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Audited Statement of Accounts 2006 2007 - Blackpool Council

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					Blackpool Council             Statement of Accounts 2006/2007




    STATEMENT OF
      ACCOUNTS

                    2006/2007

  Councillor R Wynne                   S Weaver
  The Mayor                            Chief Executive

  Councillor P Callow                  M Hanson
  Council Leader                       Director of Finance




                        -1-
     Blackpool Council                                      Statement of Accounts 2006/2007



                                 STATEMENT OF ACCOUNTS
                                        2006/2007
                                       CONTENTS

                                                                            PAGE
Section 1 –   Explanatory Foreword                                               3

Section 2 –   Independent Auditors Report                                        12

Section 3 –   Statement of Accounting Policies                                   14

Section 4 –   Core Financial Statements

              Income & Expenditure Account                                       22

              Statement of Movements on the General Fund Balance                 23

              Statement of Total Reserves Gains and Losses                       24

              Balance Sheet                                                      25

              Cash Flow Statement                                                27

Section 5–    Notes to Core Financial Statements                                 28

Section 6–    Supplementary Statements

              Housing Revenue Account and Notes                                  63

              Collection Fund Statement and Notes                                70

Section 7 – Group Accounts                                                       74

Section 8 -   Statement of Responsibilities for the Statement of Accounts        83

Section 9 –   Statement on the System of Internal Control                        85

Section 10 – Glossary of Terms                                                   91




                                                   -2-
Blackpool Council           Statement of Accounts 2006/2007




                    SECTION 1




        EXPLANATORY FOREWORD




                      -3-
      Blackpool Council                                     Statement of Accounts 2006/2007

1.0         INTRODUCTION

These accounts have been prepared in accordance with Regulation 7 of the Accounts and Audit
Regulations 2003 and the current Code of Practice on Local Authority Accounting in the United Kingdom,
A Statement of Recommended Practice 2006 issued by the Chartered Institute of Public Finance and
Accountancy (CIPFA). These accounts set out the main features of the Council’s financial performance for
                 st
the year ended 31 March 2007 and provide information relating to the Council’s financial position as at
that date.

The statements presented on the following pages comprise:-

Statement of Accounting Policies

This explains the basis of the figures in the accounts.

Income and Expenditure Account

This account reports the net cost for the year of all functions for which the Council is responsible and
demonstrates how that cost has been financed from general government grants and income from local
taxpayers. It brings together expenditure and income relating to all of the Council’s functions.

Statement of Movement on the General Fund Balance

This represents the amounts in addition to the Income and Expenditure surplus or deficit for the year that
are required by statute and non-statutory proper practices to be charged or credited to the General Fund in
determining the movement on the General Fund Balance for the year.

Statement on Total Recognised Gains and Losses
                                                                                      st
This statement shows all the gains and losses recognised in the financial year to 31 March 2007.

Balance Sheet
                                                                   st
This sets out the overall financial position of the Council as at 31 March 2007. It shows the reserves and
balances of the Council, its long-term indebtedness and the value of fixed and net current assets .

Cash Flow Statement

This summarises the inflows and outflows of cash arising from transactions with third parties for revenue
and capital purposes.

Housing Revenue Account

This reflects a statutory obligation to account separately for local authority housing provision. It shows the
major elements of housing revenue expenditure and income.

Collection Fund

This account reflects the statutory requirement for billing authorities to maintain a separate Collection Fund
which show the transactions on non-domestic rates and council tax and illustrates the way in which these
are distributed to Lancashire Police Authority, Lancashire Fire Authority and the Council’s General Fund.

Group Accounts

The summarised group financial statements are prepared in order to show the overall financial position
and results of the local authority group.




                                                  -4-
      Blackpool Council                                    Statement of Accounts 2006/2007

Statement of Responsibilities for the Statement of Accounts

This sets out the respective responsibilities of the Council and the Director Finance for the accounts.

Statement on Internal Control

This statement sets out the framework within which internal control is managed and reviewed and the main
components of the system, including the arrangements for internal audit. The statement reports on the
significant identified weaknesses and actions undertaken/planned to rectify these.

1.1         SUMMARY OF THE FINANCIAL YEAR

The Council incurs expenditure on both revenue and capital items. Revenue spending is generally on
items that are consumed within a year and is financed from council tax, non-domestic rates, government
grants, charges for services and other income. Capital expenditure relates to work, services and
acquisitions whose benefits extend beyond one year.

1.1.1       REVENUE SUMMARY

Prior to 2006/2007 government support towards the Council consisted of the Revenue Support Grant
(RSG) and a share of the National Non-Domestic Rate pool. The Revenue Support Grant included funding
towards schools. This has now been taken out of the RSG and is now a separate grant to schools known
as the Dedicated Schools Grant (Section 5 Note 43). The table below shows the year-on-year increase in
the estimated government support.

                                       2005/2006                  2006/2007              Increase
                                         £’000                      £’000                   %

  Revenue Support Grant                 84,520                      10,479
  Dedicated Schools Grant                   -                       77,043
                                        84,520                      87,522                 3.55


  Non-Domestic Rates                    47,463                      54,284                 14.37




The Council Tax increase of 4.50%, an annual increase from £1,239.05 to £1,294.82 on band D
properties, in 2006/2007 produced an overall council tax level which was the lowest in Lancashire.

The original estimates assumed a contribution to the Council’s unallocated revenue reserves of £282,000.
The actual contribution to the Council’s unallocated revenue reserves in 2006/2007 was £827,000, further
details are provided in paragraph 1.1.2.




                                                   -5-
    Blackpool Council                                        Statement of Accounts 2006/2007

1.1.2       INCOME AND EXPENDITURE ACCOUNT

The table below shows an overall comparison of the Council’s Income and Expenditure Account between
the approved budget for 2006/2007 and the outturn position.


                                                 Approved              Actual          (Favourable)/
                                                  Budget                                 Adverse
                                                   £m                    £m                 £m

  Net Operating Expenditure                         131.0               130.5              (0.5)

  Capital Financing Costs                           (15.3)              (15.3)              0

  Income from Government Grants                     (64.8)              (64.8)              0

  Income from Local Taxpayers                       (51.2)              (51.2)              0


  (Surplus)/Deficit for the year                     (0.3)              (0.8)              (0.5)
                                    st
  (Surplus) brought forward at 1         April       (3.8)              (3.8)               0
  2006

  (Surplus) carried forward at                       (4.1)              (4.6)              (0.5)
    st
  31 March 2007




                            The Income and Expenditure Account is shown in Section 4

The 2006/2007 year end position on directorates’ cash limited budgets was as follows:

  DIRECTORATE                                                                                      £000

  Strategic Leadership Team                                                                         (27)

  Business Services                                                                                (169)

  Regeneration and Tourism Services                                                                 231

  Children and Young People                                                                         265

  Leisure, Culture and Community Learning                                                           105

  Housing and Social Services                                                                       355


  TOTAL                                                                                             760




                                                   -6-
   Blackpool Council                                         Statement of Accounts 2006/2007

The main reasons are as follows:


  Service                              Reasons                                                       £000
  Housing and Social Services          The ageing Blackpool population and increasing number          355
                                       of adults with learning disabilities requiring social care
                                       presents a continually growing demand for support
                                       services to people in their own homes.
  Business Services                    This predominately relates to the Highways Department         268
                                       which had a £364k overspend brought forward from
                                       2005/06. Although this has been reduced by savings on
                                       insurance costs achieved by the reduced incidence of
                                       tripping claims and by other budget saving measures,
                                       Highways still had a £213k overspend at the end of the
                                       2006/07 financial year with added pressures from
                                       increases in fuel costs and fees associated with the
                                       Street Lighting PFI scheme.
  Children & Young People              Major reviews of the use of agency staff and the              265
                                       commissioning strategy for targeted placements have
                                       contributed to the repayment of £119k of the overspend
                                       brought forward from 2005/06.
  Tourism & Regeneration               The Directorate overspend has arisen primarily in the         231
                                       areas of Illuminations and Tourism. Illuminations has
                                       recently undertaken a review of staffing which will deliver
                                       long-term savings to meet the overspend brought
                                       forward of £113k plus a retrospective gas bill reflecting
                                       incorrect charges since October 2002. The Tourism
                                       overspend has increased from £60k in 2005/06 to £152k
                                       in 2006/07 due to Events and shortfalls against the
                                       Holiday Guide income budget.
  Area Forums & Ward-based             Significant scheme commitments of £342,000 carried            (437)
                                       forward to 2007/08
  Budgets
  Other                                -                                                              78
  Total                                                                                              760


The graph below shows the change in the Council’s Unallocated Revenue Reserves over the last 6 years.


                                Unallocated Revenue Reserves


          5000
          4500
          4000
          3500
          3000
    £'000 2500
          2000
          1500
          1000
           500
              0
                   2002         2003       2004            2005           2006            2007
                                       Year ending 31st March




                                                 -7-
       Blackpool Council                                      Statement of Accounts 2006/2007

 1.1.3             CAPITAL

 The total of the Council’s capital spending in 2006/2007 was £57.2m which is a 7.7% decrease from the
                                                                         st
 previous year. The net book value of the Council’s fixed assets as at 31 March 2007 is £657m.

 The main areas of capital spending during the year were:

                                                                 2006/2007             2005/2006
                                                                       £m                    £m


      Children & Young People                                          10.8                  13.8
      Transport                                                         8.1                   5.0
      Housing                                                           8.8                  10.8
      Leisure, Culture & Community Learning                             2.3                   2.8
      Tourism & Regeneration                                            6.7                   7.4
      Coast Protection                                                 16.6                  14.2
      Social Services                                                   0.8                   0.7
      Other                                                             3.1                   7.3

      Total                                                            57.2                  62.0
Ho


 The funding of the capital expenditure came from a number of sources as summarised below:

                                                                 2006/2007           2005/2006
                                                                       £m                  £m


     Capital receipts                                                    4.8                3.4

     Grants                                                            36.3                27.7

     Borrowing                                                           8.0               23.1

     Other                                                               8.1                7.8

     Total                                                             57.2                62.0



              st
 As at 31 March 2007 the Council held a balance of usable capital receipts amounting to £3.7m. Some of
 these capital receipts are committed towards future schemes. Lottery funding and private sector monies
 are to be matched for investment in specific schemes such as Talbot Square Townscape Heritage Initiative
 (also Regeneration) and restoration of Stanley Park.

 The Council plans future capital developments within the financial constraints placed upon it. Key policy
 objectives for the future include regeneration and renewal of the town.

             Over the next three years funding of over £96m has been committed to Regeneration projects and
              related acquisitions to ensure that the redevelopment needed takes place. Blackpool Council and
              the Urban Regeneration Company, ReBlackpool are currently working together on two main areas
              of redevelopment – the Seafront Experience and Talbot Gateway. Resources have been secured
              from the European Regional Development Fund (ERDF), Single Regeneration Budget (SRB),
              North West Development Agency (NWDA) and the Council’s own capital programme.




                                                     -8-
   Blackpool Council                                    Statement of Accounts 2006/2007

       A Health Village which has been developed within the Talbot and Brunswick ward area is also part
        of Regeneration. This comprises a Sure Start centre, multi-use games area and playzone,
        community centre and landscaped open spaces. The project brings together funding from the
        Council’s Housing Investment programme, the local Primary Care Trust, and grants from Sure
        Start, New Opportunities Fund, SRB, NRF, ERDF and other external contributions.

       A coastal defence programme totalling £62m and funded by DEFRA commenced in 2005/2006
        and is phased over 5 years. This has since attracted additional funding of £15.8m from NWDA and
        ERDF for enhancements to the original scheme in order to “dovetail” with the proposed Peoples
        Playground.

       Improvements of over £4m have been spent on Sandcastle Water World. This is funded through
        prudential borrowing.

       A budget of over £7m has been used to the rebuild of Devonshire School and is funded by both
        grants and borrowing.

   
                th
        From 15 January 2007 the Council’s housing stock is managed by an Arms Length Management
        Organisation, Blackpool Coastal Housing Ltd. Funding of approximately £66m has been bid for in
        order to bring housing stock up to Decent Homes Standard.

1.1.4      HOUSING REVENUE ACCOUNT

The summary position on the Housing Revenue Account comparing the original budget to the outturn
position is as follows:

                                              Budget             Actual           Difference
                                               £’000             £’000               £’000


  Gross Expenditure                           16,623             16,897              274


  Income                                     (16,771)            (17,114)            (343)


  (Surplus) for the Year                       (148)              (217)              (69)


  Balance (Surplus) Brought Forward            (556)              (556)                0
   st
  1 April 2006


  Balance (Surplus) Carried Forward            (704)              (773)              (69)
    st
  31 March 2007




                                               -9-
  Blackpool Council                                      Statement of Accounts 2006/2007

1.2         PENSION LIABILITY

In accordance with best accounting practice the Council must show the surplus or deficit position on its
share of the Pension Fund. For Blackpool the net position showed a liability of £91.6m for 2006/2007
compared to a liability of £103.1m for 2005/2006. The decrease in liability is £11.5m (11.1%).

The 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 the assumptions about mortality rates,
salary levels, etc. The assets and liabilities have been assessed by Mercer Human Resource Consulting
Ltd, an independent firm of actuaries. The liabilities will not become due immediately or all at once, as
they relate to pensions payable to current scheme members on their normal retirement dates. The
position at the end of the financial year is based on prevailing market and other economic conditions. As
such it may fluctuate significantly from one year to the next.

1.3         ACCOUNTING PRACTICE COMPLIANCE

In accordance with the latest CIPFA Code of Practice on Local Authority Accounting in the United
                                                          st
Kingdom, which is applicable to financial reporting from 1 April 2006, the Income and Expenditure
Account is presented using a Service Expenditure Analysis (SEA) reflecting the Best Value Accounting
Code of Practice approach to consistent financial reporting. The accounting policies adopted by the
Council are explained fully in Section 3.

1.4         COMPLIANCE WITH STATUTORY CONTROLS & TARGETS

In 2006/2007 the Council received supported capital expenditure (SCE) approvals of £5m in order to
borrow for capital purposes. The costs of this borrowing must be met from the service revenue budget
over the useful life of the asset and it is the Council’s policy that the cost of the capital scheme using
prudential borrowing must have a nil effect on the council tax. Therefore, increased income/savings must
be achievable before the scheme can go ahead. From 2006/2007 it has been government policy to
gradually replace SCEs with Capital Grant.

The Council set aside as a provision for credit liabilities a minimum revenue provision (MRP) of £5.5m
representing 4% of the capital financing requirement, as adjusted in respect of the commutation of
certain Government housing grants. In addition to the statutory minimum of 4% £0.2m has been set
aside to repay debt relating to shorter life assets which have been funded by prudential borrowing.

1.5         FURTHER INFORMATION

The Statement of Accounts forms one element of the Council’s financial reporting to local taxpayers,
employees and other interested parties. Further information can be found in the following publications
which are produced each year:

Revenue Budget                     available for inspection in local libraries or on the
                                   Council’s website

Schedule of Fees & Charges         obtainable from the Director of Finance

Council Tax Leaflet                distributed to all households with council tax bills

Corporate Performance Plan        available on the Council’s website or Council offices

Community Plan                    available on the Council’s website or Council offices

Facts, Figures & Finance         available from the Director of Finance
(covers the ten Greater Manchester authorities plus Blackpool, Blackburn with Darwen, Warrington and
St Helens unitary authorities)




                                               - 10 -
  Blackpool Council                                     Statement of Accounts 2006/2007


Information can also be found on the Council’s website www.blackpool.gov.uk

Further information about this Statement of Accounts is available from:

Chief Financial Officer
P O Box 4
Town Hall
Blackpool
FY1 1NA

Public Inspection of Accounts

Interested members of the public have a statutory right to inspect the accounts before the audit is
                                                   nd                    th
completed. This inspection will take place from 2 July 2007 until 27 July 2007 for the 2006/2007
Statement of Accounts. The availability of the accounts for inspection is advertised in the local press in
June 2007.




                                              - 11 -
Blackpool Council              Statement of Accounts 2006/2007




                    SECTION 2




INDEPENDENT AUDITORS REPORT




                      - 12 -
Blackpool Council            Statement of Accounts 2006/2007




                    - 13 -
Blackpool Council              Statement of Accounts 2006/2007




                    SECTION 3




      STATEMENT OF ACCOUNTING
             POLICIES




                      - 14 -
Blackpool Council                                      Statement of Accounts 2006/2007

3.0      GENERAL

The statement of accounts summarises the Council’s transactions for the 2006/2007 financial year and
                               st
its position at the year end 31 March 2007. It has been prepared in accordance with the Code of
Practice on Local Authority Accounting in the United Kingdom – A Statement of Recommended
Practice 2006 (the SORP).

3.1     CHANGES IN ACCOUNTING POLICIES

In previous years a notional transaction – the capital financing charge (or notional interest) was
included within the Consolidated Revenue Account. This requirement has been removed from the
2006 SORP. Also credits for government grants deferred are now posted to service revenue accounts
and support services rather than credited as a corporate income item and gains and losses on the
disposal of fixed assets are recognised in the Income and Expenditure Account.

The Consolidated Revenue Account has been replaced with an Income and Expenditure Account and
Statement of Movement on the General Fund Balance. The Consolidated Balance Sheet has been
renamed Balance Sheet. The Statement of Total Movements in Reserves has been replaced by the
Statement of Total Recognised Gains and Losses. These statements can be found in Section 4.

3.2     INTANGIBLE FIXED ASSETS

Expenditure on assets that do not have physical substance but are identifiable and controlled by the
Council (eg software licences) is capitalised when it will bring benefits to the Council for more than one
financial year. The balance is amortised to the relevant revenue account over the economic life of the
investment to reflect the consumption of benefits.

3.3     TANGIBLE FIXED ASSETS

Tangible fixed assets are assets that have physical substance and are held for use in the provision of
services or for administrative purposes on a continuing basis. Expenditure on the acquisition, creation
or enhancement of tangible fixed assets has been capitalised on an accruals basis for all items over
£15,000.

Tangible fixed assets are valued and included in the balance sheet on the basis recommended by the
CIPFA Accounting Code of Practice and in accordance with the Practice Statements in the Royal
Institution of Chartered Surveyors (RICS) Appraisal and Valuation Manual:

         a)     Operational assets are included in the balance sheet at the lower of net current
                replacement cost or net realisable value in existing use. The exception to this is
                specialist property which is valued at depreciated replacement cost.
         b)     Non-operational assets are valued and included in the balance sheet on the basis of
                open market value.
         c)     Infrastructure and community assets are included in the balance sheet at historical
                cost.

Operational assets include council dwellings and other land and buildings. Council dwellings are
included in the balance sheet at current (capital) value as at March 2007 less an average discount for
right to buy dwellings.

A significant proportion of the land and buildings was revalued by the external valuers as at 1st
January 2003. The Council is continuing its rolling programme of revaluations and aims to revalue
20% of its properties each year over a 5 year cycle.

Non-operational assets are valued on a continuing basis by the Council's Principal Estates and
Valuation Officer.




                                             - 15 -
Blackpool Council                                      Statement of Accounts 2006/2007

Impairment

The values of each category of assets and of material individual assets that are not being depreciated
are reviewed at the end of each financial year for evidence of reductions in value. Where impairment is
identified as part of this review or as a result of a valuation exercise, this is accounted for by:

        where attributable to the clear consumption of economic benefits – the loss is
        charged to the relevant service revenue account
       otherwise – written off against the Fixed Asset Restatement Account.


Disposals

When an asset is disposed of or decommissioned, the value of the asset in the balance sheet is
written off to the Fixed Asset Restatement Account via the Income and Expenditure Account. Amounts
received from disposal are credited to the Usable Capital Receipts Reserve which can then only be
used for new capital investment or set aside to reduce the Council’s borrowing requirement.

A proportion of receipts relating to housing disposals (75% for dwellings, 50% for land and other
assets, net of deductions and allowances) is payable into a Government pool.

Depreciation

Depreciation is provided for on all assets with a determinable finite life by allocating the value of the
asset in the balance sheet over the periods expected to benefit from their use.

The Council depreciates its material fixed assets other than land and non-operational investment
properties on a straight line basis over the expected life of the asset after allowing for residual value.

3.4         LEASES

Rentals payable under operating lease are charged to revenue on an accruals basis. Assets
previously acquired under finance leases which have not been fully depreciated are capitalised in the
Council’s accounts and the liability to pay for future rentals included as a deferred liability. Finance
leases are allocated and charged to revenue over the term of the lease.

3.5       CHARGES FOR FIXED ASSETS
The General Fund and DSO revenue accounts include the annual provision for depreciation relating
to the use of fixed assets. The charge made to the Housing Revenue Account is in accordance with
regulations issued under the Local Government and Housing Act 1989.

3.6           VAT

VAT is included in Income and expenditure only to the extent that it is irrecoverable.

3.7            ACCRUALS OF INCOME AND EXPENDITURE
Activity is accounted for in the year that it takes place, not simply when cash payments are made or
received. In particular:

         Fees, charges and rents due from customers are accounted for as income at the date the
          Council provides the relevant goods and services.
         Supplies and services are recorded as expenditure when they are received. Items received
          but not consumed are included within the balance sheet as stocks (paragraph 3.8). The only
          significant exceptions are in respect of wages, bonus and related costs which are included in
          the accounts on the basis of the nearest payment date to the year end; housing rents which
          are included on the basis of the number of weeks which commence within the financial year.
          This policy is consistently applied each year and therefore does not have a material effect on
          the year's accounts.


                                              - 16 -
Blackpool Council                                       Statement of Accounts 2006/2007

         Works are charged as expenditure when they are completed, before which they are carried as
          works in progress on the balance sheet.
         Interest payable and receivable on borrowings is accounted for in the year to which it relates,
          on a basis that it reflects the overall effect of the loan or investment.
         Where income and expenditure has 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 it is
          doubtful that debts will be settled, the balance of debtors is written down and a charge made
          to revenue for the income which might not be collected (bad debt provision).
         Dividend income is recognised in the accounts in the year which it is declared rather than the
          year to which it relates.
         Income and expenditure are credited and debited to the relevant account, unless they properly
          represent capital receipts or capital expenditure.

3.8           STOCKS AND WORK IN PROGRESS
a)        Stocks and Stores
Items of stock held by the Central Print Unit are valued at current price. All other operational stores of
the Council, including spares for plant and vehicle fleets, are included in the accounts at the lower of
average cost or net realisable value.
These valuation policies are in part a departure from the 1996 Accounting Code and SSAP 9 which
recommend that stocks be shown at the lower of actual cost or net realisable value.

b)        Work in Progress
Work in progress arises in the Council's Direct Service Organisation, the Illuminations Division
(production of new features) and the Central Print Unit. It is valued at cost including an allocation of
overheads.

3.9       OVERHEADS

The Council complies with CIPFA’s 2006 Best Value Accounting Code of Practice - Accounting for
Overheads. This recommends that all support service costs are charged or apportioned to service
users. The Council has adopted the requirement of the Best Value Code of Practice for the cost of
non-distributed costs.

The main basis for charging of overhead costs are:-

Percentage Time –     Business Services Management
                      Financial Services
                      Payroll (also number of employees/payslips)
                      Debtors & Creditors (also number of transactions)
                      Human Resources
                      Legal Services
                      Information Technology (also Direct Allocation/No of PCs)
                      Strategic Leadership Team
Floor Area -          Administrative Buildings
Actual Time Allocation - Technical Services

3.10      PROVISIONS
Provisions are made where an event has taken place that gives the Council an obligation that probably
requires settlement by a transfer of economic benefits, but where the timing of the transfer is
uncertain.

Provisions are charged to the appropriate revenue account where the authority becomes aware of the
obligation, based on the best estimate of the likely settlement. When payments are eventually made,
they are charged to the provision set up in the balance sheet. Estimated 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 be required, the provision is reversed and credited back to the relevant revenue
account.



                                              - 17 -
Blackpool Council                                     Statement of Accounts 2006/2007

Where some or all of the payment required to settle a provision is expected to be met by another party,
this is only recognised as income in the relevant revenue account if it is virtually certain that
reimbursement will be received if the obligation is settled.

3.11    RESERVES
Amounts set aside for purposes falling outside the definitions of Provisions are considered as
Reserves and transfers to and from them are distinguished from service expenditure disclosed in the
accounts. Expenditure is not charged direct to any Reserve.

Reserves include earmarked reserves set aside for specific policy purposes and balances which
represent resources set aside for purposes such as general contingencies.

Capital reserves are not available for revenue purposes and certain of them can only be used for
specific statutory purposes. The Fixed Asset Restatement Account and Capital Financing Account are
non-distributable reserves and are therefore referred to as “accounts”.

3.12    REPURCHASE OF BORROWING
Gains or losses on the repurchase of borrowing are to be recognised in the Movement on General
Fund Balance in the year in which they are realised. Where however the repurchase is coupled with a
refinancing or restructuring of borrowing with substantially the same overall economic effect, gains or
losses are recognised over the life of the replacement borrowing.

3.13     ACCOUNTING FOR PENSIONS
The Pension Fund accounts have been prepared in accordance with the main recommendations of the
Financial Reports of Pension Schemes - a Statement of Recommended Practice - as this applies to
Local Authorities.

As part of the terms and conditions of employment of its officers and other employees, the Council
offers retirement benefits. Although these will not actually be paid until employees retire, the Council
has a future commitment to make the payments. This needs to be disclosed at the time that
employees earn their future entitlement.

The Council participates in the Lancashire County Pension Fund (LCPF), a part of the Local
Government Pension Scheme which is administered by Lancashire County Council. This is a funded
scheme, which means that the Council and employees pay contributions into the fund, calculated at a
level intended to balance pension liabilities with the investment assets.

The LCPF scheme is a defined benefit scheme. The retirement benefits are determined independently
of the investments of the scheme and employers have obligations to make contributions where assets
are insufficient to meet employee benefits. The last full actuarial valuation of the scheme was 31st
March 2004.

In addition the Council has a liability to pay unfunded teachers pensions. Although most elements of
teachers’ pensions are administered nationally, there are some discretionary benefits which are the
sole responsibility of the Council. These benefits are within the scope of FRS17 and, where
appropriate, adjustments have been made to the income and expenditure account and to the balance
sheet on the same basis as the local government scheme. The net liability of this scheme is minor and
is included within the statements which primarily comprise the net liability of Blackpool’s share of the
LCPF.

Local authorities are required to use the AA corporate bond rate to discount scheme liabilities. This
rate is 5.40% for 2006/2007 (4.9% 2005/2006).

The Council making employer’s contributions of 15.90% of superannuable pay provides pensions
funding for members of the local government pension scheme. Employees who are members of the
scheme pay contributions of either 5% or 6% of pensionable pay. Discretionary extra benefits are not
met from the Superannuation Fund but directly by the Council. Teacher’s pensions are provided



                                            - 18 -
Blackpool Council                                      Statement of Accounts 2006/2007

through the Department for Education and Skills by the Council making employers contributions of
13.65%. Teachers themselves pay contributions of 6% of superannuable pay. The teachers pension
scheme is a defined benefit scheme but the authority is unable to identify its share of the underlying
assets and liabilities though this does not have a material effect on the financial statements.

The expected cost of providing pensions under the scheme, as calculated periodically by
professionally qualified actuaries, is charged to the net cost of services in the Income and Expenditure
Account so as to spread the cost over the service lives of employees in the scheme in such a way that
pension costs are a substantially even percentage of current and anticipated future pensionable
payroll.

3.14    GOVERNMENT GRANTS
Government grants are accounted for on an accruals basis and have been credited, in the case of
revenue grants, to the appropriate revenue account or, in the case of capital grants, to a “government
grants - deferred account”. Amounts are released from the “government grants - deferred account” to
offset any related depreciation charges.

3.15        GROUP ACCOUNTS

The Council has adopted the full arrangements within the Accounting Code requirements in relation to
                                                                                th
Group Accounts. The consolidated group accounts are shown in Section 7. On 15 January 2007 the
Council placed its Housing Management into an Arms Length Management Organisation, Blackpool
Coastal Housing Ltd. The company is a local authority controlled company limited by guarantee. The
                                                                          st
accounts for Blackpool Coastal Housing Ltd from 15th January 2007 and 31 March 2007 have been
included in the Group Accounts in Section 7.

3.16        INVESTMENTS IN COMPANIES
Investments are shown in the balance sheet in accordance with the Accounting Code which requires
investments to be included at cost less provision, where appropriate, for loss in value. The
investments consist of share capital in Blackpool Transport Services Limited (set up under the
Transport Act 1985) and Blackpool Operating Company (Sandcastle Water World). The Council also
has a 5% share in Blackpool Airport.

3.17       LONG-TERM DEBTORS
Long-term debtors are cash sums made by the Council where repayment is not due during the next
twelve months. These debtors represent a share in land held for use under the Lancashire Waste
Private Finance Initiative, care and repair loans for council tenants and staff car loans. Further details
are shown in Section 5 Note 27.

3.18      PRIVATE FINANCE INITIATIVE (PFI)

Blackpool Council has entered into a Joint Working Agreement with Lancashire County Council to co-
operate in the provision of certain waste disposal functions. The Council has authorised Lancashire
County Council to enter into a PFI contract with Global Renewables Lancashire Limited and administer
all matters under that contract on behalf of Blackpool Council. This arrangement is a continuing
commitment until March 2036.

In line with FRS 5 the assets are not held on the Council’s balance sheet. Further details on the
scheme are explained in Section 5 Notes 3 and 27.




                                             - 19 -
Blackpool Council                                    Statement of Accounts 2006/2007

3.19    LANDFILL ALLOWANCE TRADING SCHEME (LATS)

The Waste and Emissions Trading Act 2003 places a duty on waste disposal authorities (WDAs) to
reduce the amount of biodegradable municipal waste (BMW) disposed to landfill. It also provides the
                                                        st
legal framework for LATS which commenced operation on 1 April 2005.

Allowances to use landfill at a specified level (the cap) are allocated free of charge to WDAs by
                                                                           st              st
DEFRA. LATS operates for 15 annual compliance periods and runs from 1 April 2005 to 31 March
2020. WDAs are able to buy and sell allowances for current and future compliance periods but only
from another WDA.

In 2006/2007 Blackpool did not buy or sell any allowances. The value of the landfill allowances are
shown in the balance sheet at the lower of cost and net realisable value.




                                           - 20 -
Blackpool Council              Statement of Accounts 2006/2007




                    SECTION 4




   CORE FINANCIAL STATEMENTS




                      - 21 -
   Blackpool Council                                         Statement of Accounts 2006/2007



                       INCOME AND EXPENDITURE ACCOUNT
                          YEAR ENDED 31ST MARCH 2007
 2005/2006                                       2006/2007          2006/2007    2006/2007     Notes
    Net                                            Gross              Gross         Net
Expenditure                                      Expenditure         Income     Expenditure
   £000                                            £000                £000        £000
                Continuing Operations                                                          1,14,15

      84,319    Education Service                         127,485     120,129         7,356      43
         210    Court Services                                404         148           256      11
                Cultural, Environmental &
      30,444       Planning Services                       60,371      28,955        31,416    3,4,7,8
       2,436    Central Services to the Public             15,562      10,350         5,212    6,10,11
                Highways, Roads & Transport
       6,482      Services                                 20,738      12,975         7,763      9
       1,420    Housing General Fund                       64,456      60,423         4,033
      49,067    Social Services                            84,237      27,276        56,961      12
                Corporate and Democratic
        3,662     Core                                      5,290       1,705         3,585    5,13,16
      (4,635)   Non-Distributed Costs                       1,351         209         1,142
        4,712   Housing Revenue Account                    24,472      16,626         7,846
            0   Exceptional Item                            1,894           0         1,894      2
     178,117    Net Cost of Services                      406,260     278,796       127,464

          64    Precepts                                                                 66

           0    Dividends from companies                                              (349)

                Interest Payable and Similar
       7,341      Charges                                                             8,997

                Amounts Payable to Housing
       1,253     Capital Receipts Pool                                                  988

       (811)    Interest & Investment Income                                         (1,796)

                Pensions Interest Cost &
                 Expected Return on
       3,252     Pensions Assets                                                      2,159      42

     189,216    Net Operating Expenditure                                           137,529

         (72)   Surplus on Collection                                                   (37)
                  Fund

    (84,555)    Government Grants                                                   (11,180)

    (48,491)    Demand on Collection Fund                                           (51,212)

                Distribution of Non-Domestic                                        (54,284)
    (47,463)      Rate Pool

       8,635    Deficit for the Year                                                 20,816




                                                 - 22 -
  Blackpool Council                                       Statement of Accounts 2006/2007



  STATEMENT OF MOVEMENT ON THE GENERAL FUND BALANCE
               YEAR ENDED 31ST MARCH 2007

The Income and Expenditure Account shows the Council’s actual financial performance for the
year, measured in terms of the resources consumed and generated over the last twelve months.
However, the authority is required to raise council tax on a different accounting basis, the main
differences being:

       Capital investment is accounted for as it is financed, rather than when the assets are
        consumed.
       The payment of a share of housing capital receipts to the Government scores as a loss in
        the Income & Expenditure Account, but is met from the usable capital receipts balance
        rather than council tax.
       Retirement benefits are charged as amounts become payable to pension funds and
        pensioners, rather than as future benefits are earned.

  The General Fund Balance compares the Council’s spending against the council tax that it
  raised for the year, taking into account the use of reserves built up in the past and contributions
  to reserves earmarked for future expenditure.

  This reconciliation statement summarises the differences between the outturn on the Income
  and Expenditure Account and the General Fund Balance. A breakdown of these figures can be
  found in Section 5 Note 17.

    2005/2006                                                                   2006/2007     Notes
         £000                                                                        £000

         8,635    Deficit for the year on the Income & Expenditure Account          20,816

                  Net additional amount required by statute and non-
        (8,135)   statutory proper practices to be debited or credited to the     (22,131)      17
                  General Fund Balance for the year

           500    Increase in General Fund Balance for the Year                     (1,315)


        (7,985)   General Fund Balance brought forward                              (7,485)


        (7,485)   General Fund Balance carried forward                              (8,800)


                  Amount of General Fund Balance held by governors
        (3,706)   under schemes to finance schools                                  (4,194)

                  Amount of General Fund Balance generally available for
        (3,779)   new expenditure (Unallocated Revenue Reserves)                    (4,606)


        (7,485)   Total General Fund Balance                                        (8,800)     37




                                               - 23 -
Blackpool Council                                    Statement of Accounts 2006/2007



     STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                          YEAR ENDED 31ST MARCH 2007

This statement brings together all the gains and losses of the council for the year and shows the
aggregate increase in its net worth. In addition to the surplus generated on the Income and
Expenditure Account it includes gains and losses relating to the revaluation of fixed assets and re-
measurement of the net liability to cover the cost of retirement benefits.


  2005/2006                                                            2006/2007
    £000                                                                 £000


       8,635   Deficit on the Income & Expenditure                          20,816
               Account for the Year

    (37,134)   Surplus Arising on Revaluation of Fixed Assets             (92,187)

       2,348   Actuarial (Gains)/Losses on Pension Fund Assets and        (16,465)
               Liabilities

         159   Any Other (Gains)/Losses Required to be Included                543



    (25,992)   Total Recognised Gains for the Year                        (87,293)




                                           - 24 -
   Blackpool Council                                     Statement of Accounts 2006/2007

                                   BALANCE SHEET
                             YEAR ENDED 31ST MARCH 2007
2005/2006                                                         2006/2007    2006/2007   Notes
  £000      Fixed Assets                                               £000         £000

     658    Intangible Assets                                           483                19
            Tangible Fixed Assets
            Operational Assets
  169,853          – Council Dwellings                              226,802                19,
  215,089          -    Other Land & Buildings                      242,512                20,21,
    2,704          -    Vehicles, Plant, Furniture & Equipment        4,163                22,23
  135,231          -    Infrastructure Assets                       162,362
    3,484          -    Community Assets                              2,852
            Non-Operational Assets
    8,455               - Investment Properties                      10,193
    4,372               - Assets Under Construction                   3,879
    2,658               - Surplus assets held for Disposal            3,767
  542,504   Total Fixed Assets                                                   657,013

    2,789   Investment in Companies                                   2,789                26
       88   Long Term Loans                                              88
       77   Long Term Debtors                                           845                3,27
      111   Deferred Debtors                                             89                28
    1,207   Deferred Premiums on Early Repayment of Debt              1,022
    4,272                                                                          4,833
  546,776   Total Long Term Assets                                               661,846

            Current Assets
    1,834   Payments in Advance                                       2,556                29
      673   Stocks & Work in Progress                                   534                30
   26,306   Debtors                                                  37,664                31
   10,550   Investments                                              19,000
        0   Cash & Bank                                                 488
    1,086   Landfill Usage Allowances                                   912
   40,449   Total Current Assets
  587,225   Total Assets                                                          61,154
                                                                                 723,000
            Current Liabilities
        0   Borrowing repayable within 12 months                     (7,200)
  (3,588)   Receipts in Advance                                      (5,951)               32
 (29,504)   Creditors                                               (35,383)               33
    (855)   Liability to DEFRA for BMW Landfill Usage                  (697)
    (377)   Bank Overdraft                                           (1,828)
 (34,324)   Total Current Liabilities
                                                                                (51,059)
  552,901   Total Assets less Current Liabilities
                                                                                 671,941
(111,780)   Borrowing repayable in excess of 12 months             (131,780)               34
  (6,750)   Creditors due in excess of 12 months                         (4)
  (5,912)   Provisions                                               (6,741)               35
 (29,623)   Deferred Liabilities                                    (28,531)               36
  (2,930)   Unapplied Government Grants                              (3,028)
(103,623)   Government Grants Deferred                             (133,811)
    (105)   Deferred Credits                                            (84)
(103,071)   Pension Liability                                       (91,562)               42
(363,794)                                                                      (395,541)

  189,107   Total Assets less Liabilities                                        276,400




                                              - 25 -
   Blackpool Council                                    Statement of Accounts 2006/2007


2005/2006                                                       2006/2007    2006/2007   Notes
  £000                                                               £000         £000

             Reserves

(251,772)    Fixed Asset Restatement Account                     (333,563)               37(a)
 (12,446)    Capital Financing Account                            (10,235)               37(b)
  103,071    Pensions Reserve                                       91,562               37(e)
   (4,081)   Usable Capital Receipts Reserve                       (3,719)               37(c)
   (1,576)   Major Repairs Reserve                                 (1,213)               37(d) &
 (22,303)    Fund Balances and Reserves                           (19,232)               37(e)

(189,107)    Total Reserves                                                  (276,400)




                                               - 26 -
 Blackpool Council                                          Statement of Accounts 2006/2007

                                CASH FLOW STATEMENT
                              YEAR ENDED 31ST MARCH 2007
2005/2006                                                         2006/2007     2006/2007    Notes
  £000       Revenue Activities                                     £000          £000
             Cash Outflows
  158,933    Cash Paid to & Behalf of Employees                      164,837
    7,245    Precepts Paid                                             7,734
   38,703    NNDR Payments to National Pool                           39,115
   50,872    Housing Benefit Paid Out                                 57,392
    1,387    Payments to Capital Receipts Pool                         1,119
  160,369    Other Operating Cash Payments                           167,193
                                                                                   437,390
             Cash Inflows
   (5,967)   Rents (after Rebates)                                    (5,051)
  (44,552)   Council Tax Receipts                                    (44,354)
  (47,463)   NNDR Receipts from National Pool                        (54,284)
  (39,697)   Non-Domestic Rate Receipts                              (39,228)
  (84,212)   Revenue Support Grant                                   (10,515)
  (70,924)   DWP Grant for Benefits                                  (75,635)
   (4,521)   Other Government Grants                                (135,362)
  (31,264)   Cash Received for Goods & Services                      (43,446)
         0   Agency                                                     (242)
 (102,139)   Other Operating Cash Receipts                           (36,738)    (444,856)
  (13,230)   Net Cash Inflow from Revenue Activities                               (7,466)     44

             Returns on Investments and Servicing of
             Finance
             Cash Outflows
    7,148    Interest Paid                                             7,205
        1    Interest Element of Finance Lease                             2
             Cash Inflows
     (811)   Interest Received                                        (1,990)

             Net Cash Out Flow on Returns on Investments
    6,338    and Servicing of Finance                                                5,217

             Capital Activities
             Cash Outflows
   57,172    Purchase of Fixed Assets                                 58,336
        0    Other Capital Cash Payments                               3,155
             Cash Inflows
   (3,226)   Sale of Fixed Assets
  (23,446)   Capital Grants Received                                 (42,891)
     (559)   Other Capital Cash Receipts                              (4,823)

   29,941    Net Cash Out Flow on Capital Activities                                13,777

   23,049    Net Cash Out Flow before Financing                                     11,528

             Management of Liquid Reserves
   10,550    Net increase/decrease in short-term deposits              8,450         8,450

             Financing
             Cash Outflows
   71,108    Repayments of Amounts Borrowed                            6,500
        4    Capital Element of Finance Lease                              9
             Cash Inflows
  (21,000)   New Loans Raised                                        (20,000)
  (64,350)   New Short-Term Loans                                     (8,700)
  (14,238)   Net Cash Inflow Financing Activities                                 (22,191)

   19,361    Net Increase/Decrease in Cash                                         (2,213)     45




                                                  - 27 -
Blackpool Council              Statement of Accounts 2006/2007




                    SECTION 5




  NOTES TO THE CORE FINANCIAL
         STATEMENTS




                      - 28 -
Blackpool Council                                        Statement of Accounts 2006/2007

1.        PRIOR PERIOD ADJUSTMENTS

In the 2006/2007 Statement of Accounts the Council has adopted three significant new accounting
policies that impact on the comparative figures for 2005/2006 in the Income and Expenditure Account:
      capital financing charges for the use of fixed assets are no longer made to the service revenue
         accounts and support services
      credits for government grants deferred are now posted to service revenue accounts and
         support services rather than credited as a corporate income item
      gains and losses on the disposal of fixed assets are recognised in the Income and
         Expenditure Account.
These changes have had the following impact on the comparative figures for 2005/2006 compared
with those published in the 2005/2006 Statement of Accounts (only figures that have changed are
included in the table):

                             Consolidated     Removal         Relocation of   Recognition         2005/2006
                                 Revenue     of capital        government     of gains and    comparatives
                               Account in    financing              grants       losses on   in Income and
                                2005/2006      charges            deferred     disposal of     Expenditure
                             Statement of                           credits   fixed assets         Account
                                Accounts
                                     £000            £000             £000           £000             £000

Education Services                 89,065      (3,944)                (802)             0           84,319

Cultural, Environment and
Planning Services                  39,200      (5,646)              (3,110)             0           30,444

Central Services to the
Public                              2,802        (295)                 (21)           (50)           2,436

Highways, Roads &
Transport Services                  9,281      (2,671)                (128)             0            6,482

Housing Services                    1,476            (56)                0              0            1,420

Social Services                    49,745        (426)                (118)          (134)          49,067

Corporate & Democratic              4,005            (31)             (312)             0            3,662
Core

Non Distributed Costs             (4,562)               0              (73)             0           (4,635)

Housing Revenue Account             9,731      (4,985)                 (34)             0            4,712


TOTAL                             200,743     (18,054)              (4,598)          (184)         177,907




In order to comply with the 2006 SORP the loan debt which transferred to the Council on Unitary
status but is still administered by Lancashire County Council has been transferred from the Fixed
Asset Restatement Account to Deferred Liabilities. The 2005/2006 comparatives have also been
changed to reflect this. The effect is shown in the table below.

                                      Balance Sheet in 2005/2006              2005/2006 Comparatives in
                                      Statement of Accounts                         Balance Sheet
                                                  £’000                                 £’000

Deferred Liabilities                                   (64)                            (29,623)

Fixed Asset Restatement Account                  (281,331)                            (251,772)




                                            - 29 -
Blackpool Council                                    Statement of Accounts 2006/2007

2.     EXCEPTIONAL ITEMS

Under the Equal Pay Act 1970 as modified by the Equal Pay (Amendment) Regulations 2003
employees have a right to claim compensation from their employer for failing to give equal pay for
work of an equal value.

The Council is committed to equal pay and in 2006/2007 conducted a local pay review within the
framework laid down by the Joint Guidance issued by the Employer’s Organisation for Local
Government.

The costs of the local pay review in 2006/2007 were £1,894,365 which has been included under Net
Cost of Services. The Department of Communities and Local Government approved the
capitalisation of the £1,557,743 of this expenditure. This has been included in the Statement of the
Movement in the General Fund Balance. Therefore the amount to be funded from General Fund
Balances is £336,622.

3.     PRIVATE FINANCE INITIATIVE (PFI)

The Council has entered into a Joint Working Agreement with Lancashire County Council to co-
operate in the provision of certain waste disposal functions. The Council has authorised Lancashire
County Council to enter into a PFI contract with Global Renewables Lancashire Ltd and administer all
matters under that contract on behalf of Blackpool Council.

The County Council signed a PFI (Private Finance Initiative) contract with Global Renewables
Lancashire (GRL) Limited in March 2007. The contract provides for waste treatment facilities at two
central locations, Leyland and Thornton.

The facilities will receive and process ‘green’ garden and kitchen waste, ‘recyclable’ waste such as
paper, glass, aluminium cans and textiles, and residual ‘black bag’ rubbish from households in
Lancashire and Blackpool. As the County Council’s partner for the project, Blackpool Council will
contribute towards the costs. The basis of the partnership is set out in the Joint Working Agreement.
The first waste treatment facility is expected to receive waste for testing during 2009/10 and be fully
                      st
operational from 1 October 2010. The second facility will be tested during 2010/11, with both
                                   st
facilities fully operational from 1 April 2011.

Payments made under the contract are performance related, and deductions will be made if the
contractor fails to provide services to the standards required under the contract. The contracted
capital value of the facilities is £250M.

Payments under the contract will commence in April 2007 and will continue until March 2036. Initial
payments will relate to ‘soft services’ such as waste minimisation. Payments for testing the facilities
will commence in 2009/10 and payments for ‘full service’ ie when both facilities will be fully
operational will commence from April 2011. In 2007/08 Blackpool Council will pay in the order of
£38,000 under the contract. In 2008/09 it will pay approximately £50,000. In 2009/10 costs increase
to around £1.2m, and further increase in 2010/11 to £3.9m. From 2011/12 costs will be in the order
of £7.7m (inflated) per annum.

The amount of undischarged obligations in respect of the scheme as at 31 March 2007 is
approximately £2.1bn.

The County Council will receive a PFI special grant from the government towards the financing of the
scheme. From 2006/07 until 2035/36 Blackpool Council’s share of the PFI grant will be
approximately £850,000 per annum. In 2007/08 and 2008/09 there will be more PFI grant than
payments made to the contractor. The balance of ‘unspent’ grant will be set aside as deferred
income to be applied to the costs of the scheme in later years.




                                           - 30 -
Blackpool Council                                      Statement of Accounts 2006/2007

4.        LANDFILL TRADING ALLOWANCES

In 2005/06 CIPFA issued LAAP Bulletin 64 “Accounting for the Landfill Allowance Trading Scheme”.
This bulletin seeks to give local authorities guidance on accounting for LATS in the absence of settled
UK generally accepted accounting practice (GAAP). Allowances to use landfill at a specified level (the
cap) have been allocated free of charge to Waste Disposal Authorities (WDAs) by DEFRA. LATS
operates for 15 compliance periods from 1 April 2005 to 31 March 2020 and WDAs have been
advised of their allowances for the whole 15 year period. WDAs can buy and sell allowances for both
the current and future periods from or to another WDA.

In 2006/2007 the weighted average traded value of allowances was £17.98. In 2005/2006 this was
£20.20. The effect of this reduced value is a cost to the Income and Expenditure Account of £15,000.

5.        SECTION 137 EXPENDITURE

Section 137 of the Local Government Act 1972 (as amended) empowers local authorities to make
contributions to certain charitable funds, not-for-profit bodies providing a public service in the United
Kingdom and mayoral appeals. The Council’s expenditure under this power was £278,868 mainly on
donations to voluntary bodies working in the local area (£215,075 in 2005/2006).

6.        TRADING SERVICES

                                                              2006/2007              2005/2006
                                                                   £000                   £000
     Building Maintenance
     Expenditure                                                     3,148                5,437
     Income                                                        (3,145)              (5,392)
     Net Expenditure                                                     3                   45

     Vehicle Maintenance
     Expenditure                                                      540                     524
     Income                                                           538                     524
     Net Expenditure                                                    2                       0

     Building Cleaning
     Expenditure                                                      842                   831
     Income                                                         (891)                 (828)
     Net Expenditure                                                 (49)                     3




7.        PUBLICITY

The Local Government Act 1986 defines publicity as “any communication, in whatever form,
addressed to the public at large or to a section of the public”. Disclosure is required under Section 5 of
that Act.

                                                      2006/2007                  2005/2006
                                                           £000                       £000

     Information Offices                                     121                         70
     Recruitment Advertising                                 392                        713
     Other Publicity (Mainly Tourism)                      3,198                      2,904

     TOTAL PUBLICITY                                       3,711                      3,687




                                             - 31 -
Blackpool Council                                     Statement of Accounts 2006/2007

8.        BUILDING CONTROL ACCOUNT

The Building (Local Authority Charges) Regulations 1988, regulation 5 (6) requires local authorities to
prepare a statement in relation to charges showing the relevant income and costs.

                                                          2006/2007              2005/2006
                                                               £000                   £000

     Total Charges Income Received                             (320)                 (399)

     Total Charges Expenditure Incurred                          371                  404

     Deficit for the Year                                         51                    5




9.        ON-STREET PARKING SURPLUS

Decriminalised Parking Enforcement (DPE) of on-street parking was introduced in November 2003 as
part of the Local Transport Plan with the aim of reducing congestion and improving traffic
management. The surplus arising from on street parking is used to defray qualifying expenditure. The
use of DPE is governed by section 55 of the Road Traffic Regulation Act 1984, as amended from
October 2004 by section 95 of the Traffic Management Act 2004. This specifies the use that DPE
surpluses may be put to.

                                                                  2006/2007                  2005/2006
                                                                       £000                       £000

 On-street parking operation surplus                                   (2,844)                 (2,383)



 Utilised to Fund:

 Public Transport                                                       3,405                    1,525

 Traffic Management and Road Safety                                       228                     276

 On off transport and environmental improvement
 projects                                                                 396                    1,298


     Total Qualifying Expenditure                                       4,029                    3,099


10.       BUSINESS IMPROVEMENT DISTRICT SCHEMES

Blackpool Council is the billing authority for the Blackpool Town Centre Business Improvement District
which is managed by Blackpool Town Centre BID Ltd. 2006/2007 is the second year of the BID
Schemes.

A Business Improvement District (BID) is a partnership of businesses, organisations and the local
authority working in a defined geographical area to deliver initiatives to improve the trading
environment and business.

The BID is financed by way of a levy equivalent to 1% of the non-domestic rateable value charged on
all properties listed in the 2005 local Non-Domestic Rating List located within the BID area except
those located within the Hounds Hill centre that already pay a service charge, these properties are
subject to a levy at 0.7% of their rateable value.



                                            - 32 -
Blackpool Council                                    Statement of Accounts 2006/2007


The BID area covers the main town centre and other areas designated for future commercial
developments.

The BID aims to achieve:

A better and safer environment
More customers and better trade
Reduction in shop theft, street crime and begging
High profile marketing and promotion
Festivals and events
Leverage of additional support funding from external sources


                                                               2006/2007      2005/2006
                                                                    £000           £000

  BID Levy Income                                                    211             137


  Cost of Collecting Levy                                             20               0
  Council expenditure on providing services                            0               0
  Payment for services provided by other parties                     191             137
  Increased provision for bad debts                                    0               0

  Total Expenditure                                                  211             137


  Surplus for the Year                                                  0                0


  Surplus brought forward                                               0                0

  Surplus carried forward                                               0                0




11.     LOCAL AUTHORITY (GOODS & SERVICES) ACT 1970

The Council is empowered by this Act to provide goods and services to certain other public bodies.
The main bodies of relevance to the Council include voluntary organisations, health authorities,
community associations, Magistrates/Probation/Police Committees, sports councils and voluntary
aided schools.

                                                         2006/2007          2005/2006
                                                              £000               £000

  Maintenance of buildings                                       0                  26
  Coroners Service                                             148                 138
  Registrars                                                     0                  45
  Payroll                                                       77                  13

  TOTAL EXPENDITURE                                            225                 222




                                           - 33 -
Blackpool Council                                     Statement of Accounts 2006/2007

12.     POOLED BUDGET

Section 31 of the Health Act 1999 allows the establishment of joint working arrangements between
National Health Service bodies and local authorities in order to improve and co-ordinate services.
Each partner makes a contribution to a pooled budget, with the aim of providing integrated services
and activities for a client group. Funds contributed are those normally used for services represented in
the pooled budget and allow the organisations involved to act in a more cohesive way.
                                                                                         st
The Council together with Blackpool Primary Care Trust has established from 1 April 2003 a
partnership for the purposes of commissioning services for Adults with Learning Disabilities.

                                                               2006/2007         2005/2006
                                                                    £000              £000

  Expenditure
  In house provision                                                6,338             6,103
  External providers                                                7,319             6,387

  Total Expenditure                                               13,657             12,490

  Income
  Blackpool Council                                               (8,123)            (7,450)
  Blackpool Primary Care Trust                                    (5,494)            (5,000)
  Supporting People                                                  (40)               (40)
  Other

  Total Income                                                   (13,657)          (12,490)

  BALANCE CARRIED FORWARD                                                0                 0



13.     MEMBERS ALLOWANCES

The total amount of members’ allowances paid in 2006/2007 was £391,919 (2005/2006 - £398,917).

14.     OFFICERS’ EMOLUMENTS

The number of employees whose remuneration, excluding pension contributions was £50,000 or more
in bands of £10,000 were:-
                                                      Number in            Number in
                                                      2006/2007            2005/2006
   £50,000 - £59,999                                          57                  62

  £60,000 - £69,999                                                 31                   31

  £70,000 - £79,999                                                  7                     7

  £80,000 - £89,999                                                  3                     2

  £90,000 - £99,999                                                  3                     3

  £100,000 - £109,999                                                1                     1

  £110,000 - £119,999                                                3                     3

  £120,000 - £129,999                                                0                     0

  £130,000 - £139,999                                                1                     0




                                            - 34 -
Blackpool Council                                         Statement of Accounts 2006/2007

15.     RELATED PARTIES

In accordance with FRS 8 the Council is required to disclose material transactions with related parties,
bodies or individuals that have the potential to control or influence the Council or to be controlled or
influenced by the Council. Disclosure of these transactions allows readers to assess the extent to
which the Council might have been constrained in its ability to operate independently or might have
secured the ability to limit another party’s ability to bargain freely with the Council.

Related party transactions include:-
Central Government has effective control over the general operations of the Council. It is responsible
for providing the statutory framework within which the Council operates, provides the majority of its
funding in the form of grants and prescribes the terms of many of the transactions that the Council has
with other parties (eg housing benefits). Details of transactions with government departments are set
out in Note 48.

Lancashire Police Authority and Lancashire Fire Authority
The level of council tax set by the Council each year includes a precept element, which the Council
pays to Lancashire Police Authority and Lancashire Fire Authority. (See Collection Fund – Precepts).

Joint Ventures and Joint Venture Partners
During 2006/2007 the Authority acted as the accountable body for the distribution of Single
Regeneration Budget funds. In addition the Council distributed the Neighbourhood Renewal Fund,
European Regional Development Fund and Learning Skills Council allocations from Central
Government. The organisations who have received Single Regeneration Budget and/or
Neighbourhood Renewal Funding are as follows:

 5th Blackpool Scout Group                                Five Piers Housing Association
 Age Concern                                              Foyer First Step Centre
 Bay Housing Association                                  Friends of St Johns
 Beneast Training                                         Fylde Primary Care Trust
 Bispham High School                                      Greater Manchester Play Resources Unit
 Blackpool & The Fylde College                            Helping Hand Charity
 Blackpool Advocacy                                       HOAST
 Blackpool Airport                                        Kensington Foundation
 Blackpool Central Mosque - BCM                           Lancashire Co-operative Development
 Blackpool Challenge Partnership                          Agency
 Blackpool Christian Centre                               Lancashire Disability Information
 Blackpool Community Safety Partnership                   Federation
 Blackpool Fylde & Wyre CVS                               Lancashire Fire and Rescue Service
 Blackpool Hotel & Guest House Association                Lancastrian Transport Trust (LTT)
 Blackpool Moneyline                                      Learning Disability Partnership
 Blackpool Town Centre Forum                              Manchester Methodist Housing
 Blackpool Trades Club                                    Association
 Blackpool Victoria Hospital                              MBW Training
 British Red Cross                                        North British Housing Association
 Business Link                                            North West Health Authority
 Career Link                                              North West Tourist Board
 Charter Consulting                                       Philippi House
 Claremont First Step Centre                              Radio Wave 96.5
 Claremont West Family Centre                             Revoe Community Primary School
 Connect Centre                                           Robert Pinkus & Co
 Council of Voluntary Services                            Salvation Army
 Disability Services                                      South Shore Fire Station
 Donna's Dream House – Children’s respite care            St Johns Development Fund
 Drugline Lancashire Ltd                                  St Marks PCC
 Education Business Partnership Link                      St Thomas' Church
                                                          Sure Start
                                                          University of Central Lancashire




                                                 - 35 -
Blackpool Council                                      Statement of Accounts 2006/2007

In addition 2006/2007 was the first year the Blackpool Council became the accountable body for Local
Area Agreements (LAA). LAA is a three-year agreement based on local Sustainable Community
Strategies that sets out priorities for a local area and is represented by the lead local authority and
other key partners through Local Strategic Partnerships.

Subsidiary and Associated Companies
The Council has an interest in three wholly owned companies: Blackpool Transport Services Ltd,
Blackpool Operating Company (Sandcastle Water World) and Blackpool Coastal Housing. The Council
also has a 20% share in Connexions, a 43% share in Lancashire and Blackpool Tourist Board and
50% in the Urban Regeneration Company - ReBlackpool. In addition the Council has a 5% share in
Blackpool Airport. More detailed information on the group companies can be found in the Group
Accounts section of the Statement of Accounts.

Members and Chief Officers
It is considered that transactions identified involving Members and Chief Officers with related parties
are not material.

Assisted Organisations
The Council has entered into a number of service level agreements with a number of local voluntary
organisations and provides material financial assistance to them.

                                                               2006/2007             2005/2006
                                                                       £                     £


 Blackpool Council for Voluntary Services                         30,490                 28,740

 Blackpool Citizens Advice Bureau                                 64,503                 63,550

 Lancashire Disability Information                                21,220                 21,220
 Federation

 PIP Integration                                                  17,255                 17,000

 PIP Link                                                         17,255                 14,100

 Streetlife Trust                                                 40,325                 39,730

 Blackpool Centre for the Unemployed                              26,780                 26,780

 Relate Blackpool                                                   3,085                  3,040


 TOTAL                                                           220,913                214,160




                                             - 36 -
Blackpool Council                                      Statement of Accounts 2006/2007

16.     AUDIT COSTS

Blackpool Council incurred the following fees relating to external audit and inspection:

                                                                     2006/2007        2005/2006
                                                                          £000             £000

 Fees payable to the Audit Commission with regard to
 external audit services carried out by the appointed                       205            185
 auditor

 Fees payable to the Audit Commission in respect of                          16             86
 statutory inspection

 Fees payable to the Audit Commission for the certification                  75             79
 of grant claims and returns


 TOTAL                                                                      296            350




                                             - 37 -
Blackpool Council                                    Statement of Accounts 2006/2007

17.  NOTE OF RECONCILING ITEMS FOR THE STATEMENT OF MOVEMENT
ON GENERAL FUND BALANCE

2005/2006                                                                       2006/2007
  £000                                                                            £000
             Amounts Included in Income & Expenditure Account but
             Excluded when Determining the Movement on General Fund
             Balance for the Year

  (14,300)   Depreciation and Impairment of Fixed Assets                          (21,299)

    4,598    Government Grant Deferred Amortisation                                  5,963

   (3,578)   Deferred Charges                                                      (4,123)

      184    Net Gain/Loss on Sale of Fixed Assets                                     50

             Amount by Which Pension Costs Differ to Contributions Due Under      (16,630)
   (9,374)   Pension Scheme Regulations

             Amounts not in Income & Expenditure Account but Required
             to be Included when Determining the Movement on the
             General Fund Balance for the Year

    4,815    Provision for Repayment of Debt                                         5,503

      362    Capital Expenditure Charged to General Fund Balance                      604

             Transfer from Usable Capital Receipts equal to Amount Payable to
   (1,253)   the Housing Capital Receipts Pool                                       (988)

             Employers contributions payable to the Pension Fund and
   11,021    Retirement Benefits payable direct to Pensioners                       11,674

             Transfers to/from General Fund Balance that are required to be
             taken into account when determining the movement on the
             General Fund Balance for the Year

      (17)   Surplus of HRA to HRA Balance                                            217

      253    Voluntary Provision for Repayment of Debt                                217

     (846)   Net Transfer from Earmarked Reserves                                  (2,485)

             Net additional amount required to be credited to the General
   (8,135)   Fund Balance for the Year.                                           (22,131)




                                         - 38 -
Blackpool Council                                    Statement of Accounts 2006/2007

18. PENSION COSTS

Teachers
In 2006/2007 the Council paid £5,435,092 (2005/06 £5,283,672) to the Department for Education &
Skills, which represents 13.65% (2005/2006 13.5%) of teachers’ pensionable pay. In addition the
Council is responsible for all pension payments relating to awards of added years and other related
increases. In 2006/2007 these amounted to £54,205 (£40,922 in 2005/2006) which represents 0.14%
of pensionable pay.

Other Employees
In 2006/2007 the Council paid total employer’s contributions of £11,103,379 (2005/2006 £10,454,566)
to the local government pension scheme administered by Lancashire County Council. These
contributions help provide scheme members with statutory pension benefits related to their level and
length of service upon retirement. The cost to the Council represented 15.9% of total pensionable
pay (2005/2006 15.9%).

In addition to employer's contributions for funded benefits the Council is liable for directly funding
discretionary added years' benefits awarded to employees retiring early or suffering redundancy. The
direct costs charged to the Council for such additional benefits in 2006/2007 were £423,392 equal to
0.61% of total pensionable pay (2005/2006 £405,040, 0.62% of total pensionable pay).

The capital cost of discretionary increases in pension payments agreed and funded by the Council in
2006/2007 amounted to £2,800,601 (2005/2006 £637,073). The capital cost of discretionary
increases in pension payments in earlier years for which payments are still being made and funded
by the Council amounted to £7,621,056 (2005/2006 £7,290,720).

Under the requirements of the Financial Reporting Standard FRS17, retirement benefits are
recognised as a cost within the Net Cost of Services within the Income and Expenditure Account at
the point when they are earned by employees, rather than when the benefits are actually paid as
pensions. The cost shown in the Income and Expenditure Account represents the change in the net
pension liability over the year.

However, the charge the authority is actually required to make against council tax is based on the
cash payments (the employer’s contributions and other payments) that have been made in the year,
so the real cost of retirement benefits (as defined within FRS17) is reversed out of the Movement on
General Fund Balance. Further information on Pension Fund is included in Note 42.

Further information can be found in Lancashire County Council's Pension Scheme Annual Report
which is available upon request from: -

The County Treasurer
Lancashire County Council
P O Box 100
Preston PR1 0LD




                                           - 39 -
Blackpool Council                                    Statement of Accounts 2006/2007

19.     FIXED ASSETS

The movement on Intangible fixed assets in the year were as follows:

                                                               2006/2007     2005/2006
                                                                    £000          £000
                        st
 Gross book value at 1 April 2006                                      872        535

 Additions                                                               0        337
                             st
 Gross Book Value at 31 March 2007                                     872        872

 Accumulated Depreciation b/f                                          214        107

 Depreciation in year                                                  175        107

 Accumulated Depreciation c/f                                          389        214

                             st
 Net Book Value as at 31 March 2007                                    483        658




                                           - 40 -
                 Blackpool Council                                                    Statement of Accounts 2006/2007

                 The movement on tangible fixed assets during the year were as follows:-

                                              OPERATIONAL                                       NON-OPERATIONAL


                  Council         Other         Vehicles,    Infrastruc   Commu           Investment     Assets     Surplus     TOTAL       2005/06
                  Dwellings       Land &        Plant &      ture         nity            Properties     under      Assets
                  & Other         Buildings     Equipment    Assets       Assets                         Constru
                  HRA                                                                                    ction
                     £000           £000          £000         £000            £000          £000          £000      £000       £000        £000
Gross Book
Value as at
1st April 2006       174,339        246,636         13,489     157,352          3,898          8,522        4,371      2,633     611,240    536,369


Additions              4,882         14,477          2,410      31,593                0          605          49            0     54,016    56,039

Disposals             (1,354)              0             0            0               0             0          0       (245)     (1,599)    (2,292)

Revaluations          54,841         16,954              0            0               0          934           0       1,640      74,369    36,629
/Devaluation
s
                              0      (8,465)       (2,607)            0         (169)          (223)        (214)      (323)    (12,001)    (15,505)
Write Off
                              0       (458)              0        1,123         (871)            403        (327)       130             0   0
Transfer

Gross Book
Value as at          232,708        269,144         13,292     190,068          2,858         10,241        3,879      3,835     726,025    611,240
31st March
2007



Accumulated            4,487         31,549         10,784      22,121           413                41         0            0     69,395    59,881
Depreciation
B/F

Depreciation           5,906          8,955           917         5,290           57                0          0            0     21,125    18,682
in Year

Depreciation          (4,487)       (13,797)             0            0               0             0          0            0   (18,284)    (9,129)
– revaluation

Depreciation                  0         (75)             0         295          (295)               7          0         68             0   0
– transfers

Depreciation                  0            0       (2,572)            0         (169)               0          0            0    (2,741)    (40)
– write offs

Accumulated
Depreciation           5,906         26,632          9,129      27,706                6             48         0         68       69,495    69,394
C/F


Net Book
Value 31st           226,802        242,512          4,163     162,362          2,852         10,193        3.879      3,767     656,530    541,846
March 2007



Net Book             169,853        215,089          2,704     135,231          3,484          8,455        4,372      2,658     541,846
Value 31st
March 2006




                                                                      - 41 -
Blackpool Council                                   Statement of Accounts 2006/2007

20.   CAPITAL EXPENDITURE & FINANCING
                                                               2006/2007   2005/2006
                                                                    £000        £000
 Main items of Capital Expenditure
 Coast Protection Works                                           16,666      14,158
 Children & Young People Schemes                                  10,752      13,817
 Housing Schemes                                                   8,756      10,793
 Local Transport & Highways Schemes                                8,102       4,983
 Leisure, Culture and Community Learning                           2,281       2,795
 Social Services Schemes                                             797         727
 Regeneration Schemes                                              6,670       7,362
 Other Schemes                                                     3,142       7,315
                                                                  57,166      61,950

 Approved Capital Programme 2007/2008
 Children & Young People Schemes                                   6,660       7,036
 Leisure, Culture and Community Learning                           2,145       3,143
 Local Transport & Highways Schemes                                9,684       2,464
 Local Authority Housing Works                                     9,041       4,306
 Private Sector Housing                                            3,818       3,600
 Social Services Schemes                                           1,453       4,680
 Regeneration Schemes                                             24,219       8,690
 Coast Protection                                                 17,192      19,525
 Other Services                                                    4,038       1,780
                                                                  78,250      55,224




 Capital Financing Requirement

 Opening Capital Financing Requirement                           147,897     131,068

 Capital Investment
 Intangible Assets                                                     0         337
 Non-Operational Assets                                              653         331
 Operational Assets                                               53,358      55,709
 Deferred Charges                                                  3,155       3,567

 Sources of Finance
 Capital Receipts                                                (4,823)     (3,444)
 Government Grants & Other Contributions                        (36,349)    (27,134)
 Sums set aside from Revenue                                    (12,586)    (12,537)

 Closing Capital Financing Requirement                           151,305     147,897

 Explanations of Movements in Year
 Increase in underlying need to borrow (supported by               2,431      10,798
 Government Financial Assistance)

 Increase in underlying need to borrow (unsupported by              977        6,031
 Government financial assistance)

 Increase/(decrease) in Capital Financing Requirement              3,408      16,829




                                           - 42 -
Blackpool Council                               Statement of Accounts 2006/2007


   21.       FIXED ASSETS ANALYSIS

                                                   31st March 2007      31st March 2006
                                                   (Number of Assets)   (Number of Assets)
Operational Assets
Primary Schools                                           29                    29
Secondary Schools                                          8                    8
Specials Schools                                           3                    3
Playing Fields                                             9                    8
Childrens Family Centres                                   3                    3
Childrens Homes                                            5                    5
Childrens Resource Centre                                  6                    5
Childrens Respite Centre                                   1                    1
Sure Start Centres                                         3                    3
Youth Centres                                              2                    2
Youth Justice Centres                                      1                    1

Assessment Centres for Elderly                             2                    2
Day Centres for Elderly                                    1                    1
Homes for the Elderly                                      2                    2
LD Respite Centres                                         2                    1
LD Day Care Centres                                        1                    1
MH Resource Centre                                         1                    1
MH Residential                                             1                    1
PD Resource Centres                                        1                    1

Cemeteries                                                 4                    4
Refuse Disposal Site                                       1                    1
Civic Centres                                              2                    2
Conveniences                                              33                    34
Depots/Workshop/Storage                                   15                    15
Gypsy Sites                                                1                    1
Showgrounds                                                1                    1
Town Hall & Other Offices                                 22                    24
War Memorials                                              1                    1
Allotments                                                 8                    8
Art Gallery                                                1                    1
Bowling Greens and Related Assets                         32                    32
Golf Courses and Related Assets                            2                    3
Gymnasium                                                  1                    1
Leisure Centres and Buildings                             51                    53
Libraries                                                 11                    11
Parks & Open Spaces                                       86                    86
Playgrounds/Recreation Grounds                            55                    55
Sports Pitches/Courts etc                                 70                    69
Swimming Pools                                             3                    3
Tourist Information Centres                                2                    2
Bus Stations                                               1                    1
Car Parks                                                 31                    34
Other                                                      4                    4

Council Dwellings                                        5,433                5,463


Non Operational Assets
Business Park Assets                                      41                    41
Caravan Park                                               1                    1
Community Other                                            0                    0
Non operational Buildings and Assets                      289                  289




                                       - 43 -
Blackpool Council                                         Statement of Accounts 2006/2007


22.        FIXED ASSET VALUATION

The categories of fixed assets shown in the balance sheet have been valued for recognition and
capital charge purposes as follows:

     Council dwellings – on current (capital) values less an average discount for right-to-buy dwellings.
     Other land and buildings - on the lower of net current replacement cost or net realisable value. The
      valuations have been carried out in accordance with the RICS Appraisal Standards by both
      internal and external RICS consultant surveyors.
     Intangible assets – software – on depreciated historic cost
     Vehicles, Plant and Equipment – on depreciated historic cost.
     Infrastructure assets - on depreciated historic cost.
     Non-operational assets - on open market value as part of a rolling programme of revaluations
      undertaken by the Council's Principal Estates and Valuation Officer.


23.        VALUATIONS OF FIXED ASSETS CARRIED AT CURRENT VALUE

The following statement shows the progress of the Council’s rolling programme for the revaluation of
fixed assets. The basis for valuation is set out in the statement of accounting policies.

                                    Council         Other Land        Vehicles        Non          Total
                                   Dwellings &      & Buildings       Plant etc    Operational
                                   Other HRA
                                      £000               £000           £000          £000         £000

    Valued at historical cost                   0             2,607      13,292              96     15,995

    Valued at current value in:

    Current year as at 31/3/07          232,708          101,738               0         5,874     340,320
    Previous year as at 31/3/06               0           53,120               0           999      54,119

    Two years ago                               0         49,356               0             235    49,591

    Three years ago                             0         14,518               0         5,735      20,253

    Four years ago                              0         36,411               0         5,011      41,422

    Five years or more                          0         11,394               0               5    11,399


    TOTAL                               232,708          269,144         13,292         17,955     533,099



    2005/06                             174,339          246,636         13,489         15,526     449,990




                                                - 44 -
Blackpool Council                                    Statement of Accounts 2006/2007


24.     FINANCE AND OPERATING LEASES

Assets Held Under Finance Leases                         Vehicles, plant
                                                        and equipment
                                                               £000
Opening net book value                                          51
Additions                                                      161
Depreciation                                                   (17)
Closing net book value                                         195

Accumulated depreciation                                         51

FINANCE LEASES

Obligations Under Finance Leases                                £000
Amounts payable within 1 year                                   47
Amounts payable between 2 to 5 years                            158

Finance Charges                                                 £000
Finance charges paid within period                              11




OPERATING LEASES

Commitments Under Operating Leases                        Vehicles, plant
                                                         and equipment
                                                               £000
Lease payments due within 1 year:
Leases expiring within 1 year                                    428
Leases expiring in 2 to 5 years                                  215
Leases expiring in more than 5 years                             121


25.     DEFERRED CHARGES

Deferred charges should be amortised to revenue over an appropriate period consistent with the
consumption of the economic benefits controlled by the local authority. Deferred charges are not
shown on the balance sheet because any unamortised deferred charges properly carried in the
balance sheet must correspond to a recognised asset category, e.g. intangible fixed assets in the case
of purchased software.

Deferred charges in totaling £4,123,460 have been written off to the income and expenditure account
in 2006/2007 (2005/2006 £3,578,724).

26.     INVESTMENTS IN COMPANIES

                                                         31 March 2007      31 March 2006
                                                                  £000               £000

 Ordinary Shares (£1 per share) in:-

 Blackpool Transport Services Ltd                                 2,789               2,789



                     TOTAL                                        2,789               2,789




                                            - 45 -
Blackpool Council                                   Statement of Accounts 2006/2007

As 100% shareholders Blackpool Council agrees to meet all accumulated deficits or losses of
Blackpool Transport Services Limited and Blackpool Operating Company. The Council also has
shares in Blackpool Airport but the value of these shares is deemed to be nil.

BLACKPOOL TRANSPORT SERVICES LIMITED

Investments in Blackpool Transport Services Limited consist of share capital (£2,789,000) in the
company which was set up in accordance with the provisions of the Transport Act 1985 to operate the
Council’s municipal bus operation. The company provides a comprehensive passenger transport
service in the Fylde coast area through its bus and tram operations. The Council leases the tramway
and associated premises to Blackpool Transport Services Limited and as landlord is obliged to
maintain the tramway and attend to exterior repairs to the depot and offices. The company is wholly
owned by the Council.

BLACKPOOL OPERATING COMPANY LTD (SANDCASTLE ENTERTAINMENT CENTRE)
                                                                              th
The Council purchased the operation of the centre from a private company on 20 June 2003 and now
wholly owns both the building and the commercial operator - Blackpool Operating Company Limited
(BOC). The Council’s shares in Blackpool Operating Company are valued at £2.

27.     LONG-TERM DEBTORS
Long term debtors relate to amounts which are due to be repaid in over twelve months time. These
include a share in land held for use under the Lancashire Waste Private Finance Initiative, care and
repair loans and staff car loans.

Waste PFI

The total value of land held under the PFI contract at current market value is estimated at £4.415m.
Under the terms of the Joint Working Agreement, Blackpool Council will be due a 12.5% share of this
at the end of the PFI contract.

Care and Repair Loans

These are loans to council tenants for home improvements and repairs to be paid back over a number
of years

Car Loans

The number of outstanding long-term car loans at 31st March 2007 was 15 (18 as at 31 March 2006).

                                                             st                    ST
                                                          31 March 2007        31       March 2006
                                                                   £000                       £000


  Waste PFI                                                            552                       0

  Care & Repair Loans                                                  221                       0

  Car Loans                                                             72                     77


  TOTAL                                                                845                     77




                                           - 46 -
Blackpool Council                                 Statement of Accounts 2006/2007

28.    DEFERRED DEBTORS
                                                     st                  st
                                                   31 March 2007        31 March 2006
                                                            £000                 £000


 Deferred Debtors - Mortgages                                     89              111




 29.   PAYMENTS IN ADVANCE

                                                  31 March 2007          31 March 2006
                                                           £000                   £000


 Social Services                                           325                    495
 Children’s & Young People                                 497                    486
 Leisure, Culture & Community Learning                     367                     38
 Tourism                                                   316                    258
 Cleansing                                                   0                    120
 Corporate and Democratic                                  160                    192
 Housing Revenue Account                                   196                      1
 Other                                                     695                    244


 TOTAL PAYMENTS IN ADVANCE                                2,556                  1,834




30.    STOCKS AND WORK IN PROGRESS

                                                      31 March 2007      31 March 2006
                                                               £000               £000

 Work In Progress
 Illuminations Features                                            17              134
 Other                                                              0                0
 Total Work In Progress                                            17              134

 Stocks
 Operational Services Division                                    139               66
 Other                                                            378              473
 Total Stocks                                                     517              539

 TOTAL STOCKS & WORK IN PROGRESS                                  534              673




                                         - 47 -
Blackpool Council                                   Statement of Accounts 2006/2007

31.      DEBTORS
                                                              st              st
                                                         31 March 2007       31 March 2006
                                                                  £000                £000

 Collection Fund                                                     9,753              7,770
 Housing Revenue Account                                             1,266                593
 Capital                                                            12,152              5,593
 Childrens & Young People                                            1,487              2,125
 Leisure, Culture and Community Learning                                 0                 66
 Social Services                                                     1,024                626
 Debtors System                                                      5,989              4,989
 Economic Development                                                1,576              2,858
 Housing Benefits                                                    2,337              2,342
 Other Debtors                                                      10,803              6,020

 Gross Value of Debtors                                             46,387             32,982

 Less Provision for Bad & Doubtful Debts
                 - NNDR                                                530                635
                 - Council Tax                                       1,950              1,400
                 - Rent Arrears                                        631                512
                 - Housing Benefits                                  2,249              2,071
                 - Car Parks                                           385                436
                 - Other                                             2,978              1,622

 Less: Total Provisions                                              8,723              6,676

 NET VALUE OF DEBTORS                                               37,664             26,306

In 2006/07 debtors relating to the Collection Fund include council tax arrears of £5.6m
(£3.9m in 2005/06) and non-domestic rate arrears of £2.2m (£2.0m in 2005/06).

32.      RECEIPTS IN ADVANCE
                                                         ST                    ST
                                                    31        March 2007     31     March 2006
                                                                    £000                  £000

 Children’s & Young People                                         2,204                 1,254

 Leisure, Cultural & Community Learning                             335                   294

 Housing Revenue Account                                              58                  202

 Social Services                                                   1,060                  726

 Collection Fund                                                    775                   787

 Other                                                             1,519                  325

 TOTAL                                                             5,951                 3,588




                                           - 48 -
Blackpool Council                                  Statement of Accounts 2006/2007

33.     CREDITORS
                                                     st                     st
                                                   31 March 2007          31 March 2006
                                                            £000                   £000


 Collection Fund                                                 0                    577
 Capital                                                     2,822                  7,147
 Children & Young People                                     2,674                  3,208
 Leisure, Culture & Community Learning                         101                    433
 System Creditors                                            2,881                  1,417
 Social Services & Housing                                   4,830                  2,196
 Housing Revenue Account                                       165                    371
 Economic Development                                          181                    538
 Cleansing                                                       0                  1,113
 Treasury Management                                         6,153                    596
 Housing Benefits                                            3,314                  5,686
 Other Creditors                                            12,262                  6,222


 TOTAL VALUE OF CREDITORS                                   35,383                 29,504


34.     LONG-TERM BORROWING

                           Rate of Interest       Total Outstanding       Total Outstanding
                             Payable %               31 March 2007           31 March 2006
                          Weighted Average                     £000                    £000

                                  4.89
 PWLB                                                       94,780                  74,780
                                  5.59
 Market Loans                                               37,000                  37,000


 TOTAL LONG-TERM                                           131,780                 111,780
 BORROWING BY
 TYPE



 Loans by Maturity at 31 March                            31 March 2007      31 March 2006
                                                                   £000               £000

 Maturing in 1-2 years                                            1,000              5,000
 Maturing in 2-5 years                                            8,000              4,000
 Maturing in 5-10 years                                           8,000              9,000
 Maturing in more than 10 years                                 114,780             93,780

 TOTAL LONG-TERM BORROWING BY MATURITY                          131,780            111,780




                                         - 49 -
 Blackpool Council                                        Statement of Accounts 2006/2007

35.      PROVISIONS

                        Balance at       Receipts           Balance         Payments      Balance at
                            st                                                              st
                          1 April              in        Transferred(to)/         in      31 March
                                            Year       from General Fund        Year
                              £000          £000              £000              £000           £000



 Insurance                    2,330             0                     480            0         2,810

 Other                        3,582          843                    (465)         (29)         3,931


 Total value of               5,912          843                       15         (29)         6,741
 Provisions


 2005/06                      5,875          852                    (490)       (325)          5,912



The insurance provision relates to outstanding claims as at 31st March 2007 on internal insurances.
These provide cover for fire damage to certain Council houses, employer’s liability, employees’
personal accident, fidelity guarantee cover and certain other small-specified risks.

Other provisions are maintained for a number of activities including some general provisions that were
transferred over from Lancashire County Council.

36.      DEFERRED LIABILITIES

Deferred liabilities consist of liabilities which by arrangement are payable beyond the next year at some
point in the future or paid off by an annual sum over a period of time. Deferred liabilities are broken
down as follows:


                                                            st                            st
                                                          31 March 2007                  31 March 2006
                                                                   £000                           £000

 Loan debt transferred on reorganisation                           28,343                       29,560
 (managed by Lancashire County Council)

 Outstanding finance lease obligations                               188                               63


 Total Deferred Liabilities                                        28,531                       29,623




                                              - 50 -
 Blackpool Council                                    Statement of Accounts 2006/2007

 37. SUMMARY TO DETAIL OF MOVEMENTS ON FUND BALANCES AND
 RESERVES


                      Balance 1           Net       Balance 31    Purpose of the Reserve           Further
                      April 2006   Movement in      March 2007                                    Detail of
                                         Year                                                    Movement
                           £000          £000             £000

Fund Balances
                                                                  To be used in future        See Section 6
Collection Fund             (45)         (543)           (588)    years to increase/reduce
                                                                  council tax
Total Fund Balances         (45)         (543)           (588)




Reserves

Fixed Asset             251,772         81,791         333,563    Store of gains on           See (a) below
Restatement Account                                               revaluation of fixed
                                                                  assets

Capital Financing        12,446         (2,211)         10,235    Store of capital            See (b) below
Account                                                           resources set aside to
                                                                  meet past expenditure

Usable Capital            4,081          (362)           3,719    Proceeds of fixed asset     See (c) below
Receipts                                                          sales available to meet
                                                                  future capital investment


Pensions Reserve       (103,071)        11,509         (91,562)   Balancing account to        Note 42 to the
                                                                  allow inclusion of          financial
                                                                  Pension Liability on        statements,
                                                                  Balance Sheet

Housing Revenue             556            217             773    Resources available to      HRA
Account                                                           meet future running costs   Statements,
                                                                  for council houses          Section 6


Major Repairs             1,576          (363)           1,213    Resources available to      HRA
Reserve                                                           meet capital investment     Statements,
                                                                  in council housing          Section 6

General Fund              7,485          1,315           8,800    Resources available to      See (d) below
                                                                  meet running costs for
                                                                  non housing services


Other Reserves           14,307         (4,060)         10,247                                See (e) below


Total Reserves          189,152         87,836         276,988


TOTAL FUND
BALANCES &              189,107         87,293         276,400
RESERVES




                                           - 51 -
Blackpool Council                                    Statement of Accounts 2006/2007

(a)      Fixed Asset Restatement Account
The Fixed Asset Restatement Account was established as a requirement of the system of capital
accounting introduced in 1994. The reserve decreases by the net book value of assets written out of
the balance sheet as they are disposed of and increases or decreases by the amount of surpluses and
deficits arising from fixed asset revaluations.

                                                            st                        st
                                                          31 March 2007              31 March 2006
                                                                   £000                       £000
              st
 Balance at 1 April                                             251,772                    223,771

 Revaluation/Devaluation of Fixed Assets in
 Year
             - General Fund                                            19,528                2,275
             - HRA                                                     54,821               34,354

 Disposal of Fixed Assets
             - General Fund                                              (245)                (290)
             - HRA                                                     (1,334)              (2,005)

 Write Offs
               - General Fund                                         (11,999)             (15,426)
               - HRA                                                         0                 (78)

 Depreciation on Revaluations/Disposals                                21,020                 9,171
                st
 Balance at 31 March                                                  333,563              251,772




 (b)     Capital Financing Account
The Capital Financing Account contains the former provision for credit liabilities, the amounts which
are required to be set aside from capital receipts for the repayment of external loans and the amount
of capital expenditure that is financed from revenue appropriations, capital reserves and capital
receipts. It also contains the difference between amounts provided for depreciation and the total
amount required to be charged to revenue to repay the principal element of external loans.

                                                                 st                   st
                                                             31 March 2007           31 March 2006
                                                                      £000                    £000
                     st
 Balance as at 1 April                                              12,446                  14,220

 Capital financing:
       - capital receipts                                                  4,941              3,411
       - revenue                                                           2,084              4,598
       - impairment                                                            0                  0

 Major Repairs Reserve                                                     3,951              4,161

 Grant                                                                           0               11

 Waste PFI                                                                   552                  0

 Minimum Revenue Provision (less depreciation)                          (11,110)           (10,665)

 Less: Write off deferred charges                                         (2,629)           (3,290)
                      st
 Balance as at 31 March                                                   10,235            12,446




                                           - 52 -
Blackpool Council                                      Statement of Accounts 2006/2007

(c)       Usable Capital Receipts
                                                               st                 st
                                                             31 March 2007      31 March 2006
                                                                      £000               £000
                 st
  Balance as at 1 April                                               4,081               3,556

  Add: Receipts in year                                               4,580               3,969


  Less: Receipts used to finance expenditure                        (4,942)              (3,444)


  Balance as at 31st March                                            3,719               4,081


(d)       General Fund Balance
                                                                                             st
                                           Balance as          Movement in    Balance as at 31
                                                st
                                            at 1 April               Year          March 2007
                                                   2006
                                                   £000               £000                £000


  Unallocated Revenue Reserves                      3,548              842               4,390

  Landfill Allowance Trading Scheme                   231             (15)                 216

  Schools Balance – Credit Balances                 4,802              468               5,270

  Schools Balance – Debit Balances                 (1,096)              20             (1,076)


  Total                                             7,485            1,315               8,800




                                          - 53 -
 Blackpool Council                                     Statement of Accounts 2006/2007

      (e)     Other Reserves
                                                  st                                                  st
                                  Balance as at 1         Movement in Year         Balance as at 31
                                        April 2006                                      March 2007
                                              £000                      £000                   £000

Capital Reserves
Repairs and Renewals                          1,734                       (8)                      1,726
Transport Realisation                         3,112                         0                      3,112
Reserve
Unapplied Revenue Reserve                       175                         0                        175
Other                                         6,528                   (3,959)                      2,569

Total Capital Reserves                      11,549                    (3,967)                      7,582


Revenue Reserves
DSO                                             132                      (34)                        98
Insurances                                      490                        58                       548
Print Unit                                       18                         7                        25
Leased Flats                                    248                        24                       272
Lottery Account                                  41                         0                        41
Matched Funding Reserve                         499                      (73)                       426
LABGI Reserve                                     0                       375                       375
Other                                         1,330                     (450)                       880

Total Revenue Reserves                        2,758                      (93)                      2,665

Total Other Reserves                        14,307                    (4,060)                  10,247




38.         CONTINGENT LIABILITIES / ASSETS

Blackpool Airport
Upon the sale of Blackpool Airport to City Hopper Airports in 2004/05 the agreement provides for a
deferred consideration to be paid to the Council on the happening of specified events e.g passenger
numbers exceeding a specified amount or a specified number of years from the date of sale whichever
happens first. The timing of this payment cannot currently be assessed.

Municipal Mutual Insurance
Following the liquidation of Municipal Mutual Insurance (MMI) in 1992/93 there are a number of claims
outstanding which may not be resolved for many years. The Council may be liable to make a
contribution towards any deficits incurred by MMI Ltd both in relation to the Council pre unitary status
and Lancashire County Council.

These assets and liabilities are not included on the Balance Sheet.

39.         AUTHORISED FOR ISSUE

FRS 21 requires authorities 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.
                                                                                              th
The 2006/2007 Statement of Accounts is authorised for issue by the Director of Finance on 29 June
2007.




                                             - 54 -
 Blackpool Council                                         Statement of Accounts 2006/2007

40.      EVENTS AFTER THE BALANCE SHEET DATE

There were no material events after the balance sheet date which have not been reflected in the
financial statements.

41.      TRUST FUNDS
The Council acts as trustee for legacies left by residents of the Borough. The balances on the following
accounts are excluded from the Consolidated Balance Sheet of the Council.

                                           Balance at         Income      Expenditure       Balance at
                                             31.03.06                                         31.03.07
                                                 £000            £000              £000           £000


 Robert Evans Mills
 (Annual lecture on local history)                     2            0                 0               2

 Total                                                 2            0                 0               2




42.      ACCOUNTING FOR PENSIONS
The Council participates in the Lancashire County Pension Fund (LCPF), a part of the Local
Government Pension Scheme which is administered by Lancashire County Council. This is a funded
scheme, which means that the Council and employees pay contributions into the fund, calculated at a
level intended to balance pension liabilities with the investment assets.

The LCPF scheme is a defined benefit scheme. This means that the retirement benefits are determined
independently of the investments of the scheme and employers have obligations to make contributions
where assets are insufficient to meet employee benefits. The last full actuarial valuation of the scheme
was at 31 March 2004.

In addition, the Council has a liability to pay unfunded teachers pensions. This liability is £1,120,000 as
     st
at 31 March 2007. This Note discloses the financial effects of Blackpool’s share of both the LCPF and
the unfunded teachers pension liability.

The scheme’s actuary has chosen the redemption yield on the iBoxx Sterling AA corporate bond over 15
years index to discount the scheme’s liabilities. This meets the requirement for local authorities to use a
discount rate based on AA rated corporate bond yields. This rate is 5.40% (4.90% 2005/06).




                                              - 55 -
  Blackpool Council                                         Statement of Accounts 2006/2007

                                                                           Combined effect of LCPF and
                                                                           unfunded teachers’ pensions
                                                                         2006/07                2005/06
                                                                            £000                   £000
  Net Cost of Services:
  Current service cost                                                    13,420                     10,684
  Curtailment cost                                                           225                         118
  Past service cost                                                          826                     (4,680)
                                                                          14,471                       6,122
  Net Operating Expenditure:
  Interest cost                                                            17,200                     15,975
  Expected return on assets                                              (15,041)                   (12,723)
                                                                            2,159                      3,252
  Amounts to be met from government grants and local
  taxation:

  Movement on pensions reserve                                            (4,956)                      1,647
                                                                          11,674                      11,021
  Actual amount charged against council tax for
  pensions in the year:
  Employer’s superannuation                                               10,509                      10,575
  Pension enhancements (voluntary redundancies)                            1,111                         405
  Teachers pension enhancements                                               54                          41
                                                                          11,674                      11,021


Current Service Cost and Employer Contributions - the FRS17 Current Service Cost represents the
increase in the authority’s liability to pay pension benefits in the future which is expected to arise as a
result of employee service in the current year, calculated on the actuarial assumptions used for FRS17
purposes. As required by the accounting standard, it is net of employee contributions. Along with the
employee contributions the Current Service Cost serves to increase the pension liabilities at the end of
the year. The employer contributions are the actual amounts paid by the employer during the year, and
along with the employee contributions they serve to increase the employer’s FRS17 assets at the year
end. If the actual employer contributions paid are less than the FRS17 Current Service Cost, the FRS17
deficiency at the end of the year will increase.

Past Service Cost (Gain) and Curtailment Cost (Gain) - the Past Service and Curtailment Costs
(Gains) are normally the result of increased benefits being paid in the event of members retiring early
during the year. They may result either from “early retirement strains” (the cost of paying the members’
benefits earlier than had been anticipated), or from additional benefits being awarded on retirement.
Those costs which result from redundancy/efficiency retirements are classed as Curtailment Costs, with
any other amounts being regarded as Past Service Costs. Any augmentation of benefits for active
members would also give rise to a past service cost.

Settlement Gain (Loss) - this is where a restructuring exercise has occurred and a number of staff have
transferred from the employer, i.e. a settlement has occurred in terms of the liabilities lost (transferred out)
to either another employer in the Fund or to a different pension scheme. A gain or loss will occur where
the liabilities (as measured on the FRS17 assumptions) are higher or lower than the corresponding
assets transferred.

Interest on Liabilities - the value of the pension liabilities is calculated by discounting the expected
future benefit payments for the period between the expected date of payment and the date at which they
are being valued. This is so that a valid comparison can be made with the value of the Fund’s existing
assets, allowing the asset coverage on the valuation date to be measured. When the valuation date is
moved on one year, one year’s worth of the discount “unwinds” as the benefit payments are one year
closer, and the result is an increase in the value placed on the liabilities of one year’s “interest”. The effect
for 2006/07 was a 4.9% increase (based on the discount rate in force at the start of the year).

Expected Return on Assets - the average rate of return expected on the investment assets held by the
pension scheme. Part of the way that the pension liabilities are expected to be financed is through



                                                 - 56 -
  Blackpool Council                                      Statement of Accounts 2006/2007

investment returns. This is allowed for in the FRS17 figures, and typically an investment return of about 6-
6.5% (net of expenses) on the existing assets had been anticipated for FRS17 purposes for 2006/07. This
figure may vary from year to year depending on the assumptions made and the types of assets held by
the Fund.

Asset Gain (Loss) - typically an investment return of about 6-6.5% (net of expenses) was anticipated for
2006/07, and actual returns were broadly in line with this, typically between 3% and 7% for most funds.
The difference between the actual and anticipated returns is recognised in the Asset Gain, and the figure
which normally emerges for 2006/07 is up to +/-2%, when measured as a proportion of the year end
assets.

Liability Gain (Loss) - the Liability Gain (Loss) relates to the fact that the annual FRS17 calculations are
calculated using an estimated approach, with the figures being reviewed/revised every three years when
accurate calculations are done as part of the actuarial valuation. The liability loss is the cumulative three
year effect of bringing the estimated figures into line with the more accurately calculated ones. Examples
of events which this would cover are earnings growth different from that previously assumed in the
calculations, and mortality and other demographic experience being different from the FRS17
assumptions.

Movement on pensions reserve - the net change in the pension liability recognised within the Income
& Expenditure Account. This is not the net amount by which the future liability to pay pension benefits
has increased or decreased during the current period as it excludes the change in the liability arising
from an actuarial gain of £16,465,000 which is recognised in the Statement of Total Movements in
Reserves.

Change in Assumptions - the pension liabilities are calculated as discounted cash flows and there can
be changes between the assumptions which are used for discounting purposes between the start and
end of the year. In 2006/07 there was a increase in the real discount rate during the year (as measured
by the yields on corporate bonds and index-linked gilts, as required by FRS17). The real discount rate at
the start of the year was 2.0% (actual corporate bond yield of 4.9% less 2.9% inflation assumption)
whereas at the end of the year it was 2.3% (actual corporate bond yield 5.4% less 3.1% inflation
assumption).

The typical effect of this change in assumptions was a reduction of around 5-7% in the year end
liabilities. For unfunded benefits in payment, the effect is slightly less, due to the shorter term of the
liabilities (e.g. for teachers’ unfunded additional pensions the effect is a reduction of about 3%).

At 31 March 2007 the Council had the following overall assets and liabilities for pensions:
                                                            st                           st
                                                         31 March 2007                 31 March 2006
                                                                  £000                          £000


  Market value of assets in scheme                                263,883                       243,525

  Value of liabilities in the schemes                            (355,445)                    (346,596)


  Surplus/(deficit)                                               (91,562)                    (103,071)


Compensatory added benefits which are recharged to the employer have been included in the liabilities
for the purpose of FRS17 disclosures.

The liabilities show the underlying commitments that the authority has in the long term to pay retirement
benefits earned by staff. The total liability of £91,562,000 has a substantial impact by reducing the net
worth of the Council as recorded in the balance sheet. However, statutory arrangements for funding the
liability mean that the financial position of the Council remains healthy with the deficit being made good by
increased contributions over the remaining working life of employees as assessed by the scheme
actuary.



                                               - 57 -
  Blackpool Council                                     Statement of Accounts 2006/2007


As required by FRS17, liabilities have been assessed using the projected unit actuarial cost method, an
estimate of the pensions that will be payable in future years dependent on the assumptions about
mortality rates, salary levels, etc. The assets and liabilities have been assessed by Mercer Human
Resource Consulting Ltd, an independent firm of actuaries. Estimates are based on the latest full
                                  st
valuation of the scheme as at 31 March 2004. The main financial assumptions used in their calculations
have been:

                                                                End of year             Beginning of year

  Rate of inflation                                                   3.10%                        2.90%
  Rate of increase in salaries                                        4.85%                        4.65%
  Rate of increase in pensions                                        3.10%                        2.90%
  Discount rate                                                       5.40%                        4.90%



Changes to the Local Government Pension Scheme permitted employees retiring on or after 6 April
2006 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
after 6 April 2006 will take advantage of this change to the pension scheme. Assets in the LCPF are
valued at fair value, principally market value for investments, and consist of the following categories by
proportion of the total assets held by the Fund:

                                 Expected rate of                     Assets at                Assets at
                                                                  st                       st
                                 return on assets               31 March 2007            31 March 2006
                                     End Beginning                £000       %             £000       %
                                  of year    of year

  Equities                         7.50%        7.00%          169,677 64.3%            157,074 64.5%
  Government bonds                 4.70%        4.30%           22,166   8.4%            17,777   7.3%
  Other bonds                      5.40%        4.90%           32,985 12.5%             38,233 15.7%
  Property                         6.50%        6.00%           18,472   7.0%            14,612   6.0%
  Cash/liquidity                   5.25%        4.50%           11,875   4.5%             9,254   3.8%
  Other                            7.50%        7.00%            8,708   3.3%             6,575   2.7%
                                                               263,883 100.0%           243,525 100.0%

 The movement in the net pension liability (the combined effect of LCPF and unfunded teachers’
 pensions) for the year to 31st March 2007 is as follows:

                                                                          2006/2007            2005/2006
                                                                               £000                 £000
    Movement in scheme deficits during year

    Surplus/(deficit) at beginning of the year                             (103,071)            (102,370)
    Current service cost                                                    (13,420)             (10,676)
    Employer contributions                                                    11,674               11,021
    Past service /curtailment/settlement gain/(loss)                         (1,051)                4,554
    Net interest/return on assets                                            (2,159)              (3,252)
    Actuarial gain/(loss) as analysed below                                   16,465              (2,348)
    Surplus/(deficit) at end of year                                        (91,562)            (103,071)

    Statement of actuarial gains and (losses)
    Asset gain (loss)                                                         (1,774)              32,858
    Liability gain (loss)                                                           -             (7,503)
    Change in assumptions.                                                    18,239             (27,703)

    Net (increase)/reduction in deficit                                       16,465              (2,348)




                                               - 58 -
 Blackpool Council                                           Statement of Accounts 2006/2007

43.        DISCLOSURE OF DEPLOYMENT OF DEDICATED SCHOOLS GRANT

The council’s expenditure on schools is funded by grant monies provided by the Department for
Education and Skills, the Dedicated Schools Grant (DSG). DSG is ring-fenced and can only be applied
to meet expenditure properly included in the schools budget. The schools budget includes elements for
a restricted range of services provided on an authority wide basis and for the individual schools budget,
which is divided into a budget share for each school. Over and under spends on the two elements are
required to be accounted for separately.
The Council is able to supplement the Schools Budget from its own resource and this year programmed
an additional £250k to mitigate against the financial implications of reduced pupil numbers on
centrally-retained services.

Details of the deployment of DSG receivable for 2006/2007 are as follows:

                                                  Schools Budget Funded by Dedicated Schools Grant

                                                  Central               Individual               Total
                                                Expenditure        Schools Budget
                                                   £000                      £000                 £000
  Original grant allocation to Schools Budget
  for the current year in the authority’s                 10,794            66,249               77,043
  budget

  Adjustment to finalised grant allocation                 (775)                 -                 (775)


  DSG receivable for the year                             10,019            66,249               76,268

  Actual expenditure for the year                         10,261            66,249               76,510

  (Over)/underspend for the year                           (242)                 0                 (242)

  Planned top-up funding of Schools Budget
                                                            250                  0                   250
  from Council resources

Use of schools balances brought forward                       0                  0                    0

  (Over)/underspend carried forward to
                                                              8                  0                    8
  2007/08




                                                 - 59 -
Blackpool Council                                    Statement of Accounts 2006/2007


44. RECONCILIATION OF CASH FLOW TO INCOME AND EXPENDITURE
ACCOUNT

                                                                    2006/2007   2006/2007
                                                                        £’000       £’000

(Surplus) for the year on Income & Expenditure Account                             20,816

Non Cash Movements in Revenue Account:
Minimum revenue provision                                             (5,720)
Contributions (to)/from reserves                                        2,685
Contributions to capital outlay                                         (604)
Other                                                                (24,352)
                                                                                  (27,991)

Movement in Current Assets and Liabilities:
Decrease in payments in advance                                           722
Increase in debtors                                                   11,358
Increase in stocks and work in progress                                 (139)
Decrease in creditors                                                 (5,895)
Decrease in receipts in advance                                       (2,363)
                                                                                       3,683

Items shown elsewhere in the Cash Flow Statement:
Servicing of finance                                                  (5,217)
Other                                                                   1,243      (3,974)


Net cash (inflow) from revenue activities                                          (7,466)



45.  RECONCILIATION OF INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS PER BALANCE SHEET

                                                31 March 2006   31 March 2007   Movement
                                                        £’000           £’000       £’000


Cash in hand and at bank                                   0             488            488

Bank Overdrawn                                           377            1,828      (1,451)

Short term borrowing                                       0            7,200          7,200

Short term investments                                 10,550          19,000      (8,450)

(Decrease) in cash in Cash Flow
Statement                                                                          (2,213)




                                            - 60 -
 Blackpool Council                                    Statement of Accounts 2006/2007

46.   MOVEMENTS IN OTHER CURRENT ASSETS/LIABILITIES PER BALANCE
SHEET

                                                31 March 2006       31 March 2007       Movement
                                                        £’000               £’000           £’000


 Payments in advance                                      1,834               2,556              722

 Stocks & work in progress                                 673                 534              (139)

 Debtors                                                26,306              37,664          11,358

 Receipts in advance                                    (3,588)             (5,951)         (2,363)

 Creditors                                             (29,504)            (35,399)         (5,895)


 TOTAL                                                  (4,279)               (596)             3,683




47.        MOVEMENTS IN LONG-TERM BORROWING

                                                31 March 2006       31 March 2007       Movement
                                                        £’000               £’000           £’000

 Public Works Loan Board                                74,780              94,780          20,000

 Market Loans                                           37,000              37,000                 0

 TOTAL                                                 111,780             131,780          20,000




48.     ANALYSIS OF GOVERNMENT GRANTS

The following government grants were received in 2006/2007 and are reflected in the cash flow
statement.

                                                                      2006/2007          2005/2006
                                                                          £’000              £’000

 Revenue Support Grant                                                   10,515             84,555
 Non domestic rates (pool distribution)                                  54,284             47,463
 Housing benefit & Council Tax subsidy                                   75,635             70,924
 Dedicated Schools Grant                                                 76,268                  0
 Other government grants                                                 59,094              4,521


 TOTAL                                                                  275,796            207,463




                                            - 61 -
Blackpool Council              Statement of Accounts 2006/2007




                    SECTION 6




 SUPPLEMENTARY SINGLE ENTITY
    FINANCIAL STATEMENTS




                      - 62 -
Blackpool Council                                        Statement of Accounts 2006/2007



                            HOUSING REVENUE ACCOUNT

                     INCOME AND EXPENDITURE ACCOUNT

                                                                         2006/2007    2005/2006
                                                                              £000         £000
INCOME
Dwelling rents (gross)                                                     (14,007)    (13,580)
Non-dwelling rents (gross)                                                    (231)       (163)
Charges for services and facilities                                         (1,435)     (1,355)
Contributions towards expenditure                                             (244)       (293)
HRA Subsidy receivable (including MRA)                                        (925)     (1,001)

TOTAL (INCOME)                                                             (16,842)    (16,392)

EXPENDITURE
Repairs & maintenance                                                        4,853         4,975
Supervision and management                                                   6,266         5,870
Rents, rates, taxes and other charges                                           90            98
Sums directed by the Secretary of State                                        525           803
Depreciation and impairments of fixed assets                                 5,906         4,487
Debt management costs                                                           26            27
Increased provision for bad or doubtful debts                                  282           340

TOTAL EXPENDITURE                                                           17,948       16,600

NET COST OF HRA SERVICES AS INCLUDED IN WHOLE                               (1,106)         208
AUTHORITY INCOME AND EXPENDITURE ACCOUNT

HRA share of the operating income and expenditure included in the
whole authority Income & Expenditure Account

Interest payable and similar charges                                            921          960
Amortised premiums and discounts                                                129          138
Interest and Investment income                                                (271)        (286)

DEFICIT FOR THE YEAR ON HRA SERVICES                                         1,885         1,020




                                                - 63 -
 Blackpool Council                                      Statement of Accounts 2006/2007



        STATEMENT OF MOVEMENT ON THE HOUSING REVENUE
                      ACCOUNT BALANCE


                                                                   2006/2007       2005/2006
                                                                        £000            £000


Deficit for the year on HRA Income and Expenditure                     1,885              1,020
Account


Net additional amount required by statute to be debited or           (2,102)          (1,003)
(credited) to the HRA balance for the year


(Increase) or decrease in the Housing Revenue                          (217)                17
Account balance


Housing Revenue Account surplus brought forward                        (556)              (574)


Housing Revenue Account surplus carried forward                        (773)              (557)




                                              - 64 -
 Blackpool Council                                               Statement of Accounts 2006/2007


                                    NOTES TO THE HRA STATEMENT
 1.      NOTE TO THE STATEMENT OF MOVEMENT ON THE HRA BALANCE

                                                                             2006/2007       2005/2006
                                                                                  £000            £000

 Items not included in the HRA Income and
 Expenditure Account but included in the movement
 on HRA balance for the year

 Transfer to/(from) Major Repairs Reserve                                       (2,318)        (1,003)


 Capital expenditure funded by the HRA                                             216                0


 Net additional amount required by statute to be
 debited or (credited) to the HRA balance for the year                          (2,102)        (1,003)




2.       HOUSING REVENUE ACCOUNT STOCK
                                                  st
The Council owned 5,433 dwellings at 31 March 2007 which are analysed below:-

                                                                            2006/2007        2005/2006

 Low rise flats                                                                 2,257              2,260

 Medium rise flats                                                              1,079              1,085

 High rise flats                                                                 383                383

 Houses and bungalows                                                           1,662              1,683

 Multi occupied dwellings                                                         52                 52

 TOTAL                                                                          5,433              5,463

The change in the stock during the year is summarised below:-

                                                                              2006/2007      2005/2006
            st
 Stock at 1 April                                                                 5,463            5,532

 Less                 -       Sales to tenants                                          22           38
                          -    Disposal to Housing Association                          10           33

 Add                  -       Right-To-Buy Buy-Backs                                     2            2
                 st
 Stock at 31 March                                                                5,433            5,463




                                                       - 65 -
Blackpool Council                                        Statement of Accounts 2006/2007

The Balance Sheet value of assets held in the Housing Revenue Account was as follows:-

                                                                       2006/2007         2005/2006
                                                                            £000              £000
 Operational assets:

     Council dwellings                                                   223,646           167,747

     Other HRA                                                             3,156             2,106


 TOTAL                                                                   226,802           169,853




3.         DWELLING RENTS
This is the total rent due for the year after allowance is made for voids etc. During the year
3.8% of lettable properties were vacant (2005/06: 4.3%). The average rent was £51.31 a week in
2006/07, an increase of 3.2% over the previous year.

                                                                     2006/2007           2005/2006
                                                                          £000                £000

 Vacant possession value of properties                                 353,403             284,630




                                                                st
The vacant possession value of dwellings held on 1              April 2006 was £353,403,000.
The difference between this and the Existing Use Value (Social Housing) valuation of £226,137,000
represents the economic cost to the Government of providing council housing at less than the open
market rents.

4.         MAJOR REPAIRS RESERVE

The movements in the Major Repairs Reserve (MRR) are summarised below:

                                                                         2006/2007       2005/2006
                                                                              £000            £000
                   st
 Balance as at 1 April                                                       1,576           2,254

 Transferred to MRR during the year                                          5,906           4,486

 Transferred from MRR to HRA during the year                                (2,318)        (1,003)

 Debits to MRR during the financial year in respect of
 capital expenditure:
           Houses held within HRA                                           (3,951)        (4,161)
                    st
 Balance as at 31 March                                                      1,213           1,576




                                             - 66 -
 Blackpool Council                                       Statement of Accounts 2006/2007

5.         HOUSING REPAIRS ACCOUNT
The movement on the Housing Repairs Account during the year is summarised below:

                                                                        2006/2007        2005/2006
                                                                             £000             £000
                   st
 Balance as at 1 April                                                             0            0

 Add Revenue Contribution                                                   4,853            4,975

 Less Expenditure in the Year
  Responsive repairs                                                       (3,824)         (4,139)
  Planned maintenance                                                      (1,029)           (836)
                     st
 Balance as at 31 March                                                            0            0



6.         CAPITAL EXPENDITURE WITHIN HOUSING REVENUE ACCOUNT

                                                                           2006/2007     2005/2006
                                                                                £000          £000

 Total Capital Expenditure within the Housing Revenue Account                  4,906         6,721
 on Land, Housing, Other Property.

 Sources of funding for the above Capital Expenditure:

      - Usable Capital Receipts                                                    738       2,549
      - Revenue contributions (as defined in Local                                 217           0
         Government and Housing Act 1989)
      - Major repairs reserve                                                  3,951         4,161
      - Grants                                                                     0            11

          TOTAL CAPITAL EXPENDITURE WITHIN THE HRA                             4,906         6,721




Capital receipts totalling £1,334,000 were received during the year.

 7.        DEPRECIATION CHARGE WITHIN THE HRA

                                                                       2006/2007         2005/2006
                                                                            £000              £000

  Depreciation charges for:

       - Operational Assets, comprising dwellings                          5,798             4,414
            and other land and buildings
       - Non-Operational Assets                                             108                73

  TOTAL                                                                    5,906             4,487




                                               - 67 -
Blackpool Council                                     Statement of Accounts 2006/2007

8.       HOUSING SUBSIDY
The Housing Revenue Account has been compiled in accordance with the Local Government and
Housing Act 1989 as follows:

a)       Housing Subsidy

The Housing Revenue Account subsidy is central government’s contribution towards the cost of
council housing in Blackpool. It is calculated as the amount required to balance a notional Housing
Revenue Account, based on government estimates of the income and expenditure which should be
earned and spent by the Authority on council housing.

b)         The Ring Fence

The present rules do not allow authorities to transfer funds from the Housing Revenue Account to the
General Fund or vice versa except under specified conditions. The items to be included within the
Housing Revenue Account are also specified.


c)          Control

A deficit balance on the Account is not allowed and the format of the Account must comply with
Schedule 4 of the Act.

d)          Annual Report

An annual report to tenants must be published detailing activities and performance during the year.

A breakdown of the Housing Subsidy received for 2006/2007 is shown below:

                                                                      2006/2007           2005/2006
 Housing Subsidy                                                           £000                £000

 Management allowance                                                      3,565               3,168

 Maintenance allowance                                                     5,265               4,890

 Capital charges                                                           1,447               1,426

 Specified debt management                                                     47                 46

 Net premiums                                                                127                 136

 Specified set aside                                                            6                 24

 Assumed interest on receipts                                                 (9)                 (9)

 Major repairs allowance                                                   3,587               3,484

 Notional rent income                                                    (13,112)           (12,166)

 Other                                                                          2                     2

 TOTAL SUBSIDY                                                               925               1,001




                                            - 68 -
Blackpool Council                                      Statement of Accounts 2006/2007

9.      RENT ARREARS
Rent Arrears for 2006/2007 amounted £656,000 compared to £478,000 in the previous year. During
the year 2006/2007 rent arrears as a proportion of gross collectable rent (including service charges)
increased slightly to 4.2% compared to 3.3% in 2005/2006.

Amounts written off during the year amounted to £141,000 (2005/2006 £184,000). The total provision
for bad and doubtful rental debts in the Housing Revenue Account at 31st March 2007, is £531,000
(£399,000 2005/2006). This provision has been calculated in accordance with the Housing Revenue
Account (Arrears of Rents and Charges) Directions 1990.

10.     SUMS DIRECTED BY THE SECRETARY OF STATE
Rent Rebates are no longer accounted for in the HRA. This has implications for the method of
controlling local authority rents used by the Office of the Deputy Prime Minister. Local Authority rents
are controlled by the Government through the use of Rent Rebate Subsidy Limitation. This reduces the
level of grant the authority receives from the Department of Work and Pensions to fund the housing
benefit payments if the average rent for the authority is above the limit set by the DCLG.

As Rent Rebates are no longer part of the Housing Subsidy, this amount is now reclaimed through the
General Fund, but is still calculated on the same basis. As this loss of grant is suffered on the General
Fund the HRA transfers funds to the General Fund to cover the loss of grant. This loss in 2006/2007
was £525,000 (2005/2006 - £803,000).




                                             - 69 -
Blackpool Council                                       Statement of Accounts 2006/2007

                         COLLECTION FUND 2006/2007

    2005/2006       INCOME AND EXPENDITURE ACCOUNT                      2006/2007   2006/2007
         £000                                                                £000        £000

                INCOME

       44,027   Income from Council Tax                                    46,385
        (666)   Write Offs                                                  (540)

                Transfers from General Fund
       12,284                   - Council Tax Benefits                     13,041

       36,495   Income collectable from Business Ratepayers                38,533


       92,140   TOTAL INCOME                                                              97,419


                EXPENDITURE

                Precepts and Demands on Collection Fund:
        2,341                  - Lancashire Fire Authority                  2,486
        4,840                  - Lancashire Police Authority                5,139
       48,491                  - Blackpool Council                         51,212

                Business Rates:
       36,194                  -    Payment to national pool               38,144
          301                  -    Costs of NNDR Collection                  298

           50   Provision for Bad and Doubtful Debts                         641

                Contributions towards previous year’s estimated
           82   Collection Fund surplus                                       42

       92,299   TOTAL EXPENDITURE                                                         97,962


          159   (SURPLUS)/DEFICIT FOR THE YEAR                                              543
                                     st
        (114)   Fund balance as at 1 April ((Surplus)/Deficit)                               45
                                                   ST
           45   DEFICIT/(SURPLUS) AS AT 31              MARCH                               588




                                          - 70 -
 Blackpool Council                                     Statement of Accounts 2006/2007

                           NOTES TO THE COLLECTION FUND
1.       GENERAL
The Collection Fund was established under the Local Government Finance Act 1988 but the operation of
the fund was changed substantially with the introduction of Council Tax in April 1993 under the Local
Government Finance Act 1992.

The surplus or deficit on the Collection Fund is distributed between billing and precepting authorities on
                                      th
the basis of estimates made on 15 January of each year. The Collection Fund is operated on an
accruals basis and the accounts are consolidated into the Council’s Balance Sheet.

2.       INCOME FROM BUSINESS RATEPAYERS
The Council collects Non-Domestic Rates in respect of business premises by applying a rate poundage
set by central Government to the rateable value of its premises. For 2006/2007 this was 43.3p (42.2p in
2005/2006). A small Business Rate Relief was introduced in April 2005 and for businesses qualifying for
this relief the rate applied was 42.6p in 2006/2007 (41.5p for 2005/2006) Total non-domestic rateable
                st
value as at 31 March 2007 was £104m (7,055 properties).

The total amount, less certain reliefs and reductions, is paid to a central pool (the NNDR pool) managed
by Central Government. The Government pay into the General Fund of the Council a share of the pool
based on population.

3.       COUNCIL TAX 2006/2007
                                                                                         st
The Council as billing authority is required to set a tax base for each billing year by 31 January of the
previous year. The Council Tax base represents the number of chargeable dwellings in each valuation
band (adjusted for discounts, etc) multiplied by a set proportion to give the number of band D
equivalents.

The effect of the variation between the actual tax base during the year and the estimated tax base has
resulted in a deficit on the Collection Fund relating to Council Tax as follows:-


                                                                           2006/2007          2005/2006
                                                                                £000               £000


 Amount estimated council tax receivable in year                               58,924            55,640

 Actual council tax received in year

     Council tax                                                             (45,845)           (43,361)
     Council tax benefit                                                     (13,041)           (12,284)

 Increase in Bad Debt Provision                                                   550                 50




 Deficit on Collection Fund in respect of Council Tax                             588                 45




                                             - 71 -
   Blackpool Council                                               Statement of Accounts 2006/2007

 4.           COUNCIL TAX BASE CALCULATION 2006/2007
                              Disabled
                              Band A         A        B           C       D        E         F          G    H     TOTALS

1. Total per Valuation
                                   N/A   29,972   19,880   11,101      4,598    1,791     545      270       28      68,185
List

2. Adjustment for disabled
                                    57      80       -40         -28     -44        3      -13          -8   -7             0
adaptations

                                    57   30,052   19,840   11,073      4,554    1,794     532      262       21      68,185


3. Full charge properties           41   13,209   11,980       7,466   3,353    1,420     415      199       15      38,098

4. Single person 25%
                                    16   14,892    7,083       3,193   1,036     302        81          40   2       26,645
discount

5. No qualifying person
                                     0     745      268         144      68        38       24          15   4        1,306
50% discount

6. Exempt property no tax
                                   N/A    1,206     509         270      97        34       12          8    0        2,136
payable

                                    57   30,052   19,840   11,073      4,554    1,794     532      262       21      68,185

7. Equivalent number of
properties adjusted to              53   24,751   17,426       9,933   4,164    1,666     488      237       19      58,737
discounts and exemptions

8. Allowances for
changes in valuation and             0      -63      -45         -25     -11       -4       -1          -1   0         -150
discount

9. Adjusted number of
                                    53   24,688   17,381       9,908   4,153    1,662     487      236       19      58,587
properties



10. Ratio to band D                5/9      6/9      7/9         8/9      1      11/9     13/9     15/9      2



11. Band D equivalents              29   16,459   13,519       8,807   4,153    2,031     703      393       38      46,132

12. Allowances for losses
                                                                                                                           692
on collection

                                                                               Tax Base for 2006/2007             45,440




                                              Council Tax Base 2006/2007

            Amount to be met from Council Tax 2006/2007 = £58,837,000 (2005/2006 - £55,672,000)

                             Divided by Tax base (see above) = 45,440 (2005/2006 – 44,931)

       Amount to be met from Council Tax divided by tax base gives Band D of £1,294.82 (2005/2006 - £1,239.05)


   The amount to be met from Council Tax of £58,837,000 includes Lancashire Police Authority Precept
   of £5,139,000 (2005/2006 – £4,840,000) and the Lancashire Fire Authority Precept of £2,486,000
   (2005/2006 - £2,341,000).




                                                      - 72 -
 Blackpool Council                                      Statement of Accounts 2006/2007

 The tax base is not constant. The number of properties eligible for discounts varies during the year. The
 number of properties on the valuation list also varies during the year owing to new properties being
 occupied and others being demolished. As a result the amount receivable from Council Tax payers in
 the year varies from the estimated amount. This will result in a surplus or deficit on the Collection Fund
 in respect of Council Tax.


                                                             2006/2007                2005/2006
                                                                 £000                     £000

                                                                    45                     (114)
                    st
  Fund balance at 1 April

  Contribution towards previous year’s estimated                   543                      159
  collection fund surplus/deficit


                         st
  Fund Balance at 31 March                                         588                       45




Surplus and deficits on the Collection Fund are shared between the Council and the other precepting
authorities in proportion to their budgets. The Council’s share of any surplus or deficit is used to reduce
or increase the level of council tax bills in later years.




                                              - 73 -
Blackpool Council                 Statement of Accounts 2006/2007


                       SECTION 7




                    GROUP ACCOUNTS




                         - 74 -
Blackpool Council                                     Statement of Accounts 2006/2007

7.0        INTRODUCTION
The Group Accounts show the combined overall financial position of the Council, of its subsidiary
companies Blackpool Transport Services Limited, Blackpool Operating Company Limited and
Blackpool Coastal Housing Ltd and of its associated companies Connexions Lancashire Limited,
Lancashire & Blackpool Tourist Board and the Urban Regeneration Company - ReBlackpool.
      th
On 15 January 2007 the Council placed its housing management in to an Arms Length Management
Organisation (ALMO), Blackpool Coastal Housing Ltd. The company is a local authority controlled
                                                                                      th
company limited by guarantee. The accounts for BCH Ltd are based on the period from 15 January
          st
2007 to 31 March 2007.

The Council has 100% shareholding in Blackpool Transport Services Limited, Blackpool Operating
Company Limited and Blackpool Coastal Housing Ltd. The accounts for Blackpool Transport Services
                                      st
Ltd are based on the 53 weeks ending 1 April 2007.

Connexions Lancashire Limited is limited by guarantee and therefore has no share capital. The
Council has 20% of the voting rights. Connexions delivers three core services:-
              Connexions to young people aged 13-19
              Advice to adult customers aged 20+
              Services to businesses via its Business Services Team.

Lancashire & Blackpool Tourist Board is limited by guarantee and therefore has no share capital. The
Council has 43% of the voting rights. It supports businesses in the Lancashire and Blackpool area by
representing their interests regionally and nationally, by co-ordinating marketing activity, managing and
developing the tourism product and working in partnership with industry. Activities in commercial
membership, business support, “Welcome to Excellence” training, visitors services and marketing
activity are all designed to improve quality and achieve common goals.

The Urban Regeneration Company, ReBlackpool is limited by guarantee and therefore has no share
capital. The Council has 50% of the voting rights. The Company was incorporated in October 2005
                                                    st
and therefore only 6 months trading results to 31 March 2006 are included in the 2005/2006,
comparatives in the group accounts. ReBlackpool is responsible for delivering the towns Masterplan, a
large regeneration project.

The Group Income and Expenditure Account shows the surpluses generated by the trading activities
of the above companies and their effect on the overall balances of the Group.

The balance sheet shows the combined assets and liabilities of the Group.

7.1        BASIS OF CONSOLIDATION
The consolidation of the Companies in the Group with those of the Council has been based on the
degree of control exercised by the Council over the operations of each company. The extent of
control exercised by the Council is determined by the share of the total voting rights held by the
Council representatives on the boards of the companies. The percentage shares of voting rights have
been applied to the transactions and balances of the companies to produce the amounts to be
consolidated. This is in accordance with recommended practice. With the exception of Blackpool
Operating Company and ReBlackpool the accounts of the subsidiaries and associates are all draft
and are subject to audit.




                                            - 75 -
  Blackpool Council                                           Statement of Accounts 2006/2007



                            GROUP INCOME AND EXPENDITURE ACCOUNT
                                                               2006/2007    2006/2007           Net    2005/06
                                                                 Gross          Gross   Expenditure
                                                              Expenditure     Income
                                                                 £000            £000         £000        £000

Education Services                                                127,485     120,129         7,356     84,319
Court Services                                                        404         148           256         210
Cultural, Environment & Planning Services                          62,491      31,075        31,416     30,444
Central Services to the Public                                     15,562      10,350         5,212       2,436
Highways, Roads & Transport Services                               41,748      35,985         5,763       5,454
Housing Services                                                   63,835      59,802         4,033       1,420
Social Services                                                    84,237      27,276        56,961     49,067
Corporate & Democratic Core                                         5,290       1,705         3,585       3,662
Housing Revenue Account                                            24,472      16,626         7,846       4,712
Non-Distributed Costs                                               1,351         209         1,142     (4,635)
Exceptional Item                                                    1,894           0         1,894           0
NET COST OF GENERAL FUND SERVICES                                 428,782     303,318       125,464    177,089

Share of Operating Results of Associates                                                       115         (46)

NET COST OF SERVICES                                                                        125,579    177,043

Levies - North West Regional Flood Defence                                                       66         64
Contribution of housing capital receipts to Government Pool                                     988      1,253
Expected Return on Assets and Interest Cost – Pensions                                        1,757      2,909
Authority’s share of Expected Return on Assets & Interest
Cost – Pensions                                                                                   0         21
Interest Payable                                                                              9,090      7,426
Authority’s Share of Interest Payable of Associates
Interest and Investment Income                                                              (1,897)      (859)
Taxation of Group Entities                                                                      642        401
Authority’s Share of Taxation of Associates                                                      (2)        (2)

NET OPERATING EXPENDITURE                                                                   136,223    188,256

AMOUNT TO BE MET FROM GOVERNMENT GRANTS
AND LOCAL TAXPAYERS

Demand on Collection Fund                                                                  (51,212)    (48,491)
Government Grants                                                                          (11,180)    (84,555)
Collection Fund (surplus)/deficit                                                              (37)        (72)
Non-domestic rates redistribution                                                          (54,284)    (47,463)

(SURPLUS)/ DEFICIT FOR THE YEAR                                                              19,510      7,675




                                                  - 76 -
Blackpool Council                                     Statement of Accounts 2006/2007



RECONCILIATION OF SINGLE STATUS SURPLUS/DEFICIT TO THE GROUP
SURPLUS/DEFICIT

     2005/2006                                                        2006/2007
       £000                                                             £000

           8,635     (Surplus)/Deficit for the years on Authority          20,816
                     Income & Expenditure Account

                 0   Adjustment for transactions with other group                 0
                     entities


           8,635     (Surplus)/Deficit in Group Income &                   20,816
                     Expenditure Account attributable to Authority


                     (Surplus)/Deficit in Group Income &
                     Expenditure Account attributable to group
                     entities (adj for intra group transactions)


           (933)     Subsidiaries                                          (1,419)

            (27)     Associates                                               113


           7,675     (Surplus)/Deficit for the year on Group Income        19,510
                     & Expenditure Account




                                           - 77 -
Blackpool Council                                   Statement of Accounts 2006/2007


GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES



   2005/2006                                                             2006/2007
     £000                                                                  £000

         7,675    Deficit on Group Income & Expenditure Account for            19,510
                  the Year

       (36,304)   Surplus on revaluation of fixed assets                    (111,431)

         2,348    Actuarial gains and losses on Pension Fund Assets          (17,546)
                  and Liabilities

           159    Any Other Gains and Losses Required to be Included             543



       (26,122)   Total Recognised Gains and Losses for the Year            (108,924)




                                          - 78 -
Blackpool Council                                               Statement of Accounts 2006/2007

GROUP BALANCE SHEET
                                                                                2006/2007     2005/2006
                                                                                     £000          £000

FIXED ASSETS
Intangible Fixed Assets                                                              483                658

Tangible Fixed Assets
Operational Assets - Council dwellings and other HRA assets                       226,802          169,853
                   - Other land and buildings                                     243,723          216,326
                   - Vehicles, plant, furniture and equipment                      12,142           10,425
                   - Infrastructure assets                                        162,362          135,231
                   - Community assets                                               2,852            3,484
Non-Operational Assets – Investment properties                                     10,193            8,455
                    -      Assets under construction                                3,879            4,372
                    -      Surplus assets held for disposal                         3,767            2,658
Total Fixed Assets                                                                666,203          551,462

Long-term loans                                                                        88                88
Long-term debtors                                                                     684                77
Deferred debtors                                                                       89               111
Deferred Premiums and Early Repayment of Debt                                       1,022             1,206
Share in Net Assets of Associates                                                   (915)           (1,116)

Total-Long Term Assets                                                            668,016          551,828

Current Assets
Payments in advance                                                                 2,260            1,834
Stocks and work in progress                                                           928            1,072
Debtors (net of provision for bad & doubtful debts)                                38,596           26,974
Landfill Usage Allowances                                                           1,102            1,086
Short-Term Investments                                                             19,000           10,550
Cash and bank                                                                       4,073            1,414
Total Current Assets                                                               65,959           42,930

Total Assets                                                                      733,975          594,758

Current Liabilities
Borrowing repayable on demand or within 12 months                                 (7,200)                 0
Receipts in advance                                                               (5,655)           (3,588)
Creditors                                                                        (41,166)          (32,754)
Liability to DEFRA for BMW Landfill usage                                           (697)             (855)
Bank Overdrawn                                                                    (1,828)             (377)
Total Current Liabilities                                                        (56,546)          (37,574)

Total Assets less Current Liabilities                                             677,429          557,184

Borrowing repayable in excess of 12 months                                      (131,780)         (111,780)
Government grants-deferred                                                      (133,811)         (103,623)
Deferred Liabilities                                                             (28,531)          (29,623)
Provisions                                                                        (8,492)           (7,534)
Creditors due in excess of 12 months                                                (590)           (7,498)
Pension Liability                                                                (90,536)         (102,928)
Unapplied Government Grants                                                       (3,028)           (2,930)
Deferred Credits                                                                     (84)             (105)
Total Long-Term Liabilities                                                     (396,852)         (366,021)

TOTAL ASSETS LESS LIABILITIES                                                     280,577          191,163

Fixed Asset Restatement Account                                                 (333,563)         (251,772)
Capital financing account                                                        (10,235)          (12,446)
Usable capital receipts reserve                                                   (3,719)            (4,081)
Major repairs reserve                                                             (1,213)            (1,576)
Fund Balances and Reserves                                                       (19,232)          (22,303)
Pensions Reserve                                                                   90,536           102,928
General Reserves of Group Entities                                                    915              1,116
Profit & Loss of Subsidiaries                                                     (4,066)            (3,030)

TOTAL EQUITY                                                                    (280,577)         (191,163)




                                                      - 79 -
Blackpool Council                                           Statement of Accounts 2006/2007

      GROUP CASH FLOW STATEMENT

                                                                            2006/2007   2005/2006
                                                                                 £000        £000
       REVENUE ACTIVITIES:
       NET CASH (INFLOW)/OUTFLOW FROM REVENUE                                 (9,220)    (15,381)
       ACTIVITIES

       SERVICING OF FINANCE, RETURN ON
       INVESTMENTS:
        Cash Outflows
        Interest paid                                                           7,205         7,148
        Interest element of finance lease rental payments                          95            86
        Cash Inflows
        Interest and dividends received                                       (2,091)         (860)

        Taxation                                                                 267            37

       NET CASH OUTFLOW BEFORE CAPITAL ACTIVITIES                             (3,744)     (8,970)

       CAPITAL ACTIVITIES:
        Capital Activities - Cash Outflows
        Purchase of fixed assets                                               58,207      57,815
        Other capital cash payments                                             3,156           0

        Capital Activities - Cash Inflows
        Proceeds of Sale of fixed assets                                            0     (3,239)
        Capital grants received                                              (42,891)    (23,446)
        Other Capital cash receipts                                           (4,823)       (559)


       NET CASH OUTFLOW; CAPITAL ACTIVITIES                                    13,916      30,571

       Equity Dividends Paid                                                     426           424


       NET CASH FLOW BEFORE FINANCING                                          10,598      22,025

       Management of Liquid Resources
        Net increase/decrease in short term deposits                            8,450      10,550

       FINANCING ACTIVITIES:
        Financing Activities - Cash Outflows
        Repayments of amounts borrowed                                          6,500     72,065
        Capital element of finance lease rental payments                          841       1,226
        Refinancing of Hire Purchase Agreements                                     0     (1,277)

        Financing Activities - Cash Inflows
        New long term loans raised                                           (20,000)    (21,000)
        New short term loans                                                  (8,700)    (64,350)

       NET CASH OUTFLOW; FINANCING ACTIVITIES                                (12,909)    (13,336)


       (INCREASE)/DECREASE IN CASH AND CASH
                                                                              (2,311)     19,239
       EQUIVALENTS




                                                  - 80 -
Blackpool Council                                 Statement of Accounts 2006/2007



                        NOTES TO GROUP ACCOUNTS
1. RECONCILIATION OF NET CASH FLOW ON REVENUE ACTIVITIES TO NET
    SURPLUS/DEFICIT ON GROUP INCOME AND EXPENDITURE ACCOUNT


                                                                          2006/2007
                                                                              £’000

      (Surplus)/Deficit for the year on Group Income & Expenditure
      Account                                                                19,510


      Non Cash Movements in Revenue Account:
      Minimum revenue provision                                              (5,720)
      Depreciation of Group Entities                                         (1,074)
      Contributions (to)/from reserves                                         2,685
      Contributions to capital outlay                                          (604)
      Other                                                                 (24,865)

      Movement in Current Assets and Liabilities:
      Movement in payments in advance                                            722
      Movement in debtors                                                    11,358
      Movement in debtors of group entities                                    (656)
      Movement in stocks and work in progress                                  (139)
      Movement in stocks and work in progress of Group Entities                (104)
      Movement in creditors                                                  (5,895)
      Movement in creditors of Group Entities                                  1,899
      Movement in receipts in advance                                        (2,363)


      Items shown elsewhere in the Cash Flow Statement:
      Servicing of finance                                                   (5,217)
      Other                                                                    1,243


      Net cash (inflow) from revenue activities                              (9,220)




                                        - 81 -
Blackpool Council                                     Statement of Accounts 2006/2007

2.          LIABILITY FOR LOSSES AND DEFICITS OF COMPANIES WITHIN THE GROUP

Blackpool Transport Services Limited, Blackpool Operating Company Limited and Blackpool Coastal
Housing Ltd are wholly owned subsidiaries therefore the Council is responsible for any losses and
deficits relating to the companies.

The Associated Companies are limited by guarantee but on winding up the Council would be
responsible for the following amounts of any remaining debts or liabilities of the companies.


                        Connexions Limited                       20%

                        Lancashire & Blackpool Tourist Board      43%

                        ReBlackpool                               50%




3.          TRANSPORT COMPANY REVENUE RESERVES

The revenue reserves relating to the Transport Company are not available to the Council.


4.          INTERNAL BALANCES

Certain figures from the balance sheets of Group members have been taken out of the consolidated
position as they represent amounts outstanding within the Group and therefore cancel each other out
in the balance sheet. The adjustments are as follows:

      I.         The Council owns shares to the value of £2,789,000 in Blackpool Transport. This has
                 been taken out of long term investments and capital and reserves
      II.        An amount of £380,000 representing amounts outstanding between the Council and
                 Blackpool Transport has been taken out of debtors and creditors.
     III.        An amount of £576,213 representing amounts outstanding between the Council and
                 Blackpool Operating Company has been taken out of debtors and creditors
     IV.         An amount of £2,663,546 representing amounts outstanding between the Council and
                 Blackpool Coastal Housing has been taken out of debtors and creditors




                                             - 82 -
Blackpool Council              Statement of Accounts 2006/2007


                    SECTION 8




STATEMENT OF RESPONSIBILITIES
    FOR THE STATEMENT OF
          ACCOUNTS




                      - 83 -
  Blackpool Council                                             Statement of Accounts 2006/2007




8.1       THE COUNCIL’S RESPONSIBILITIES

The Council is required to:

             make arrangements for the proper administration of its financial affairs and to secure that one of
              its officers has the proper responsibility for the administration of those affairs. In this authority
              that officer is the Director of Finance;

             manage its affairs to secure economic, efficient and effective use of resources and safeguard its
              assets; and

             approve the Statement of Accounts.




  Chair – Audit Committee


  8.2          THE DIRECTOR OF FINANCE RESPONSIBILITIES

  The Director of Finance is responsible for the preparation of the authority’s Statement of Accounts in
  accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority
  Accounting in United Kingdom (“the Code of Practice”).

  In preparing this Statement of Accounts, the Director of Finance has:

               selected suitable accounting policies and then applied them consistently;

               made judgements and estimates that were reasonable and prudent; and

               complied with the Code of Practice.


  The Director of Finance has also:

               kept proper accounting records which were up to date; and

               taken reasonable steps for the prevention and detection of fraud and other irregularities.

  The Statement of Accounts represents fairly the financial position of the Council at the accounting date
                                                       st
  and its income and expenditure for the year ended 31 March 2007.




          th
      13 June 2007




                                                      - 84 -
Blackpool Council              Statement of Accounts 2006/2007


                    SECTION 9




  STATEMENT ON THE SYSTEM OF
       INTERNAL CONTROL




                      - 85 -
Blackpool Council                                       Statement of Accounts 2006/2007

9.0      SCOPE OF RESPONSIBILITY
Blackpool Council is responsible for ensuring that its business is conducted in accordance with the law
and proper standards, and that public money is safeguarded and properly accounted for, and used
economically, efficiently and effectively. Blackpool Council also has a duty under the Local
Government Act 1999 to make arrangements to secure continuous improvement in the way in which
its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

In discharging this overall responsibility, Blackpool Council is also responsible for ensuring that there is
a sound system of internal control which facilitates the effective exercise of its functions and which
includes arrangements for the management of risk.

9.1      THE PURPOSE OF THE SYSTEM OF INTERNAL CONTROL
The system of internal control is designed to manage risk to a reasonable level rather than to eliminate
all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and
not absolute assurance of effectiveness. The system of internal control is based on an ongoing
process designed to:-

     identify and prioritise the risks to the achievement of Blackpool Council’s policies, aims and
      objectives,
     evaluate the likelihood of those risks being realised and the impact should they be realised, and
     manage them efficiently, effectively and economically.

The system of internal control has been in place at Blackpool Council for the year ended 31 March
2007 and up to the date of approval of the annual accounts.

9.2      THE INTERNAL CONTROL ENVIRONMENT
The internal control environment comprises the Council’s policies, procedures and operations in place
to:

     Establish and monitor the achievement of the Council’s goals
     Identify, assess and manage the risks in achieving the Council’s goals
     Facilitate policy and decision making
     Ensure the economical, efficient and effective use of resources and assets
     Ensure compliance with established policies, procedures, laws and regulations
     Secure the financial management of the Authority and its financial reporting
     Provide for performance management and performance management reporting.

The main features of the Council’s internal control environment are as follows:

9.3 ESTABLISHING AND                     MONITORING            THE     ACHIEVEMENT             OF     THE
AUTHORITY’S OBJECTIVES
The key objectives of the Council are set out in the Community Plan and the Corporate Performance
Plan. The Corporate Performance Plan consists of three corporate goals, these are:
     The New Blackpool – moving towards a world class resort destination, a great place to visit
       and a better place to live
     Quality Services – delivering services which are of high quality, effective and offer value for
       money with particular priority on those services which deal with young people and those
       protecting our most vulnerable
     Stronger Communities – enabling people to feel proud to live, work and learn in Blackpool and
       be safe and healthy.




                                              - 86 -
Blackpool Council                                        Statement of Accounts 2006/2007

These corporate goals are underpinned by cross-cutting organisational values including:

     Customer focus
     Looking forward
     Honesty, integrity and accountability
     Communication
     Partnership
     Being a good employer
     Valuing diversity and respecting others

Directorate service plans identify the objectives, linked to the Corporate Goals, which together deliver
the Council’s commitment to the Corporate Plan and strategic policy framework.

The arrangements for establishing and monitoring the Council’s goals are reviewed annually and
provide the framework for the annual budget challenge. The budget challenges the alignment of
budget allocations to priorities. The Council Performance Management Framework also identifies
services that are not performing adequately and which require further attention.

Progress towards the achievements of the goals is formally monitored by the Chief Executive’s
Leadership Group, Executive Cabinet and Policy Overview and Scrutiny Management Committee on a
quarterly basis. The Corporate Plan is reviewed and updated on a yearly basis.

9.4      THE FACILITATION OF POLICY AND DECISION MAKING
The Budget for the year is agreed by Council in the context of the medium term financial strategy.

Policy and decision making is undertaken by the Executive and key decisions are outlined in the
forward plan.

The Executive is the part of the Council that is responsible for most day-to-day decisions. The
Executive is made up of the Leader and a Cabinet of five other Councillors. When major decisions are
to be discussed or made, these are published in the Executive’s Forward Plan insofar as they can be
anticipated. When major decisions are to be taken with Council Officers at a meeting of the Executive,
this will be open for the public to attend. The Executive has to make decisions that are in line with the
Council’s overall policies and budget. If it wishes to make a decision that is outside the budget or
policy framework, this must be referred to the Council as a whole to decide.

The Council has adopted a scheme of delegation to officers and committees that is contained in the
Council’s constitution.

9.5 ENSURING COMPLIANCE WITH ESTABLISHED POLICIES, LAWS AND
REGULATIONS
There are controls in place to ensure compliance with policies, laws and regulations. The corporate
policy and human resources teams monitor national changes in policy and legislation, as do other
departments in their own areas of expertise. The Head of Legal and Democratic Services acts as
Monitoring Officer, this responsibility includes ensuring lawfulness and fairness of decision making,
and providing advice on the scope of powers and the authority of the Council to take a decision. The
Monitoring Officer provides advice on probity issues to members and officers, and reports on such
matters to the Council’s standards committee that is chaired by an independent committee member.

The Director of Finance takes responsibility for the role of Statutory Finance Officer, which includes
ensuring the lawfulness and financial prudence of decision-making and providing advice on the scope
of the powers of the Authority jointly with the Monitoring Officer. In 2007/08 the Statutory Finance
Officer role will become the responsibility of the Assistant Director of Performance and Finance.

The Internal Audit Section also has important responsibilities in this area, assessing the compliance
with appropriate regulatory frameworks in much of its plan of work. Heads of service are also involved
in ensuring there are nominated staff in their service with responsibility for compliance issues.




                                                - 87 -
Blackpool Council                                     Statement of Accounts 2006/2007

Risk management

Risk management is now established within the Council through high-level executive and senior
management risk workshops, underpinned by a framework of directorate and thematic risk
management groups. A corporate risk register has been developed and action plans put in place by
the various risk management groups to address these risk priorities. An executive member has risk
management responsibilities to provide top-level leadership to the process. Specific training on health
and safety risk assessment has been made widely available for staff with management responsibilities.

The Council’s Corporate Risk Assurance Group provides professional support to the risk management
groups. The service also provides training in risk identification and risk management to service
managers in conjunction with Human Resources to widen and deepen risk awareness in all services.
Services with particular risk management issues by nature of their activity (e.g. education, leisure and
Masterplan related activity) are given specific support in developing a coherent risk management
framework. It is recognised that there is still work to be done to ensure risk management is fully
embedded in all services, but following an internal audit during the year a number of steps have been
taken to further improve the embedding of risk management within services.

9.6 ENSURING EFFECTIVE AND EFFICIENT USE OF RESOURCES AND
SECURING CONTINUOUS IMPROVEMENT
Blackpool aspires to develop its services whilst maintaining a relatively low council tax. Increased
investment can therefore generally only be accommodated by finding further service efficiencies. This
is currently being addressed by:

       Exploiting economies of scale in service provision by pooling overheads
       Increasing throughput and activity at proportionately less cost by re-engineering service
        provision
       Promoting partnership working with other public and private sector organisations where there
        are mutual efficiency gains
       Negotiating procurement discounts or identifying cheaper goods and services
       Attracting more external funding to support Council services
       Undertaking an enhanced programme of service efficiency reviews through a new
        Performance Review Team
       Meeting the national requirements for both cashable and non-cashable savings as required
        from the consequences of the Gershon Report.

The Council is continuously striving to achieve improved value for money in the services which it
delivers and looks beyond the current year through three-year service plans to gear up to the financial
challenges of future years.

Financial management

Accountancy support to services is provided by four dedicated finance teams serving Business
Services; Tourism and Regeneration; Adult Social Care & Housing and both Children & Young
People’s Services and Culture & Communities respectively. The finance teams are decentralised to
enable them to better serve their customers by being located close to the services they support.
The remit of the Accountancy Section is to provide operational, corporate and strategic support across
the broad range of finance functions:
      undertaking a corporate stewardship role in ensuring statutory compliance in the Council’s
         application of resources and its recording of expenditure and income
      supporting the financial monitoring and reporting of revenue and capital to individual
         departments, the Council’s directors and the Executive
      providing financial data and statistics to central government departments, the Chartered
         Institute of Public Finance & Accountancy (CIPFA) and other external bodies
      undertaking finance research and development
      providing a systematic programme of financial training to internal customers
      ad hoc financial projects and queries.



                                            - 88 -
Blackpool Council                                      Statement of Accounts 2006/2007

Audit Commission judgements on these areas in the year under the Use of Resources framework
showed further improvement consistent with previous direction of travel.

Performance management

Regular monitoring reports including performance management information and key performance
indicators are produced by the Performance and Improvement team. Performance measurement and
management information includes Best Vale Performance Indicators, LPSA/LAA targets and local
performance indicators.

Towards the end of the year a new Performance Review Team was established to undertake service
reviews. This team reports into the Assistant Director of Performance and Finance and has identified
an initial three-year programme of service reviews.

Throughout the year the Council monitors performance against targets and key milestones through a
Performance Monitoring Framework. These monitoring reports are considered by CELG, Directorate
Management Teams, Corporate Performance Efficiency Group, the Executive and the relevant
Scrutiny Committees.

The IPA process has continued to be developed to create a more direct link between staff appraisal
and the achievement of the Council’s corporate priorities. Individual objectives are cascaded down
from the Chief Executive to all staff to ensure the relevance of improvement actions identified.

9.7     REVIEW OF EFFECTIVENESS
Blackpool Council has responsibility for conducting, at least annually, a review of the effectiveness of
the system of internal control. The review of the effectiveness of the system of internal control is
informed by the work of the internal auditors and the executive managers within the Authority who
have responsibility for the development and maintenance of the internal control environment, and also
by comments made by the external auditors and other review agencies and inspectorates.

The Corporate Risk Management Group includes the Executive Director of Business Services and a
lead head of service from each directorate with officers having relevant experience within risk
management, health & safety and internal audit. This reflects the commitment of the Council to a
coherent and comprehensive approach to risk management.

Internal Audit has reviewed all the core financial systems of the Authority as part of their annual
financial controls assurance testing. This identified no areas requiring to be reported in the statement
of internal control.

Internal Audit’s risk based programme of work for the year found that there were no significant control
issues in the majority of the areas subject to review. Concerns of sufficient magnitude to feature in the
statement of internal control were identified in work on grant monitoring, which has been included in
section 5 of this statement. Areas in the 2006 statement have been reviewed for progress, some are
now considered to be adequately controlled and have been removed from the action plan. Areas
where control issues are not yet fully addressed have been left in the statement. Following liaison with
Occupational Health & Safety, asbestos management has also been included in this year’s statement.

The recently formed Audit Committee continued to operate during the year. As part of its remit the
Audit Committee reviews quarterly summaries of internal audit reports, approves the annual internal
audit plan and receives the statement of internal control. Progress reports on the prior year statement
of internal control are also received by the Audit Committee to ensure remedial action is taking place.
The Audit Committee also now undertakes an annual review of the effectiveness of the internal audit
service.

A plan to address weakness and ensure continuous improvement of the system is in place. Internal
Audit will continue to monitor progress with the items in the action plan through their programme of risk
based and compliance work and progress reports will also be submitted to the Audit Committee.




                                             - 89 -
 Blackpool Council                                      Statement of Accounts 2006/2007


 9.8     SIGNIFICANT INTERNAL CONTROL ISSUES
The action plan for the significant issues identified in Blackpool Council’s statement of internal
control for the current year is set out below:


Issue                            Control improvements            Responsible officers
                                 required
 Project management              Corporate approach to be        Executive Director of Tourism
                                 finalised and rolled out        and Regeneration.

 Recruitment and retention       Completion of equal value       Head of Human Resources
                                 exercise

 Social Services ICT             Completion of single            Executive Director of Adult
                                 integrated ICT solution         Social Care and Housing /
                                                                 Head of ICT

 Business continuity planning    All continuity plans to be      Executive Director of
                                 tested                          Business Services

 Asbestos control                Compliance with HSE             Executive Director of
                                 enforcement notice              Business Services

 Performance management          Embed performance culture       Executive Directors
                                 through service reviews

 Grant monitoring                Formal monitoring system for    Executive Directors
                                 grants

                                 Clarity of roles and
                                 responsibilities




                                             - 90 -
Blackpool Council                  Statement of Accounts 2006/2007




                        SECTION 10




                    GLOSSARY OF TERMS




                          - 91 -
Blackpool Council                                      Statement of Accounts 2006/2007


ACCOUNTING POLICIES
Those principles, bases, conventions, rules and practices applied by an entity that specify how the
effects of transactions and other events are to be reflected in its financial statements through:
i)      recognising,
ii)     selecting measurement bases for; and
iii)    presenting assets, liabilities, gains, losses and changes to reserves.
Accounting policies do not include estimation techniques.

Accounting policies define the process whereby transactions and other events are
reflected in financial statements. For example, an accounting policy for a particular type of
expenditure may specify whether an asset or a loss is to be recognised; the basis on
which it is to be measured; and where in the revenue account or balance sheet it is to be
presented.

ACCRUALS
The concept that income and expenditure are recognised as they are earned or incurred, not as
money is received or paid.

ACQUIRED OPERATIONS
Operations comprise services and divisions of service as defined in CIPFA’s Standard Classification
of Income and Expenditure. Acquired operations are those operations of the local authority that are
acquired in the period.

ACTUARIAL GAINS AND LOSSES
For a defined benefit scheme the changes in actuarial deficits or surpluses that arise because:
(a) events have not coincided with the actuarial assumptions made for the last valuation
(experienced gains and losses); or
(b) the actuarial assumptions have changed.

BEST VALUE ACCOUNTING CODE OF PRACTICE
A code of practice prepared to provide accounting guidance on financial reporting to stakeholders
which is designed to enhance the comparability of local authority financial information. The code
represents proper accounting practice for the purpose of best value reporting.

CAPITAL CHARGE
A charge to service revenue accounts to reflect the cost of fixed assets used in the provision of
services.

CAPITAL EXPENDITURE
Expenditure above £15,000 on the acquisition of a fixed asset or expenditure which adds to and not
merely maintains the value of an existing fixed asset.

CAPITAL RECEIPTS
Proceeds above £10,000 from the sale of capital assets. Such income may only be used for capital
purposes, ie to repay existing loan debt or to finance new capital expenditure. Any receipts which
have not yet been utilised as described are referred to as “capital receipts unapplied”.

CIPFA
The Chartered Institute of Public Finance and Accountancy - the Institute provides financial and
statistical information for local government and other public sector bodies and advises central
government and other bodies on local government and public finance matters.

COLLECTION FUND
A statutory account which billing authorities have to maintain for the collection and
distribution of amounts due in respect of Council Tax and Non-Domestic Rates.




                                            - 92 -
Blackpool Council                                      Statement of Accounts 2006/2007


 COMMUNITY ASSETS
 Assets that the local authority intends to hold in perpetuity, that have no determinable useful life and
 that may have restrictions on their disposal. Examples of community assets are parks and historic
 buildings.

 CONSISTENCY
 The principle that the accounting treatment of like items within an accounting period and from one
 period to the next is the same.

 CONTINGENCY
 A condition which exists at the balance sheet date, where the outcome will be confirmed only on the
 occurrence or non-occurrence of one or more uncertain future events.

 CONTINGENT LIABILITY
 A contingent liability is either:
 (a)      a possible obligation arising from past events whose existence will be confirmed only by the
 occurrence of one or more uncertain future events not wholly within the authority’s control; or
 (b)      a present obligation arising from past events where it is not probable that a transfer of
 economic benefits will be required or the amount of the obligation cannot be measured with sufficient
 reliability.

 COUNCIL TAX
 A banded property tax which is levied on domestic properties throughout the country. The banding is
                                           st
 based on estimated property values as at 1 April 1991. The level of tax is set annually by each local
 authority for the properties in its area.

 CREDITORS
 Amounts owed by the Council for work done, goods received or services rendered to it during the
 accounting period, but for which payment has not been made by the balance sheet date .

CURRENT ASSETS
Assets which will be consumed or cease to have value within the next accounting period, e.g. stock
and debtors.

CURRENT LIABILITIES
Amounts which will become payable or could be called in within the next accounting period, e.g.
creditors and cash overdrawn.

CURRENT SERVICE COST (PENSIONS)
The increase in the present value of a defined benefit scheme’s liabilities expected to arise from
employee service in the current period.

DEBTORS
Amounts due to the Council which relate to the accounting period and have not been received by the
balance sheet date.

DEPRECIATION
The measure of the cost or revalued amount of the benefits of the fixed asset that have been
consumed during the period.

Consumption includes the wearing out, using up or other reduction in the useful life of a fixed asset,
whether arising from use, passage of time, or obsolescence through technological or other changes.

DIRECT REVENUE FINANCING
Resources provided from an authority’s revenue budget to finance the cost of capital projects (also
known as Capital Expenditure met from Revenue Account (CERA) or previously Revenue
Contributions to Capital Outlay (RCCO).



                                             - 93 -
Blackpool Council                                        Statement of Accounts 2006/2007


EMOLUMENTS
All sums paid to or receivable by an employee and sums due by way of expenses allowances (as far
as those sums are chargeable to UK income tax) and the money value of any other benefits received
other than in cash. Pension contributions payable by either employer or employee are excluded.

EXCEPTIONAL ITEMS
Material items which derive from events or transactions that fall within the ordinary activities of the
authority and which need to be disclosed separately by virtue of their size or incidence to give fair
presentation of the accounts.

EXPECTED RATE OF RETURN ON PENSIONS ASSETS
For a funded defined benefit scheme, the average rate of return, including both income and changes in
fair value but net of scheme expenses, expected over the remaining life of the related obligation on the
actual assets held by the scheme.

EXTRAORDINARY ITEMS
Material items possessing a high degree of abnormality, which derive from events or transactions that
fall outside the ordinary activities of the authority and which are not expected to recur.

FINANCE LEASE
A lease that transfers substantially all of the risks and rewards of ownership of a fixed asset to the
lessee. Such a transfer of risks and rewards may be presumed to occur if at the inception of the lease
the present value of the minimum lease payments, including any initial payment, amounts to
substantially all of the fair value of the leased asset.

FINANCIAL REPORTING STANDARDS
Financial Reporting Standards (FRSs) are statements which deal with accounting issues of
fundamental importance and general application. They are applicable to all published accounts and
compliance is mandatory. Any departure from them must be disclosed and explained in the accounts.
The Code of Practice on Local Authority Accounting in UK applies FRSs (and their remaining
predecessors, Statements of Standard Accounting Practice; (SSAPs) to councils’ accounts as
appropriate.

FINANCIAL YEAR
                                             st                                  st
The Council’s financial year runs from the 1 April through to the following 31 March.

FIXED ASSETS
Tangible assets that yield benefits to the local authority and the services it provides for a period of
more than one year.

FORMULA SPENDING SHARE (FSS)
The FSS is made up of a basic amount reflecting an authority's population. This is topped up in some
areas to cover any extra expenses associated with deprivation, staffing pressures, and/or services,
such as provision in remote areas. This replaces the previous Standard Spending Assessment (SSA)
scheme.

GENERAL FUND
The main revenue account of the Council which brings together all income and expenditure other than
that recorded in the Housing Revenue Account, DSO accounts and the Collection Fund.

HOUSING REVENUE ACCOUNT
A statutory account which local authorities have to maintain if they provide public housing and which
includes all income and expenditure relating to the administration and maintenance of council
dwellings and related properties.




                                              - 94 -
Blackpool Council                                        Statement of Accounts 2006/2007

INFRASTRUCTURE ASSETS
Fixed assets that are inalienable, expenditure on which is recoverable only by continued use of the
asset created. Examples are highways and footpaths.

INTEREST COST (PENSIONS)
For a defined benefit scheme, the expected increase during the period in the present value of the
scheme liabilities because the benefits are one period closer to settlement.

INVESTMENTS (NON-PENSIONS FUND)
A long-term investment is an investment that is intended to be held for use on a continuing basis in the
activities of the authority. Investments should be so classified only where an intention to hold the
investment for the long term can clearly be demonstrated or where there are restrictions as to the
investor’s ability to dispose of the investment.

Investments, other than those in relation to the pensions fund, that do not meet the above criteria
should be classified as current assets.

LEA
Local Education Authority – a local authority with the statutory responsibility for securing the provision
                                st
of education in its area. From 1 April 2006 the LEA will be known as the Children’s Services
Authority.

NATIONAL NON-DOMESTIC RATES (NNDR)
A tax levied on business properties and sometimes known as Business Rates. An NNDR poundage is
set annually by the Government. Sums based on rateable values are collected by billing authorities
and paid into a national pool. The proceeds are then redistributed by central government as a grant to
local authorities in proportion to adult population.

NEIGHBOURHOOD RENEWAL FUND (NRF)
Funding designed to encourage strategic partnerships to promote neighbourhood renewal.

NET BOOK VALUE
The amount at which fixed assets are included in the balance sheet, i.e. historic 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 REALISABLE VALUE
The open market value of an asset in its existing use less the expenses to be incurred in realising the
asset.

PAST SERVICE COST
For a defined benefit scheme, the increase in the present value of the scheme liabilities related to
employee service in prior periods arising in the current period as a result of the introduction of, or
improvement to, retirement benefits.

PROVISION
An amount set aside by the Council for any liability of uncertain timing or amount that has been
incurred.

PRUDENTIAL CODE FOR CAPITAL FINANCE
                                           st
The Code has been introduced from 1 April 2004. The basic principle of the Code is that local
authorities will be free to invest so long as their capital spending plans are affordable, prudent and
sustainable. The Code sets out indicators that the authority must use and factors that they must take
account to demonstrate that they have fulfilled this objective.




                                                - 95 -
Blackpool Council                                         Statement of Accounts 2006/2007

RESERVES
Amounts set aside in the accounts to meet expenditure which the Council may be committed to in
future periods, but not allocated to specific liabilities which are certain or very likely to occur.

Earmarked reserves are allocated to a specific purpose or area of spending. Unallocated reserves are
often described as balances.

REVENUE ACCOUNT
An account which records all annual running costs and the associated income.

REVENUE EXPENDITURE
Expenditure incurred on the day-to-day running of the Council.

REVENUE SUPPORT GRANT
A central government grant paid to each local authority to help to finance its general expenditure. The
distribution of the grant between authorities is intended to allow the provision of similar standards of
service throughout the country for a similar council tax levy.

RINGFENCED SUPPORTED CAPITAL EXPENDITURE (REVENUE) (SCE(R))
Replaces SCAs from 2004/2005 under the Local Government Act 2003. A specific
amount of capital expenditure to be used under Government support is available to cover
borrowing costs.

SINGLE POT SUPPORTED CAPITAL EXPENDITURE (REVENUE) (SCE(R))
Replaces BCA from 2004/2005 under the Local Government Act 2003. A specific amount of capital
expenditure for which the Government will support the borrowing by RSG grant.

SRB
Single Regeneration Budget (SRB) - the SRB provides resources to support regeneration initiatives
carried out by local partnerships. It is an important instrument in the Government’s drive to tackle
social exclusion and promote equality. Its priority is to enhance the quality of life of local people in
areas of need by reducing the gap between deprived and other areas and between different groups.

STOCKS
The amount of unused or unconsumed stocks held in expectation of future use. When use will not
arise until a later period, it is appropriate to carry forward the amount to be matched to the use or
consumption when it arises. Stocks comprise the following categories: goods or other assets
purchased for resale, consumable stores, raw materials and components purchased for incorporation
into products for sale, products and services in intermediate stages of completion, long-term contract
balances and finished goods.

WORK IN PROGRESS
The cost of work undertaken up to a specified date on an uncompleted revenue project.




                                               - 96 -
Blackpool Council            Statement of Accounts 2006/2007




                    - 97 -

				
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