which provides a statement of recommended practice (SORP) for local authorities. Subsequently fundamental changes in relation to the valuation of assets and liabilities and associated capital reserves were introduced for 2007/2008 in an effort to attain full UK GAAP compliance. This included the implementation of the Revaluation Reserve, Capital Adjustment Account, and accounting for Financial Instruments. For 2008/2009 there are comparatively few changes in the presentation of the accounts. The main change is an amended and increased disclosure requirement for the Pension Fund Accounts as recommended by the Pensions SORP to take account of Financial Reporting Statement 25 Financial Instruments. This is detailed in note 32 to the accounts. The cashflow statement is now presented using the Indirect Method as incorporated in the SORP and the 2007/2008 figures have been restated for comparative purposes. Further fundamental changes in the content and presentation of the accounts will be implemented for the adoption of International Accounting Standards as required by the Local Authority SORP from 2010/2011. • Borrowing The Council has been debt-free since 1991. As part of the disaggregation of the County Council accounts, the Council will no longer be debt free as at the 1st April 2009, inheriting approximately £91m of borrowing debt. Statement of Accounts

The Council’s Accounts for the year 2008/2009 are set out on the following pages and consist of:

1. Income and Expenditure Account This account comprises all of the functions of the Council and summarises all the resources that have been generated or consumed in providing services during the year. This statement sets out the gross expenditure and income relating to the various services and functions of the Council. 2. Statement of Movement on the General Fund Balance

A reconciliation showing how the balance of resources generated or consumed in the year is linked to the statutory requirements for raising Council Tax.

3. Statement of Total Recognised Gains and Losses

A summary of how the movement in net worth in the Balance sheet reconciles with the surplus/deficit in the Income and Expenditure Account and the other unrealised gains and losses.

4. Balance Sheet This sets out the financial position of the Council at 31 March 2009 excluding any trust funds. It shows the balances and reserves at the Authority’s disposal and the net fixed and net current assets employed in providing services, together with summarised information on the fixed assets held.

2

5. Cash Flow Statement This statement reflects the operation of the Authority as a whole and provides additional information on the activities of the Authority to that in the revenue account and balance sheets. The statement summarises the movement of cash arising from transactions with third parties for revenue and capital purposes. 6. Collection Fund This account reflects the statutory obligation for the Council, as the billing authority for all local taxation and the requirement to maintain a separate Collection Fund. It shows transactions relating to Non-Domestic Rates, Council Tax and residual Community Charges and illustrates the way in which these were distributed to the County Council, Police Authority, Fire Authority and Borough Council General Fund. 7. Direct Labour Organisation Accounts

These accounts reflect the Council’s decision to account separately for direct service organisations operations. They give information about the operation of the Council’s direct labour force. 8. Group Accounts

The Statement of Recommended Practice for Local Authorities requires the preparation of group accounts for all local authorities that have interests in subsidiaries, associated companies and joint ventures that are material in aggregate. In addition to the above, the figures are supported by a Statement of Accounting Policies which is set out immediately following this foreword and by various notes appended to the accounts.

Final 2008/2009 outturn In accordance with Council Policy the Provisional outturn in comparison to the budget was reported to the 24 June 2009 Executive. At the time of writing the key variances were disclosed as shown below: There are a number of factors arising from service and function budgets that have contributed to the outturn as detailed below, where they exceed £20,000, i.e. to accord with the reporting level during the year. £105,000 Benefit Subsidy The net saving on benefits reflects a higher level of subsidy than forecast in relationship to the benefits awarded,

partially due to the higher level of subsidy payments. £25,000 (adverse) Commercial Property Management This is due to the continuing high level of empty property rates, partially offset by increased rental income.

£27,000 (adverse) Off Street Car parking This is primarily due to reduced income; this is attributable to the bad weather experienced in January and

February. £24,000 (adverse) Mowsbury Golf Complex The golf income is lower than expected due to a combination of bad weather (January and February) and

economic pressures. £33,000 (adverse) Environmental Health The adverse spend is due to the transfer of unrecoverable costs on Public Health Act funerals. The cost of these

was held pending possible recovery, but it is felt that this is now unlikely to recover these. £32,000 (adverse) Cemetery and Crematorium This reflects a lower than expected income from burial fees.

£28,000 Farm Set Aside The surplus on this budget reflects a higher level of grant income than anticipated.

£50,000 (adverse) NNDR Credits This budget reflects balances on rate accounts that are in credit, but the payee is untraceable. The outturn

position is not as high as estimated. £28,000 (adverse) Recycling The increase reflects the higher than anticipated level of cost of various Government and Council initiatives.

£122,000 Investment Income The budget was exceeded mainly as a result of:

• Lower than expected bank rates resulting in lower sums paid to third parties • Additional interest received on land compensation payments • Investment balances being higher than anticipated when calculating the probable estimate

The balance relates to minor variances on other services. The final outturn following the completion of the audit has increased the £6,000 outturn saving to a £97,000 outturn saving.

3

Explanations Relating to the Accounts Local Taxation In respect of Council Tax the Council, once again, set a Borough Level Council Tax below the average of Shire Districts (see Table 1 below). Table 1 – Average Band D Council Tax Comparative Council Tax Levels for District Council Services reveal that the Council maintained a below national average Council Tax requirement for Borough services.

Average Band D

Council Tax 2004/2005

Average Band D


Average Band D


Average Band D


Average Band D


£ £ £ £ £ Bedford Borough 128.06 133.89 140.18 144.00 149.32 Average District 136.70 142.92 147.29 152.37 158.00

Source: CIPFA Statistics Table 2 – Analysis of Band D Council Tax In respect of Council Tax set for 2008/2009 the following analysis details how the Average Band D Council Tax for this area was made up:

Bedford Borough

Average Band D Council Tax

Percentage

Relating to each Body

£ % Borough Council Requirement 149.32 9.91 Average Parish Requirement 19.67 1.31 Bedfordshire County Council Requirement 1,123.47 74.57 Bedfordshire Police Authority 135.28 8.98 Bedfordshire & Luton Combined Fire Authority 78.84 5.23 1,506.58

Source: CIPFA Statistics Table 3 The Council’s collection performance for Local Taxation can be summarised as follows:

Council Tax Business Rates 2007/2008

% 2008/2009

% 2007/2008

% 2008/2009

% Bedford Borough Council 97.8 97.8 99.1 98.0 Average Shire Districts 98.0 98.0 99.0 98.2 Average English Authority 97.1 97.0 98.8 97.8

Source: Department for Communities and Local Government The figures represent the amount of Council Tax and Business Rates collected in the year expressed as a percentage of the debit raised in the year. Group Accounts This Statement of Accounts has been prepared in accordance with the requirements for Group Accounts contained in the 2008 Accounting Code of Practice. Externally Invested Funds At 31 March 2009 the Council had £47.38 million temporarily invested, managed internally by Council staff. This relates to General Fund revenue and capital balances in hand pending use on agreed needs, as well as Collection Fund balances in hand at that date. The monies are invested in line with the Council’s Treasury Management Policy Statement and Treasury Management Practices. The Council also employs Sector Treasury Services Ltd to provide investment advice and other related financial matters. Revenue Provisions, Reserves and Balances Details of the movement and sums held in Revenue Provisions and Reserves and their purpose are included in the notes to the accounts. The total of Revenue Provisions, Reserves and Balances as at 31 March 2009 is set out below by comparison to the position at 31 March 2008.

Balance Sheet 31 March 2008 31 March 2009 £’000 £’000 Provisions (Excluding Bad Debts) 596 1,430 Reserves and Balances 28,370 21,232 TOTAL (Excluding Bad Debts) 28,966 22,662 Bad Debts Provision 1,568 1,346 TOTAL (Including Bad Debts) 30,534 24,008

The total of revenue provisions and reserves decreased year on year by £6.526, details can be seen in Notes 25 and 26 to the accounts. The Council undertakes a comprehensive review, annually, of revenue provisions and reserves. Note: The General Fund Bad Debts Provisions are netted off the Debtors figure on the Balance Sheet. Capital Accounting Arrangements The Council applies charges to all operational assets with a value in excess of £20,000. The Council’s Land & Property Unit in accordance with current valuation principles and CIPFA guidelines, undertake valuations of land and property. Vehicles, Plant and Equipment, and Infrastructure Assets, are included at purchase price and depreciated over the anticipated life of the asset. The council maintains a 5-year rolling programme to revalue Land and Property Assets.

4

As at 1st April 2008 the Council revalued 50% of its operational and non-operational property. This generated a revaluation gain of £25.7 million that was credited to the Revaluation Reserve, and also produced impairment losses on downward revaluations of £7.7 million that was charged to the Income and Expenditure Account. Due to a general fall in property prices during 2008/2009, a further revaluation of all relevant operational and non-operational property was carried out as at 31st March 2009. This resulted in a total downward revaluation of £9.9 million, of which £6.9 million was set against previous revaluation gains stored in the Revaluation Reserve, and the balance of £3.0 million was charged as impairment to the Income and Expenditure Account. A further £9.9 million was charged to the Income and Expenditure Account for impairment resulting from deterioration in the condition of fixed assets, that is defined as consumption of economic benefit of an asset, and may not be set against any balance in the Revaluation Reserve. All of the impairment losses that were charged to the Income and Expenditure Account, were subsequently reversed in the Statement of Movement on the General Fund Balance, and therefore have a neutral impact upon the revenue accounts that must comply with statutory requirements for raising the Council Tax. Pension Fund Liability The deficit at 31 March 2009 in respect of the Council’s Pension Fund Liability increased to £46.0 million from £33.7 million as at 31 March 2008. The deficit is reduced to £41.5million (£29.0million in 2007/2008) after allowing for the Council’s additional contributions in respect of discretionary awards previously made. Full details can be found in the Note 32 to the accounts. Renewal and Repairs Reserves The Council continued to repair and refurbish its properties in line with the planned maintenance schedule approved annually by the Service Manager (Land & Property) so as to maintain the properties to a sufficient standard to prevent deterioration and devaluation. Additionally the Council maintains an Equipment, Plant and Vehicles Renewal Reserve to finance the cost of new and replacement assets. The reserves also receive annual contributions in respect of repairs to assets and to repay advances for assets previously funded by this method. Capital Investment The Council remains ‘debt free’ and, therefore, financed all of its capital investment during 2008/2009 from capital receipts, capital grants, revenue contributions or finance lease. Capital Expenditure on fixed assets in 2008/2009 totalled £8.7 million, including expenditure on the redevelopment projects in Bedford Town Centre and at the Museum, the refurbishment of the Howard Centre, and acquisition of properties in Greyfriars. A further £2.41 million of capital funded expenditure was made on Revenue Expenditure Funded From Capital Resources, primarily for housing related grants. Since 1 April 2003 the Council has had the power to make direct capital grants to Housing Associations and these are now included in the Capital Programme in accordance with Council’s Corporate Priorities. Finance Lease The Council arranged two finance leases in 2008/2009, a five year lease to acquire £313,415 of vehicles and a seven year lease to acquire £187,343 of vehicles (£305,510 in 2007/2008) to be used by the Commercial Services Department. The use of this method of funding capital expenditure is possible under the Prudential Code for Borrowing. Further details of the Council’s capital expenditure are included in the note 15 to the Accounts. Commercial Services Department Following the replacement of Compulsory Competitive Tendering with Best Value legislation, there is no requirement to continue with Statutory DLO Accounts. However, the Council has determined that the Direct Service Organisation (Commercial Services Department) should continue to operate as a separate trading department. Consequently memorandum DLO accounts have been prepared for information purposes. Business Improvement District (BID) The Council is the billing authority for the business improvement district, collecting monies for the BID. Bedford BID Company, an umbrella group of local businesses operates and is responsible for the BID. The Council collects the levy from business ratepayers on behalf of the BID body and is reimbursed for the cost of collection. Further information is provided at note 8 to the accounts. Unitary Status Bedford Borough Council was on the 6th March 2008 awarded Unitary status to take effect from 1st April 2009 and during 2008/2009 the Council has concentrated on preparing for a smooth transition. This process was led by the Implementation Executive comprising of the directly elected Mayor, ten Councillors from Bedford Borough and three from Bedfordshire County Council. To support the process Full Council approved funding of £1.117 million which was primarily for additional staff costs e.g. the appointment of new senior management posts prior to vesting day. On reflection the Council’s plans were demonstrated to be robust given there have been no service failures. Further Information Additional information about these accounts is available from the Executive Director for Finance and Corporate Services, Bedford Borough Council, Borough Hall, Cauldwell Street, Bedford MK42 9AP. This reflects the Council’s policy of providing as much information as it possibly can about the conduct of its affairs. In addition, members of the public have a statutory right to inspect the accounts before the audit is completed and the availability of the accounts for this inspection is advertised each year in the local press.

Statement of Accounting Policies

5

General The general principles adopted in compiling and presenting the accounts are those specified within the ‘Code of Practice on Local Authority Accounting in the United Kingdom 2008 : A Statement of Recommended Practice’ (the SORP), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA). Service expenditure is analysed in accordance with the ‘Best Value Accounting Code of Practice’ (BVACOP). Both these documents set out the proper accounting practices required by Section 21(2) of the Local Government Act 2003 and regulation 7 of the Accounts and Audit Regulations 2003. This formal recognition has been further strengthened by the Accounts and Audit (Amendment) (England) Regulations 2006 to the extent that, where proper practices are not specifically identified, the accounts must conform to UK Generally Accepted Accounting Practice (UK GAAP). In addition to the accounting concepts set out below, the accounts are presented on a ‘going concern’ basis, i.e. the Council will continue to operate for the foreseeable future. The accounts also reflect the concept of primacy of legislative requirements in that where an accounting treatment is prescribed by law, it must be applied even if it contradicts another accounting concept.

Accounting Concepts In general the accounts are prepared on the basis of historical cost modified by the revaluation of land, buildings, vehicles and plant subject to and in accordance with the fundamental accounting concepts set out below:

Relevance The accounts are prepared so as to provide readers with information about the council’s financial performance and position that is useful for assessing the stewardship of public funds. Reliability The accounts are prepared on the basis that the financial information contained in them is reliable, i.e. they are free from material error, deliberate of systematic bias, complete within the bounds of materiality and represent faithfully what they intent to represent. Where there is uncertainty in measuring or recognising the existence of assets, liabilities, income and expenditure then caution and prudence has been used as a basis to inform the selection and application of accounting policies and estimation techniques. Comparability The accounts are prepared so as to enable comparison between financial periods. To aid comparability the council has applied its accounting policies consistently both during the year and between years. Understandability Every effort has been made to make the accounts as easy to understand as possible. Nevertheless, an assumption has been made that the reader will have a reasonable knowledge of accounting and local government. Where the use of technical terms has been unavoidable, an explanation has been provided in the glossary of terms. Materiality Certain information may be excluded from the accounts on the basis that the amounts involved are not material either to the fair presentation of the financial position and transactions of the council or to the understanding of the accounts. Accruals With the exception of the Cash Flow Statement, the accounts are prepared on an accruals basis. The accruals basis of accounting requires the non-cash effect of transactions to be reflected in the accounts for the year in which those effects are experienced and not in the year in which the cash is actually received or paid.

Estimation techniques Estimation techniques are the methods adopted by the council to arrive at monetary amounts corresponding to the measurement basis selected for assets, liabilities, gains, losses and changes in reserves. Details of where these have been used are contained in the relevant Notes to the Accounts. Where a change in an estimation technique is material an explanation is also provided of the change and its effect on the results for the current period.

Fixed Assets All expenditure on the acquisition, creation or enhancement of fixed assets (in excess of £20,000) unless funded by finance lease, is capitalised on an accruals basis in the accounts. This expenditure generally yields benefits to the Authority and the services it provides for more than one year. Fixed assets are valued on the basis recommended by CIPFA and in accordance with the Statements of Assets Valuation Principles and Guidance Notes issued by the Royal Institute of Chartered Surveyors. The valuation report has been prepared by a Property Consultant, reflecting valuations at 1 April 2008, undertaken in 2008/2009 and certified by Mr D Joyce MRICS the Council’s Service Manager (Land & Property). In accordance with Financial Reporting Standard (FRS) 11 ‘Impairment of fixed assets and goodwill’, the valuer also reviews the assets for impairment due to one or more of the following events: • Significant decline in a fixed asset’s market value • Evidence of obsolescence or physical damage • A significant adverse change in the statutory or other regulatory environment in which the authority operates • A commitment by the Council to undertake significant reorganisation

Fixed assets are classified into the groupings required by the SORP as follows: • Non-operational assets are included at market value. • Operational, non-specialised property, is valued on the basis of existing use. • Operational, specialised property is valued on the basis of Depreciated Replacement Cost. • Infrastructure assets are included in the balance sheet at historical cost net of depreciation. • Community Assets are included at historical cost. • Intangible Assets that do not have physical substance but are identifiable and controlled by the Council eg Computer Software, are shown

at historical cost net of depreciation.

6

Assets included in the Balance Sheet at current value are revalued when there is a material change in value and as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. The Revaluation Reserve was implemented for 2007/2008 and only includes revaluation gains from 1st April 2007. Gains arising before this date have been consolidated into the Capital Adjustment Account. Any reductions in valuations are charged to the Revaluation Reserve where there is a previous revaluation gain for that particular asset. If no gain exists then the revaluation loss is charged to the service account with an appropriation to the Capital Adjustment Account to ensure that the overall revenue effect is neutral and that no cost falls to the local taxpayers. Impairment losses may be reversed if circumstances change. Impairment losses arising from asset use (e.g. physical damage or deterioration) are automatically charged to the service account and are an appropriation to the Capital Adjustment Account. This ensures that the overall revenue effect is neutral and that no cost falls to the local taxpayers. Impairment losses may be reversed if circumstances change. As a result of the SORP, when an asset is disposed of or decommissioned the resultant surplus or loss is now written off to Income and Expenditure Account. As the written-off value of disposals is not a charge against council tax, the amount is subsequently appropriated to the Capital Adjustment Account from the Statement of Movement on the General Fund Balance so that no cost falls to the local taxpayer.

Depreciation

Fixed Assets, which have a finite life, are depreciated over their useful, economic life. Under Financial Report Standard 15 (FRS15) depreciation is applied to all operational assets, on the value of the asset excluding any land value, over their finite life, which is determined at the time of acquisition or revaluation. Depreciation has been applied from re-valuations undertaken during the 5-year rolling programme. Depreciation is not applied where the asset is non-depreciable freehold land, is a non-operational investment property or the depreciation charge would be immaterial. Where depreciation is provided for, the straight line method is used i.e. the asset value is reduced by equal amounts each year over the estimated life of the asset to leave a nil value in the accounts at the end of the asset’s anticipated useful life. Depreciation is not charged on de minimis items (less than £20,000) unless funded through finance lease or specific capital grant. These are generally written out in the year of purchase. The estimated useful life is generally between 5 and 15 years for Equipment, Plant and Vehicles and 10 and 20 years for Infrastructure items. Intangible Assets such as computer software are depreciated over 5 years. The estimated life of buildings is 100 years. As the depreciation charge is not an allowable charge against Council Tax it is neutralised by a entry in the Statement in Movement in General Fund balances.

Revenue Expenditure Funded From Capital Resources Under Statute

These are payments of a capital nature where no fixed asset is created, but which may properly be financed over a period of years. They include Private Sector Renewal Grants. Such expenditure is written off in the year in which it is incurred to the Income and Expenditure Account. As this is not an allowable charge against the Council Tax, it is neutralised by an entry in the Statement of Movement in General Fund Balances, with a corresponding entry to the Capital Adjustment Account.

Value Added Tax Value Added Tax (VAT) is not included in the Council’s income or expenditure for either revenue or capital, except where the Council is unable to recover the VAT from Customs and Excise.

Capital Receipts Receipts from disposals of fixed assets in excess of £10,000 are categorised as capital receipts. These are credited to the Income and

Expenditure Account as part of the gain or loss on disposal of fixed assets and netted off against the carrying value of the asset in the Balance Sheet at the time of the disposal. Some capital receipts may not be attached to a disposal of a fixed asset, e.g. a wayleave, and these receipts are also credited to the Income and Expenditure Account. Capital receipts are required to be credited to the Usable Capital Receipts Reserve and are therefore appropriated to the Reserve by a reversing entry from the Statement of Movement on the General Fund Balance.

Debtors and Creditors

All accounts of the Council are maintained on an accruals basis in accordance with the Code of Practice and FRS18. That is, sums due to or from the Council during the year are included whether or not cash has actually been received or paid in the year. Exception to this principle relate to public utility quarterly payments which are charged at the date of meter reading rather than being apportioned between financial years and to the monthly paid manual workers payroll for which overtime is not accrued at the 31st March. This policy is consistently applied each year and, therefore, does not have a material effect on the year’s accounts.

Stock, Stores and Work in Progress

The stores computer system values the stock using the First in First Out (FIFO) costing method. This in line with the current requirements of the Code and SSAP 9 which stipulates that stocks should be shown at actual cost or net realisable value if lower. Stocks in the Printing and Central Stationery Store are valued at cost price. Works in progress relating to the internal Printing Section and all external rechargeable works are valued at cost price.

Costs of Support Services The basis of allocation used for the main cost of management and administration are outlined below. All costs have been fully allocated to services as recommended by the Best Value Accounting Code of Practice.

Cost of Office Accommodation By floor area Printing By actual usage Information Technology By actual usage Telephone By extensions Technical Support Actual time spent by staff Staff Operating Accounts Estimated time spent by staff on services/function

7

Provisions The Council sets aside provisions for specific future expenses, by charging expenditure to the Income and Expenditure Account in anticipation of the liability having to be met, provided: • there is a present obligation as a result of a past event • it is probable that a transfer of economic benefits will be necessary to settle the obligation • a reliable estimate of the amount of the obligation can be made. When expenditure is incurred to which the provision relates they are charged to the provisions account.

Bad and Doubtful Debts The Council maintains a Bad Debt provision to ensure that it can finance any sums due to the Council that are subsequently deemed to be irrecoverable after recovery measures have been exhausted. The Corporate & Resource Policy Review Development Committee periodically reviews the level of this provision. The amount needed to provide for potential unpaid sundry debts (including commercial rents and Benefit overpayments) is reduced annually by sums written off and increased by an annual contribution from revenue. The provision is netted off Debtors in the Balance Sheet and not included in the Provisions total.

Earmarked Reserves and Balances

The Council maintains earmarked reserves to fund future expenditure on specific policy priorities as well as to provide funds to meet various contingency requirements the Council may have to face. However, the Corporate & Resource Policy Review & Development Committee and the Executive undertake an annual review to ensure they are still required for the purpose set out and that the balance is still appropriate.

Financial Instruments

The 2007 SORP adopted Financial Reporting Standard (FRS)25, FRS26 and FRS29 which deal with the recognition, measurement, disclosure and presentation of financial instruments. The changes required as a result of the implementation of the 2007 SORP are reflected in the Statement of Accounts and the policy is shown below. Further detailed information is included in Note 16 to the accounts. - Investments The fair value of each class of financial asset and liability is shown in the Notes to the Statement of Accounts, where this is different from the carrying amount stated in the Balance Sheet.

The fair value has been determined by calculating the Net Present Value of future cash flows, which provides an estimate of the value of payments in the future in today’s terms. Where discount rates have been used they are market rates available on 31 March 2009, using bid prices where applicable. The discount rate used in the NPV calculation is equal to the current rate in relation to the same instrument from a comparable lender. This is the rate applicable in the market on the date of the valuation, for an instrument with the same duration i.e. equal to the outstanding period from the date of valuation to maturity Assumptions made: - Interest is calculated using the most common market convention i.e. ACT /365 - Interest on fixed term deposits is calculated on the assumption that interest is received on maturity - Where interest is paid/received every six months on a day basis, the value of interest is rounded to 2 equal instalments Investments in the Balance Sheet as at 31 March 2009 include accrued interest as at the Balance Sheet date.

- Soft Loans These are loans that the Council may make for policy reasons at an interest rate below the market rate for that type of loan. Where this occurs they are accounted for on a fair value basis. The fair value is the present value of future receipts discounted using the prevailing interest market interest rate for a similar loan and for an organisation with a similar credit rating. The impact of these loans, and others that may be regarded as soft loans, are assessed annually.

Where material the difference between cash lent and the fair value is charged against the relevant service and as the loan is repaid the increased fair value of the loan is credited to the service, giving a neutral effect over the term of the loan.

At 31 March 2009 loans to third parties that are accounted for as soft loans are included in the Long Term Debtors.

Where the debt or loan is of a statutory nature, interest is charged at a deemed to be commercial rate or the difference between the fair value and the cash lent is immaterial no adjustment is made.

When assessing the impact of soft loans the interest rate on the loan is compared to the prevailing rate for a similar loan with the same remaining life to calculate the fair value, as in investments above.

- Financial Guarantees The Council may give financial guarantees requiring payments to be made to reimburse the holder of a debt if a debtor fails to make a payment when due in accordance with the terms of a contract. Where these guarantees are given they are to be included in the accounts at fair value.

Where guarantees are given to unrelated parties, the fair value is the premium received unless that sum does not represent a reliable estimate of the fair value. Where no premium is received the fair value of the guarantee is estimated by assessing the likelihood of the guarantee being called against the likely amount payable.

At 31 March 2009 the Council had given no financial guarantees but may do so in the future.

8

Financial Liabilities Financial liabilities are initially measured at fair value and carried at their amortised cost. Annual charges to the Income and Expenditure Account for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. At 31 March 2009 the Council had none outstanding. The Council had no outstanding long term debt at 31 March 2008 or 31 March 2009 and did not redeem debt during the year.

Information Technology

Costs relating to the introduction of new and the internal development of existing Information Technology systems are charged against the associated system or service in the year the expenditure is incurred.

Pension Costs

Employees, subject to certain qualifying criteria, are eligible to join the Local Government Pension Scheme administered up to 31 March 2009 by Bedfordshire County Council. It is a funded, defined benefits pension scheme. Pensions and other retirement benefits are paid from the fund. Employers and employees make regular contributions into the fund so that the liabilities are paid for evenly over the employment period. Actuarial valuations of the fund are undertaken every three years to determine the contributions rates needed to meet its liabilities.

Under the 2008 SORP the Council has adopted the amendment to FRS17, Retirement Benefits. As a result quoted securities held as assets in the defined benefit pension scheme are now valued at bid price rather than mid-market value. The effect of this change on the fund assets at less than 0.5% is considered immaterial and therefore the Council has decided not to restate prior years balances. The current and prior year surplus have been unaffected by this change.

The Accounts show the implementation of FRS17 Retirement Benefits. FRS17 requires organisations to recognise retirement benefits in the Income and Expenditure Account when they are earned, even though the benefits will not be payable until employees retire. However, as statutory procedures require the charge against Council Tax to be based on the cash payable by the Authority to the pension fund during the year, an appropriation is made to the Pensions Reserve which equals the net change in the pensions liability recognised in the Income and Expenditure Account. A neutralising appropriation entry is made in the Statement of Movement in General Fund Balance.

The Balance Sheet discloses the Council’s net liability in relation to retirement benefits. The figures are based on the Actuary’s latest calculation.

Note 32 to the accounts provide further information about the Local Government Pension Scheme.

Government Grants and Contributions Revenue Grants and contributions are credited in the Council’s accounts in the same period the related expenditure is charged. Where the amount receivable is not precisely known an estimate is made based on the known facts. Capital grants and contributions are credited to the Capital Contributions Unapplied Account pending the application to finance capital expenditure, when it is transferred to the Capital Contributions Deferred Account. Amounts are then written off to the Income and Expenditure Account on a straight line method over the useful life of the asset to offset any depreciation on assets to which it relates. As these write off’s are not an allowable charge against Council Tax, it is neutralised by an entry in the Statement of Movement in General Fund balances with the corresponding entry to the Capital Adjustment Account.

Exceptional Items These are items that derive from events that fall within the normal activities of the authority and are included within the service revenue accounts. The transition costs in establishing the Unitary authority have been identified separately on the Income and Expenditure Account.

Group Accounts The requirement to produce group accounts was introduced by the 1996 Code in response to the issue of Financial Reporting Standard 2, Accounting for Subsidiary Undertakings (FRS2). The Council has been connected to one company and three trusts funds that are required to be consolidated within the annual accounts under this Standard. Details of those relationships are outlined in notes 31 and 32 to the accounts. Group Accounts have been prepared in accordance with SORP guidance.

Leasing

Lease rental payments made under leasing agreements have been accrued and accounted for in the period to which the payment relates. Interest

Interest income and payable is accrued and accounted for in the accounts of the period to which it relates.

Statement on Responsibilities for the Statement of Accounts

9

Bedford Borough Council The Council is required to:

- manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets - make arrangements for the proper administration of its financial affairs and appoint an officer responsible for this function in accordance

with Section 151 of the Local Government Act 1972 - approve the Statement of Accounts

The Executive Director for Finance & Corporate Services

This is the officer appointed under Section 151 of the Local Government Act 1972 to ensure that arrangements are in place for the proper administration of the Council’s financial affairs. He is responsible for:

- certifying that the Annual Statement of Accounts presents fairly the financial position and transactions of the Authority at the 31 March of each year;

- selecting suitable accounting policies and applying them consistently; making judgements and estimates that were reasonable and prudent;

- complying with SORP - ensuring proper accounting records have been kept up to date; reasonable steps are taken in the prevention and detection of fraud and

other irregularities. Certification of the Executive Director for Finance & Corporate Services I hereby certify that the Statement of Accounts for 2008/2009 represents fairly the financial position of Bedford Borough council and its income and expenditure for that year. Trevor Roff CPFA FMAAT Interim Executive Director for Finance & Corporate Services Dated: 30 September 2009 Certification of the Chair of Audit Committee I hereby certify that the Statement of Accounts for 2008/09 was approved by the Audit Committee in my presence on the 30 September 2009. Councillor Charsley Chair of Audit committee Dated: 30 September 2009

Income & Expenditure Account

10

This account comprises all of the functions of the Council and summarises all the resources that have been generated or consumed in providing services during the year. It is prepared on the basis of UK Generally Accepted Accounting Practice (UK GAAP) and does not include transactions made under statute or the use of reserves that are detailed on the note of reconciling items for the statement on the movement on the general fund below.

2007/2008 2008/2009

Expenditure £’000

Income

£’000

Net Expenditure

£’000

By Service

Expenditure

£’000

Income

£’000

NetExpenditure

£’0001,515 0 1,515 Cultural & Heritage 9,257 3 9,2549,167 1,351 7,816 Recreation & Sport 9,580 1,443 8,1371,264 978 286 Tourism 1,384 1,086 298

555 532 23 Cemeteries & Crematorium 665 544 1219,543 1,063 8,480 Environment 11,169 1,543 9,6265,419 3,276 2,143 Planning & Development 10,310 3,460 6,8502,977 4,405 - 1,428 Property Management 8,472 4,330 4,1422,527 2,367 160 Highways 1,771 1,540 2313,880 4,127 - 247 Parking Services 3,748 3,930 -1822,009 152 1,857 Public Transport 2,364 478 1,886

50,695 46,023 4,672 Housing & Housing Benefits 53,571 50,341 3,2304,474 1,250 3,224 Corporate & Democratic 3,909 272 3,637

Non Distributed Costs 986 0 986 3,230 1,305 1,925 Other Services To The Public 2,684 925 1,759 - - - Transitional Costs 3,252 70 3,18297,255 66,829 30,426 Net Cost of Services 123,123 69,966 53,157

- 334 Gains & Losses on the Disposal of Fixed Assets -2,327 - 990 Other Capital Receipts -313 - 394 Surplus of Trading Undertakings and Dividends -534 971 Parish Precepts 1,067

103 Interest Payable 69 - 3,805 Interest Receivable -3,441

89 Contribution of Housing Capital Receipts to Government Pool

32

7,075 Pension Interest Costs 7,670 - 5,422 Pensions Expected Return on Assets -5,221

27,719 Net Operating Expenditure 50,159 - 8,727 Precept on Collection Fund (Note 36) -9,173 - 128 Council Tax Surplus in Aid of Council Tax (Note 36) -152 - 2,004 General Government Grant (Note 36) -1,886 -11,940 National Non-Domestic Rates from Pool (Note 36) -12,635 4,920 - Surplus/Deficit for Year 26,313 Included in the Surplus of Trading Undertakings and Dividends above is the Profit the CSD made in the year on works and services carried out for the Council (see Note 2). This is a requirement of the Best Value Accounting Code of Practice from the 2000/2001 accounts; the service expenditure has been reduced to credit back this 'profit' element. Expenditure from Earmarked Reserves and contributions to Provisions also produces fluctuations in the year on year comparative figures.

Statement of Movement on General Fund

11

This statement shows the movement on the General Fund Balance resulting from the Council’s revenue spending against the Council Tax that was raised for the year. It is a combination of the Council’s outturn for the year as generated on the Income and Expenditure Account, and adjustments for the use of reserves and those provisions required by statute that the Council needs to allow for when setting local taxes.

2007/2008 2008/2009 £’000 £’000 4,920 - Surplus / Deficit for Year on Income & Expenditure Account 26,313

- 5,120

Net Additional Amount Required by Statute and Non-Statutory Proper Practices to be Credited to the General Fund Balance for the Year -26,313

- 200 Increase in General Fund Balance 0

- 3,450 General Fund Balance B/Fwd -3,650

- 3,650 General Fund Balance at 31 March -3,650 Note of Reconciliation Items for the Statement of Movement on the General Fund This note comprises those transactions that are not included in the Income and Expenditure Account but are required by statute to be credited or debited to the General Fund. It also includes the use of the Authority’s own reserves in the year.

£’000 £’000 £’000 £’000

Amounts Included in the Income & Expenditure Account but required by statute to be excluded when determining the Movement on the General Fund Balance

- 4,313 Depreciation and Impairment of Fixed Assets -22,391

466 Government Grants Deferred Amortisation 986

487 Net Gain on Sale of Fixed Assets 2,480

990 Other Capital Receipts 313

- 2,911 Revenue Expenditure Funded From Capital Resources Under Statute -1,554

-89

Amount by which Financial Costs calculated in accordance with SORP differ from those calculated in accordance with Statutory requirements -80

- 4,631 Net Charge for Retirement Benefits in Accordance with FRS 17 -5,575

-10,001 -25,821

Amounts Not Included in the Income & Expenditure Account but required by statute to be included when determining the Movement on the General Fund Balance

369 Capital Expenditure Charged In-Year to the General Fund Balance 2,406

- 89 Usable Capital Receipts to Meet Payments to the Housing Capital Receipts Pool -32

3,833 Employers Contributions Payable to the Bedfordshire Pension Fund 4,069

4,113 6,443

Transfers to the General Fund Balance that are to be taken into Account when determining the Movement on the General Fund Balance

112 Voluntary Provision For Repayment of Debt 203

7,389 Transfer to Earmarked Reserves 13,848

- 6,733 Transfer From Earmarked Reserves -20,986

768 -6,935

- 5,120 Net Amount Required to be Debited/Credited to the General Fund Balance - 26,313

Statement of Total Recognised Gains & Losses

12

This comprises all gains and losses, both revenue and capital that the Authority has generated during the year.

2007/2008 2008/2009 £’000 £’000 4,920 Deficit for the Year on the Income & Expenditure Account 26,313

-10,028 Surplus Arising on the Revaluation of Fixed Assets -18,751

- 19,005 Actuarial Loss/Gain on Pension Fund Assets and Liabilities 10,766

321 Other Gains and Losses 165

-23,792 Total Recognised (Gains) / Losses for the Year 18,493

Balance Sheet

13

31 March 2008 31 March 2009 £’000 £’000 £’000 £’000

Net Fixed Assets (Note 15) 352 Intangible Fixed Assets 660 Tangible Fixed Assets Operational Assets

87,730 - Other Land and Buildings 83,856 4,235 - Community Assets 7,617

890 - Infrastructure 2,618 2,316 - Equipment, Plant and Vehicles 3,280

95,171 97,371 12,578 Under Construction and Development 6,943 50,456 Non Operational Assets 58,638 158,557 163,612 7,356 Long Term Investments (Note 16) 3,136 853 Long Term Debtors (Note 24) 1,199 166,766 Total Long Term Assets 167,947 Current Assets

412 Stocks, Stores and W.I.P (Note 17) 456 14,565 Debtors (Note 18) 15,501

504 Cash 893 22 Imprest Accounts 21

45,304 Investments (Note 16) 45,756 60,807 62,627 227,573 Total Assets 230,574 Less Current Liabilities

1,277 Temporary Loans & Money Held for Third Parties 1,386 26,737 Creditors & Capital Contributions Unapplied (Note 19) 26,936 40 Deposits 45

28,054 28,367 199,519 Total Assets less Current Liabilities 202,207

Long Term Liabilities 385 Less Finance Leases (Note 28) 693 596 Less Provisions (Note 25) 1,430

6,926 Less Capital Contributions Deferred (Note 37) 14,694 Less Liability Related to Defined Benefit Pension 33,692 Scheme (Note 32) 45,964 157,920 Total Assets less Liabilities 139,426

Financed By: 10,001 Revaluation Reserve (note 21) 28,651 -93 Financial Instruments Adjustment Account -174 4 Available-for-sale Financial Instruments Reserve 4 133,294 Capital Adjustment Account (Note 21) 131,638 15,780 Usable Capital Receipts - (Note 20) - 848 Deferred Capital Receipts (Note 22) 796 28,370 Reserves and Balances (Note 26) 21,232 -33,692 Pensions Reserve (Note 32) -45,964 3,408 Collection Fund Balances 3,243 157,920 Total Equity 139,426

Trevor Roff CPFA FMAAT Interim Executive Director for Finance & Corporate Services Dated: 30 September 2009

Cash Flow Statement

14

2007/2008

2008/2009

£'000 £'000 £’000 516 Net Cash Flow on Revenue Activity 6,056 DIVIDENDS FROM JOINT VENTURES AND ASSOCIATES Cash Inflows

-70 Dividends Received -70 -70 -70 RETURNS ON INVESTMENTS & SERVICING OF FINANCE Cash Outflows

2 Interest Paid 69 13 Finance Leases 19

15 88 Cash Inflows

-3,453 Interest Received -3,750 -3,453 -3,750 CAPITAL ACTIVITIES Cash Outflows

8,889 Purchase of Fixed Assets 9,007 3,000 Other Capital Cash Payments 406

11,889 9,413 Cash Inflows

-312 Finance Lease Drawdown -501 -3,004 Sale of Long Term Investments -4,000

-487 Sale of Fixed Assets -2,845 -4,038 Capital Grants and Contributions -5,333 -1,036 Other Capital Income -

-8,877 -12,679 MANAGEMENT OF LIQUID RESOURCES -453 -Net decrease /increase in short term deposits 460 FINANCING

-48 -Net increase/decrease in short term borrowing -109 112 Capital Element of Finance Leases 203

64 94 -369 - Net Cash inflow -388

Notes to the Accounts

15

1(i) Exceptional Items and Prior Period Adjustments Exceptional Items are ones that are material in terms of the authorities overall expenditure and not expected to occur frequently or regularly. The costs, £3.182 million relating to preparing for Unitary status from 1st April 2009 fall within this category and are shown in the Income and Expenditure Account. The expenditure includes the recruitment, salary and related costs for staff in post prior to 1st April 2009, costs to prepare I.T. systems to be available when required, and other costs relating to the implementation of the new authority. Included within this amount is a provision of £2 million which has been set up for redundancy costs. Prior year adjustments are material adjustments that arise from changes in accounting policies or from the correction of previous errors. No significant changes were required for the 2008/2009 Accounts.

1(ii)Discontinued Activities

The Council had no discontinued activities in 2008/2009. 2 Trading Operations

The Council’s Commercial Services Department (CSD) carry out the major part of the Council’s trading activity, carrying out works for housing associations, other local authorities and commercial business as well as for the Borough Council. The work includes maintenance in connection to land and buildings, refuse collection and cleansing services and highways work. The Council also operate on Wednesday and Saturday a Charter market in Bedford Town Centre, a gourmet food market on Thursday, joined by a monthly Farmers Market on the 2nd Thursday of the month, and a flower and plant market on Friday. A Thursday general market is also held at Saxon Centre, Kempston. The Council receives a dividend from Bedford Bereavement Care, a wholly owned company that provide crematorium services and administer cemeteries on behalf of the Council.

2007/2008 2008/2009 Net Surplus Turnover Expend Surplus

£’000 £’000 £’000 £’000 1,691 CSD Trading 30,489 28,412 2,077

-1,362 Less Internal Contracts -20,990 -19,387 -1,603 329 9,499 9,025 474

-5 Market Undertaking 270 285 -15 324 Total Trading Surplus 9,769 9,310 459

70 Dividends 75 394 Surplus & Dividends 534

3 Discretionary Expenditure

There was no Section 137 related expenditure for 2008/09 (Nil in 2007/08). The Local Government Act 2000 granted powers to authorities to promote well being in their area which now covers some expenditure previously paid under S.137.

4 Publicity & Promotions

The following has been prepared as a requirement under Section 5 of the Local Government Act 1986. Under this Section local authorities must produce a separate account of their expenditure on publicity.

2007/2008 2008/2009Net

Expenditure Expenditure on Publicity Net Expenditure

£’000 £’000156 Advertising Staff Vacancies 214386 Advertising excluding Staff 462243 Tourist Information and Development 274145 Public Relations & Marketing 148930 1,098


16

5 Building Control Trading Account The Local Authority Building Control Regulations require the disclosure of information regarding the setting of charges for the administration of the building control function. However, certain activities performed by the Building Control Unit cannot be charged for, such as providing general advice and liaising with other statutory authorities. The statement below shows the total cost of operating the building control unit divided between chargeable and non-chargeable activities.

2007/2008 2008/2009 Non NonChargeable Chargeable Total Chargeable Chargeable Total

£’000 £’000 £’000 £’000 £’000 £’000 Expenditure

388 123 511 Employee Expenses 346 109 45518 6 24 Premises 18 6 2411 4 15 Transport 14 5 1919 6 25 Supplies & services 21 6 27

33 11 44 Central & Support Service Charges 28 9 37469 150 619 427 135 562

Income

592 - 592 Building Regulation Charges 545 - 545 - 115 115 Miscellaneous Income - 113 113592 115 707 Total Income 545 113 658

-123 35 -88 -Surplus/Deficit for Year -118 22 -96

6 Agency Services

During 2007/2008 both the Park and Ride scheme and the Civil Enforcement Area (CEA) were run by the Council as agent for Bedfordshire County Council. Bedfordshire County Council managed the Park & Ride site themselves in 2008/2009 and therefore the Borough Council only ran the CEA as agent. In 2008/2009 a deficit of £29,517 was made on the CEA (£2,773 deficit in 2007/2008). The retained surpluses for the CEA are ring-fenced for transportation initiatives. These were £ 64,993 at 31 March 2009 (£144,510 as at 31 March 2008) after annual contributions to the Park & Ride scheme.

2007/2008 2008/2009 Expend Income Net Expend Income Net £’000 £’000 £’000 £’000 £’000 £’000

1,305 1,302 3 Civil Enforcement Area 1,411 1,382 29 394 394 - Park & Ride - - - 1,699 1,696 3 Total 1,411 1,382 29

7 Transport Act 2000

From April 2006 the Council operates a Concessionary Travel Scheme which enables the over 60’s and people with eligible disabilities, who are resident in the Borough, to travel for free on local bus services for journeys starting or ending in Bedfordshire or Luton, to those destinations as specified in the published scheme leaflet. The net operating cost to the Council of the scheme was £1,694,294 in 2008/2009 (£1,757,371 in 2007/2008).

8 Business Improvement District (BID) The Council is the billing authority and acts as agent for the business improvement district managed by Bedford BID Company, (BID body), an umbrella group of local businesses that aims to improve their trading environment. The businesses identify projects that will add value and agree the level of funds that will make the project happen. During 2008/2009 the projects delivered by the BID body, have included:

Be Safe Be Smiley, which includes the Blue cap service, radio link scheme, and sponsorship of a Police Community Support Officer and the BedfordBID CHILDSAFE campaign.

Easy come easy go, which provided Day Pass tokens to be used on the Park and Ride services. Come around to our town, that included major events including Indulge in Bedford, Be Beautiful in Bedford, the BedfordBID Voucher

scheme to promote shops and businesses in the town, Christmas Crackers promotion, BedfordBID Football Shootout and the Out of the Blue summer entertainment campaign and press and media campaigns. The Christmas in Bedford promotion saw a massive campaign on local radio and in newspapers and magazines, with a 32 page brochure. Bedford Bluecaps were at July’s River Festival giving away free goody bags containing gifts donated by the towns shops and businesses.

Small is beautiful, customer service training sessions for businesses, free design of flyers and web site pages for independent businesses and radio promotion

The Council collects a levy from business ratepayers on behalf of the BID body, and pays them to the BID body when collected, less an agreed Cost of Collection.

2007/2008 2008/2009 £’000 £’000 416 BID Levy Income 407 -351 Payments to BID Body -385 65 22

-10 Cost of Collecting Levy -10 -14 -24 Contribution to Provision for Bad Debts -23 -33

41 Surplus/ - Deficit for year -11 30 Surplus/ - Deficit b/fwd 71 71 Balance c/fwd 60


17

9 Economic Development During 2008/2009 the Council incurred net expenditure of £1,383,522 (£918,883 in 2007/2008) under its Economic Development powers promoting the prosperity and quality of life in Bedford, including providing events and attractions in the Town Centre for visitors and regular users as well as establishing partnerships to carry out agreed projects. The 2007/2008 figure has been amended to reflect Reserve Funded expenditure. This is to allow comparison to be made.

10 Local Government Goods and Services Act 1970

Under Section 1 of the above Act this authority has carried out work and maintenance in connection with land and buildings on behalf of other public bodies including, Bedfordshire County Council, Bedfordshire Pilgrims and other Housing Associations, and Anglian Water Services. The value of work undertaken in 2008/2009 was £4.29 million (19% of total CSD turnover), [£4.24 million (20% of total CSD turnover) in 2007/2008] and is detailed below. With all services listed the Council at least recovers the costs of providing the services.

2007/2008 2008/2009 Other

Bodies

Total Other

Bodies

Total

£’000 £’000 % £’000 £’000 % 270 2,488 11 Highways and Sewerage 261 2,672 10

1,563 2,714 58 General Maintenance 1,504 3,735 40 687 2,881 24 Ground Maintenance 631 2,956 21

1,682 5,469 31 Refuse Collection 1,856 5,955 31 34 2,604 1 Cleansing 35 2,737 1

0 4,854 0 Leisure 0 4,845 0 4,236 21,010 20 4,287 22,900 19

The Council provides payroll services to Mid Bedfordshire District Council, Uttlesford District Council and Kings Lynn and West Norfolk Borough Councils, as well as Bedford College and a number of local schools and voluntary organisations. In addition, a collection service for the Business Improvement District Levy was provided and an internal audit service for Bedfordshire Pilgrims Housing Association. The income received for these services totalled £209,903 in 2008/2009 (£192,258 in 2007/2008).

11 Members Allowances

The total of Members allowances paid in 2008/2009 was £531,748 (£440,264 in 2007/2008). The 2008/2009 figure includes £71,715 due to Unitary Implementation. Further details relating to Members Allowances can be obtained from the Head of Exchequer Services, Town Hall, St Paul’s Square, Bedford MK40 1SJ

12 Officers Remuneration

The number of employees whose total remuneration (excluding pension contributions but including gross taxable benefits) was £50,000 or more in bands of £10,000 were:

2007/2008 2008/2009 Employees Remuneration Band Employees

16 £50,000 - £59,999 19 4 £60,000 - £69,999 7 6 £70,000 - £79,999 2 1 £80,000 - £89,999 3 1 £90,000 - £99,999 3

Nil £100,000 - £109,999 Nil Nil £110,000 - £119,999 Nil 1 £120,000 - £129,999 1

Nil £130,000 - £139,999 1 Nil £140,000 - £149,999 Nil Nil £150,000 - £159,999 Nil Nil £160,000 - £169,999 Nil Nil £170,000 - £179,999 Nil Nil £180,000 - £189,999 1

13 Related Party Transactions

The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or be controlled or influenced by the Council. Information in respect of material transactions with related parties not disclosed elsewhere within the Statement of Accounts is shown below. The Elected Mayor, Council Members, Chief Officers, their close relatives or members of the same household had no material declarable transactions with the Council. However, during the year the Council made payments totalling £27,585 (£21,305 in 2008/2009) to companies where an interest was held. The Council provides material financial assistance to various Voluntary Organisations and Community Centres the total of those payments are listed below. Payment to Bedfordshire and River Ivel Drainage Board is a levy on the Council by that authority.

2007/2008 2008/2009 £’000 £’000 Grants to Voluntary Organisations 363 328 Bedfordshire & River Ivel Drainage Board 443 467 North Bedfordshire Community Transport (Door to Door) 60 55 Payments to Community Centres 36 37 Grants to Parish Councils – Revenue - -

- Capital 186 82 1,088 969


18

Members represent the Council on various organisations. Appointments are reviewed annually unless a specific termination date for the term of office applies. Bedford Borough Council is an equal partner in a Local Strategic Partnership, but is the partner tasked with procuring all goods and services for achieving the aims and objectives of the organisation. All income of the Partnership is held as a creditor within the Borough’s accounts.

14 Audit Costs

In 2008/2009 Bedford Borough Council incurred the following fees relating to external audit and inspection: 2007/2008 2008/2009 £ £ Fees payable to the Audit Commission with regard to external audit services carried out by the appointed auditor

123,393 139,459

Fees payable to the Audit Commission in respect of statutory inspection/additional work 15,372 - Fees payable to the Audit Commission for the certification of grant claims and returns 48,956 31,607 187,721 171,066

15 Fixed Assets

The properties have been valued using open market value for existing use or depreciated replacement cost as appropriate. Operational properties are depreciated over 100 years, the estimated finite life, using the straight-line method. Properties are re-valued on a five-year rolling programme. Therefore every property is re-valued once in every five years. A property is also re-valued in any year significant capital works are completed or when a disposal of part of the asset occurs. Vehicles, Plant and Equipment, and Infrastructure assets are depreciated using the straight line method, over the expected life of the asset, between five and fifteen years for Vehicles, Plant and Equipment and between 10 and 20 years for Infrastructure, based on the original purchase price. A de minimis level of £20,000 is set for acquisitions of Vehicles, Plant and Equipment, and capitalised purchases below this level, other than those financed through Finance Leases or capital grants, are fully written out to revenue in the year of purchase. Intangible Assets relate to purchases of computer software and their associated licences. Movements in fixed assets during the year were as follows:

Inta

ngib

le

Ass

ets

Oth

er L

and

& B

uild

ing

Com

mun

ity

Ass

ets

Infr

astr

uctu

re

Vehi

cle

Plan

t &

Equ

ipm

ent

Non

-O

pera

tiona

l A

sset

s - O

ther

Non

-O

pera

tiona

l A

sset

s –

Inve

stm

ent

Prop

sN

on-

Ope

ratio

nal

Ass

ets

– Su

rplu

s A

sset

s

Ass

ets

Und

er

Con

stru

ctio

n

Tota

l

£,000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Gross Book Value 31.3.2008 871 90,925 4,235 1,671 4,261 39,207 8,579 2,969 12,578 165,296 Cumulative Depreciation & Impairment at 31.3.2008

-519 -3,195 - -781 -1,945 -222 -75 -2 - -6,739

Net Book Value at 31.3.2008 352 87,730 4,235 890 2,316 38,985 8,504 2,967 12,578 158,557 Additions/Expenditure 383 1,934 162 900 1,338 239 1,412 - 2,327 8,695 Transfers 130 2,408 3,220 1,028 374 -1,231 2,061 -27 -7,963 - Disposal/Write Out - - - - - - - - - - Revaluations - 9,030 - - - 5,810 1,164 2,747 - 18,751 Depreciation for the Year -205 -634 - -200 -748 - - - - -1,787 Impairment for the Year - -16,612 - - - -2,409 -525 -1,058 - -20,604 Net Book Value at 31.3.2009 660 83,856 7,617 2,618 3,280 41,394 12,616 4,629 6,942 163,612 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Net Book Value at 31.3.2009 660 83,856 7,617 2,618 3,280 41,394 12,616 4,629 6,942 163,612 Cumulative Depreciation & Impairment to 31.3.2009

723

5,461 - 976 2,698 30 - - - 9,888

Gross Book Value 31.3.2009 1,383 89,317 7,617 3,594 5,978 41,424 12,616 4,629 6,942 173,500 Depreciation Method Straight

Line Straight

Line None Straight

Line Straight

Line None None None None

Asset Life (years) 5 100 10-20 5-15 Intangible Assets Purchased Software Software

Licences Total £’000 £’000 £’000 Original Cost 748 122 870 Amortisations to 31 March 2008 -472 -46 -518 Balance at 31 March 2008 276 76 352 Expenditure in Year 278 235 513 Amortisations in Year -160 -45 -205 Balance at 31 March 2009 394 266 660

The Council has transferred to the General Fund or disposed of all its Housing Revenue Account property.


19

Valuation of Fixed Assets carried at Current Value

Other Land & Building

Non-Operational Assets TOTAL

£’000 £’000 £’000 2008/2009 83,641 50,918 134,559 2007/2008 215 7,621 7,836 2006/2007 - - - 2005/2006 - 100 100 2004/2005 - - - 83,856 58,639 142,495

The above statement shows the effects of revaluations under the Council’s 5-year rolling revaluation. The Council’s Property Development Unit carries out the valuations

Financing of Capital Expenditure:

2007/2008 2008/2009 £’000 £’000 £’000 £’000 Opening Capital Financing Requirement 185 385 Capital Expenditure Intangible Fixed Assets 114 383 Operational Assets - Other Land and Buildings 196 1,934 - Community Assets 20 162 - Infrastructure 232 900 - Equipment, Plant and Vehicles 860 1,338 Non Operational Assets 236 1,651 Assets Under Construction 7,713 2,327 Loans 98 177 Revenue Expenditure Funded From Capital Resources Under Statute

3,329

1,991

12,798 10,863 Sources of Finance Capital Receipts -5,552 -3,922 Government Grants & Contributions -6,565 -4,025 Revenue Contributions -369 -2,405 -12,486 -10,352 Minimum Revenue Provision -112 -203 Voluntary Set Aside Capital Receipts -14,671 ____ ____ Closing Capital Financing Requirement 385 -13,978 Movement in the Year 200 -14,363

The movement in the year on the Capital Financing Requirement represents a net decrease resulting from additional financing by finance leases of £308,000, less the voluntary set aside of capital receipts of £14,671,000. All unspent capital receipts as at 31st March 2009 were set aside to reduce the outstanding debt liability of the Unitary Bedford Borough Council in 2009/2010. Consequently the Unitary Council may reduce its Minimum Revenue Provision liability for 2009/2010. Major Items of Capital Expenditure in 2008/2009 were:

£’000 £’000 Bedford Gallery Development 1,466 Playground Equipment 233 Acquisition of 15 - 25 Greyfriars 1,404 Working at Height Risk Assessment and Works 226 Disabled Facilities Grants 1,281 Town Centre Semi Permanent Market Stalls 212 Howard Centre and Mall Improvements 673 Sports Pitch Drainage - Mowsbury Park 182 Affordable Housing - Council Direct Contribution 440 Longholme Boating Lake - Dredging 180 Unitary Financial Management System Software & Equipment

423 Small Industrial Estate - Renovation 163

Town Centre - Pedestrianisation Church Square 410 Recycling Improvements 154 Roads and Footpaths Funding (in line with Section 42 Agreement)

340 Extension of Network Software for Unitary Council 149

Private Sector Renewal - Discretionary Grants 327 Railway Station Quarter Develoment 130 Working at Height Robinson Pool 296 Footpath Reconstruction Works 115

Commitments Under Capital Contracts The following significant contractual commitments have been made against capital schemes as at 31st March:

£’000 Town Centre Improvements 240 Refurbishment of Lifts 145 St Pauls Square Permanent Market Stalls 68


20

The Council will make commitments against a number of significant capital projects during 2009/2010, many of which will be undertaken by the Council’s Contract Services Department. At 31 March these include:

£’000 £’000 Non Principal Roads 3,500 Harnessing Technology 673 Schools Development Formula 3,044 Early Years Capital 673 Principal Roads 2,245 Affordable Housing - Council Direct Contribution 635 Town Centre Development 2,000 Lincroft Middle School - ASD Provision 600 Affordable Housing - Council Direct Contribution

1,910 River Wall Repairs 503

Wixams Lakeview Lower School 1,760 Property Capital Maintenance (incl asbestos mgt) 500 Primary Capital 1,508 Sharnbrook Upper School Science Provision 500 IT Infrastructure Upgrade including Schools 1,500 Homelessness Contingency 457 Elstow Landfill 1,500 Rights of Way 455 Integrated Transport 1,303 Children’s Centre Capital 431 Private Sector Renewal - Disabled Facilities Grants

1,250 Fleet Replacement Programme 400

Private Sector Renewal - Discretionary Grants 1,154 IT Desktop Replacement Programme 400 Roads & Paths 1,000 Schools Access Initiative 350 New Deal for Schools Modernisation 1,000 Biddenham Loop New Primary School 350 Cecil Higgins Art Gallery & Museum - Development (Borough Funding)

900 Relocation of Kempston Rural School 300

Cauldwell Lower 900 Targeted Capital 270 Reprovision of Learning Disabilities 700 Roads and Footpaths Funding (in line with Section 42

Agreement) 250

The above schemes relate to items within the Council’s approved Capital Programme as at 31st March 2009. A Summary of the Council’s main assets, by number, is shown below:

31.3.2009 No. Town Hall Complex 1 Depots and Workshops 3 Multi-storey Car Parks 4 Surface Car Parks 4 Parks and Recreation Grounds (Hectares) 435 Athletic Centre 1 Swimming Pools 3 Golf Course 1 Museum 1 Art Gallery 1 Cemeteries 2 Community Centres 10 Industrial Units 96 Shops on Lease 99 Bedford iLab (140 Units) 1 Ikan Small Business Centre 1

A more detailed breakdown of individual General Fund assets and the Capital Programme can be obtained from the Executive Director for Finance & Corporate Resources, Borough Hall, Cauldwell Street, Bedford, MK42 9AP.

16 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability of another and therefore covers both financial assets and liabilities. It covers from the most straightforward, such as creditors and debtors, to the most complex investment and borrowing products Investment and Borrowing The borrowing and investments disclosed in the Balance Sheet are made up of the following categories of financial instruments:

Investments Long Term Current 31 March

2008 31 March

2009 31 March

2008 31 March

2009 £’000 £’000 £’000 £’000 Loans & Receivables Investments 7,000 3,000 43,973 44,433 Accrued Interest 356 136 1,324 1,316 Investments 7,356 3,136 45,297 45,749 £’000 £’000 £’000 £’000 Available for Sale Financial Assets - - 7 7

These values include the accrued interest and reflects the Market Value of the assets.


21

Borrowing Long Term Current 31 March

2008 31 March

2009 31 March

2008 31 March

2009 £’000 £’000 £’000 £’000 Financial Liabilities Rent Deposits 54 - 66 140 Monies Held for Third Parties - - 1,276 1,247 Accrued Interest - - 30 13 54 - 1,372 1,400

These values include the accrued interest and reflect the Market Value of the liabilities. Rent deposits are returned to tenants on the termination of their leases, third parties monies are repayable on demand. Financial Instruments Gain and Losses The gains and losses recognised in the Income & Expenditure Account and Statement of Total Recognised Gains & Losses (STRGL) in relation to financial instruments are:

Financial

Liabilities Financial Assets

Liabilities Measured

At Cost Loans and

Receivables Available for Sale assets Total

£’000 £’000 £’000 £’000 Interest Expense -69 - - -69 Losses on Derecognition - - - - Impairment Losses - - - - Interest Payable and similar charges

-69 - - -69

Interest Income - 3,441 - 3,441 Gains on derecognition - - - - Interest and Investment Income - 3,441 - 3,441 Gains on revaluation - - - - Losses on revaluation - -81 - -81 Surplus/(deficit) arising on revaluation of assets

- -81 - -81

Net Gain/(Loss) for the year -69 3,360 - 3,291 Fair Value of Assets and Liabilities carried at Amortised costs Financial assets and liabilities shown on the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that take place over the remaining life of the instruments. Assumptions made: - Interest is calculated using the most common market convention. - Interest on fixed term deposits is calculated on the assumption that interest is received on maturity - Where interest is paid/received every six months on a day basis, the value of interest is rounded to 2 equal instalments - For loans receivable prevailing market rates at 31 March have been used to calculate the fair value - Where an instrument has a maturity of less than 12 months or is a trade or other receivable the fair value is taken to be the principal

outstanding or the invoiced amount. - The fair value of trade and other receivables is taken to be the invoiced or billed amount.

Fair Values at 31 March are: Balance Sheet Fair Value Balance

Sheet Fair Value

31 March 2008 31 March 2009 £’000 £’000 £’000 £’000 Investments less than 365 days 45,297 45,305 45,749 46,101

Investments greater than 365 days 7,356 7,397 3,136 3,252 52,653 52,702 48,885 49,353

The difference between fair value and balance sheet values indicates that the interest rate receivable on the fixed term investments is greater than that available for similar investments at 31 March. Soft Loans These are loans and advances the Council may make for policy reasons at an interest rate below the prevailing market rate. The impact of these Soft Loans has been assessed and where they would significantly affect the Council accounts the relevant accounting entries have been made. Details of these are disclosed in Long Term Debtors Note and Debtors Note Financial Guarantees Local authorities sometimes give financial guarantees that require them to make payments to reimburse the holder of a debt if a debtor fails to make a payment when due in accordance with the terms of a contract. Where these guarantees are given they are included in the accounts at fair value. At 31 March 2009 the Council had given no financial guarantees but may do so in the future.


22

Disclosure of Nature and Extent of Risk Arising from Financial Instruments Key Risks

The Council’s activities expose it to a variety of financial risks, the key risk areas are:

- Credit Risk – the possibility that other parties might fail to pay amounts due to the Council; - Liquidity Risk – the possibility that the Council might not have the funds available to meet its commitments to make payments; - Market Risk – the possibility that financial loss might arise for the Council as a result of changes in such measures as interest

rate movements Overall Procedures for Managing Risk The Council’s overall risk management procedures focus on the unpredictability of financial markets, and implementing restrictions to minimise these risks. The procedures for risk management are set out through a legal framework in the Local Government Act 2003 and the associated regulations. These require the Council to comply with the CIPFA Prudential Code, the CIPFA Treasury Management in the Public Services Code of Practice and Investment Guidance issued through the Act. Overall these procedures require the Council to manage risk in the following ways:

by formally adopting the requirements of the Code of Practice; by approving annually in advance prudential indicators for the following three years that set limits for:

the Council’s maximum and minimum exposures to fixed and variable interest rates the maximum annual exposures to investments maturing beyond a year the Council’s overall borrowing the maximum and minimum exposures and the maturity structure of debt

• by approving an investment strategy for the forthcoming year setting out its criteria for both investing and selecting investment counterparties in compliance with Government Guidance.

These are required to be reported and approved at or before the Council’s annual Council Tax setting budget. These items are reported with the annual treasury management strategy that outlines the detailed approach to managing risk in relation to the Council’s financial instrument exposure. Actual performance is also reported to members annually. These policies are implemented by a treasury team. The Council maintains written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, and the investment of surplus cash through Treasury Management Practices (TMPs). These TMPs are a requirement of the Code and are reviewed regularly. Credit Risk Credit Risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s customers. Deposits are not made with banks and financial institutions unless they meet the minimum requirements of the investment criteria set out above. The following analysis summarises the Council’s potential maximum exposure to credit risk, based on experience of default assessed by the rating agencies and the Council’s experience of its customer collection levels.

Amount as at

31 March 2009 Historical

experience of default

Adjustment for Market conditions at

31 March 2008

Estimated Maximum Exposure to default

£’000 % % £’000 (a) (b) (c) (a)x(c) Deposit with Banks and Financial Institutions

47,379 0.0

0.0 0.0

Bonds and Other Securities - 0.0 0.0 0.0 Trade Debtors 4,326 5.0 5.0 216

No breaches of the Council’s counterparty criteria occurred during the reporting period and the Council does not expect any losses from non-performance by any of its counterparties in relation to deposits.

The Council does not generally allow credit for its trade debtors, such that £2.51m of the £4.33m balance is past its due date for payment. The past due amount can be analysed by age as follows:

31 March

2008 31 March

2009 £’000 £’000 Less than 4 weeks 3,519 1,821 5 to 8 weeks 538 778 9 to 12 weeks 355 179 More than 12 weeks 1,346 - 12 to 52 Weeks - 730 More than 1 year - 818 5,758 4,326

Collateral – At 31 March 2009 the Council held the following sums as rent deposits - £139,369 (£126,511 at 31 March 2008)


23

Liquidity Risk The Council manages its liquidity position through the risk management procedures above (the setting of prudential indicators and the approval of the treasury and investment strategy), as well as through cash flow management procedures required by the Code of Practice and included in the TMPs. In the event of an unexpected cash requirement the Council has ready access to borrowings from the Money Market to cover any day to day cash flow need. The Council is also required to provide a balanced budget through the Local Government Finance Act 1992, which ensures sufficient monies are raised to cover annual expenditure. There is therefore no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. Refinancing and Maturity Risk The Council has no long-term debt and therefore the risk only applies to short-term borrowing and to monies held on behalf of third parties. Following the granting of Unitary status form 1 April 2009 the Council will take over long-term debt from the County Council. The Council manages this risk by:

- setting limits for short-term borrowing within the prudential indicators - managing day to day cash flow with the aim of ensuring there is no requirement to borrow in the short-term and to have funds available to repay monies to third parties on demand

With regard to investments:

- the prudential indicators limit the value of investments placed for greater than one year - the treasury and investment strategies address the main risks and the treasury team address the operational risks within the approved

parameters. This includes: - monitoring the maturity profile of investments to ensure sufficient liquidity is available for the Council’s day to day cash flow needs, and

the spread of longer term investments provide stability of maturities and returns in relation to the longer term cash flow needs. The profile of third parties monies held is as follows:

31/03/2008 31/03/2009 £’000 £’000 Rent Deposits Repayable at end of lease or agreement 127 139 Third Party monies Repayable on demand 1,150 1,247 1,277 1,386

The maturity profile of financial assets is as follows:

31/03/2008 31/03/2009 £’000 £’000 No notice 1,524 8,410 7 day notice 3,392 23 Less than one year 39,005 36,000 Between one and two years 7,000 3,000 50,921 47,433

All trade and other payables are due to be paid in less than one year and trade debtors of £4.33m (£5.76m 2007/2008) are not shown in the table above. Market risk Interest Rate Risk The Council is exposed to interest rate movements on any borrowing it undertakes and on its investments. Movements in interest rates have a complex impact on the Council, depending on how variable and fixed rates move across differing financial instrument periods. For instance, a rise in variable and fixed interest rates would have the following effects:

- borrowing at variable rates – the interest expense charged to the Income and Expenditure Account would rise. The Council aims not to borrow at all but, currently would only do so in the short term and at a fixed rate and, therefore this would not apply;

- borrowing at fixed rate – the fair value of the borrowing liability would fall. As the Council would borrow only in the short-term this is unlikely to apply;

- rent deposits and monies held on behalf of third parties are credited with interest at a rate linked to Bank Rate and are therefore variable. The charge to the Income and Expenditure account would therefore increase;

- investments at variable rates – the interest income credited to the Income and Expenditure Account would rise. - Investments at fixed rates – the fair value of the assets will fall

Changes in interest payable and receivable on variable rate investments and borrowing is charged to the Income and Expenditure account and impacts on the General Fund Balance. Movements in the fair value of fixed rate investments will be reflected in the Statement of Total Realisable Gains and Losses (STRGL), unless the investments have been designated as Fair Value through the Income and Expenditure Account. The Council has a number of strategies for managing interest rate risk. The Annual Treasury Management Strategy draws together the Council’s prudential indicators and its expected treasury operations, including an expectation of any interest rate movements. From the strategy a prudential indicator is set providing maximum and minimum limits for fixed and variable interest rate exposure. The treasury team monitor market and forecast interest rates within the year to adjust exposures appropriately. For instance during periods of falling interest rates and where economic circumstances make it favourable fixed rate investments may be taken for longer periods with the aim of securing long term returns as part of the budgeting strategy.


24

If interest rates had been 1% higher in 2008/2009 with all other variables held constant, the financial effect would have been:

31/03/2008 31/03/2009 £’000 £’000 Increase in interest payable on variable rate borrowings - - Increase in interest on variable rate investments 108 69 Impact on Income & Expenditure Account 108 69 Increase in fair value of fixed rate investments 217 258 Impact on STRGL - -

The impact of a 1% fall in interest rates would be as above but with the movements being reversed. Following the disruption in the financial markets following Lehman Brothers filing for bankruptcy in September 2008, and the general banking crisis the Council undertook a review of the agreed treasury management lending criteria. The Council had no exposure to Icelandic banks but was affected by the dramatic downturn in interest rates, with Bank Rate falling from 5% to 0.5% during the year, The reduction on interest rates was mirrored around the world aimed at countering the effects of a major downturn in economic growth which has seen many countries fall into recession Price Risk The Council does not generally invest in equity shares but does have a shareholding of £20,000 in Bedford Bereavement Care Ltd (See Note 30) the company is wholly owned by the Council and is not quoted on the stock market. The investments being unquoted are not subject to price variations as any quoted investment would.

Foreign Exchange Risk The Council has no financial assets or liabilities denominated in foreign currencies. It therefore has no exposure to loss arising from movements in exchange rates.

17 Stocks and Work in Progress

31.3.2008 31.3.2009£’000 £’000

Work in Progress 16 Rechargeable Works (inc. DSO) 50

Stocks

150 Commercial Services Department 12927 Printing and Central Stationary Stores 1743 Tourist Information 102

124 Mausoleums 12114 Controlled Parking Zone 838 Other 29

412 456

18 Debtors

31.3.2008 31.3.2009£’000 £’000

Amounts Falling Due in One Year 10,006 General 10,5038,684 Local Taxation 9,097

Less -1,568 Provision for Bad Debts – General -1,346-3,600 Provision for Bad Debts – Local Taxation -3,52113,522 14,733 770 Payments in Advance 76814,292 15,501 273 Amounts Falling due After One Year -

14,565 15,501

Debtors at 31 March 2009 are shown above, classified as debtors less bad debt provisions and payments the Council has made in advance. This is a change in presentation from previous years when the debtors figure was analysed by type of debtor. In 2007/2008 Car Loans to Employees, Works in Default and Rent Deposit Loans were included in the 2007/2008 debtors and categorised as Amounts Falling Due After One Year. These totalled £273,000 and were included separately within the debtors table. These sums are now shown in Long Term Debtors.


25

19 Creditors

31.3.2008 31.3.2009£’000 £’000

14,080 Creditors – General 13,622

1,784 Receipts in Advance – General 7,651 843 Receipts in Advance – Local Taxation 81716,707 22,09010,030 Capital Contributions Unapplied (See Note 20 below) 4,84626,737 26,936

Creditors in 2008/2009 are shown above, classified under creditors, amounts the Council has received prior to payment date and Capital Contributions Unapplied. This is a change from previous years when the creditors figure was analysed by type of debtor. There is change to the overall total of creditors. The increase in Receipts in Advance reflects grants received in advance of expenditure being incurred.

20 Usable Capital Receipts and Grants and Contributions Unapplied

Usable Capital Receipts and Capital Contributions Unapplied are available to finance future approved capital expenditure. 2007/2008 2008/2009 Usable Grants &

Capital Contributions Receipts Unapplied

£'000 Sources £'000 £'000 487 Sales of Land and Property 2,480 - 991 Unattached Receipts 313 -

45 Repayment of Advances (incl. Social Housing Grants) 52 - 5,721 Contributions, Grants etc - 3,570 7,244 2,845 3,570

Application 11,865 Financing of New Capital Expenditure 3,922 3,588

Voluntary Set Aside for Debt Repayment 14,671 89 Contribution to Housing Capital Receipts Pool 32 -

11,954 18,625 3,588

-4,710 Net Movement for Year -15,780 -18 6,090 Grants Earmarked as funding for Assets Under Construction - -5,166

24,430 Balance at Beginning of Year 15,780 10,030 25,810 Balance at End of Year 0 4,846

A total of £2,928,696 of Grants and Contributions Unapplied has been earmarked to fund expenditure already incurred on Assets Under

Construction. 21 Capital Adjustment Account and Revaluation Reserve From the 1st April 2007 the Capital Adjustment Account (CAA) and Revaluation Reserve were introduced to replace the Capital Financing

Reserve and Fixed Asset Restatement Account. The account is also credited with the resources set aside to finance capital expenditure.

Capital Adjustment Account £'000 £'000 Balance at 1 April 2008 133,294

Capital Grants 986 Revenue Contributions to Capital 2,406 Capital Receipts Applied 3,922 Minimum Revenue Provision 203 Capital Receipts Set Aside for Repayment of Debt 14,671 22,188 155,482

Less Asset Depreciation & Impairment 22,087

Revenue Expenditure Funded From Capital Receipts 1,554 Finance Lease Depreciation 203 23,844

Balance at 31 March 2009 131,638


26

The Revaluation Reserve records the gains from the revaluation of assets where the current net book value of an asset is above its historic cost. It represents the accumulated amount of valuation gains less amounts written off due to depreciation and impairment.

Revaluation Reserve 2008/2009 £’000

Balance at 1 April 2008 10,001 Revaluation of Land and Property 18,751 Write Out of Assets & Depreciation -101 Balance at 31 March 2009 28,651

From 1 April 2004 the Local Authorities (Capital Finance and Accounting) (England) Regulations 2004, as amended, came into force. Under the regulations authorities that were debt free on 31 March 2004 can treat amounts in their Provision for Credit Liabilities as capital receipts and, therefore, remain available for financing capital expenditure. The Council decided the PCL should be transferred to capital receipts. Adjustments and transfers include the effect of this decision. Adjustments for commuted sums are now from an earmarked reserve as a result of changes under the same regulations.

22 Deferred Capital Receipts

Deferred Capital Receipts are amounts derived from the sales of assets, which will be received in instalments over agreed periods of time. They arise principally from mortgages on sales of Council Houses, which form the main part of mortgages under Long Term Debtors.

2007/2008 Deferred Capital Receipts 2008/2009 £’000 £’000 £’000 £’000

895 Balance 1 April 848 Less Repayments

- 6 Housing Associations -7 - 1 Star Rowing Club -1

- 39 Housing Revenue Ac. Mortgages -43 - 1 - 47 Housing Revenue Ac.HP -1 -52

848 Balance 31 March 796 23 Deferred Liabilities

The 1993 Code of Practice required assets acquired under finance leases to be capitalised and included in the Accounts together with an equivalent liability to pay future rentals. The Council arranged two Finance Leases in 2008/2009, a five year lease to acquire £313,415 and a seven year lease to acquire £187,343 (£305,510 in 2007/2008) of vehicles to be used by the CSD. The annual rental on the 2008/2009 lease is £98,108 (£69,192 for the 2007/2008 leases) and the Council is committed to making these payments for the five and seven year life of the leases.

24 Long Term Debtors

2007/2008 2008/2009 £’000 £’000

895 Balance at 1 April 853 15 Renovation Loan at 31 March 2007 -

0 Rent Deposits 120 0 Car Loans 43 0 Works in Default 110

1,126 187 Additions/Interest 406

-151 Written Down/Repaid -252 -93 Loss on revaluation -81 853 Balance 31 March 1,199

Renovation loans, rent deposit loans and a mortgage to a Housing Association are advances made by the Council that are currently at below market rates, for similar products. They must therefore be accounted for on a fair value basis. Where the loan or mortgage has been made at a commercial rate, is a loan made under statute e.g. Council House Mortgages, or the difference between the fair value and the value outstanding is immaterial no fair value adjustment has been made. Rent Deposits, Car Loans and Works in Default were shown previously under current debtors falling due after one year. The difference between cash lent and fair value is recognised in the Income & Expenditure Account, under Housing Services the table above shows the net reduction of £81,000. This accounting entry does not reduce the principal to be repaid. The carrying value of the loan will increase over the term of the loan as the amount of interest forfeited reduces. Long Term Debtors balance at 31 March 2009 consists of mortgage, rent deposit loans and renovation loans to Housing Associations and house buyers and long term loans to Star Rowing Club. Details of the number of Mortgage and other loans to Housing Associations and house buyers at 31 March are:

31 March 2008 31 March 2009 Mortgages 1 1 Housing Associations 7 7 Housing Mortgages 25 17 Hire Purchase 2 2 Rent Deposits 301 400 Renovation Loans 13 26

TOTAL 349 453


27

25 Provisions The following provisions are maintained under the provisions of section 41 (3) (b) of the Local Government and Housing Act 1989. Balance at Receipts/ Expenditure/ Balance at

31 March 2008 Transfers in Transfers Out 31 March 2009 £’000 £’000 £’000 £’000 Unitary Redundancy - 372 - 372 Single Status 484 451 - 935 Other 112 70 59 123

596 893 59 1,430

Unitary Redundancy This sum provides for Redundancy costs Payable in 2009/2010 that arise from the Council becoming a Unitary authority from 1 April 2009. Single Status This provision is the estimated first year employee costs that will be payable on finalisation of the Single Status scheme. Other This comprises several provisions under £100k each, including Orchestral Support and Healthier Bedford Partnerships contribution.


28

26 Detail of Movement in Reserves

The Council maintain a number of reserves that are recorded on the balance sheet, some are held to comply with statute and proper accounting practice whereas others have been established voluntarily to earmark resources for future spending plans.

Reserve Balance

31 March 2008

Receipts/ Transfers

In

Expenditure/ Transfers

Out

Balance 31

March 2009

Purpose Further Details

£’000 £’000 £’000 £’000 Revaluation Reserve 10,001 25,671 7,021 28,651 Records Gains on revaluation of

fixed assets See Note 21

Capital Adjustment Account

133,294 22,188 23,844 131,638 Records capital resources set aside to meet past capital expenditure

See Note 21

Usable Capital Receipts 15,780 2,845 18,625 - Proceeds of asset sales available to meet future capital expenditure

See Note 20

Deferred Capital Receipts 848 - 52 796 Represents principal outstanding from Council house sales and loans to housing associations

See Note 22

Pension Fund -33,692 4,069 16,341 -45,964 Balancing account that enables inclusion of Pensions Liability in the Balance Sheet

See note 32

Collection Fund 3,408 142,220 142,385 3,243 The surplus on the statutory Collection Fund

See Collection Fund

General Fund 3,650 - - 3,650 Resources available to meet future expenditure

See Statement of Movement on General Fund Balance

Other Reserves 24,720 13,848 20,986 17,582 Represents earmarked resources to meet future expenditure

See Note below

Available for Sale Financial Instruments Reserve

4 - - 4 Stores gains on revaluation of investments that are not yet realised through sales

Financial Instruments Adjustment Account

-93 20 101 -174 Balancing account to allow for differences between statutory requirements and proper accounting practices for borrowing and investments

Total 157,920 210,861 229,355 139,426

Earmarked Reserves are maintained to fund expenditure, not included in the on-going revenue or capital budgets, on specific policy priorities and to allow for various contingency requirements the Council may have to face.

Balance at Receipts/ Expenditure/ Balance at 31 March 2008 Transfers in Transfers Out 31 March 2009

£’000 £’000 £’000 £’000Cultural & Heritage 52 3 23 32Recreation & Sport 280 300 421 159Housing Services 586 92 457 221Community Safety 637 238 386 489Environmental Services – Environmental Health 231 2 75 158Environmental Services – Clean & Green Priorities 1,270 446 933 783Environmental Services – Other Needs 138 19 72 85Highways & Transportation 475 318 180 613Planning Services 688 0 419 269Economic Development 1,412 270 1,327 355Community Related Services 490 67 157 400Property Management 1,930 1,176 1,520 1,586Corporate Functions/Requirements 4,837 7,709 6,932 5,614Capital Investment 4,998 467 3,251 2,214General Reserves and Balances 5,558 459 1,267 4,750Commercial Services 4,788 2,282 3,566 3,504 28,370 13,848 20,986 21,232 Pension Reserve -33,692 4,069 16,341 -45,964

Cultural & Heritage These reserves are held specifically to support art and history related activity. Recreation & Sport These reserves mainly provide the funding for the biennial River Festival and the replacement of minor equipment at leisure sites.


29

Housing Services Housing reserves provide resource to help prevent homelessness and to assist the homeless to find accommodation through various Council initiatives. Community Support This covers a number of initiatives, principally the Neighbourhood Wardens and Street Rangers schemes, support for the Community Safety Partnership, CCTV and Bedsafe Projects. Environmental Services - Environmental Health Environmental Health issues include the review and assessment of air quality, assessment of contaminated land and works at the Council’s cemeteries not covered by routine maintenance Environmental Services - Clean & Green These reserves cover the maintenance and enhancement of the environment by providing funding for cleansing and litter reduction initiatives, energy efficiency, recycling, and refuse collection including replacing wheeled bins at the end of their useful life. Environmental Services – Other Improvement work in Urban areas and repairs to river bridges are the main reserves within this group Highways & Transportation These reserves hold funds to provide matched funding, one-off and additional funding for specific highways and transportation issues. Planning Funding for the Local Development Framework, the costs associated with extending the Planning service to include on-line applications and the finance for additional external resource where required in planning appeals and related matters are the major element within this category. Economic Development Economic Development and Regeneration reserves provide support for the future regeneration schemes and other economic development initiatives to add to the prosperity and vibrancy of the Borough including the promotion of tourism and local markets Community Related Services Held to provide for one-off projects linked to the Council’s Community Plan, assistance to Community Centres and grants to voluntary bodies. Property Management These mainly cover funding for work to Council property identified through the planned maintenance annual review and programme and to provide resource for other identified property related matters. Corporate Functions & Requirements This Insurance and Risk management reserve is part of this category. It covers the following risks: (a) any potential liability falling on the Council in respect of outstanding claims relating to the period when MMI were the Council's Insurers

(following the insolvency of MMI there is a Scheme of Arrangement which is not yet finalised); (b) the need for a level of ongoing self insurance fund after allowing for the portfolio held with the Council's current Insurers, Zurich Municipal,

specifically: (i) "excesses" which the Council has to cover on claims made to Zurich (e.g. the first £15,000 of any claim under Public and Employers

Liability); (ii) where insurance is available, but given the risk and associated premium, it is not cost effective to insure externally; (iii) insurance settlements on Council vehicles which are less than the sum due to be paid under the lease or to replace the vehicle; (iv) other miscellaneous areas not covered by Zurich Municipal but are considered to be risks to be insured against.

(c) any risk of the Council where the insurance market does not provide cover, e.g. the contamination of land through seepage; (d) any net costs faced by the Council through litigation which are not covered by external insurance policies (e.g. judicial review

proceedings); (e) any costs relating to one-off needs from the Council’s risk management strategy and business continuity arrangements; (f) any funding required to meet the ‘run-off’ of claims due to the Council ceasing to perform a service or function. Also included in this group are staffing and staffing related matters, reserves to assist the continuing Information Technology and Systems development and the Vehicle, Plant and Equipment Renewal Reserve. A reserve was established and spent on the transitional costs in 2008/2009 relating to Unitary status and an additional reserve has been established to allow for any unexpected costs arising in 2009/2010. Capital Investment The Council is able to make revenue contributions to capital expenditure. These reserves earmarked for capital expenditure provide funding support for the approved capital programme, to cover urgent schemes not in the programme (subject to approval) and for variations in costs of approved schemes. General Reserves The sums held include the General Reserve, which is determined on a risk analysis based on the minimum necessary for the prudent administration of Council affairs, together with fixed term funding for future needs related to the Corporate Plan Commercial Services Balances These reserves relate to CSD funding and include the accumulated surplus from CSD funding to cover possible losses on external contracts should any be incurred, and reserves to fund the replacement vehicles and plant, and future Art Gallery and Museum projects.


30

27 Leases Finance Leases (i) Vehicles and Equipment

The Council arranged two Finance Leases in 2008/09, a five-year lease to acquire £313,415 of vehicles and a seven year lease to acquire £187,343 of vehicles that are to be used by the Contract Services Department. The use of this method of funding capital expenditure is possible under the Prudential Code for Borrowing that was introduced in 2004/2005, and this is the fourth time since 1990 that the Council has used a Finance Lease to fund vehicles. The Council is committed to paying an annual rental of £67,970 until 2012/2013 and £30,138 until 2014/15 for the 2008/2009 lease. This rental was charged as £6,832 financing costs (debited to the Income and Expenditure Account) and £91,275 relating to the write down of the obligation to the lessor. The Council has three other five year Finance Leases that it has previously undertaken to acquire vehicles to be used by the CSD to the value of £560,458.

(ii) Industrial Buildings In 1982, the Council constructed 16 unit factories through a Finance Lease, the payment made in 2008/2009 was £321 (£321 in 2007/2008) and related to secondary period lease rentals.

Operating Leases The Council also acquires equipment, vehicles and plant through operating leases, although no new leases were approved in 2008/2009. The current capital value of the assets held under these outstanding obligations is £245,365 (£1,233,160 in 2007/2008). Lease payments for the year amounted to £104,788 (£241,682 in 2007/2008). The Council’s Contract Services Department has entered contract hire agreements for vehicles used in refuse collection and cleansing. These agreements cover both the use and maintenance of the vehicles. The Council is committed to making payments under these agreements in future years as follows:

Operating Lease

£

Contract Hire

£

Total

£ Leases Expiring in 2009/2010 - 7,763 7,763 Leases Expiring between 2010/2011 and 2012/2013

35,835 522,372 558,207

Leases Expiring after 2013/2014 - - - Total 35,835 530,135 565,970

28 Finance Leases

The following value of assets are held by the Council under finance leases in their primary period, and accounted for as part of Tangible Fixed Assets.

Vehicles, Plant & Equipment

£’000 Gross Value as at 1 April 2008 569 Depreciation as at 1 April 2008 -184 Net Value as at 1 April 2008 385 Additions 511 Revaluations - Depreciation 2008/2009 -203 Disposals - Net Value as at 1 April 2009 693 Depreciation as at 1 April 2009 387 Gross Value as at 1 April 2009 1,080

In addition to the depreciation charge on the above finance leases for 2008/2009 a sum of £19,668 representing the interest element of the repayments was charged to the Income and Expenditure Account within Interest Payable. Outstanding obligations to make payments under the above finance lease at 31st March 2009, accounted for as part of long term liabilities, are as follows-

Vehicles, Plant & Equipment

£’000 2009/2010 222 2010/2011 203 2011/2012 174 2012/2013 98 After 2013 60

29 Net Assets Employed

This note discloses the net assets of the Council and therefore excludes Collection Fund balances. 31 March 2008 31 March 2009 £’000 £’000 Total * 188,204 182,147 Less Pensions Reserve 33,692 45,964 154,512 136,183 Trading Operations - - 154,512 136,183

* Total Balance Sheet £’000 £’000 Total 157,920 139,426 Less Collection Fund -3,408 -3,243 Add Pension Fund 33,692 45,964 188,204 182,147


31

30 Associated and Subsidiary Companies The Council is associated with a number of companies whose assets and liabilities are not included in the Council's accounts. (i) Bedford Bereavement Care Ltd – Company Registration No. 3033404 The Council holds all £20,000 of issued share capital, and wholly owns this company. The principal activities of the company are to provide

crematorium services and the administration of the Council's cemeteries. The company commenced trading on 1 July 1995, in premises at Norse Road, Bedford leased from the Borough Council. The registered office for the company is 104 Norse Road, Bedford, MK41 0RL. The company made a profit on its activities for the period to 31 March 2009 of £184,397 (£128,689 for the period to 31 March 2008) and a dividend of £75,000 was paid (£70,000 in 2007/2008). At 31 March 2009 the Council was due to receive £ 17,870 (£85,450 at 31 March 2008) from the company and also was due to pay to the company £ 3,781 (£ 2,888 at 31 March 2008). The Company also has £ 340,000 invested temporarily with the Borough Council at 31 March 2008 (£286,778 at 31 March 2008). Interest received on investments with the Borough Council in 2008/2009 totalled £9,675 (£11,882 in 2007/2008). Copies of the company's accounts are available from the Service Manager, Accountancy, Bedford Borough Council, Town Hall, St Paul's Square, Bedford MK40 1SJ.

(ii) Bedford Town Centre Company Ltd – Company Registration No. 3949008 This is a company limited by guarantee and has no share capital. Its main object is to promote and develop Bedford Town Centre. This

company was formally incorporated on 16 March 2000. The company operates from premises at 1 Lurke Street, Bedford, MK40 3TN. The companies registered office is Town Hall, St Paul’s Square, Bedford MK40 1SJ.

The company made a loss on its activities to 31 March 2009 of £20,274 (£8,065 profit for the year to 31 March 2008). The company does

not invest with the Borough Council and receives no interest from it. There were no monies either due to, or from the Borough Council in either 2008/2009 or 2007/2008. Copies of the company’s accounts are available from the Service Manager, Accountancy, Town Hall, St Paul’s Square, Bedford, MK40 1SJ.

31 Trust Funds

The Council administers various Trust Funds, including legacies left by inhabitants of the Borough. Some of these Fund Balances are invested in gilt edged and equity securities. The main trusts and their purposes are summarised as follows: (a) House of Industry Estate

Set up under the Bedford Corporation Act 1964, the Estate owns significant land holdings, income from which (together with investment income) is used to provide financial assistance within the scheme approved by the Charity Commissioners. The current scheme was approved to have effect from 1 April 1988.

(b) Freeman’s Common Maintained under an Order of the Charity Commissioners in 1970. The fund owns 32 acres of farmland and various investments, income from which is used to provide financial assistance within the terms of the Order.

(c) Bedford Tree Fund The Charity was registered in September 1997 and launched in December the same year. The objectives of the fund are to enhance and improve the environment of the Borough of Bedford, for the benefit of all its present and future inhabitants through the planting and maintenance of trees.

(d) Grange Trust The Council also maintains the Grange a property in Addison Howard Park. This was left to the council to provide social housing. Any surplus on this account is retained to provide a contribution towards the upkeep of the building.

The assets held by the Trusts are not included in the Balance Sheet, as they are not Borough Council assets. House of Industry Estate Income for 2008/2009 totalled £ 183,008 (£160,996 in 2007/2008). Expenditure for the year was £166,806 (£186,323). Assets at 31 March 2009 totalled £3,533,732, including £334,698 invested with the Borough Council, and liabilities £132,795. At 31 March 2008 the figures were £3,586,790, including £301,164 invested with the Borough Council, and £147,385 respectively.

Freemans Common Charity Income for 2008/2009 totalled £2,455 (£3,219 in 2007/2008). Expenditure was £1,438 (£51 in 2007/2008). Assets at 31 March 2009 totalled £49,990, including £39,546 invested with the Borough Council, and nil liabilities. At 31 March 2008 the figures were £48,973, including £39,546 invested with the Borough Council and nil respectively.

Bedford Tree Fund Charity Income for 2008/2009 totalled £305 (£835 in 2007/2008). Expenditure for the year was £5,000 (£3,000). Assets at 31 March 2009 totalled £4,360, including £4,275 invested with the Borough Council and nil liabilities. At 31 March 2008 the figures were £9,055, including £8,644 invested with the Borough Council and £nil respectively.

32 Pension Costs

The Council offers retirement benefits as part of the terms and conditions of employment of staff. Although these benefits do not become payable until employees retire, the Council needs to disclose the payments that it has a commitment to make at the time that the employees earn their future entitlement. The Council participates in the Local Government Pension Scheme administered by Bedfordshire County Council. This is a funded scheme into which both the Council and employees make contributions that are calculated at a level that will ultimately balance the pensions liabilities with investment assets. The Council recognises the cost of retirement benefits in the Net Operating Expenditure at the date they are earned by employees rather than when the benefits are paid as pensions. However, the charge that the Council is required to make against Council Tax is based on cash payable in the year to the Pension Fund, so any variance with the actual cost of retirement benefits is credited back to the Statement of Movement on the General Fund Balance following the calculation of the surplus or deficit for the year on the Income and Expenditure Account. The following transactions have been made in the Income and Expenditure Account and Statement of Movement on the General Fund Balance during the year.


32

Income and Expenditure Account 2007/2008 2008/2009 £’000 £’000 Net Cost of Services Current Service Cost -2,978 -2,140 Past Service Cost - -986 Net Operating Expenditure Interest Cost -7,075 -7,670 Expected Return on Assets 5,422 5,221 Net Charge to the Income and Expenditure Account -4,631 -5,575 Statement of Movement on General Fund Balance Reversal of Net Charges made for Retirement Benefits in Accordance with FRS17

4,631 5,575

Actual Amounts Charged Against the General Fund Balance for Pensions in the Year

Employers Contribution to the Scheme -3,833 -4,069 In addition to the recognised gains and losses included in the Income and Expenditure Account, actuarial losses of £10,766,000 (£19,006,000 gain in 2007/2008) were included in the Statement of Total Recognised Gains and Losses. The cumulative amount of actuarial gains and losses recognised in the Statement of Total Recognised Gains and Losses since 2004/2005 is a net loss of £10,261,000. Assets and Liabilities in Relation to Retirement Benefits:

Reconciliation of Present Values of the Scheme Liabilities

2007/2008 2008/2009

£’000 £’000 1st April -131,800 -111,503 Current Service Cost -2,978 -2,140 Interest -7,075 -7,670 Contribution by Scheme Members -956 -1,088 Actuarial Gains and Losses 26,093 9,529 Benefits Paid 5,213 4,924 Past Service Cost - -986 31st March -111,503 -108,934

Reconciliation of Fair Value of the Scheme Assets

2007/2008 2008/2009

£’000 £’000 1st April 79,900 77,811 Expected Rate of Return on Assets 5,422 5,221 Actuarial Gains and Losses -7,087 -20,295 Contribution by the Employer 3,833 4,069 Contribution by Scheme Members 956 1,088 Benefits Paid -5,213 -4,924 31st March 77,811 62,970

The expected return on scheme assets is based on the long term future expected investment return for each asset class. The actual return on scheme assets in the year was negative -£14,898,000 (-£597,000 in £2007/2008). Scheme History 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 £000 £000 £000 £000 £000 Present Value of Liabilities -107,300 -130,700 -131,800 -111,503 -108,934 Fair Value of Assets in the Scheme 60,500 73,800 79,900 77,811 62,970 Deficit in the Scheme -46,800 -56,900 -51,900 -33,692 -45,964 The Fair Value of Assets in the Scheme prior to 2008/2009 are measured at mid-market value. The Council decided not to restate these figures at bid price as the resultant change of less than 0.5% is not considered material. The liabilities show the underlying commitments the Council has in the long term to pay retirement benefits. The net liability as at 31st March 2009 of £45.9m has a substantial impact on the net worth of the Council as recorded on the Balance Sheet, resulting in an overall balance of £136.1m, excluding Collection Fund balances of £3.2m, (£154.5m in 2007/2008, excluding £3.4m). However it should be noted that the calculation is based on the market value of assets as at 31st March each year, whereas the triennial actuarial review which determines our contributions is prepared on the different basis of estimated future performance of the investment market. Statutory arrangements for funding the scheme means that the deficit will be made good by increased contributions over the remaining working life of employees as assessed by the scheme actuary. The total employer’s contributions to be made to the Pension Scheme for the Borough Council prior to unitary status in the year to 31st March 2010, is expected to be approximately £4 million.


33

Basis For Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependant on assumptions about mortality rates, salary levels etc, in compliance with FRS17. The fund liabilities have been assessed by Hymans Robertson, an independent firm of actuaries, and based on the latest full valuation of the scheme as at 31 March 2007. The principal assumptions used by the actuary were as follows:

2007/2008 The main assumptions used by the Actuary in their Calculations 2008/2009 % % Long Term Expected Rate of Return on Assets in the Scheme

7.7 Equity Investments 7.0 5.7 Bonds 5.6 5.7 Property 4.9 4.8 Cash 4.0

Mortality Assumptions Longevity at 65 for Current Pensioners

19.6 Men 19.6 22.5 Women 22.5

Longevity at 65 for Future Pensioners 20.7 Men 20.7 23.6 Women 23.6

3.6 Rate of Inflation 3.1 5.1 Rate of Increase in Salaries 4.6 3.6 Rate of Increase in Pensions 3.1 6.9 Rate for Discounting Scheme Liabilities 6.9 50 Take up of Option to Convert Annual Pension into Retirement Lump Sum 50

Assets are valued at fair value and consist of the following categories, by proportion to the total assets held by the Fund: Category 31 March 2008 31 March 2009 % % Equity Investments 56 54 Bonds 17 21 Property 10 8 Cash 17 17

History of Experience Gains and Losses

The actuarial gains identified as movements on the Pensions Reserve in 2008/2009 can be analysed into the following categories, measured as a percentage of assets or liabilities as at 31st March 2009. 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 % % % % % Differences Between the Expected and Actual Return on Assets

3.14 11.24 0.75 -7.74 -31.95

Experience Gains and Losses on Liabilities 0.09 3.37 1.37 -6.68 -0.05

Further information on the Pensions Fund can be found in the Bedfordshire Superannuation Funds Annual Report which is available from the Executive Director for Finance and Corporate Services, Bedford Borough Council, Borough Hall, Cauldwell St., Bedford MK42 9AP.


34

33 Notes to the Cash Flow Statement Reconciliation of Surplus/Deficit on Revenue Activities to Revenue Activities Net Cash Flow

2007/2008 2008/2009 £'000 £'000

-4,920 General Fund -26,313 -321 Collection Fund -165 -5,241 - Surplus/Deficit -26,478

NON CASH TRANSACTIONS

6,031 Amounts Required by Statute and Proper Practice 20,117 484 Contributions to/ -from Reserves/Provisions 834 6,515 20,951

ITEMS IN OTHER CLASSIFICATION ON CASH FLOW STATEMENT 15 Interest paid 88

-70 Dividend Received -75 -3,453 Investment Income -3,441 -3,508 -3,428

ITEMS ON ACCRUALS BASIS -1,017 Decrease/ -Increase in Debtors -2,760

497 Decrease/ -Increase in Stocks -44 2,238 Decrease/ -Increase in Creditors 5,703 1,718 2,899

-516 Net Cash Flow -from/to Revenue -6,056

34 Notes to the Cash Flow Statement

Analysis of changes in cash and liquid resources during this year 1.4.2008 31.3.2009 Movement

£'000 £'000 £'000 Short Term Investments 45,304 45,756 452 Cash and Imprest 526 914 388 Total 45,830 46,670 840

Reconciliation of Net Debt to Balance Sheet 1.4.2008 31.3.2009

£'000 £'000 Balance as at 1 April 44,590 45,830 Receipt/payment of interest accrual -943 -1,324 Other Cashflow in year 369 848 Other non-cash changes 1,814 1,316 Balance as at 31 March 45,830 46,670


35

35 Notes to the Cash Flow Statement Analysis of Main Revenue Grants

2007/2008 2008/2009 £'000 £'000

45,432 Housing and Council Tax Benefit Grant 47,497 650 Planning Growth Partnership/Renaissance Bedford 616 421 Planning Delivery Grant 569 418 Disabled Facilities Grant 437 267 LA Business Grant 355 102 Concessionary Fares 338 246 Regional Housing Pot 317

36 Collection Fund, Revenue Support Grant and National Non-Domestic Rates

From 1 April 1990 the method of financing Local Government changed. The Council now precept on the Collection Fund for income obtained previously via General Rate Collection and Block Grant. From 1 April 1993 the Council Tax replaced Community Charges as the means of local taxation. Monies due to the Council for National Non-Domestic Rates (NNDR) and Revenue Support Grants (RSG) are received direct into the General Fund and not the Collection Fund. Parish Councils precept directly on the General Fund; not on the Collection Fund. The Department for Communities and Local Government when notifying the 2008/2009 RSG settlement indicated that no monies were due to or from the Council as a result of recalculation and RSG amending report for the prior years. Sums collected in excess of that needed to pay the demands on the Collection Fund are also used to set off against the Council Tax demand. Surpluses relating to Community Charges, under regulations are set against the Borough Council Tax, whereas surpluses on the Council Tax element are shared between all the Authorities precepting on the Fund. Non-specific government grants are shown within the RSG figure. This includes Area Based Grant of £105k and Climate Change grant of £23k.

37 Capital Contributions Deferred This represents capital expenditure or depreciable items financed from capital grants eg Netball Centre, E-Government. The contributions

deferred are written down at the same rate as the related asset is depreciated.

Capital Contributions Deferred 2007/2008 2008/2009

£’000 £’000 7,281 Balance 1 April 6,926

111 Grants Applied to Finance Expenditure 8,754 -466 Less Deferred Contributions Written Down -986 6,926 14,694

38 Contingent Liability

The Council has an on-going claim in respect of VAT on off-street car parking. During 2005/2006 the Council’s VAT consultants advised that an amount equivalent to the VAT received from off-street car parking should be withheld pending a ruling as to whether off-street car parking is VATable. The Council is one of a number of local authorities taking this course of action. The decision has been referred to the European Courts for a ruling and is expected later in the year. At 31 March 2009 the Council had withheld a net £88,112 (£100,084 as at 31 March 2008) relating to February and March 2009. This figure is included in the Council’s creditors. Until a final ruling is made HM Revenue & Customs charge interest on the outstanding sums which varies in line with interest rates and was below £2,400 in 2008/2009. In 2008/09, there was a Planning Appeal for £220,000 which is still on-going. It is expected that this will be resolved in 2009/2010.

39 Contingent Asset

At 31 March 2009 there are no contingent assets, however the following was disclosed in the 2007/2008 accounts. In 2005 the Council entered into an agreement with Barfordia Farms Ltd and Persimmons Homes Ltd to grant access over land in its ownership to enable land owned by Bedfordia Farms to be developed by Persimmon Homes. The Council received an initial capital receipt of £10.536 million from Persimmon Homes as consideration for the access, with a further £2.333 million to be paid once a bus gate and part of the access road to the development is adopted by the County Council. The outstanding receipt was not recognised in the Income and Expenditure Account or Balance Sheet as the conditions had not been satisfied as at 31st March 2008. Full settlement of monies outstanding together with interest on the late payment was received in January 2009.

40 Area Based Grant

Local Area Agreements (LAAs) are three-year agreements between a Local Strategic Partnership (LSP) and the government through the Government Office for the region. Under LAA, priorities are set for the LSP participants to work to. The funding for these schemes is provided via the Local Area Agreement Grant, rather than a number of different funding streams. The LSP distributes the grant among the partnership bodies.

Bedford Borough Council is a partner in the LAA, the partnership consists of the four local authorities in Bedfordshire and a number of other public bodies and voluntary organisations. 2008/2009 was the second year of the agreement.

In 2007/2008 the Bedfordshire Countrywide Partnership allocated £71,000 funding to Bedford Borough Council projects. LAA monies were monies received by Bedfordshire County Council as the accountable body and paid to the partner bodies based on the agreed funding and claims submitted.

In 2008/2009 the LAA grant was changed to Area Based Grant. The Area Based Grant is now paid direct to the authority that benefit from the grant rather than initially to the accountable body. The grant is not ring fenced for any specific purpose. The Council received £127,500 in 2008/2009 and that sum is held in a reserve pending expenditure in support of the partnership scheme. One of the aims of the scheme is to support the Community Strategy vision by agreement between Bedfordshire Local Strategic Partnership, the government regional office and other agencies.


36

41 Post Balance Sheet Event The Council became a Unitary Authority on 1st April 2009, assuming the responsibilities of Bedfordshire County Council in the Borough area. This means that the nature of the services and accounts will change from 2009/10 onwards. It was reported in last year’s statement that as at the 31st March 2008 the Council was owed a final instalment of £2.3 million on a capital receipt from a developer for access over land in its ownership. All monies due were received in January 2009, together with outstanding interest on the late payment.

Collection Fund

37

Income and Expenditure Account

2007/2008 Income 2008/2009 £’000 £’000 £’000 £’000

55,035 Business Rates (Note i) 58,781 69,452 Council Tax (Note iii) 73,144 9,562 Council Tax Benefits 10,295

134,049 142,220 Expenditure Precepts and Demands

58.294 Bedfordshire County Council 60,982 8,727 Bedford Borough Council 9,173 6,648 Bedfordshire Police Authority 7,343 4,072 Bedfordshire & Luton Combined Fire Authority 4,279 81,777

77,741 National Non-Domestic Rate Pool 54,799 - Contribution to NNDR Pool 58,545 236 55,035 - Cost of Collection 236 58,781

1,124 Council Tax Surplus in Aid of Council Tax Distributed 1,354 470 Provision for Uncollectable Amounts (Note iv) 473 134,370 142,385 -321 Balance for Year -165 3,729 Balance at 1 April 3,408 3,408 Fund Balance at 31 March 3,243

These accounts represent the transactions of the Collection Fund, which is a statutory fund under the provisions of the Local Government Finance Acts 1988 and 1992. The fund is maintained separately from the main accounts of the Council, but from 1 April 1993 it has been included in the Balance Sheet. Prior to this date the Collection Fund Balance Sheet appeared as a separate account. The 1988 Act and the relevant regulations, directions and specifications issued as Statutory Instruments under the Act prescribe Income and Expenditure to the fund. The Collection Fund covers all Council Tax and National Non-domestic Rates (NNDR) collected in the Bedford Borough area. The estimated surplus on the Fund for each year (plus or minus any adjustments relating to the previous year’s surplus compared to the estimate for that year) is required to be distributed between the precepting authorities, in proportion to their precepts for that year. Any deficits are recovered by contributions from those authorities. Notes i Business Rates

Under the arrangements for business rates, the Council collects non-domestic rates for the area based on local rateable values multiplied by a uniform rate (the Multiplier) set by Central Government and applied across the country. Certain reliefs are available and the figure shown as collectable is net of these reliefs.

The total amount less deductions for the cost of collection and bad and doubtful debts is paid to a central pool (NNDR Pool) managed by Central Government. The NNDR Pool distributes to authorities their share based on a standard amount per head of population. The total non-domestic rateable value at 31 March 2009 was £142.25 million compared to £143.07 million at 31 March 2008. The rate in the £ for 2008/2009 is 46.2p, a small business multiplier, of 45.8p in the £ also applies in 2008/2009 (44.4p and 44.1p in 2007/2008).

ii Interest Paid and Received

These are sums of money paid to Non-Domestic Ratepayers relating to backdated reductions in Rateable Values after appeals. The monies are recovered from the Department of Communities & Local Government and are included as a debtor within the Collection Fund. In 2008/2009 £179,710 was paid out and will be recovered in 2009/2010 (interest paid in 2007/2008 totalled £104,092 and was recovered in 2008/2009).

38

iii Council Tax

Council Tax is charged on residential properties, which are classified into one of eight valuation bands based on estimated values at 1 April 1991. The Band D tax is calculated by dividing the total amount of income required by the Collection Fund to pay County, Borough, Police and Fire precepts for the forthcoming year by the Council tax base. The Council tax base, used in the calculation is based on the number of dwellings in each band on the Valuation list at the relevant date, adjusted for exemptions, discounts and disabled banding changes. The tax base for 2008/2009 was 54,279.64 Band D equivalent properties, (53,859.25 for 2007/2008). The tax base calculation for 2008/2009 is shown below: Valuation Band

Dwellings per Valuation List

Adjustment for Exemptions, Discounts & Disabled

Revised Dwellings

Ratio to Band D

Band D Equivalent Properties

A (Disabled) 0 5.50 5.50 5/9 3.06 A 9,043 -1,857.00 7,186.00 6/9 4,790.67 B 16,138 -2,102.00 14,036.00 7/9 10,916.89 C 16,150 -1,600.00 14,550.00 8/9 12,933.33 D 9,110 -733.00 8,377.00 9/9 8,377.00 E 6,999 -373.00 6,626.00 11/9 8,098.44 F 4,421 -260.00 4,161.00 13/9 6,010.33 G 2,584 -123.00 2,461.00 15/9 4,101.67 H 206 -27.00 179.00 18/9 358.00

TOTAL 64,651 -7,069.50 57,581.50 55,589.39 Less Allowance for non-collection -

1,309.75 Council tax base 2008/2009 54,279.64

The average Council Tax for 2008/2009 was £1,506.58 (£1,443.39 in 2007/2008). However, the effect of special item charges and parish precepts results in a variation in the average Band D Tax in all areas of the Borough.

2007/2008 2008/2009 Authority £ £ Bedfordshire County Council 1,082.33 1,123.47 Bedford Borough Council (inc Parishes)

162.03 168.99

Bedfordshire Police Authority 123.43 135.28 Bedfordshire & Luton Combined Fire Authority 75.60 78.84

TOTAL 1,443.39 1,506.58

Income from Council Tax

2007/2008 2008/2009£’000 £’000

88,569 Council Tax Levied 93,249119 Amended liability 362-93 Disabled Relief -93

-6,909 Discounts -7,315-2,672 Property Exemptions -2,76479,014 83,439-9,562 Council Tax Benefits -10,295

- Transitional Reduction -69,452 73,144

iv Provision for Uncollectable Amounts

Council Tax Non-Domestic Rates

£’000 £’000 Balance at 1 April 2008 2,691 909Less Write Off- /On in Year -588 -333Contribution Made 473 370Balance 31 March 2009 2,576 946

Direct Labour Organisation - Memorandum Account

39

Revenue Account* 2007/2008 2008/2009

H'ways & General Ground Refuse H'ways & General Ground Refuse Sewerage M'tce M'tce Collect Cleansing Sewerage M'tce M'tce Collect Cleansing

£'000 £'000 £'000 £'000 £'000 Income £'000 £'000 £'000 £'000 £'000

1,070 1,366 2,194 3,756 2,558 Recharges to Service Accounts 1,661 1,576 2,310 4,085 2,7011,120 - - - - Recharge to Agency Accounts 694 - - - - 272 1,573 687 1,713 46 Works Contracts 264 1,513 646 1,870 362,462 2,939 2,881 5,469 2,604 2,619 3,089 2,956 5,955 2,737

9 543 - - - Less – WIP b/fwd 35 318 35 318 - - - Plus – WIP c/fwd 88 977 . . .2,488 2,714 2,881 5,469 2,604 2,672 3,748 2,956 5,955 2,737

Expenditure 335 790 1,631 2,043 1,394 Labour 393 678 1,617 2,117 1,391

1,575 1,409 374 908 81 Supplies & Services 1,625 2,345 385 1,192 198 258 101 443 1,825 646 Transport 252 172 494 1,772 5962,168 2,300 2,448 4,776 2,121 Operating Expenditure 2,270 3,195 2,496 5,081 2,185 214 379 393 312 242 Overheads 215 444 417 371 2902,382 2,679 2,841 5,088 2,363 2,485 3,639 2,913 5,452 2,475

106 35 40 381 241 Surplus Appropriated to DLO Reserve 187 109 43 503 262156 1,142 454 1,389 7 Direct cost attributable to external work 199 1,170 670 1,649 9

* Net of movement to reserves. Notes 1 Operations

The Council operates six Direct Labour Organisations, within its Commercial Services Department: - Highways & Sewerage and General Maintenance - Ground Maintenance, Refuse Collection, Cleansing and Management of Sports & Leisure Facilities The General Maintenance DLO carries out building and repair work on Council property and for other clients. The work ranges from day to day maintenance schemes up to more major works with a value in excess of £10,000. The Highways and Sewerage DLO carries out work under Section 42 of the Highways Act on behalf of Bedfordshire County Council. The work ranges from cleaning street lamps to major carriageway reconstruction and repair and maintenance of sewers. Ground Maintenance DLO carries out grass cutting and provides horticultural services for the Council. The Refuse DLO provides a refuse collection service to domestic properties in this Council's area. The DLO also provides a county-wide trade refuse collection service. The cleansing DLO provides Street and Environmental Cleansing throughout the Borough. Sports and Leisure Management includes the management of the Council owned Swimming Pools and Athletic Stadium. The Commercial Services Department has also managed the Council's Car Parks and Mowsbury Golf Course since 1 April 1993, and the management of the Controlled Parking Zone (CPZ) in the Town Centre from its inception on 13 November 2000.

2 Rate of Return Following the replacement of Compulsory Competitive Tendering with Best Value legislation, there is no requirement to continue with Statutory DLO Accounts. However, the Council has determined the Direct Service Organisation (Commercial Services Department) should continue to operate as a separate trading department, consequently the DLO accounts have been prepared for information and to enable comparison to be made with previous years.

3 Summary Position on Trading

The sum transferred to the Appropriation Account was £1,568,461. 4 Work in Progress Work in Progress includes both internal and external balances on works not yet completed. Internal Work in Progress of £1,034,094 in

2008/2009 and £353,000 in 2007/2008 have been excluded from the Balance Sheet.

40

Sports and Leisure Facilities Management Revenue Account Note: Facilities managed in this account are: 2007/2008 2008/2009 £’000 Expenditure £’000 £’000 Kempston Pool - from 28 December 1991 2,265 Employees 2,200 Robinson Pool – from 1 October 1992 1,239 Premises 1,179 Oasis Pool – from 1 October 1996 954 Supplies & Services 1,003 Bedford Athletics Stadium - from 1 January 1993 4,458 Operating Expenditure 4,382 Mowsbury Golf Complex - from 1 April 1993 Contribution to 304 Management Costs 354 4,762 4,736 Income 2,707 Sales & Charges 2,644 Charges to other accounts of 2,147 The Council 2,201 4,845 92 Surplus for the Year 109 Direct Labour Organisation Appropriation Account

2007/2008 2008/2009

£'000 £'000 £'000 2,966 Balance brought forward 3,282

ADD: Revenue Account Surplus 106 Highways & Sewerage 187

35 General Maintenance 109 40 Grounds Maintenance 43

381 Refuse Collection 503 241 Cleansing 262

92 Sport & Leisure 109 339 Surplus on Non DSO Activity 368 1,581

4,200 4,863 LESS: Applied in Year

500 Contribution to the Council priorities 500 80 Subsidy for Grounds Maintenance Contract (Area A) 40

- Unitary Transitional Costs 1,600 Provision for Past and Future Liabilities

237 Pension Deficit funding 601 Investment into CSD Trading Operations

24 - Building Works IT system upgrade 32 5 - Leisure Evacuation Ski Pads 3

- Oasis Gym Equipment 20 - Museum/Gallery Projects 11

72 Transfer to Reserves 41 2,848 3,282 Balance carried forward at 31 March 2,015

Group Accounts

41

Introduction The 2004 Statement of Recommended Practice for Local Authorities requires the preparation of group accounts for all local authorities that have interests in subsidiaries, associated companies and joint ventures that are material in aggregate. Group accounts are considered appropriate as many authorities now provide services through partner organisations that operate under the control of the authority, and in such cases the financial statements of the controlling organisation no longer present the complete picture of its activities and financial position. The group financial statement is required to reflect the extended service delivery carried out by these separate legal entities on behalf of the authority. There are four organisations that the Council considers fall within the legal definitions of group accounts that in aggregate have a material impact on the Accounts:

- Bedford Bereavement Care - a company established to carry out cremation activities and also manages the Council’s cemeteries. - The House of Industry – an organisation that awards grants to the poor and needy within the Borough. This is a registered charity

established with the members of the Council as trustee. As such, the Council has control over the charitable funds, although these assets are subject to charitable trusts and therefore are not the property of the Council.

- Freemans Common Trust – a registered charity with members of the Council as the trustees that provides grants to the needy in the

Borough. As such, the Council has control over the charitable funds, although these assets are subject to charitable trusts and therefore are not the property of the Council.

- Grange Trust – a property for the elderly and associated park that was donated to the Council who comprises 100% of the trustees.

As such, the Council has control over the charitable funds, although these assets are subject to charitable trusts and therefore are not the property of the Council.

The accounts of these organisations have been consolidated with the financial statements of Bedford Borough Council as entities using the merger basis of consolidation to produce the following group accounts. Intra group transactions between the entities have been eliminated from the statements. Please see Note 30 for the Main Statements for further information on these companies and how to obtain copies of the accounts.

Group Financial Statements The Authority is required to prepare the key statements to the accounts together with the relevant notes where they are materially different to the reporting Authority’s accounts. The following statements have been prepared:

- Group Income and Expenditure Account – comprising the Bedford Borough Council Income and Expenditure Account together with the income and expenditure accounts of the four entities.

- Reconciliation of the Single Entity Deficit to the Group Deficit – this reconciles the Bedford Borough Council deficit on the Income and

Expenditure Account to the Group deficit.

- Group Statement of Total Recognised Gains & Losses – presents the gains and losses of the four entities.

- Group Balance Sheet – consolidates the balance sheets of the four entities.

- Group Cash Flow Statement – consolidates the individual cash flow statements of Bedford Borough Council with Bedford Bereavement Care and the House of Industry. Cash flow statements have not been prepared for Freemans Common and the Grange Trust as they are not material in respect of the overall group statements.

Statement of Accounting Policies The same accounting policies have been adopted by the entities as that of Bedford Borough Council as set out previously. The basis on consolidation of the Group is line by line, in accordance with Financial Reporting Standard 2.

Group Income and Expenditure Account

42

The statement shows the expenditure and income for the Group analysed by service:

2007/2008 2008/2009

Expenditure £’000

Income

£’000

Net Expenditure

£’000

By Service

Expenditure

£’000

Income

£’000

NetExpenditure

£’0001,515 - 1,515 Cultural & Heritage 9,257 3 9,2549,167 1,351 7,816 Recreation & Sport 9,581 1,444 8,1371,264 978 286 Tourism 1,384 1,086 2981,011 1,144 -133 Cemeteries & Crematorium 1,161 1,278 -1179,543 1,063 8,480 Environmental Health 11,169 1,543 9,6265,419 3,276 2,143 Planning & Development 10,310 3,460 6,8502,976 4,399 -1,423 Property Management 8,472 4,329 4,1432,527 2,367 160 Highways 1,771 1,540 2313,830 4,127 -297 Parking Services 3,699 3,931 -2322,009 152 1,857 Public Transport 2,364 478 1,886

50,715 46,055 4,660 Housing & Housing Benefits 53,603 50,369 3,2344,474 1,250 3,224 Corporate & Democratic 3,909 272 3,637

Non Distributed Costs 986 0 9863,388 1,327 2,061 Other Services To The Public 2,868 956 1,912

- - - Transitional Costs 3,252 70 3,18297,838 67,489 30,349 Net Cost of Services 123,786 70,759 53,027

-334 Gains & Losses on Disposals of Fixed Assets -2,327 -1,540 Other Capital Receipts -313 -324 Surplus on Trading Undertakings and Dividends -459

-62 Investment Gain(-)/loss 159 971 Parish Precepts 1,067 86 Interest Payable 53 -3,870 Interest Receivable -3,529

89 Contribution of Housing Capital Receipts to Government Pool

32

7,115 Pension Interest Costs 7,721 -5,466 Pensions Expected Return on Assets -5,265 32 Corporation Tax 50

27,046 Net Operating Expenditure 50,216

-8,727 Precept on Collection Fund -9,173 -128 Council Tax Surplus in Aid of Council Tax -152

-2,004 Revenue Support Grant -1,886 -11,940 National Non-Domestic Rates from Pool -12,635

4,247 Surplus -/Deficit for Year 26,370

Reconciliation of the Single Entity Deficit for the Year to the Group Deficit The statement summarises the changes required to the Bedford Borough Council Income and Expenditure Account Deficit to reconcile with the Group Deficit as generated above:

2007/2008 2008/2009£’000 £’0004,920 Deficit on the Bedford Borough Council Income & Expenditure Account 26,313

-27 Adjustments for Transactions with Other Group Entities -3970 Less Dividend Income from Other Entities 75

-716 Add Surplus from Other Entities 214,247 Group Account Surplus -/Deficit for the Year 26,370

Group Statement of Total Recognised Gains and Losses

43

This comprises all gains and losses, both revenue and capital that the Group has generated during the year.

2007/2008 2008/2009 £’000 £’000 4,247 Surplus -/Deficit on the Group Income & Expenditure Account -26,370

-10,028 Surplus -/Deficit Arising on the Revaluation of Fixed Assets 18,855

-19,003 Actuarial Gain -/Loss on Pension Fund Assets and Liabilities -10,859

321 Other Gains and Losses -165

0 Prior Year Adjustments 0

-24,463 Total Recognised Gains for the Year -18,539

Group Balance Sheet as at 31 March 2009

44

31.3.2008 ( )

2007/2008

31.3.2009

Group Bedford BC Entities Group £000 £000 £000 £000

Net Fixed Assets 352 Intangible Fixed Assets 660 - 660

Tangible Fixed Assets Operational Assets

87,730 - Other Land and Buildings 83,856 - 83,856 4,330 - Community Assets 7,617 69 7,686

890 - Infrastructure 2,618 - 2,618 2,356 - Equipment, Plant and Vehicles 3,280 58 3,338

12,578 Under Construction and Development 6,942 - 6,942 52,082 Non Operational Assets 58,639 1,730 60,369

160,318 Total Net Fixed Assets 163,612 1,857 165,469 8,973 Long Term Investments (Note 2) 3,136 1,458 4,594

853 Long Term Debtors 1,199 - 1,199 170,144 Total Long Term Assets 167,947 3,315 171,262

Current Assets

412 Stocks, Stores and W.I.P 456 - 456 22 Imprest Accounts 21 3 24

14,584 Debtors 15,475 68 17,543 542 Cash 893 12 905

45,331 Investments 45,756 - 45,756 231,035 Total Assets 230,548 3,398 233,946

Current Liabilities 649 Temporary Loans & Money Held for Third 672 - 672

26,866 Creditors 26,832 187 27,019 40 Deposits 45 - 45 27,555 Total Current Liabilities 27,549 187 27,736

______ ______ _ ___ ______ 203,480 Total Assets less Current Liabilities 203,000 3,211 206,211

385 Less Finance Leases 693 - 693 596 Less Provisions 1,430 - 1,430

33,784 Less Liability Related to Defined Benefit Pension 45,964 178 46,142 Scheme

6,926 Less Capital Contributions Deferred 14,694 - 14,694 161,789 Total Assets less Liabilities 140,219 3,033 143,252

Financed By:

10,001 Revaluation Reserve 28,651 104 28,755 -93 Financial Instruments Adjustment Account -174 - -174 66 Available-for-Sale Financial Instruments Reserve 4 -96 -92

134,907 Capital Adjustment Account 131,638 1,587 133,225 16,352 Usable Capital Receipts 0 572 572

848 Deferred Capital Receipts 796 - 796 30,084 Reserves and Balances 21,232 1,837 23,069

-33,784 Pensions Reserve -45,964 -178 -46,142 3,408 Collection Fund Balances 3,243 - 3,243

161,789 Total Equity 139,426 3,826 143,252 Trevor Roff CPFA FMAAT Interim Executive Director for Finance & Corporate Services Dated: 30 September 2009

Group Cash Flow Statement

45

2007/2008 2008/2009 Group Bedford BC Entities Group

£'000 £'000 £'000 £’000293 Net Cash Flow on Revenue Activity 5,965 0 5,965

DIVIDENDS FROM JOINT VENTURES AND ASSOCIATES

Cash Inflows 0 Dividends received -70 75 5

-70 75 5 Cash outflows Dividends paid 75 -75 - 75 -75 - RETURNS ON INVESTMENTS &

SERVICING OF FINANCE Cash Outflows

2 Interest Paid 69 -13 56 Investments 53 -53 -

13 Finance Leases 19 - 1915 141 -66 75

Cash Inflows -3,520 Interest received -3,846 66 -3,780-3,520 -3,846 66 -3,780

CAPITAL ACTIVITIES Cash Outflows

8,901 Purchase of Fixed Assets 9,029 9,0293,000 Other Capital Cash Payments 406 406

11,901 9,435 9,435 Cash Inflows

-312 Finance Lease Drawdown -501 -501-3,004 Sale of Long Term Investments -4,000 -4,000

-487 Sale of Fixed Assets -2,845 -2,845-4,038 Capital Grants and Contributions -5,333 -5,333-1,586 Other Capital Income . .-9,427 -12,679 -12,679

Management of Liquid Resources 247 Net(decrease)increase short term deposits

481 481

0 Net(increase)decrease in other liquid resources

- -

247 481 481 Financing

-8 Net movement in amounts borrowed -109 -109112 Capital element of finance lease rental 203 203104 94 94

-387 - Net Cash inflow -404 -404

Notes to the Group Accounts

46

The notes to the Group Accounts are only required where there is a material difference to those produced for the Bedford Borough Council. The notes to the Bedford Borough Council Accounts are not materially changed by the inclusion of the entities in these accounts and therefore the single entity notes apply to the Group Accounts, with the exception of the following. 1 Summary Analysis of Entities Balance Sheets

Bedford Bereavement

Care House of Industry

Freemans Common

Trust Grange Trust Total

£’000 £’000 £’000 £’000 £’000 Fixed Assets 58 1,730 69 - 1,857 Long Term Assets - 1,457 1 - 1,458 Current Assets 64 8 11 - 83 Current Liabilities -62 -125 - - -187 Long Term Liabilities -178 ___- __- __ -178 Total Assets Less Liabilities -119 3,070 81 3,033 Intra Group Transactions 326 331 40 96 793 208 3,401 121 96 3,826 Financed By: Capital Adjustment Account - 1,517 69 - 1,587 Revaluation Reserve - 104 - - 104 Financial Instruments Reserve - -96 - - -96 Usable Capital Receipts - 550 22 - 572 Reserves & Balances 385 1,326 30 96 1,837 Pensions Reserve -178 _____ ___ __ -178 Total Financing 207 3,401 121 96 3,826

2 Long Term Investments

The House of Industry hold investments with the Charities Investment Fund currently valued at £1,457,255, whereby units of the fund are purchased and then redeemed at a suitable date as determined by the investor. The Freemans Commons Trust currently invest £662 in Government Stock. These investments are shown at current value.

47

To assist the reader in understanding the information contained in the Statement of Accounts, a brief explanation of some of the terms used is below. Accounting Policies The principles, bases, conventions, rules and practices applied, which specify how the effects of transactions and other events are to be reflected in the financial statements. Amortisation The writing out of intangible assets e.g. grants, in the year. CIPFA Chartered Institute of Public Finance and Accountancy. Capital Charge This is a charge to service revenue accounts to reflect the cost of fixed assets used in the provision of services. Capital Expenditure Expenditure on the acquisition of a fixed asset or expenditure, which adds to and not merely, maintains the value of an existing asset. Community Assets Assets that the Council intends to hold in perpetuity. They have no determinable useful life, and may have restrictions on their disposal. Contingent Assets These are items of favourable events that may occur at year end but are insufficiently certain to be included in the main statements. Where the amounts are likely to be material, the nature of the contingent asset is disclosed in the notes to the accounts. Contingent Liabilities These are items of unfavourable events that may occur at year end but are insufficiently certain to be included in the main statements. Where the amounts are likely to be material, the nature of the contingent liability is disclosed in the notes to the accounts. Corporate and Democratic Core This comprises all activities that the Council engages in specifically because it is an elected multi-purpose authority. The cost of these activities are thus over and above those which would be incurred by a series of independent, single purpose, nominated bodies managing the same services. Depreciation The measure of the cost or revalued amount of the benefits of the fixed asset that have been consumed during the period. Consumption includes wearing out, using up or other reduction in the useful life of a fixed asset whether arising from use, effluxion of time or obsolescence through either changes in technology or demand for the goods and services produced by the asset. Exceptional Items Material items which derive from events or transactions that fall within the ordinary activities of the authority and which need to be disclosed separately by virtue of their size or incidence to give fair presentation of the accounts. Extraordinary Items Material items, possessing a high degree of abnormality, which derive from events or transactions that fall outside the ordinary activities of the authority and which are not expected to recur. They do not include exceptional items nor do they include prior period items merely because they relate to a prior period. Extraordinary items are disclosed and described on the face of the income and expenditure account. Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability of another and therefore covers both financial assets and liabilities. It covers from the most straightforward such as creditors and debtors to the most complex investment and borrowing products. A note to the accounts provides details of effect on the accounts.

Finance Lease A lease that transfers substantially all of the risks and rewards of ownership of a fixed asset to the lessee. Such a transfer of risks and rewards may be presumed to occur if at the inception of the lease the present value of the minimum lease payments, including any initial payment, amounts to substantially all of the fair value of the leased asset. Fixed Assets Tangible assets that yield benefits to the Council and to the services provided for a period of more than one year. Government Grants Assistance by government and inter-government agencies and similar bodies, whether local, national or international, in the form of cash or transfers of assets to an authority in return for past or future compliance with certain conditions relating to the activities of the Council. Group Accounts

Group Accounts will be prepared where the authority has an interest in Associates or Joint Ventures, and that these are material to the authority’s accounts. Infrastructure Assets Fixed assets ancillary to the provision of services eg the installation of CCTV and Celebratory and Amenity Lighting where the benefit is received by the continued use of the asset created.

48

Intangible Assets Intangible Fixed Assets are defined in FRS10 – Goodwill and Intangible Assets - as ‘non-financial’ fixed assets that do not have any physical substance but are identifiable and are controlled by the entity through custody or legal rights. An example of this type of asset is computer software. Internally developed intangible assets are only capitalised where there is a readily ascertainable market value. Non-Operational Assets Fixed assets held by the Council but not directly occupied, used or consumed directly in the delivery of Council services (eg commercial property such as unit factories). Operating Leases Leases other than finance leases. Operational Assets Fixed assets held and occupied, used or consumed by the authority in the direct delivery of those services for which it has a statutory or discretionary responsibility. Post Balance Sheet Events Those events, both favourable and unfavourable, which occur between the balance sheet date and the date on which the Statement of Accounts is signed by the Head of Financial Services. Prior Period Adjustments Those material adjustments applicable in prior years arising from changes in accounting policies or from the correction of fundamental errors. A fundamental error is one that is of such significance as to destroy the validity of the financial statements. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years. Provisions Provisions are established for any liabilities of uncertain timing or amount that have been incurred. Provisions have been recognised when:

• There is a present obligation (legal or constructive) as a result of a past event • It is probable that a cost will have to be met to settle the obligation.

Provisions are charged to the appropriate service heading in the Income and Expenditure account. When a payment for expenditure against a provision is made, the expenditure is charged directly to the provision. Prudence The concept that revenue is not anticipated but is recognised only when realised in the form either of cash or of other assets the ultimate cash realisation of which can be assessed with reasonable certainty. Related Parties Two or more parties are related when at any time during the financial period: (i) one party has direct or indirect control of the other party; or (ii) the parties are subject to common control from the same source; or (iii) one party has influence over the financial and operational policies of the other party to an extent that the other party might be

inhibited from pursuing at all times its own separate interests; or (iv) the parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties

to the transaction has subordinated its own separate interests. Related Party Transaction A related party transaction is the transfer of assets or liabilities or the performance of services by, to or for a related party irrespective of whether a charge is made. Reserves Amounts set aside for purposes falling outside of the definition of provisions or contingent liabilities are treated as reserves and transfers to and from them are distinguished from service expenditure. Expenditure is not charged directly to any reserve. Revenue Expenditure Funded From Capital Resources Expenditure which may properly be deferred, but which does not result in, or remain matched with, tangible assets. Useful Life The period over which the authority will derive benefits from the use of a fixed asset.

49

BEDFORD BOROUGH COUNCIL ANNUAL GOVERNANCE STATEMENT 2008/2009

Scope of responsibility: Bedford Borough Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Council also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. In discharging this overall responsibility, the Council is responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its function, and which includes arrangements for the management of risk. The Council has approved and adopted revised corporate governance arrangements which are consistent with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government. A copy of the arrangements is on our website at (www.bedford.gov.uk).This statement explains how the Council has complied with the arrangements and also meets the requirements of regulation 4(2) of the Accounts and Audit Regulations 2003 as amended by the Accounts an Audit (Amendment) (England) Regulations 2006 in relation to the publication of a statement on internal control. Purpose of the governance framework: The governance framework comprises the systems and processes, and culture and values, by which the Council is directed and controlled and its activities through which it accounts to, engages with and leads the community. It enables the Council to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives of the Council, and our philosophy is about being risk aware not risk averse. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Council’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The governance framework has been in place at the Council for the year ended 31 March 2009 and up to the date of approval of the statement of accounts. In respect of the 2007/2008 Action Plan, this has been a transitional year for the Council with much added work relating to the detailed preparation for Unitary status on 1 April 2009. Additionally, the Council was mindful that there would be a new Council elected in June 2009 (the Implementation Executive making decisions up to 31 March 2009). Accordingly, it was considered appropriate to defer major reviews of the Constitution, performance management, risk management and other governance

50

arrangements until after the new Council was elected. In this way the Unitary impact on these arrangements could be assessed, reviewed and decided upon by the Council newly elected. Documents and arrangements comprising the Council’s Corporate Governance Framework The Council’s Corporate Governance Framework comprises the following: The Constitution, including schemes of delegation, high level financial procedure rules and contract procedure rules Detailed financial procedure rules as issued by the Executive Director for Finance & Corporate Services Medium Term Financial Strategy Risk Management Strategy Value for Money Strategy Corporate Plan and Service Plans Governance Arrangements for Partnerships Performance Management System Statement of Compliance with CIPFA/SOLACE good governance checklist. Aspects of the governance framework outlined in this statement: How the Council ensures that it meets legal obligations (Section 1 below) How the Council establishes organisational objectives (Section 2 below) The Council’s corporate governance arrangements (Section 3 below) The Council’s performance management arrangements (Section 4 below) The Council’s systems and processes in place for the identification and

management of strategic and operational risk (Section 5 below) The Council’s key controls to manage principal risks (Section 6 below) How internal control is assessed and evaluated and assurances obtained

(Section 7 below) Responsibility for the review of effectiveness of arrangements and preparation,

approval and certification of the Annual Governance Statement (Section 8 below). Action Plan: Following review of the effectiveness of arrangements in place (Section 9 below), this statement provides an action plan of measures needed to deal with any weaknesses identified or opportunity for improvement in the internal control framework or corporate governance matters. The action plan can be found under Section 10 of this statement.

51

Certification: We have been advised on the implications of the result of the review of the effectiveness of the governance framework by the Audit Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place.

………………………………........ ………………………………............... Elected Mayor Chief Executive

52

1. HOW THE COUNCIL MEETS LEGAL OBLIGATIONS:

The first duty of any local authority is to ensure that the legal obligations placed on it by Parliament are adhered to. The Council achieves this by way of the following measures.

1.1 Council Constitution

The Council has approved a Constitution in accordance with section 37 of the Local Government Act 2000. This complies with the requirements of the Local Government Act 2000 (Constitutions) (England) Direction 2000 and includes the following:

o Summary and explanation o Articles of the Constitution o Responsibilities for functions o Full Council Procedure Rules o Access to Information Procedure Rules o Executive Procedure Rules o Scrutiny and Policy Review and Development Committee Procedure

Rules o Regulatory Committee Procedure Rules o Standards Committee Procedure Rules o Officer Employment Procedure Rules o Contract Procedure Rules o Financial Procedure Rules o Budget and Policy Framework Procedure Rules o Schemes of Delegations to Officers o Joint Arrangements o Standards of Conduct o Register of Members of the Council o Members’ Allowances Scheme o Complaints Procedure o Management Structure

All Members and Officers at Service Manager level and above have a

copy of the Constitution, which is also available on the Council’s intranet and website).

In 2008/2009 the Constitution was amended to allow for arrangements

pending Unitary status on 1 April 2009. A further review of the Constitution will be undertaken by the new Council after June 2009 (see Action Plan) in the light of experience of practical operation of the new arrangements.

New Members have a comprehensive series of induction courses which

include training on the operation of the Constitution and Codes of Conduct. All Members also receive training on the requirements of the law relating to the specific responsibilities they are carrying out (ie before taking decisions on, for example, the Licensing and Planning Committees).

53

During 2008/2009 members also received introductory training on the new

areas of responsibility which would transfer to the council from 1 April 2009, including Adults & Children’s Services and Education.

1.2 Internal Management Arrangements

The Council’s weekly senior officer management team meetings (Corporate Operational Management Group (COM)) agenda includes a standing item entitled “Legal Items”. The Council’s Monitoring Officer is a member of COM and attends each meeting. Any new legislative developments/legal clarification on current issues can be raised at these meetings. At COM meetings the legal and other implications of draft reports for Members are considered before the reports are issued.

The Council’s management and organisational structure ensures that all

statutory obligations are covered. Respective service groupings include qualified professional officers who are employed to meet relevant statutory service or function requirements. Job descriptions for all post holders make responsibilities clear as does the person specification and selection criteria used for the recruitment process. The Council’s recruitment and selection procedure ensures that the Council employs officers able to carry out the duties required of them in their new posts.

Having met the necessary recruitment selection criteria and therefore,

having the ability to carry out their posts’ functions, new staff receive basic induction training and, where appropriate, additional training on relevant statutory requirements before they fully undertake their new duties (eg benefits assessment staff are trained on the legislative requirements for that service).

The Monitoring Officer circulates periodic updates of information of any

changes/updates in the law to any Council officers/service areas affected relating to new legislation, case law or legal articles.

Where relevant, training is provided to staff to ensure they are up to date

with changes in legislation or new statutory requirements which impact on their responsibilities. Additionally, under the Council’s performance appraisal scheme, training needs/requirements are reviewed at least annually for each member of staff.

Professional officers also receive up to date information on any changes in

the law affecting their profession from their professional associations.

Service Heads/Managers arrange for detailed staff briefings on new legislation/amendments affecting their particular service groups.

54

1.3 Ensuring Legal Implications are considered before decisions are made:

All reports to the Executive collectively, individual portfolio holders, Council and its Committees set out the legal implications of the decision(s) that Members are being asked to take.

The Executive/individual Portfolio Holders are also required as part of their

scheme of delegation to follow the Executive decision making protocol in reaching decisions. This requires them to allow sufficient time for the Head of Service concerned, in consultation with other senior officer colleagues as appropriate, to assess any legal, policy, risk or resource implications and report back accordingly in writing before any decision is made.

1.4 Arrangements for dealing with any non compliance:

The Council has an excellent record in terms of compliance with legal obligations. However, where instances of non compliance are identified (eg as a result of customer complaints) procedures are reviewed and action taken to eliminate the risk of further non compliance.

Apart from the statutory responsibility of the Monitoring Officer (reflected

within the Constitution) to deal with any non compliance with the law, there is a delegation to enable the Monitoring Officer to take any action reasonably incidental to the carrying out of his Monitoring Officer functions.

2. HOW THE COUNCIL ESTABLISHES CORPORATE OBJECTIVES:

The Council was assessed as an Excellent authority in 2007/2008 under the Corporate Assessment process. As such, the Council demonstrated best practice in consultation on its aims and objectives, preparing plans to meet them (including partnership working) and communicating how these plans will be delivered and monitored.

2.1 Consultation with Stakeholders

Using it’s Communication and Consultation Strategy, the Council

undertakes extensive consultation with all stakeholders (public, partners, Members, officers and the statutory, business, voluntary and community sectors in the area) as part of the process of determining it’s objectives and priorities, The outcome of this consultation is made public and carefully assessed in formulating the Community Plan for the Borough and the Council’s Corporate Plan.

2.2 The Community Plan

This plan reflects the approved aims and objectives of the Council and its local strategic partners (the Bedford Partnership Board) in meeting the need to continuously improve social, economic and environmental wellbeing in the Borough area. The Community Plan 2004-2010 sets out

55

overall aims and objectives on nine key themes which emerged following detailed consultation as outlined earlier. (The Community Plan has been published and can be found on the Council’s internet and website.) Each partner organisation has a role to play in meeting the aims and objectives relating to the nine key themes and as far as Bedford Borough Council is concerned this is delivered through its Corporate Plan and associated Service Plans. As at 31 March 2009 the Council was in the process of commencing a detailed consultation on a Sustainable Community Strategy which will replace the Community Plan during 2009.

This Strategy will not be adopted until the outcome of consultation is

known and it is ultimately approved by the new Council for Bedford Borough Unitary.

2.3 Corporate Plan

The Council’s Corporate Plan 2007-2009 was approved by Council and

takes into account the outcome of consultation, how the Council will contribute to achieving Community Plan themes as well as other national and local priorities (including helping to achieve the delivery of the Bedfordshire Local Area Agreement). The Plan timescale was extended during 2008/2009 given the pressing needs of preparing for Unitary status and also the need for the new Council for Bedford Borough (to be elected in June 2009) to approve the Plan following detailed consultation. The current key service priorities in the Corporate Plan as at 31 March 2009 are as follows:

o Protecting and improving the local environment o Having a safe and respectful Borough o Having a prosperous and vibrant Borough o Having a healthy, enjoyable and active Borough o Delivering homes for all o Being a proactive and listening Council.

The Corporate Plan has been published and is on the Council’s internet and website. All Members and officers are aware of the Corporate Plan priorities and there is annual review by the Executive of progress against action plans and targets (as Best Value Performance Review of 2007/2008 undertaken in 2008/2009)

A new Corporate Plan will be developed in 2009 (see Action Plan).

2.4 Service Plans

As well as reflecting legal requirements and national priorities, Service Plans set out, in the form of detailed priorities and targets, how the Council will achieve its Corporate Plan priorities at service level.

Service Plans are reviewed annually in liaison with Executive Portfolio

Holders in order to monitor progress and identify any “fine tuning” needed.

56

This review is undertaken in accordance with the Council’s Medium Term Financial Strategy. It must be recognised that in this transitional year the level of service planning has not been as thorough in all former district services as previous years given the demands of preparing for Unitary status. Also it will be necessary to radically review all County Service Plans during 2009 ready for the budget process for 2010/2011.

2.5 Resource Allocation and Corporate Priorities

The Council’s Medium Term Financial Strategy and associated Capital Investment Programme and revenue budgets are closely aligned to meeting legal and Corporate Plan priorities through Service Plan review (see earlier).

There is a continuous review of resource availability (both capital and

revenue) to ensure that the legal and Corporate Plan priorities can be achieved within the timescales envisaged. Any shortfall in forecast resource availability is reflected in the planning process so that, where necessary, priorities and/or timescales can be adjusted.

3. CORPORATE GOVERNANCE ARRANGEMENTS

The Council complies with best practice on corporate governance arrangements (as periodically updated by CIPFA/SOLACE guidance) and these arrangements are embedded throughout the procedures and practices of the Council. Corporate governance arrangements are normally kept under review by a senior officer working group whose members include the Monitoring Officer, the Chief Finance Officer and the Chief Audit and Control Officer. The outcomes from this Group’s work are reported to the Audit Committee (designated for the purpose) whose Members are required by the Constitution to satisfy themselves as to the adequacy of the Council’s arrangements and ensure that they are reviewed on a formal basis at least annually. However, in 2008/2009, the demands of preparing the Unitary status have not enabled time for any detailed review during the year. It is a priority that early in 2009/2010 the Corporate Governance arrangements will be reviewed (see Action Plan). The statement on good corporate governance, as approved on 3 April 2008, is available on the Council’s intranet and website and the following summarises the position:

3.1 How the Council focuses on the purpose of the authority and on outcomes for the community and creating and implementing a vision for the local area The process of developing and promoting the Council’s purpose and vision

is set out earlier in this Statement viz:

o meeting legal obligations (see Section 1 above) o establishing corporate objectives (see Section 2 above).

57

As part of the regular review of the Council’s vision for the area and it’s

impact on governance arrangements the Council will review these matters in 2009/2010 following consultation on corporate objectives and the election of a new Council in June 2009 following which any changes will be approved and adopted.

The Council’s partnership arrangements are subject to approved

governance principles which ensure terms of reference are agreed at the outset to meet defined needs.

The Council meets legal annual report requirements and timescales viz:

o publication of its approved annual statement of accounts and

associated governance/internal control statements. o publication of an annual Best Value Performance Plan – in the case of

2008/09 to the extent still required by the Department for Communities and Local Government following the Local Government and Public Involvement in Health Act 2007 (ie the outcome of 2008/2009 performance against targets).

o annual explanatory leaflet on Council spending plans with the Council Tax demand.

The Council’s Corporate Plan and associated Service Plans set out the

quality of service to be delivered and how it is to be measured (ie performance indicators/targets/standards) and there is an annual review of delivery against these measures as well as identifying opportunities for improvement.

The Council has a comprehensive complaints procedure (see under 3.4

below) which is used to help identify any failure in service delivery and remedial action needed. The performance monitoring arrangements (see Section 4 below), also deal with any failure in service delivery.

There are comprehensive arrangements in place and embedded in order

to achieve economy, efficiency and effectiveness in service delivery as set out in the Council’s Value for Money Strategy and also its performance management arrangements (see Section 4 below).

The Mayor has established a Sustainability Committee whose role

includes responsibility for keeping the Council’s policy commitments relating to sustainability under review and monitoring implementation of those policy commitments and their practical impact

3.2 How Members and officers work together to achieve a common purpose

with clearly defined functions and roles:

The Council’s constitution sets out:

o key roles and responsibilities of the Elected Mayor and Executive

58

including scheme of delegation to individual Executive Members (Portfolio Holders) and the legal and constitutional framework in which they make decisions

o respective roles and responsibilities of other Council Members (eg scrutiny), Councillors generally and also senior officers of the Council

o matters which, having regard to statutory provisions, are the responsibility of various Council Committees as well as a scheme of delegation to officers

o the responsibilities of the Chief Executive as the head of the paid service and accountable to Council for all aspects of operational management.

The Elected Mayor and Chief Executive have a full understanding and

mutual appreciation of each others roles and responsibilities and a shared vision which was a factor in the Council achieving “excellent” status under external “Comprehensive Performance Assessment” (CPA).

The Council has designated the Executive Director of Finance & Corporate

Services as the statutory Chief Finance Officer.

The Council has designated the Assistant Chief Executive (Governance) as the statutory Monitoring Officer.

As well as having a formal ”Member/Officer protocol” approved by the

Council, effective communications between members and officers is facilitated by periodic meetings between the strategic management team of officers and the Elected Mayor and political group leaders.

The Council has appropriate mechanisms governing the terms and

conditions for remuneration of Members and officers viz:

o Members Allowance Scheme for Members which is reviewed annually by an Independent Remuneration Panel which reports its findings to Full Council

o employment contracts for all staff which set out their conditions of service and remuneration which is subject to review under the Council’s job evaluation scheme.

As outlined earlier under “establishing organisational objectives” (see

Section 2) of this Statement) and later under “performance management arrangements” (see Section 4 of this statement), there are appropriate mechanisms in place whereby Members and officers work together to develop vision, strategic plans, priorities and targets and also effectively monitor service delivery performance.

59

The Council have adopted governance principles for partnership working and these were reviewed and enhanced in March 2008. These provide the necessary framework to assist Members in having clarity regarding their roles and responsibilities both individually and collectively. These governing principles also require the legal status of any partnership to be made clear and the extent to which representatives of the Council can bind the Council in respect of any partner decisions.

3.3 How the Council promotes values for the authority and demonstrates

the values of good governance through upholding high standards of conduct and behaviour:

The Council is committed to operating in a spirit of openness, mutual

respect and support. The Council’s constitution and codes of conduct for Members and officers provide the framework necessary to ensure:

o that Members and officers conduct the Council’s business without

prejudice, bias or conflicts of interest o public confidence in how the Council conducts it’s affairs o shared values are developed and maintained within the Council in the

pursuance of the Council’s aims and objectives and for effective decision making

o that the behaviour of both Members and officers demonstrates the highest ethical standards expected from those charged with governance and in respect of all Council dealings.

These Council standing orders and codes of conduct are made clear to all

Members of the Council as being a requirement of their service to the Council and its community.

The Council has a long established customer care charter which sets out

the standards of behaviour the Council expects its employees to adhere to in dealing with customers (eg service users in the area). Critical to achieving level 3 of the Equality Standard (July 2008), all service areas systematically assessed the equality impact of their services and policies and developed action plans to address any gaps or shortcomings which were identified as a result of that work.

The Council’s Standards Committee is charged with ensuring the

promotion and maintenance of high standards of conduct by Members and with providing guidance to Members to assist them to observe the Code of Conduct.

The Council also has long established guidance for Officers on the

standards of conduct expected of them. These also form part of the constitution and are issued to all new employees as part of their “starter” pack. Periodic reminders of the need to observe these standards are issued to all staff by the Director of Finance and the Head of Corporate Administration.

60

The procedures of the Council relating to Standards Committees were assessed against criteria set out by the Standards Board during 2007/2008 and the outcome sent to the Standards Board of England.

61

3.4 How the Council takes informed and transparent decisions which are subject to effective scrutiny and managing risk:

The Council has four Committees which, with the support of two full time

officers, together undertake the overview and scrutiny function for the Council. The Scrutiny Committee’s primary responsibility is to hold the Executive to account for decisions or actions (either by the Mayor, in Committee or by individual Portfolio Holders) in discharging their functions including “call in” procedures for certain decisions before they are enacted. The Community and Culture, Corporate and Resource and Environment Policy Review and Development Committees undertake under take in depth reviews of selected Council policies and strategies and monitoring of service performance targets.

The Council’s decision making arrangements are robust, effective and

transparent. They include:

o the requirement that any decision by Members may only be taken following the receipt of an officer report which must outline the legal, financial/other resource, risk and policy implications of the proposals to the Council (as well as an evaluation of possible alternative options wherever possible) before decisions can be taken (this also applies to the decision making protocol for Executive/Portfolio Holders).

o all decisions are properly documented and recorded together with supporting data (eg background papers/report to members).

o that in respect of legal and financial implications, the relevant professional advice has been included in the officer report being considered by Members.

o the requirement that Members and officers comply with Codes of Conduct relating to ensuring that no conflicts of interest can affect the decision making process.

The terms of reference for the Council’s Audit Committee help to ensure

the Council maintains effective checks and balances as the Committee:

o reviews governance and internal control arrangements (including an annual report of the Finance Portfolio Holder and Director of Finance in the adequacy of financial administration in the Council);

o receives, considers and approves the annual statement of accounts and governance statement and action plan;

o receives and considers all reports from external audit on behalf of the Council and agrees any action plans to deal with issues identified by external audit;

o receives and approves the internal audit plan drafted by the Head of Internal Audit and considers progress against the plan during the year;

o receives and considers periodic and annual reports relating to the outcome of internal audit work.

The Council has an effective and transparent complaints procedure which

is included in the Council’s constitution and is available to the public on

62

request and is on the Council’s website. Any complainant not satisfied with the initial response can go to stage 2 (review by the relevant Head of Service), or if still not satisfied go to stage 3 (review by a Strategic Director) and if still not satisfied are advised how to complain to the Local Government Ombudsman. Where a complaint is upheld, the complainant receives an apology from the Council and steps are taken to ensure any failure in service delivery/dealing with customers is not repeated.

Effective risk management procedures are essential to good governance

and internal control and the Council has embedded very effective arrangements (see Section 5 of this Statement).

The Council has “whistle blowing” arrangements in place through its

Confidential Reporting policy which provides a framework within which employees, contractors working for the Council, suppliers and service providers are encouraged and enabled to raise concerns with Council.

In addition to ensuring it meets legal obligations (see Section 1 of this

Statement) the Council also has arrangements to ensure that in dealing with all Council business the general requirements of the law are adhered to and taken into account. In particular:

o relevant officers ensuring the limits of lawful activity (ie the “ultra vires”

doctrine) are made known to Members and officers. o relevant officers ensuring that specific legislative requirements are

followed and that in any Council decision or action regard is had to proportionality, rationality, legality and natural justice in establishing procedures or taking decisions.

3.5 How the Council develops the capacity and capability of Members and

Officers to be effective:

The Council provides a structured induction programme for new members designed to introduce them to the Council and being a Councillor. This is normally reviewed annually to take into account feedback received from those Members who have undertaken it most recently to ensure that it continues to be relevant and appropriate to the needs of new Members (no induction in 2008/2009 as no elections). On an ongoing basis, the Council provides regular training and development activities for Members during the year to meet a variety of personal and professional needs, as well as the Council’s corporate requirements. Training/development activities provided during 2008/2009 mainly related to comprehensive training provided by IDEA to prepare Members for Unitary governance from 1 April 2009 to ensure adequate preparation for this event.

Post training evaluation includes feedback on changes that individual

Members will make as a result of the training to the way in which they undertake their role and any further training needs identified as a result of the training undertaken.

63

All Officers are required to undertake mandatory induction training within the first three months of their employment with the Council. Thereafter, Service Managers are responsible for ensuring that as part of their operational induction, the training needs (including “on the job” training) of all new employees are assessed at whatever level they have been recruited. Ongoing training needs are further assessed annually as part of the Council’s performance appraisal process. The Council’s constitution and management structure ensure that the statutory officers (eg Chief Finance Officer/Monitoring officer) are key members of the top management team and that their job descriptions reflect their statutory responsibilities.

Council also ensures that these statutory officers have the skills, resources

and support necessary to perform effectively in their roles.

Under the Council’s performance management arrangements (see Section 4 of this Statement) the officer performance appraisal scheme is actively used to identify training and development needs annually. Also the Council pursues opportunities for succession planning in officer development. The Council has Investors In People Awards for Recruitment and Selection, Training and Development and Work/Life Balance.

With a view to pursuing effectiveness in service delivery the Council has

arrangements in place to obtain feedback from all sectors of the community and provide opportunities for them to contribute to and participate in the work of the authority.

Examples include:

o State of the Borough debates o regular consultation exercises o citizens panel o statement of community involvement.

3.6 How the Council engages with local people and other stakeholders to

ensure robust public accountability

The Council clearly sets out in its published Community and Corporate Plans what it is accountable for and to whom and this is emphasised to all Members and staff and communicated to the public.

The Council’s annual reporting arrangements help to fulfil the

requirements of robust public accountability through the publication of:

o Annual financial and governance statements o Annual report of the scrutiny and overview functions.

Council meetings and Council Committee meetings are held in public apart

from the very limited instances where there is a need for confidentiality.

64

As detailed on page 6 the Council has effective arrangements for

communications and consultation with all stakeholders (including Council staff) and which includes:

o listening to the views of local people o consulting on key Council objectives and related priorities o informing citizens of Council services o reaching all sections of the community.

4. EFFECTIVE PERFORMANCE MANAGEMENT ARRANGEMENTS IN

PLACE

4.1 Performance Management Framework

There is a performance management system (PMS) embedded in the Council which is easy to understand (traffic light system)

The PMS covers all relevant national performance indicators The PMS identifies:

o who is responsible for achieving each performance measure o who is responsible for collating the data for each one o who receives reports on performance and how often o how performance data is captured and its integrity maintained o how performance is driven upwards over time o how poor performance is addressed. NB: Work will be undertaken in 2009 to update the system from the KPIs to the national indicator set.

4.2 How Key Performance Indicators (KPIs) are established and monitored

The Council is committed to the achievement of national PIs (now the national indicator set) which are all covered by the PMS.

Additionally local KPIs are established in relation to the Council’s key priorities. These are effected using the Corporate Plan targets which then cascade down to more detailed targets in Service Plans. These are reviewed (and where necessary updated) annually by the Executive and relevant Service Portfolio Holders prior to the commencement of the new financial year.

To illustrate the embedded nature of the Council’s PMS, each member of staff is given targets (under the Council’s staff performance appraisal scheme) which relate to the achievement of national or local KPIs.

The relevant Portfolio Holders receive periodic briefings on progress in delivering KPIs. Additionally this monitoring process allows the Executive and/or Portfolio Holders to agree new KPIs and targets which would assist in the achievement of continuous improvement (eg following the outcome of benchmarking reviews with peer authorities).

65

4.3 How the Council knows how well it is performing against its planned outcomes

Performance monitoring meetings are held between the Chief Executive,

Strategic Directors, Heads of Service and Service Managers to review performance against all KPIs/targets.

Officers provide periodic updates to the relevant Portfolio Holders on

progress in delivery of national and local KPIs and targets (as determined under 4.2 above).

Annual External Audit/Inspection reports and periodic external

Comprehensive Performance Assessment (CPA) reports are tabled with the Audit Committee and/or the Executive which provide external assessment of performance.

The Executive receives reports on how well resources are being used both

in respect of Value for Money targets (as part of the annual service budget review) and regular budget monitoring for both capital and revenue budgets both in year and in relation to the Medium Term Financial Strategy.

4.4 How knowledge of absolute and relative performance achieved is used

to support decisions that drive improvements in outcomes

The updates provided to Executive Portfolio Holders on performance includes a direction of travel for each target under KPIs. There is a realistic annual assessment based on performance achieved/direction of travel as to whether or not the targets can be further adjusted to achieve continuous improvement. This ultimately features in the annual review by Executive of Corporate Plan progress and by Portfolio Holders of Service Plans progress.

The Council actively develops benchmarking data with peer authorities in

the following ways:

o to compare performance in all key national PIs o to compare unit cost and service output/satisfaction under the Council’s

value for money arrangements. This comparable data is used to determine any further variation to national or local targets with a view to continuous improvement (as approved by Executive/Portfolio Holders|) or to make better use of resources (by using the VFM comparative data to inform the annual budget process).

Arrangements are in place to ensure that any below par performance is

identified and remedied through appropriate management action.

66

4.5 How the Council continuously improves its performance management arrangements

The Council has an “in-house” Performance Management support team

whose duties include continuous review of best practice and recommending any necessary amendments to the Council’s framework for approval by the Chief Executive and or Executive. External Audit periodically review the Council’s performance management arrangements and any recommendations made by them are actioned. In 2008/2009 the external auditors reviewed Best Value Performance Plan. No issues were identified. The external auditors also undertook a review of the Council’s Data Quality, identifying that Performance Indicator values reported all fell within expected ranges and that those indicators on which spot checks were undertaken were fairly stated.

Continuous development and improvement of benchmarking data with the

Council’s peer authorities (the true comparator group) continues to be an important part of improving the performance management arrangements.

5. SYSTEMS AND PROCESSES IN PLACE FOR THE IDENTIFICATION AND

MANAGEMENT OF STRATEGIC AND OPERATIONAL RISK

The Council has robust arrangements embedded for identifying and managing risk and there is commitment to risk management contained in the constitution within the Council’s approved Financial Procedure Rules. The following measures are in place:

5.1 Risk Management Policy and Strategy

Approved by the Council’s Executive in 2003 and has been subject to

detailed annual review by them since that time (latest review having been undertaken at its meeting on 31 October 2007). Note that there is a comprehensive review being tabled at the Council’s Executive in June 2009.

Clearly sets out the responsibilities of the Executive and individual officers

and the processes to be followed.

Has been communicated to all Members and staff and is on the Council’s internet and website has been the subject of Member and staff training since inception.

5.2 Structures and Processes for implementation of the strategy

Executive commitment is emphasised by an Executive Portfolio Holder

being charged as responsible for leading on risk management at the highest level.

The Executive decision making protocol includes the requirement that risk

implications are taken into account before any decision is made (this

67

includes taking into account risks associated with any proposed partnerships).

Executive considers an annual report from the strategic management team

on the corporate/strategic risks facing the Council and any action needed to mitigate these risks as part of the annual corporate planning process ( in 2007/2008 a report was considered by Executive at its meeting on 19 March 2008). (No report in 2008/2009 as it has been delayed to June 2009 Executive meeting to fully take into account new services inherited under Unitary status.)

Each Executive Portfolio Holder is responsible for considering the risks

relating to the delivery of the Service Plans for their respective areas and identifying any action to mitigate such risks before the finalisation/approval of these plans.

Executive take risk into account in the annual resource allocation process

viz:

o considering risks relating to income and expenditure relevant to individual service and function budgets before making recommendations on these budgets (a comprehensive report on budget risks relating to inherited County services was provided in January 2009 for the 2009/2010 budget process)

o considering resource implications of mitigating any risks which cannot be dealt with by other means as part of the budget process

o considering risks relating to individual capital schemes and the proposed capital investment programme before making recommendations on these matters

o considering the risks associated with financing the total annual (and medium term) revenue and capital budget proposals before finalising recommendations

o considering risks associated with the Council’s reserves and provisions before making recommendations on annual levels.

Training has been provided for the Council’s Audit Committee on risk

management and the Committee apply this in considering annual governance/internal control requirements and external and internal audit annual reports.

The risk identification and evaluation procedure established throughout the

Council is based on detailed assessment by officers and includes the relative degree of risk, whether or not each risk is currently adequately mitigated (ie by Council processes, procedures or by insurance arrangements) and what action is needed to provide a reasonable level of mitigation to those risks not currently adequately covered and which are considered to warrant such coverage.

68

The Strategic Management Team ensure risk management is part of the ongoing process of Council operations and that there is an annual review of corporate/strategic risks for Executive consideration (see above).

The Corporate Operational Management Group (COM) consider risk

management issues at their weekly meetings including risks outlined in all draft reports to Executive, health and safety issues and business continuity requirements.

Heads of Service and Service Managers are responsible for the

identification, evaluation, recording and reporting on risk in their respective service areas including:

o service delivery risks assessments which could impact on Service

Plans/resource requirements for Executive consideration o health and safety risks including workplace inspections o business continuity risk assessments and plans (the Council maintains

an annually reviewed Business Continuity Plan) o updating of insurable risks and identifying potential claims.

The Executive Director of Finance & Corporate Services is the director

leading on risk management and has overall responsibility for ensuring that the strategy is fully implemented. He is supported by the Assistant Director of Finance and Insurance officer whose duties include:

o maintaining the Council’s corporate risk register o managing the Council’s insurance arrangements.

Internal Audit annual audit plans are based on a risk assessment relating to the Council’s operations to ensure audits are focused on areas of highest risk.

External Audit review the Council’s risk management arrangements for

adequacy and report any concerns in their annual report which is considered by the Audit Committee

5.3 Financing risk

The Executive annually reviews:

o external insurance portfolio arrangements and associated premiums o the adequacy of the Council’s self insurance arrangements and related

insurance reserve o the level of other contingency provisions to enable the Council to deal

with certain specified risks (eg health and safety, emergency planning) and makes recommendations to Council on the appropriate level of resource needed as part of the budgetary process).

The Council meets all legal requirements for insurance and associated

costs.

69

Officers maintain constant monitoring of insurance claim trends and

assess the cost effectiveness of insurance arrangements and report thereon to the Executive as part of their annual review.

6. KEY CONTROLS IN PLACE TO MANAGE RISK 6.1 Rules and Regulations

Adherence to the roles and responsibilities of Council, Executive,

Regulatory and Scrutiny and Overview Committees as set out in the Constitution is a key internal control which helps to provide effective “checks and balances” at Member level on the operations of the Council.

o Decision Making Protocol

Before the Executive, Committee of the Executive, Elected Mayor or Portfolio Holder makes a decision on any matter they must allow the relevant Head of Service time to prepare a report on any legal, policy, risk and resource implications. These implications must be considered/taken into account before any decision is made.

o Call in Procedure

Before any Executive decision can be implemented, there is a period of time which allows Members to “call in” the decisions for consideration by the Scrutiny Committee based on the concerns set out by the relevant number of Members. This procedure is available for all decisions apart from those where the Monitoring Officer and/or Chief Finance Officer certify that there are legal or financial reasons why the decision cannot be delayed.

o Role of the Audit Committee - see page 13 of this Statement.

Council Financial Procedure Rules are part of the Council’s approved

Constitution and provide the regulatory framework for financial management and administration within the Council. They are issued to all Members and all staff who have resource management responsibilities (eg budget holders) and these staff receive detailed guidance and supplementary rules on key aspects issued periodically by the Director of Finance.

Council Contract Procedure Rules are also part of the Council’s

approved Constitution and provide a regulatory framework to cover all contracts entered into by the Council for procurement of goods, works or services (excluding the engagement of staff and Counsel). They are issued to all Members and all staff who have responsibility for procurement and these staff receive detailed guidance.

70

Competition and Procurement Strategy which helps to ensure the Council receives best value from procurement as well as meeting probity requirements. The Procedure Rules and related Procurement Strategy are periodically reviewed against best practice (the latest review and amendments being undertaken in March 2008).

Codes of Conduct are in place for Members and Officers (see under 3.3

of this Statement) and there is a Register of Interests

Council Chief Officers are responsible (under Financial Procedure Rules) for:

o establishing sound arrangements for planning, appraising, authorising

and controlling their operations in order to achieve continuous improvement, economy, efficiency and effectiveness and for achieving their financial performance targets;

o ensuring that established controls are being adhered to and reviewing existing controls in the light of changes affecting the Council and to ensure they remain necessary and cost/risk effective;

o ensuring all staff under their service/function areas have a clear understanding of the controls to be followed and the consequences of any lack of control;

o ensuring all staff under their service/function areas are aware of their responsibilities under the Freedom of Information Act, Human Rights Act and the Council’s computer user security policy.

6.2 Resource Management Policies, Strategies and Controls

Control of resource is key to good governance in the public sector and the Council has a comprehensive framework, approved by Council/Executive, as follows: Major Financial Decisions Framework

This deals with Council and Executive responsibilities relating to the management of the Council’s financial resources and sets out dates during the Municipal Year when key decisions have to be made.

Medium Term Financial Strategy

This sets out the guiding principles for revenue and capital budget preparation and identifies virement rules and forward financial planning arrangements. The strategy was reviewed by the Implementation Executive in March 2009 and approved by Council on 8 April 2009.

Corporate Asset Plan

This sets out how the Council will manage, control and optimise the land and property assets at its disposal and is closely linked to the Council’s capital investment strategy (the Plan was reviewed during 2008 and a six

71

monthly progress report was submitted to the Mayor (as the relevant portfolio holder). Note that in April 2009 a revised Corporate Asset Plan was approved by the Mayor taking into account inherited assets under Unitary status.

Value for Money Strategy

The strategy sets out how the Council will manage its affairs to ensure economy, efficiency and effectiveness is delivered in the provision of Council services and functions. It was reviewed by Executive in October 2008 and will be subject to further review after June 2009 (see Action Plan).

Budget Monitoring and Control

As part of the Council’s Financial Procedure Rules and Major Financial Decisions Framework, the Council has sound systems of budgetary management, monitoring and control for all capital, revenue and provision/reserve budgets. Quarterly reports are submitted to Executive, the dates being shown in the Medium Term Financial Strategy.

Prudential Code Compliance

In accordance with the annual budget process and Major Financial Decisions Framework, the Council fully complies with the Prudential Code for Capital Finance in Local Authorities (ie Executive and Full Council consider a detailed report thereon from the Director of Finance before agreeing the capital programme, revenue budget and Council Tax requirements).

Treasury Management Controls

The Council has an approved treasury management policy and there is full compliance with the CIPFA code on treasury management which includes the Director of Finance arranging for:

o annual review by Executive of the treasury management strategy; o annual report to Treasury Management Panel (Members) from the

Council’s independent investment advisor (Sector) on treasury management arrangements/performance of fund managers;

o continually updated treasury management practices relating to borrowing and investment controls;

o annual outturn report to the Treasury Management Panel on the previous year’s treasury management operations/performance;

o annual target setting for ensuing year by Treasury Management Panel together with budget proposals (eg investment income forecasts).

72

Major Financial Systems Controls

The main financial systems covering accounting, treasury management, exchequer (including debtors, creditors and payroll), local taxation and benefits are subject to detailed control arrangements approved by the Director of Finance and test checked/reviewed annually by Internal Audit. An annual report on the position is included in the Statement of Accounts.

Statutory Officer Financial Reports

The Director of Finance reports each year to: o Council under Section 25 of the Local Government Act 2003 on the

robustness of the estimates and adequacy of reserves before the Council finalise capital and revenue budget decisions and associated Council Tax requirements;

o Audit Committee under the Accounts and Audit Regulations, on the Annual Statement of Accounts in accordance with legislative requirements and relevant codes of practice, which now includes the requirement for group accounts (the position on internal financial control arrangements is part of the statement);

o Audit Committee and the Executive on the fitness for purpose of the Council’s financial administration.

Personnel Management

There is a comprehensive framework of policies and controls governing personnel management throughout the Council including:

o effective recruitment, selection and retention procedures o robust and up to date personnel policies o Investors in People accreditation across three activities:

Recruitment and Selection Training and Development Work/Life Balance

o proactive training and development programme o internal management development programme o contracts of employment for employees o job evaluation and job descriptions for all posts o staff establishment control allied to budget control o performance appraisal and target setting scheme o sickness management.

Computer User Security Policy

Information technology is a resource critical to the delivery of Council services and functions. It is necessary to ensure that the large investment made by the Council into computer hardware and software is properly controlled and to this end the Council has a computer user’s security policy guiding all users on necessary controls.

73

6.3 Other Policies, Strategies and Arrangements in Place to assist in

providing adequate internal control and mitigate risk

Internal Audit

The Council maintains an effective internal audit function with terms of reference set out under the Council’s Financial Procedure Rules. Internal Audit’s role is to:

o test the adequacy of all the Council’s main financial control systems

annually relating to accounting, treasury management, exchequer services, local taxation and benefits;

o undertake random test checks on expenditure, income and asset control for probity;

o test that financial procedure rules and contract procedure rules are being adhered to across the Council.

The Council’s External Auditors undertake a triennial review of the Council’s Internal Audit and, reported to the Audit Committee on 25 September 2007 on their 2006/2007 review as part of their Annual Governance Report. Their conclusion was that the CIPFA standards were being broadly met although there were a number of areas where they concluded that compliance was only partial. The Audit Committee agreed an action plan to address those areas where compliance was considered to be only partial and subsequent review of progress against that plan undertaken by the Committee, indicated there had been substantial progress towards completing the actions identified.

Anti Fraud Strategy

This relates to the Council’s arrangements to deter fraud and corruption. The Director of Finance is responsible for keeping it under review and when/where necessary making any proposals to Executive for revision. The strategy has been effective in dealing with benefit fraud and featured within the BFI award of an excellent rating to the Council on benefits administration. It also acts as an effective deterrent to any potential fraud and corruption in the Council.

Confidential Reporting Policy

This relates to the Councils “whistle blowing” policy outlined earlier in this Statement (see under 3.4 above).

Complaints Procedure

See under 3.4 of this of this Statement.

74

Performance Management Arrangements

Part of the internal control system is to ensure the Council is meeting its service targets (see Section 4 of this Statement).

Risk Management Arrangements

Comprehensive arrangements are in place including business continuity. See under 5.2 of this Statement.

Health and Safety Arrangements

The Council has a corporate health and safety policy which is approved by the Elected Mayor as part of Executive responsibilities. There is an Executive Portfolio Holder responsible for championing the policy The policy (and regular updates) together with detailed health and safety guidance documentation are issued to all senior officers who have specific health and safety responsibilities (eg Heads of Service and Building Managers). The policy is on the Council’s Intranet and internet and made known to all Council contractors.

Operation of Corporate Operational Management Group

The weekly meetings of the senior officer Corporate Operational Management Group (COM) provide the vehicle for ongoing corporate. Management and related controls including financial, legal and personnel issues as well as acting as the “officer pre agenda” for reports to Members.

7. HOW INTERNAL CONTROL IS ASSESSED AND EVALUATED AND

ASSURANCES OBTAINED

The Council considers it essential to annually assess and evaluate the effectiveness of key control measures and thereby obtain assurance or identify any weakness necessitating action. The Annual Governance Statement sets out the arrangements in place which are evaluated and tested both internally and externally.

7.1 Internal Assessment

The Council’s senior management team is charged with the responsibility

of annually assessing, evaluating and providing assurance (or identification of action needed) on the effectiveness of:

o corporate governance arrangements o key internal control arrangements.

This is normally undertaken by way of a Corporate Governance Working

Group responsible for ensuring the Council has effective Corporate

75

Governance arrangements. However, the demands of preparing for Unitary status has meant these arrangements were not subject to review in 2009/2010 by this Group. However, the senior management team undertook work during the year on these matters and this has allowed a full report to the Audit Committee on governance arrangements in 2008/2009.

All individual Directors and Heads of Service are aware of the key internal

control measures to be adhered to (as set out in Section 6 of this Statement). These officers, for their area of responsibility, annually provide certification to the senior management team confirming that these controls have been adhered to and remain adequate for the purpose of providing effective internal control in their area.

Internal Audit undertake annual test checks on the Council’s internal

control arrangements based on risk and the Chief Audit and Control Officer reports annually to the Audit Committee on the outcome of these tests, thus providing assurance and/or identifying areas of weakness necessitating action.

Also the Chief Audit Control Officer reports annually to the Director of Finance on the detailed financial control systems in order that the Director can fulfil his statutory responsibilities and certify annually that these systems remain adequate to provide effective control of financial resources (see Section under Statement of Accounts). The above activities have not identified any material weaknesses during 2008/2009. However, it is recognised that, in the first year of Unitary status, a detailed and comprehensive review of governance arrangements will be necessary (see Action Plan).

7.2 External Assessment

The Audit Commission arrange for independent external assessment of local authorities in respect of external audit and inspection including: Auditing the Council’s Statement of Accounts and providing appropriate

certification. Assessing the Council’s arrangements for the use of resources and how it

obtains economy, efficiency and effectiveness in their use. Comprehensive Performance Assessments (Caps) Testing that the Statement of Governance can be supported with relevant

evidence relating to governance and internal control arrangements. The outcomes of External Audit findings are reported to the Council’s Audit Committee.

76

8. RESPONSIBILITY FOR THE REVIEW OF EFFECTIVENESS OF ARRANGEMENTS AND PREPARATION APPROVAL AND CERTIFICATION OF THE ANNUAL GOVERNANCE STATEMENT

8.1 The senior officer management team (ie COM) is responsible for:

Considering the annual governance statement prepared by the Director of

Finance, Corporate Services and Deputy Chief Executive. Taking into account any issues identified by External Audit from external

assessment

8.2 The Audit Committee is responsible for:

Reviewing overall policy and arrangements for governance within the Council and for approving revised governance arrangements

Approving the Annual Governance Statement and action plan.

8.3 The Elected Mayor and the Council’s Chief Executive are responsible for

certifying the Annual Governance Statement providing that:

They are satisfied with the statement and It has been recommended by the Audit Committee and for ensuring the

action plan is carried out. 9. THE OUTCOME OF THE REVIEW

Given the embedded nature of governance arrangements the last year as a District Council has relied on these arrangements to ensure business of the council has been undertaken satisfactorily. However, there have been great time demands on senior staff and Councillors relating to the preparation for Unitary status. This has meant that some of the reviews of governance arrangements to identify opportunity for continuous improvement have had to be delayed. Consequently, the review has revealed the following issues which need to be addressed.

9.1 Overall Governance

There is a need for the new Unitary Council to review the current Constitution in the light of experience of operating the initial arrangements put in place for the Unitary Council and make any amendments considered necessary.

Current government arrangements need to be reviewed in the light of

Unitary status and a new Code of Corporate Governance developed.

77

The new Council needs to:

o develop a new Corporate Plan o develop a Sustainable Communities Strategy (to replace the current

Community Plan) o prepare a Local Area Agreement

New and existing Members need to identify how their skills can best be

used and identify where training and development is required (ie over and above normal induction arrangements).

9.2 Performance Management

Taking on new services provides an ideal opportunity to review the current policy, practice and procedures relating to performance management in the Council.

9.3 Risk Management

Consider the need for a Risk Management Board; Review Risk Management arrangements; Review adequacy of risk management information systems; Review Business Continuity Plans to reflect Unitary status; Review adequacy of Risk Register.

9.4 Formalise need for annual assurance statements on internal control by

Directors/Heads of Service for their area of responsibility. 9.5 Introduce more structured framework for how the effectiveness of governance

and internal control arrangements will be tested, assessed and evaluated. 10. ACTION PLAN

In response to the issues identified above a number of actions are considered necessary to mitigate any weakness and/or provide continuous improvement. An action plan setting out the actions required, timescales for their completion and lead officers is attached as Appendix A.

78

APPENDIX A

BEDFORD BOROUGH COUNCIL ANNUAL GOVERNANCE STATEMENT 2008/2009

ACTION PLAN Item No

Action Timescale Lead Officer(s)

1. Review of Council’s Constitution 31 March 2010 ACE(Gov) 2. Develop a New Corporate Plan 31 October 2009 CEX 3. Develop a Sustainable Communities Strategy 31 October 2009 CEX 4. Prepare a Local Area Agreement 31 March 2010 ACE(PPP) 5. Formalise Need for Annual Assurance Statements 30 September 2009 CEX 6. Introduce a more structured Framework for Testing, Assessing and Evaluating

Effectiveness of Governance and Internal Control Arrangements 31 December 2009 CEX

7. Review Corporate Governance Arrangements for the new Unitary Authority 30 September 2009 CEX 8. Update the Performance Management System to reflect the new National

Indicator Set 30 September 2009 ACE(PPP)

9. Review Value for Money Strategy 30 September 2009 EDF&CS 10. Identity Member Development Needs and Develop a Programme to Meet those

needs 31 October 2009 ACE(Gov)

11. Review risk Management Arrangements including: The need for a Risk Management Board Review Risk Management arrangements Review adequacy of risk management information systems Review Business Continuity Plans to reflect Unitary status Review adequacy of Risk Register

30 September 2009 EDFCS

Independent auditor’s report to the Members of Bedford Borough Council

Opinion on the financial statements I have audited the Authority and Group accounting statements and related notes of Bedford Borough Council for the year ended 31 March 2009 under the Audit Commission Act 1998. The Authority and Group accounting statements comprise the Authority and Group Income and Expenditure Account, the Authority Statement of Movement on the General Fund Balance, the Authority and Group Balance Sheet, the Authority and Group Statement of Total Recognised Gains and Losses, the Authority and Group Cash Flow Statement, the Collection Fund and the related notes. These accounting statements have been prepared under the accounting policies set out in the Statement of Accounting Policies. This report is made solely to the members of Bedford Borough Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of Auditors and of Audited Bodies prepared by the Audit Commission.

Respective responsibilities of the Responsible Financial Officer and auditor The Responsible Financial Officer’s responsibilities for preparing the financial statements in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008 are set out in the Statement of Responsibilities for the Statement of Accounts. My responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). I report to you my opinion as to whether the Authority and Group accounting statements present fairly, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008:

• the financial position of the Authority and its income and expenditure for the year; and

• the financial position of the Group and its income and expenditure for the year.

I review whether the governance statement reflects compliance with ‘Delivering Good Governance in Local Government: A Framework’ published by CIPFA/SOLACE in June 2007. I report if it does not comply with proper practices specified by CIPFA/SOLACE or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial

statements. I am not required to consider, nor have I considered, whether the governance statement covers all risks and controls. Neither am I required to form an opinion on the effectiveness of the Authority’s corporate governance procedures or its risk and control procedures. I read other information published with the Authority and Group accounting statements, and consider whether it is consistent with the audited Authority and Group accounting statements. This other information comprises the Explanatory Foreword. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the Authority and Group accounting statements. My responsibilities do not extend to any other information.

Basis of audit opinion I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the Audit Commission and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Authority and Group accounting statements and related notes. It also includes an assessment of the significant estimates and judgments made by the Authority in the preparation of the Authority and Group accounting statements and related notes, and of whether the accounting policies are appropriate to the Authority’s circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the Authority and Group accounting statements and related notes are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the Authority and Group accounting statements and related notes.

Opinion In my opinion:

• The Authority financial statements present fairly, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008, the financial position of the Authority as at 31 March 2009 and its income and expenditure for the year then ended; and

• The Group financial statements present fairly, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008, the financial position of the Authority as at 31March 2009 and its income and expenditure for the year then ended.

Conclusion on arrangements for securing economy, efficiency and effectiveness in the use of resources Authority’s Responsibilities The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance and regularly to review the adequacy and effectiveness of these arrangements. Auditor’s Responsibilities I am required by the Audit Commission Act 1998 to be satisfied that proper arrangements have been made by the Authority for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires me to report to you my conclusion in relation to proper arrangements, having regard to relevant criteria specified by the Audit Commission for principal local authorities. I report if significant matters have come to my attention which prevent me from concluding that the Authority has made such proper arrangements. I am not required to consider, nor have I considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

Conclusion I have undertaken my audit in accordance with the Code of Audit Practice and having regard to the criteria for principal local authorities specified by the Audit Commission and published in May 2008 and updated in February 2009, and the supporting guidance, I am satisfied that, in all significant respects, Bedford Borough Council made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2009.

Certificate I certify that I have completed the audit of the accounts in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

Debbie Hanson, District Auditor Audit Commission Regus House 1010 Cambourne Business Park Cambourne Cambridge CB23 6DP 30 September 2009

Bedford Borough Council Annual Statement of Accounts 2008/2009 · The Statement of Accounts is...

Documents

Transcript of Bedford Borough Council Annual Statement of Accounts 2008/2009 · The Statement of Accounts is...