NORTH YORKSHIRE COUNCIL
STATEMENT OF ACCOUNTS
2024/25
INTRODUCTION
1.
North Yorkshire Council's accounts
for the year ended 31st March 2025 are presented in the format laid
down in The Code of Practice on Local Authority Accounting in
the United Kingdom 2024/25 (The Code): issued by the
Chartered Institute of Public Finance and Accountancy and in
accordance with the International Accounting Standards Board
framework for the preparation and presentation of financial
statements as interpreted by The Code.
The Code is based upon International Financial Reporting Standards
(IFRS).
(a)
the Narrative Report;
the purpose of this Report is to act
as a guide to the most significant matters impacting on the
Council's finances. It gives an indication of where the Council's
money comes from, what it is spent on and what services it provides
as well as its financial position and assisting in the
interpretation of the accounting statements.
(b)
the Independent Auditor’s
Report; this explains the
auditor’s responsibilities in relation to the Statement of
Accounts. It also expresses an opinion on the Accounts and shows
how this opinion was reached. The report also gives a conclusion on
value for money in terms of the arrangements for securing economy,
efficiency and effectiveness.
(c)
the Statement of Responsibilities
for the Statement of Accounts; this outlines the Council’s
responsibilities for the Accounts under local government
legislation and any other requirements. It also shows the legal and
professional responsibility for the Accounts of the Corporate
Director - Resources.
(d)
the Statement of Accounting
Policies; which explains
the principles, bases, conventions and rules applied by the Council
in preparing the Statement of Accounts.
(e)
the Comprehensive Income and
Expenditure Statement; this shows the Net Cost of the Services provided
by the Council and how this has been financed from general
government grants and local tax payers. This statement shows the accounting cost in the
year of providing services in accordance with generally accepted
accounting principles, rather than the amount to be funded from
taxation.
(f)
the Movement in Reserves
Statement; this statement
shows the movement in the different reserves held by the Council
over the year. The statement is analysed into usable reserves,
those that can be applied to fund expenditure or reduce local
taxation, and other unusable reserves.
(g)
the Balance Sheet;
this is a statement of the financial
position of the Council and shows the Balances and Reserves at the
Council’s disposal, its long term indebtedness and the long
term and net current assets employed in its operations.
(h)
the Cash Flow
Statement; this statement
shows the changes in cash and cash equivalents of the Council
during the financial year. The statement shows how the Council
generates and uses cash and cash equivalents by classifying cash
flows as operating, investing and financing activities.
(i)
notes to the Core Financial
Statements; these provide
further details and explanation of the figures included in the Core
Financial Statements.
(j)
the Housing Revenue
Account Income and Expenditure Statement; this Statement shows the economic cost in the
year of providing housing services in accordance with generally
accepted accounting practices, rather than the amount to be funded
from rents and government grants. Authorities charge rents to cover
expenditure in accordance with regulations; this may be different
from the accounting cost. The increase or decrease in the year, on
the basis on which rents are raised, is shown in the Movement on
the Housing Revenue Account Statement.
(k)
movement on the
Housing Revenue Account (HRA) Statement; which shows how the HRA Income and Expenditure
Account surplus or deficit for the year reconciles to the movement
on the HRA Balance for the year.
(l)
the Collection Fund
(England) Statement;this shows income and expenditure
relating to Council Tax and National Non-Domestic Rate
Collection.
(m)
Group Accounts;
the Council conducts some of its
activities through partnerships and separate undertakings. Some of
these are not directly reflected in the statements (e) – (i)
above on the basis of materiality. These Group Accounts are
required to present a full picture of the Council’s economic
activities and financial position in order to support the primary
financial statements.
(n)
the North Yorkshire Pension Fund
Accounts; which show the
income and expenditure of the North Yorkshire Pension Fund together
with the financial position of the Fund on 31st March
2025.
(o)
the Annual Governance
Statement; this sets out
the framework within which financial control and corporate
governance is managed and reviewed by the Council and the main
components of the system. It also reports on significant identified
weaknesses and the actions undertaken to rectify these.
OVERVIEW
2.
2024/25 is the second year of the
new unitary council and our transformation journey has continued
although there have been many challenges over the last year –
balancing cost pressures alongside work to converge
services.
Our quarter 4 report highlighted the
on-going rising demand in both adults’ and children’s
services which has meant some significant overspends in these
directorates. But we have also been working hard to realise
the benefits of merging eight councils into one – taking
opportunities to bring services together and use our increased
spending power to drive down costs in areas such as
utilities.
In total over the last year, we have
delivered savings of £25m and ended the year with an overall
underspend of £2.6m helped largely by savings being delivered
in advance of 25/26. This welcome underspend will be used to
provide funds to mitigate risk within our capital programme –
some major schemes have also experienced rising costs over the last
year.
The Statement of Accounts also
includes our Annual Governance Statement - it sets out the
framework within which financial control and corporate governance
is managed and reviewed by the Council and the main components of
the system. It also reports on significant issues and the
actions we intend to take forward into 2025/26 to address
these.
North Yorkshire is the largest
county in England – covering 8,654 km2 with an
estimated population of over 620k. The Council is responsible for
many key local services and organised into 5 directorates each
responsible for a range of services:
-
Children and Young People’s
Service - including the safeguarding of children, looked after
children, services to vulnerable children and young people and
their families and adoption and 5 fostering services; early years
and pre-school, mainstream schools and education, special
educational needs provision, school improvement, raising the
participation age, youth services and career advice, and traded
services.
-
Health and Adult Services -
including services for older people, people with physical or
learning disabilities, public health, mental health services, child
health related matters and drug and alcohol matters.
-
Environmental Services –
including: highways and transportation, parking, street scene,
parks and grounds; environmental services and climate change;
integrated passenger transport, licensing. Public rights of way and
harbours; regulatory services, registration, bereavement and
coroners.
-
Community Development –
including: planning; economic development, regeneration, tourism
and skills; culture, libraries and leisure; housing; and economic
partnership unit.
-
Central Services – including:
customer, revenues and benefits; property, procurement and
commercial service; transformation; technology; finance; local
engagement; human resources and business support, legal and
democratic services.
Alongside the reorganisation of local government
in North Yorkshire a mayoral combined authority covering the areas
of York and North Yorkshire was established in 2023, with the
election of our first Mayor in May 2024.
SUMMARY OF REVENUE
SPENDING
3.
The main components of the final Budget for 2024/25 and a
comparison with the actual position are set out below:-
The spending, financing and surplus
figures reported above are not the same as those reported in the
Comprehensive Income and Expenditure Statement. This is because of
a number of statutory
accounting transactions that are
required to be reflected in the Comprehensive Income and
Expenditure Statement. A brief reconciliation of the two sets of
figures are as follows:-
WHAT THE MONEY IS
SPENT ON AND HOW IT IS FINANCED
4.
The following table
sets out how the money was spent:-
* This figure
represents the Actual Employer Contributions made to the Pension
Fund, less the current service costs (as determined by the
Council’s actuary) less Early Retirement costs.
5.
The following table sets out the
sources of finance:-
6.
The Council employed 12,203 full
time equivalent staff at the end of the financial year and a
breakdown across Service Directorates is as follows:
CAPITAL
EXPENDITURE
7.
In 2024/25 the Council spent £179.4m on capital expenditure
and a comparison with the original and revised Capital Plan is set
out below:-
Actual Capital Plan spending was therefore
£178.6m compared with a Revised Capital Plan of £232.1m
approved in February 2025.
In addition, £0.8m (£1.8m 2023/24) was
spent on Fixed Assets from Directorate revenue budgets, principally
on plant and equipment. The above Capital expenditure was funded as
follows:-
8.
The major part of this capital
expenditure related to spending on programmes in Community
Development and Environmental Services. There were several
large individual schemes including Kex Gill (£19.9m) and Ripon
Pool and Leisure Centre (£4.2m).
9.
Total outstanding borrowing for
capital purposes as at 31st March 2025 was £568.5m, which
includes both external borrowing and borrowing from internal
sources and consists of the following:-
The Capital Financing Requirement (CFR) at 31st
March 2025 was £723.0m which includes the Capital Borrowing
Requirement of £568.5m reported above together with other long
term Private Finance Initiative (PFI) and finance lease liabilities
of £154.5m.
LOCAL GOVERNMENT PENSION FUND
10.
This Statement of Accounts includes
a section on the Accounts of the North Yorkshire Pension Fund. The
impact of the Council’s participation in this Fund is
reflected in the Council’s Accounts based upon the
requirements of IAS 19 Employee Benefits. IAS 19 requires
that pension costs are recorded in the year in which the benefit
entitlements are earned by the employees rather than the year in
which the pensions and employers’ contributions are actually
paid. Also, any net liability arising from a deficit on the
Pension Fund should be reflected on the Balance Sheet as calculated
under the prevailing market conditions.
11.
The results of the 2022 Triennial
Valuation were produced in 2022/23 when the Actuary completed a
detailed analysis of the Fund’s liabilities. These
results were used to determine the employer contributions from
2023/24 to 2025/26. The IAS 19 calculations have been updated
in 2024/25 to reflect the 2022 Triennial Valuation and the changes
that have occurred since then.
The assets of North Yorkshire
Pension Fund increased in value by 2.5% over the year. Full details
of the management of the Fund and its investment performance are
available in the Annual Report of the Fund.
12.
The total reported pension liability
of the Council stood at £7.4m as at 31st March 2025. This has
decreased by £28.0m from an Opening Asset Balance of
£20.6m.
The North Yorkshire Pension Fund has an
investment strategy in place to address its funding
requirements.
The 2022 Triennial Valuation has set appropriate
employer contribution rates for 2023/2024, 2024/2025 and 2025/26
with no deficit payments required from the Council.
Due to its nature, the pension liability will
not occur immediately as it represents benefit payments to
pensioners over their lifetime. As a significant proportion of the
membership is still actively contributing to the Fund this means
that liabilities will be spread in excess of 50 years.
CHANGES IN ACCOUNTING
POLICY
13.
IFRS 16 Leases
as adapted and interpreted for local
authorities by the Code was applied to these financial statements
with an initial application date of 1 April 2024. IFRS 16
replaced IAS 17 Leases, IFRIC 4 Determining whether an
arrangement contains a lease and other interpretations.
The standard was applied using a modified retrospective
approach with the cumulative impact recognised at the date of
initial application, 1 April 2024. Upon initial application, the
provisions of IFRS 16 were only applied to existing contracts where
they were previously deemed to be a lease or contain a lease under
IAS 17 and IFRIC 4. Where existing contracts were previously
assessed not to be or contain a lease, these assessments were not
revisited. As required by the Code, comparative balances for the
prior year have not been restated.
The Trust as
lessee
-
For continuing leases previously
classified as operating leases, a lease liability was established
on 1 April 2024 equal to the present value of future lease payments
discounted at the Council’s incremental borrowing rate. A
right of use asset was created equal to the lease liability and adjusted for any prepaid and
accrued lease payments and deferred lease incentives recognised in
the statement of financial position immediately prior to initial
application. Hindsight has been used in determining the lease term
where lease arrangements contain options for extension or earlier
termination.
-
No adjustments have been made on
initial application in respect of leases with a remaining term of
12 months or less from 1 April 2024 or for leases where the
underlying asset has a value below £20,000. No
adjustments have been made in respect of leases previously
classified as finance leases.
The
Trust as lessor
-
Leases of owned assets where the
Trust is the lessor were unaffected by initial application of IFRS
16.
CHANGES TO THE STATEMENT OF ACCOUNTS
14.
The most significant changes to the
accounts for 2024/25 relate to the adoption of IFRS 16 Leases, as
set out in disclosure note 13.
MATERIAL CONTINGENT LIABILITIES
15.
The Council has identified no area
where a present or past obligation has resulted in the possibility
of a future liability which has not already been included in the
financial statements.
GROUP ACCOUNTS
16.
The 2024/25 Code of Practice
requires all Local Authorities to consider their relationships with
associated companies, strategic partnerships, joint ventures and
any other service delivery vehicles and to produce Group Accounts
where a significant exposure to economic benefits or financial
risks can be established.
Work has been undertaken to document
all the entities connected with the Council and their financial
relationship. Following Chartered Institute of Public Finance and
Accountancy (CIPFA) guidance on Group Accounts, it has been
established that the Council has group relations with:-
- Align Property
Partners Limited;
- Align Property
Services Limited;
- Bracewell Homes
Limited;
-
Brierley Homes Limited;
-
Brimhams Active Limited;
-
First North Law Limited;
-
Maple Park LLP;
-
NY Highways Limited;
- NYnet
Limited;
- Veritau
Limited;
- Yorkshire
Purchasing Organisation; and
- Yorwaste
Limited.
Three of these bodies have been
consolidated into the financial statements of the Council and a
full set of equivalent “group” financial statements
have been produced. The Companies that have been consolidated and
have a major impact on the Council’s financial results are in
relation to:-
- NYnet Limited, a
company providing a broadband infrastructure in North
Yorkshire;
- Yorwaste Limited, a
subsidiary waste disposal company; and
- NY Highways Limited,
a company providing construction, maintenance and repair of
highways.
Align Property Partners Limited, Align Property
Services Limited, Veritau Limited, First North Law Limited,
Brimhams Active Limited, Maple Park LLP, Bracewell Homes Limited
and Brierley Homes Limited have not been consolidated in the
2024/25 Group Accounts as their values do not materially impact on
the group financial position.
Yorkshire Purchasing Organisation is
not consolidated into the financial statements as the Council does
not exert a significant level of influence over their
activities.
The full set of Group Accounts and
the financial implications are seen on pages 124 to 139.
THE COUNCIL PLAN
17.
The Council Plan 2025-2029 sets out
the council’s vision, ambitions and priorities for the next
four years, as well as the approach we will take to achieve them.
The plan addresses the exciting opportunities to transform
services, drive innovation and improve outcomes, but also the many
significant challenges ahead due to the impact of rising costs and
huge demand for our services.
Our
vision: We want to
harness the power of North Yorkshire’s natural capital,
unique communities and businesses, continuously improving our
services to enable a good quality of life for all.
The plan is based around four key themes (each
with supporting priority actions):
-
support thriving places and
empowered communities that live, work, visit and do business in
North Yorkshire
-
develop more sustainable and
connected places across North Yorkshire
-
ensure the people of North Yorkshire
are safe, healthy and living well
-
maximise the potential of North
Yorkshire’s people and communities
Supported by the following
overarching ambition: One Council with strong, local and
customer-led services.
Our aim is to be the ‘most
local large council’; therefore, locality working is another
key element of our Council Plan. The plan outlines our four
pillars of locality working:
-
local services and access
-
local accountability
-
local action
-
local empowerment
The plan also details where our funding comes
from and what it is spent on.
PERFORMANCE AND BUDGET
MONITORING
18.
Reports are submitted on a Quarterly
Basis (30th June, 30th September, 31st December and 31st March) to
the Council’s Executive on Performance and Budget Monitoring
issues. The key issues covered in these Reports can be summarised
as follows (alongside a very brief summary of the position to date
as at 31st March 2025):-
Performance
North Yorkshire Council has well
developed performance and financial processes which maintain rigour
around delivering outcomes within a sustainable fiscal environment.
Our Internal Performance Management Framework has been refreshed
with a more rigorous focus on delivery of ambitions set out in our
Council Plan. Each quarter, the Executive receive an update on
Corporate Performance, but with an in depth focus on one of our
four themes. Our approach to assessing and delivering Value for
Money has also developed following new audit requirements for
2024/25 and the CIPFA Financial Management Code.
General Fund
In 2024/25, the council reported a
net underspend of £2.59m against a net budget of
£579.4m. There were overspends in Children and Young
People’s Services and Health and Adult Services which were
offset by underspends across other directorates. It should be
noted that a large proportion of the underspends reported across
services related to early achievement of budget savings due to be
delivered in 2025/26, for example utilities.
Housing Revenue Account
(HRA)
Outturn for the
financial year was £1.8m surplus against a balanced budget,
this was transferred to the Major Repairs Reserve (MRR), along with
planned contributions and drawdowns to give a closing balance of
£8.9m (£4.7m brought forward from 22/23) to support
future capital programme spending. The HRA Working Balance as
at 31st March 2024 was £19.3m against a benchmark minimum
balance of £12.5m, this provides an additional level of
headroom within HRA business plan.
Whilst the
performance metrics were introduced as part of the 2024-25 HRA
Business plan and Medium Term Financial plan, the 2023/24 estimates
were calculated to establish a baseline for tracking performance
going forwards.
The table below sets out the actual
results of the four key metrics, showing the benchmark /
’golden rule’ values, against the budgeted position and
outturn. All four measures exceeded target and an improvement
against budget, as a direct result of the financial performance
above, along with no new borrowing being undertaken in
year.
Capital Expenditure and
Financing
Gross Capital spend of £178.6m was
£53.5m below the last Capital Plan update of £232.1m in
January 2025. After accounting for £45.5m less capital
income however there was a net capital underspend of
£8.0m.
The net underspend of £8.0m is being
carried over into 25/26. After utilising other capital income
the balancing figure of £8.7m has increased the level of
internal borrowing.
Annual Treasury
Management
External Debt for Capital purposes reduced from
£377.7m as at 1st April 2024 to £367.1m at 31st March
2025, through loan repayments and no new external borrowing being
taken. The average interest rate of this debt was 3.76% at 31st
March 2025.
The total borrowing requirement in the year was
-£5.9m which resulted in the total internal capital financing
to £201.4m at 31st March 2025 (£199.0m at 31st March
2024). The total underlying borrowing need at 31st March 2025 was
therefore £568.5m consisting of £367.1m external debt and
£201.4m internally financed capital debt.
For cash invested in 2024/25, the average rate
of interest achieved was 5.13% which was above the average 7-day
market rate of 4.91% and above the average bank rate of 4.95%. The
balance at 31st March 2025 was £637.7m of which £93.1m
belonged to other organisations who are part of the Council’s
investment pool arrangements.
STRATEGIC DOCUMENTS
19.
The Council produces a number of key
strategic documents which can be accessed at www.northyorks.gov.uk
and provide more strategic context to the annual Statement of
Financial Accounts:-
|
Policy or Plan
|
Purpose of Policy or Plan
|
|
Constitution
|
Sets out how
the Council operates, how decisions are made and the procedures
which are followed to ensure that these are efficient, transparent
and accountable to local people. It also details our policy
framework which includes documents which are approved by the full
Council.
|
|
Digital
Strategy
|
This
gives clear direction as to how North
Yorkshire will become a smart county. It is a response to the
massive changes as the ‘Digital Revolution’ accelerates
and impacts on the county, our citizens and businesses in
fundamental ways.
|
|
Medium Term Financial
Strategy
|
Sets out how resources will be put
in place to support the delivery of the Council Plan and to enable
priorities and service objectives to be achieved.
|
|
|
|
|
Corporate Equality Policy
Statement
|
The Council is
committed to equality and to making fair treatment an important
part of everything which the Council does. This statement sets out
how the Council will achieve these aims.
|
|
Modern Slavery Statement
|
This statement sets out our actions
to understand all potential modern slavery risks related to our
business and to put in place steps that are aimed at ensuring that
there is no slavery or human trafficking in our own business or our
supply chains.
|
|
Health and Safety Policy
|
The health and safety policy
includes our financial and legal responsibilities and duties that
we have for the health, safety and welfare of our employees and
others affected by our activities.
|
|
Being Young in North
Yorkshire
Climate Change Strategy
|
The
North Yorkshire Safeguarding Children Partnership Strategy for
children and young people living in North Yorkshire.
The
Climate Change Strategy 2023-30 sets out how the Council will
respond to the climate emergency by: reducing greenhouse gas
emissions, preparing for the changing climate and supporting nature
to thrive.
|
|
Minerals and Waste
Plan
|
The
Council has a Joint Minerals and Waste Plan with City of York
Council and the North York Moors National Park Authority.
This has policies around where and how minerals are to be
extracted, land to be safeguarded, sites for waste treatment and
management and policies which manage the impacts of minerals and
waste projects on our environment.
|
|
Local Transport Plan
|
Set
of documents that the Government requires all local transport
authorities to produce. The plan sets out the Council’s plans
and strategies for maintaining and improving all aspects of the
local transport system over a set period of time.
|
|
Procurement and Contract Management
Strategy
|
Our
Procurement and Contract Management Strategy 2023-2029 sets out our
plan to achieve best value, efficient use of resources, use of
technology, innovation and practices and procedures to ensure we
make the best use of spending.
|
|
Joint Health and
Wellbeing
|
The joint
health and wellbeing strategy is produced by the health and
wellbeing board. It explains what health and wellbeing priorities
the board has set in order to tackle identified needs. It is not
about taking action on everything at once, but about setting
priorities for joint action and making a real impact on people's
lives.
|
|
Dignity in Care
People Strategy
|
The Dignity in
Care campaign aims to stimulate debate around the need for people
receiving care services to be treated with dignity and
respect.
Our People
Strategy 2023-25 is our workforce plan. It is a key building block
to ensure we will be in the best possible position to achieve our
ambitions as a new council and set us on strong foundations so we
can rise to current and new challenges that face us.
|
The Council must also abide by the Freedom of
Information Act 2000 – which intends to promote openness and
accountability among public bodies by ensuring that people have
rights of access to information that is held by them.
Under the General Data
Protection Regulation (GDPR) North Yorkshire Council is classified
as a ‘data controller’. This means the Council
has a duty of care towards the individuals whose personal data
it collects and uses.
TRADE UNIONS
20.
In order to comply with the Trade
Union (Facility Time Publication Requirements) Regulations 2017
please find below data relating to the employment of relevant union
officials by North Yorkshire Council for the year ended 31st March
2025.
|
Unions Recognised
|
UNISON
(Corporate)
|
NEU (was NUT/ATL) (Education)
|
ASCL
(Education)
|
NAHT
(Education)
|
NAS/UWT
(Education)
|
|
Number of relevant Union Officials
during the period
|
8
|
4
|
0
|
0
|
5
|
|
FTE of Union Officials during the
period
|
6.08
|
3.0
|
0.0
|
0.0
|
1.4
|
|
Percentage of working time spent on
facilities time
|
100%
|
100%
|
0
|
0
|
100%
|
|
Total cost of facility
time
|
£287,306
|
£151,882
|
0
|
0
|
£95,940
|
|
Total pay bill
|
£393,015,565
|
£194,770,465
|
0
|
0
|
£194,770,465
|
|
Percentage of pay bill for facility
time
|
0.07%
|
0.08%
|
0
|
0
|
0.05%
|
|
Paid trade union
activities:-
Percentage of the hours spent on
trade union activities
|
1.36%
|
0% - Voluntary
|
n/a
|
0% - voluntary
|
n/a
|
RISKS AND UNCERTAINTIES AFFECTING THE
COUNCIL
21.
This note identifies the principal
risks and uncertainties that are likely to impact on North Yorkshire Council together with the main trends
and factors likely to affect future development, performance and
the position of the Council. Many of these are financial and relate
to the ability of the Council to be able to provide statutorily
required services and meet public expectation against a background
of reducing financial resources.
The Corporate Risk Register is
included in the February 2025 Budget / Medium Term Financial
Strategy (MTFS) report and highlights the following
risks:-
-
Failure to
deliver the Council’s aim to achieve carbon neutrality of its
own operations by 2030, carbon neutrality of the region by 2034 and
a carbon negative region by 2040, and also ensure that appropriate
mitigations and adaptations are progressed, failure would result in
continued / increasing damaging events (e.g. floods, heat waves),
unmet public expectation and missed opportunities for energy spend
reduction;
-
Major disruption in care markets
results in being unable to meet the needs of vulnerable children,
adults and families who use services. This could be caused by
economic performance or resource capabilities including recruitment
and retention. The impact could include loss of trust in the Care
Markets, increased budgetary implications and inability to protect
service users from harm;
-
Ineffective information governance
and cyber security arrangements lead to unacceptable levels of
unauthorised disclosure of personal and sensitive data, poor
quality or delayed responses to FoI requests, and inability to
locate key data upon which the Council relies resulting in loss of
reputation, poor decision making, fine, etc (including Brierley
Group companies). Failure to put in place the appropriate
cyber security arrangements could potentially lead to breach, loss
of data, loss of systems, loss of reputation and inability to
operate effectively and discharge our responsibilities;
-
Failure to deliver a coherent NY
transformation programme which meets the needs of moving to the
Council’s Operating Model, LGR transition, transformation
service operational requirements and deliver the savings
requirements as a result of financial challenges;
-
Failure to comply with building and
housing legislation including asbestos, legionella, building
services and preparation for the new Social Housing Regulation Bill
resulting in potential injury or ill health, prosecution and
subsequent financial and reputational damage to the
council;
-
Failure to recruit and retain
appropriately skilled staff and have sufficient resources resulting
in inability to deliver services, key projects and the desired
organisational transformation also increased staff workload,
decreased morale and impact on staff wellbeing;
-
Failure to plan, respond to and
recover effectively from significant incidents in the community
resulting in risk to life and limb, impact on statutory
responsibilities, impact on financial stability and
reputation.
The February 2025 Budget / Medium
Term Financial Strategy (MTFS) report also sets out some of the key
financial risks, many of which are connected to those on the Risk
Register above, and warns that this should not be regarded as
exhaustive due to many national and local uncertainties.
Cost and demand
pressures – Whilst
headline inflation has reduced, the Council’s basket of goods
is still experiencing high inflationary pressure. This is for
a variety of reasons including national living wage and employer NI
costs, supply chain distress and some areas of insufficient supply
where price increases are exceptional, particularly for children
and adult placements. In addition, demand is still a strong
feature especially in home care for adults, social care for adults
of working age, SEND, home to school transport and children’s
social care.
Funding settlement and further
deterioration of national funding – the impending reform of national funding
presents a significant threat to the Council’s position as
many of its cost pressures are insufficiently reflected in the
government’s current focus on deprivation as a proxy for
demand.
Inability to deliver existing
savings whilst also looking for new savings
opportunities – the
Council plans to deliver over £52m worth of net savings over
the next three years and, at the same time, deliver
business-as-usual and service improvements. There is clearly a risk
therefore that some element of savings is not delivered. Resource
will need to be prioritised to ensure savings can be
delivered.
Workforce –
Insufficient resource to deal with
competing demands of the authority and inability to deliver service
and/or progress strategically important initiatives.
Financial assumptions
– the MTFS includes
assumptions around council tax levels and base; continuation of
core funding streams; business rates levels; pay; income levels and
inflation all of which carry a degree of uncertainty and risk
especially so close to a Spending Review and reform of local
government funding.
Legal
challenge– savings
proposals and the way in which the Council delivers services may be
subject to legal challenge from third parties resulting in delays
and additional costs.
Emergencies /
incidents –
incidents such as flooding, severe winters and cyber security will
incur additional costs which it is simply not possible to predict
and will compound costs and pressures.
Others including Schools /
DSG – increasing levels of deficit budgets and
unfunded additional responsibilities.
The on-going monitoring of the above and other
risks will be essential throughout 2025/26 as the demands on our
services and finances continue to grow.
WHITBY HARBOUR
22.
North Yorkshire Council is the
statutory harbour undertaker for Whitby Harbour, a responsibility
which it inherited from Scarborough Borough Council after LGR on 1
April 2023. In recent years, this has been the subject of
local opposition on the Councils’ treatment of income
received from the land in proximity to the harbour.
Following publication of the former
Scarborough Council’s draft 2015/16 Statement of Account, a
formal objection to the accounts was received from a local
elector. The objector questioned whether sections 16 and 17
of the Whitby Urban District Council Act 1905 required income
generated from land around Whitby Harbour, particularly land being
used for off street car parking, should be specifically ring-fenced
in earmarked reserves to fund harbour-related expenditure as
opposed to being held in the former Scarborough Borough
Council’s General Fund (as is presented in these
accounts). Similar objections were raised to the 2016/17,
2017/18, 2018/19, 2019/20, 2020/21, 2021/22, 2022/23 and 2023/24
accounts prepared by North Yorkshire Council.
After some delay in reaching a
determination on the objection, Mazars LLP (Mazars), the former
Scarborough Borough Council’s external auditors, issued their
Statement of Written Reasons to the elector and the authority on 26
March 2021.
In providing their Statement of
Reasons, Mazars stated that they considered whether it is more
likely than not that income from each of the car parks is revenue
received in respect of the harbour undertaking and whether the
former Scarborough Borough Council had failed to hold any surplus
funds from the Whitby harbour undertaking in earmarked reserves for
the improvement of Whitby harbour and inappropriately passed these
to the General Fund. Mazars concluded that it was not
proportionate or appropriate for the time being to take this any
further and therefore recommended that the former Scarborough
Borough Council seek a declaration from the Court as to the status
of the land in contention within 6 months of its Statement of
Reasons.
The former Scarborough Borough
Council accepted this recommendation on 23 July 2021. There
followed legal correspondence seeking clarification on the
recommendation which led to a revised recommendation being issued
by Mazars on 27 October 2021 as follows:
We recommend that the Council should
seek a declaration from the Court as to the status of the land in
contention, with a claim being issued by 31 December 2021. That is
to say, the Council should take proceedings to seek a ruling on the
land and property which comprises the statutory ‘harbour
undertaking’, and whether all income from activities
associated with that land and property is revenue received by the
Council in respect of the ‘harbour undertaking’. In the
event that the Court decides that any revenue is received by the
Council in respect of the ‘harbour undertaking’, the
Court should be invited to give a direction as to the rectification
of the accounts, including the financial years which should be
rectified.
The former
Scarborough Borough Council made an application to the High Court
on 31 December 2021, in accordance with the external
auditors’ recommendations, and the hearing took place in
March 2024. The judgment was handed down on 14 March 2025 and
the judge found in favour of the objector as
follows:
•
By virtue of the Whitby Urban District Council Act 1905, all income
and expenditure generated by land held for harbour purposes should
be credited to a separate harbour account, regardless of
use
•
Car parking is incidental to the main purposes of a harbour.
Revenue from exploiting harbour assets (rents etc) should be
ringfenced for harbour.
•
All of the disputed land (primarily car park land) is held for
harbour purposes
•
The separate harbour account should include all capital assets and
liabilities, not just revenue income and
expenditure
•
NYC ordered to pay objector’s legal costs (approx.
£168k)
Following
the judgment, the Council has reviewed the income and expenditure
that has been allocated to the harbour in each year from 2015/16 to
2024/25. The primary impact is that car parking income (and
expenditure) from a number of car parks in Whitby is to be
allocated to the Whitby Harbour account, along with property rental
income (and expenditure) generated by properties within the harbour
boundary. The overall impact for the years 2015/16 to 2024/25
inclusive is that a balance of £7,899k has been transferred to
the Whitby Harbour reserve. This must be spent on activities
and assets that fall within the harbour boundary, along with
in-year surpluses from 2025/26 onwards. Over the coming
years, there are a number of significant capital schemes that are
needed to repair and improve the harbour, which will now be funded
from this reserve rather than the Council’s wider General
Fund reserves.
Following
the court judgment, the same principles have been applied to
Scarborough Harbour. In this instance, the reallocation of
income and expenditure to the harbour account has been backdated to
2021/22, in line with the first instance of an objection being
raised against the treatment of Scarborough Harbour within the
former Scarborough Borough Council statement of account. The
cumulative financial impact of this review is that a total of
£1,088k has been transferred to the Scarborough Harbour
reserve in 2024/25. Again, there are a number of significant
capital schemes in different stages of planning, which will utilise
this funding and any future in-year surpluses in the first
instance, before calling on wider Council
funding.
Further
information is included within Note 41 to these
accounts
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF NORTH YORKSHIRE COUNCIL
Report on the audit
of the financial statements – North Yorkshire Pension
Fund
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Independent
auditor’s report to the Members of North Yorkshire
Council
Report on the audit of the financial
statements
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The Authority
is required to:
(a)
make arrangements for the proper
administration of its financial affairs and to ensure that one of
its officers has the responsibility for the administration of those
affairs. In this Authority, that officer is the Corporate Director
– Resources;
(b)
manage its affairs to secure
economic, efficient and effective use of resources and to safeguard
its assets; and
(c)
approve the Statement of
Accounts.
The Corporate
Director – Resources is responsible for the preparation of
the Authority's Statement of Accounts in accordance with proper
practices set out in the CIPFA/LASAAC Code of Practice on Local
Authority Accounting in the United Kingdom ('the Code').
In preparing
this Statement of Accounts, the Corporate Director –
Resources has:
(a)
selected suitable accounting
policies and then applied them consistently;
(b)
made judgements and estimates that
were reasonable and prudent; and
(c)
complied with the local authority
Code.
The Corporate
Director – Resources has also:
(a)
kept proper accounting records which
were up to date;
(b)
taken reasonable steps for the
prevention and detection of fraud and other
irregularities;
(c)
assessed the Authority’s and
the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern;
(d)
used the going concern basis of
accounting on the assumption that the functions of the Authority
and the Group will continue in operational existence for the
foreseeable future; and
(e)
maintained such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
CERTIFICATE OF THE CORPORATE DIRECTOR –
RESOURCES
I certify that
the Statement of Accounts 2024/25 presents a true and fair view of
the financial position of the Council and the North Yorkshire
Pension Fund at the accounting date and their income and
expenditure for the year ended 31st March 2025.
Gary
Fielding
Co-signed by,
Corporate
Director –
Resources
Richard Flinton
xxth xxxxxxx
2025
Chief Executive
xxth xxxxxxx 2025
CERTIFICATE OF THE AUDIT COMMITTEE
I confirm that
these Accounts were approved by the Audit Committee on xxth xxxxxxx
2025 following completion of
the External Audit.
Chair of the
Audit Committee
(to be signed
at the xx xxxxxxx 2025 Audit Committee Meeting)
1.
General
The purpose of this statement is to explain the
basis for the recognition, measurement and disclosure of
transactions and other events in the Accounts.
The authority is required to prepare an annual
statement of accounts by the Accounts and Audit Regulations
2015. These Accounts have been prepared in accordance with
The Code of Practice on Local Authority Accounting in the United
Kingdom 2024/25 (The Code): issued by the Chartered Institute
of Public Finance and Accountancy (CIPFA). The Code has
adopted International Financial Reporting Standards (IFRS) for
financial statements produced since 2010/11. The accounting
policies adopted have been used consistently throughout the current
and prior period unless stated otherwise. Any significant
non-compliance with The Code is disclosed as part of the relevant
financial statement.
The accounting convention adopted in
the statement of accounts is principally historical cost, modified
by the revaluation of certain categories of property, plant and
equipment and financial instruments.
The Code requires that a Local Authority’s
Statement of Accounts are prepared on a Going Concern basis.
This means that the accounts are based on the assumption that the
Council will continue in operational existence for the foreseeable
future.
2.
Property, Plant and
Equipment
Recognition
All expenditure on the acquisition, creation or
enhancement of Fixed Assets is capitalised on an accruals basis in
the Accounts. Expenditure is capitalised, provided that the asset
yields benefits to the Council, for a period of more than one year,
and it meets the accepted definition of capital expenditure in line
with IAS 16 Property, Plant and Equipment. This excludes
expenditure on routine repairs and maintenance which is charged
direct to revenue. A de-minimis level of £20k has been adopted
by the Council in relation to capital expenditure.
Measurement
Assets are initially measured at cost,
comprising all expenditure directly attributable to bringing the
asset into working condition for its intended use. Borrowing costs
incurred whilst assets are under construction are not
capitalised. Assets are valued on the basis required by The
Code and in accordance with the Appraisal and Valuation Standard
issued by The Royal Institution of Chartered Surveyors
(RICS). Asset Valuations are carried out on an agreed
on-going basis by an external land and property consultancy
organisation.
Assets are classified into the groupings
required by The Code with assets being valued on the following
basis:-
- Land and Buildings (other
property) are included in the Balance Sheet at Current Value, net
of any subsequent depreciation. Current value is determined
as the amount that would be paid for the asset in its existing use
(existing use value) for assets for which there is an active market
(e.g. offices) and Depreciated Replacement Cost (DRC) for assets
for which there is not an active market (e.g. schools). Where there
is an active market, current value is defined as the price that
would be received to sell an asset in an orderly transaction
between market participants at the measurement date. Land and
Buildings are re-valued sufficiently regularly to ensure that their
carrying amount is not materially different from their current
value at the year end, but as a minimum every five
years;
- Council dwellings are
included in the Balance Sheet at their existing use value for
social housing (EUV-SH);
- Surplus assets are not used for direct service
provision but do not yet meet the strict criteria to be classified
as assets held for sale. The current value measurement basis is
fair value, based on the price that would be received to sell an
asset in its highest and best use in an orderly transaction between
market participants at the measurement date;
- The vehicles, plant, furniture and equipment
recognised were either purchased outright and are all valued at
depreciated historical cost as a proxy for current value due to the
assets having short useful lives or low values (or both), or leased
in as finance leases under sale and leaseback arrangements and
included at the present value of the minimum lease
payments;
- Assets under the course of
construction are measured at historic cost.
A full Revaluation of Property is undertaken on
a five year “rolling programme”. A desk top review of
property not being revalued in any given year is also undertaken
annually to ensure valuations reflect a true and current view of
the carrying value of assets at the Balance Sheet date.
Council Dwellings are fully revalued as part of
a five-year programme to comply with Resource Accounting for the
Housing Revenue Account. In the intervening years the portfolio is
subject to annual 'desk top reviews' with material changes being
reflected in the year in which they occur. The next full
revaluation is due as at April 2025
A Revaluation Reserve for those Assets recorded
at current value is held in the Balance Sheet made up of unrealised
revaluation gains relating to individual Assets, with movements in
valuations being managed at an individual asset level. Any
decreases in value of an asset are recorded against the revaluation
reserve to the extent that a balance of accumulated gains is
recorded against the individual asset. Where the decrease in value
is in excess of any balance held within the Revaluation Reserve the
reduction is then charged to the relevant service line within the
Comprehensive Income and Expenditure Statement.
The Revaluation Reserve contains revaluation
gains recognised since 1st April 2007 only, the date of this
reserve’s formal implementation. Gains arising before that
date were subsequently consolidated into the Capital Adjustment
Account. Movement in the valuations of properties do not impact
upon the General Working Balance and are not a charge or credit to
Council Tax.
Impairment
Assets are assessed at each year end as to
whether there is any indication that an asset may be impaired.
Where indications exist and any possible differences are estimated
to be material, the recoverable amount of the asset is estimated
and, where this is less than the carrying amount of the asset, an
impairment loss is recognised for the shortfall.
Where impairment losses are identified, they are
accounted for by:-
- where there is a balance of
revaluation gains for the asset in the Revaluation Reserve, the
carrying amount of the asset is written down against that balance
(up to the amount of the accumulated gains); or,
- where there is no balance in
the Revaluation Reserve or an insufficient balance, the carrying
amount of the asset is written down against the relevant service
line(s) in the Comprehensive Income and Expenditure
Statement.
Where an impairment loss is reversed
subsequently, the reversal is credited to the relevant service
line(s) in the Comprehensive Income and Expenditure Statement, up
to the amount of the original loss, adjusted for depreciation that
would have been charged if the original loss had not been
recognised.
Disposal and Non-Current Assets Held for Sale
When it becomes probable an Asset will be sold
rather than the Council recovering the economic value through its
continuing use, it is reclassified as an Asset Held for Sale.
Assets Held for Sale are marketed with the expectation of disposal
within 12 months of the financial period end.
The asset is revalued before reclassification
and then measured at current value less costs to sell. Where there
is a subsequent decrease to current value less costs to sell, the
loss is charged to Other Operating Expenditure in the Comprehensive
Income and Expenditure Statement. Gains in current value are
recognised only up to the amount of any previous losses recognised
in the Surplus or Deficit on Provision of Services. Depreciation is
not charged on Assets Held for Sale.
Receipts from the disposal of Assets are
accounted for on an accruals basis. When an asset is disposed
of, the value of the asset in the Balance Sheet is written off to
the Other Operating Expenditure line of the Comprehensive Income
and Expenditure Statement, as is the disposal receipt. These
amounts are not a charge or receipt to Council Tax as the cost of
Fixed Assets is fully provided for under separate arrangements for
capital financing. The asset value written off is appropriated to
the Capital Adjustment Account, the capital receipt to the Usable
Capital Receipts Unapplied Reserve, via the Movement in Reserves
Statement. Any revaluation gains that have accumulated in the
Revaluation Reserve are transferred to the Capital Adjustment
Account.
Capital Receipts have been used to finance
capital expenditure based on the policy of the
Council. A proportion
of receipts relating to Housing Revenue Account dwellings
(buildings) is payable into a Government pool, based on a central
government formula.
Depreciation
Depreciation is provided for on all Property,
Plant and Equipment with a finite useful life (this can be
determined at the time of acquisition or revaluation) according to
the following policy:-
- Property assets are split
into three specific components; Land (which is not depreciated),
the Main Structure of the Building and the Mechanical and
Electrical Services of the Building. Each component is depreciated
separately at rates representative of their estimated remaining
useful lives. This is normally between ten and fifty
years.
- Vehicles, Plant, Furniture
and Equipment are depreciated over a number of years depending on
the nature of the asset. This is normally between four to six
years.
Depreciation is calculated on a straight line
basis with no residual value being assumed. Depreciation has been
charged in the year of asset acquisition and also in the year of
revaluation.
Depreciation is charged to the Comprehensive
Income and Expenditure Statement but does not impact on Council Tax
and is written off to the Capital Adjustment Account via the
Movement in Reserves Statement. Where non-current assets have
been re-valued the excess depreciation, above the historic cost
depreciation, is transferred from the Revaluation Reserve to the
Capital Adjustment Account.
2.1 Highways Infrastructure
Assets
Highways infrastructure assets include
carriageways, footways and cycle tracks, structures (eg bridges),
street lighting, street furniture (eg illuminated traffic signals,
bollards), traffic management systems and land which together form
a single integrated network.
Recognition
Expenditure on the acquisition or replacement of
components of the network is capitalised on an accrual basis,
provided that it is probable that the future economic benefits
associated with the item will flow to the authority and the cost of
the item can be measured reliably.
Measurement
Highways infrastructure assets are
generally measured at depreciated historical cost. However, this is
a modified form of historical cost – opening balances for
highways infrastructure assets were originally recorded in balance
sheets at amounts of capital undischarged for sums borrowed as at 1
April (1994 England and Scotland) (1996 Wales), which was deemed at
that time to be historical cost.
Where impairment losses are identified, they are
accounted for by the carrying amount of the asset being written
down to the recoverable amount.
Depreciation
Depreciation is provided on the
parts of the highways network infrastructure assets that are
subject to deterioration or depletion and by the systematic
allocation of their depreciable amounts over their useful lives.
Depreciation is charged on a straight-line basis.
Annual depreciation is the depreciation amount
allocated each year. Infrastructure is depreciated at rates
representative of their estimated remaining useful lives, covering
periods of 5 to 120 years.
Disposals and
derecognition
When a component of the network is disposed of
or decommissioned, the carrying amount of the component in the
Balance Sheet is written off to the “Other operating
expenditure” line in the Comprehensive Income and Expenditure
Statement, also as part of the gain or loss on disposal (i.e.
netted off against the carrying value of the asset at the time of
disposal).
The written off amounts of disposals are not a
charge against Council Tax, as the cost of non-current assets is
fully provided for under separate arrangements for capital
financing. Amounts are transferred to the Capital Adjustment
Account from the General Fund Balance in the Movement in Reserves
Statement.
3.
Heritage Assets
Heritage Assets are non-current assets that are
intended to be preserved in trust for future generations because of
their historical, artistic, scientific, technological, geophysical
or environmental qualities. They are held and maintained
principally for their contribution to knowledge and
culture.
It is anticipated that any acquisition of
Heritage Assets will be made by donation. Where an item is donated
and it is deemed appropriate, valuations will be sought from an
independent external valuer.
Heritage Assets are measured at valuation where
available and the asset is recognised within the Balance Sheet.
Valuations are reviewed with sufficient frequency to ensure
measurement remains current.
Where the Council considers that obtaining full
valuations for assets would involve a disproportionate cost in
comparison to the benefits to the users of the financial statements
the asset is not recognised in the Balance Sheet, but included in
the accounts as a disclosure. When reported on the Balance Sheet, Heritage
Assets are recognised and measured in accordance with the Council's
accounting policies on Property, Plant & Equipment, and for
property they are valued in accordance with the property Royal
Institution of Chartered Surveyors (RICS) guidance. Other
Heritage Assets, where a market value exists, the assets are valued
at current market value and where no market value exists they are
recognised at their insurance valuation.
Where Heritage Assets are held within the
Balance Sheet, the carrying amounts will be reviewed
where there is evidence of impairment i.e. where
an item has suffered physical deterioration or breakage or where
doubts arise to authenticity. Any impairment is recognised in
accordance with the Council’s general policies on
impairment.
If it is agreed to dispose of any Heritage
Assets the proceeds are accounted for in accordance with the
Council’s general provisions relating to the disposal of
Property, Plant and Equipment. Disposal proceeds are disclosed
separately in the notes to the financial statements and are
accounted for in accordance with statutory accounting requirements
for capital receipts.
Heritage Assets are not subject to depreciation
as they are considered to have indefinite lives.
4.
Investment
Property
Investment Properties are those that are used
solely to earn rentals and/or for capital appreciation. The
definition is not met if the property is used in any way to
facilitate the delivery of services or production of goods or is
held for sale.
Investment properties are measured initially at
cost and subsequently at fair value, being the price that would be
received to sell such an asset in an orderly transaction between
market participants at the measurement date.
Properties are not depreciated but
are revalued annually according to market conditions at the year
end. Gains and losses on revaluation are posted to the Financing
and Investment Income and Expenditure line in the Comprehensive
Income and Expenditure Statement. The same treatment is applied to
gains and losses on disposal. However, revaluation and
disposal gains and losses are not permitted by statutory
arrangements to have an impact on the General Working Balance. The
gains and losses are therefore transferred out of the General
Working Balance in the Movement in Reserves Statement and allocated
to the Capital Adjustment Account.
Rentals received in relation to Investment
Properties are credited to the Financing and Investment Income line
and result in a gain for the General Working Balance.
As a non‑financial asset an
investment property shall be measured at highest and best
use.
5.
Intangible Assets
Intangible Assets represent Non-Current Assets
that do not have physical substance, but are identifiable and are
controlled by the Council through custodial or legal rights.
All purchased Intangible Assets are capitalised at historical cost
in line with The Code.
Following initial capitalisation, Intangible
Assets are carried at its cost less any accumulated amortisation
and any accumulated impairment loss.
In line with other Non-Current Assets, their
useful economic life is determined based on the length of time that
the benefit will accrue to the Council. Based on the best
estimate of the useful economic life, the intangible asset is
charged to the relevant service lines within the Comprehensive
Income and Expenditure Statement over this period. This is for a
period of up to twenty-five years on a straight line
basis.
6.
Charges to Revenue for
non-current assets
Service Revenue Accounts, Support Services and
trading accounts are charged with the following amounts to record
the real cost of holding Fixed Assets throughout the
year:-
- depreciation attributable to
the assets used by the relevant service;
-
Revaluation losses where there are
no accumulated gains in the Revaluation Reserve for the impacted
asset against which said losses can be written off;
- impairment losses
attributable to non-current assets used by the service;
and
- amortisation of intangible
assets attributable to the service.
The Council does not raise Council Tax to cover
depreciation, impairment loss or
amortisations. The Council does, however,
make an annual contribution from revenue to reduce its borrowing
requirement (equal to approximately 4% of the Capital Financing
Requirement). Depreciation, impairment losses, amortisation
and gains or losses on the disposal of assets are therefore written
out of the General Working Balance via the Movement in Reserves
Statement, by way of an adjusting transaction within the Capital
Adjustment Account.
7.
Revenue Expenditure Funded from
Capital under Statute
Revenue Expenditure Funded from Capital under
Statute represents expenditure which may be properly capitalised,
but which does not result in the creation of any Fixed Asset to the
Council. In line with the guidance contained in The Code,
this expenditure is written off to the relevant service within the
Comprehensive Income and Expenditure Statement in the year the
expenditure is incurred, because the Council does not control the
economic benefits arising from this expenditure.
Any statutory provision that allows capital
resources to meet the expenditure shall be accounted for by
debiting the capital adjustment account and crediting the General
Fund balance and showing as a reconciling item in the Movement in
Reserves Statement.
8.
Long Term
Investments
The Council has equity instruments designated at
Fair Value through Other Comprehensive Income (FVOCI) which are its
investments in non-consolidated subsidiaries and joint
ventures. The Council has made an irrevocable election to
designate these equity instruments as FVOCI on the basis that these
are held for non-contractual benefits, not held exclusively for
trading but for strategic purposes. These assets were transferred
to the new category on 1 April 2018. The fair value of these long
term investments is based on the principle that they do not have a
quoted market price in an active market and there are no future
plans to sell these investments in the Council's companies and
joint ventures.
Other long term investments, in the form of
simple deposits with banks / building societies, are valued at
amortised cost using the effective interest rate method, in
accordance with IFRS 9.
9.
Accruals of Income and
Expenditure and Revenue Recognition
The Accounts of the Council are, in
general, maintained on an accruals basis in accordance with
recognised accounting policies. The Accounts reflect sums due to or
incurred by the Council during the year, whether or not the amount
has actually been received or paid in the year. Appropriate
provision has been made, therefore, for Creditors and Debtors at
31st March 2025.
Activity is accounted for in the year that it
takes place, not simply when cash payments are made or
received.
Revenue is defined as income arising
as a result of the Council’s normal operating
activities
and where income arises from
contracts with service recipients it is recognised when or as the
Council has satisfied a performance obligation by transferring a
promised good or service to the service recipient.
Revenue is measured as the amount of
the transaction price which is allocated to that
performance obligation.
Interest receivable on investments
and payable on borrowings is accounted for respectively as income
and expenditure on the basis of the effective interest rate for the
relevant financial instrument rather than the cash flows fixed or
determined by the contract unless the difference is
immaterial.
Supplies are recorded as expenditure
when they are consumed - where there is a gap between the date
supplies are received and their consumption, they are carried as
inventories on the Balance Sheet.
Expenses in relation to services
received (including services provided by employees) are
recorded as expenditure when the
services are received rather than when payments are
made.
Where revenue and expenditure have
been recognised but cash has not been received or paid, a Debtor or
Creditor for the relevant amount is recorded in the Balance Sheet.
Where debts may not be settled, the balance of Debtors is written
down and a charge made to revenue for the income that might not be
collected.
10.
Grants
Revenue grants are accrued and credited to
income in the period in which the conditions of the grant have been
complied with and there is reasonable assurance that the grant or
contribution will be received. Where this is in advance of
the related expenditure being incurred an Earmarked Reserve is
credited to reflect the expenditure commitments in future
years. Where the grant or contribution is for capital
purposes then the grant income is recognised in the year it is
received, although this is subject to any outstanding conditions
having been met. Capital Grant income recognised in the
Comprehensive Income and Expenditure Statement in advance of the
related expenditure is transferred to the Capital Grants Unapplied
Reserve. Amounts in the Capital Grants Unapplied Reserve are
transferred to the Capital Adjustment Account once they have been
applied to fund capital expenditure.
Monies advanced as grants and contributions for
which conditions have not been satisfied are carried on the Balance
Sheet as Creditors (Income in Advance).
This accounting treatment for grants is in
accordance with IAS 20 Accounting for Government Grant.
11.
VAT
Income and Expenditure transactions exclude any
amounts relating to VAT as all VAT collected is payable to HM
Revenue & Customs and all VAT paid is recoverable from
them.
12.
Leases
The Council, as lessee, has entered into leasing
arrangements of both an Operating and Finance Lease nature.
Where under IAS 17 Leases it is judged that substantially all of
the risks and rewards incidental to the ownership of an asset have
been transferred, then the lease is classified as a Finance
Lease. A Finance Lease gives rise to the recognition of the
Fixed Asset on the Balance Sheet together with a corresponding
liability for future payments. Rental payments made under a Finance
Lease are apportioned between a charge to write down the lease
liability within the Balance Sheet and an element for finance
charges, this is based upon the original rent payable on the lease
agreement.
The Council acts as the lessor on a number of
properties under Operating Lease arrangements (a lease which is not
classified as a Finance Lease as described above). Rental income is
credited to the cost of services on a straight-line basis over the
period of the lease.
The Council has reviewed its operational
contractual arrangements to determine whether any embedded leasing
of assets exists within these types of arrangements.
13.
Private Finance Initiative (PFI)
and Service Contracts
PFI contracts are fixed term agreements whereby
the Council receives a service from a PFI contractor and the
responsibility for making available the Fixed Assets needed to
provide the services passes to the PFI contractor. These
Fixed Assets are deemed to be owned by the Council
because:-
- the Council control the
services that are provided under its PFI schemes for the duration
of the fixed term contract; and
- ownership of the Assets pass
to the Council at the end of the contract for no additional
charge.
If the PFI arrangement meets the above two
criteria, it is the Accounting Policy of the Council to carry the
Assets used under this type of contract onto its Balance
Sheet. In addition the Council recognises a liability for
amounts due to the PFI operator to pay for those assets for the
duration of the PFI Contract.
The Assets associated with PFI Contracts, which
are recognised on the Balance Sheet are depreciated and revalued in
the same way as all other Property, Plant and Equipment directly
owned by the Council.
The amounts payable to the PFI contractor on an
annual basis for the provision of services are referred to as
Unitary Charges. The Unitary Charge is split into the following
elements:-
- payment for the provision of
day-to-day services during the year. These are charged to the
relevant directorate service headings in the Comprehensive Income
and Expenditure Statement;
- payment towards reducing the
liability associated with the cost of the Asset. This is included
within the annual Minimum Revenue Provision which the Council sets
aside to repay external debt and liabilities; and
- interest charges on the
outstanding Balance Sheet liability which are charged against
Interest Payable in the Comprehensive Income and Expenditure
Statement.
14.
Financial
Instruments
A Financial Instrument is defined as: “any
contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another”.
Although this covers a wide range of items, the main implications
are in terms of investments and borrowings.
As reflected in The Code, the accounting
standard on Financial Instruments, IFRS 9 covers the concepts of
recognition, measurement, presentation and
disclosure.
A financial asset or liability should be
recognised on the Balance Sheet when, and only when, the holder
becomes a party to the contractual provision of the
instrument.
Financial Assets
There are three main classes of
financial assets held by the Council which are measured
at:
·
Amortised cost
·
Fair value through profit and loss
(FVPL), and
·
Fair value through other
comprehensive income (FVOCI)
The Council largely holds investments to collect
contractual cashflows i.e. payments of interest and
principal. Most of the Councils financial assets are
therefore classified as amortised cost, except for those that are
not solely payment of principal and interest.
Financial Assets Measured at
Amortised Cost
Financial assets measured at
amortised cost are recognised on the Balance Sheet when the Council
becomes a party to the contractual provisions of a financial
instrument and are initially measured at fair value. They are
subsequently measured at their amortised cost. Annual credits to
the Financing and Investment Income and Expenditure line in the
Comprehensive Income and Expenditure Statement (CIES) for interest
receivable are based on the carrying amount of the asset multiplied
by the effective rate of interest for the instrument. For most of
the financial assets held by the Council, this means that the
amount presented in the Balance Sheet is the outstanding principal
receivable (plus accrued interest) and interest credited to the
CIES is the amount receivable for the year in the loan
agreement.
Any gains and losses that arise on
de-recognition of an asset are credited or debited to the Financing
and Investment Income and Expenditure line in the CIES.
Financial Assets Measured at Fair
Value through Profit or Loss (FVPL)
Financial assets that are measured
at FVPL are recognised on the Balance Sheet when the Council
becomes a party to the contractual provisions of a financial
instrument and are initially measured and carried at fair value.
Fair value gains and losses are recognised as they arrive in the
Surplus or Deficit on the Provision of Services. The Councils
current investments that fall under FVPL are in property funds and
are measured at market price, as quoted market prices exist for
this type of investment. As these gains or losses impact on
the General Fund balance, a statutory override has been agreed with
the Department for Levelling Up, Housing and Communities (DLUHC),
so any loss or gain is reversed and recorded in the Financial
Instruments Revaluation Reserve, unless funded from capital in
which case through the Capital Adjustments Account. Any gain
or loss will only be realised when the investments are
sold.
IFRS 9 Financial Instruments sets
out that investments in equity should be classified as fair value
through profit and loss unless there is an irrevocable election to
recognise changes in fair value through other comprehensive income.
The Council will assess each investment that falls in to this
category on an individual basis and assign an IFRS 9 category
(amortised cost, FVPL or FVOCI). The assessment will be based on
the underlying purpose for holding the financial
instrument.
Financial Assets Measured at Fair
Value through Other Comprehensive Income (FVOCI)
The Council has equity instruments
designated at Fair Value through Other Comprehensive Income (FVOCI)
which are its investments in non-consolidated subsidiaries and
joint ventures. The Council has made an irrevocable election
to designate these equity instruments as FVOCI on the basis that
these are held for non-contractual benefits, not held exclusively
for trading but for strategic purposes. These assets were
transferred to the new category on 1 April 2018. The fair value of
these long term investments is based on the principle that they do
not have a quoted market price in an active market and there are no
future plans to sell these investments in the Council's companies
and joint ventures. Dividend income is credited to Financing and
Investment Income and Expenditure in the Comprehensive Income and
Expenditure Statement when it becomes receivable by the
Council. If there is a change in fair value, this is posted
to Other Comprehensive Income and Expenditure and is balanced by an
entry in the Financial Instruments Revaluation Reserve. When
the asset is de-recognised, the cumulative gain or loss previously
recognised in Other Comprehensive Income and Expenditure is
transferred from the Financial Instruments Revaluation Reserve and
recognised in the Surplus or Deficit on the Provision of
Services.
Financial Liabilities
Financial liabilities are recognised
on the Balance Sheet when the Council becomes a party to the
contractual provisions of a financial instrument and are initially
measured at fair value and are carried at their amortised cost.
Annual charges to the Financing and Investment Income and
Expenditure line in the Comprehensive Income and Expenditure
Statement (CIES) for interest payable are based on the carrying
amount of the liability, multiplied by the effective rate of
interest for the instrument. The effective interest rate is the
rate that exactly discounts estimated future cash payments over the
life of the instrument to the amount at which it was originally
recognised.
For the borrowings that the Council
has, this means that the amount presented in the Balance Sheet is
the outstanding principal repayable (plus accrued interest); and
interest charged to the CIES is the amount payable for the year
according to the loan agreement. Gains and losses (discounts and
premiums) on the repurchase or early settlement of borrowing are
credited and debited to the Financing and Investment Income and
Expenditure line in the CIES. If the Council
decides to write off these gains or losses on early repurchase /
settlement then this can be done over 10 years or over the life of
the new loan or over a shorter more prudent time scale. The
CIES is charged with one year related costs with the rest being
taken to the Financial Instruments Adjustment Account in the
Balance Sheet via the Movement in Reserves Statement - General
Working Balance. The accounting policy is to charge gains and
losses to Net Operating Expenditure in the year of repurchase /
settlement.
However, where repurchase has taken
place as part of a restructuring of the loan portfolio that
involves the modification or exchange of existing instruments, the
premium or discount is respectively deducted from or added to the
amortised cost of the new or modified loan and the write-down to
the CIES is spread over the life of the loan by an adjustment to
the effective interest rate. Please note that this situation has
not occurred and is not reflected in the current Statement of
Accounts and is unlikely to occur in the future.
Expected Credit Loss
Model
The Council recognises expected
credit losses on all of its financial assets held at amortised cost
and these measured at Fair Value through other Comprehensive Income
where relevant and where material. Expected Credit losses are
measured by multiplying the total value of the investment by the
financial institution's risk of default, as provided by our
independent Treasury advisors.
Impairment losses are calculated to
reflect the expectation that the future cash flows might not take
place because the borrower or investee could default on their
obligations. Credit risk plays a crucial part in assessing losses.
Where risk has increased significantly since an instrument was
initially recognised, losses are assessed on a lifetime basis.
Where risk has not increased significantly or remains low, losses
are assessed on the basis of 12-month expected losses.
Soft Loans
The Council has the power to advance loans to
Voluntary Organisations at less than market rates (soft loans).
When soft loans are made, a loss is recorded in the Comprehensive
Income and Expenditure Statement, charged to the relevant service,
for the present value of the interest that will be foregone over
the life of the instrument, resulting in a lower amortised cost
than the outstanding principal. Interest is credited at a
marginally higher effective rate of interest than the rate
receivable from the Voluntary Organisations, with the difference
serving to increase the amortised cost of the loan in the Balance
Sheet. Statutory provision requires that the impact of soft loans
on the General Working Balance is the interest receivable for the
financial year. The reconciliation of amounts debited and credited
to the Comprehensive Income and Expenditure Statement to the net
gain required against the General Working Balance is managed by a
transfer to or from the Financial Instruments Revaluation Reserve
in the Movement in Reserves Statement.
15.
Inventories
Inventories have been included in the Accounts
at weighted average cost price. Any obsolete and slow moving
items are written off during the year and netted off against the
value of the inventories shown in the Balance Sheet. No
amounts are included for such items as inventories at Health and
Adult Services residential homes, and inventories at special
schools and outdoor education centres. It is considered that
exclusion of these items does not have a material effect on the
values stated.
16.
Allocation of Support Services
Costs
The costs of Support Services provided by
Corporate Service Units have been allocated to the relevant Traded
Services largely on the basis of the estimated time spent by
officers. A proportion of the costs relating to the Central
Services Directorate have been charged to the North Yorkshire
Pension Fund in respect of the administration of the
Fund.
17.
Provisions, Contingent
Liabilities and Contingent Assets
Provisions
Provision has been made against relevant
services within the Comprehensive Income and Expenditure Statement
for liabilities that have been incurred by the Council, but where
the amounts or dates on which they will arise are
uncertain.
Provisions are required to be recognised when
the Council has a present obligation, as a result of a past event,
where it is probable that a transfer of economic benefits will be
required to settle the obligation and a reliable estimate can be
made of the amount of the obligation, (IAS 37 Provisions,
Contingent Liabilities and Contingent Assets).
When expenditure is incurred to which the
provision relates, it is charged directly against the provision in
the Balance Sheet and not against the Comprehensive Income and
Expenditure Statement.
The estimated value and timing of settlements
are reviewed at the end of each financial year. Where it
becomes more likely than not that a transfer of economic benefits
will not now be required (or a lower settlement than anticipated is
made), the provision is reversed and credited back to the relevant
service within the Income and Expenditure Statement.
Where some or all of the payment required to
settle a provision is expected to be met by another third party
(e.g. from an insurance claim), this is only recognised as income
in the relevant service Revenue Account if it is virtually certain
that reimbursement will be received if the obligation is
settled.
Contingent Liabilities
A Contingent Liability arises where an event has
taken place that gives the Council a possible obligation whose
existence will only be confirmed by the occurrence or otherwise of
uncertain future events not wholly within the control of the
Council. Contingent Liabilities also arise in circumstances where a
provision would otherwise be made but either it is not probable
that an outflow of resources will be required or the amount of the
obligation cannot be measured reliably. Contingent Liabilities are
not recognised in the Balance Sheet but disclosed in a Note to the
Core Financial Statements.
Contingent Assets
A Contingent Asset arises where an event has
taken place that gives the Council a possible asset whose existence
will only be confirmed by the occurrence or otherwise of uncertain
future events not wholly within the control of the Council.
Contingent Assets are not recognised in the Balance Sheet but
disclosed in a Note to the Core Financial Statements where it is
probable that there will be an inflow of economic benefits or
service potential.
18.
Reserves
The Council maintains separate balances for the
General Fund and Housing Revenue Account to or from which
appropriations are made for annual surpluses or
deficits.
The Council also holds reserves earmarked for
specific purposes which are detailed in note 34b to 34d in the
Notes to the Core Financial Statements. These reserves
together with the Capital Grant Unapplied Reserve and Capital
Receipts Unapplied Reserve are deemed to be distributable reserves,
which can be utilised to support future expenditure.
Under arrangements for Local Management of
Schools (LMS), budget allocations are made to individual
establishments at the start of each financial year. Any
under-spends or over-spends against budget allocations are carried
forward into the following financial year's budget allocation by
way of the LMS reserve.
When expenditure to be financed from a reserve
is incurred, it is charged to the appropriate Service Income and
Expenditure heading in that year and represents a charge against
the Net Cost of Services. The reserve is then appropriated back
into the General Fund Balance statement so that there is no net
charge against Council Tax for the expenditure.
Non-distributable (unusable) reserves include
the Revaluation Reserve, the Capital Adjustment Account, the
Pension Reserve, the Accumulated Absences Reserve, Financial
Instruments revaluation Reserve, DSG Adjustment Account and the
Collection Fund Adjustment Account Reserve. These represent
“technical non-cash” reserves which are maintained to
manage the accounting processes and other statutory accounting
adjustments under regulations. These reserves do not represent
usable resources available to the Council or impact upon the level
of local taxation and are not able to be utilised in support of
service delivery.
19.
Pensions
The pension liabilities of the Council are to be
accounted for using IAS 19 principles. The Council
participates in three different pension schemes which meet the
needs of employees in particular services. The three schemes
are:-
- The Local Government Pension
Scheme, administered by the Council;
- The Teachers’ Pension
Scheme administered by Capita Teachers’ Pension on behalf of
the Department for Education; and
-
The NHS Pension Scheme administered
by the NHS Business Services Authority on behalf of the Department
of Health and Social Care.
All three schemes provide members with defined
benefits related to pay and service. However, the arrangements for
the teachers’ scheme and the NHS scheme mean that liabilities
for these benefits cannot be identified specifically to the
Council. These schemes are therefore accounted for as if they are
defined contribution schemes and no future liability for future
payments or benefits is recognised in the Balance Sheet.
The Local Government Pension Scheme
The Local Government Scheme is accounted for as
a defined benefit pension scheme. In line with the accounting
policies outlined in The Code, the Council has complied with the
requirements of IAS 19 Employee Benefits and in
particular:-
- the assets of each scheme
are measured at fair value;
- the attributable liabilities
of each scheme are measured on an actuarial basis;
- quoted securities and
unitised securities are measured at current bid-price, unquoted
securities are measured using a professional estimate;
- the scheme liabilities are
discounted at a rate based upon long dated, AA rated, corporate
bonds which reflects the time value of money and the characteristic
of the liability;
- the deficit in the scheme is
the shortfall of the value of assets over the present value of
liabilities;
- the interest cost is the
allowance for one year’s worth of the discount on the
liabilities “unwinding” as the liabilities at the start
of the period are one year closer to payment;
- the current service cost is
the increase in liabilities as a result of years of service earned
this year – allocated in the Comprehensive Income and
Expenditure Statement to the services for which the employees
worked;
-
remeasurement of liabilities arises
from changes in financial assumptions and demographic assumptions,
as well as adjustments following the detailed analysis at each
triennial valuation;
-
settlements and curtailments are the
increase or decrease in liabilities arising from current decisions
where the effect relates to years of service earned in earlier
years and is charged or credited to the Net Cost of Services in the
Comprehensive Income and Expenditure Statement;
-
interest on assets is the expected
one year’s growth of the assets held at the start of the
year;
-
remeasurement of assets reflects the
difference between actual and expected growth of assets over the
year, as well as adjustments following each triennial valuation;
and
-
administration
expenses are the costs of running the Fund attributable to the
Council. In relation to retirement benefits, statutory provisions
require the General Fund balance to be charged with the amount
payable by the authority to the pension fund or directly to
pensioners in the year, not the amount calculated according to
the relevant accounting standards. In the Movement in Reserves
Statement, this means that there are transfers to and from the
pensions reserve to remove the notional debits and credits for
retirement benefits and replace them with debits for the cash
paid to the pension fund and pensioners and any such amounts
payable but unpaid at the year-end. The negative balance that
arises on the pensions reserve thereby measures the beneficial
impact to the General Fund of being required to account for
retirement benefits on the basis of cash flows rather than as
benefits are earned by employees.
20.
Trust Funds Administered by the
Council
Trust Funds administered by the Council have not
been included in the Balance Sheet, in accordance with the
provisions of The Code.
21.
Group Accounts
The Council has financial relationships with a
number of entities and partnerships and, as a result, is required
to prepare Group Accounts in addition to its main financial
statements. In preparing Group Accounts the Council has followed
CIPFA guidance and in general, the following policies have been
applied:-
- all financial relationships
within the scope of Group Accounts have been assessed;
- subsidiary company statutory
accounts have been prepared under UK GAAP (FRS101), this may give
rise to inconsistent accounting treatments to those applied within
the Council’s accounts. Where material differences in the
accounting treatment applied within subsidiaries are identified the
subsidiary accounts are aligned with the accounting policies of the
Council prior to consolidation;
- Associates and Joint
Ventures have been accounted for in line with the provisions of IAS
28 Investment in Associates and IAS 31 Interest in Joint
Ventures;
- the Council has made an irrevocable election to
designate these equity instruments as FVOCI on the basis that these
are held for non-contractual benefits, not held exclusively for
trading but for strategic purposes; and
- financial interests that do
not have a material impact on the Group Accounting Statements have
not been consolidated.
22.
Council Tax and Non-Domestic
Rates (NDR) Income
The Local Government Finance Act 2012 introduced
a business rates retention scheme from 1st April 2013 that enables
local authorities to retain a proportion of non-domestic rates
generated in their area.
Council Tax Income
North Yorkshire Council is a billing authority
and is required by statute to maintain a separate fund for the
collection and distribution of amounts due in respect of council
tax and non-domestic rates. The Fund's key features relevant to
accounting for council tax in the core financial statements are
detailed below.
In its capacity as a billing authority the
Council acts as an agent: it collects and distributes Council Tax
income on behalf of the major preceptors and itself. The major
preceptors are North Yorkshire Police, North Yorkshire Fire and
Rescue Authority and the North Yorkshire Police, Fire and Crime
Commissioner.
While the Council Tax income for the year
credited to the Collection Fund is the accrued income for the year,
regulations determine when it should be released from the
Collection Fund and transferred to the General Fund of the billing
authority or paid out of the Collection Fund to major preceptors.
The amount credited to the General Fund under statute is the
Council's precept or demand for the year plus the Council's share
of the surplus on the Collection Fund for the previous year or less
its share of the deficit on the Collection fund for the previous
year; and this amount may be more or less than the accrued income
for the year in accordance with GAAP, although in practice the
difference would usually be small.
Council Tax income included in the Comprehensive
Income and Expenditure Statement for the year is the accrued income
for the year. The difference between the income included in
the Comprehensive Income & Expenditure Account and the amount
required by regulation to be credited to the General Fund is taken
to the Collection Fund Adjustment Account and included as a
reconciling item in the Movement in Reserves Statement.
Since collection of Council Tax is in substance
an agency arrangement, the cash collected by the Council as billing
authority from Council Tax debtors belongs proportionately to the
billing authority and the major preceptors. There will therefore be
a debtor/creditor position between the billing authority and each
major preceptor to be recognised since the net cash paid to each
major preceptor in the year will not be its share of cash collected
from Council Tax payers.
If the net cash paid to a major preceptor in the
year is more than its proportionate share of net cash collected
from Council Tax debtors/creditors in the year the Council as
billing authority shall recognise a debit adjustment for the amount
overpaid to the major preceptor in the year and the major preceptor
shall recognise a credit adjustment for the same amount to the
debtor/creditor position between them brought forward from the
previous year.
If the cash paid to a major preceptor is less
than its proportionate share of net cash collected in the year from
Council Tax debtors/creditors the Council as billing authority
shall recognise a credit adjustment for the amount underpaid to the
major preceptor in the year and the major preceptor shall recognise
a debit adjustment for the same amount to the debtor/creditor
position between them brought forward from the previous
year.
The Cash Flow Statement of the Council includes
in Revenue Activities cash flows only of its own share of Council
Tax net cash collected from Council Tax debtors in the year; and
the amount included for precepts paid excludes amounts paid to
major preceptors. The difference between the major preceptors'
share of the net cash collected from Council Tax debtors and net
cash paid to major preceptors as precepts and settlement of the
previous year's surplus or deficit on the Collection Fund is
included as a net increase/decrease in other liquid
resources.
The Balance Sheet includes the Authority's share
of the end of year balances in respect of council tax relating to
arrears, impairment allowances for doubtful debts, overpayments and
prepayments and appeals. Where debtor balances for the above
are identified as impaired arising from a past event that payments
due under the statutory arrangements will not be made, the asset is
written down and a change made to the taxation and non-specific
grant income and expenditure line in the CIES. The impairment loss
is measured as the difference between the carrying amount and the
revised future cash flows.
Non-Domestic Rates (NDR)
Income
With effect from 1 April 2013 the Government's
localisation of business rates was introduced and the financing and
accounting arrangements for NDR billing and income collection were
changed. The following policy applies from 1 April 2013.
North Yorkshire Council is a billing authority
and as such is required by statute to maintain a separate fund for
the collection and distribution of amounts due in respect of
council tax and non-domestic rates.
In its capacity as a billing authority the
Council acts as an agent: it collects and distributes NDR income on
behalf of the government, major preceptors and itself. The major
preceptors are North Yorkshire Police, North Yorkshire Fire and
Rescue Authority and the North Yorkshire Police, Fire and Crime
Commissioner.
While the NDR income for the year credited to
the Collection Fund is the accrued income for the year, regulations
determine when it should be released from the Collection Fund and
transferred to the General Fund of the billing authority or paid
out of the Collection Fund to the government and major preceptors.
The amount credited to the General Fund under statute is the
Council's pre-determined share for the year plus the Council's
share of the surplus on the Collection Fund for the previous year
or less its share of the deficit on the Collection fund for the
previous year; and this amount may be more or less than the accrued
income for the year, although in practice the difference would
usually be small.
NDR income included in the Comprehensive Income
and Expenditure Statement for the year is the accrued income for
the year.
The difference between the income included in
the Comprehensive Income & Expenditure Account and the amount
required by regulation to be credited to the General Fund is taken
to the Collection Fund Adjustment Account and included as a
reconciling item in the Movement in Reserves Statement.
Since collection of NDR is in substance an
agency arrangement, the cash collected by the Council as billing
authority from NDR debtors belongs proportionately to the billing
authority, the government and the major preceptors. There will
therefore be a debtor/creditor position between the billing
authority and the government and each major preceptor to be
recognised since the net cash paid to the government and each major
preceptor in the year will not be its share of cash collected from
NDR payers.
Of the net cash paid to the government and the
major preceptors in the year is more or less than its proportionate
share of net cash collected from NDR debtors/creditors in the year,
then the Council as billing authority shall recognise either a
debit or credit adjustment for the amount over or underpaid to the
government and major preceptors in the year and the government and
major preceptors shall recognise a credit or debit adjustment for
the same amount to the debtor/creditor position between them
brought forward from the previous year.
The Council’s Cash Flow Statement only
includes the Council’s share of NDR net cash flows; and the
amount included for precepts paid excludes amounts paid to the
government and major preceptors. The difference between the
government and major preceptors' share of the net cash collected
from NDR debtors and net cash paid to the government and major
preceptors is included as a net increase/decrease in other liquid
resources.
The Balance Sheet includes the Authority's share
of the end of year balances in respect of NDR relating to arrears,
impairment allowances for doubtful debts, overpayments and
prepayments and appeals. Where debtor balances for the above
are identified as impaired arising from a past event that payments
due under the statutory arrangements will not be made, the asset is
written down and a change made to the taxation and non-specific
grant income and expenditure line in the CIES. The impairment loss
is measured as the difference between the carrying amount and the
revised future cash flows.
23.
Cash and Cash
Equivalents
Cash is represented by cash in hand and deposits
with financial institutions repayable without penalty on notice of
not more than 24 hours.
Cash Equivalents are short term investments that
are of a highly liquid nature. The Council has deemed that
deposits held within call accounts and other short term investments
that have a deposit term of one month or under and are held for the
purposes of meeting short term cash commitments are categorised as
Cash Equivalents.
In the Cash Flow Statement, Cash and Cash
Equivalents are shown net of bank overdrafts that are repayable on
demand where there is a right of offset.
24.
Short Term Compensated Employee
Benefits
The Council in accordance with IAS 19 makes
accruals for short term employee compensated absences such as
untaken holiday pay and accumulated flexi time at the period end.
These balances are recognised as Provisions and under statutory
guidance an offsetting balance is included within the reserves
section of the Balance Sheet.
Short term employee benefits are those due to be
settled within 12 months of the year end. They include such
benefits as wages and salaries, paid annual leave and paid sick
leave, bonuses and non-monetary benefits for current employees and
are recognised as an expense for services in the year in which
employees render service to the Council. An accrual is made for the
cost of holiday entitlements (or any form of leave e.g. time off in
lieu, flexi balances) earned by employees but not taken before the
year end which employees can carry forward into the next financial
year. The accrual is charged against the Provision of Services, but
then reversed out through the Movement in Reserves Statement so
that holiday benefits are ultimately charged to revenue in the
financial year in which the holiday absence occurs.
25.
Exceptional items
When items of income and expenditure are
material, their nature and amount is disclosed separately, either
on the face of the Comprehensive Income and Expenditure Statement
or in the Notes to the Core Financial Statements, depending on how
significant the items are to an understanding of the
Council’s financial performance.
26.
Prior Period Adjustments, Changes
in Accounting Policies and Estimates and Errors
Prior period adjustments may arise as a result
of a change in accounting policies or to correct a material error.
Changes in accounting estimates are accounted for prospectively,
i.e. in the current and future years affected by the change and do
not give rise to a prior period adjustment.
Changes in accounting policies are only made
when required by proper accounting practices or the change provides
more reliable or relevant information about the effect of
transactions, other events and conditions on the Council’s
financial position or financial performance. Where a change is
made, it is applied retrospectively (unless stated otherwise) by
adjusting opening balances and comparative amounts for the prior
period as if the new policy had always been applied.
Material errors discovered in prior period
figures are corrected retrospectively by amending opening balances
and comparative amounts for the prior period.
27.
Events After the Balance Sheet
Date
Events after the balance sheet date are those
events, both favourable and unfavourable, that occur between the
end of the reporting period and the date when the Statement of
Accounts is authorised for issue. Two types of events can be
identified:-
- those that provide evidence
of conditions that existed at the end of the reporting period - the
Statement of Accounts is adjusted to reflect such events;
and
- those that are indicative of
conditions that arose after the reporting period - the Statement of
Accounts is not adjusted to reflect such events, but where a
category of events would have a material effect, disclosure is made
in the notes of the nature of the events and their estimated
financial effect.
Events taking place after the date of
authorisation for issue are not reflected in the Statement of
Accounts.
28.
Jointly Controlled Operations and
Jointly Controlled Assets
Jointly controlled operations are activities
undertaken by the Council in conjunction with other ventures that
involve the use of the assets and resources of the ventures rather
than the establishment of a separate entity. The Council recognises
in its Balance Sheet the assets that it controls and the
liabilities that it incurs and debits and credits the Comprehensive
Income and Expenditure Statement with the expenditure it incurs and
the share of income it earns from the activity of the
operation.
Jointly controlled assets are items of Property,
Plant or Equipment that are jointly controlled by the Council and
other venturers, with the assets being used to obtain benefits for
the ventures. The joint venture does not necessarily involve the
establishment of a separate entity. The Council accounts for only
its share of the jointly controlled assets, the liabilities and
expenses that it incurs on its own behalf or jointly with others in
respect of its interest in the joint venture and income that it
earns from the venture.
29.
Schools
The Code confirms that the balance
of control for Local Authority maintained schools (i.e. those
categories of school identified in the School Standards and
Framework Act 1998, as amended) lies with the Local Authority. The
Code also stipulates that those schools’ assets, liabilities,
reserves and cash flows are recognised in the Local Authority
financial statements (and not the Group Accounts). Therefore
schools’ transactions, cash flows and balances are recognised
in each of the financial statements of the Council as if they were
the transactions, cash flows and balances of the
Council.
30.
Termination
Benefits
Termination benefits are amounts payable as a
result of a decision by the Council to terminate an officer's
employment before the normal retirement date or an officer's
decision to accept voluntary redundancy in exchange for those
benefits. They are charged on an accruals basis at year-end, to the
appropriate service in the Comprehensive Income and Expenditure
Statement at the point where either the Council can no longer
withdraw the offer of those benefits or when the Council recognises
costs for a restructuring. Where termination benefits involve the
enhancement of pensions, the General Fund Balance is charged with
the amount payable by the Council to the pension fund or pensioner
in the year, not the amount calculated according to the relevant
accounting standards. In the Movement in Reserves Statement,
adjustments are made to and from the Pensions Reserve, to remove
the notional debits and credits for pension enhancement termination
benefits and replace them with debits for the cash paid to the
pension fund and pensioners and any such amounts payable but unpaid
at the year-end.
COMPREHENSIVE INCOME
AND EXPENDITURE STATEMENT (continued)
This statement shows the accounting cost in the
year of providing services in accordance with generally accepted
accounting practices, rather than the amount to be funded from
taxation. Authorities raise taxation to cover expenditure in
accordance with statutory requirements; this may be different from
the accounting cost. The taxation position is shown in both the
Expenditure and Funding Analysis and the Movement in Reserves
Statement.
This statement
shows the movement from the start of the year to the end on the
different reserves held by the Council, analysed into ‘Usable
Reserves’ (ie those that can be applied to fund expenditure
or reduce local taxation) and other ‘Unusable
Reserves’. The Movement in Reserves Statement shows how the
movements in year of the Council’s reserves are broken down
between gains and losses incurred in accordance with generally
accepted accounting practices and the statutory adjustments
required to return to the amounts chargeable to Council Tax for the
year. The net increase / decrease line shows the statutory General
Fund balance movement in the year following those
adjustments.
MOVEMENT IN RESERVES STATEMENT (continued)
BALANCE SHEET AS AT
31ST MARCH 2025 (continued)
The Balance
Sheet shows the value as at the Balance Sheet date of the Assets
and Liabilities recognised by the Council. The net Assets of the
Council (Assets less Liabilities) are matched by the Reserves held
by the Council.
Reserves are
reported in two categories. The first category of Reserves are
Usable Reserves, ie those Reserves that the Council may use to
provide services, subject to the need to maintain a prudent level
of Reserves and any statutory limitations on their use (for example
the Capital Receipts Reserve that may only be used to fund Capital
Expenditure or repay debt). The second category of Reserves are
those that the Council is not able to use to provide services. This
category of Reserves includes Reserves that hold unrealised gains
and losses (for example the Revaluation Reserve), where amounts
would only become available to provide services if the Assets are
sold, and Reserves that hold timing differences shown in the
Movement in Reserves Statement line ‘Adjustments between
accounting basis and funding basis under
regulations’.
CASH FLOW STATEMENT
(continued)
The Cash Flow
Statement shows the changes in Cash and Cash Equivalents of the
Council during the reporting period. The statement shows how the
Council generates and uses Cash and Cash Equivalents by classifying
Cash Flows as Operating, Investing and Financing Activities. The
amount of net Cash Flows arising from Operating Activities is a key
indicator of the extent to which the operations of the Council are
funded by way of Taxation and Grant Income or from the recipients
of services provided by the Council. Investing activities represent
the extent to which cash outflows have been made for resources
which are intended to contribute to the Council’s future
service delivery. Cash Flows arising from Financing Activities are
useful in predicting claims on future Cash Flows by providers of
Capital (ie borrowing) to the Council.
1.
Prior Period Adjustments
There have been no prior period
adjustments.
2.
Accounting Standards that have been issued but have not yet been
adopted
Accounting Standards that have been issued but
not yet adopted by the CIPFA Code of Practice are:
-
IAS 21 The Effects
of Changes in Foreign Exchange Rate (Lack of Exchangeability)
issued in August 2023. The amendments to IAS 21 clarify how an
entity should assess whether a currency is exchangeable and how it
should determine a spot exchange rate when exchangeability is
lacking, as well as require the disclosure of information that
enables users of financial statements to understand the impact of a
currency not being exchangeable.
-
IFRS 17 Insurance
Contracts issued in May 2017. IFRS 17 replaces IFRS 4 and sets out
principles for recognition, measurement, presentation and
disclosure of insurance contracts.
-
The changes to the
measurement of non-investment assets within the 2025/26 Code
include adaptations and interpretations of IAS 16 Property, Plant
and Equipment and IAS 38 Intangible Assets. These include setting
out three revaluation processes for operational property, plant and
equipment, requiring indexation for tangible non-investment assets
and a requirement to value intangible assets using the historical
cost approach.
Any impact on the Statement of Accounts will be
assessed at the time of adoption by the CIPFA Code of Practice, but
based on our initial assessment we expect the adoption of the above
standards to be either not relevant to the Council or that any
impact will not be material.
3.
Critical Judgements in applying Accounting Policies
In applying the accounting policies as set out
at the Statement of Accounting Polices the Council has had to make
critical judgements about complex transactions and those involving
uncertainty about future events (sensitivity analysis relating to
changes to specific critical judgements are included where
appropriate) :-
-
in the current economic environment
there continues to be a degree of uncertainty about future levels
of funding for local government. The Council continues to review
the provision of services by the Authority, in response to known
and forecast future funding reductions. In 2024/25 funding from
Central Government (Dedicated Schools Grant, Other Specific Grants,
Uniform Business Rates proceeds and Capital Grants) totalled
£xxx.xm. A change
in this funding of 1% is equivalent to £x.xm. There will be no risk to the
going concern status of the council and statutory services will
continue to be delivered;
-
the Council, via its external
valuer, has conducted an impairment review on land and property
assets not being revalued in 2023/24, as set out in Disclosure Note
19 – Valuation of Non-Current Assets. As a result of this
impairment review, it has been concluded no material impairment has
occurred. If any material impairment had occurred, a 1%
decrease in asset values would reduce the closing NBV on the
Council’s balance sheet by £xx.xm;
-
xx
schools transferred to Academy
Status in 2024/25. It is the Council’s policy to exclude
academy schools from its Balance Sheet as it does not retain
sufficient control over the schools service provision to warrant
the recognition of the school as an asset. Typically the land and
buildings of schools that transfer to academy status are
transferred to the Academy Trust under a 125 year lease at a
peppercorn rent. The value of the Council’s balance sheet
would have been £xx.xm
higher if the xx schools had not been removed. Further schools may
transfer to Academy Status in 2025/26;
-
the Council does not recognise the
Property of Voluntary-aided and Voluntary-controlled Schools
(except where title of the land and buildings is held by the
Council) located on the Balance Sheet. It has been determined that
this property is held by the Trustees of the relevant schools. The
voluntary aided and voluntary controlled schools had a combined NBV
of £xx.xm.
Although the current value of these schools is not known this
valuation provides an indication of the additional value that would
have been recorded on the Council’s balance sheet if the
schools had not been removed;
-
The Council irrevocably elected to
carry the value of its investment in its Group Companies at
amortised cost as it is not possible to revalue these investments
on an annual basis because they are neither marketable or
available-for-sale equity; nor is it possible to obtain a reliable
market estimate of the net worth of the investments. A 1% increase
in the value of these investments would equate to
£xx.xk.
-
judgement is required to determine
whether the Council can be reasonably assured that the conditions
of grant and contribution income received have been met before
recognising them as income in the Comprehensive Income and
Expenditure Statement. Where conditions require specified
expenditure to have taken place, the grant monies will not be
recognised until this has happened. Equally where conditions
specify that a grant or contribution must be re-paid in the event
of non-expenditure, the income is not recognised until the
conditions of the grant have been met; and
-
The Code requires the Council to
consider the classification of leases between the categories of
finance and operating on an annual basis. An element of
judgement is required to make the assessment in line with best
practice. The Code defines a finance lease as a lease that
transfers substantially all the risks and rewards incidental to
ownership of an asset and the title may or may not be eventually
transferred. An operating lease is defined as a lease other
than a finance lease. As per disclosure note 13 – Leases, the
Council currently has commitments to make payments under operating
leases in future years of £xxm. If 1% of the value of these
commitments had been classified as finance leases, the combined
total of current and long term liabilities on the Council’s
Balance Sheet would increase by £x.xk.
4.
Assumptions Made About the Future and Other Major Sources of
Uncertainty
The Statement of Accounts contains estimated
figures that are based upon assumptions made by the Council about
the future or that are otherwise uncertain. Estimates are made
taking into account historical experience, current trends and other
relevant factors.
Pension Liability
Estimation of the net liability to pay pensions
depends upon a number of complex judgements relating to the
discount rate used, the rate at which salaries are projected to
increase, mortality rates and expected returns on pension fund
assets. A firm of consulting actuaries is engaged by the Council to
provide expert advice about the assumptions to be applied, these
assumptions may be adjusted on a yearly basis.
A sensitivity analysis around
certain assumptions has identified the following changes to the
pension deficit of £6.2m would occur if alternative
assumptions were to be applied:-
- a +0.1%pa
increase in the discount rate to be applied would reduce the
pension deficit by £39.7m;
- a +0.1%pa
increase in pension payments inflation would increase the deficit
by £41.6m;
- a +0.1%pa pay growth would
increase the deficit by £43.6m; and
- an additional 1 year
increase in life expectancy would increase the deficit by
£43.1m.
Further information regarding the carrying
amount of the Pension Liability as at 31 March 2025 can be found in
Disclosure Note 10 - Pension Arrangements.
Property, Plant and Equipment
Assets are depreciated over the
useful economic life that the asset (or components of the assets
where appropriate) will be operational. The useful economic life of
an individual asset is dependent upon maintaining an appropriate
level of repair and maintenance expenditure on that asset. Should
insufficient expenditure be incurred to properly maintain an asset
then it may be the case that the useful economic life of that asset
is reduced; this might give rise to an impairment or accelerated
depreciation being required.
Further information regarding the
carrying amount of Property, Plant and Equipment as at 31 March
2025 can be found in Disclosure Note 19 - Movement in Property,
Plant and Equipment.
Valuation and Revaluations of Property Plant and
Equipment
Valuation and Revaluation of
Property Plant and Equipment Property (Non-Council Dwellings) is
revalued over the course of a five year rolling valuation
programme. Where assets are not revalued in year, they subject to
an overview report, reviewing whether any indication of a material
change to their valuation exists,and, where this is the case, a
decision is taken by the council in consultation with its external
auditors as to whether the asset/s in question are revalued in
year. Assets are further reviewed annually for indicators of
impairment. Judgements are required to make an assessment as to
whether there is an indication for impairment. The impairment tests
include whether there has been any material damage to the asset as
well as an examination of capital expenditure incurred in the
financial year to ascertain whether it has resulted in an increase
in value or an impairment of an asset. The influence of external
market factors on the value of assets are also reviewed annually.
This work is undertaken by the Valuers employed by the Council. If
the actual results differ from the assumptions the value of
property, plant and equipment will be over or understated. This
would be picked up adjusted for as part of the rolling revaluation
programme.
Assets are depreciated over useful lives that are dependent on
assumptions about the level of repairs and maintenance that will be
incurred in relation to individual assets. If the Council fails to
sustain its current maintenance programme, the useful economic life
of an asset may be reduced. If the useful life of assets are
reduced then depreciation increases and the carrying amount of an
individual asset may fall.
The material judgement in choice of accounting policy relates to
the valuation of the Council's dwellings stock. The guidance issued
by the Department for Communities and Local Government permits two
valuation methods: the Beacon Approach and the Discounted Cash Flow
Approach. The Council has chosen the Beacon Approach which groups
properties according to their type and values them accordingly at
Open Market Value, then applies a multiplication factor of 41%
(previously 31% prior to 2016/17) to reflect Existing Use (Social
Housing), as it is felt that this more accurately reflects the
value of the stock.
5.
Expenditure and Funding Analysis 2024/25
The Expenditure
and Funding Analysis demonstrates how the funding available to the
Council for the year has been used in providing services in
comparison with those resources consumed or earned by authorities
in accordance with generally accepted accounting practices. This
statement also shows how this expenditure is allocated for decision
making purposes between the Council’s directorates.
Income and expenditure accounted for under generally accepted
accounting practices is presented more fully in the Comprehensive
Income and Expenditure Statement.
Comparative Expenditure and Funding Analysis
2023/24
Adjustments between funding and accounting basis 2024/25
Comparative Movements in
2023/24
Segmental Income
Expenditure and Income Analysed by
Nature
Fees, charges and other service
income includes £xx.xm
which relates to revenue from contracts with service
recipients.
Cash Flow – Operating
Activities
The cash flows for operating
activities, included in the above Interest payments and Income and
investment Income are:-
6. Trading
Activities
The Council operates a number of trading
services. Details of those services with a turnover of greater than
£2m are as follows:-
During 2024/25, the Council’s traded
services, including insurance offered to schools, operated under
the brand of North Yorkshire Education Service (NYES). This is an
in-house arrangement which reflects a governance and reporting
structure whereby such services are held accountable by a Board,
chaired by the Council’s Chief Executive.
The net surplus / deficit on each traded
activity is transferred to a reserve at the end of each financial
year.
Trading operations are incorporated into the
Comprehensive Income and Expenditure Statement. Some trading
operations are an integral part of the Council’s services to
the public, whilst others are support services to the
Council’s activities e.g. Cleaning. Where the trading
activities are not integral to the Council’s service
obligations, the net financial position of the trading operations
are identified within the Financing and Investment Income section
of the Comprehensive Income and Expenditure Statement.
7.
Council Tax Income
Council Tax Income totalled £xxx.xm consisting of:-
The income from Council Tax is equivalent to a
basic amount of £x,xxx.xx for an average band D
property.
8.
Non-Domestic
Rates
9.
Grant Income
The Council credited the following
grants and contributions to the Comprehensive Income and
Expenditure Statement.
Credited to Taxation and
Non-specific Grant Income
The Council has received a number of grants and
contributions that have yet to be recognised as income as they have
conditions attached to them that will require the grant to be
returned if those conditions are not met. The balances at the
year-end are as follows:-
Capital Grants and Contributions
Received in Advance
Capital Grants Credited to
Services
10.
Pension Arrangements
As part of the terms and
conditions of employment, the Council offers retirement benefits to
its employees. Although these benefits will not actually be
payable until employees retire, the Council has a commitment to
make the payments that need to be disclosed at the time that
employees earn their future entitlement. The Council
participates in three different pension schemes:-
- Local Government
Pension Scheme, for employees other than teachers, administered by
North Yorkshire Council. This is a funded defined benefit
scheme, meaning that the Council and employees pay contributions
into a fund, calculated at a level intended to balance pension
liabilities with investment
assets;
-
Teachers’ Pension
Scheme, sponsored by the Department for Education (DfE). This
is an unfunded defined benefit scheme, meaning that there are no
investment assets built up to meet the pension liabilities, and
cash has to be generated to meet actual pension payments as they
eventually fall due. The Actuary is unable to individually
allocate a share of assets to scheme participants; this scheme is
treated on the same basis as a defined contributions scheme for the
purposes of these accounts.
Any discretionary enhancements to
benefits awarded by the Council remain the liability of the Council
and are paid monthly in addition to the pension paid by the
DfE. These costs are accounted for on a defined benefit basis
and are identified separately within this note.
-
NHS Pension Scheme,
administered by the NHS Business Service Authority. This is
an unfunded defined benefit scheme that the Council is required to
account for as if it were a defined contribution scheme. This
is because the Council’s obligation is limited to paying
contributions as they fall due, with no obligation to pay future
benefits. Contributions paid in 2024/25 were
£50k. The Council
estimates that contributions payable in 2025/26 will be
£52k. At 31 March 2025 only 3 employees of the Council
pay contributions to the NHS Pension Scheme out of an estimated
1.7million active members nationally.
The Council recognises
the cost of retirement benefits in the Net Cost of Services when
they are earned by employees, rather than when the benefits are
eventually paid as pensions. However, the charge the Council
is required to make against council tax is based on the cash
payable in the year, so the real cost of retirement benefits is
reversed out (transferred) in the Movement in Reserves Statement -
General Working Balance.
Further information relating to sensitivity
analysis for each significant actuarial assumption is available in
Disclosure Note 4 - Pensions Liability on page 52.
A comparison between the Net Cost of Service and
the actual amount charged against the General Fund Balance in year
shows that the costs disclosed for services are £7,966k higher
than the amount charged against the General Fund. This is as a
result of the following:
-
the Councils contributions of
£63,629k to the Local Government Pension Scheme being replaced
with a current service cost of £61,133k. This £2,496k
adjustment equates to a 3.9% increase in employer’s pension
costs;
-
in addition, under IAS 19, the
unfunded liability arising from enhanced teachers’ pensions
requires that the cost of benefits paid in the year (£1,104k)
is removed from the net cost of services as it relates to periods
of service prior to 2024/25;
-
a past service cost including
curtailments and settlements of £2,353k relating to decisions
taken in previous financial years; and
-
administration expenses of
£2,013k.
Assets and Liabilities in Relation
to Post-employment Benefits
Reconciliation of present value of the scheme
liabilities (defined benefit obligation)
Reconciliation of the fair value of the scheme
assets
The actual return on the scheme assets in the
year was £66.6m.
The liabilities show the underlying commitments
that the Council has in the long-run to pay for retirement
benefits. The total net liability of £6.2m has a sustained
impact on the net worth of the Council.
However, statutory arrangements for funding the
deficit mean that the financial position in relation to pensions
remains healthy because:-
-
the deficit on the local government
scheme will be made good by setting appropriate contribution rates
over the remaining working life of employees, as assessed by the
scheme actuary; and
-
finance is only required to be
raised to cover the teachers’ pension enhancements when the
pensions are actually due to be paid.
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 dependent on assumptions about
mortality rates, salary levels etc. The liabilities have been
assessed by AON, an independent firm of actuaries and the main
assumptions used in their calculations have been:-
Changes in the Local Government Pension Scheme
permit employees retiring to take an increase in their lump sum
payment on retirement in exchange for a reduction in their future
annual pension. On the advice of our actuaries we have
assumed that 50% of employees retiring will take advantage of this
change to the pension scheme. When first introduced, there
was a significant “one-off” reduction in the
Council’s liabilities which was reflected as a change in
accounting policies as it affected all accrued liabilities. In
subsequent years the impact of commutation is considerably smaller
as it only relates to liabilities arising in the year and is
included under Past Service Costs/Gains.
Assets in the North Yorkshire Pension Fund are
valued at fair value, principally market value for investments. The
Council’s share of the assets totals £2,680.4m at 31st
March 2025. The assets consist of the following categories, by
proportion of the total assets held by the Fund. There are no
assets in place to cover the teachers’ enhanced pension
liability.
The overall expected rate of return on assets is
based on the strategic asset allocation of the Fund as
follows:-
Surplus / (Deficit) in the
Scheme
Actuarial Gains and Losses
The actuarial gains / (losses) identified as
movements on the Pensions Reserve in 2024/25 can be analysed into
the following categories, measured as absolute amounts and as a
percentage of assets or liabilities at 31st March 2025:-
Further details are contained in
the Statement by Consulting Actuary, copies of which are available
on request from Central Services, County Hall, Northallerton, DL7
8AD.
The estimated amount of
contributions expected to be paid to the Scheme during the 2025/26
financial year is £64.1m.
Teacher’s Pension
Scheme
Teachers employed by the Council
are members of the Teachers’ Pension Scheme, administered by
Capita. It provides teachers with defined benefits upon their
retirement, and the Council contributes towards the costs by making
contributions based upon a percentage of members’ pensionable
salaries. The policy of offering enhancements to the retirement
benefits of teachers ceased in 1996/97, however, the cost of
enhancements awarded prior to that date will continue to be met
until those pensions cease to be paid.
In 2024/25 the Council paid
£26.9m to the Teachers' Pension Agency as a contribution
towards teachers' pension costs, which represents 23.6% of
teachers' pensionable pay. The Council estimates that contributions payable
in 2025/26 will be £28.0million. At 31 March 2025 2,417
teachers employed by the Council are active members and contribute
to the Teachers’ Pension Scheme out of an estimated 713k
active members nationally.
The scheme is a defined benefit
scheme. Although the scheme is unfunded, Teachers’
Pensions use a notional fund as the basis for calculating the
employers’ contribution rate paid by local education
authorities. However, it is not possible for the Council to
identify a share of the underlying liabilities in the scheme
attributable to its own employees.
The Council is unable to identify
the deficit of the Teachers’ Pension Scheme as Central
Government suspended all actuarial valuations whilst the scheme was
re-designed as part of public sector pensions reform. The primary
purpose of these valuations is to set the contribution
rate.
The Council is responsible for the
costs of any additional benefits awarded upon early retirement
outside of the terms of the teachers’ scheme. These benefits
are fully accrued in the pensions liability as described
above.
Assumptions for the Teachers’ Pension
Scheme are broadly in line with those for the Local Government
Pension Scheme.
11.
Audit Fees
In 2024/25 the Council incurred the following
fees relating to external audit:-
12.
Private Finance Initiative (Service Concessions)/Public Private
Partnership
In April 2002 the Council commenced payments on
a Private Finance Initiative (PFI) scheme which provides for four
replacementprimary schools at
Barlby CP, Brotherton and Byram PS (both near Selby), Kirby
Hill CE (near Boroughbridge) and Ripon Cathedral CE. The
contract is for 25 years.
Brotherton and Byram CPS converted to academy
status on 1st August 2015. As a result, the building value of
the school has been removed from the Council Balance
Sheet.
Two of the schools, Kirby Hill CEPS and Ripon
Cathedral CEPS, are voluntary controlled schools. On expiry
of the private finance initiative in 2027 these two school
buildings will transfer to the respective Trustees of each of the
schools. However, to reflect the substance of the transaction
and to give consistency in approach to the PFI scheme the building
values for these two schools are retained on the Council balance
sheet along with that of Barlby CPS.
The associated liability for all of the schools
is shown as a finance lease within the accounts.
In March 2018, the Council commenced payments on
a Public Private Partnership project in conjunction with York City
Council, for a Waste treatment plant provided by Amey CESPA, AWPR
Ltd. The payments made by North Yorkshire Council represent 79% of
the scheme, with 21% attributable to York City Council. The
contract is for 25 years.
During the term of the contract, the provider is
required to make facilities available in line with the agreement
with approved variations adjusted through the payment mechanism
where appropriate.
Upon expiry the facility will be handed to the
Council in good working order. The associated asset has been
recognised within Property, Plant & Equipment within the
accounts, along with liabilities due over the term of the
contract.
Value of PFI/PPP Assets
Forming part of the above balance are the two
voluntary controlled schools which have a net book value of
£x,xxxk. This
represents the fair value of the Council's interest in the
remaining term of the contract; on the expiry of the PFI
arrangement in 2027, the buildings of the two voluntary controlled
schools revert to the Trustees of those schools.
Value of PFI/PPP Liabilities
13.
Leases
Finance Leases
The Council has a number of arrangements that
are considered to be finance leases. These leases are in relation
to buildings, the rental payments under these arrangements in the
year were £169k.
The Council is committed to making minimum lease
payments under these leases in future financial years comprising
the settlement of the long term liability for the interest in the
property and financing costs payable whilst the lease obligation
remains outstanding.
The minimum lease payments set out in the
agreements entered in to by the Council include a further
£x,xxxk of finance
costs over the remaining life of the lease. The minimum lease
payments will be payable over the following periods:
The following net value of assets held under
finance leases are shown on the Balance Sheet.
Operating
Leases
The Council utilised assets held under operating
leases for Land and Buildings and Vehicles, Plant and Equipment.
Payments made during the year amount to £x,xxxk in respect of Land and Building
leases and £x,xxxk for
Vehicles, Plant and Equipment.
The Council had commitments at the 31st March
2025 to make payments under operating leases in future financial
years, comprising the following elements:-
The capital value of these operating leases is
not shown on the Balance Sheet.
The Council acted as lessor and sub-lessor for
various properties under cancellable agreements, these primarily
comprise of County Farms and highway maintenance depots operated
under a service agreement with NY Highways Limited.
Rental receipts for Land and Buildings received
during the year amount to £x,xxxk.
14. Related Party
Transactions
The Accounting Code of Practice requires the
disclosure of all material transactions undertaken by the Council
with a related party during the year. IAS 24 Related Party
disclosures was introduced to ensure that financial statements
highlight any material transactions between an organisation and its
related parties. These are bodies or individuals that have the
potential to control or influence the Council or to be controlled
or influenced by the Council.
Members of the Council have direct control over the Council's financial
and operating policies. During 2024/25, a Member’s
spouse had an interest in an organisation that leases a building,
from the Council, at a peppercorn rent; the same Member’s
spouse also had an interest in a community library which is leased
from the Council. One Member is a partner in a business that
received £53k for services provided to the Council; the same
Member had interests in a community group that received £670k
of funding from the Council. One Member is a volunteer
Director of a community benefit society that received a grant of
£15k. The same Member is a volunteer Director for an
organisation that received £3k of funding. The spouse of
one councillor, that has a controlling interest in a business, has
entered a s106 agreement with the Council. Details of all
relationships are recorded in the Register of Members’
Interest.
Officers have day to day control of the running of the
Council's affairs. During 2024/25 the Council provided services to
an academy trust in which one Senior Officer had interests. It
should also be noted that the Corporate Director – Resources
is Treasurer to the North Yorkshire Pension Fund and an Assistant
Director – Resources is Deputy Treasurer to North Yorkshire
Pension Fund.
Companies and
Joint Ventures
The Council has a substantial interest in the
following companies:-
- Align Property Partners
Limited
- owning 100% of the share capital
- Align Property Services
Limited
- owning 100% of the share capital
-
Bracewell Homes
Limited
- wholly owned company limited by guarantee (LBG)
- Brierley Homes
Limited
- owning 100% of the share capital
-
Brimhams Active
Limited
- owning 100% of the share capital
- First North Law
Limited
- owning 100% of the share capital
-
Maple Park (Hambleton)
LLP
- owning 99% of the share capital
- NY
Highways
- owning 100% of the share capital
- NYnet
Limited
- owning 100% of the share capital
- Veritau Limited
- owning 50% of the share capital
- Veritau Public Sector
Limited
- the company is limited by guarantee. The Members are North
Yorkshire Council, City of York Council, Redcar & Cleveland
Borough Council, Leicester City Council and Cherwell District
Council.
- Yorwaste Limited
- owning 78% of the issued share capital.
The transactions between the Council and those
companies where a material group
relationship has been identified are eliminated
in the Group Accounts financial statements.
There is also a group relationship with
Yorkshire Purchasing Organisation (YPO) but, as there is not a
significant level of control nor material expenditure, no
consolidation adjustments have been undertaken within the Group
Account statements on the grounds of it being a simple
investment.
Align Property Partners
Limited:
The total value of services provided by Align
Property Partners Limited in 2024/25 to the Council was
£2,580k (£5,875k in 2023/24) and at 31st March 2025 the
trading creditor balance was £266k (£443k in
2023/24).
The Council provided services to Align Property
Partners Limited totalling £199k (£513k in 2023/24) of
which £8k (£3k in 2023/24) was outstanding as at 31st
March 2025.
The Council provided a loan facility to Align
Property Partners Limited of up to £500k of which £Nil
(£Nil in 2023/24) was taken up at 31st March 2025.
Align Property Partners Limited paid the Council
a dividend of £Nil in 2024/25 (£750k in
2023/24).
Align Property Services
Limited:
The total value of services provided by Align
Property Services Limited in 2024/25 to the Council was
£5,935k (£165k in 2023/24) and at 31st March 2025 the
trading creditor balance was £557k (£44k in
2023/24).
The Council provided services to Align Property
Services Limited totalling £675k (£216k in 2023/24) of
which £78k (£75k in 2023/24) was outstanding as at 31st
March 2025.
The Council provided a loan facility to Align
Property Services Limited of up to £495k of which £495k
was taken up at 31st March 2025 (£495k in 2023/24) and
therefore £54k of interest was paid to the Council in 2024/25
(£16k 2023/24).
Align Property Services Limited paid the Council
a dividend of £Nil in 2024/25 (£Nil in
2023/24).
Bracewell Homes Limited:
The Council provided services to Bracewell Homes
Limited totalling £41k (£40k in 2023/24) of which
£Nil was outstanding at 31st March 2025 (£Nil
in 2023/24).
The Council provided a loan facility to
Bracewell Homes Limited of up to £10m of which £700k was
taken up as at 31st March 2025 (£700k in 2023/24)
and therefore £61k interest was paid to the Council in 2024/25
(£111k in 2023/24).
Brierley Homes Limited:
The total value of services provided by Brierley
Homes Limited in 2024/25 to the Council was £Nil. The Council
provided services to Brierley Homes Limited totalling £350k
(£278k in 2023/24) of which £346k (£218k in 2023/24)
was outstanding as at 31st March 2025.
The Council provided a loan facility to Brierley
Homes Limited of up to £25m of which
£22.49m (£16m in 2023/24) was taken up
as at 31st March 2025 and therefore £2.28m (£1.4m in
2023/24) interest was paid to the Council in 2024/25.
Brimhams Active Limited:
The Council paid £600k (£2,500k in
2023/24) to Brimhams Active Limited as a management fee for the
provision of leisure services and charged £800k (£1,500k
in 2023/24) to the company for the provision of support
services.
First North Law Limited:
The total value of services provided by First
North Law Limited in 2024/25 to the Council was £Nil
(£Nil in 2023/24) and at 31st March 2025 the trading creditor
balance was £Nil (£Nil in 2023/24). The Council
provided services to First North Law Limited totalling £113k
(£100k in 2023/24) of which £31k was outstanding as at
31st March 2025 (£31k in 2023/24).
The Council provided a loan facility to First
North Law Limited of up to £250k of which £65k was taken
up as at 31st March 2025 (£65k in 2023/24) and therefore
£6k interest was paid to the Council in 2024/25 (£6k in
2023/24).
Maple Park LLP:
In 2024/25, the Council recharged £100k to
Maple Park LLP (£228k in 2023/24) to cover the time spent by
the Council’s operational staff working at the
crematorium. The Council provided additional services to
Maple Park LLP totalling £9k (£18k in 2023/24). The
company reported a net profit of £232k (£356k in 2023/24)
of which 99% was passed to the Council.
The operations undertaken by Maple Park
transferred to the Council from 1 October 2024 and the figures
reflect 6 months of trading. The company is in the process of
being voluntarily dissolved.
NYnet Limited:
The total value of services provided by NYnet
Limited in 2024/25 to the Council was £1,050k (£1,593k in
2023/24), and at 31st March 2025 the trading creditor balance was
£Nil (£33k in 2023/24).
The Council provided services to NYnet Limited
totalling £106k in 2024/25 (£62k in 2023/24), of which
£Nil was outstanding as at 31st March 2025 (£1k in
2023/24).
The Council provided a loan facility to NYnet
Limited of up to £10m in 2024/25 of which the closing balance
as at 31st March 2025 was £3.35m (£7.9m in
2023/24). Interest accrued in 2024/25 of £Nil on this
loan (£Nil in 2023/24).
NY Highways Limited:
The total value of services provided by NY
Highways Limited in 2024/25 to the Council was £61.7m
(£59.2m in 2023/24), and at 31st March 2025 the trading
creditor balance was £8.8m (£5.5m in 2023/24). The
Council provided services to NY Highways Limited totalling
£5.6m (£8.2m in 2023/24), and at 31st March
2025 the trading debtor balance was £4.9m (£3.7m in
2023/24).
The Council provided a loan facility to NY
Highways Limited of up to £11m during 2024/25 (£11m in
2023/24) of which £8.96m was taken up at 31st March 2025
(£9.46m at 31st March 2024). Interest was received from
NY Highways Limited by the Council of £1.08m in 2024/25
(£1.2m in 2023/24).
Veritau Limited:
The total value of services provided by Veritau
Limited in 2024/25 to the Council was
£546k (£1,801k in 2023/24) and at 31st
March 2025 the trading creditor balance was £Nil
(£11,941k in 2023/24).
The Council provided services to Veritau Limited
in 2024/25 totalling £23k (£25k in 2023/24) and at 31st
March 2025, £Nil was outstanding (£Nil in
2023/24).
Veritau Public Sector Limited (new
company incorporated May 2024):
The total value of services provided by Veritau
Public Sector Limited in 2024/25 to the Council was £1,143k
and at 31 March 2025 the trading creditor was £Nil.
The Council provided services to Veritau Public
Sector Limited in 2024/25 totalling £41k and at 31 March 2025,
£Nil was outstanding.
Yorwaste Limited:
The total value of services, including landfill
tax provided by Yorwaste Limited in 2024/25 to the Council was
£37,886k (£35,952k in 2023/24) and at 31st March 2025 the
trading creditor balance was £3,516k (£2,848k in
2023/24).
The Council provided services to Yorwaste
Limited totalling £13,354k (£10,867k in 2023/24) of which
£1,736k (£437k in 2023/24) was outstanding as at 31st
March 2025.
The Council provided
a loan to Yorwaste Limited of £3,700k (£3,700k in
2023/24) of which interest was received by the Council of
£331k (£334k in 2023/24).
Yorwaste Limited paid the Council a dividend of
£Nil in 2024/25 (£Nil in 2023/24).
Yorkshire Purchasing Organisation
(YPO):
The Council made payments to YPO in 2024/25
totalling £?m
(£3.5m in 2023/24).
A dividend of £180k in relation to
YPO’s 2024 trading activities is reflected in the
Council’s 2024/25 Accounts (£267k in
2023/24).
Other Related Party
Transactions
The UK government exerts significant influence
through legislation and grant funding. The following material
transactions, (over £1m), with other related parties arose,
which are not disclosed elsewhere in the Statement of
Accounts:-
Revenue and Capital contributions received
towards jointly funded schemes; NHS bodies within North Yorkshire
totalling £41.1m (£39.1m in 2023/24) and made payments
totalling £1.7m (£2m in 2023/24).
The Council provided the North Yorkshire Pension
Fund with administrative and support services totalling £2.2m
in 2024/25 (£2.1m in 2023/24).
15.
Pooled Funds
Under Section 75 of the Health Act 2006, the
Council has undertaken joint working arrangements with appropriate
NHS bodies. Pooled funds enable the Council to address specific
local health issues.
The formation of a Pooled Fund does not create a
separate legal entity. The Council is involved in three distinct
areas of pooled funds - the Intermediate Care (Whole Systems)
Pooled Fund, Equipment Pooled Fund and the Better Care Pooled
Fund. Where the Council acts as the 'host', the Council has
responsibility for the financial administration of the pool. All
contributions by the Council toward pooled funds have been included
within the Net Cost of Services in the Comprehensive Income and
Expenditure Statement.
The Intermediate Care (Whole Systems) Pooled
Fund and Equipment Pooled Fund have not been itemised below as
their values do not materially impact on the overall
position.
The Better Care Fund
(BCF)
The BCF formally operated for the first time in
2015/16 involving the Council and Integrated Care Boards (ICBs)
that operate within the North Yorkshire Area. The aim of the fund
is to create closer integration between health and social care to
improve outcomes for patients, service users and carers. The
Council is the host for the pooled fund for all areas of the
County.
The Improved Better Care Fund (IBCF) was first
announced in the 2015 Spending Review and is paid as a direct grant
to local government, with a condition that it is pooled into the
local BCF plan. The IBCF grant allocations were increased in
the 2017 Spring Budget. According to the grant determination,
the funding can be spent on three purposes:
-
Meeting adult social care
needs;
-
Reducing pressures in the NHS,
including supporting more people to be discharged from hospital
when they are ready; and
-
Ensuring that the local social care
provider market is supported.
There is no requirement to spend across all
three purposes, or to spend a set proportion on each. The
table below shows committed funds against planned IBCF and BCF
schemes. Any unspent but committed funds at the year-end have
been held as a reserve.
16.
Members Allowances
The total
amount of members allowances including travel and other expenses
paid during the year was £2,073k (£1,934k in 23/24).
17.
Disclosure of Remuneration
Regulations require the Council to
disclose the number of staff receiving payments, including taxable
benefits, of more than £50k in the relevant financial
year.
The number of employees
who receive remuneration of over £50k are as follows.
Please note that these figures include (i) teachers employed
directly by a school’s governing body rather than by the
local authority (ii) the senior employees as identified at the end
of this note:-
The Regulations also require the Council to
disclose the individual remuneration details of senior employees, under
the following categories:
-
salary, fees and allowances;
-
bonuses;
-
expenses allowance;
- compensation for loss of employment;
-
employer’s pension contribution; and
- any other emoluments.
The
regulations also require that
persons whose salary is in excess of £150k per annum must be
identified by name and that certain senior employees whose salary
is £50k or more per year but less than £150k, must be
listed individually by way of job title. Unless otherwise stated,
none of the senior officers received fees, bonuses or compensation
for loss of employment or any other emoluments in 2024/25.
Details of Members Allowances and Expenses are published annually
on the ‘Councillor Allowances’ page of the NYC
website.
18.
Exit Packages / Termination Benefits
Details of the Exit Packages / Termination
Benefits paid out to employees who were made redundant during the
year are set out in the table below.
The table shows the total number of compulsory
and other voluntary redundancies / departures and their total
cost. This is broken down into incremental bands of £20k
up to £100k and bands of £50k thereafter. The total
costs shown include payments made to the employees plus payments
made to the relevant pension funds to compensate for “strain
on the fund” costs resulting from the employee’s exit
and resulting pension entitlements.
The table covers all employees of the Council,
including school teachers employed directly by the school’s
governing body rather than by the Local Authority.
Recognised Impairment
During 2024/25 the Council recognised impairment
loss of £56.1m in relation to its land and buildings and
surplus assets. Impairment losses were recognised within the
Comprehensive Income and Expenditure Statement under the following
sections.
Movements on
Infrastructure
In accordance with the Code of
Practice on Local Authority Accounting this note does not include
disclosure of gross cost and accumulated depreciation for
infrastructure assets because historical reporting practices and
resultant information deficits mean that this would not faithfully
represent the asset position to the users of the financial
statements.
The authority has chosen not to disclose this
information as the previously reported practices and resultant
information deficits mean that gross cost and accumulated
depreciation are not measured accurately and would not provide the
basis for the users of the financial statements to take economic or
other decisions relating to infrastructure assets.
Infrastructure assets are not disclosed on the
face of the Balance Sheet. Total Property, Plant and
Equipment (PPE) is shown in the reconciliation table
below:-
The authority has determined in accordance with
Regulation [30M England] of the Local Authorities (Capital Finance
and Accounting) (England) (Amendment) Regulations 2022 that the
carrying amounts to be derecognised for infrastructure assets when
there is replacement expenditure is nil.
20.
Valuation of Non-Current Assets
The Council carries out
a rolling programme that ensures that all Non-Current Assets that
are required to be measured at current Value are revalued at least
every five years.
Valuations of Land and
Buildings were carried out by registered Valuers in the
Council’s Property Services Team and Align Property Partners,
in accordance with the methodologies and bases for estimation set
out in the professional standards of the Royal Institution of
Chartered Surveyors. Valuations are undertaken with the approach
that the valuations provided represent a true and fair value of the
Assets as at 31st March 2025. The valuers have continued to
exercise professional judgement and this continues to be the best
information available to the Council.
In accordance with the
five-year rolling programme, the following asset classes were
revalued in 2024/25; Primary Schools and Temporary & Emergency
Housing. This Comprises a total of £253.9m of the
Council’s Land and Building Portfolio as at 31st March 2025.
Those properties not considered as part of the rolling programme in
2024/25 were subject to a desktop review by the Registered
Valuer.
Council Dwellings are
subject to a five-year full inspection of the Council’s
Portfolio of Dwellings, with desktop reviews being performed in the
intervening years. For 2024/25 a full review of the former Selby DC
Housing stock was performed, along with a desktop review of the
former Harrogate and Richmondshire stock. This resulted in a
valuation of £557.2m as at 31st March 2025.
21.
Disposal of Property, Plant and Equipment
20 Schools gained Academy status during 2024/25.
As a consequence, the Land and Building assets of £52.7m
relating to the schools were transferred to the relevant Academy
Trusts and have now been removed from the Council's Balance
Sheet.
In addition, the Local Authority Accounting Code
of Practice requires a 'transfer of assets for no consideration' or
'loss on disposal of fixed assets' charge to be included in the
Comprehensive Income and Expenditure Statement. This
exceptional £52.7m loss is purely notional and does not impact
on the Council's General Working Balance or Council Tax
levy.
Other disposals in the year resulted in a net
gain of £2.8m, of which £2.1m relates to General Fund Disposals and £0.7m
relates to Housing Revenue Account Disposals.
22.
Major Areas of Capital Spending
Major areas of capital spending,
over £2m during 2024/25
were:-
Committed Capital
Expenditure
The Council had an approved Capital Plan for
2025/26 of £327.4m. Of this £327.4m is committed
expenditure as at 1st April 2025. It should be noted, however, that
this figure includes a significant element (£19.9m) relating
to a number of general provisions and other schemes where legal
contracts had not been exchanged by 31st March 2025.
23.
Capital Expenditure, Capital Financing and the Capital Financing
Requirement
The total amount of capital expenditure incurred
in the year is shown in the next table (including the value of
assets acquired under Finance leases and PFI contracts), together
with the resources that have been used to finance it. Where capital
expenditure is to be financed in future years by charges to revenue
as assets are used by the Council, the expenditure results in an
increase in the Capital Financing Requirement (CFR), a measure of
the capital expenditure incurred historically by the Council that
has yet to be financed from Revenue. The CFR is analysed in the
second part of this note.
(a) Capital
Expenditure and its financing
(b) Capital
Financing Requirement (CFR)
24.
Long Term Creditors
25.
Intangible Assets
An intangible item may meet the definition of an
asset when “access to the future economic benefits” is
controlled by an authority through custody or legal protection.
Examples of this type of Intangible Assets within the Councils
Capital Plan include:-
- Health and Adult Services
partnership schemes where the Council holds nomination rights to
services; and
- ICT schemes.
Details of Intangible Assets in 2024/25 are as
follows:-
The movement on Intangible Asset balances during
the year is as follows:-
26.
Investment Property
The Council has determined that County Farm
properties and other commercial properties are classified as
investment properties. The fair value for the
farm properties (at market
rents) has been based on the market approach using current market
conditions and recent sales prices and other relevant information
for similar assets in the local authority area, as market conditions are such that
similar properties by
nature are actively purchased and
sold. Due to no one
County Farm being exactly the same as another however,
the
level of unobservableinputs lead to theseproperties being categorised
at Level 3 in the fair value hierarchy. Inputs to the valuation techniques in
respect of assets and liabilities for which fair value is measured
or disclosed in the Council’s financial statements, including
Investment Property, are categorised within the fair value
hierarchy. Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that the Council
can access at the measurement date. Level 2 inputs are those other
than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Level 3 are
unobservable inputs for the asset or liability.
Other commercial properties were purchased in a competitive
open market and are valued annually at their fair
value. There has been no change in the valuation
techniques used during the year. The following table summarises the
movement in the fair value of these properties over the
year.
The Council has no restriction on its ability to
realise the value inherent in its investment property or its right
to the remittance of income and the proceeds from
disposal.
The following items of income and expenditure
have been accounted for within the Financing and Investment Income
section of the Comprehensive Income and Expenditure Statement,
under Investment properties:-
The Council has certain contractual obligations
in relation to repairing and maintaining these investment
properties.
27.
Heritage Assets
Heritage Assets are non-current assets that are
intended to be preserved in trust for future generations because of
their historical, artistic, scientific, technological, geophysical
or environmental qualities. They are held and maintained
principally for their contribution to knowledge and
culture.
Heritage Assets are measured at valuation and the asset should be
recognised on the Balance Sheet when identified. An annual
review is undertaken across the Council to identify any Heritage
Assets.
The Council’s Records Office hold a large
number of archive collections, which are owned by the Council,
which would meet the definition of Heritage Assets and should be
classified as such.
A valuation of the items held by the Records
Office has never been established and any valuation exercise would
be costly and resource intensive. As a result, it was concluded
that the cost of obtaining a full valuation of these assets would
involve a disproportionate cost in comparison to the benefits to
the users of the financial statements. The assets held by the
records office are not, therefore, recognised in the Balance Sheet,
but disclosed above for information.
28.
Current Assets Held for Sale
Assets held for Sale are those properties that
are currently marketed and it is anticipated will be sold within 12
months of the reporting period.
29.
Cash and Cash Equivalents
Cash and Cash Equivalents represents balances
held within bank current accounts and short term investments that
are of a highly liquid nature and the balance is made up of the
following elements:-
30.
Long Term Investments
The Council holds long term investments in local
authority owned companies as follows:-
These companies’ Profit and Loss Accounts
are not included as part of the Comprehensive Income and
Expenditure Statement. However, any dividend income received
is included as part of the Council's income for 2024/25. Similarly,
these companies’ Assets and Liabilities are not included in
the Council's Balance Sheet on page 46 and 47.
The Council has determined, however, that it has
a group relationship with the following three companies and they
have therefore been incorporated into its Group Accounts on pages
124 to 139.
Brief details of these Companies are as
follows:-
Name
:- NYnet Limited
Business
:- The provision of broadband infrastructure in
North Yorkshire
Name
:- Yorwaste Limited
Business
:- The management, transport and disposal of
waste
Name
:- NY Highways Limited
Business
:- The construction, maintenance and repair of
highways
Copies of these companies’ Draft Accounts
are held by Central Services, County Hall, Northallerton, North
Yorkshire, DL7 8AD.
The investments the Council have are as
follows:-
31.
Long Term Debtors
Loan balances are increased by any new loans and
reduced as a loan is repaid.
32.
Short Term Debtors
33.
Short Term Creditors
34.
Provisions
Comparison for 2023/24
Alterations & Appeals
This provision is to cover the future loss of
income following business rate appeals It is an
estimate of the amount that businesses have been overcharged up to
31 March 2025. The estimate has been calculated in two parts.
Firstly, in relation to the 2010 rating list, by using the
Valuation Office ratings list of appeals and historical analysis of
successful appeals. Secondly, in relation to the 2017 rating list,
by using the allowance included within the business rates
multiplier for appeals and multiplying it by the rateable value,
and then adjusting for the amendments that have so far been made
to. The uncertainty about the amount and timing of any
resulting economic benefits or service potential is due to the
unknown nature of the number of appeals the council will receive,
how many appeals will be successful, the rateable value of the
businesses appealing and how many years an appeal relates
to.
Highways Advance Payments
Where building work is undertaken which fronts
onto a private street, a deposit under the Advance Payment Code is
required from developers in respect of the cost of necessary street
works. A provision is maintained in the Accounts representing
deposits held where the liability of the developer has not yet been
discharged. The
uncertainty about the amount and timing of any resulting economic
benefits or service potential is due to the length of time a
developer takes to complete street works, if the works are not
completed to the council's standards or if the developer ultimately
decides not to progress with a development.
Insurance (Claims &
Liability)
Self-funding arrangements for employer's, public
liability and motor claims have been established and an insurance
provision has been created for this purpose. The Council is unable
to accurately determine when the longer term (to be used in excess
of one year) provision will be utilised. The uncertainty about the amount and timing of
any resulting economic benefits or service potential is due to the
unknown nature of any potential employer's, public liability or
motor claim. It is not possible to predict the events that
could lead to these claims.
Municipal Mutual Insurance (MMI) was the
predominant insurer of public sector bodies, including the Council,
until it stopped underwriting operations in 1992. The 1993
implementation of a ‘scheme of arrangement’ means that
these public bodies have an exposure to MMI. Due mainly to
subsequent much higher than expected levels of industrial disease
type claims, MMI’s deteriorating solvency position led to
insolvent liquidation. As a result the Council was liable for
an initial 15% levy of claims paid since 1993, which was settled in
2013/14. In addition the Council is liable to pay a 15%
contribution towards all future liability claim payments and thus a
residual provision is required which is based on an external review
of the historical claims experience.
35.
Usable Reserves
Supplementary to the Movement in Reserves
Statement the following tables identify detail of the adjustments
between the accounting basis and funding basis under regulations by
reserve. The reserves are grouped by usable reserves and unusable
reserves.
(b) Earmarked
Reserves
Strategic Resources
Reserve - This reserve
is funded from in-year revenue surpluses beyond those required to
top up the General Fund Working Balance and windfall
resources. It is used to fund revenue budget shortfalls and,
subject to available resources, specific
projects.
LGR Reserve - this reserve supports the additional
transitioning and transformation costs for the new unitary
council.
Brexit / Capital Supply Chain Management - this reserve was
initially created to help manage the council's uncertain financial
risks in a post EU environment. These included risks that suppliers
of services with significant exposure to workers from the EU and /
or currency fluctuations will seek to recover additional costs from
customers including the Council. The council continues to
experience issues with its supply chain.
Superfast Broadband - this reserve supports the creation and
development of superfast broadband across North Yorkshire,
especially in hard to reach, rural communities.
Programme for
Growth - a legacy reserve from Selby
District Council funded from renewable energy business rates and
provides resources for pre-agreed capital or 'one-off' revenue
projects to support delivery of the Council's plan.
(c)
Capital Receipts Unapplied
Reserve
The Capital Receipts Unapplied
Reserve records balances of monies received from capital disposals
that can be retained for qualifying capital purposes, expenditure
of a capital nature or repayment of long term loans.
(d)
Capital Grants Unapplied
Reserve
The Capital Grants Unapplied Reserve is required
under IFRS and IAS 20 Accounting for Government Grants. The reserve
holds the balances of capital grants received where the conditions
of use have been met but the actual expenditure has not been
incurred. This reserve is classified as a usable reserve as the
balances held within this account can be utilised to fund future
expenditure of a capital nature.
36.
Unusable Reserves
(a)
Revaluation
Reserve
The Revaluation Reserve records the
unrealised gains from the revaluation of Property, Plant and
Equipment.
The revaluation reserve is built up from
individual balances for each asset within the Property, Plant and
Equipment categories of assets. No individual asset will have a
negative revaluation balance even if the overall reserve is in
surplus.
The Reserve contains only revaluation gains
accumulated since 1st April 2007, the date that the reserve was
created; prior to this date the Capital Adjustment Account was used
to record revaluation gains.
Revaluations arising on investment properties
are (under IFRS) charged to the Surplus or Deficit on Provision of
Services section of the Comprehensive Income and Expenditure
Statement as and when they arise. Revaluation values for investment
properties are therefore not held within the revaluation
reserve.
(b)
Collection Fund Adjustment
Account
The Council Tax and Non-Domestic Rates
Collection Fund Adjustment Account holds the movement between the
Council Tax and Non-Domestic Rates income in the Comprehensive
Income and Expenditure Statement and the amount required by
regulation to be credited to the General Fund. This is
included as a reconciling item in the statement of Movement in
Reserves. This is an unusable reserve for the
Authority.
(c)
Accumulated Absences
Account
The Accumulated Absences Account is used to
accrue for short term compensated absences such as holiday pay
earned but not taken. This accrual is under statutory provision and
does not represent a charge to the General Working Balance; this
reserve holds the balance of the accrual within the unusable
reserves section of the Balance Sheet.
(d)
Pension Reserve
The Pension Reserve absorbs the timing differences arising from the
different arrangements for accounting for post-employment benefits
and for funding benefits in accordance with statutory provisions.
The Council accounts for post-employment benefits in the
Comprehensive Income and Expenditure Statement as the benefits are
earned by employees; however, statutory arrangements require
benefits earned to be financed as the Council makes contributions
to the pension fund.
The debit balance on the Pensions Reserve therefore shows a
substantial shortfall in the
benefits
earned by past and current employees and the resources the Council
has set aside to meet them.
(e)
Capital Adjustment
Account
The Capital Adjustment Account
records the historic cost of acquiring, creating or enhancing Fixed
Assets, (including depreciation and impairment), over the life of
those assets as well as the resources set aside to finance
them.
(f)
Financial Instruments Revaluation
Reserve
The Financial Instruments Revaluation Reserve
contains the gains made by the Council
arising from increases in the value of its
investments that are measured at fair value through
other
comprehensive income. The balance is reduced when investments
with accumulated gains are:
-
Revalued downwards or impaired and
the gains are lost; or
-
Disposed of and the gains are
realised.
*The DLUHC introduced a statutory over-ride to
protect the General Fund balance from any fluctuations in fair
value movements in quoted investment funds. In the Council's case
this relates to its investments in two Pooled Investment Property
Funds. This over-ride initially expired on 31st March 2023 but was
extended until 31 March 2025, without this override all fair value
movements will impact on the General Fund Balance.
(g)
Dedicated Schools Grant
Adjustment Account
The Dedicated Schools Grant Adjustment Account
is a reserve introduced in November 2020 by the laying of a new
statutory instrument by DLUHC to amend the Local Authorities
(Capital Finance & Accounting Regulations) 2003. The
statutory instrument establishes new accounting practices relating
to treatment of local authorities' schools budget deficits,
requiring any such deficit to be recorded in a specific account
established solely for the purpose of recording deficits relating
to its schools' budget.
(h) Financial
Instruments Adjustment Account
This account absorbs the timing differences
arising from the different arrangements for accounting for income
and expenses relating to certain financial instruments and for
bearing losses or benefitting from gains per statutory
provisions. The Council has used the Account to manage
premiums paid and discounts received on the early redemption of
loans. Premiums are debited to the Comprehensive Income and
Expenditure Statement when they are incurred but reversed out of
the General Fund Balance to the Account in the Movement in Reserves
Statement. Over time, the expense is posted back to the
General Fund Balance in accordance with statutory arrangements for
spreading the burden on council tax.
37.
Material Contingent Liabilities
There have been no material contingent
liabilities identified by the Council in 2024/25.
38.
Events after the Balance Sheet Date
Under IAS 10 Events after the Reporting Period,
the Council is required to disclose the date that the financial
statements are authorised for issue. This establishes the date
after which events will not have been recognised in the Statement
of Accounts.
The Draft Statement for 2024/25 was authorised
for issue on xx xxxxx 2025
by the Corporate Director – Resources. The Statement of
Accounts is then subject to the External Audit process, before
being considered and approved by the Audit Committee Members on
29th September 2025.
Since the Balance Sheet date, x schools have converted to Academy
status. Land and Building asset values totalling £xx.xm will be transferred off the
Council’s balance sheet in 2025/26 and the Council will no
longer receive Dedicated School Grant of around £x.xm. Schools converting to
Academies after the balance sheet date is a non-adjusting
event.
39.
Dedicated Schools Grant
The Council’s expenditure on schools is
funded primarily by grant monies provided by the Education and
Skills Funding Agency (ESFA), the Dedicated Schools Grant (DSG).
DSG is ring-fenced and can only be applied to meet expenditure
properly included in the Schools Budget, as defined in the School
Finance and Early Years (England) Regulations 2021. The Schools
Budget
includes elements for a range of educational
services provided on an authority-wide basis and for the Individual
Schools Budget, which is divided into a budget share for each
maintained school.
Details of the deployment of DSG receivable for
2024/25 are detailed below:-
In 2024/25, £xxx,xxxk has been credited against the
Education and Children’s Services in the Comprehensive Income
and Expenditure Statement.
The net underspend in 2024/25 of
£xxxk on central
expenditure and ISB has been added to the agreed carry forward of
£x,xxxk, and the net
surplus of £x,xxxk is
held as a positive unusable reserve.
This is in accordance with the statutory
requirements (as defined in the School and Early Years Finance
(England) Regulations 2020) for 2021/22, which affect the manner in
which the Council can use the general reserves held as at 31 March
2025, and the requirements of the Accounts and Audit Regulations
2015, as amended (Regulation 7 (4)).
Both the net overspend and the deficit balance
have arisen due to the chronic underfunding of the schools budget by the
Education and Skills Funding Agency (ESFA) since the legislative
reform introduced by the Children and Families Act 2014, which has
resulted in significant increases in the number of Education Health
Care Plans (EHCPs) that in turn increases the demand for High Needs
provision. The Council has developed a comprehensive and robust
long-term Strategy for SEND 0-25; however, its implementation is
greatly hindered by the continued lack of capital funding by the
Department for Education. The Council is also lacking any assurance
on the future DSG monies it will receive, and this uncertainty
represents significant financial risks to any recovery plan of the
deficit balance over future funding periods.
40.
Financial Instruments
Financial Instruments are formally defined as
contracts that give rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. For the
Council, this definition covers the instruments used in Treasury
Management activities, including the borrowing and lending of money
and the making of investments.
The Council has adopted the CIPFA Code of Practice on Treasury
Management. This Code sets
out a framework of operating procedures to reduce treasury risk and
improve understanding and accountability regarding the Treasury
position of the Council.
The CIPFA Code of Practice on Treasury
Management requires:-
- a Treasury
Management Policy Statement (TMPS) stating the Council’s
policies and objectives for its treasury management activities;
and
- a framework of
Treasury Management Practices (TMPs) setting out the manner in
which the Council will seek to achieve the policies and objectives
set out above and prescribing how it will manage and control those
activities.
The twelve recommended TMPs are reviewed and
updated as and when
necessary in the light of regulatory and/or local policy changes
and cover the following areas:-
- risk
management;
- performance
measurement;
- decision-making and
analysis;
- approved instruments,
methods and techniques;
- organisation, clarity
and segregation of responsibilities and dealing
arrangements;
- reporting requirements
and management information arrangements;
- budgeting, accounting
and audit arrangements;
- cash and cash flow
management;
- money
laundering;
- training and
qualifications;
- use of external
service providers; and
- corporate
governance.
The Council provides treasury management
services to the external bodies listed on page 112 (the external bodies listed as
having temporary loans with the Council) and the loans from them
represent working balances which are invested with the
Council.
The Council recognises and measures financial
assets at either amortised cost, at fair value through profit and
loss or at fair value through other comprehensive
income. IFRS 9 – Financial Instruments states
that investments in equity should be recognised as fair value
through profit and loss, which would result in changes in valuation
impacting upon the Council’s General Fund balance and its
revenue budget. To mitigate this, the CIPFA Code of Practice
allows councils to elect to treat equity investments as fair value
through other comprehensive income. The Council has elected
to designate its shareholdings in its non-consolidated subsidiaries
and a joint venture as fair value through other comprehensive
income.
The Council irrevocably elected to carry the
value of its investment in its subsidiary, Yorwaste Limited, at
amortised cost.
The Council also holds a pooled investment in
four property funds. IFRS 9 also requires any changes in
valuation to be recognised as fair value through profit and loss,
which again would impact upon the Council’s general fund
balance and revenue budget. The DLUHC has permitted a
temporary (5 year) statutory override for English local authorities
to mitigate the impact of these changes in valuation, commencing
1st April 2018. The DLUHC subsequently extended the statutory
override by two years, therefore the expiry date is 31 March
2025. The Council will utilise the statutory override to
account for any changes in the value of this investment.
(a) Categories of
Financial Instruments
The following categories of financial instrument are carried in the
Balance Sheet.
Financial
Assets
Financial Liabilities
(b) Income,
Expense, Gains and Losses
(c) Fair
Values of Assets and Liabilities
The Council holds units within two
Property Funds. Inputs to the valuation techniques in respect
of assets and liabilities for which fair value is measured or
disclosed in the Council’s financial statements are
categorised within the fair value hierarchy. Level 1 inputs
are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Council can access at the
measurement date. Level 2 inputs are those other than quoted prices
included within Level 1 that are observable for the asset or
liability, either directly or indirectly. Level 3 are unobservable
inputs for the asset or liability. Property Fund investments
are held at Net Asset Value, as per the Investment Manager’s
Annual Statement, therefore
classified as a Level 2 input.
The funding of these investments was from Capital reserves. The
Council did not borrow funds to finance these investments therefore
Minimum Revenue Provision (MRP) has not been adjusted. However, the
performance of these investments will be monitored closely to
ensure no / minimal loss, and MRP reviewed regularly and amended if
indicated by the year end position.
As these gains or losses impact on the General
Fund balance, the temporary statutory override, agreed with the
DLUHC, will be utilised. This will result in any loss or gain
being reversed and recorded in the Financial Instruments
Revaluation Reserve. Any gain or loss will only be realised
when the investments are sold and will be treated as a capital
receipt and recognised through the Capital Adjustments Account, as
these investments were funded from capital.
Except for the Financial Assets valued at fair
value above, all other financial liabilities and financial assets
represented by loans and receivables are carried in the Balance
Sheet at amortised costs. Their fair value can be assessed by
calculating the present value of the cash flows that will take
place over the remaining term of the instruments, using the
following assumptions:-
-
for loans from the Public Works Loan
Board, (PWLB), new borrowing rates available from the PWLB have
been applied and for other loans payable, current market rates were
obtained from the Council’s Treasury Management Advisors,
Link Asset Services;
-
for loans receivable, the prevailing
benchmark market rates have been used to provide fair
value;
-
no early repayment or impairment is
recognised; and
-
the fair value of trade and other
receivables is taken to be the invoiced or billed amount.
Please note that during 2024/25 all fair value measurements above
were based on level 2 inputs, with no Level 1 or 3.
The fair values calculated are as follows:-
Borrowing Activities
The fair value of the liabilities is lower than
the carrying amount because the Council’s portfolio of loans
includes a number of fixed rate loans where the interest rate
payable is lower than the rates available for similar loans at the
Balance Sheet date. This commitment to pay interest below market
rates decreases the amount that the Council would have to pay if
the lender requested to agree to early repayment of the
loans.
The fair value of Public Works Loan Board (PWLB)
loans measures the economic effect of the terms agreed with the
PWLB compared with estimates of the terms that would be offered if
the borrowing was undertaken at the Balance Sheet date. The
difference between the carrying amount and the fair value measures
the additional interest that the authority will pay over the
remaining terms of the loans under the agreements with the PWLB,
against what would be paid if the loans were at prevailing PWLB
rates.
However, the Council has a continuing ability to
borrow at concessionary rates from the PWLB rather than from the
markets. A supplementary measure of the additional interest that
the authority will pay as a result of its PWLB commitments for
fixed rate loans is to compare the terms of these loans with the
new borrowing rates available from the PWLB. If a value is
calculated on this basis, the carrying amount of £xxx.xm would be valued at
£xxx.xm. But, if
the authority were to seek to realise the projected loss by
repaying the loans to the PWLB, the PWLB would raise a penalty
charge for early redemption in addition to charging a premium for
the additional interest that will not now be paid.
Investment Activities
In addition the financial assets representing
the shareholding in Yorwaste Limited (£3,518k), Align Property
Partners Limited (£500k), NY Highways Limited (£500k),
First North Law Limited (£0.1k), Brierley Homes Limited
(£0.1k), NYnet Limited (£1), Veritau (£1), Brimhams
Active Limited (£1), Central Northallerton Development
Company Limited (£2) and Maple Park (Hambleton) Limited
(£1) continued to be valued at Historic Cost and have been
omitted from the above. These share-holdings are valued at
Historic Cost because they do not have a quoted market price in an
active market and therefore their fair value cannot be measured
reliably. In addition these investments are not classified as
“Held for Sale” and therefore in accordance with The
Code, can be accounted for at Cost.
(d) Disclosure of nature and
extent of risks arising from Financial Instruments
The Council’s activities expose it to a
variety of financial risks, the key risks 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 funds available to meet its commitments to make
payments;
Re-financing risk
– the possibility that the Council might be
required to renew a financial instrument on maturity at
disadvantageous interest rates or terms; and
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:-
- adopt the requirements of
the Code of Practice;
- approve annually in advance,
prudential indicator limits for the following three
years;
-
review the Council’s overall
borrowing limits;
·
its maximum and minimum exposures to
fixed and variable rates;
·
its maximum and minimum exposures to
the maturity structure of its debt;
·
its maximum annual exposures to
investments maturing beyond a year; and
-
approve an investment strategy for
the forthcoming year setting out its criteria for both investing
and selecting investment counterparties in compliance with the
Government Guidance.
The Annual Treasury Management Strategy includes
these procedures in order to manage the risks of the
Council’s financial instrument exposure. It is approved
at the Council’s annual council tax setting budget meeting
before the beginning of the financial year.
Annual outturn reports are submitted to the Executive for Treasury
Management and Prudential Indicators which set out full details of
activities and performance during the preceding financial year. In
addition, quarterly reports on Treasury Management matters are
submitted to the Executive as part of the Council’s Quarterly
Performance Monitoring report and periodic meetings are held between the Corporate Director - Strategic Resources,
the Chairman of the Audit Committee and the Deputy Leader to
discuss issues arising from the day to day management of Treasury
Management activities. The Audit Committee is responsible for
scrutinising the Council’s Treasury Management activities and
receives regular reports and updates on Treasury Management
matters.
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 outlined in the treasury
management strategy.
The Council relies on credit ratings and
“ratings watch” and “outlook” notices
published by the three credit rating agencies (Fitch, Moody’s
and Standards & Poor’s) to establish the credit quality
of counterparties and investment schemes. All three credit rating
agencies also produce a Sovereign Rating which assesses a
country’s ability to support a financial institution should
they get into difficulty.
No combination of ratings can be viewed as
entirely fail-safe and all credit ratings, ratings watches and
outlooks are monitored on a daily basis and changes made as
appropriate. In addition, the Council takes into account trends
within the Credit Default Swap (CDS) Market. Since they are a
traded instrument they reflect the market perception of an
institution’s credit quality unlike credit ratings which
often focus on a longer term view. The Council also monitors other
sources of market intelligence, including the financial press, for
rumours and speculation which may impact on organisations which the
Council may invest with.
Further details of the Council’s
investment criteria are included in the Annual Treasury Management
Strategy, a copy of which is available on the Council’s
website, www.northyorks.gov.uk.
In addition, the Council has set maximum
investment limits for each organisation which also reflect that
institution’s credit worthiness – the higher the credit
quality, the greater the investment limit. These limits also
reflect UK Government involvement (i.e. Government ownership or
being part of the UK Government guarantee of liquidity).
These limits can be summarised as
follows:-
Maximum
Investment
Limit
Criteria
£75m
– UK "Nationalised" Banks / UK Banks with
UK Central Government Involvement
£20m -
£75m
- Selected UK "Clearing Banks" and other UK
based Banks and Building Societies
£20m -
£40m
- High quality Foreign Banks
The Council’s maximum exposure to credit
risk in relation to its investments in Banks and Building Societies
cannot be assessed generally as the risk of any institution failing
to make interest payments or repay the principal sum will be
specific to each individual institution. A risk of
recoverability applies to all of the Council’s deposits,
however, there was no evidence at the 31st March 2025 that this was
likely to occur.
The following analysis summarises the
Council’s potential maximum exposure to credit risk as at
31st March 2025, based on experience of default assessed by the
credit rating agencies and experience of its customer collection
levels over the last five financial years, adjusted to reflect
current market conditions.
Amounts Arising from Expected Credit
Loss
The Council has assessed all its short and long
term investments and concluded that the expected credit loss is not
material, therefore no allowances have been made.
A summary of the credit quality of the
Council’s investments at 31st March 2025 is shown below along
with the potential maximum exposure to credit risk, based on
experience of default and collectability.
The Council’s exposure to
credit risk can also be analysed by the Sovereign Rating of the
Country in which the financial institution is domiciled as
follows:-
The Council does not generally allow credit for
its trade debtors. Analysis of invoices raised as at 31st March
2025, which are included within the £186.9m Short Term
Debtors, can be analysed by past-due and age status as
follows:-
It is considered that £48.6m of the
£93.7m debtors invoice balance is past its due date for
payment. The Council maintains an Expected Loss Provision for debts
based on both the age of the debt and the likelihood of a continued
dispute or future settlement. No further assessment of the fair
value has therefore been made. Amounts are carried on the Balance
Sheet at their amounts outstanding and no amounts have been
included in the table for the Councils exposure to
default.
Liquidity Risk
The Council manages its liquidity position
through the risk management procedures above (the setting and
approval of prudential indicators and the approval of the treasury
and investment strategy reports), as well as through a
comprehensive cash flow management system, as required by the CIPFA
Code of Practice. This seeks to ensure that cash is available
when needed.
The Council has ready access to borrowings from
the money markets to cover day to day cash flow need, whilst the
PWLB and money markets provide access to longer term funds.
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 meet its
commitments under financial instruments.
The approved prudential indicators “limits
for the maturity structure of debt” and the “limits
placed on investments for greater than one year in duration”
are the key parameters used to address liquidity risk. The maturity
of debt limit is used when carefully planning new loans to be taken
and (where it is economic to do so) making early loan repayments.
Also the limit placed on investments is monitored when considering
cash flow needs and placing funds in the longer term.
Creditors are paid in accordance with
suppliers’ terms which, for liquidity risk purposes to the
Council, are less than one year and are not shown in the table
above. Further analysis of creditors can be found in note
33.
All investments held with banks and financial
institutions are due to mature within less than one
year.
Refinancing and Maturity risk
The Council maintains a significant debt and
investment portfolio. Whilst the cash flow procedures above
are considered against the refinancing risk procedures, longer-term
risk to the Council relates to managing the exposure to replacing
financial instruments as they mature. This risk relates to
both the maturing of longer term financial liabilities and longer
term financial assets.
The approved treasury indicator limits for the
maturity structure of debt and the limits placed on investments
placed for greater than one year in duration are the key parameters
used to address this risk. The Council approved 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
financial liabilities and amending the profile through either new
borrowing or the rescheduling of the existing debt; and
-
monitoring the maturity profile of
investments to ensure sufficient liquidity is available for the
Council day to day cash flow needs, and the spread of longer term
investments provides stability of maturities and returns in
relation to the longer term cash flow needs.
The maturity analysis of financial liabilities
(borrowing) is as follows:-
Market Risk - Interest rate risk
The Council is exposed to interest rate
movements on its borrowings and investments. Movements in
interest rates have a complex impact on the Council, depending on
how variable and fixed interest rates move across differing
financial instrument periods. For instance, a rise in
variable and fixed interest rates would have the following
effects:-
- borrowings at variable rates
- the interest expense charged to the
Comprehensive Income and Expenditure Statement will
rise;
- borrowings at fixed rates
- the fair value of the borrowing liability will
fall;
- investments at variable
rates
- the interest income credited to the
Comprehensive Income and Expenditure Statement will
rise;
- investments at fixed rates
- the fair value of the assets will
fall.
Borrowings are not carried at fair value on the
Balance Sheet, so nominal gains and losses on fixed rate borrowings
would not impact on the Comprehensive Income and Expenditure
Statement. However, changes in interest payable and
receivable on variable borrowings and investments will be posted to
the Comprehensive Income and Expenditure Statement and affect the
General Working Balance.
The Treasury Management strategy includes
sensitivity analysis and the prudential indicators for managing
interest rate risk. One of the prudential indicators provides
maximum and minimum limits for fixed and variable interest rate
exposure. The treasury team also monitors the market and forecasts
interest rates to adjust exposures accordingly. For example,
during periods of falling interest rates, and where economic
circumstances are favourable, fixed rate investments may be taken
for longer periods to secure better long term returns.
If all interest rates had been 1.0% higher, with
all other variables held constant, the financial effect would
be:-
The impact of a 1.0% fall in interest rates
would be as above but with the movements being reversed.
Market Risk – Price risk
The Council does not invest in equity shares but
does have shareholdings to the value of £3.5m in Yorwaste
Limited, £0.5m in Align Property Partners Limited, £0.5m
NY Highways Limited, £100 in First North Law Limited,
£100 in Brierley Homes Limited and a nominal value of £1
in NYnet Limited, Brimhams Active Limited, Maple Park Limited and
Veritau Limited. These holdings are generally illiquid and
therefore are not exposed to losses arising from movements in the
prices of these shares.
The shareholdings have arisen as they have been
acquired rather than originated by the Council. These long term
investments are as a result of acquisition of specific interest and
are not quoted in an active market. The Council is not exposed to
price movements.
The value of the above shares are classified as
loans and receivables as a reliable fair value cannot be
determined.
Further information can be found in note 30 Long
Term Investments.
Market Risk – Foreign exchange risk
The Council has no financial assets or
liabilities denominated in foreign currencies and thus has no
exposure to loss arising from movements in exchange
rates.
41.
Land at Whitby Harbour
Section
22 of the
Narrative Report provides an update on the objections to the
Council’s 2015/16 accounts and outlines the judgement handed
down by the Court in relation to the status of the land at Whitby
Harbour.
Following the outcome of the court ruling, the
Council has reviewed the income and expenditure that should be
attributed to Whitby Harbour and will hold those funds separately
to the Council’s other activities. The table below
shows the individual financial performance of Whitby Harbour based
on the allocation of income and expenditure as dictated by the
court ruling. The figures for 2023/24 have been restated in
order to be comparable.
Income and
Expenditure
Whitby Harbour
Reserves
The value of the assets that sit
within Whitby Harbour, as defined by the judgement, are as
follows:
Scarborough Harbour Revenue
Account
Following the court judgement in relation to
Whitby Harbour, a similar exercise of historical income and
expenditure reallocation was undertaken, from 2021/22 to 2024/25,
to reflect income and expenditure that should be held as part of a
separate account for Scarborough Harbour. The table below
shows the individual financial performance of Scarborough Harbour
based on the allocation of income and expenditure as dictated by
the court ruling. The figures for 2023/24 have been restated
in order to be comparable.
Income and
Expenditure
Scarborough Harbour
Reserves
The value of the
assets that sit within Scarborough Harbour are as
follows:
HOUSING REVENUE ACCOUNT (HRA)
The HRA Income and Expenditure Statement shows
the economic cost in year of providing housing services in
accordance with generally accepted accounting practices, rather
than the amount to be funded from rents and government
grants. Authorities charge rents to cover expenditure in
accordance with regulations, this may be different from the
accounting cost. The increase or decrease in the year, on the
basis of which rents are raised, is shown in the Movement on the
HRA Statement.
Movement on the HRA
Statement
Note to the
movement on the HRA statement
(a)
HRA Self
Financing
During 2011, the Government
announced significant changes to the funding of the HRA. The
aim of the government reforms was to enable Councils to manage
their housing stock for the benefit of local residents in a
transparent, accountable and cost effective way. In practical
terms, the self financing initiative put an end to the housing
subsidy system and put authorities in a position where stock can be
supported from income raised within the HRA. New arrangements
were introduced from 1 April 2012, and in future the HRA will be a
self sufficient ring fenced account which will retain and use
rental income.
(b)
Depreciation
& Impairments
The following amounts were
charged to the Account in respect of revaluation and depreciation
of assets:
The operational /
non-operational split of the charges is as follows:
The following
amounts were charged to the service revenue accounts for impairment
and reversal of impairment costs where there has been an increase
in value:
Impairment occurs because
something has happened either to the non-current assets, or to the
economic environment in which they are used. A review for
impairment of a non-current asset whether carried at historical
cost or valuation should be carried out if events or changes in
circumstances indicate that the carrying amount of the non-current
asset may not be recoverable. The Statement of Accounting
Policies gives further information.
(c)
Provision For
Debt Impairment
The account is charged with the
‘top up’ required for provision toward debt impairment
in respect of rent arrears. An adjustment of £24k was
made during the year in respect of rent arrears in 2024/25.
The total rent arrears provision at 31 March 2025 amounted to
£934k.
(d)
Major Repairs
Reserve
The following is a statement of
the movements in this reserve during the financial year
2024/25:
(e) Housing Revenue Account
Non-Current Assets
The total balance
sheet value of non-current assets owned by the HRA is summarised as
follows:
Assets can be
defied as either operational (such as council dwellings and other
buildings) or non-operational (such as community land). The
split is summarised below:
Vacant Possession Value
The vacant
possession value of the houses within the HRA as at 31 March 2025
was £x,xxx.xm.
The substantial difference between the vacant possession value and
the balance sheet value of the dwellings demonstrates the economic
cost to Government of providing council housing at less than open
market value.
(f)
Capital
Receipts
Capital receipts
totalling £2,984k were received by the HRA in 2024/25.
The total can be broken down as follows:
(g)
Capital
Expenditure
Capital expenditure
and sources of financing during the year were as
follows:
(h)
Rent
Arrears
At the end of the
financial year 2024/25, rent arrears as a proportion of gross
income are 3% (£1,287k) from 3.25% (£1,278k) in
2023/24.
(i)
Revenue
Expenditure Financed from Capital Under Statute
(REFCUS)
Legislation in
England and Wales allows some expenditure to be classified as
capital for funding purposes when it does not result in an asset
being carried on the Balance Sheet. The purpose of this is to
enable it to be funded from capital resources rather than being
charged to the HRA.
(j)
Housing
Stock
The analysis of the
HRA housing stock is summarised as follows:
(k)
Capital Asset
Charges Accounting Adjustment
The Code of
Practice requires an explanation of the capital assets accounting
adjustment, calculated in accordance with the Item 8 Credit and
Item 8 Debit (General) Determination for the year.
In accordance with
the calculation for the Capital Asset Charges Accounting
Adjustment, interest is payable on the mid-year HRA capital
financing requirement, except that where the CFR is negative, where
interest is receivable.
The costs of
impairment are included as charges to the HRA Income and
Expenditure Account. The effect of the capital asset charges
accounting adjustment is that the impairment cost is reversed out
of the HRA in the Movement on the HRA Statement as this is not a
cost to be borne by HRA Tenants. For 2024/25 the impairment
charge is £3.928m (£8.806m in 2023/24).
The Collection Fund
is an agent's statement that reflects the statutory obligation for
billing authorities to maintain a separate Collection Fund. The
statement shows the transactions of the billing authority in
relation to the collection from taxpayers and distribution to local
authorities and the Government of Council Tax and Non-Domestic
Rates (NDR).
NOTES TO THE
COLLECTION FUND
1.
Income
from Council Tax
Council Tax is charged on
residential properties based upon valuation bandings established
when the system was introduced in 1993. The Tax base for
North Yorkshire Council was calculated at £246,009 for
2024/25, being the total number of properties converted to an
equivalent number of Band D dwellings. The number of
properties in each band and the calculation of the tax base
(adjusted to reflect relevant discounts and exemptions) was
approved by the Full Council on 21 February 2024 and is summarised
below:
2.
Income from
Business Ratepayers
The Council collects National
Non-Domestic Rates (NNDR) for its area based on local
rateable values provided by the
Valuation Office Agency (VOA) multiplied by a uniform business
rate set
nationally by Central Government, these are as follows:
3.
Allocation of
collection Fund Surplus
INTRODUCTION
1.
The Code of Practice on Local
Authority Accounting recognises the wide diversity of service
delivery vehicles used nationally by Local Authorities. The
Council produces a consolidated set of Group Accounts to show the
totality of its operations in a transparent manner.
The Council has undertaken
significant research to identify and document its relationships
with all partners, companies, joint ventures and voluntary
organisations. Consideration of issues such as the type of
interest, ownership of share capital, membership of appropriate
committees, the degree of operational and financial control, access
to benefits and exposure to risks have been key elements in this
analysis.
SUMMARY OF FINDINGS
2.
In the majority of cases the
arrangements for accounting for relationships with these
organisations are fully covered within the Council’s
Comprehensive Income and Expenditure Statement. Similarly any
assets and liabilities generated are accounted for within the
Council’s Balance Sheet.
As a result there is no ‘group’ relationship for most
of these arrangements.
After consideration of all relevant criteria,
the Council has determined that for 2024/25, it has a group
relationship with eight bodies (including their subsidiaries where
appropriate):-
- Align Property Partners
Limited;
- Align Property Services
Limited;
- Bracewell Homes
Limited;
-
Brierley Homes Limited;
-
Brimhams Active Limited;
-
First North Law Limited;
-
Maple Park (Hambleton)
LLP;
-
NY Highways Limited;
- NYnet Limited;
- Veritau Limited;
- Yorkshire Purchasing
Organisation; and
- Yorwaste Limited.
(a)
Align Property Partners
Limited
The Council owns 100% of the issued share
capital of Align Property Partners Limited; a company established
in 2016 whose principal activities are architectural, engineering
and property consultancy services. The Council has provided a
loan facility to Align Property Partners Limited for
£500k.
Align Property Partners Limited has not been
consolidated into North Yorkshire Council’s Group Accounts as
its values do not materially impact on the group financial
position.
(b)
Align Property Services
Limited
The Council owns 100% of the issued
share capital of Align Property Services Limited; a company
established in 2023 whose principal activities are architectural,
engineering and property consultancy services to the Council and
external clients.
Align Property Services Limited has
not been consolidated into North Yorkshire Council’s Group
Accounts as its values do not materially impact on the group
financial position.
(c)
Bracewell Homes
Limited
Bracewell Homes Limited is a wholly
owned company limited by guarantee; a company established in 2019,
whose principal activities are to provide high quality homes to
more residents across the Harrogate area. The Council has
provided a loan facility to Bracewell Homes Limited for
£10m.
Bracewell Homes Limited has not been
consolidated into North Yorkshire Council’s Group Accounts as
its values do not materially impact on the group financial
position.
(d)
Brierley Homes
Limited
The Council owns 100% of the issued share
capital of Brierley Homes Limited; a company established in 2016
whose principal activities are development of building projects,
construction of domestic buildings, buying and selling of own real
estate and other letting and operating of own or leased real
estate. The Council has provided a loan facility to Brierley
Homes Limited of £25m.
Brierley Homes Limited has not been consolidated
into North Yorkshire Council’s Group Accounts as its values
do not materially impact on the group financial
position.
(e)
Brimhams
Active Limited
The Council owns 100% of the issued share
capital of Brimhams Active Limited; a company established in 2021
whose principal activities as a community health and wellbeing
company, is to operate gyms, leisure centres and community hubs
within the Harrogate area.
Brimhams Active Limited has not been
consolidated into North Yorkshire Council’s Group Accounts as
its values to not materially impact on the group financial
position.
(f)
First North Law
Limited
The Council owns 100% of the issued
share capital of First North Law Limited; a company established in
2016 whose principal activities are the provision of professional
legal services. The Council has provided a loan facility to
First North Law Limited for £250k.
First North Law Limited has not been
consolidated into North Yorkshire Council’s Group Accounts as
its values do not materially impact on the group financial
position.
(g)
Maple Park (Hambleton)
LLP
The Council owns 100% of the issued
share capital of Maple Park (Hambleton) LLP; a company established
in 2022 whose principal activities are the provision of crematorium
and wake facilities.
Maple Park (Hambleton) LLP has not
been consolidated into North Yorkshire Council’s Group
Accounts as its values do not materially impact on the group
financial position.
(h)
NY Highways
Limited
NY Highways Limited is a company set up by the
Council gin June 2021 to undertake and deliver all highway
maintenance activities. The Council has provided a loan
facility to NY Highways for £11m.
NY Highways Limited has been
consolidated into North Yorkshire Council’s Group
Accounts.
(i)
NYnet Limited
NYnet Limited is a company set up by the Council
in February 2007 to provide a world class high speed communication
(broadband) infrastructure across North Yorkshire.
The Company has competitively procured a
‘next generation broadband network’ and sells capacity
on that network to public sector organisations (including the
Council) as well as private sector internet service providers
(ISPs) who then sell onto the end users of businesses and
consumers.
The Company is limited by shares, which are 100%
owned by the Council and is managed by a Board of Directors
appointed by the Council.
NYnet 100 Limited was established in 2011/12 to
facilitate and fund on-going developments around the
“Connecting North Yorkshire” project.
The financial results reported are for the
entire NYnet sub-group. NYnet 100 Ltd is 100% owned by NYnet
Limited.
A working capital loan facility is being
provided by the Council with the sum taken up at 31st March 2024
being nil. This loan is
included in the Council’s Balance Sheet as a Long Term
Debtor.
NYnet Limited has been consolidated into North
Yorkshire Council’s Group Accounts as a consolidated
subsidiary.
(j)
Veritau Limited
In April 2009 North
Yorkshire Council and the City of York Council worked in
partnership to develop a shared service covering all the functions
of internal audit, counter fraud and information
governance.
The company is
wholly owned by both councils, with each council holding 50% of the
shares. Veritau Limited has responsibility for carrying
out all internal audit, information governance and counter
fraud services for the two councils and a number of other District
Councils.
Veritau Limited is not consolidated
into North Yorkshire
Council’s Group
Accounts as their values do not materially impact on the group
financial position.
(k)
Yorkshire Purchasing Organisation
(YPO)
Established as a joint committee of Local
Authorities in 1974, YPO is a purchasing and supply service for
office supplies, stationery and general equipment. The company
supplies the constituent 13 member authorities but also schools,
the voluntary sector and the general public. YPO operates on a
self-financing basis with no subsidies payable by any member
authority. Any surpluses are used for dividend payment primarily
but with some scope for re-investment.
Due to the involvement of all member authorities
in the Management Committee and its increasing use of customers
outside of the local authority market, the Council does not exert a
significant level of influence over YPO’s activities.
Analysis of the relationship for group Account purposes concludes
that it is equivalent to a simple investment. As the Council made
no original investment in 1974 and has no share capital, no
consolidation adjustments are necessary.
(l)
Yorwaste Limited
The Council owns 78% of the issued share capital
of Yorwaste Limited; a company established in 1993 and based in
Northallerton whose principal activity is the provision of waste
disposal facilities by the operation and management of landfill
sites/recycling centres. The remaining shareholder in Yorwaste
Limited is the City of York Council holding 22%.
The policies of Yorwaste Limited in relation to
Fixed Assets are different to that operated by the Council. All the
company’s Fixed Assets are valued at historic cost less
depreciation. The useful economic life of each asset is calculated
individually with depreciation calculated on a straight line basis
taking into account both commercial and technical
obsolescence.
The total issued share capital of Yorwaste
Limited is £4,526k (a total of 4,526,000 ordinary shares
issued at £1 each).
The Council has provided a loan facility to
Yorwaste Limited for £3.7m. This loan is included in the
Councils Balance Sheet as a Long Term Debtor.
Yorwaste Limited has paid the Council a dividend
in 2024/25 of £xxx
(2023/24 £Nil).
Yorwaste Limited has been consolidated into
North Yorkshire Council’s Group Accounts as a
subsidiary.
FINANCIAL STATEMENTS AND
RESULTS
3.
The Group Accounts for the Council
are based upon the consolidation of the Council, NYnet Limited,
Yorwaste Limited and NY Highways Limited. It should be noted
that although adjustments have been made to facilitate
comparability between the sets of Accounts, there is a fundamental
difference between the objectives of the organisations with the
Council being a non-profit making body. The figures included are
based on Draft Accounts for the three bodies. These companies do
not report under IFRS, rather as small unlisted companies, and
their accounts are produced under UK GAAP, incorporating FRS 102 in
their 2024/25 accounts.
Although the subsidiaries
consolidated into the group accounts may use different accounting
policies to the Council, there is no material difference and no
material effect to the reader's interpretation of the
accounts. For example, non-current assets have been
consolidated using the valuation basis specified by the Code unless
the entity has a distinct class of asset that the Council does not
and in this case the subsidiary's policy is used. Yorwaste
owns landfill sites and account for restoration, afterlife and site
life development costs which the council as a single entity does
not. Details of Yorwaste's accounting policies for these
assets can be found in their published accounts at Companies
House.
GROUP
COMPREHENSIVE INCOME AND EXPENDITURE
STATEMENT
GROUP
COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT (continued)
This statement shows the accounting cost in the
year of providing services in accordance with generally accepted
accounting practices, rather than the amount to be funded from
taxation. Authorities raise taxation to cover expenditure in
accordance with statutory requirements; this may be different from
the accounting cost. The taxation position is shown in both the
Group Expenditure and Funding Analysis and the Group Movement in
Reserves Statement.
GROUP MOVEMENT IN
RESERVES STATEMENT
This statement shows the movement from the start
of the year to the end on the different reserves held by the
Council, analysed into ‘Usable Reserves’ (ie those that
can be applied to fund expenditure or reduce local taxation) and
other ‘Unusable Reserves’. The Movement in Reserves
Statement shows how the movements in year of the Council’s
reserves are broken down between gains and losses incurred in
accordance with generally accepted accounting practices and the
statutory adjustments required to return to the amounts chargeable
to Council Tax for the year. The net increase / decrease line shows
the statutory General Fund balance movement in the year following
those adjustments.
NOTES TO THE GROUP STATEMENTS
1.
Expenditure and Funding Analysis
2024/25
Adjustments from General Fund to arrive at the
Comprehensive Income and Expenditure Statement amounts
2.
The Individual Group Companies
together with consolidating adjustments are identified within the
following schedules for the Comprehensive Income and Expenditure
Statement and the respective Balance Sheets.
3.
Movement in Property, Plant and
Equipment
4.
Cash and Cash
Equivalents
5.
Short Term Debtors
6.
Short Term
Creditors
7.
Provisions
Comparative Movements in 2023/24
FUND ACCOUNT
FOR THE YEAR ENDED 31ST MARCH
2025
NORTH YORKSHIRE PENSION
FUND – NET ASSETS STATEMENT
The accounts
summarise the transactions of the Fund and deal with the net
assets. They do not take account of the obligations to pay pensions
and benefits which fall after the end of the financial
year.
NOTES TO THE NORTH YORKSHIRE PENSION FUND
ACCOUNT
FOR THE YEAR ENDED 31ST
MARCH 2025
1.
Description of the
Fund
The North Yorkshire Pension Fund (NYPF or
“the Fund”) is part of the Local Government Pension
Scheme (LGPS) and is administered by North Yorkshire Council
(NYC). The Council is the reporting entity for the
Fund.
The following description of the Fund is a
summary only. For more detail, refer to the NYPF Annual
Report 2024/25 and the statutory powers underpinning the Scheme,
namely the Public Service Pensions Act 2013 and the Local
Government Pension Scheme (LGPS) Regulations.
(a)
General
The Fund is governed by the Public Service
Pensions Act 2013 and is administered in accordance with the
following secondary legislation:
·
the LGPS Regulations 2013 (as
amended)
·
the LGPS (Transitional Provisions,
Savings and Amendment) Regulations 2014 (as amended)
·
the LGPS (Management and Investment
of Funds) Regulations 2016 (as amended)
It is a contributory defined benefit pension
scheme administered by NYC to provide pensions and other benefits
for pensionable employees of NYC and a range of other scheduled and
admitted bodies within the county area. Teachers, police
officers and fire fighters are not included as they come within
other national pension schemes.
The Fund is overseen by the Pension Fund
Committee, which is a committee of NYC.
(b)
Membership
Membership of the LGPS is voluntary and
employees are free to choose whether to join the Fund, remain in
the Fund or make their own personal arrangements outside the
Scheme. New joiners are auto-enrolled to the Fund but may
subsequently opt-out.
Organisations participating in NYPF
include:
·
scheduled bodies,
which are local authorities, academy trusts and similar bodies
whose staff are automatically entitled to be members of the
Fund
·
admitted bodies,
which are other organisations that participate in the Fund under an
admission agreement between the Fund and the relevant
organisation. Admitted bodies include voluntary, charitable
and similar bodies or private contractors undertaking a local
authority function following outsourcing to the private
sector.
At 31 March 2025 there were 124 contributing
employer organisations within NYPF including the Council itself,
and over 103,000 individual members.
Active, pensioner and deferred pensioner
numbers, split between NYC as the Administering
Authority and all other employers
were as follows:
(c)
Funding
Benefits are funded by contributions and
investment earnings. Contributions are made by active members
of the Fund in accordance with the LGPS Regulations 2013 and range
from 5.5% to 12.5% of pensionable pay for the financial year ended
31 March 2025. Employee contributions are supplemented by
employers’ contributions which are primarily determined as
part of each triennial valuations. The last such valuation
was on 31 March 2022 and that set the contribution rates for
2023/24, 2024/25, 2025/26; details of the rates for individual
employers are available on the Fund’s website.
(d)
Benefits
Prior to 1 April 2014 pension benefits under the
LGPS up to 31 March 2014 are based on final pensionable pay and
length of pensionable service.
For service up to 31 March 2008 each year worked
is worth 1/80th of final pensionable salary, an
automatic lump sum of three times salary is payable, and part of
the annual pension can be exchanged for a one-off tax free cash
payment at the rate of £12 lump sum for each £1 pension
given up. For service from 1 April 2008 each year worked is
worth 1/60th of final pensionable salary, there is no
automatic lump sum, and part of the annual pension can be exchanged
at the same rate as for service up to 31 March 2008.
From 1 April 2014 the scheme became a career
average scheme whereby members accrue benefits based on their
pensionable pay in that year at an accrual rate of
1/49th. Accrued pension is adjusted annually in
line with CPI.
There are a range of other benefits provided
under the Scheme including early retirement, disability pensions
and death benefits. For more details please refer to the
Publications section on the Fund’s website at https://www.nypf.org.uk/index.shtml.
2.
Basis of
Preparation
The Statement of Accounts summarises the
Fund’s transactions for the 2024/25 financial year and its
year end position as at 31 March 2025. The accounts have been
prepared in accordance with the Code of Practice on Local Authority
Accounting in the United Kingdom 2024/25 which is based upon
International Financial Reporting Standards (IFRS), as amended for
the UK public sector. The accounts have been prepared on the
basis that functions of the Pension Fund will continue in
operational existence for the foreseeable future.
The accounts report on the net assets available
to pay pension benefits. They do not take account of
obligations to pay pensions and benefits which fall due after the
end of the financial year.
3.
Summary of Significant Accounting
Policies
Fund Account – Revenue Recognition
(a)
Contribution
Income
Normal contributions, both from the members and
from the employer, are accounted for on an accruals basis at the
percentage rate recommended by the fund actuary for employer
contributions and the rates set by statute for employee
contributions.
Employer deficit funding contributions are
accounted for in the period in which they are payable under the
schedule of contributions set by the Actuary or on receipt if
earlier than the due date.
Employers’ augmentation contributions
(pension strain due to early retirement and compensatory added
years) are accounted for in the period in which the liability
arises. Any amount due in year but unpaid will be classed as
a current asset. Amounts due in future years are classed as
long term assets.
(b)
Transfers To and From Other
Schemes
Transfer values represent the amounts received
and paid during the year for members who have either joined or left
the Fund during the financial year and are calculated in accordance
with LGPS Regulations (see notes 8 and 10).
Individual Transfers in/out are accounted for
when received/paid, which is normally when the member liability is
accepted or discharged.
Transfers in from members wishing to use the
proceeds of their additional voluntary contributions or other
defined contribution arrangements to purchase scheme benefits are
accounted for on a receipts basis and are included in Transfers In
(see note 8).
Bulk (group) transfers are accounted for on an
accruals basis in accordance with the terms of the transfer
agreement.
(c)
Investment Income
Interest income is recognised in the Fund as it
accrues, using the effective interest rate of the financial
instrument as at the date of acquisition or origination.
Income includes the amortisation of any discount or premium,
transaction costs or other differences between the initial cost of
the instrument and its value at maturity calculated on an effective
interest rate basis.
Dividend income is recognised on the date the
shares are quoted ex-dividend. Any amount not received by the
end of the reporting period is disclosed in the Net Assets
Statement as a current asset.
Distributions from pooled funds are recognised
at the date of issue. Any amount not received by the end of
the reporting period is disclosed in the Net Assets Statement as a
current asset.
Changes in the net market value of investments
are recognised as income/expenditure and comprise all realised and
unrealised profits/losses during the year.
Fund Account – Expense Items
(d)
Benefits Payable
Pensions and lump sum benefits payable include
all amounts known to be due as at the financial year end. Any
amounts due but not paid are disclosed in the Net Assets Statement
as current liabilities.
(e)
Taxation
The Fund is a registered public service scheme
under Section 1(1) of Schedule 36 of the Finance Act 2004 and as
such is exempt from UK income tax on interest received and from
capital gains tax on the proceeds of investments sold. Income
from overseas investments suffers withholding tax in the country of
origin, unless exemption is permitted. Irrecoverable tax is
accounted for as a Fund expense as it arises.
(f)
Management
expenses
The Fund discloses its pension fund management
expenses in accordance with the CIPFA guidance Accounting for Local
Government Pension Scheme Management Expenses (2016), as shown
below. All items of expenditure are charged to the fund on an
accruals basis as follows:
|
Administrative expenses
|
All staff costs of the pensions administration
team are charged direct to the Fund. Associated management,
accommodation and other overheads are apportioned to this activity
and charged as expenses to the Fund.
|
|
Oversight and governance
|
All staff costs associated with governance and
oversight are charged direct to the Fund. Associated management,
accommodation and other overheads are apportioned to this activity
and charged as expenses to the Fund.
|
|
Investment management expenses
|
Fees of the external investment managers are set
out in the respective mandates governing their appointments.
Broadly, these are based on the market value of the investments
under their management and therefore increase or reduce as the
value of these investments change.
In addition, the Fund has negotiated with the
following managers that an element of their fee will be performance
related:
·
Baillie Gifford & Co - Global
Equities
·
Arcmont (formerly Bluebay) –
Private Debt
·
Permira – Private
Debt
·
BCPP – Infrastructure, Private
Debt and Climate Opportunities
Where an investment manager’s fee note has
not been received by the year-end date, an estimate based upon the
market value of their mandate as at the end of the year is used for
inclusion in the Fund Account.
|
Net Assets Statement
(g)
Lifetime
Allowances
Members are entitled to request the
Fund pays their tax liabilities due in respect of lifetime
allowance in exchange for a reduction in pension. Where the Fund
pays member tax liabilities direct to HMRC it is treated as an
expense in the year in which the payment occurs.
(h)
Financial Assets
Equity shares in the LGPS asset pool, Border to
Coast Pensions Partnership (BCPP), are valued at transaction price,
i.e. cost, as an appropriate estimate of fair value. An asset is
recognised in the Net Assets Statement on the date the Fund becomes
party to the contractual acquisition of the asset. From this
date any gains or losses arising from changes in the fair value of
the asset are recognised in the Fund Account.
If valuations at the reporting date are not yet
available, as may be the case for private debt and infrastructure
investments, the latest available valuation is adjusted for
cashflows in the intervening period.
The values of investments as shown on the Net
Assets Statement have been determined at fair value in accordance
with the requirements of the Code and IFRS 13 (see Note 16).
For the purposes of disclosing levels of fair value hierarchy, the
Fund has adopted the classification guidelines recommended in
Practical Guidance on Investment Disclosures (PRAG /
Investment Association, 2016).
(i)
Foreign Currency
Transactions
Dividends, interest and purchases and sales of
investments in foreign currencies have been accounted for at the
spot market rates at the date of the transaction. End of year
spot market exchange rates are used to value cash balances held in
foreign currency bank accounts, market values of overseas
investment and purchases and sales outstanding at the end of the
reporting period.
(j)
Derivatives
The Fund does not hold derivatives for
speculative purposes (see note 15).
(k)
Cash and Cash
Equivalents
Cash comprises cash in hand and demand deposits,
and includes amounts held by the Fund’s external managers and
custodian.
Cash equivalents are short term, highly liquid
investments that are readily convertible into known amounts of cash
and that are subject to minimal risk of changes in
value.
(l)
Liabilities
The Fund holds liabilities at amortised cost as
at the reporting date. A liability is recognised in the Net
Assets Statement on the date the Fund becomes party to the
liability. From this date any gains or losses arising from
changes in the fair value of the liability are recognised in the
Fund Account as part of the change in market value of
investments.
(m)
Actuarial Present Value of
Promised Retirement Benefits
The actuarial present value of promised
retirement benefits is assessed on a triennial basis by the
Fund’s Actuary in accordance with the requirements of IAS26
and relevant actuarial standards.
As permitted under the Code, the Fund has opted
to disclose the actuarial present value of promised retirement
benefits by way of an Appendix to these
statements.
(n)
Additional Voluntary
Contributions
The Fund provides an Additional Voluntary
Contribution (AVC) scheme for its members, the assets of which are
invested separately from those of the Fund. The Fund has
appointed Prudential as its AVC provider. AVCs are paid to
the AVC provider by employers and are specifically for providing
additional benefits for individual contributors. Each AVC
contributor receives an annual statement showing the amount held in
their account and the movements in the year.
AVCs are not included in the accounts in
accordance with Section 4(1)(b) of the LGPS (Management and
Investment of Funds) Regulations 2016 but are disclosed for
information only (see note 23).
(o)
Contingent assets and contingent
liabilities
A contingent asset arises where an event has
taken place giving rise to a possible asset whose existence will
only be confirmed or otherwise by the occurrence of future
events.
A contingent liability arises where an event has
taken place prior to the year-end giving rise to a possible
financial obligation whose existence will only be confirmed or
otherwise by the occurrence of future events. Contingent
liabilities can also arise in circumstances where a provision would
be made, except that it is not possible at the balance sheet date
to measure the value of the financial obligation
reliably.
Contingent assets and liabilities are not
recognised in the Net Assets Statement but are disclosed by way of
narrative in the notes.
4.
Critical Judgement in Applying
Accounting Policies
There were no material instances of critical judgements in relation
to the application of the
accounting policies of the Fund resulting in significant impact to
the presentation of
the 2024/25 Financial Statements.
5.
Assumptions Made About the Future
and Other Major Sources of Estimation Uncertainty
These accounts require management to make
judgements, estimates and assumptions that affect the amounts
reported for assets and liabilities at the balance sheet date and
for revenue and expenses during the year. Estimates are made
taking into account historical experience, current trends, and
other relevant factors. However, the nature of estimation
means that the actual outcomes could differ from those based on
these assumptions and estimates.
Private equity investments are valued at fair
value in accordance with International Private Equity and Venture
Capital Valuation Guidelines (2018). These investments are
not publicly listed and as such there is a degree of estimation
involved in the valuation, with other private market (unlisted)
assets are treated similarly.
Investments, where at least one input with a
material effect on the instrument’s fair value is not based
on observable market data, are classified as Level 3 assets within
the Fair Value Hierarchy. The Fund held £708.0m of
financial assets under this valuation basis as at 31 March 2025 (31
March 2024 £548.7m). A description of the valuation
basis for each level 3 asset along with an associated sensitivity
analysis can be found in Note 16.
6.
Events After the End of the
Reporting Period
In June 2023 the High Court (Virgin Media
Limited v NTL Pension Trustees II Limited) ruled that amendments to
certain defined benefit pension schemes were void if they were not
accompanied by section 37 actuarial certificates. The Court
of Appeal rejected an appeal of this decision in July 2024.The
Local Government Pension Scheme is affected by this
ruling.
The Government Actuary’s Department has so
far failed to locate evidence that section 37 certificates are in
place for all amendments. Work is ongoing to discover whether
the evidence exists. Until this work is complete, it is not
possible to conclude whether there is any impact on the value of
retirement benefits under IAS26 or if it can be reliably
estimated.
Although this is the current position in law,
the Government is being lobbied to make a change to the regulations
to retrospectively validate amendments which would otherwise be
void because of a failure to have obtained section 37
certificates. The Government has an existing power to make
the necessary regulations but not yet said whether it will do
anything. There is also the possibility that Virgin Media
could seek permission to appeal to the Supreme Court.
Developments are being monitored. In the
current circumstances, it is not considered necessary to make any
allowance for the potential impact of the Virgin Media case in the
disclosure of the value of retirement benefits in the financial
accounts.
7.
Contributions
Receivable
By category
By authority
8.
Transfers In from Other Pension
Funds
Three transfers during 2024/25 were Group/Bulk
Transfers (£0 in 2023/24). An amount of £158.8k was
received from Redcar and Cleveland Pension Fund during October 2024
in relation to a Group Transfer in to NYPF. Group Transfers out of
NYPF saw payments of £252.3k made to East Riding Pension Fund
in May 2024 and £16.28m to West Yorkshire Pension Fund in
December 2024.
9.
Benefits Payable
10.
Payments To and On Account of
Leavers
11.
Management
Expenses
Investment Management Costs includes
£3,863k (2023/24: £4,136k) in respect of performance
related fees payable to the Fund’s investment managers and
£7,354k in respect of transaction costs (2023/24;
£7,072k).
In addition to these costs, indirect costs are
incurred through the bid-offer spread on investments sales and
purchases. These are reflected in the cost of acquisitions
and in the proceeds from the sales of investments (see Note
14a).
12.
Investment
Income
13.
Other Fund Account
Disclosures
14.
Investments
(a)
Reconciliation of Movements in
Investments
(b)
Analysis of
Investments
(c)
Investments analysed by Fund
Manager
The investments BCPP Global Equity Alpha, BCPP
Listed Alternatives, BCPP Multi Asset Credit, BCPP Index Linked
Bonds, BCPP Investment Grade Credit, BCPP Infrastructure, Baillie
Gifford & Co and Threadneedle each represent more than 5%
of net assets. These investments are in pooled
funds.
15.
Analysis of
Derivatives
The Fund does not hold derivatives.
16.
Fair Value – Basis of
Valuation
The basis of the valuation of each class of
investment asset is set out below. There has been no change in the
valuation techniques used during the year. All assets have been
valued using fair value techniques which represent the highest and
best price available at the reporting date.
|
Description of
asset
|
Valuation
hierarchy
|
Basis of
valuation
|
Observable and
unobservable inputs
|
Key sensitivities
affecting the valuations provided
|
|
Market quoted investments
|
Level 1
|
Published bid market price ruling on
the final day of the accounting period
|
Not required
|
Not required
|
|
Quoted bonds
|
Level 1
|
Fixed interest securities are valued
at a market value based on current yields
|
Not required
|
Not required
|
|
Exchange traded pooled
investments
|
Level 1
|
Closing bid value on published
exchanges
|
Not required
|
Not required
|
|
Unquoted bonds
|
Level 2
|
Average of broker prices
|
Evaluated price feeds
|
Not required
|
|
Overseas bond options
|
Level 2
|
Option pricing model
|
Annualised volatility of
counterparty credit risk
|
Not required
|
|
Pooled investments – overseas
unit trusts and property funds
|
Level 2
|
Closing bid price
where bid and offer prices are published
Closing single price where single
price published
|
NAV-based pricing set on a forward
pricing basis
|
Not required
|
|
Pooled investments – hedge
funds
|
Level 3
|
Closing bid price
where bid and offer prices are published
Closing single price where single
price published
|
NAV-based pricing set on a forward
pricing basis
|
Valuations could be
affected by material events occurring between the date of the
financial statements provided and the pension fund’s own
reporting date, by changes to expected cashflows, and by any
differences between audited and unaudited accounts
|
|
Other unquoted and private
equities
|
Level 3
|
Comparable
valuation of similar companies in accordance with International
Private Equity and Venture Capital Valuation Guidelines
(2018)
|
EBITDA
multiple
Revenue
multiple
Discount for lack
of marketability
Control
premium
|
Valuations could be
affected by changes to expected cashflows, and by any
differences between audited and unaudited accounts
|
Sensitivity of assets valued at
level 3
Having analysed historical data and current
market trends, and consulted with independent investment advisors,
the Fund has determined that the valuation methods described above
are likely to be accurate to within the following ranges, and has
set out below the consequent potential impact on the closing value
of investments held at 31 March 2025.
a. Fair
Value Hierarchy
Asset and liability valuations have been
classified into three levels, according to the quality and
reliability of information used to determine fair values. Transfers
between levels are recognised in the year in which they
occur.
Level 1
Assets and liabilities at level 1 are those
where the fair values are derived from unadjusted quoted prices in
active markets for identical assets or liabilities. Products
classified as level 1 comprise quoted equities, quoted fixed
securities, quoted index linked securities and unit
trusts.
Level 2
Assets and liabilities at level 2 are those
where quoted market prices are not available; for example, where an
instrument is traded in a market that is not considered to be
active, or where valuation techniques are used to determine fair
value.
Level 3
Assets and liabilities at level 3 are those
where at least one input that could have a significant effect on
the instrument’s valuation is not based on observable market
data.
The following table provides an analysis of the
financial assets and liabilities of the Pension Fund grouped into
levels 1 to 3, based on the level at which the fair value is
observable.
b.
Reconciliation of Fair Value
Measurements Within Level 3
17.
Financial Instruments
(a)
Classification of Financial
Instruments
Accounting policies describe how different asset
classes of financial instruments are measured, and how income and
expenses, including fair value gains and losses, are
recognised. The following table summarises the carrying
amounts of financial assets and liabilities by category.
(b) Net Gains and
Losses on Financial Instruments
18.
Nature and Extent of Risks
Arising from Financial Instruments
Risk and Risk Management
The Fund’s primary long term risk is that
the Fund’s assets will fall short of its liabilities (i.e.
promised benefits payable to members). Therefore, the aim of
investment risk management is to minimise the risk of an overall
reduction in the value of the Fund and to maximise the opportunity
for gains across the whole Fund portfolio. The Fund achieves
this through asset diversification to reduce exposure to market
risk (price risk, currency risk and interest rate risk) and credit
risk to an acceptable level. In addition, the Fund manages
its liquidity risk to ensure there is sufficient liquidity to meet
the Fund’s forecast cash flows. NYC manages these
investment risks as part of its overall approach to Pension Fund
risk.
Responsibility for the Fund’s risk
management strategy rests with the Pension Fund Committee. A
Risk Register has been established to identify and analyse the
risks faced by NYC’s pensions operations. This document is
reviewed regularly to reflect changes in activity and in market
conditions.
(a) Market
Risk
Market risk is the risk of loss from
fluctuations in equity prices, interest and foreign exchange rates
and credit spreads. The Fund is exposed to market risk from
its investment activities, particularly through its equity
holdings. The level of risk exposure depends on market
conditions, expectations of future price and yield movements and
the asset mix.
The objective of the Fund’s Risk Register
includes identifying, managing and controlling market risk exposure
within acceptable parameters, whilst optimising the risk-adjusted
return.
In general, excessive volatility in market risk
is managed through the diversification of the portfolio in terms of
geographical and industry sectors and individual securities.
To mitigate market risk, the Pension Fund Committee (PFC) and its
investment advisers undertake appropriate monitoring of market
conditions and benchmark analysis.
The Fund manages these risks in two
ways:
·
the exposure of the
Fund to market risk is monitored through advice from the investment
advisers to ensure that risk remains within tolerable
levels
·
specific risk
exposure is limited by applying risk weighted maximum exposures to
individual investments through Investment Management
Agreements
Other Price Risk
Other price risk represents the risk that the
value of a financial instrument will fluctuate as a result of
changes in market prices (other than those arising from interest
rate risk or foreign exchange risk), whether those changes are
caused by factors specific to the individual instrument or its
issuer or factors affecting all such instruments in the
market.
The Fund is exposed to share and derivative
price risk. This arises from investments held by the Fund for
which the future price is uncertain. All securities
investments present a risk of loss of capital. The maximum
risk resulting from financial instruments is determined by the fair
value of the financial instruments.
The Fund’s investment managers mitigate
this price risk through diversification and the selection of
securities and other financial instruments is monitored to ensure
it is within limits specified in the Fund’s investment
strategy.
Other Price Risk – Sensitivity
Analysis
Following analysis of historical
data and expected investment return movement during the financial
year, in consultation with the Fund’s investment consultants,
the Fund has determined that the following movements in market
price risk are reasonably possible for the 2024/25 reporting
period.
The potential price changes
disclosed above are broadly consistent with a one-standard
deviation movement in the value of the assets. The sensitivities
are consistent with the assumptions contained in the investment
advisors’ most recent review. This analysis assumes that all
other variables, in particular foreign currency exchange rates and
interest rates, remain the same.
Had the market price of the Fund
investments increased/decreased in line with the above, the change
in the net assets available to pay benefits in the market price
would have been as follows (the prior year comparator is shown
below).
Interest Rate Risk
The Fund invests in financial assets for the
primary purpose of obtaining a return on investments. These
investments are subject to interest rate risks, which represent the
risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest
rates.
The Fund’s interest rate risk is monitored
by the Fund and its investment advisers through the risk management
strategy, including monitoring the exposure to interest rates and
assessment of actual interest rates against the strategic
benchmark.
The Fund’s direct exposure to interest
rate movements as at 31 March 2025 and 31 March 2024 is set out in
the tables below. These disclosures present interest rate
risk based on the underlying financial assets at fair
value.
The Fund recognises that interest rates can vary
and can affect both income to the Fund and the value of the net
assets available to pay benefits. For illustrative purposes
if it were to change by +/- 1% the values in the table above would
change by £148m for 2024/25 and £173m for
2023/24.
Currency Risk
Currency risk is the risk that the fair value of
future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Fund is exposed to
currency risk on financial instruments that are denominated in any
currency other than the functional currency of the Fund
(GBP). The Fund holds both monetary and non-monetary assets
denominated in currencies other than GBP.
The Fund’s currency rate risk is monitored
in accordance with the Fund’s risk management strategy,
including monitoring the range of exposure to currency
fluctuations.
After receiving advice it is considered that the
likely volatility associated with foreign exchange movements to be
+/-6.6%. A fluctuation of this size is considered reasonable
based on an analysis of the implied volatility of the 1-year
options contracts for the exchange rates in the financial
market.
Assuming all other variables, in particular,
interest rates remain constant, an 6.6% strengthening/weakening of
the pound against the various currencies in which the Fund holds
investments would increase/decrease the net assets available to pay
benefits as follows:
(b)
Credit Risk
Credit risk is the risk that the counterparty to
a transaction or a financial instrument will fail to discharge an
obligation and cause the Fund to incur a financial loss. The
market values of investments generally reflect an assessment of
credit in their pricing and consequently the risk of loss is
implicitly provided for in the carrying value of the Fund’s
assets and liabilities.
In essence the Fund’s entire investment
portfolio is exposed to some form of credit risk, where the risk
equates to the net market value of a positive derivative
position. However the selection of high quality
counterparties, brokers and financial institutions minimises credit
risk that may occur through the failure to settle a transaction in
a timely manner.
Contractual credit risk is represented by the
net payment or receipt outstanding, and the cost of replacing the
derivative position in the event of counterparty default. The
residual risk is minimal due to the various insurance policies held
by the exchanges to cover defaulting counterparties.
Credit risk on over the counter derivative
contracts is minimised as counterparties are recognised financial
intermediaries with acceptable credit ratings determined by
recognised rating agencies.
Deposits are not made with banks and financial
institutions unless they are rated independently and meet
NYC’s credit criteria. NYC has also set limits as to
the maximum amount of deposits placed with any one financial
institution. The banks and institutions chosen all have at
least the minimum credit rating as described in NYC’s
Treasury Management Strategy.
NYC believes it has managed its exposure to
credit risk and has had no experience of default or uncollectible
deposits over the past five financial years. The Fund’s
cash holding under its treasury management arrangements with NYC at
31 March 2025 was £15m (31 March 2024, £2.1m) and was
held with the following institutions:
The Fund held liquid cash in a UK and an
Overseas Short Term Investment Fund during 2024/25, the average
investment balances for these funds were £22m and £5m
respectively (£38m and £7m in 2023/24). The Fund received
interest of £726k on these funds in 2024/25 (£852k in
2023/24).
(c)
Liquidity Risk
Liquidity risk represents the risk that the Fund
will not be able to meet its financial obligations as they fall
due. The Fund therefore takes steps to ensure that it has
adequate cash resources to meet its commitments.
The Fund has immediate access to its cash
holdings, subject to the fixed periods determined when deposits are
placed. These deposits are scheduled to ensure cash is
available when required.
The Fund also has access to an overdraft
facility for short term (up to three months) cash needs. This
facility is only used to address changes in the strategic benchmark
and is met by either surplus cash from contributions received
exceeding pensions paid or if necessary, disinvesting.
The Fund defines liquid assets as assets that
can be converted to cash within three months. Illiquid assets
are those assets which will take longer than three months to
convert to cash. As at 31 March 2025 the value of illiquid
assets was £687m (31 March 2024, £533m).
All liabilities at 31 March 2025 are due within
one year. The Fund does not have any financial instruments
that have a refinancing risk as part of its treasury management and
investment strategies.
19.
Funding
Arrangements
In line with the Local Government Pension Scheme
Regulations 2013 the Fund’s Actuary, Aon, undertakes a
funding Valuation every three years for the purpose of setting
employer contribution rates for the forthcoming triennial
period. The last such Valuation took place as at 31 March
2022.
The key elements of NYPF’s funding policy
are:
·
to ensure the long term solvency of
the Fund, i.e. that sufficient funds are available to meet all
pension liabilities as they fall due for payment
·
to ensure that employer contribution
rates are as stable as possible
·
to minimise the long term cost of
the scheme by recognising the link between assets and liabilities
and adopting an investment strategy that balances risk and
return
·
to reflect the different
characteristics of employing bodies in determining contribution
rates where the Administering Authority considers it reasonable to
do so
·
to use reasonable measures to reduce
the risk to other employers and ultimately to the council tax payer
from an employer defaulting on its pension obligations
At the 2022 Valuation the aim was to achieve
100% solvency over a period of 18 years from April 2023 and to
provide stability in employer contribution rates by spreading any
increases in rates over a period of time. Solvency is
achieved when the funds held, plus future expected investment
returns and future contributions are sufficient to meet expected
future pension benefits payable.
At the 2022 Triennial Valuation the Fund was
assessed as 116% funded (114% at the 2019 Valuation). This
reflected a surplus of £640m (surplus of £450m at the
2019 Valuation).
The common rate of employers’
contributions is the average rate required from all employers
calculated as being sufficient, together with contributions paid by
employees, to meet all liabilities arising in respect of service
after the Valuation date. For 2023/24 the common rate
(determined at the 2012 Valuation) is 17.3% of pensionable
pay.
Individual employers’ rates will vary from
the common contribution rate depending on the demographic and
actuarial factors particular to each employer. Full details
of the contribution rates payable can be found in the 2022
Triennial Valuation Report and the Funding Strategy Statement on
the Fund’s website.
The valuation of the Fund has been undertaken
using the projected unit method under which the salary increase for
each member is assumed to increase until they leave active service
by death, retirement or withdrawal from service. The
principal assumptions were:
Future life expectancy (from age 65) based on
the Actuary’s Fund specific mortality review was:
Commutation Assumption
It is assumed that future retirees will take 75%
of the maximum additional tax-free lump sum up to HMRC limits for
pre-April 2008 service and for post-April 2008 service.
50:50 Option
It is assumed that no active members (evenly
distributed across the age, service and salary range) will take up
the 50:50 option in the LGPS 2014 scheme.
20.
Actuarial Present Value of
Promised Retirement Benefits
The actuarial present value of promised
retirement benefits based on projected salaries is disclosed via an
IAS26 based Triennial Funding Valuation for the Fund. In
addition to this, the Actuary also undertakes a valuation of
pension fund liabilities on an IAS19 basis each year on behalf of
Employers, using the same base data as the Valuation, taking
account of changes in membership numbers, and utilising updated
assumptions. A Statement prepared by the Actuary is attached
as an Appendix.
In June 2023 the High Court (Virgin Media
Limited v NTL Pension Trustees II Limited) ruled that amendments to
certain defined benefit pension schemes were void if they were not
accompanied by section 37 actuarial certificates. The Court
of Appeal rejected an appeal of this decision in July 2024.
The Local Government Pension Scheme is affected by this
ruling.
The Government Actuary’s Department has so
far failed to locate evidence that section 37 certificates are in
place for all amendments. Work is ongoing to discover whether
the evidence exists. Until this work is complete, it is not
possible to conclude whether there is any impact on the value of
retirement benefits under IAS26 or if it can be reliably
estimated.
Although this is the current position in law,
the Government is being lobbied to make a change to the regulations
so as to retrospectively validate amendments which would otherwise
be void because of a failure to have obtained section 37
certificates. The Government has an existing power to make
the necessary regulations but not yet said whether it will do
anything. There is also the possibility that Virgin Media
could seek permission to appeal to the Supreme Court.
Developments are being monitored. In the
current circumstances, it is not considered necessary to make any
allowance for the potential impact of the Virgin Media case in the
disclosure of the value of retirement benefits in the financial
statements.
21.
Current
Assets
22.
Current
Liabilities
23.
Additional Voluntary
Contributions (AVCs)
The AVC provider for the North Yorkshire Pension
Fund is Prudential. The market value of the AVCs as at 31
March 2025 was £18.3m (£17.5m as at 31 March 2024).
Contributions paid directly to Prudential during the year 2024/25
were £3.9m (£3.6m in 2023/24).
24.
Agency Services
The North Yorkshire Pension Fund does not
operate Agency Services contracts.
25.
Related Party
Transactions
North Yorkshire Council
The North Yorkshire Pension Fund is administered
by North Yorkshire Council. Consequently, there is a strong
relationship between the Council and the Fund.
The Council incurred costs of £2.2m
(£2.1m in 2023/24) in relation to the administration of the
Fund and was subsequently reimbursed by the Fund for these
expenses. The Council is also the single largest employer of
members of the Fund and contributed £86.3m to the Fund in
2024/25 (£81.9m in 2023/24).
The Fund’s cash holdings for cashflow
purposes are invested with banks and other institutions by the
treasury management operations of NYC, through a service level
agreement. During the year to 31 March 2025 the Fund had an
average investment balance of £5.2m (£3.6m during
2023/24) and received interest of £227k (£194k received
in 2023/24) on these funds.
Governance
At 31 March 2025 there were no Pension Fund
Committee Members who were also active members of the Fund.
The Corporate Director – Resources, who was also the
Treasurer of the Fund was an active member. Benefits for the
Treasurer were accrued on the same basis as for all other members
of the Fund.
Key Management Personnel
The section 151 Officer, linked to the Fund is
directly employed by North Yorkshire Council and the costs to the
Fund are included within recharges to the Fund. The remuneration
disclosure required by The Accounts and Audit (England) Regulations
can be found in the main accounts of NYC.
Members
North Yorkshire Council appoint a number of
elected members to the Pension Fund Committee and Audit Committee.
Two of these members are in receipt of pension benefits from the
Fund.
There have been no material transactions between
any Member or their families and the Pension Fund.
Employers
Employers are related parties in so far as they
pay contributions to the fund in accordance with the appropriate
Local Government Pension Scheme (LGPS) Regulations. Contributions
owed by employers in respect of March 2025 payroll total
£12.96m and are included within the non-investment debtors
figures in Note 17
26.
Contractual
Commitments
Outstanding capital commitments (investments) at
31 March 2025 were £382.4m (31 March 2024 £515.5m).
These commitments relate to outstanding call payments due on
unquoted limited partnership funds held in the private debt and
infrastructure parts of the portfolio.
APPENDIX A
Statement of the Actuary for
the year ended 31 March 2025
Introduction
This statement has been prepared in accordance
with Regulation 57(1)(d) of the Local Government Pension Scheme
Regulations 2013 (the ‘LGPS Regulations’).
The LGPS Regulations require that a full
actuarial valuation is carried out every third year. The purpose of
this is to establish that the North Yorkshire Pension Fund (the
‘Fund’) is able to meet its liabilities to past and
present contributors and to review employer contribution rates. The
last full actuarial investigation into the financial position of
the Fund was completed as at 31 March 2022 by Aon, in
accordance with Regulation 62 of the LGPS Regulations.
Actuarial Position
1.
The valuation as at 31 March 2022
showed that the funding level of the Fund had increased since the
previous valuation with the market value of the Fund’s assets
as at 31 March 2022 (of £4,634.5M) covering 116% of the
liabilities.
2.
The valuation also assessed each
individual employer’s (or group of employers’) position
separately. Contribution requirements were determined based on the
principles in the Fund’s Funding Strategy Statement and are
set out in Aon's report dated 29 March 2023 (the "actuarial
valuation report"). In addition to the contributions certified,
payments to cover additional liabilities arising from early
retirements (other than ill-health retirements) will be made to the
Fund by the employers.
Total contributions payable by all employers over the three years
to 31 March 2026 are estimated to be:
|
Year from 1 April
|
% of pensionable pay
|
Plus total contribution amount
(£M)
|
|
2023
|
17.3
|
1.495
|
|
2024
|
17.0
|
1.685
|
|
2025
|
16.7
|
1.888
|
3.
The funding plan adopted in
assessing the contributions for each employer is in accordance with
the Funding Strategy Statement. Different approaches were adopted
in relation to the calculation of the primary contribution rate,
stepping of contribution changes and individual employers' recovery
periods as agreed with the Administering Authority and reflected in
the Funding Strategy Statement, reflecting the employers'
circumstances.
4.
The valuation was carried out using
the projected unit actuarial method for most employers, allowing
for future increases in pensionable pay. The main financial
actuarial assumptions used for assessing the funding target and the
contribution rates were as follows.
|
Discount rate for
periods in service
Scheduled and subsumption body funding target *
Intermediate
(strong covenant approach) funding target
Intermediate (standard approach) funding target
Ongoing orphan funding target
|
4.20%
p.a.
3.85%
p.a.
3.60% p.a.
3.60% p.a.
|
|
Discount rate for
periods after leaving service
Scheduled and subsumption body funding target *
Intermediate
(strong covenant approach) funding target
Intermediate (standard approach) funding target
Ongoing orphan
funding target
|
|
|
Rate
of pay increases
|
3.55%
p.a.
|
|
Rate
of increase to pension accounts **
|
2.30%
p.a.
|
|
Rate
of increases in pensions in payment **
(in excess of Guaranteed Minimum Pension)
|
2.30%
p.a.
|
|
|
|
|
|
|
|
|
* The secure scheduled body discount
rate was also used for employers whose liabilities will be subsumed
after exit by a scheduled body.
** In addition, a 10% uplift has been applied to the past service
liabilities on the scheduled body and subsumption funding targets
to make allowance for short-term inflation above the long-term
assumption.
In addition, the discount rate and
rate of increases to pensions for already orphaned liabilities
(i.e. where there is no scheme employer responsible for funding
those liabilities and the employer has exited the Fund) were
assumed to be 1.7% p.a. and 3.4% p.a. respectively.
The assets were valued at market value.
5.
The key demographic assumption was
the allowance made for longevity. The post retirement
mortality assumption adopted for the actuarial valuation was in
line with standard self-administered pension scheme (SAPS) S3
mortality tables with appropriate scaling factors applied based on
an analysis of the Fund's pensioner mortality experience and a Fund
membership postcode analysis using Aon's Demographic
HorizonsTM longevity model, and included an allowance
for future improvements based on the 2021 Continuous Mortality
Investigation Projections Model, with a long term annual rate of
improvement in mortality rates of 1.5% p.a. The resulting average
future life expectancies at age 65 (for normal health retirements)
were:
|
|
Men
|
Women
|
|
Current pensioners aged 65 at the
valuation date
|
22.5
|
24.9
|
|
Current active members aged 45
at the valuation date
|
23.4
|
26.0
|
Further details of the assumptions
adopted for the valuation, including the other demographic
assumptions, are set out in the actuarial valuation
report.
6.
The valuation results summarised in
paragraph 1 above are based on the financial position and market
levels at the valuation date, 31 March 2022. As such the results do
not make allowance for changes which have occurred subsequent to
the valuation date. The Actuary, in conjunction with the
Administering Authority, monitors the funding position on a regular
basis.
7.
The formal actuarial
valuation report and the Rates and Adjustments Certificate setting
out the employer contribution rates for the period from 1 April
2023 to 31 March 2026 were signed on 29 March
2023.Other than as agreed or
otherwise permitted or required by the Regulations, employer
contribution rates will be reviewed at the next actuarial valuation
of the Fund as at 31 March 2025 in accordance with Regulation 62 of
the Local Government Pension Scheme Regulations 2013.
8.
This Statement has been prepared by
the Actuary to the Fund, Aon, for inclusion in the accounts of the
Fund. It provides a summary of the results of their actuarial
valuation which was carried out as at 31 March 2022. The valuation
provides a snapshot of the funding position at the valuation date
and is used to assess the future level of contributions
required.
This Statement must not be
considered without reference to the formal actuarial valuation
report which details fully the context and limitations of the
actuarial valuation.
Aon does not accept any
responsibility or liability to any party other than our client,
North Yorkshire Council, the Administering Authority of the Fund,
in respect of this Statement.
9.
The report on the actuarial
valuation as at 31 March 2022 is available on the Fund's website at
the following address:
North Yorkshire Pension Fund 2022
valuation report FINAL (nypf.org.uk)
Aon Solutions UK Limited
May 2025
APPENDIX B
IAS 26 Results
Whole of Pension Fund Accounting 2023
|
Prepared for:
|
North Yorkshire Council, as
Administering Authority to the North Yorkshire Pension
Fund
|
|
Prepared by:
|
Scott Campbell FIA
|
|
Date:
|
19 May 2023
|
Glossary
|
|
|
|
Accounting
Date
|
31 March
2023
|
|
Fund
|
North
Yorkshire Pension Fund
|
|
Fund
Administering Authority
|
North
Yorkshire Council
|
|
2022
Valuation
|
Actuarial Valuation
of the North Yorkshire Pension Fund as at 31 March 2022 as reported
in the document titled 'Report on the 31 March 2022 actuarial
valuation' dated 29 March 2023
|
Introduction
Why bring you this
report?
This report is
commissioned by and addressed to North Yorkshire Council (the
Addressee).
This report sets out
pension cost information required by the Fund Administering
Authority in order to meet their disclosure requirements in
relation to their pension obligations as specified by the
accounting standard, IAS 26.
We have carried out this work in relation to
benefits payable from the Fund.
Related
documents
The advice provided
in this report is supported by advice contained in the following
documents:
§
IAS 26 Terms of
Reference - Whole of Pension Fund accounting 2023 ('Terms of
Reference').
§
IAS 26 Assumptions
Advice - Whole of Pension Fund accounting 2023 ('Assumptions
Advice').
In addition, the following documents should be
referred to:
§
2022 Valuation
report
Background
|
Methodology
The approach to our
calculations was set out in the Terms of Reference and Appendix A
of this report.
|
CIPFA’s Code of
Practice indicates that the Fund accounts for the year ending 31
March 2023 should disclose the "actuarial present value of the
promised retirement benefits" as set out in IAS 26 and that the
actuarial present value should be calculated on assumptions set in
accordance with IAS 19 rather than on the funding
assumptions.
CIPFA put forward three
options for disclosing the actuarial present value of promised
retirement benefits. Further detail on these can be found in our
Terms of Reference.
The Fund Administering
Authority has chosen option C which was confirmed to us in an
e-mail dated 17 April 2023. Option C requires the actuarial
valuation of the liabilities on an IAS 19 basis to be prepared at
formal triennial valuations only, the most recent being as at
31 March 2022. Under option C this, together with
other related information, should be disclosed in an actuarial
report which will accompany the notes to the accounts.
The calculations
contained in this document have been carried out on a basis
consistent with our understanding of IAS 19.
I confirm that I am
an independent qualified actuary.
IAS 26
disclosures
IAS 26 requires the 'actuarial
present value of the promised retirement benefits' to be disclosed,
which is the IAS 26 terminology for what IAS 19 refers to as the
'defined benefit obligation'.
The information set
out below relates to the actuarial present value of the promised
retirement benefits in the Fund which is part of the Local
Government Pension Scheme.
The LGPS is a
funded defined benefit plan with benefits earned up to
31 March 2014 being linked to final salary. Benefits
after 31 March 2014 are based on a Career Average
Revalued Earnings scheme. Details of the benefits covered by these
figures are set out in ‘The Local Government Pension Scheme
Regulations 2013’ (as amended) and ‘The Local
Government Pension Scheme (Transitional Provisions, Savings and
Amendment) Regulations 2014' (as amended).
Actuarial present
value of promised retirement benefits
CIPFA's Code of
Practice on local authority accounting for 2022/23 sets out
that the actuarial present value of
promised retirement benefits based on projected salaries should be
disclosed.
The
results as at 31 March 2022, together with the results as at
31 March 2019 are shown in the table below. The
corresponding fair value of Fund assets is also shown in order to
show the level of surplus or deficit within the Fund when the
liabilities are valued using IAS 19 assumptions.
We do
not believe the Fund Administering Authority needs to show the 2019
figures under IAS 26 if it does not wish to do so. The Code of
Practice is not clear if the fair value of assets and the surplus /
deficit at 31 March 2022 also needs to be disclosed but you may
want to include these figures for clarity.
|
|
Value as at
31 March 2022
(£M)
|
Value as at
31 March 2019
(£M)
|
|
Fair
value of net assets
|
4,634.5
|
3,575.2
|
|
Actuarial present
value of the defined benefit obligation
|
5,533.1
|
4,418.3
|
|
Surplus
/ (deficit) in the Fund as measured for IAS 26 purposes
|
(898.6)
|
(843.1)
|
|
|
Assumptions
The latest full
triennial actuarial valuation of the Fund's liabilities was carried
out as at 31 March 2022. The principal assumptions used for the
purpose of IAS 26 by the Fund's independent qualified actuaries
were:
|
|
31 March
2022
|
31 March
2019
|
|
Discount
rate
|
2.70%
|
2.40%
|
|
CPI
inflation (1) (2)
|
3.00%
|
2.20%
|
|
Salary increases
(3)
|
4.25%
|
3.45%
|
Notes
(1)
Pension increases on
pension in excess of Guaranteed Minimum Pension in payment where
appropriate.
(2)
The assumption for
the revaluation rate of pension accounts is set equal to the
assumption for pension increases. In the 2022 assumption we have
also made allowance for higher actual CPI for the period 30
September 2021 to 31 March 2022, where 30 September 2021 is the
date of the reference CPI index that the Scheme’s benefits
had been increased by in April 2022.
(3)
A promotional salary
scale is assumed to apply in addition to this, at the rates assumed
in the relevant valuation of the Fund.
Demographic
assumptions
The mortality assumptions are based on actual
mortality experience of members within the Fund based on an
analysis carried out as part of the 2022 Actuarial Valuation and
allow for expected future mortality improvements. Sample life
expectancies at age 65 in normal health resulting from these
mortality assumptions are shown below:
|
|
31 March
2022
|
31 March
2019
|
|
Males
|
|
|
|
Future lifetime from
age 65 (pensioners aged 65 at 31 March 2022)
|
22.5
|
22.0
|
|
Future lifetime from
age 65 (actives aged 45 at 31 March 2022)
|
23.4
|
23.7
|
|
Females
|
|
|
|
Future lifetime from
age 65 (pensioners aged 65 at 31 March 2022)
|
24.9
|
24.0
|
|
Future lifetime from
age 65 (actives aged 45 at 31 March 2022)
|
26.0
|
25.9
|
Different mortality
assumptions have been used for other categories of member as set
out in the actuary's report on the 2022 valuation. Assumptions for
the rates of withdrawal and ill health retirements (for active
members), the allowance made for cash commutation on retirement,
and the proportion of members whose death gives rise to a
dependant's pension are the same as those adopted in the 2022
valuation of the Fund, which are detailed in the actuary's
valuation report.
Key risks associated with reporting under IAS 26
and sensitivity
Volatility of
results
Results
under IAS 26 can change dramatically depending on market
conditions. The defined benefit obligation is linked to yields on
AA-rated corporate bonds, while a significant proportion of the
assets of the Fund are invested in equities and other growth
assets. Changing markets in conjunction with discount rate
volatility will lead to volatility in the funded status of the
pension fund. For example:
§
A decrease in
corporate bond yields will increase the value placed on the
liabilities for accounting purposes, although this will be
marginally offset by the increase in the assets as a result (to the
extent the Fund invests in corporate bonds).
§
The majority of the
pension liabilities are linked to either pay or price inflation.
Higher inflation expectations will lead to a higher liability
value. The assets are not perfectly correlated with inflation
meaning that an increase in inflation will increase the
deficit.
§
The majority of the
Fund’s obligations are to provide benefits for the life of
the member following retirement, so increases in life expectancy
will result in an increase in the liabilities.
Post balance sheet
date experience
Since
31 March 2022 the Fund’s assets have generally delivered
lower than expected returns and inflation has been higher than
expected. However, corporate bond yields have increased
significantly which will have led to a reduction in the value of
the defined benefit obligation (liabilities) on an accounting
basis. We would expect the Funds’ IAS 26 balance sheet
position to have improved significantly over the year, with a lower
IAS 26 deficit, at 31 March 2023 if the Fund had chosen to update
the position annually.
If at
any time during the year you want us to provide you with an update
of the IAS 26 position, please let us know.
Choice of
accounting assumptions
The
calculation of the actuarial present value of the promised
retirement benefits involves projecting future cash-flows from the
Fund many years into the future. This means that the assumptions
used can have a material impact on the surplus / deficit. As such,
the Fund Administering Authority should ensure that it understands
the reasoning behind the assumptions adopted and is comfortable
that they are appropriate.
Furthermore, the
Fund Administering Authority should bear in mind that, as required
by the accounting standard, the assumptions (with the exception of
the discount rate) have been set so that they represent a best
estimate of future experience from the Fund. In practice future
experience within the Fund may not be in line with the assumptions
adopted. This means that the liabilities shown in this report only
represent one view of the future and the true position could be
different from those shown. For example, members could live longer
than foreseen or inflation could be higher or lower than allowed
for in the calculations.
Sensitivity of
results to key assumptions
In order to understand the magnitude
of the possible volatility in the balance sheet position and to
understand which assumptions are most important in determining
the
size of
the liabilities, it is helpful to understand how sensitive the
results are to the key assumptions.
IAS 19
requires entities to disclose information about the sensitivity of
the defined benefit obligation to changes in key assumptions
although it is not clear that IAS 26 or the CIPFA Code of Practice
requires this information. Nevertheless, we have set out below how
the results would alter by changing the discount rate, the pay
increase assumption and pension increase assumption by plus or
minus 0.1% and if life expectancy was to reduce or increase by 1
year. In each case, only the assumption mentioned is altered; all
other assumptions remain the same.
|
Discount rate assumption
|
|
|
|
Adjustment to discount rate
assumption
|
+0.1%
£M
|
-0.1%
£M
|
|
|
|
|
|
£ change to present value of the defined
benefit obligation
|
(114.5)
|
116.9
|
|
% change in present value of defined benefit
obligation
|
-2.1%
|
2.1%
|
|
|
|
|
|
Rate of general increase in
salaries
|
|
|
|
Adjustment to salary increase rate
assumption
|
+0.1%
£M
|
-0.1%
£M
|
|
|
|
|
|
£ change to present value of the defined
benefit obligation
|
4.2
|
(4.1)
|
|
% change in present value of defined benefit
obligation
|
0.1%
|
-0.1%
|
|
|
|
|
|
Rate of increase to
pensions and rate of revaluation of pensions accounts
|
|
Adjustment to pension increase rate
assumption
|
+0.1%
£M
|
-0.1%
£M
|
|
|
|
|
|
£ change to present value of the defined
benefit obligation
|
112.7
|
(110.3)
|
|
% change in present value of defined benefit
obligation
|
2.0%
|
-2.0%
|
|
|
|
|
|
Post retirement mortality
assumption
|
|
|
|
Adjustment to members' life
expectancy
|
- 1 year
£M
|
+ 1 year
£M
|
|
|
|
|
|
£ change to present value of the defined
benefit obligation
|
(233.6)
|
235.1
|
|
% change in present value of defined benefit
obligation
|
-4.2%
|
4.2%
|
|
|
|
|
|
|
|
|
Membership
data
A
summary of the membership data used in these calculations is set
out in the 2022 Valuation report.
Appendix A:
Explanation of actuarial methods used
Benefits
Our calculations
relate to benefits payable from the Fund (as set out in LGPS
Regulations at the relevant times – further details can be
found in the 2022 valuation report). These benefits include
retirement pensions and benefits on members’ death and
leaving service.
Unfunded defined
benefit obligations e.g. discretionary pensions benefits being paid
under the Local Government (Early Termination of Employment)
(Discretionary Compensation) Regulations (generally referred to as
Compensatory Added Years), have not been valued as they do not form
part of the Fund. However, they may be required in the IAS 19
figures prepared for individual employers within the
Fund.
Data
The valuation of
accrued pension benefits for IAS 26 purposes requires detailed
information in respect of each member such as date of birth, gender, date of joining the fund, their
accrued pension and so forth.
This
information was supplied by the Fund Administering Authority for
the 2022 formal actuarial valuation of the Fund in the form of a
standardised data extract from the Fund Administering Authority's
administration systems.
The
formal valuation process (which is a precursor to the valuation for
IAS 26 purposes) involves a series of structured validation tests
on the data items for integrity and reasonableness. These
tests, together with any actions taken in respect of specific data
issues, are documented as part of the normal valuation
process.
Where
tests reveal issues with the data, the Fund Administering Authority
is contacted with a view to resolving all data queries. Only
when the data queries have been resolved to the satisfaction of the
Fund Actuary, will the valuation proceed.
We can
confirm that no data issues were identified at the 2022 valuation
that we believe would have a material effect on the calculations
presented in this report. Overall, it is our opinion that the
data presented at the valuation is sufficiently accurate, relevant
and complete for the Fund Administering Authority to rely on the
resulting IAS 19 (IAS 26) figures.
Assumptions
IAS 19 sets
out the following general requirements for the setting of
assumptions:
Actuarial
assumptions shall be unbiased and mutually compatible;
and
Financial
assumptions shall be based on market expectations, at the balance
sheet date, for the period over which the obligations are to be
settled.
Furthermore IAS 19 requires
that the assumed discount rate is determined by reference to market
yields at the balance sheet date on high quality corporate
bonds
and in
countries where there is no deep market in such bonds, the market
yield (at the balance sheet date) on government bonds shall be
used.
The
assumptions are ultimately the responsibility of the Fund
Administering Authority. Any assumptions that are affected by
economic conditions (financial assumptions) should reflect market
expectations at the balance sheet date.
The key
financial assumptions are set out in “Information required
for IAS 26” and the derivation of the assumptions is set out
in our assumptions letter referred to in the Related Documents
section.
Method of
calculation
The figures at 31
March 2022 have been based on a full calculation of the liabilities
using the data summarised in this report and the assumptions set
out in the Assumptions Advice. Further information on the method
was set out in the Terms of Reference.
Assets
IAS 19 requires
that assets be valued at Fair Value which is defined as the amount
for which an asset could be exchanged or a liability settled
between knowledgeable, willing parties in an arm's length
transaction. For the purposes of this exercise we have taken
the asset values directly from the Fund's draft annual accounts as
at 31 March 2022.
The assets do not
include defined contribution Additional Voluntary
Contributions.
Treatment of risk
benefits
To value the risk
benefits paid on death in service and ill health early retirement
we have valued service related benefits based on service completed
to the date of calculation only.
Expenses
Fund administration
expenses are not reserved for in the net present value of actuarial
liabilities, consistent with the treatment adopted for individual
employers who require IAS 19 disclosures.
IFRIC 14
IFRIC
14 is an interpretation of paragraph 58 of the IAS 19
accounting standard setting out limits to the amount of surplus
that can be recognised by employing organisations in their
accounts. We do not believe it has any relevance to IAS
26.
Appendix B:
Compliance and disclaimer
This document has been
prepared in accordance with the framework below.
Compliance with Professional
Standards
This document, and
the work relating to it, complies with ‘Technical Actuarial
Standard 100: Principles for Technical Actuarial Work’
(‘TAS 100’).
Disclaimer
The calculations
contained in this report have been made on a basis consistent with
our understanding of IAS 19 and IAS 26. Figures required for other
purposes should be calculated in
accordance with the specific requirements of those purposes. It
must not be assumed that figures produced for the purposes of IAS
26, which we present in this report, have any relevance beyond the
scope of IAS 26.
This
report is prepared on the instructions of the Fund Administering
Authority ("you" or "your") in relation to the preparation of
accounting figures for your financial reporting as at the
Accounting Date. It has been prepared at this date, for the purpose
and on the basis set out in this report.
This
report should not be used or relied upon by any person other than
the Addressee for any other purpose including, without limitation,
other professional advisers, including the auditors and accountants
("third parties" or "third party") to the Addressee. All third
parties are hereby notified that this report shall not be used as a
substitute for any enquiries, procedures or advice which ought to
be undertaken or sought by them. We do not accept any
responsibility for any consequences arising from any third party
seeking to rely on this report.
We
neither warrant nor represent (either expressly or by implication)
to any third party who receives this report that the information
contained within is fair, accurate or complete, whether at the date
of its preparation or at any other time.
Unless
we provide express prior written consent, no part of this report
should be reproduced, distributed or communicated to any other
person other than to meet any statutory requirements and, in
providing this report, we do not accept or assume any
responsibility for any other purpose or to anyone other than the
Fund Administering Authority.
We
recognise that the Fund Administering Authority’s auditors
may request to see a copy of our report, as part of their audit
process and under statutory requirements. We agree that you may
release our report to your auditors for such purpose however in
making such disclosure you shall ensure that this disclaimer
remains attached to this report, and you further agree that you
shall ensure that your auditors have read this disclaimer. For the
avoidance of doubt, if we are approached directly by any third
party for copies of this report or requested to answer queries
about the report, we will require such third party to accept a
third party release non reliance letter agreeing that we did not
prepare the report for the third party and we do not accept any
legal obligations to them. Please rest assured that this approach
does not affect our contractual obligations to you as our client,
with whom we continue to hold a duty of care in accordance with our
terms of engagement.
This
report was based on data available to us at the effective date of
our calculations and takes no account of developments after that
date except where explicitly stated otherwise.
With respect to data on which we have
relied in producing this report, whilst we have taken certain
limited steps to satisfy ourselves that the data provided to us is
of a quality sufficient for the purposes of our investigation,
including carrying out certain basic tests for the purpose of
detecting manifest inconsistencies, it is not possible for us to
confirm the accuracy or completeness of the detailed information
provided. Whilst the Fund Administering Authority may have relied
on others for the maintenance of accurate data, it is their
responsibility to ensure the adequacy of these arrangements and
ultimately the Fund Administering Authority that bears the primary
responsibility for the accuracy of such information
provided.
Annual Governance Statement
2022/23
|
Contents
|
|
|
|
Section
|
|
|
1.
|
Introduction
|
|
|
2.
|
Scope of
Responsibility
|
|
|
3.
|
The Purpose of
the Governance Framework
|
|
|
4
|
The Governance
Framework
|
|
|
5.
|
Review of
Effectiveness
|
|
|
6.
|
Significant
Governance Issues
|
|
|
7.
|
Conclusion
|
|
|
|
|
June 2025
1.
Introduction
This statement
explains how North Yorkshire Council (the Council) has complied
with the Accounts and Audit (England) Regulations 2015, regulation
6 (b), which requires all relevant bodies to prepare an Annual
Governance Statement.
This is the
second Annual Governance Statement (AGS) for North Yorkshire
Council since it became a unitary authority in April 2023. The
Council’s governance framework aims to ensure that in
conducting its business it:
·
operates in a
lawful, open, inclusive and honest manner,
·
ensures public
money is safeguarded, properly accounted for and spent
wisely
·
has
effective arrangements in place to manage risk
·
meets the needs
of North Yorkshire’s communities – securing continuous
improvements in the way the Council operates.
The format and
content of the AGS has been reviewed and updated as part of a wider
review of the Local Code of Corporate Governance, which subject to
approval, will come into effect from 25/26.
We will over
the coming year, take steps to address the matters identified in
Section 6 of this Statement to support further improvements to the
governance arrangements of the Council. Progress will be subject to
monitoring by the Audit Committee.
2. Scope of
responsibility
The 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. The Council also has a
duty under the Local Government Act 1999 to make arrangements to
secure and deliver continuous improvement in the way its functions
are exercised, having regard to a combination of economy,
efficiency, and effectiveness.
The Council has
approved and adopted a Local Code of Corporate Governance (Local
Code) which is consistent with the principles of the CIPFA/SOLACE
Framework Delivering Good Governance in Local Government (2016).
The Local Code is reviewed annually, and it defines the expected
standards of behaviour for members and staff, as well as
referencing a number of relevant policies. A copy of the
latest Code of
Corporate Governance can be obtained
from the Council’s website
here.
The governance
arrangements and Final Accounts of the North Yorkshire Pension Fund
(NYPF) are audited separately from the Council. However, because
the NYPF is administered by the Council, the governance
arrangements of the Council also apply to the NYPF. This AGS
therefore also forms part of the governance framework for the
NYPF.
3. The purpose of the
governance framework
The Governance
Framework comprises the systems, processes, culture and values, by
which the Council is directed and controlled and the activities
through which it accounts to, engages with and leads the community.
It enables the Council to monitor the achievement of its strategic
objectives, manage risk 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 Governance Framework
and it is designed to manage risk to a reasonable level rather than
try to eliminate all risk of failure to achieve policies, aims and
objectives. Because it is not possible to eliminate all risks, the
system of internal control can therefore only provide reasonable
and not absolute assurance of effectiveness. The system of internal
control is based on a continuous process designed to identify and
prioritise the risks that threaten 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 then to manage those risks efficiently,
effectively and economically.
The overall
Governance Framework, and in particular the system of internal
control, described in this AGS, has been in place within the
Council for the year ended 31 March 2025 and up to the date of
approval by the Audit Committee of this Statement alongside the
Statement of Final Accounts on 23 June 2025.
4. The governance
framework
The Council’s executive arrangements and the
oversight of its functions ensures political, strategic, and
partnership leadership arrangements.
The constitution sets out how the Council
operates, how decisions are made and by who, and the procedures
that are followed to ensure these are efficient, transparent and
accountable to local people. The Council plan communicates the
vision of its purpose and intended outcomes for all stakeholders to
enable accountability and encourage open consultation. It is used
as a basis for developing service plans and establishes clear
channels of communication with all sections of our communities and
other stakeholders.
The Council has
effective arrangements in place for the discharge of the Head of
Paid Service, the Chief Financial Officer (S151), and the
Monitoring Officer functions as the Council’s Statutory
Officers. The roles and duties of each are contained in the
Council’s Constitution, and the Chief Executive leads the
Council’s Management Team and appropriate resources are made
available for him/her to undertake the role.
Standards and
Governance Committee
The
Council’s Standards and Governance Committee met regularly
during the year and successfully completed a range of activities,
including reviewing national ethical framework developments,
delivering training to members to help maintain awareness of
ethical standards, introducing new standards documentation and
reviewing the existing complaints processes. The Committee also
provided oversight of the process to investigate complaints against
members for possible breaches of the Council’s Code of
Conduct and/or complaints about the conduct of members of local
town and parish councils in North Yorkshire. The annual
report
of
the Standards and Governance Committee was presented to Full
Council in May 2025. The report detailed the work undertaken by the
Committee during the year to promote and maintain high ethical
standards and governance. No significant ethical failings or issues
were identified.
The Audit
Committee
The Audit
Committee is a key part of the Council’s governance framework
and provides an important source of assurance about the
organisation’s arrangements for managing risk, maintaining an
effective control environment, and reporting on financial and other
performance. The Committee has a programme of work in place to
ensure it can fulfil its responsibilities effectively.
The
annual
reportof
the Audit Committee was presented to Full Council in November 2024.
The report detailed the work that been undertaken and concluded
that the Committee was satisfied that adequate and effective
controls have been maintained by the Council throughout the period
of review.
The Committee
has overseen and supported the Council’s governance
arrangements across a number of areas during the year
including:
·
establishing a
corporate governance working group to review the draft 2023/24
Statement of Final Accounts (SOFA) for the Council and associated
governance documents. The group also considered a number of the
former district and borough council accounts, supporting the s151
officer to ensure that the outstanding accounts were
finalised.
·
receiving and
considering the results of internal audit work performed in respect
of corporate and operational areas. The committee also monitored
the progress made by management during the period to address
identified control weaknesses.
·
receiving and
considering the Annual Report of the Head of Internal Audit for
2023/24 which provided an overall opinion on the Council’s
framework of governance, risk management and control.
·
ensuring the
arrangements for Internal Audit continue to conform with the
relevant professional standards. The Committee also considered the
outcomes of the annual internal audit quality assurance and
improvement programme (QAIP).
·
considering the
annual fraud risk assessment, approving the Counter Fraud Strategy
and workplan for 2024/25 and proposed changes to the
Council’s anti-money laundering and terrorist financing
policy.
·
reviewing the
effectiveness of the Council’s risk management arrangements
and procedures. The Committee received details of the corporate
risk register and also assessed the adequacy and effectiveness of
each directorate’s risk management arrangements through
consideration of the risks and mitigating actions identified in
each directorate risk register.
·
receiving a
report detailing the results of a self-assessment of compliance
with the CIPFA Financial Management Code. No significant compliance
issues were noted in this report.
·
considering
changes to the Local Code of Corporate Governance prior to its
approval.
·
scrutinising
the Council’s treasury management arrangements. This included
reviewing the updated Treasury Management Strategy for
2024/25.
·
receiving a
report detailing the work of the Procurement and Contract
Management Service (PCMS) during the year.
·
considering the
ongoing work of the Corporate Information Governance Group (CIGG)
which is responsible for updating the corporate information policy
framework, identifying new or emerging risks, sharing best
practice, and monitoring compliance with corporate information
governance standards.
During the year
the Committee continued to benefit from the attendance and
participation of its two independent co-opted members.
External
Audit
The role of
external audit is to:
·
provide an
opinion on the financial statements for the Council and Pension
Fund
·
assess the
councils’ arrangements for delivering financial
sustainability and good governance, and for ensuring economy,
efficiency and effectiveness. The results inform the external
auditor’s conclusion on the council’s value for money
arrangements.
The
Council’s external auditors, Forvis Mazars reported the
results of the audit of the 2023/24 financial statements and value
for money opinion to the Audit Committee in February 2025. In
respect of the financial statements, Forvis Mazars issued a
disclaimer of opinion due to uncertainties with some of the brought
forward balances included in the accounts. The uncertainties
related to various issues with the audited accounts of several of
the former North Yorkshire borough and district councils. However,
a significant factor was the uncertainty relating to the outcome of
a High Court case in respect of the accounting treatment of
revenues from Whitby Harbour. The case had resulted in Forvis
Mazars issuing a disclaimer of opinion for the accounts of the
former Scarborough Borough Council in 2022/23 and previous years.
The High Court subsequently found against the Council which means
that there is now clarity about the correct accounting treatment.
The Council is also committed to making all the necessary changes
required by the judgement. Forvis Mazars confirmed there were no
concerns regarding the financial accounting activities of the
Council during the 2023/24 year. They also confirmed that, in
respect of the Councils arrangements for financial sustainability,
governance, and improving economy efficiency and effectiveness,
they had not identified any significant weaknesses.
Risk
Management
The
Council’s approach to risk management is set out in the
Corporate Risk Management Policy and its associated Strategy. Risk
Registers are prepared and maintained at corporate, directorate and
service levels. The generic risk assessment methodology is also
applied to specific key projects or areas of policy development.
The risk prioritisation process is designed to identify key risks
that are a threat to the achievement of the Council’s
objectives, evaluate risk controls and ensure risk reduction
actions are embedded within service performance plans.
5. Review of
effectiveness
The Council has
responsibility for formally conducting, at least annually, a review
of the effectiveness of its governance framework including the
system of internal control. This review relates to the Governance
Framework which has been in place at the Council for the year ended
31 March 2025 and up to the date of approval of the Statement of
Accounts.
The review of
effectiveness is informed in two ways. Firstly, at a corporate
level, assurance is provided by those with key governance
responsibilities within the Council including the Head of Paid
Service, Monitoring Officer, s151 Officer, and other senior
managers within the Council who have responsibility for the
development and maintenance of the governance framework. Assurance
is also provided through the work of internal audit and the
Council’s risk management processes, and the findings of the
external auditors and other review agencies and inspectorates.
Secondly, at a service level, assurance is provided by each
corporate director through the annual reports presented to the
Audit Committee on governance, risk and control as part of the
regular reporting cycle. A framework has recently been established,
which will help align this service level reporting with the May
2025 issued CIPFA Solace ‘delivering good governance in local
government addendum’ covering the annual review of governance
and the annual governance statement, which applies to statements
from 2025/26 onwards.
A range of
other reports are presented to the Audit Committee each year which
provide further assurance on the operation of elements of the
Council’s governance framework. Examples include updates on
the Council’s business continuity, partnership governance and
information governance arrangements, and oversight of the
Council’s companies.
In addition,
Management Board has considered the outcome of this year’s
review of effectiveness and confirmed that all significant matters
have been considered for inclusion in the Annual Governance
Statement.
After
considering the assessments completed as part of our annual review
process, our view is that the Councils governance arrangements,
including the core areas included in relevant CIPFA Solace guidance
are generally in place, operating effectively and supporting the
achievement of the Council’s objectives. However, we have
found some areas where our governance framework needs to improve.
Further information about these areas is included in section 6
below.
6. Significant governance
issues 2024/25
The governance
and internal control arrangements can provide only reasonable and
not absolute assurance that assets are safeguarded, that
transactions are authorised and properly recorded, that material
errors or irregularities are either prevented or would be detected
within a timely period and that significant risks impacting on the
achievement of the Council’s objectives have been
mitigated. It also needs to be recognised that the current
external challenges to local government and the wider public sector
are such that there are an unparalleled number of business risks
and challenges; an effective governance framework therefore helps
but cannot by itself eliminate such issues.
On the basis of
the review work carried out it was considered that the majority of
the governance and internal control arrangements continue to be fit
for purpose and that the overall governance framework was effective
during the financial year 2024/25. However, there were some areas
identified which require attention either as a result of weaknesses
or as a result of external challenges. The most significant of
these areas are set out below where we also explain the actions
being put in place to help to address these matters.
|
Significant
Governance and Business Challenges requiring attention in 2024/25
and beyond
|
|
Challenge
|
|
A1
|
Information Governance and security
To ensure the council continues to comply with its data
protection, information governance and information security
legislative, regulatory and statutory obligations (Responsible
officer: Senior Information Risk Owner).
|
|
Actions
|
|
a)
|
Ongoing
monitoring and reporting of data breaches including identification
of lessons learned.
|
|
b)
|
Ongoing
measures to raise staff awareness of risks including updates to and
completion of mandatory training as necessary; phishing simulation
exercises; case studies; and monitoring arrangements in place to
evaluate effectiveness and any other required actions.
|
|
c)
|
Continued
investment in technology to best protect the Council’s
network and data integrity from potential cyber threats.
|
|
Challenge
|
|
A2
|
Transformation
and savings delivery (Responsible Officer: Corporate Director
Resources)
The council has
an established transformation programme to bring together services
following unitarisation and deliver significant savings. However,
increasing funding pressures mean there are further challenges
ahead and more savings will be needed.
|
|
Actions
|
|
a)
|
Consider both
internal and external opportunities for wider transformation and
savings delivery.
|
|
b)
|
Review existing
service delivery structures. Challenge current ways of working and
service delivery. To fully roll
out the Target Operating Model way of working throughout the
Council. Adopt standard
ways of working to reduce possible waste and to improve outcomes.
Identify changes which cut across services and provide a better
journey and outcome for customers (linked to the Customer
Strategy).
|
|
c)
|
Consider
opportunities for services to increase net income, reduce third
party expenditure and deliver savings. Ensure services have the
right tools and operating environment to drive out efficiencies and
increase productivity.
|
|
d)
|
Identify
measures to reduce and manage demand, working collaboratively
across services and with partners.
|
|
e)
|
Develop and
agree a council wide plan to help deliver these improvements and
savings.
|
|
Challenge
|
|
A3
|
Consistent good
quality management of Capital Schemes
(Responsible officers: All of Management Board)
To ensure the
council consistently and effectively manages the delivery of major
capital programmes and projects.
|
|
Actions
|
|
a)
|
Review of
project management guidance to provide greater clarity on roles,
responsibilities (including financial management), project
governance, accountability and decision making.
|
|
b)
|
Review and roll
out budget management training to ensure the consistent application
of the Council’s requirements for effective control of
programme and project budgets.
|
|
c)
|
Implement
standard processes for the appointment, use and management of
consultants to ensure consistent practices are being followed
throughout the Council.
|
|
d)
|
Implement
assurance frameworks to ensure capital schemes are being managed in
line with Council expectations.
|
|
Challenge
|
|
A4
|
Data and
Systems (Responsible officers: All of Management
Board)
The new Council
inherited a large number of systems and processes. Further work is
required so that the council has the reliable data and insights to
consistently support decision making, track outcomes and drive
improvement.
|
|
Actions
|
|
a)
|
To define,
develop and implement the data strategy.
|
|
b
|
To fully roll
out the Target Operating Model way of working throughout the
Council.
|
7. Conclusion and
Signatures
We, the
undersigned, accept primary responsibility for the content of this
Annual Governance Statement and will over the coming year, take
steps to address the matters identified in Section 6 of this
Statement to support further improvements to the governance
arrangements of the Council.
We are satisfied that these steps will address the need for
improvements that were identified in the significant governance and
business challenges and will monitor their implementation and
operation as part of the next annual review of effectiveness.
Reports on progress will be submitted to the Audit
Committee.
Signed:
|
Cllr Carl Les
Leader of the Council
|
Richard Flinton
Chief Executive
|
|
Date:
|
Date:
|
I confirm the Audit Committee (meeting on the 23 June 2025)
was satisfied, on the basis of the information available to it,
that this Annual Governance Statement for 2024/25 has been prepared
and approved after due and careful enquiry.
|
Cllr Clifford Lunn
Chairman of the Audit Committee
|
|
|
Date:
|
|
Accruals
The concept
that income and expenditure are recognised as they are earned or
incurred, not as cash is received or paid.
Actuary
An actuary is
an expert on pension scheme assets and liabilities. The Local
Government Pension Scheme Actuary determines the rate of employer
contributions due to the Pension Fund every three years.
Amortised
Written off
over a suitable period of time (usually in line with the useful
life of a fixed asset). This is a proxy for depreciation for
intangible assets.
Appropriations
Amounts
transferred from the Comprehensive Income and Expenditure Statement
through the Movement in General Fund Balance to revenue or capital
reserves.
Asset Rental Charges
The Council
charges Asset Rentals to Services in order to reflect the economic
costs of the assets they use in service provision. These charges do
not impact on Council Tax.
Assets
Anything which
has a monetary value e.g. property, investments or cash.
Assets Held for Sale
Those assets
that are actively being marketed with the expectation that disposal
will occur within a 12 month period.
Associate
An entity is an
associate of a reporting authority if it has a participating
interest and over whose operating and financial polices the
reporting authority is able to exercise significant
influence.
AVC
Additional
Voluntary Contributions.
Benchmark
A measure
against which investment performance is assed. The benchmark may
take the form of a “market index” where performance is
measured by comparison with a particular market or where
measurement is against an average established by reference to the
performance of a peer group or league table.
BCF
Better Care
Fund
Bid Price
In the context of stock trading on a stock exchange,
the bid price is the highest price a buyer of a stock is willing to
pay for a share of that given stock.
Bond
A type of
investment where cash is exchanged for a certificate of debt issued
by the government or company, promising regular payment on a
specified date, or range of dates, usually involving a final lump
sum capital payment at the time the bond is given up by the
investor.
Budget
A statement of
the Council’s expected level of service and spending over a
set period, usually one year.
Callable Deposit
Deposit with a
bank or building society for an agreed term but where the bank has
the option of repaying the full amount at set intervals. For
example, a three year deposit with six monthly calls.
Capital Expenditure
Expenditure on
the acquisition of a fixed asset or expenditure which adds to, or
enhances, the life or value of an existing fixed asset.
Capital Financing
Funds used to
pay for capital expenditure. These funds can come from both
external and internal sources.
Capital Plan
The proposed
budget for capital expenditure and funding for the
Council.
Capital Receipts
Proceeds from
the sale of Fixed Assets. These are used to finance new capital
expenditure.
Carrying Amount
The amount at
which an asset is recognised in the Balance Sheet.
Cash and Cash Equivalents
A Balance Sheet
heading to identify both cash (or overdraft) and other highly
liquid resources, these liquid resources are deemed to be short
term investments that are held with maturity periods of three
months or less and are for the purposes of cash
management.
CCG
Clinical
Commissioning Groups.
The Code
In relation to the financial statements The Code
refers to the Code of Practice on Local Authority Accounting. The
Code of Practice is based upon approved accounting standards and
provides the accounting standards under which the Statement of
Accounts are prepared.
CFR
Capital
Financing Requirement.
CIPFA
The Chartered
Institute of Public Finance and Accountancy is the lead accountancy
body for the Public Sector on accounting practice and the
preparation of local authority Accounts.
CIPFA FM Code
Chartered
Institute of Public Finance and Accountancy Financial Management
Code. This Code sets the standards of financial management for
Local Authorities.
Consolidation
The process of
adjusting and combining financial information from the individual
financial statements of a reporting authority and its subsidiaries.
The overall aim is to prepare consolidated financial statements
that present financial information for the group as a single
entity.
Contingencies
Sums set aside
to meet either the potential costs of activities expected to occur
during the year, over and above those costs included in the
services budget (pay and price), or items which are difficult to
predict in terms of financial impact or timing (uncertain
items).
Corporate Governance
The
authoritative rules and controls in place within an organisation
required to promote openness, inclusivity, integrity and
accountability.
Council Tax
The means of
raising money locally to pay for local authority services. This is
a property based tax where the amount levied depends on the
valuation of each dwelling.
Credit Rating
A published
ranking, based on detailed financial analysis by a credit bureau,
of an organisation’s financial history, specifically relating
to an organisation’s ability to meet its debt
obligations.
Creditors
Amounts owed by
the Council for goods or services that it has received but for
which payment had not been made by the last day of the financial
year (31st March).
Current Assets and Liabilities
Current assets
are items that are owed to Council and can be readily converted
into cash. Current liabilities are items that are due for payment
immediately or in the short term.
Current Service Cost IAS 19
Employer
pension contributions charged during the year have been removed
from the Comprehensive Income and Expenditure Statement and
replaced with an amount (i.e. current service cost) which reflects
the increase in the scheme liabilities expected to arise from
employee membership of the scheme in the year of
account.
Debtors
Amounts owed to
the Council at the last day of the financial year (31st March)
where services have been delivered but payment has not been
received.
Delegated Budgets
Budgets for
which schools and other services have complete autonomy in spending
decisions.
Depreciation
The measure of
the wearing out, consumption, or other reduction in the useful
economic life of a fixed asset, whether arising from use, age or
obsolescence through technological or other changes.
DfE
Department for Education.
DLUHC
Department for
Levelling Up, Housing and Communities (formerly MHCLG - Ministry of
Housing, Communities and Local Government).
DSG
Dedicated
Schools Grant. A ring-fenced
grant which can only be applied to expenditure properly included in
the Schools budget.
Earmarked Reserves
These reserves
represent monies set aside that can only be used for a specific
purpose.
EFA
Expenditure
& Funding Analysis
Expected Return on Assets
The average
rate of return expected on the actual assets held by the Local
Government Pension Fund.
Fair Value
A rational and
unbiased estimate of the potential market price of a good, service
or asset.
Finance Leases
Under a finance
lease agreement, most of the risks and rewards associated with
ownership are transferred to the lessee. The accounting policy is
to recognise these assets.
FRS
Financial
Reporting Standard
FVOCI
Financial
Assets Measured at Fair Value through Other Comprehensive
Income
FVPL
Financial
Assets Measured at Fair Value through Profit or Loss
GAAP
Generally
Accepted Accounting Practice.
Government Grants
Revenue grants
and contributions are credited to the appropriate service Revenue
Account where they relate to a specific service; general grants
including capital grants are credited to non-specific grant income
within the Comprehensive Income and Expenditure Statement to the
extent that the conditions of the grant have been met.
HWRC
Household Waste
Recycling Centre
IAS
International
Accounting Standard
ICT
Information and
Communications Technology.
IFRIC
Interpretations originated from the International
Financial Reporting Interpretations Committee.
IFRS
International Financial Reporting Standards.
Guidelines and rules set by the
International Accounting Standards Board (IASB) that companies and
organisations can follow when compiling financial
statements.
Impairment
The worsening
of an asset, through damage, dilapidation etc., which affects the
value of that asset.
Income
Amounts which
the Council receives, or expects to receive, from any source.
Income includes fees, charges, sales, capital receipts, government
grants, the precept on Council Tax collection funds, Revenue
Support Grant and National Non-Domestic Rate.
Income in Advance
Amounts
received by the Council during the current financial year relating
to services to be delivered in the following financial
year.
Intangible Assets
Assets that do
not have physical substance but are identified and are controlled
by the Council through custody or legal rights.
Interest Cost
A financing
charge reflecting the increases in the present value of Pension
Fund scheme liabilities.
Investments
Short term
investments comprise of deposits of funds with banks or similar
institutions.
Investment Properties
Properties that
are held for income or capital appreciation only, rather than used
for any service delivery purposes.
ISAB
International
Accounting Standards Board.
ISB
Individual
School Budgets.
ISP
Internet
Service Provider.
Joint Venture
An entity in
which the reporting authority has an interest on a long term basis
and is jointly controlled by the reporting authority and one or
more entities under a contractual or other binding
arrangement.
LAA
Local Area
Agreement. A partnership with other public bodies involving the
pooling of government grants to finance work towards jointly agreed
objectives for local public services.
LAAP
Local Authority Accounting
Panel. Bulletins issued by
CIPFA to provide guidance on topical issues and accounting
developments and when appropriate provide clarification on the
detailed accounting requirements.
LASAAC
Local
Authorities (Scotland) Accounts Advisory Committee.
LDDF
Learning
Difficulties Development Fund.
LGPS
Local
Government Pension Scheme.
LGR
Local
Government Reorganisation.
LIBOR
The
London Interbank Offered Rate. A daily reference rate based on the
interest rates at which banks borrow unsecured funds from other
banks in the London wholesale money.
LOBO
Lender Option
Borrower Option. Financial instrument used to borrow from the money
market such loans feature on initial fixed interest period followed
by a specified series of calls where the lender has the option to
request an interest rate increase. The borrower has the option of
repaying the loan (at no penalty) or accepting the higher
rate.
LPSA
Local Public
Service Agreement.
LSP
Local Strategic
Partnership.A non-statutory, multi-agency partnership, which
matches a local authority boundary, and includes representatives
from the public, private, community and voluntary
sector.
LMS
Local
Management of Schools.
Long Term Borrowing
Long term
borrowing is loans that have been raised to finance capital
expenditure.
Market Value
The monetary
value of an asset as determined by current market
conditions.
Mid-market price
The mid-point between the bid price and the offer
price for a security based on quotations for transactions of normal
market size by recognised market-makers or recognised trading
exchanges.
Minimum Revenue Provision
The statutory
minimum amount that must be charged to a Revenue Account in each
financial year to repay external debt.
Minority Interest
The interest in
a subsidiary entity that is attributable to the share held by, or
on behalf of persons other than the reporting authority.
MTFS
Medium Term
Financial Strategy
NAHT
National
Association of Head Teachers.
NASUWT
National
Association of Schoolmasters Union of Women Teachers.
National Non-Domestic Rate
The Government
levies a standard rate on all properties used for commercial
purposes. The rates are collected on behalf of the government by
District Councils, and then redistributed nationally on the basis
of resident population.
Net Book Value
The amount at
which Fixed Assets are included in the Balance Sheet, i.e. their
historical cost or current value less the cumulative amounts
provided for depreciation.
Net Current Replacement Cost
The cost of
replacing or recreating the particular asset in its existing
condition and in its existing use, i.e. the cost of its replacement
or of the nearest equivalent asset, adjusted to reflect the current
condition of the existing asset.
Net Debt
This comprises
cash in hand, cash overdrawn, short term investments and long term
borrowing.
Net Realisable Value
The open market
value of the asset in its existing use (or open market value in the
case of non-operational assets) less the expenses to be incurred in
realising the asset.
NEU
National
Education Union (formerly NUT National Union of Teachers and ATL
Association of Teachers and Lecturers.
NHS
National Health
Service.
NJC
National Joint
Council.
Non-Current Assets
Assets that
yield benefits to the authority and the services it provides for a
period of more than one year.
NYBEP
North Yorkshire
Business and Education Partnership.
NYES
North Yorkshire
Education Services.
NYnet Limited
A company
providing broadband connectivity within North Yorkshire.
Past Service Cost
The increase in
Pension Fund liabilities arising in the current period as a result
of the introduction of, or improvement to, retirement
benefits.
PFC
Pension Fund
Committee.
PFI
Private Finance
Initiative. A means of securing new assets and associated services
in partnership with the private sector.
PIP
The Pending
Issues Provision (PIP) was set up in 2008/09 as part of the budget
and medium term financial strategy process to underpin a financial
strategy that would ensure sufficient recurring funds are available
in future years to meet the predicted year on year costs of the
Waste Strategy.
The provision was funded by increasing the annual
Council Tax charge in the three year period 2008/09 to 2010/11 by
more than was strictly needed to pay for the annual cost of the
Council’s services in those year’s.
In addition to providing the longer term funding
required for the Waste Strategy, the funding paid into the PIP but
not yet drawn down by the Waste Strategy is available for non-
recurring items of urgent expenditure and investment in
services.
Portfolio
A block of
assets managed by a fund manager, to an agreed performance
specification, on behalf of an investor.
PPP
Public Private
Partnership. A long-term contract between a private party and
a government entity for providing a public asset.
Precept
The amount of
money the Council has to levy on Council Tax payers (via district
collection funds) to pay for Council services.
Prepayments
Amounts paid by
the Council in the current financial year that relate to goods and
services not received until the following financial
year.
Provisions
Provisions
represent sums set aside for any liabilities of uncertain amount or
timing that have been incurred.
PWLB
Public Works
Loan Board. The Government agency set up to provide loans to Local
Authorities to finance capital expenditure.
REFCUS (Revenue Expenditure funded from Capital
under Statute)
Expenditure
which may be properly capitalised, but which does not result in the
creation of any fixed asset.
Reserves
There are two
types of reserves, usable and unusable reserves. Usable reserves
are those reserves that can be applied to fund expenditure or
reduce local taxation. Unusable reserves are other reserves, such
as the revaluation reserve, that arise from accounting
requirements.
Revenue Expenditure
Revenue
expenditure is spending on the day to day running costs of the
Council. It includes expenditure on employees, premises, transport
and supplies and services.
RICS
Royal
Institution of Chartered Surveyors.
RSG
Revenue Support
Grant. Central Government grant support towards local government
expenditure.
SEN
Special
educational needs.
SEND
Special
educational needs and disability.
SDT
Standard
Desktop.
Section 151 Officer
The Officer
designated to assume overall responsibility for the administration
of the financial affairs of the Council and for the preparation of
the Council’s Statement of Accounts.
Settlements and Curtailments
Settlements and
liabilities settled at a cost materially different to the IAS 19
reserve during the year. Curtailments represent the cost arising
from early payment of accrued pensions in respect of any
redundancies during the year.
Simple Investment
The reporting
authority’s interest does not qualify the entity as a
subsidiary, associate or a joint venture because the reporting
authority has limited influence or its interest is not long
term.
SIF
Special
Investment Fund.
SIP
Statement of
Investment Principles.
Subsidiary
An entity is a
subsidiary of a reporting authority if the authority is able to
exercise control over the operating and financial policies of the
entity and is able to gain benefits / be exposed to risk of
potential losses from this control.
Surplus Properties
Those
properties that are not used in service delivery but neither do
they meet the classification of investment properties or assets
held for sale.
T&C
Technology and
Change.
Term Deposit
A deposit held
in a financial institution for a fixed term at a fixed
rate.
TMP
Treasury
Management Practices.
TMPS
Treasury
Management Policy Statement.
VAT
Value Added
Tax.
Veritau Limited
A company
providing Internal Audit, Counter fraud and Information Governance
Services.
VOICE
This is a union
for Education Professionals.
Work in Progress
The value of
rechargeable work which has not been recharged at the end of the
financial year.
YDHTP
Yorkshire Dales
and Harrogate Tourism Partnership.
Yorwaste Limited
A subsidiary
waste disposal company.
YPO
Yorkshire
Purchasing Organisation.
