Agenda item

Members of the public may ask questions or make statements at this meeting if they have given notice and provided the text to Democratic Services (democraticservices.central@northyorks.gov.uk) no later than midday on Wednesday, 10 December 2025, three working days before the meeting takes place. Each speaker should limit themselves to three minutes on any item. 

 

If you are exercising your right to speak at this meeting, but do not wish to be recorded, please inform the Chair who will instruct those taking a recording to cease whilst you speak.

Three public questions were received.

 

Question from James Corrigan:

 

I note from the updated accounts published at Appendix C of Agenda Item 13 that several adjustments have been made to the draft statement of accounts originally published on 27 June 2025. I particularly note that a new point 31 has been disclosed in the Statement of Accounting Policies to explain the ‘Key Accounting Concept of Materiality’. It is clear from this explanation that this concept is more than just a number. The second sentence states:

 

‘Information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting local authority.’

 

Bearing in mind the significant public interest and the High Court Judgement in relation to Whitby Harbour does the Council consider that the adjustments made in relation to Whitby Harbour and Scarborough Harbour as set out in Note 41 of the statement of accounts are material?

 

Response to James Corrigan:

 

In the financial statements any misstatements, including omissions, are considered material if individually or in aggregate they could reasonably be expected to influence the economic decisions of users of the accounts. The quantitative level that materiality is set at is an auditor judgement and for the 2024/25 audit it was to set at £36.9m (2023/24: £34.5m). Based on the calculations undertaken to determine the funds that should be held within the individual Harbour reserves, both individually and in aggregate, the balances are not quantitatively material. Additionally, while there is a level of public interest in the High Court Judgement it isn’t considered sufficient for it to be material in terms of the accounting adjustments as there is not a significant impact on the Council’s level of income and expenditure, future delivery of services or intended capital projects and as such is not considered to be an influence on the decision making of a user of the accounts.

 

Therefore following the Council’s assessment of a range of factors it does not consider the adjustment to be material.

 

In a supplementary question, James Corrigan asked for information on why the Council had spent significant amounts of money to defend an incorrect position and why the signing of accounts had been delayed since 2015 if the amount of money being discussed is not material. The Chair clarified that a response would be provided in writing.

 

Question from Robin Gray:

 

I note from the updated accounts published at Appendix C of Agenda Item 13 that the Council has revisited the reserves for Scarborough Harbour and Whitby Harbour in the stated sums of £3.5 million and £18.5million, which appear to be round sum estimates. These balances are shown in note 35(b) of the Statement of Accounts as 'Earmarked Reserves' with a sub - heading 'Retained for Specific Initiatives'.

 

Earmarked Reserves are defined in the CIPFA Code of Practice on Local Authority Accounting as 'funds set aside for specific future needs'. That is a decision by the Executive to set the funds aside, which can equally be reallocated or released by Executive decision.

 

Will this Audit Committee please confirm

 

A) that the use of so-called 'Earmarked' Reserves is not the appropriate heading for the Ring Fenced funds retained as set out in the specific legislation for each harbour,

 

B) whether the amounts quoted are round sum or actual amounts belonging to each harbour, and

 

C) the rate of interest on these ring - fenced funds also forms part of the ring - fenced funds.

 

Response to Robin Gray:

 

The Council’s reserves are categorised as either Useable or Non-Useable and within useable reserves they are further categorised into General Balances or Earmarked Reserves. Earmarked Reserves is the appropriate categorisation of the harbour ring fenced reserves.

 

The amounts are the estimated accumulated historic balances extrapolated from the historic records available to the Council following the Court Judgment.

 

The Council does not as a general rule apply interest to earmarked reserves and no specific provision for interest is included in the reported balances. Nor does the council charge interest internally (one exception being the Housing Revenue Account which is subject to specific rules). In the context of the Council’s financial statements, interest is not material and would not have any bearing on decisions concerning harbour related expenditure.

 

In a supplementary question, Robin Gray asked that if the Council was not paying interest to the harbour on the funds it was holding, then could information be provided on the approximate rate that the Council receives interest on its cash deposits and short-term investments. The Chair clarified that a response would be provided in writing.

 

Question from Susan Boyce:

 

My question refers to Agenda Item 13, the draft Statement of Accounts for 2024/2025.

 

Section 22 (p17) of the Narrative report in Appendix C recounts my objections to previous years’ Annual Accounts and then summarises the High Court judgment, which was issued in March 2025. The revised draft Accounts now show a Whitby Harbour Reserve of £18.5M within the Council’s Earmarked Reserves.

 

Mr Justice Sweeting’s judgment was very clear about the correct interpretation of the Whitby Urban District Council Act of 1905. He stated that ‘Section 62 refers expressly to “the harbour account” and not simply a practice of separate accounting’. One of the specific questions submitted by the Council to the Court was “Does the 1905 Act require a segregation of the capital assets and liabilities pertaining to the Harbour?” The Court ruled that “Yes it does”.

 

However, note 41 (p124) of the Council’s Draft Accounts, entitled "Land at Whitby Harbour", only shows the financial performance of Whitby Harbour and Scarborough Harbour, together with the book value of the assets and reserves attributed to each harbour.

 

The Council presents the disclosures in note 41 as the practice of separate accounting. But the Court Judgment was definitive that this practice is not sufficient. Whitby Harbour is not simply a department within North Yorkshire Council: it is a Statutory Harbour Authority, governed by its own specific legislation that requires its own full annual accounts to be prepared as a separate entity.

 

Q. Will this Council produce full annual accounts for the Whitby Statutory Harbour Authority as a separate entity, in accordance with the High Court Judgment of March 2025?

 

Response to Susan Boyce:

 

The Council has fulfilled its obligations for the segregation and reporting of the statutory harbour undertakings. There are no unapplied capital receipts to report relating to the harbours. Should any such liabilities arise in the future then these will be reported.

 

In a supplementary question, Robin Gray asked whether, given the risk that this council's accounts may not comply, the Audit Committee should still go ahead and delegate responsibility for final sign off as per the recommendation. The Chair clarified that a response would be provided in writing.