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Draft Final Statement of Accounts Newham

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					                       LONDON BOROUGH OF NEWHAM

                 DRAFT STATEMENT OF ACCOUNTS
               FOR THE YEAR ENDED 31st MARCH 2010
                                                CONTENTS                                                  PAGE
EXPLANATORY FOREWORD............................................................................. 2


RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS ......................... 15


REPORT BY THE AUDITORS TO MEMBERS ................................................... 16


ANNUAL GOVERNANCE STATEMENT ............................................................ 18


INCOME AND EXPENDITURE ACCOUNT ........................................................ 28


STATEMENT OF MOVEMENT ON THE GENERAL FUND BALANCE ............. 29


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES ....................... 31


BALANCE SHEET.............................................................................................. 32


CASH FLOW STATEMENT................................................................................ 33


NOTES TO THE ACCOUNTS............................................................................. 34


HOUSING REVENUE ACCOUNT ...................................................................... 75


COLLECTION FUND.......................................................................................... 80


GROUP ACCOUNTS ......................................................................................... 82


NOTES TO THE GROUP ACCOUNTS ............................................................... 87


PENSION FUND ................................................................................................. 89


GLOSSARY OF FINANCIAL TERMS ................................................................ 98

 Statement of Accounts 2009/10                                                                                      1
EXPLANATORY FOREWORD                                       Notes to the accounts, which cover
1. Presentation of Accounts and Changes in                  supplementary information to the above
    Presentation                                            statements. This includes the Statement of
The Council’s Accounts are presented in accordance          Accounting Policies which explain the basis of
with statutory requirements under the Accounts and          the figures in the accounts and includes changes
Audit Regulations 2003 as amended by the Accounts           in policy, the basis of charges to revenue and the
and Audit (Amendment)(England) Regulation 2006,             calculation of balance sheet items.
and the Code of Practice on Local Authority Accounting     The Housing Revenue Account Income and
in Great Britain, Statement of Recommended Practice         Expenditure Account (HRA), which provides
(SORP) produced by the Chartered Institute of Public        details of the income and expenditure of the
Finance and Accountancy (CIPFA).                            Council’s dwellings and associated properties for
                                                            which it is responsible as a landlord. This
2. Explanation of the Statement of Accounts                 section includes a Statement of Movement on
The Council’s accounts are set out on pages 28 to 95,       the HRA balance, which shows how the HRA
and consist of the following:                               income and Expenditure Account surplus or
 The Income and Expenditure Account, which                 deficit for the year reconciles to the movement
   summarises the Council’s revenue income and              on the HRA balance for the year and
   expenditure for all services provided during the         supplementary notes.
   year. This also shows how much is received from         The Collection Fund, which shows how income
   Council Tax receipts and central government.             from Council Tax is used to meet expenditure by
 Statement of the Movement on the General Fund             the Council and its preceptors, and shows the
  Balance, which shows how the surplus or deficit in        collection and distribution of Business Rates.
  the Income and Expenditure Account links with the         The Council is required to maintain this
  movement on the General Fund balance for the              separately from other funds and accounts.
  year.   The General Fund balance is key in               The Group Accounts, which include an Income
  determining Council Tax levels.                           and Expenditure Account and Group Balance
 The Statement of Total Recognised Gains and               Sheet for the Council's wholly owned subsidiary
  Losses (STRGL), which shows movements in the              (Newham      Homes).    Newham     Homes     is
  net worth of the Council. This links the movement in      responsible for the provision of services
  Balance Sheet reserves in the year to Council gains       associated with the Council's housing stock,
  and losses.                                               such as repairs.
 The Balance Sheet, which gives the Council’s             The Pension Fund, which shows the income
  financial position as at the 31st March 2010 for the      and expenditure relating to pensions payable to
  above mentioned areas and services, but excludes          former employees, and investment transactions.
  the Pension and Trust/Gift Funds. This shows what         To comply with Financial Reporting Standard 17:
  the Council owns and what is owed.                        Retirement Benefits (FRS17), the actuarially
                                                            calculated Pension Fund deficit is disclosed on
 The Cash Flow Statement, showing the
                                                            the face of the Balance Sheet as the pension
  movements in the Council’s cash balances                  provision.
  resulting   from  transactions with external
  organisations for both capital and revenue               Glossary, which provides an explanation of
  purposes.                                                 terms used within the Accounts.

3. Actual and Budgeted Expenditure and Income for 2009/10
                     Actual v Budget 2009/10                           Actual          Original Budget
                                                                              £000s                £000s
     Service Expenditure                                                  1,574,959            1,151,697
     less Service Income                                                (1,295,729)            (887,395)
                                                                            279,230              264,302
     Capital Financing Costs (net of interest receipts)                       26,015              27,913
     Total Net Expenditure                                                  305,245              292,215
     Contribution to / (use of ) Reserves                                   (16,575)              (3,545)
     Budget Requirement                                                     288,670              288,670
     Breakdown of movements in Reserves:
          General Fund *                                                    (9,458)                 3,545
          Earmarked Reserves (incl. Schools' balances)*                     26,033                      0
     Contribution To / (use of ) Reserves                                   16,575                  3,545
*See Note 2 (Page 41 of Movement in Revenue Resources)



Statement of Accounts 2009/10                                                                               2
Below is an extract of the Council's Budget Monitor for 2009/10. This shows the Council's expenditure against
service control budget totals (these categories are different from the Income and Expenditure statutory headings.
      Expenditure Compared to Control Budget                Control                                      %
                                                                          Outturn     Variance
                          2009/10                           Budget                                   Variation
                                                             £ million     £ million    £ million
      1. Service Spend
      Adults Social Care                                       87.2           87.2               0          (0)
      Children and Young People                              101.0          100.5            (0.5)        (0.5)
      Cleansing, Waste and Recycling                           32.7           32.8             0.1        0.31
      Corporate and Strategic Management                        6.6            6.5           (0.1)        (1.5)
      Community Safety                                         10.7           10.8             0.1          0.9
      Customer Services                                         6.7            6.5           (0.2)        (3.0)
      Housing and Public Protection                             2.0            3.3             1.3        65.0
      Highways, Transport and Parking                          13.2           12.5           (0.7)        (5.3)
      Leisure                                                  11.2           11.1           (0.1)        (0.9)
      Regeneration and Development                             10.2           10.4             0.2        (2.0)
      Resources                                                33.5           33.3           (0.2)        (0.6)
                                                             315.0          314.9            (0.1)        (0.0)
      2. Reversal of Notional Capital Charges                (22.5)         (22.6)           (0.1)          0.4
      3. Capital Financing (interest costs)                    27.9           26.0           (1.9)        (6.8)
      4. Central Budget Items                                   1.7            2.0             0.3        17.7
      5. Area Based Grant                                    (35.9)         (36.2)           (0.3)          0.8
      6. Implementation costs                                   6.0            8.3             2.3        38.3
      7. Budgeted use of balances                             (3.5)          (3.5)             0.0          0.0
                                                             288.7          288.9              0.2          0.5
      8. Net Budget Framework Underspend                                                     (0.2)
      9. Budgeted use of balances                                                            (3.5)
      10. Transfer from other reserves                                                       13.2
      11. Reduction in General Fund balance                                                    9.5
      12. General Fund Balance B/Fwd                                                         15.6
      13. Usable Balances C/Fwd                                                              25.1

Key Service variances were:

      The Older People services under spent by £0.335m against a budget of £20.5m
      The Mental Health service overspent by £0.702m against a budget of £9.5m
      The Substance Misuse service under spent by £0.126m against a budget £0.917m; and
      The Management and Support Services under spent by £0.335m against a budget of £10.6m.
      The Corporate Parenting Care Placement service overspent by £1.04m against a budget of £33.6m; and
      The Home to School Transport service overspent by £1.03m against a budget of £2.9m. This arose due to
       a delay in implementing a comprehensive service review.
      The Local Service Centres under spent by £0.121m against a budget of £5.5m
      The Facilities service overspent by £0.231m against a budget of £2.75m
      The Infrastructure service under spent by £0.141m against a budget of £1.6m
      Old Town Hall Stratford overspent by £0.144m against a net budget of £0.230m; and
      The Cycling Event budget of £0.150m was not spent.
      The Street Cleansing service overspent by £0.539m against a budget of £11.7m; and
      The Waste and Depot services under spent by £0.401m against a budget of £13.439m.
      The Management and Administration budget overspent by £0.344m due to costs incurred as a result of
       restructuring the service; and
      The Neighbourhood Crime Reduction Budget under spent by £0.126m against a budget of £4.52m due to a
  shortfall in Fixed Penalty Notice income and delays in recruitment.
      The Housing and Public Protection overspent by £1.3m against a budget of £1.97m. This was a result of
  handing back Private Sector Leased properties (PSL’s) to landlords as part of management action taken to
  mitigate future budget pressures in 2010/11. These result from changes to the Housing Benefit subsidy regime
  taking effect from 1st April 2010. The hand-back of properties resulted in a loss of rental income and higher
  voids costs, which will be offset by savings in future years.

Statement of Accounts 2009/10                                                                                       3
       Traffic, Transport and Safety achieved higher income by £0.406m against a net budget of £0.668m.
  Highways and Environment Design group overachieved income by £0.737m against a net budget of £0.01
  million. Both were due to increased fee income from capital programme work; and
       The Sewers’ team budget was overspent by £0.486m against a budget of £0.271m. This was due to the
  loss of income as the service ceased to be provided internally.
       The Development Control and Enforcement service overspent by £0.420m against a budget of £1.7m
       The Building Control and Land Charges service overspent by £0.675m against a budget of £1.1m
       Commercial Property under spent by £0.268m against a net budget of £3.1m; and
       The Markets overspent by £0.260m against a net budget of £0.025m.
       The Legal and Democratic service under spent by £0.292m against a budget of £5.6m
       The Business Support and Office Accommodation service overspent by £0.152m against a budget of
  £4.6m
       Human Resources overspent by £0.396m against a budget of £1.2m
       The Council Tax and Benefits service under spent by £0.841m against a budget of £20m; and
       The Newham Catering and Cleaning Services generated a surplus income of £0.329m.
       This leaves cumulative usable reserves of £25.1 million at 31st March 2010.
       The Executive Director of Resources is satisfied that this balance is within financial stability
  guidelines for the Council's medium term plan.

3. Major Contracts in 2009/10

During the year, the Council entered into the following contracts where expenditure will be incurred beyond
2009/10. The minimum contract sum reported has been set at £750,000.

                                          Major Contracts                                                  £000s
   Non Housing Schemes:
   Essex Primary – Major remodelling (PCP Programme)                                                        5,100
   Forest Gate School - Major remodelling (BSF Programme)                                                   3,400
   Curwen Primary School - Major remodelling (PCP Programme)                                                5,200
   Lister Playing Field – Development of Sports facilities                                                  1,350
   Lister School – BSF Programme ( PFI Contract)                                                           29,300
   Rokeby School - BSF Programme ( PFI Contract)                                                           23,400
   A13 Canning Town Highway Scheme                                                                          7,000
   Canning Town Demolition Area 7                                                                           1,485
   Total Non-Housing Schemes Cost                                                                          76,235
   Housing Schemes:
   Priory Court E6, External Refurbishment and Internal Common Areas to Tall Blocks                         3,952
   Stubbs Point E13, External Refurbishment and Internal Common Areas to Tall Blocks                        1,547
   External Refurbishment and Internal Common Areas to Low Rise Blocks – Various Out
   borough addresses                                                                                        2,554
   Aubrey Point E13 – Heating works                                                                           880
   Stubbs Point E13 – Heating works                                                                         1,188
   Scott House E13 – Heating works                                                                            842
   Internal Modernisation contracts at various sites across the borough                                    23,314
   External and Internal Refurbishment contracts at various sites across the borough                       26,299
   Total Housing-Schemes Cost                                                                              60,568
Expenditure on these contracts in 2009/10 is included within overall capital expenditure - details in note 17
5. Economic Environment
The worldwide economic slowdown has impacted upon the Council’s Statement of Accounts in a number of areas.
The value of Council fixed assets on the Balance Sheet and the values of pension fund investments reduced
significantly during 2008/09 and have not increased significantly during 2009/10.

The failure of some Icelandic banks put some Council investments at risk; negotiations are continuing to take place
on the likely recovery of these amounts.

Further information on the value of Council assets and liabilities is available within the balance sheet, pension fund
and financial instrument notes within the Accounts.



Statement of Accounts 2009/10                                                                                       4
The Executive Director of Resources is satisfied that General Fund reserves are within financial stability guidelines
for the Council's medium term plan. As financial resources for Local Government are expected to be scaled back in
the future, the Council’s financial plan is to preserve reserve balances in the medium term to provide some protection
against possible grant reductions in the future.
To support the local community, the Council has put a recession package in place. To help the community,
Newham’s Council Tax has been frozen at the same level for the third year in 2010/11. Other support involves
providing funding of £900,000 to local people to help them through the economic slowdown.

The Council is looking to find ways of improving energy efficiency within the community to reduce energy costs.
The Council is also looking to reduce its carbon footprint. Further details of this are outlined in the future service
developments section below.




Statement of Accounts 2009/10                                                                                       5
6. Future Service Developments within the Corporate Plan - “The Vision”
NEWHAM’S CORPORATE PLAN 2010 TO 2013
Introduction and Context
Welcome to Newham’s Corporate Plan for 2010 to 2013. It covers all the services Newham Counc il provides to
the local community. The Plan is focused on improving the services we provide for our residents, ensuring value
for money, high performance and quality services. It is updated each year to reflect the key priorities for the
council over the coming three years in line with our budget planning. The Council priorities are based on what
residents have told us is important to them, and are reflected in our Sustainable Community Strategy - which is our
long term vision for the borough: to make Newham a place where people choose to live, work and stay.

We work hard throughout the year to understand residents’ concerns and wishes. We do this through borough -
wide surveys, service-user surveys and our ongoing contacts with residents, both directly and via their local
elected representatives - the Mayor and the local councillors.

The Corporate Plan is closely linked to the seven themes of the Sustainable Community Strategy, which are:
- Safer Newham
- Cleaner, Greener Newham
- Young Newham
- Ambitious (Working) Newham
- Housing Newham
- Active and Connected Newham
- Healthy Newham

As part of measuring our success in delivering these priorities, we closely monitor our performance, both as a
Council and in terms of how well we work with Partners. Together as Newham Partnership we have agreed a
Local Area Agreement for 2008 to 2011. This includes 35 priority indicators for measuring the difference we are
making for local residents in key areas such as crime, children’s services, health, jobs, and housing. The
Corporate Plan also sets out how the Council will ensure it is fit for purpose and is able to meet the needs of
residents. Our aim is to continually improve our efficiency and effectiveness with a committed and talented
workforce, so we can deliver a high performing Council for a High Performing Newham.

Our Vision
Making Newham a place where people choose to live, work and stay requires a shared vision and commitment -
our aim is to transform the lives of the people of Newham by investing in services, to help them to achieve and
succeed in what they want to do. We are the future of the capital - our population is the youngest in the country
and this is reflected through the vibrancy and confidence you will find in the borough. We are also an ambitious
place with ambitious plans; and young people are at the heart of those plans. We are committed to improving
people’s lives, helping them fulfil their potential and boost aspirations. Our aim is to build an inspirational place in
which everyone plays their part, regardless of social or economic circumstances.

By 2030, we fully expect Newham to be recognised across Europe as a leading economic and residential district
of London. Newham will be known as a prosperous and forward looking borough, synonymous with health,
opportunity and sustainable employment. We will have a strong and innovative local economy, served by
some of the best transport links in the country and focused on modern low carbon industries including high quality
retail and leisure. Most importantly we will be a net contributor to London’s economy, with our residents enjoying
the same standard of living as other Londoners. Newham is well-placed to deliver this vision. London is moving
east at an accelerated pace. Regeneration on a massive scale continues to progress, from the Olympic Park and
Stratford City in the North of the borough, down through the £3.7 billion regeneration of Canning Town and
Custom House and on to the rejuvenation of the Royal Docks. We have a once in a lifetime opportunity in one of
the most deprived areas in the capital to create new chances for our residents - in terms of jobs, decent homes
and modern high quality public services.

Newham’s strength also lies in the wealth of diversity you find in the borough and which is underpinned by a strong commitment to delivering
opportunities for all our residents. The key principles of our approach are:
- Building personal and economic capacity: Getting people into work, out of benefits and providing a more flexible and responsive education
system that addresses vocational training as well as academic. We will also tailor services more to the needs of an individual, and improve
support for residents, including the vulnerable.
- Trust and fairness: Creating transparent services where there is no ambiguity, such as in housing allocations. We will also strengthen
community spirit, employment opportunities, and push to get the basics right, notably cleaner and safer streets.
- Connecting people: Getting people together through activities, from sports to events and ensuring our places and community are mixed by
class, ethnicity and tenure. We will build communities, friendship and common purpose through cohesion. We also have a special
responsibility as a Partnership and a wider community in helping to keep more vulnerable residents safe and supporting them to participate
fully in the community.




Statement of Accounts 2009/10                                                                                                             6
The 2012 Olympic and Paralympics Games will also provide a catalyst for our existing plans to redevelop the
borough and will provide a once-in-a-lifetime opportunity for monumental change. Newham and the four other host
boroughs in East London have joined together to develop a shared vision and action plan - the Strategic
Regeneration Framework. Together we want to ensure a real and long lasting legacy so that within 20 years
those communities who host the Games have the same social and economic chances as their neighbours across
the rest of London. We refer to this as ‘convergence’. What does convergence mean for Newham’s residents? It is
about ensuring residents have the skills and qualifications to take advantage of new job opportunities - and giving
them the confidence and aspiration to go for it. It is about using those employment opportunities to reduce
worklessness, child poverty and a dependence on benefits. It’s about ensuring the quality and affordability of new
and existing homes. It is also about our communities - ensuring people are able to live healthy and active lives,
where they participate and have pride in their community, making it a safer and more content place. By achieving
all of this we want to ensure East London is seen a place where people choose to live because of the high quality
of life its residents enjoy.

Delivering residents’ priorities in 2010/2011
Safer Newham
Residents’ Priorities
Fear of crime, whether serious or antisocial behaviour, is a major concern for most people - regardless of actual
crime levels. We want an environment which rewards citizenship and provides positive activities, as an alternative
to disruptive and intimidating behaviour, where standards of good behaviour and the law are understood and
shared. The Council will quickly remove the visible effects of anti-social behaviour such as graffiti and fly-tips and
work with the police to take action against those responsible. We will focus on persistent offenders and will
continue to work with the courts to push for reflective sentencing to break the cycle of re-offending. Through
collaborative partnership working we will build a community where people feel safe and are able to be actively
involved in making the place they live more socially cohesive. Residents and visitors to the borough will benefit
from an area which has their safety in mind at all times, and where partner organisations and local people engage
together to make it look and feel more attractive and safe.

How we are meeting residents’ priorities
In 2009 the Council introduced a strengthened enforcement service, which focuses on area based joint tasking
with the police and an intelligence led approach to tackling enviro-crime and anti-social behaviour. Working hand
in hand with the Police our team of 51 Enforcement Offices during 2010/11 will be focussing on tackling the issues
that are important to local residents, including dealing more effectively with fly tipping and businesses that dump
waste illegally on the streets. Our aim is to get unsightly bags off our streets and provide a more pleasant and
cleaner public environment. The five Council funded Safer Neighbourhood Teams will continue to focus on
tackling and deterring crime and anti-social behaviour around our parks, schools and estates.

Cleaner, Greener Newham
Residents’ Priorities
A clean borough, along with a safe borough, is one of the top priorities for Newham residents, which is why we are
improving street cleanliness. Key to this is ensuring that businesses take their waste management responsibilities
seriously and cracking down on fly-tipping and poor living conditions. We will be making an unprecedented level of
investment in roads, pavements and street lighting across the borough over the next three years, while we also
look to create more spaces and encourage the development of others, such as the new Olympic Park. We care
about the environment, and Newham residents have some of the lowest carbon footprints in the UK largely due to
living on lower incomes. As the population prospers we will need to encourage people to make more sustainable
choices.

How we are meeting residents’ priorities
Over the past year we have significantly improved productivity in our cleansing and waste service through a
modernisation of terms and conditions, investment in technology and a sharper focus on performance
management. During 2010/2011 we will be working to further improve the effectiveness of our staff through
improved training and supervision arrangements. In 2009 the Council commissioned a review of its approach to
recycling and in 2010 we will be introducing improvements to our recycling arrangements in order to continue
building on recent improvements in the borough’s recycling rate. This will be based on a twin tracked approach of
improving the collection and sorting process plus continuing to communicate and inform residents about the
recycling service. During 2010/2011 we will deliver our first year targets for the Council’s Carbon Reduction
Programme, which aims to reduce our carbon emissions by 40% within 5 years, and to also make more efficient
use of both natural and financial resources, thus saving money as well as carbon.

We will also continue to invest in our public spaces, improving the facilities in our parks and continuing to make
them safer. We will be making an unprecedented level of investment in our public realm over the next three years,
investing in both our high streets and residential areas, upgrading roads, paving and street lighting. When
investing in improvements across the borough local Councillors play a key role in understanding residents’

Statement of Accounts 2009/10                                                                                       7
priorities and ensuring that the local schemes that will make the most difference for residents are prioritised in
each area. We also remove fly tips and graffiti within one working day of it being reported and provide a free bulky
waste collection for our residents.

Young Newham
Residents’ Priorities
We must ensure young people have aspirations and opportunities - otherwise we risk losing their skills and talent
in the long term. Learning choices should be flexible for different needs, abilities and interests, with the end result
being a realistic prospect of getting a job, and the knowledge, skills and results needed to build a career. Despite
impressive Key Stage 2 and GCSE results, we must demand more for our young people by challenging coasting
performance, improving facilities and expanding after schools activities. We are investing in buildings and services
to improve childcare, healthy eating, advice, support and education, while bolstering child safeguarding, tackling
child poverty and promoting civic participation in the community and involvement in decision making through our
Young Mayor and Youth Council.
How we are meeting residents’ priorities
In 2009 GCSE results continued to improve - 64% of Newham’s students gained 5 A*-C grades and 47% did so
with English and Maths included. This represents strong performance and improved outcomes for our young
people, but we recognise that further improvement must be achieved quicker in order to achieve convergence in
outcomes with the rest of the Capital, so we are establishing a challenging and staged approach in primary and
secondary education. We are also providing a greater range of learning and skills options. We are supporting non -
traditional methods of qualification, offering the largest range of 14 -19 Diplomas, with places for 800 students this
year. In addition to Building Schools for the Future and the Primary Capital programme, we have increased our
extended services provision, investing £11 million and putting in place a complete network of 24 children's centres
covering the borough.

With one of the youngest populations in the country, ensuring representation of young people is crucial. The
Young Mayor and Youth Council provide direct channels for young people to address their issues and to influence
their own futures in the borough. Protecting our young people from harm is our paramount concern and the
Council will continue to work with partners to ensure we improve the well being and safety of vulnerable children
and young people, enabling them to have the same opportunities and experiences as other young people. The
Council will also look to deliver more opportunities for young people to participate in sports and cultural activities,
which are both enjoyable, rewarding and enable them to develop new skills.

Ambitious (Working) Newham
Residents’ Priorities
Building job opportunities and helping people out of benefits strengthens communities, gives people economic
capacity and builds personal responsibility. This is why we provide a guarantee in our employment schemes that
people will be better off in work. Our Workplace programme and The Mayor’s Employment Project are already
creating jobs and we are working to ensure new regeneration leads to new employment opportunities for our
residents. Our economy will focus on meeting the needs of new and innovative industries as well as high quality
leisure and retail. We must ensure our residents, including the disabled and vulnerable, have the skills to access
jobs both in the borough and across the wealth of opportunities in London and the Thames Gateway. Training and
skills development will therefore need to be tailored to meet these new opportunities.

How we are meeting residents’ priorities
During 2009 we helped our residents through tougher economic times with a freeze in council tax, the introduction
of a free first parking permit to any residential property and the introduction of universal free school meals for all
our primary school students. During 2010 we will be working to expand our successful Workplace and Mayor’s
Employment Projects with new Workplace hubs opening across the borough. We will continue our work with
Westfield and the major retailers who will be opening stores at the new Stratford City shopping centre in 2011 to
develop pathways to work programmes. We will be looking to work with other retailers in similar agreements to the
one agreed with John Lewis to provide training for 250 long term unemployed. We will also work in partnership
with the new Retail Academy for Stratford City which will aim to provide local people with the skills required to
access retail employment opportunities.

As an employer, the Council will continue to look to expand the opportunities available for local people to gain
access to more jobs working for the Council. We will continue to work with East London Business Alliance to offe r
short term apprenticeships to help people become ‘job ready’ for interviews and will look to expand this approach
with other local public sector partners. Newham is undertaking the largest and most ambitious regeneration
programme in the country, from the Olympic Park and Stratford City, through the ‘arc of opportunity’ which
encompasses Canning Town and Custom House and down through the Royal Docks. During 2010 the Council will
be developing a new Economic Development Strategy and revising its employment strategy to ensure we gain
maximum benefit from the opportunities. This will provide us with a clear understanding of the future economic

Statement of Accounts 2009/10                                                                                        8
opportunities coming to the borough in order for us to ensure our local workforce has the skills and training to
access new jobs in the coming years.
Housing Newham
Residents’ Priorities
Our approach to housing is integral to tackling worklessness and serves a fundamental role in making Newham a
place where people choose to live, work and stay. While Newham has a proud and continuing history of
welcoming people, of supporting them through difficult times and providing a springboard to greater things, the
supply, quality and the price of a decent home are all major factors for residents - simply put, we need to have the
housing that will ensure people choose to stay in the borough as they achieve more and their families grow. New
development must be based on high quality sustainable design which meets differing needs. It must complement
community cohesion and be supported by local public services and a good transport infrastructure. However,
growth must be balanced, sustainable and earmarked for local people – we do not accept the need to deliver
numbers above all else. Good quality housing is also important for all our residents, whether they be a council
tenant, renting privately or owning their own home. Poor quality or overcrowded housing can impact on peoples’
health and their personal development.

How we are meeting residents’ priorities
Newham’s regeneration programme provides a once in a lifetime opportunity to tackle some of the key housing
needs of our residents. During 2010 we will continue to work with key developers and key agencies including the
London Thames Gateway Development Corporation, the Olympic Development Agency and Olympic Legacy
Company and the London Development Agency to ensure new housing meets the varied needs of our residents
and contributes towards ensuring sustainable and cohesive communities. In partnership with Newham Homes, we
have already brought 11,000 existing properties up to the Government’s Decent Homes Standard. We also carry
out over 1,000 handy van jobs each year for our elderly and disabled residents across all housing tenures at no
cost to the householder. We will continue to focus on ensuring private sector housing, in particularly private rented
and houses of multiple occupations are improved. Our Warm Zone project will continue to offer home
improvements to improve energy efficiency, thus helping residents to keep warmer and sa ve money. The Council
wishes to encourage and reward residents who are in employment to access opportunities to buy their home
through shared equity and other schemes.

Active and Connected Newham
Residents’ Priorities
Newham has a proud history of welcoming new communities to Britain and of strong community kinship. Physical
and social development must build that sense of belonging for everyone. Knowing and socialising with the people
around you, sharing past times and swapping favours is all part of a strong community and happy neighbourhood.
Bringing people together and getting physically active helps to dissolve prejudice, provide a sense of community,
builds good health and prevents social exclusion. We do more than most other local authorities to provi de
opportunities for people to get together and be active. We want to work across the Partnership to provide support
and make activities accessible for everyone. It also means ensuring that our community has access to an
infrastructure that gives them greater choice about how to access services for example though greater
accessibility to broadband services.

How we are meeting residents’ priorities
During 2010 the Council will continue to offer a wide range of activities and services for our older residents through
our 24 Warm Centres during the winder months and an ongoing annual programme of clubs and events, including
monthly free tea dances and walking clubs. Having been the first local authority to introduce free swims for young
people, free swims for the under-16s and over 60s at extended times will help to make access to sport easier for
those who are restricted by cost, especially families.

We have a strong participation programme for young people including sports, culture, volunteering, citizenship
and award schemes. The Tell Us5 survey has shown Newham’s performance in terms of young people’s
participation in positive activities to be the fourth best in London at 73.8%; this is above the London average of
67.9% and the England average of 69.5%. We will continue to develop our annual events programme including
the Stratford Fun Day, Mayor’s Town Show, Under the Stars and Firework Nights. We will also focus on
developing our Community Forum events in order that local people have an opportunity to share ideas and
experiences about their local area.

Healthy Newham
Residents’ Priorities
Our aims are that the health of people in Newham will be better than other Londoners by 2020 and that the quality
of health services will be as good as anywhere in the country by 2012. This is a challenging target in a borough
with high levels of health inequality. Our focus will be on ensuring high quality healthcare, which is delivered
around the individual’s needs, from maternity care to end of life care. We also recognise the important links

Statement of Accounts 2009/10                                                                                       9
between good health and employment and that keeping active is an important element of helping our older
residents maintain an independent life for longer. We know that our residents as they grow older want
reassurance that hard work and commitment to their community will be rewarded with support, whether that be to
help maintain an active lifestyle or helping to meet their care needs in a way that best suits them. We have a
special responsibility to ensure our more vulnerable residents are safe and in supporting them to participate fully in
their local community, particularly those residents with disabilities and mental health needs.

How we are meeting residents’ priorities
In 2010 we will continue to focus on ensuring more older and vulnerable people remain in their own homes with
appropriate and personalised support through our new Putting People First Strategy. This includes Self Directed
Support, whereby users and their families have control over the money for their care and can de cide how it should
be spent to best meet their needs. Over 800 people are now accessing Self Directed Support (as at January 2010)
and this figure will grow considerably over the coming year. We will continue to increase opportunities for people to
participate in physical and social activities, and increase people’s access to the full range of community and
employment opportunities. Our focus will be on not only ensuring high quality services and healthcare, which is
delivered around the individual’s needs, from maternity care to end of life care but also services that impact
positively on the wider determinants of health with an aim of reducing health inequalities. We will be proactive in
encouraging people, both young and old, to lead an active and healthy life through understanding how their
lifestyle can contribute to a longer and more rewarding life.

We are committed to improving opportunities and outcomes for people who use services and their carers, or who
may need support in the future. We are transforming how adult social care is provided. Our aim is to ensure there
is a personalised system of support that improves choice and control for individuals. With our key partners, we are
committed to developing services and supports that promote independence, health, wellbeing, choice, rights and
inclusion.

Key developments include:
• Improved access to universal services ensuring a clear focus on preventing ill health and social isolation
• Early intervention and enablement approaches to help prevent people needing long-term care
• Self Directed Support, (mainly through individual budgets) becoming the default opportunity for people eligible under Newham’s FACS (Fair
Access to Care Services) criteria.
• Improved support for people of working age to gain and keep employment.
• We are developing joint approaches to promoting health and wellbeing and preventing ill health across the Council, NHS and voluntary sector.
We have recently established an Integrated Commissioning Transformation Board with NHS Newham, which links with the health and social
care Partnership Boards for Mental Health, Learning Disability, Disability, Substance Misuse, Older People, and the Carers Strategy Group and
the Better Health and Wellbeing Partnership Action Board.


Making Sure the Council can deliver residents’ priorities
This part of the Corporate Plan sets out how the Council as an organisation ensures it is fit for purpose to deliver
residents’ priorities. This means ensuring we have in place effective plans for financial resources, ICT, our
workforce, ensuring an effective mainstream approach to equalities, the more effective management of property
and assets, customer services and our approach to working with other partner organisations such as the health
service, local businesses, the voluntary sector and the police.
During 2009 we received our first Comprehensive Area Assessment (CAA). In 2010 the Council will look to build
on its organisational assessment of ‘improving well’ and the broadly positive Area Assessment the Local Strategic
Partnership received.

The issues in our 2009 CAA judgement which we will be focussing on in 2010 include:
• Tackling Health Inequalities
• Creating an Economic Development Strategy and Local Development Framework
• Highlighting the excellent work we are doing in developing employment opportunities for local residents and expanding this work further
• Continuing to raise Educational Attainment
• Continuing to tackle crime and grime issues which are amongst local residents’ top priorities
• Demonstrating the success of our approach to community engagement and cohesion through the largest events programme in the country
and our innovative Influential Councillor Scheme which focuses on local decision making to tackle local priorities
• Continuing to develop our approach to housing management
• Continue to improve our use of resources, including the management of the workforce and natural resources


In 2010 the Council will be reviewing our work across a number of these areas including a strategy review of
property, the development of a new workforce strategy focusing on talent management and rewarding good
performance, an ICT Strategy focused on delivering improvements for residents in service provision and
implementing our Customer Access improvement programme. The Council will also continue to identify more
efficient and effective ways to use its financial resources through the Revenue and Capital Star Chamber
programmes, which focus on delivering better value for money and ensuring every p ound of taxpayer’s money is
focused on residents’ priorities.



Statement of Accounts 2009/10                                                                                                             10
The Council will also continue to focus on delivering improvements in performance across all service areas, with
regular monitoring of key performance indicators by the Chief Executive and the Mayor and Executive Members.
As an organisation we will also be implementing a new Equality and Diversity Strategy and developing a new
Single Equality Scheme which will focus on delivering improvements in mainstream service provision for all
residents and identifying a programme of Equalities Impact Assessments for key services and projects.

Newham’s Key Performance Indicators - Local Area Agreement Targets
The Council, together with its partners in the Local Strategic Partnership, have agreed 45 key national indicators
which reflect our priorities for improving the lives of Newham residents. Together these form the Local Area
Agreement and are the primary form by which the Council and its Partners monitors our progress.

Many of the targets rely on a cross partnership approach with different service providers contributing to ensure we
deliver effective solutions to problems and we spend public money in the most effective and efficient way.


In addition to the seven priorities in the Corporate Plan, the Council has to spend wisely

The Council is committed to delivering excellent services, while keeping Council Tax low. Effective use of financial
resources means that Newham has frozen Council Tax for 2009/10 at the same levels as 2008/09. Newham has
the lowest Council Tax of all outer London Boroughs.

The Council’s highly rated Financial Management Framework has allowed for a Medium Term Financial Strategy
that is designed to meet the needs and aspirations of Newham beyond the Olympics.

The on-going Star Chamber process will achieve nearly £56 million of savings by 2010/11 to generate resources
for ploughing back into the Council’s priorities. The recent relocation of back office services to a new office at
Newham Dockside will reduce ongoing costs and allow savings to be directed towards the community’s priorities.

The Council achieved the highest possible score of four for the overall way it uses its resources, manages its
finances and provides value for money. The Audit Commission also highlighted the way the Council understands
the needs of its diverse communities and works well with its stakeholder partners. The Commission also state that
the Council is achieving value for money and has invested in its capacity to deliver improvements. Its senior
management team and rigorous approach to improvement planning are impacting positively on service
performance.




Statement of Accounts 2009/10                                                                                    11
Future Capital Investment

The Capital Investment Programme for 2010/11 to 2012/13 is set out in more detail under the "Capital Expenditure
Commitments" note (note 21). Total planned expenditure is £533 million over the next three years, which is to be
met from the following resources:


                                Resources                                       £ millions           £ millions
    Borrowing
    Anticipated Government supported loans                                               150
    Other                                                                                 87                    237
    External Grants and Contributions
    Department for Children, Schools and Families                                        124
    Major Repairs Allowance                                                               53
    Transport for London                                                                  14
    Homes and Communities Agency                                                           4
    Department for Communities and Local Government                                       29
    London Thames Gateway Development Corporation                                          8
    Section 106                                                                           17
    Greater London Authority                                                               4
    Other Grants and Contributions                                                         9                    262
   Internal
    Receipts from Asset Sales                                                                29
    Investment of Reserves                                                                    5                  34
   TOTAL                                                                                                        533

Revenue Programme (updated subject to comments)
In 2010/11 the Council’s net budget requirement is £294.5 million (to be met from Revenue Support Grant (RSG),
National Non Domestic Rates (NNDR) and Council Tax). The table below shows how the budget has changed
between 2009/10 and 2010/11.


                                                                                                       %
                                                                                                   Increase/
                Summary of Revenue Budget Changes                  £millions     £millions        (Decrease)
                                                                                                     from
                                                                                                    2009/10
        Total 2009/10 Revenue Budget                                                 288.7
        Additional Costs
        • Adults, Community and Leisure                                 14.0                             4.8
        • Corporate and Strategic Management                             3.4                             1.2
        • Regeneration and Development                                   1.7                             0.6
        • Other services                                                 4.0          23.1               1.4
        Efficiency Savings
        • Children and Young People                                     (6.4)                           (2.2)
        • Regeneration and Development                                  (0.5)                           (0.2)
        • Other services                                                (0.7)         (7.6)             (0.2)
        Other Budget Changes
        • Increase in Area Based Grant                                              (11.2)              (3.9)
        • Contingency movement                                                       (0.2)              (0.1)
        • Change In Use Of Balances                                                    1.7                0.6
        Total 2010/11 Revenue Budget                                                294.5                 2.0




Statement of Accounts 2009/10                                                                                         12
7. Financial Instruments - Borrowing Facilities and Investments
Borrowing - The Council is able to borrow to finance capital expenditure, and to meet day-to-day cash flow needs,
as long as the total debt outstanding does not exceed the Authorised Limit set by the Council under the
requirements of the Prudential Code. The Council has recourse to a wide range of borrowing facilities, although in
practice most of its debt is with the Public Works Loans Board - notes 28a and 28c provide further details. Total
external borrowing at 31st March 2010 was £1,146 million of principal (£997 million at 31st March 2009), which
was well within the Council’s approved borrowing limit.
The basis of accounting for premia and discounts is outlined in accounting policies (note 1.11). The cost of
redeeming debt early was spread over the length of replacement borrowing in accordance with legislation.
Receipts from rescheduling loans were credited to income over a maximum of 10 years, again in line with
legislation.
Investments - The Council had investments of £292 million (principal) as at 31st March 2010 (£215 million at 31st
March 2009). Further information on borrowings and investments is within notes 28 and 29 of the Accounts.
Impairment - Icelandic banks Glitnir and Landsbanki held £5 million and £2 million respectively of the Council’s
investments when they went into administration in early October 2008. The opening impairment charge has been
altered from £0.299 million to £0.331 million in accordance with the latest guidance published in September 2009
by CIPFA. The council has taken advantage of Capital Finance Regulations to defer the impact of the impairment
on the General Fund until 31 March 2011.


8. Asset Transactions
During 2009/10, the Council undertook the following major (over £250,000) asset purchases and disposals;

                           Purchases and Disposals                                        £000s                £000s
Purchases
Canning Town Buybacks E16                                                                  1,251
99-101 Woodgrange Road, E7                                                                   390
                                                                                                               1,641
Disposals
101 Marshgate (Bywaters Site)                                                                445
Land nest to Sortex Site                                                                     421
Clays Lane Estate                                                                            348
                                                                                                               1,214
All capital receipts received by the Council are shown in Note 19 to the Accounts.


9. Pension Fund

Notes and Accounts for the Pension Fund are shown on note 11 of page 44 and note 39 of page 65. The former
represents accounting disclosure (known as FRS 17) which aims to link the position on the Fund at the year end to
the Council’s overall financial position as reflected in its Balance Sheet (page 31).

Under FRS17 valuation techniques, the deficit on the Council’s Pension Fund at 31 March 2010 is shown as £757
million (£393m as at 31 March 2009) (page 66) - this is excluding the Newham Homes' post trading pension deficit
of £5.1 million (£1.1 as at 31 March 2009) but includes the deficit of employees whilst they were working for the
Council pre 2005.

The more important Triennial Valuation is the statutory basis for assessing the Fund’s liabilities and for setting the
employer's contribution rate. The last tri-ennial valuation took place in March 2007 and showed a funding level of
72% for the whole fund. In 2008/09 the investment values had fallen as a result of the "credit crunch", the Actuary
estimates that the funding level at March 2008 was approximately 67%. In 2009/10, assets recovered their losses
from 2008/09 and the estimated funding level at 31 March 2010 was approximately 65%. The pension fund
investment strategy is seeking a fully funded position within 17 years. This long-term strategy allows for short-term
market volatility.

The actuarial process involves sophisticated modelling techniques that look far ahead at the level and flow of
pensions out of the Fund and the performance of its assets and contributions from employees and the Council.
The FRS 17 valuation however, is a far more basic approach and only refers to a specific point in time.


Statement of Accounts 2009/10                                                                                      13
The table below shows that the funding level calculated by FRS17 shows the funding position has decreased
during the 2009/10 financial year from 52% (as at 31 March 2009) to 42% (as at 31 March 2010).
                                       st                              st
 Net Pension Assets                  31 March 2009                  31 March 2010
                                          £000s                          £000s
 Estimated Assets                        552,027                        423,404
 Total Value of Liabilities            (1,308,536)                     (816,773)
 Net Pension Liability                  (756,509)                      (393,369)

 FRS17 Funding Level                        42%                             52%

These figures have been prepared in accordance with the actuary’s understanding of Financial Reporting
Standard 17 (FRS17), published in November 2000 and the subsequent amendment published in 2006. Details of
the amendments can be found at http://www.frc.org.uk/asb/technical/standards/pub0206.html.

10. Environmental Footprint/ Sustainability report

The council is concerned on its impact on the environment and is taking continued actions to reduce its carbon
foot print.

Actions taken 2009/10
     Made a public commitment to reduce carbon emissions by 40% from council operations by 2015 through
       a Carbon Management Plan, developed with the Carbon Trust
     The Carbon Management Plan includes a range of specific actions to reduce emissions throughout the
       borough including reducing emissions from transport, fleet activities, schools and council buildings.
     Signed up to the Nottingham Declaration and the 10:10 agreement
     Worked with Forum for the Future to develop a sustainability strategy for the borough as a whole
     Formed a Sustainability Board made up of senior directors to provide strategic ownership and oversight to
       our response to climate change
     Published our Sustainable Community Strategy which outlines Newham’s commitment to sustainability
     Developed a Sustainable Procurement Strategy. This won the “Best in Public Sector’ award at the Mayor
       of London’s Green Awards 2010
     Continued to improve energy efficiency of housing stock through partnership with Warm Zone and Energy
       Savings Trust

Further Improvements planned for 20010/11
     Continue to implement Carbon Management Plan to make further reductions to carbon footprint
     Develop Local Development Framework (Core Framework), which will outline Newham’s approach to
       mitigating and adapting to climate change. Work is progressing on the Core Strategy through 2010 and it
       is expected to be submitted to the Secretary of State in Spring 2011
     Complete Sustainability Strategy for the borough
     Further improve recycling rates in the borough




Statement of Accounts 2009/10                                                                                14
RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS


The Authority’s Responsibilities
The Authority is required:
 To make arrangements for the proper administration of its financial affairs and to secure that one of its officers
  has the responsibility for the administration of those affairs. In this authority, that officer is the Executive
  Director of Resources;
 To manage its affairs to secure economic, efficient and effective Use of Resources and to safeguard its assets;
  and
 To approve the Statement of Accounts.


The Responsibilities of the Executive Director of Resources
The Executive Director of Resources is responsible for the preparation of the Authority’s Statement of Accounts
which, in terms of the CIPFA Code of Practice on Local Authority Accounting in Great Britain (the Code of
Practice), is required to present fairly the financial position of the Authority at the accounting date and its income
and expenditure for the year ended 31st March 2010. In preparing this Statement of Accounts, the Executive
Director of Resources 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 Executive Director of Resources 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.

I certify that the Accounts set out on pages 28 to 95 present fairly the financial position of the Council at 31st
March 2010 and its income and expenditure for the year ended 31st March 2010.




         th
Date: 30 June 2010                       Signature:

                                         R. Heaton
                                         Executive Director of Resources




London Borough of Newham 2009/10 Statement of Accounts Approved at Investment and Accounts




Committee
Acknowledged by
Date: 30th June 2010                     Signature:

                                         Councillor Alec Kellaway
                                         Investment and Accounts Committee




Statement of Accounts 2009/10                                                                                      15
REPORT BY THE AUDITORS TO MEMBERS (to be provided)




Statement of Accounts 2009/10                        16
Statement of Accounts 2009/10   17
                                 ANNUAL GOVERNANCE STATEMENT 2009/10

Each year the Council is required by law to produce a statement that details the framework for making decisions
and controlling the resources of the Council. The statement includes the council’s governance arrangements and
highlights any significant issues requiring attention. The statement is designed to enable stakeholders to have
assurance that there is an effective decision making process and that public money is being prope rly managed on
behalf of local residents. The statement complies with the Accounts and Audit Regulations 2003 as amended. Our
work on governance is an ongoing commitment and during 2009/10 the Council was proud to be nominated for the
Local Government Chronicle Finance Award for Governance.

Scope of Responsibility
Newham 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. Newham 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, Newham is responsible for putting in place proper arrangements for the
governance of its affairs, facilitating the effective exercise of its functions, including arrangements for the
management of risk.

Newham's local Code of Corporate Governance is consistent with the principles of the CIPFA/SOLACE Framework
Delivering Good Governance in Local Government. A copy of the Code is on our website as Appendix 3 to the
council’s Constitution, with the council’s Financial Regulations set out in Part 6 of the Constitution. These
documents can be obtained from the council's Monitoring Officer. This statement explains how Newham currently
complies with the Code and also meets the requirements of regulation 4(2) of the Accounts and Audit Regulations
2003 as amended by the Accounts and Audit (Amendment) (England) Regulations 2006 in relation to the
publication of a statement of internal control.

The Purpose of the Governance Framework
The Governance Framework comprises the systems and processes, and culture an d values, by which the
Authority is directed and controlled and its activities through which it accounts to, engages with and leads the
Community. These are regularly reviewed. It enables the Authority to monitor the achievement of its strategic
objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

The system of internal control is a significant part of the governance framework and is designed to manage risk to
a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and 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 achievement of Newham’s policies, aims and
objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to
manage them efficiently, effectively and economically.

Last year we reported that Independent Members of the Standards Committee reviewed the council’s performance
in adhering to four of the six core principles of good governance, which form Newham’s Local Code of Corporate
Governance. As a result the introduction to the constitution has been updated to ensure it is clearer and the
council’s website has also been updated to improve public access.

The key elements of the systems and processes that comprise the Authority’s governance arrangements are
described in more detail below:

Vision and Purpose
Newham is an ambitious borough and the council’s vision is that by 2012 Newham will be a major business
location where people choose to live, work and stay.

The council cannot achieve this vision alone, and is working closely with partner agencies and the community to
make this happen. The council participates in and leads the Newham Partnership Board, which has developed the
Sustainable Communities Strategy and tracks the activities of the council and its partners. Closer links have been
established with the council's formal decision making process and the partnership Board meets immediately before
every other Cabinet meeting. Partnership arrangements, including the structures that support the Partnership
Board, are being reviewed alongside a refresh of the Sustainable Community Strategy to ensure a clear and
succinct vision for the long term development of the borough that is targeted and measurable. The revised
strategy will be used to underpin the development of a new Economic Development vision and Strategy for
Newham and preparation of the Local Development Framework.


Statement of Accounts 2009/10                                                                                      18
The Mayor’s Contract
The Mayor’s Contract is produced as a direct result of regular meetings, surveys and other consultation with
residents and determines the key priorities for the borough based on what people want to see or change. It sets
out the Mayor's pledges to residents for improvement over the year. Complementing the Contract, the Corporate
Plan outlines in more detail our plans for the next 12 months and beyond.

Corporate and Service Plans
The council’s Corporate Plan sets the strategic direction for the council each year, outlining its contribution to the
Sustainable Community Strategy and Local Area Agreement (LAA).

To support the Corporate Plan the council has a service-planning framework. This includes performance
measures, risk assessment, equality data and use of resource information. Each service maps their contribution to
the Corporate Plan via a Service Plan. Individual Service Plans detail the actions required to make the Corporate
Plan happen. The Corporate Plan and Service Plan are monitored monthly through the Chief Executives Service
Boards. Issues raised through those meetings are considered by the Resources Board to ensure that co -ordinated
activity is happening and that the resources required have been appropriately allocated. There is also a range of
performance indicators that assist in the monitoring of activity and these are also monitored at the monthly Service
Boards.

The actions required are translated into individual, team and section targets that are set through the council’s
appraisal process and are monitored through regular one-to-ones with staff.

Annual Reports
The Mayor’s Annual Report is published in February each year as part of the mayoral accountability framework,
and provides information to residents on progress in implementing local priorities.

The council’s Annual Report is published in July/August and includes key activities that were carried out during the
previous year (ending 31 March) to achieve the vision. The Report includes performance measures that will
measure the impact of the activity being carried out to achieve the themes in the Corporate Plan. These
performance measures are those included in the LAA.

Performance Management
In order to focus on improving performance, the Chief Executive holds regular Service Boards. Each Executive
Director is held to account by the Chief Executive for the performance of their service. Service Boards consider a
range of performance information including; a set of key performance indicators including all of the national
indicators included in the LAA and by exception a wider set of indicators; budget monitoring information both
capital and revenue; delivery against actions within service plans and the corporate plan and on key projects; how
key risks are being controlled; an assessment of successes, weaknesses, opportunities and threats.

Following on from the Service Board meetings a report is prepared for the Mayor which highlig hts areas of good
performance, indicates where performance needs improvement, identifies key risks to the council and outlines
what is being done to control these risks. Executive Members and the Executive Directors meet on a monthly basis
to discuss the Council’s performance and any issues arising.

Overview and Scrutiny Committee monitor the network of performance indicators identified above and receive
quarterly performance and budget reports which summarise the information received by the Mayor and th e
Operational Executive. The Mayor and Chief Executive attend the Overview and Scrutiny Committee when these
reports are presented.

To support these internal performance indicators, the council commissions and uses research to test the customer
and stakeholder experience of services that the council provides. It uses this feedback to drive the services
forward to deliver what the public want and to focus resources on the public’s priority areas.

External benchmarking is also used extensively to compare the services delivered by the council with others both
in the private and public sector. This is used as a tool to assess the cost effectiveness and value for money of
services provided by the council.

Council Constitution
This sets out the roles and responsibilities of officers and members. It provides details about how decisions are
made and who can make them. It also contains the rules for managing our finances and resources effectively.
Under the council’s Constitution, the elected Mayor has substantial powers to implement the wishes of the
Community and to improve the services provided. The Mayor takes decisions supported by the Cabinet, Executive
Advisors and officers. The Mayoral Model provides clear accountability, effective leadership and decis ion making.
The Full Council retains some strategic decision-making powers such as the Budget Framework and setting of the

Statement of Accounts 2009/10                                                                                      19
Council Tax. Officers in each service have schemes of delegation to enable them to handle day to day matters.
The Newham Executive Board drives forward the delivery of services.

Where a Key Decision is due to be made, the council publishes details in the Forward Plan prior to the decision -
making meetings. These meetings are open to the public unless exclusion is necessary for reasons o f
confidentiality.

The Monitoring Officer ensures that the Constitution is reviewed at least annually. A report to Full Council in May
2009 set out the areas of updating required to the Constitution and in August 2009 the updated Constitution was
published to ensure it reflects the council’s current arrangements. As part of the Constitution, the council has a set
of protocols. These are reviewed by the Standards Committee on an ongoing basis. Full Council approves
changes to the Constitution.

Codes of Conduct
The council has a Code of Conduct for officers and has responded to the consultation on a new statutory Code for
Officers. The council’s current Code and protocols relating to officers are supported by a requirement to make
declarations of interest and to declare gifts and hospitality. Interests must be declared by officers above a certain
grade and those in certain decision making and procurement positions. Each quarter managers are provided with
lists of officers from whom a declaration is required. Officers are required to generally decline gifts and hospitality
to ensure that officers are not inappropriately influenced. These codes and processes are made available to staff
at their induction, they are on the Intranet and online training is available to ensure every staff member
understands their responsibilities. All declarations can be made on-line and are automatically referred to the
manager for approval under the on-line system.

Members are required to make declarations of interest when elected and to consider their interests and make
appropriate declarations at each meeting they attend. Members must also declare any gifts and hospitality.
Member's declarations and gifts and hospitality records are made public through the council’s website. Every six
months a reminder is sent to members reminding them of the need to review their declarations. An item and
advice is included with all council and Committee agenda, reminding members of the requirements of the Code.

The Standards Committee have revised its procedures and established Sub-Committees for the purposes of
discharging its functions in relation to the local assessment of allegations of breach of the Members’ Code of
Conduct.

Rules and Regulations
The council’s rules and regulations form part of the Constitution. There is a Scheme of Delegation for the Mayor
and one for officers. These documents are published on the council’s website. They state who is authorised to
make decisions in particular areas. They are regularly updated and were last subject to complete review in
December 2007. They are currently being reviewed in detail and revised officer schemes will be reported to Full
Council and Cabinet in February 2010 and the Mayors scheme will be a matter for the AGM in May 2010.
Alongside this, the council has financial regulations which provide details of officers’ responsibilities for the
council’s control environment relating to income, expenditure, internal control, risk management and partnerships.
To support officers when they are making purchases, the council has Contract Standing Orders which are
contained in the constitution and has developed guidance, templates and model documents to assist with
procurement activity. All procurement guidance has been reviewed and updated during 2009.

Compliance with Policies, Laws and Regulations
The Constitution sets out the legal framework for making decisions and publishing them. There is a robust scrutiny
system in place to ensure that the work of the council complies with all appropriate policies, laws and regulations.
The Overview and Scrutiny Committee has the power to “Call-In” and challenge any Key Decisions. They actively
scrutinise the budget proposals made by the Mayor and they can refer any matters to the Full Council. Most of
their work relates to reviewing and developing policies and services.

The council has the following statutory officers; Head of Paid Service (the Chief Executive), The Chief Finance
Officer under s151 of the Local Government Act 1972 (the Executive Director of Resources) and the Monitoring
Officer (Divisional Director of Legal and Democratic Services). Each has the power to refer matters to the Full
Council if a breach of regulations is possible. These officers meet regularly to discuss issues arising. No ne of
these officers have been required to use their powers during the year. The statutory officers provide professional
advice on all key decision-making reports to ensure legal, financial, risk management, procedure and equality
implications are addressed.

Under the provisions of the Children Act 2004, the Local Authority must appoint a statutory officer with
responsibility for children. This role is carried out by the Executive Director for Children and Young People. The
council is required to appoint a lead Member for Children Services and Councillor Rev. Quentin Peppiatt is on the

Statement of Accounts 2009/10                                                                                       20
council's Cabinet with this portfolio. The council has an Executive Director with responsibility for Adults under the
provision of the Social Services Act 1970 (the Executive Director for Adults, Community and Leisure) and there is
also an elected member with this portfolio, the Executive Member for Older People and Adults, Councillor Joy
Laguda, who is a member of the Cabinet.

Whistle-blowing and Complaints Process
The council has a recognised complaints process. This takes the form of a three stage process enabling the public
to escalate their complaints if they are unsatisfied with the answer they receive..

The Mayor and members also receive enquiries and complaints via their surgeries, walkabouts and question time
activities. The council has a team of staff supporting members in addressing these queries to ensure that the
public receive an appropriate answer.

Within the council the Whistle Blowing Policy is actively promoted and annually there are a number of whistle
blowing events reported. The effectiveness of the Policy and the type of issues raised are reviewed and monitored
by the council’s Audit Board.

The council received 1,030 Freedom of Information Act requests during 2009/10 up from 706 in the previous year
(45%). The target for responding within 20 days for 2009/10 has been set at 90%. The council had no adverse
findings from the Information Commission and no loss of information incidents requiring reporting.

Learning and Organisational Development
The council implemented a new appraisal scheme for managers during 2009/10 and will roll this out for all staff
during 2010/11 which gives a commitment that every employee receives a quarterly appraisal to dis cuss
performance, goals and any personal development needed to achieve them. Appraisals are scored and records
are kept on staff HR information so that the organisation can be assured that all staff has had equal access to an
appraisal with their line manager. The council provides a range of training opportunities for managers and staff to
ensure that they can deliver an excellent service. These include Manager’s toolkit events, such as Recruitment
and Selection, Conduct, Capability and Managing People through Change. The council is committed to inducting
new employees effectively and provides Induction guidance and delivers the corporate ‘Welcome Event’ for all
new employees. The council’s people strategy is under development, and will articulate the counc il’s approach to
leadership development, talent management and employee development, employee engagement, culture change
and performance management.

Risk Management and computer training is also provided. The council is developing its e-learning delivery capacity
and has developed on-line governance and financial training. NEB has agreed that a number of the Manager’s
Toolkit events are mandatory for employees in management positions and the council ensures it provides
sufficient resources in these topics. The council is also developing its approach to managing learning and
organisational development generally across the organisation, with the ultimate goal of providing one access point
via the Human Resources Trent System.

Members have a support officer and a development programme to keep them up to date with changes and to
support training needs. Training is supplemented by information through briefings, conferences and ward bulletins.
Web pages tailored for individual councillors are currently being developed which will give members access to
local and borough wide information and act as a portal to information which will assist councillors in performing
their duties. The council also operates an Influential Councillor Scheme whereby members are consulted on
policies and decisions that are likely to impact on their constituents. The Audit Board, Investment and Accounts
and Standards Committee have training as part of their agendas and agree specific training plans for themselves
annually. For some aspects of council work, members are required to undertake a period of study and pass a test
to ensure they can demonstrate appropriate competence. This applies to Licensing and Employment appeals.

Communication and Engagement
Engagement and ongoing contact is led from the top. Newham’s elected Mayor and Councillors have regular and
widespread contact with residents and communities throughout the borough. They are the front line of community
representation. They have a key role in listening to and talking with local people about their aspirations, as well as
the day-to-day issues that affect their quality of life. The Mayor of Newham, for instance, personally undertakes an
extensive schedule of listening opportunities through open question times, borough events an d resident surgeries.
From these many contacts, the Mayor and councillors are well informed to take decisions that aim to improve
people’s lives and futures.

Community engagement is a key strength for Newham. We attract around 100,000 people to our free community
events, designed to get people together, get them active and provide information on how they can make the most
of local services from the council and partners. We have the biggest community activities programme in the
country, including sports and cultural activities and community events.

Statement of Accounts 2009/10                                                                                      21
Our Influential Councillor Scheme is a best practice case study in the Duty to Involve guide commissioned by the
CLG, Community Development Foundation and the Audit Commission, and Newham leads the London Boro ughs’
Empowerment Group. A Community lead councillor is appointed by the Mayor to lead activity and engagement in
each Community Forum Area, working alongside ward councillors. This work includes engagement with
community groups, the establishment of priorities for the Local Fund, allocated to spend on local improvements
such as play schemes and environmental improvements, and the representation of local concerns and priorities
for improvement to the council.

Newham has a very young population and this year marks the third election of a Young Mayor of Newham. Any
young person aged 11-18 who lives, studies or works in the borough is eligible to stand for election and vote in the
election. The Young Mayor has a clear manifesto and works to make a difference to young people’s lives within the
Borough. The Youth Council comprises the 14 runners-up in the Young Mayor Election, plus representatives from
each of the 15 school councils.

We support Newham’s carers, for example participating in a Carers Rights Day, and reach out to the older
community and those with disabilities, with programmes including free swims for the over 60s and winter warm
centres.

The council also understands residents’ priorities and needs through surveys. These include the Liveability
Survey, Newham Annual Residents Survey and Newham Household Panel Survey which are used to provide a
detailed understanding of our population, their priorities and the services the council needs to provide. The
findings of such surveys directly inform corporate planning processes, service improvements and ongoing policy
making. We use a range of tools to engage directly with service users, including user and partnership groups,
consultations on specific issues and user surveys, such as the regular Tenants an d Leaseholders Survey – again
informing service improvements and policy issues.

The council has strong and proactive communication channels, including:
       The use of marketing projects to promote council services such as recycling;
       New media such as the website – refreshed this year to make it easier to navigate and do business with
the council;
       Large events such as the Mayor’s Town Show, Under the Stars – a series of free concerts – and Fireworks
Night;
       Publications - a fortnightly Newham magazine and community forum newsletters to keep members of the
public up to date with council activities;
       Media relations.

The council engages with staff through the intranet, the monthly Insider magazine, bulletins to managers, weekly
emails from the Chief Executive, and regular briefings from senior managers and quarterly senior managers’
conferences. The council also engages with its staff through the annual Staff Satisfaction Survey, the results of
which form the basis of an action plan to address key issues.

The council has an annual corporate planning process which involves reviewing and determining priorities for the
forthcoming year, embedding them into our corporate and service plans, communicating the priorities to residents
and reporting back to them through the council’s Annual Report which was published in August 2009.

The council has planned Local Fund expenditure for the next three years of £11.3 million which has been directed
to local priorities. This has enabled involvement in determining where money is spent on local schemes such as
highway improvements, parks and Controlled Parking Zones. There is full and thorough engagement locally
though the local lead councillors and public meetings, which have helped to direct the priority areas for spend in
each of the community areas.

Partnerships
The most significant partnership for the council is the Local Strategic Partnership, led by the Newham Partnership
Board. The Partnership is governed by its own constitution. Members are also subject to a Code of Con duct and
make declarations of interests at meetings. The Sustainable Community Strategy sets out the vision and
aspirations for the community in the medium and long term, and the Local Area Agreement (LAA) agreed this year
for the period 2008 – 2011 includes key targets and indicators following negotiation between the Borough and
Central Government. The council is currently refreshing its Sustainable Community Strategy with its partners to
ensure we have a clear and long term vision for the development of the borough and that it is relevant.

The council also has important partnership arrangements with the local Primary Care Trust (PCT). These cover a
range of services, joint commissioning and are aimed at delivering a seamless service to the public. The Cha ir of


Statement of Accounts 2009/10                                                                                    22
the Newham Primary Care Trust is an observer at Cabinet, and the Mayor's Adviser on Health is an associate
member of the PCT Board.

There are also partnership arrangements with the Police, Probation and Youth Justice services to help to meet the
targets for reducing crime and making Newham a safer and stronger community through the Crime Reduction
Partnership Board, chaired by the Chief Executive.

Review of effectiveness
Newham has responsibility for conducting, at least annually, a review of the effectiveness of its governance
framework including the system of internal control. The review of effectiveness is informed by the work of the
Executive Directors, Divisional Directors and Statutory Officers within the Authority (who have responsibility fo r the
development and maintenance of the governance environment), the Head of Internal Audit’s annual report, and
also by comments made by the external auditors and other review agencies and inspectorates.

Executive Directors and Divisional Directors have responsibility for the development and maintenance of the
internal control environment. The review has been made more robust by obtaining annual reports from Divisional
Directors, Executive Directors and Statutory Officers commenting upon compliance with the council’s control
framework. These reports also identified areas for improvement during 2009/10. The review identifies and
evaluates key controls in place to manage the principal risks facing the services. The assurances received are
evaluated by an officer group chaired by the Executive Director of Resources. This includes identifying
weaknesses in either controls or assurances and developing an action plan to address any significant governance
issues. The results of this review are reported to the Newham Executive Board and the Audit Board. The Audit
Commission and the External Auditor produce an annual report to those charged with Governance. This sets out
their opinions in relation to accounts, governance and performance.

Internal Audit
Internal Audit is an independent appraisal function that acts as a control that measures, evaluates and reports
upon the effectiveness of the controls in place to manage risks. In carrying out this function Internal Audit
contributes to the discharge of the Executive Director of Resources’ S151 responsibilities. The work of the Internal
Audit Section is monitored and reviewed by the Audit Board.

Annually the Chief Internal Auditor is required to give an opinion on the council’s Internal Control Framework based
upon the work carried out during the year. Overall the control environment is currently satisfactory.

Audit Board
The council has an Audit Board comprising of members drawn from Cabinet, Executive Advisors, Overview and
Scrutiny, the Back-Bench and three independent co-optee’s. They meet up to eight times per year. Their role is to
review the council’s Internal Control Framework and to hold the Executive to account for any apparent failures.
Board members receive regular training and briefings on matters relating to their terms of reference to keep them
up to date. During the year the Audit Board has called officers to its meetings to explain how they are progressing
with internal and external audit recommendations. The Board have received a range of reports fr om the internal
and external auditors to assist them in considering the effectiveness of the council’s Control Framework. The
Board also receives regular reports on internal audit, risk management and counter fraud performance. These
reports contribute to the Board’s review of the effectiveness of the council’s system of internal audit.

Overview and Scrutiny
The Overview and Scrutiny function, reviews decisions made by the Mayor. The focus of their role is to provide a
challenge and to support the development of policies. At their meetings they consider performance information.
They also have a key role in reviewing and challenging the Mayor’s budget framework prior to consideration at Full
Council.

External Audit
In 2009, the council and its Partners were subject to external audit through the new Comprehensive Area
Assessment process, the results of which were published on 10 December 2009. The Area Assessment has
recorded no green or red flags for the Borough and the Partnership are described as having a good understanding
of the borough’s needs. The organisational assessment recorded that overall the council is performing well, an
improvement on the previous year when the council was judged as improving adequately.

The External Auditor carried out work on behalf of the Audit Commission relating to the Use of Resources
judgement within the new Comprehensive Area Assessment (CAA). Details were reported to Audit Board in late
2009. Under the new tougher criteria, the council’s overall score reduced from a maximum 4 to 3. The details for
each category are shown in the table below – as this is a new review system for 2009, there are no prior year
comparatives:


Statement of Accounts 2009/10                                                                                       23
                                     Category                                    Judgement 2008/09
                                                                                 Assessment out of 4
                                     Managing Finances                                  3
                                     Governing the Business                             3
                                     Managing Resources                                 2
                                     Overall – Use of Resources                         3
                                     Managing Performance                               3

       Note: 4 is the highest score and means performing significantly above minimum requirements – performing
       strongly, 3 is performing well and exceeding minimum requirements. Councils have to demonstrate innovation to
       score a 4 in an individual category.

       In their CAA report, the external auditors have commented that ”governance arrangements are supported by a
       robust structure, which imposes corporate ownership” and that “there is a strong commitment to risk management,
       which is integrated into the Borough’s Corporate Plan as well as both directorate and service planning processes.”
       In addition, “the audit board provide adequate scrutiny and assurance over the operations of the Borough, with
       membership widely drawn to ensure elected members have links with other parts of the Borough’s governance
       arrangements. This ensures a consistent and clear approach to internal control across the Borough”.

       Significant Governance Issues
       There were a number of issues raised within the 2008/09 Annual Governance Statement that required action
       during 2009/10. The table below details these issues and has been updated in italic text to reflect the comments
       received from the Executive Directors on progress made during 2009/10.

Control Area        Governance        Action Taken                                                                 Responsible
                    Issue                                                                                          Officer
Housing and         Overpayment of    The Service became aware of control issues in relation to payments to        Executive Director
Public Protection   landlords         landlords in April 08. To address this, two staff from Central Payments      of Environment
                                      were seconded to the Temporary Accommodation team. This brought
                                      additional capacity and expertise, supported by additional management
                                      focus on improving the robustness of the process. These actions have
                                      identified payments to landlords in respect of properties returned to
                                      suppliers (landlords) in excess of £2m (these overpayments accrued over
                                      a number of years). Recovery action is now being taken.

                                      Significant progress has been made in the recovery of
                                      overpayments to landlords/ agents, new procedures have been put
                                      in place to prevent recurrence and there has been an internal audit
                                      of the payments to landlords. Recommendations from the audit are
                                      being implemented.
Housing and         Wrongful          In order to address the high number of voids –surplus to the requirement     Executive Director
Public Protection   termination of    of the service, we commenced handing back of the properties to the           of Environment
                    leases            agents during 2007. However in 2008 a provider challenged the process,
                                      it has since been accepted that leases may have been terminated
                                      wrongfully even though there were no signed and sealed leases for the
                                      properties. To address the issue, legal services have drawn up
                                      termination notices which are now in use.

                                      New procedures were introduced with the assistance of legal
                                      services. Correct termination notices are in use and monitored.
                                      There is an outstanding claim with one of the major providers, legal
                                      remedy is being progressed.
Housing and         Lettings          The tendering process for the management and maintenance of Private          Executive Director
Public Protection   procurement       Sector Leasing stock was successfully challenged by Lettings                 of Environment
                    breakdown         International during 2008 in relation to the evaluation methods used. As a
                                      result the number of providers selected was expanded to add them to the
                                      framework. Strategic Procurement has taken steps to revise procedures
                                      as a result.

                                      New procedures were produced by Strategic Procurement and will
                                      be used for future procurement




       Statement of Accounts 2009/10                                                                                               24
Housing and         Incident - death    During 2006 a homeless customer placed outside the borough murdered             Executive Director
Public Protection   of adult            a fellow resident.                                                              of Environment
                                        We have co-operated with the independent enquiry and :
                                             1. Revised our procedures so that vulnerable single persons are
                                                  only placed out of borough in exceptional circumstances, where
                                                  this is the case they are brought back in borough at the earliest
                                                  opportunity.
                                             2. We have updated our protocol with the Community Mental
                                                  Health Team.

                                        We are awaiting the report from the Independent Inquiry and will
                                        implement any additional recommendations arising from it


Cleansing,          Incident – refuse   The incident related to a refuse loaders jacket that was caught by the          Executive Director
Waste and           collector           machinery at the back of the vehicle and he was lifted up and banged his        of Environment
Recycling                               head on the vehicle.

                                        Service was suspended for a day and all staff received retraining.

                                        Health and Safety Executive investigated the incident and found that
                                        the Council was not at fault. They described the accident as very
                                        unique.
Cleansing,          Incident – death    A review of existing procedures was carried out after the accident. It was      Executive Director
Waste and           of cyclist          identified that some staff were not adhering to the procedures for              of Environment
Recycling                               checking their vehicle.

                                        An action plan was drawn up and services met monthly to monitor
                                        progress and implement it. The remainder of the drivers are
                                        currently scheduled to be retrained.

Cleansing,          Financial           Budget monitors forecast an overspend throughout 2008/09.                       Executive Director
Waste and           overspend                                                                                           of Environment
Recycling                               There are a variety of explanations for this; early in the financial year the
                                        impact of higher fuel and utility costs meant transport and
Highways,                               premise\property related budgets were predicted to overspend. A
Transport and                           combination of release of contingency and a reduction in price toward the
Parking                                 end of the year reduced this pressure. Newham Homes use of the
                                        Highways section declined, and this left a shortfall against budgeted
                                        income, as overhead recovery reduced. This should not re-occur in
                                        2009/10 as alternative arrangements are envisaged. Parking and Trade
                                        Refuse income are less than anticipated, and this has increased the
                                        shortfall. Closer working and greater enforcement in respect of Trade
                                        Refuse should reduce the impact for 09/10.

                                        The charge from East London Waste Authority for waste disposal has
                                        also increased, reflecting the greater tonnage of commercial waste
                                        collected during the year. The Service was re-organised into two
                                        sections in November 2008; Cleansing, Waste and Recycling, and
                                        Transport, Highways and Parking. This is intended to build on
                                        improvements already made in service delivery, and should ensure that
                                        the service also contains expenditure within budget. (no update?)

                                        The Highways issue has been addressed by a re-organisation of the
                                        Sewers Service which will cease operations in February 2010. The
                                        overspend has therefore continued into 2009/10 and has been
                                        mitigated by savings elsewhere in the Service.

                                        Waste Disposal costs have been contained within the service for
                                        2009/10. However the Cleansing Waste and Recycling service
                                        overspent in respect of passenger transport due to delays in
                                        procurement of a new vehicle fleet. The service has taken action to
                                        contain the overspend in 2009/10 and has begun a procurement
                                        process to provide a long term solution.

Control Area        Governance          Action Taken                                                                    Responsible
                    Issue                                                                                               Officer




       Statement of Accounts 2009/10                                                                                                    25
Finance         Investment        The Icelandic banking crisis led to a complete review of the treasury           Executive Director
                Counterparty      management function to support the delivery of the budget strategy. This        of Resources
                Risk              included:

                                          Risk based re assessment of the investment counterparty list
                                          Alignment of activities with March 2009 Audit Commission
                                           report
                                          Setting stringent operational investment limits within the existing
                                           strategy parameters
                                          Internal Audit compliance review of strategy and CIPFA Code of
                                           Practice
                                          Commissioning independent consultants Navigant to review
                                           procedures
                                          New risk based management reporting framework (RAG) on
                                           investment portfolio
                                          Risk Management review of entire function and external training
                                          Enhancement of cash flow forecasting capabilities, specifically
                                           closer links to capital outflows
                                          Review of brokers and treasury consultants
                                          Provision of bespoke training for treasury staff
                                          Performance measurement linked to three benchmarks
                                          Additional staffing resource became permanent in October 2008

                                  The final outcome for the settling of the authorities Icelandic
                                  investments has yet to be confirmed. The Treasury Management
                                  function has undergone a thorough review of policies and
                                  procedures and now reports directly to Audit Board in line with best
                                  practice scrutiny arrangements. During 2009/10 further work has
                                  been undertaken with the Risk Management team to further embed
                                  concepts of risk management beyond that of counter party risk.
                                  The Revised CIPFA Code of Practice on Treasury Management was
                                  published in November 2009 and the section is fully compliant.

Control Area    Governance        Action Taken                                                                    Responsible
                Issue                                                                                             Officer
All             Management        An audit review of the use of consultants was carried out to establish the      Executive Director
                and Supervision   value for money of the arrangement and the management arrangements              of Resources
                of Consultants    in place. In some cases the arrangements were terminated, in others
                                  they were amended and clarified.
                                  A moratorium on the engagement of new consultants has been
                                  introduced, and the procurement process reviewed, to ensure consultants
                                  are only used where appropriate; that they are properly managed within
                                  the Council’s Scheme of Delegation; they represent value for money.

                                  Finance officers have established composite lists of all consultancy
                                  staff to ensure that spend can be checked. Consultancy support
                                  needs going forward have been identified. The Council's managed
                                  agency service has been utilised to provide high level interim
                                  support where possible. A procurement for the consultants top up
                                  (not available through the Council’s exisitng frameworks) will
                                  commence in 2010.


Control Area    Governance        Action Taken                                                                    Responsible
                Issue                                                                                             Officer
CYPS            Youth Offending   A restructuring of the Service has been agreed and is being                     Executive Director
                Team (YOT)        implemented. A YOT Co-ordinator has been appointed to manage the                of CYPS
                                  service and implement the changes. All processes and procedures have
                                  been reviewed, including financial, procurement and performance, and
                                  improvements made. Progress is reported through the monthly CYPS
                                  Service Board.



CYPS            Safeguarding      As a result of national scrutiny of safeguarding issues, there is significant   Executive Director
                Children / Care   Government, media and public interest. The Council is reviewing                 of CYPS
                Provision         safeguarding arrangements and has identified capacity in the budget in
                                  order to respond to issues arising from this review due for completion
                                  during April 2009.



       Statement of Accounts 2009/10                                                                                              26
      2009/10 Significant Governance Issues
      The review process to support the production of the Annual Governance Statement identified just one Significant
      Governance issue as tabled below.

Control Area    Governance        Action Taken                                                                 Responsible
                Issue                                                                                          Officer
Regeneration    Weaknesses in     A cross departmental review was undertaken led by finance. A report          Executive Director
                the management    was taken to Cabinet in December detailing the creation of a Section 106     of Environment
                processes for     Task Force comprising Finance, Planning and Legal officers along with
                the control of    representatives from other relevant services. New procedures have been
                Section 106       implemented and a follow on report was taken to Cabinet in January
                contributions.    2010.

                                  At the Audit Board 8 February the Chair requested that a report is brought
                                  to next available Audit Board.

      We propose over the coming year to take steps to address the above matter to further enhance our governance
      arrangements. We are satisfied that these steps will address the need for improvements that were identified in our
      review of effectiveness and will monitor their implementation and operation as part of our next annual review.

                                      Signed




                                      Sir Robin Wales
                                      Mayor




                                      Joe Duckworth
                                      Chief Executive




      Statement of Accounts 2009/10                                                                                            27
                                  INCOME AND EXPENDITURE ACCOUNT

The Income and Expenditure Account summarises the resources that have been generated and consumed in
providing services and managing the Council. It includes all day-to-day expenses and related income on an
accruals basis, as well as transactions measuring the value of Fixed Assets actually consumed and the real
projected value of retirement benefits earned by employees during the year.

 Restated
                                                                2009/10     2009/10       2009/10     Note
 2008/09         INCOME AND EXPENDITURE ACCOUNT
    Net                                                          Gross        Gross        Net
  Spend                                                         Spend        Income       Spend
    £000s    SERVICES                                             £000s          £000s      £000s
    21,374   Central Services to the Public                       99,430       (81,405)    18,025
     4,726   Corporate and Democratic Core                        74,774        (1,759)    73,015
       197   Court and Probation Services                            205              0        205
    69,777   Cultural, Environmental and Planning Services       109,075       (23,177)    85,898
  216,591    Education Services                                  726,451     (610,840)    115,611
    12,324   Highways, Roads and Transport Services               30,714       (15,404)    15,310
    42,583   Local Authority Housing (HRA)                       138,771       (99,134)    39,637
    24,458   Housing Services                                    415,951     (391,484)     24,467
    79,614   Social Services                                     116,635       (35,590)    81,045
     1,736   Non Distributed Costs                                 2,654              0      2,654
  473,380    NET COST OF SERVICES                              1,714,660   (1,258,793)    455,867
         0   Gains or Loss on disposal of Fixed Assets
        38   Net (Surplus)/Deficit on Trading Accounts                                      (1,109)
    50,671   Interest Payable and Similar Charges                                           54,029    28b
       108   Contribution to Housing Pooled Capital Receipts                                      0
       676   Levies                                                                             743    7
    21,980   Pension Interest Cost / Expected Asset Returns                                 25,983    11
  (12,012)   Interest and Investment Income                                                 (6,449)   28b
             (Gains) and Losses On Repurchase/Early
         0   Settlement of Debt                                                                  0
   534,841   NET OPERATING EXPENDITURE                                                     529,064
             AMOUNT TO BE MET FROM GRANT AND
             LOCAL TAXES
  (70,160)   Demand On The Collection Fund                                                 (70,574)
             Contribution To Collection Fund Deficit                                            433
  (32,264)   Revenue Support Grant                                                         (40,860)
  (32,399)   Area Based Grant                                                              (36,937)
     (387)   Local Authority Business Growth Incentives                                       (355)
             (LABGI)
             Distribution From National Non Domestic Rates
 (178,722)   Pool (NNDR)                                                                  (177,028)
   220,909   NET(SURPLUS)/DEFICIT FOR THE YEAR                                              203,743



Demand on the Collection Fund Account restated for 2008/09 to include Newham’s share of Deficits
during 2008/09.




Statement of Accounts 2009/10                                                                            28
STATEMENT OF MOVEMENT ON THE GENERAL FUND BALANCE

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 basis, the main differences being:
  Capital Investment is accounted for as it is financed, rather than when the Fixed Assets are consumed.
  The payment of a share of housing capital receipts (pooling) to government scores as a loss in the Income
     and Expenditure Account, but is met from actual capital receipts 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 it raised for the year, taking
into account the use of reserves built up in the past and contribution to reserves earmarked for future expenditure.
The reconciliation statement below summarises the differences between the Income and Expenditure Account and
the General Fund Balance.

  Restated                                   STATEMENT OF MOVEMENT ON                                      2009/10
  2008/09                                    THE GENERAL FUND BALANCE                                       £000s
   £000s
   220,909    (Surplus)/Deficit for the year on the Income and Expenditure Account                          203,743
              Net additional amount required by statute and non-statutory proper practices to be debited
  (218,983)   /(credited) to the General Fund Balance for the year                                         (213,201)
      1,926   (Increase)/ Decrease in General Fund Balance for the Year                                      (9,458)
   (17,518)   General Fund Balance brought forward                                                          (15,592)
   (15,592)   General Fund Balance carried forward                                                          (25,050)
          0   Amount of General Fund Balance held by Governors under schemes to finance schools                    0
   (15,592)   Amount of General Fund Balance generally available for new expenditure                        (25,050)
   (15,592)                                                                                                 (25,050)




Statement of Accounts 2009/10                                                                                          29
NOTE OF RECONCILING ITEMS FOR THE STATEMENT OF MOVEMENT ON THE GENERAL FUND
BALANCE:

Restated                                                                                                      2009/10     2009/10
2008/09

  £000s                                                                                                       £000s        £000s
              Amounts included in the Income and Expenditure Account but required by statute to be
              excluded when determining the Movement on the General Fund Balance for the year
  (214,300)   Depreciation / Impairment of fixed assets                                                       (181,292)
   (19,349)   Excess of depreciation charged to HRA services over the Major Repairs Allowance element of       (15,799)
              Housing Subsidy.
    (7,278)   Write downs of Revenue Expenditure Funded from Capital under Statute                              (8,790)
    10,940    Government Grant Deferred amortisation.                                                           10,193
              Differences between amounts debited/credited to the Income and Expenditure Account and
              amounts payable/receivable to be recognised under statutory provisions relating to soft loans
      (161)   and premiums and discounts on the early repayment of debt                                           (181)
      (299)   Financial Instruments - Impairment (Interest)                                                       (183)
  (230,447)                                                                                                               (196,052)
              Amounts not included in the Income and Expenditure Account but required to be
              included by statute when determining the Movement on the General Fund Balance for
              the year
     9,689    Statutory provision for repayment of debt                                                          18,748
              Transfer from the Capital Receipts Reserve equal to the amount payable into the Housing
      (108)   Capital Receipts Pool
              Reversal of financing of equal pay provision
              Employer’s contributions payable to the Newham Pension Fund and Retirement Benefits
    (8,459)   payable directly to pensioners                                                                    (9,236)
      1,122                                                                                                                  9,512
              Transfers to or from the General Fund Balance that are required to be taken into account
              when determining the Movement on the General Fund Balance for the year
      (991)   Housing Revenue Account Balances                                                                    (628)
     10,043   Net transfer to or from earmarked reserves                                                       (26,033)
      1,290   Collection Fund Adjustment account – Prior Year                                                         0
     10,342                                                                                                                (26,661)
  (218,983)   Net additional amount required to be credited to the General Fund Balance for the year                      (213,201)

   Demand on the Collection Fund Account restated for 2008/09 to include Newham’s share of Deficits during
                                                 2008/09




Statement of Accounts 2009/10                                                                                                  30
                                                                 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                                  Restated
                                                                              STATEMENT OF TOTAL RECOGNISED                                                2009/10
                                  2008/09
                                                                                    GAINS AND LOSSES
                                   £000s                                                                                                                   £000s
                                   220,909      (Surplus) / Deficit for the year on the Income and Expenditure Account                                     203,743
                                   124,485      (Surplus) / Deficit arising on revaluation of Fixed Assets                                                 (33,200)
                                    (1,744)     (Surplus)/Deficit arising on revaluation of available-for-sale financial assets and Financial               (1,817)
                                                Instruments
                                    (43,396)    Actuarial (gains)/losses on Pension Fund assets and liabilities                                            353,904
                                       2,614    Collection Fund                                                                                               1,956
                                                Any other gains and losses required to be included in the STRGL                                             (2,580)
                                     302,868    Total recognised gains for the year                                                                        522,006

Note: Reconciliation of items for the Group Statement of Total Recognised Gains and Losses

This statement brings together all the gains and losses of the Council for the year and shows the aggregate increase in the value of assets and liability.
                                                                                                                                               Other Capital              Movement
  Restated                                                 Movement      FIAA and                                                              Expenditure
                                              Balance                                   Unrealised                                                                         between
   Balance                                                     In       Available for                 Revaluation    Disposal       Transfer                                             Total
                                               Sheet                                   Gains/Losses                                                                       Capital and
    Sheet                                                    Year           sale
                                                                                                                                                                           Revenue
   2008/09                                         2009/10        2009/10
   £000s                                           £000s          £000s          £000s           £000s           £000s          £000s           £000s        £000s          £000s        £000s

      53,533     Revaluation Reserve                  149,454      (95,921)                                        (99,794)          3,873                                               (95,921)
     975,607     Capital Adjustment Account           741,583      234,024                                                             484      116,397        (91,885)       209,028    234,024
       9,497     Usable Capital Receipts                7,573         1,924                                                        (2,505)                        4,430                     1,925
      11,853     Major Repairs Reserve                  8,143         3,710                                                                      15,799          17,051       (29,140)      3,710
                 Financial Instrument Adj.                                                                                                                                         364
    (13,226)                                          (11,773)      (1,453)         (1,817)                                                                                               (1,453)
                 Account
                 Available For Sale Financial
             0
                 Instruments Reserve
   (393,369)     Pension Reserve                     (756,509)      363,140                         353,904                                                                     9,236    363,140
       (432)     Collection Fund Account               (2,388)        1,956                            1,956                                                                               1,956
      75,963     Revenue Reserve                        61,337       14,626                          (2,580)                                    (15,799)        18,748         14,256     14,625

    719,426          Total                197,420      522,006       (1,817)     353,280       (99,794)        1,852                            116,397        (51,656)       203,744    522,006
. Demand on the Collection Fund Account restated for 2008/09 to include Newham’s share of Deficits during 2008/09



Statement of Accounts 2009/10                                                                                                                                                                    31
                                              BALANCE SHEET
Restated                                           st
                       BALANCE SHEET AT 31 MARCH                               2009/10        Notes
2008/09
    £000s                                                             £000s         £000s
             FIXED ASSETS
     1,207   Intangible Fixed Assets                                  1,209          1,209
             Tangible Fixed Assets
             Operational Assets
1,007,280    Council Dwellings                                     1,114,428
  750,595    Other Land and Buildings                                826,896
  113,252    Infrastructure Assets                                   128,465
   21,982    Community Assets                                         24,110
   23,093    Equipment, Vehicles etc                                  25,156     2,119,055
             Non Operational Assets
  111,333    Industrial and Commercial                              107,979
   73,679    Surplus Properties                                      54,338
       21    Assets under Construction                                5,662       167,979
2,102,442    Net Fixed Assets                                                    2,288,243     16
   79,396    Long Term Investments                                                 136,256     28a
  132,364    Long Term Debtors and Prepayments                                       (658)
2,314,202    Total Long Term Assets                                              2,423,841
             CURRENT ASSETS
     1,403   Stocks and Work in Progress                                 744                   32
  133,757    Debtors and Prepayments                                145,566                    30
  (42,476)   Less Provisions                                        (46,841)                   30
  142,841    Investments                                            160,831                    28a
    18,546   Cash and Bank                                            30,150      290,450

             CURRENT LIABILITIES
 (279,190)   Borrowing Repayable on Demand or Within 12 months     (242,112)                   28a
 (119,625)   Creditors and Receipts in Advance                     (206,069)                   31
  (21,919)   Bank Overdraft                                         (39,440)     (487,621)
(166,663)    Net Current Assets                                                  (197,171)
2,147,539    Total Assets less Current Liabilities                               2,226,670
             OTHER LIABILITIES
 (738,021)   Borrowing Repayable Within a Period in Excess of 12   (926,679)                   28a
             months
 (283,880)   Government Grants Deferred                            (332,329)
     (467)   Deferred Capital Receipts                                 (467)
  (12,376)   Provisions                                             (13,266)                   33
 (393,369)   Liability Related to Defined Benefit Pension Scheme   (756,509)   (2,029,250)     39
  719,426    Total Assets less Total Liabilities                                   197,420
             Financed by:
   975,607   Capital Adjustment Account                                            741,583     24
  (13,226)   Financial Instrument Adjustment Account                              (11,773)
    53,533   Revaluation Reserve                                                   149,454     25
     9,497   Usable Capital Receipts                                                  7,573
    11,853   Major Repairs Reserve                                                    8,143
 (393,369)   Pension Reserve                                                     (756,509)     39
    75,963   Revenue Reserves                                                       61,337      2
     (432)   Collection Fund                                                        (2,388)
   719,426                                                                         197,420




Statement of Accounts 2009/10                                                                   32
                                            CASH FLOW STATEMENT
          Newham                                                            Newham
          2008/09                                                           2009/10     Notes

              £000s     Revenue Activities                                     £000s
                        Cash Outflows
            449,427     Cash Paid to and on behalf of Employees              669,609
            457,752     Other Operating Cash Payments                        408,122
            129,947     Housing Benefit Paid Out                             157,265
             73,708     Non-Domestic Rates Paid to National Pool              77,343
             22,564     Precepts Paid                                         23,191
                        Cash Inflows
            (41,783)    Rents (after rebates)                                (40,664)
            (62,513)    Council Tax Receipts                                 (62,635)
            (71,875)    Non Domestic Rate Receipts - from ratepayers         (76,462)
           (180,435)    Non Domestic Rate Receipts - from pool              (174,464)
            (32,264)    Revenue Support Grant                                (40,860)
           (273,051)    Benefits Subsidy                                    (305,510)
           (261,356)    Dedicated Schools Grant                             (255,551)
           (143,324)    Other Government Grants                             (178,268)
           (113,235)    Cash Received from Goods and Services               (124,410)
            (14,197)    Other Operating Cash Receipts                        (16,069)
            (60,635)    Cash Inflow from Revenue Activities                             60,636
                        Dividends from Joint Ventures
                        Cash Inflows
                    0   Dividends Received                                         0
                        Returns on Investments and Servicing of Finance
                        Cash Outflows
              51,807    Interest Paid                                         24,843
              51,807                                                                    24,843
                        Cash Inflows
            (11,127)    Interest Received                                     (6,272)
            (11,127)                                                                    (6,272)
                        Capital Activities
                        Cash Outflows
            191,925     Purchase of Fixed Assets                             190,910
                  0     Purchase of Long Term Investments                          0
                108     Contribution to Housing Pooled Receipts                    0
              1,279     Payment of Improvement Grants                          1,451
            193,312                                                                     192,361
                        Cash Inflows
             (4,986)    Sales of Fixed Assets                                 (2,365)
           (100,698)    Capital Grants received                              (79,533)
                  (8)   Other Capital Cash Receipts                          (49,273)
           (105,692)                                                                    (131,171)
              67,665    Net Cash (Inflow) before Financing                                140,388
                        Management of Liquid Resources
              84,362    Net increase/(decrease) in Short Term Deposits        17,990
                   0    Net Increase/(decrease) in Other Liquid Resources      (881)
                        Financing
                        Cash Outflows
            161,726     Repayments of Amounts Borrowed                       101,420
                        Cash Inflows
           (143,256)    New Loans Raised                                    (195,000)
           (179,500)    New Short Term Loans                                 (58,000)
           (322,756)                                                                    (253,000)
             (9,003)    (Increase)/Decrease in Cash                                         5,917




Statement of Accounts 2009/10                                                                       33
                                           NOTES TO THE ACCOUNTS


 Note 1. Statement of Accounting Policies


 1.1. General
 The accounts have been prepared in accordance with the Code of Practice for Local Authority Accounting in
 Great Britain: Statement of Recommended Practice (SORP) issued by the Chartered Institute of Public Finance
 and Accountancy (CIPFA).

 This is to ensure that the Statement of Accounts presents fairly the financial position of the Council, and to
 ensure it is compliant with relevant statutory accounting requirements issued by the Accounting Standards
                                                               st
 Board that are applicable to the Council for the year ended 31 March 2010.


 1.2. Changes in Accounting Policies

 2007/08 was the first year that the information on financial instruments was required to be presented in line with
 FRS25 (presentation requirements), FRS26 (covers the measurement requirement for financial instruments) and
 FRS29 (replaces the disclosure requirements of FRS25). These require additional disclosure notes in the
 accounts on the fair value of loans, investments and debtors and creditors. New reserves called the Financial
 Instrument Adjustment Account and the Available for Sale Instrument Reserve were created to account for the
 changes in accounting for financial instruments (see reserves note below). Full details of financial instruments
 held by the Council are within notes 28-29 to the Accounts.

 Both FRS26 and the SORP require the Council to make their best estimate of any impairment of financial assets.
 The Council has chosen to use the appropriate level of impairment for Glitnir and Landsbanki as recommended
 by CIPFA in their LAAP Bulletin published in September 2009. These are described in detail in Note 29b.

 The Council can choose to use the “asset life method” of Minimum Revenue Provision statutory regulations to
 charge MRP on ‘large and novel’ projects when assets become operational and this can be taken to mean
 when the assets are occupied



1.3. Fixed Assets
All Fixed Assets are shown in the Balance Sheet at a value consistent with the recommendations of CIPFA
contained within the Capital Accounting Provisions of SORP, and in accordance with the Statement of Asset
Valuation Principles and Guidance Notes issued by the Royal Institute of Chartered Surveyors. Fixed Assets are
classified into the groupings required by SORP.
Fixed Asset Values
        Land and Operational Properties are included in the Balance Sheet at the lower of net current
         replacement cost and net realisable value. This has been represented by the open market value in
         existing use or, where no market exists for a particular type of property, the depreciated replacement
         cost. Property assets with a value of less than £25,000 and less than 50 square metres in area are not
         shown in the balance sheet. Expenditure below £10,000 which results in an asset which has a useful life
         of less than two years need not be capitalised and so is charged to the Income and Expenditure
         Account.
        Non operational properties, including those surpluses to requirements and industrial/commercial property
         are shown at open market value.
        Vehicles, equipment, intangible assets are shown at historic cost less depreciation.
        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 which include parks and
         museum artefacts) are shown at historic cost.
        Infrastructure is currently shown on the balance sheet at historic cost less accumulated depreciation
         However, highways transferred to the Council by the former London Docklands Development
         Corporation (LDDC), were valued by multiplying the annual road maintenance allowance used in the
         1998/99 Revenue Support Grant calculations by the expected life of the highways of 40 years. The
         resultant value has been included as Fixed Assets within the Balance Sheet. This has subsequently
         been depreciated by 1/40th each year.

 Statement of Accounts 2009/10                                                                                  34
             Assets under Construction are shown at cost until they come into operation, at which point their
              treatment will follow those of operational properties.
             For Council dwellings, the market value has been adjusted to take account of discounts available to
              tenants who may exercise their statutory “right to buy”.


Revaluations, Impairments, Enhancements and Disposals
             The Council has a five year rolling programme of revaluation of assets to ensure that all assets are
              revalued at least once during that time.
             Where an impairment loss (a clear reduction in economic value) on a fixed asset occurs the loss is
              recognised in the Statement of Movement in the General Fund Balance. Other impairments (reflecting a
              general fall in prices) are recognised in the Revaluation Reserve Account.
             All Building Assets are considered for impairment. Where cost expended on an individual asset in the
              year is less than 5% of its book value, that cost is classed as impairment and charged to revenue. Costs
              in excess of this limit are considered individually, as to whether the work completed is an enhancement
              (adds materially to the value of the asset) and if not it is treated as impairment. Any enhancement is
              added to the asset value and reflected in the Balance Sheet.
             Capital expenditure on the enhancement of housing stock, where it is uncertain that the enhancement
              materially adds to the asset’s value, is then written off to the Revaluation Reserve (RR) pending a
              revaluation of the assets whereupon any change in value will also be shown in the Revaluation Reserve.
             Income from the disposal of assets is also accounted for on an accruals basis. The gain or loss on
              disposal is recognised in the Income and Expenditure Account by crediting the disposal proceeds and
              debiting with the carrying amount of the Fixed Asset. The gain or loss on sale included in the Income
              and Expenditure Account is reversed out in the Statement of Movement on the General Fund Balance to
              avoid any impact on the Council's usable resources.
             Assets acquired under Deferred Purchase arrangements are included in the balance sheet under Fixed
              Assets, and are treated in the above manner. The outstanding un-discharged capital value of these
              financing arrangements is shown in the balance sheet under Deferred Liabilities.
             Leases: Assets acquired under operating leases are not shown in the balance sheet. Lease rentals on
              these assets are charged directly to service revenue accounts and are outside the arrangements for
              capital charges to revenue - see Charges to Revenue (Section 1.5) Assets held under a finance lease
              are included within the balance sheet and valued and depreciated in accordance with section 1.4

1.4. Depreciation
Depreciation is provided for on all Fixed Assets (except for investment properties) with a finite useful life
(determined at the time of acquisition or revaluation) on the following bases. Revaluation gains also depreciated
with an amount equal to the difference between current value depreciation charged on assets and the depreciation
that would have been chargeable based on their historical cost being transferred each year from the revaluation
reserve to the Capital Adjustment Account. Depreciation is used to spread the value of an asset over its useful life.
           Vehicles, equipment and intangible assets are written down over their useful lives, as estimated at the time
            of purchase. For assets acquired by finance lease this is taken as the period of the lease agreement.
           Infrastructure assets are written down over 40 years unless it is clear that any particular such asset has a
            shorter operational life.
           Community assets are not depreciated, as they are held in perpetuity.
           Land and non-operational investment property is not depreciated.
           Operational property is depreciated on a straight line basis over the individual assets remaining life. The
            District Valuer re-assesses the remaining life each time the asset is re-valued
           Assets under construction are not depreciated until they are brought into use.
           Depreciation on vehicles, equipment and infrastructure is calculated using the straight-line method. It is
            based on the asset value at the commencement of the year, thus newly acquired assets are not
            depreciated until the following year.




  Statement of Accounts 2009/10                                                                                      35
1.5. Charges to Revenue
        The amount charged to services for depreciation is reversed out in the Statement of Movement on the
         General Fund Balance by way of an adjusting transaction within the Capital Adjustment Account. This is
         replaced by the repayment of external loans - minimum revenue provision (MRP).
        MRP on schemes financed from unsupported borrowing is based on annual depreciation or the useful
         life of the asset. In theory this means debt has been repaid when a replacement asset is required at a
         later date, therefore the purchase of a replacement asset with a similar value will not have a material
         financial impact. MRP chargeable on ‘large and novel’ projects are applied when assets become
         operational and the calculation is based on the asset life method.
        External interest payable on the Council’s debt is debited to the Income and Expenditure Account.
        However, in certain cases the Council continues to receive reimbursement for external interest and
         repayments of external loans (debt charges). This reimbursement is credited to the appropriate service
         revenue accounts, thus the relevant proportions of external interest and debt repayment are also
         charged to those revenue accounts

1.6. Financial Instruments - Loans and Investments
The Council has borrowed monies to fund the Council's Capital Programme. Loans are shown at amortised cost
on the Balance Sheet in accordance with financial reporting standards.

Long-term investments are intended to be held for use on a continuing basis in the activities of the authority.
Investments that do not meet this criterion are classified as current assets. The Authority’s investments fall into
this latter category and are therefore shown within current assets. Investments are split between Money Market
Funds and Cash deposits. One external cash manager is employed.

Impairment – There was a slight change £31k in the impairment estimate following publication of updated
guidance from CIPFA in September 2009 which has been reflected in the opening balance of these accounts. The
Council has taken advantage of the Capital Finance Regulations to defer the impact of the impairment on the
General Fund by transferring the sum to the Financial Instruments Adjustment Account. The interest receivable
on these investments since their inception has been borne in full by the General Fund.


The Financial assets at fair value through the Income and Expenditure account includes forward dealt investments.
In March 2009 a £15million investment was agreed to be settled in September 2009 for a period of one year; in
October 2007 three forward deals were agreed to be settled in October 2009, 2010 and 2011 for maturity in
October 2012; these three forward deals were intended to cover the cash flow requirements for the potential
interest payment of a loan commitment. The gain represents the value compared with prevailing market rates as
at the balance sheet date.

1.7. Deferred Sums
Revenue Expenditure Funded from Capital under Statute (Deferred Charges)
Deferred charges represent expenditure which may properly be capitalised but which does not represe nt tangible
fixed assets, such as expenditure on Renovation Grants and other forms of assistance to third parties. This is
written down to service revenue accounts over an appropriate period (usually one year), after deduction of any
capital grant payable in respect of the deferred charge. There is a corresponding credit to the Statement of
Movement on the General Fund balance in order to ensure no overall impact upon Council Tax and grant levels.
Deferred Capital Receipts
This is the sum due in future years from persons to whom the Council has made a loan in respect of the purchase
of Council houses (mainly under Right to Buy). It is written down each year by the sum repaid, this sum being
shown as a capital receipt, and increased by the value of new loans made. There is a corresponding sum within
the value of Long Term Debtors.

1.8 Investments
Long-term investments are investments that are intended to be held for use on a continuing basis in the activities
of the authority. Investments that do not meet this criterion are classified as current assets. Authority’s
investments fall into this latter category and are therefore shown within current assets. The investment of surplus
cash by the authority is governed by CLG Investment Guidance.
Before the start of each financial year, the Annual Investment Strategy is approved by Council setting out limits on
each category of investment and investments are broadly split into two categories: Specified and Non -Specified
investments. Specified investments include investments of less than one year in highly credit rated institutions.


 Statement of Accounts 2009/10                                                                                   36
Non-specified investments cover all other categories of investment and there use must be supported in detail in
the Investment Strategy.
Minimum Revenue Provision
Under the Local Authorities (Capital Finance and Accounting) Regulations 2004 and Statutory Instrument 2008 no
414 s4 states that a local authority shall determine for the current financial year and amount of MRP that it
considers to be prudent. The major proportion of the MRP for 2009/10 relate to historic debt liability that is
charged at the rate of 4% in accordance with option 1 of the Guidance. Certain expenditure reflected within the
debt liability is under delegated powers subject to MRP under option 3 of the Guidance.

1.9. Long Term Debtors
Long term debtors shown in the accounts relate to loans made to house purchasers and to Housing Associations.

1.10. Basis of Debt Redemption
In accordance with statutory requirements, certain sums must be set aside for the redemption of debt.

Minimum Revenue Provision
Under the Local Authorities (Capital Finance and Accounting) Regulations 2004, the Council must provide each
year from its revenue account, a sum equivalent to four per cent of its non-Housing Capital Financing
Requirement. This sum is charged within the Statement of Movement on the General Fund balance (and not to
individual service revenue accounts).
Statutory Instrument 2008/414 requires full Council to approve the MRP Policy Statement in advance of each
financial year.

The major proportion of the MRP for 2009/10 will relate to the more historic debt liability that will continue to be
charged at the rate of 4%. Certain expenditure reflected with the debt liability at 31st March 2008 will under
delegated powers be subject to MRP under option 3 – the Asset Life method. MRP may be chargeable on ‘large
and novel’ projects when assets become operational and the calculation will be based on the asset life method.
Option 4 Depreciation will be charged over a period which is reasonably commensurate with the estimated useful
life applicable to the nature of expenditure, using the equal annual instalment method

Capital Receipts
Capital receipts arise from the disposal of fixed assets and the repayment of mortgages. The Local Authorities
(Capital Finance and Accounting) Regulations 2004 introduced pooling arrangements whereby 75% of receipts
from Housing Right to Buy (RTB) receipts and 50% of housing non-RTB receipts must be paid to the Communities
and Local Government (CLG). However, a housing non-RTB receipt is not subject to the pooling arrangements if it
will be used to fund regeneration or future affordable housing schemes. The remainder of the receipt, the usable
part, is available for use in financing capital expenditure on fixed assets or to voluntarily repay debt. Whilst income
from the disposal of assets is accounted for on an accruals basis, the reserved receipts calculation only applies to
the cash actually received.


1.11. Debt Rescheduling
There was no debt rescheduling in 2009/10. The value of premia paid and discounts received in previous financial
years are charged to the Income and Expenditure Account 2009/10 in line with 2009 SORP requirements.
However the impact of paying the premia and receiving the discounts is allowed to be deferred in line with
legislation (Statutory Instrument 2007 Number 573, as amended by SI 2008 Number 414). This allows premia to
be deferred over the longer of the period of the replacement loans or the remaining term of the r epaid loan. To
follow the guidance in SI 2007 Number 573, discounts received were deferred over the shorter of the outstanding
term on the replaced loan or 10 years. .
Financial Instrument Reserves
The Financial Instrument Adjustment Account (FIAA) is required for regulatory adjustments made to the accounts.
These adjustments have been introduced by the Government to mitigate some of financial effects arising from the
accounting changes applying to financial liabilities. The current FIAA balance holds the balance on historic premia
and discounts arising from loan rescheduling, that was initially charged in full to the Income and Expenditure
Account on 1st April 2007 to comply with the SORP. This charge was then reversed through the General Fund /
HRA balance into the FIAA before being charged or credited to the General Fund / Housing Revenue Account in
future years according to historic practices.
Further details of the Council’s Reserves and Provisions can be found in later sections of the Statement of
Accounts.

  Statement of Accounts 2009/10                                                                                     37
1.12. Grants
Grants receivable in respect of revenue expenditure are accounted for on an accruals basis, and credited to the
revenue account to which the relevant expenditure has been charged. Where claims have not been settled, an
estimate of the amount due is shown in the accounts. Such grants include those payable in respect of certain debt
charges - see note 1.5 above.
Grants in respect of capital expenditure are also accounted for on an accruals basis - those in respect of Deferred
Expenditure (Charges) are written off to that expenditure, with the remaining expenditure then written down to
revenue - see Note 1.7 above. Those payable in respect of expenditure on fixed assets are shown in the Balance
Sheet as Grants Deferred, and are written down (credited) to the Statement of Movement on the General Fund
balance in line with the depreciation of the individual asset(s) concerned.

1.13. Provisions and Reserves
Provisions:
Provisions are required for any liabilities of uncertain timing or amount that have been incurred. Provisions need to
be recognised when;
The Council has a present obligation as a result of a past event, it is probable that a transfer of economic benefits
will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
The Council has established a number of specific provisions which includes an insurance provision, to meet the
estimated liability of outstanding insurance claims against the Council. Provisions totalling £7.1 million have been
made in 2007/08 and 2008/09 for estimated re-organisation costs that the Council knew it will incur up to early
2009/10. The medium term budget strategy has provided a total of £12 million towards costs in financial years up
to 2010/11, therefore funding for the balance of £4.9 million is within general reserves.

The adequacy of existing provisions and the need for new ones is reviewed annually - contributions to provisions
are charged to the relevant service revenue account, and are part of operating expenditure shown within the
Income and Expenditure Account.

Reserves:
Amounts set aside for specific future purposes or for general purposes are known as reserves. Movements in
reserves (where such movements arise from revenue activities) are shown within the Statement of Movement on
the General Fund balance, and are therefore excluded from the cost of individual services. The Council has both
general and earmarked reserves. A short description of these reserves follows:

General Fund - this reserve has arisen due to an overall surplus on revenue activities over a number of years. It is
not earmarked for any specific purpose but is available to support future expenditure
Housing Revenue Income and Expenditure Account - this reserve has arisen due to an overall surplus within
the HRA. It is ring-fenced by statute and may only be used for HRA purposes.
Earmarked Revenue Reserves - these reserves have been set up for a specific purpose

Capital - to meet the cost of future planned expenditure including the “Investment Strategy” and a number of
earmarked schemes.

Schools - this reserve represents the accumulated surpluses and deficits of schools. It is ring-fenced and may only
be used by the schools themselves.
Other – there a number of other specific reserves which include Housing Repairs, Trading Surpluses and future
service revenue spending. Refer to the Statement of Total Movement in Reserves summary. The Council reviews
the level of Earmarked Reserves, and their intended purpose, annually as part of its Medium Term Financial
Investment Strategy.

Capital Accounting Reserves
The Revaluation Reserve Account (RR) represents principally the balance of surpluses or deficits arising on the
periodic revaluation of assets. Surpluses or deficits arising on revaluation of fixed assets are included in the
Statement of Total Recognised Gains and Losses (STRGL).
The Capital Adjustment Account (CAA) represents the amounts set aside from revenue resources or capital
receipts to finance expenditure on fixed assets or for the repayment of external loans.

Financial Instrument Reserves
The Financial Instrument Adjustment Account (FIAA) is required for regulatory adjustments made to the accounts.
These adjustments have been introduced by the Government to mitigate some of financial effects arising from the
  Statement of Accounts 2009/10                                                                              38
accounting changes applying to financial liabilities. The current FIAA balance holds the balance on historic premia
and discounts arising from loan rescheduling, that was initially charged in full to the Income and Expenditure
Account on 1st April 2007 to comply with the SORP. This charge was then reversed through the General Fund /
HRA balance into the FIAA before being charged or credited to the General Fund / Housing Revenue Account in
future years according to historic practices.
Further details of the Council’s Reserves and Provisions can be found in the Statement of Accounts.

1.14. Debtors and Creditors
The Council’s accounts are maintained on an accruals basis, sums due to or from the Council are included in the
accounts whether or not the cash has actually been received or paid. An exception to this relates to electricity and
other similar periodic supplies, where apportionment is not made between years. This policy is applied each year to
ensure consistency, and the effect on the accounts is not considered to be material. Regeneration scheme
balances are included as debtors or creditors as relevant.
All debtors and creditors relate to individual services and supplies, thus there are no significant estimates in the
sums shown in the accounts.
The Council maintains a provision for bad and doubtful debts which is used to write off known uncollectable debts
and is adjusted each year to reflect the level of doubtful debts that has been estimated.

1.15. Stocks and Work in Progress
The stock in the Council’s stores is valued at the lower of historic cost or net realisable value. Work in progress is
valued based on the cost of work completed by the end of the year.

1.16. Cost of Central Support Services
The Council operates a Support Service Framework through which the cost of central support services is allocated
to service revenue accounts using the most appropriate basis e.g. time spent by individual staff, area of office
space occupied, number of staff on the payroll, etc. Allocations are made to all revenue accounts, including
trading accounts and the Housing Revenue Income and Expenditure Account.

1.17. Pensions - Retirement Benefits
Employees of the Council can participate in two separate pension schemes:
The Teachers' Pension Scheme, administered by the Department for Children, Schools and Families (DCFS)
The Local Government Pension Scheme, administered by the Council.
Both schemes provided defined benefits to members (lump sums and pensions), earned as employees worked for
the Council.


Teacher's Pension Scheme

The arrangements for the Teachers' scheme mean that liabilities for these benefits cannot be identified to the
Council. The scheme is therefore accounted for as if it were a defined contributions scheme - no liability for future
payments of benefits is recognised in the Balance Sheet and revenue accounts are charged with the employer's
contributions payable to the DCFS in the year.

The Local Government Pension Scheme

The Local Government Scheme is accounted for as a defined benefits scheme:
The liabilities of the London Borough of Newham Pension Scheme attributable to the Council are included in the
Balance Sheet on an actuarial basis using the projected unit method - i.e. an assessment of the future payments
that will be made in relation to retirement benefits earned to date by employees, based on assumptions about
mortality rates, employee turnover rates, and estimates of projected earnings for current employees.

Liabilities are discounted to their value at current prices, using a discount rate to be advised. A discount rate
based on the current rate of return on a high-quality corporate bond of equivalent currency and term to scheme
liabilities is used.

The assets of the London Borough of Newham Pension Fund attributable to the Council are included in the
Balance Sheet at their fair value:

       quoted securities - bid value

  Statement of Accounts 2009/10                                                                                    39
       unquoted securities - professional estimate
       unitised securities - bid value
       property - bid value

The change in the net pension liability is analysed into seven components:

       Current service cost - the increase in liabilities as a result of years of service earned this year, allocated
        to the revenue accounts of services for whom the employees worked.
       Past service cost - the increase in liabilities arising from current year decisions whose effect relates to
        years of service earned in earlier years. This is charged to the Net Cost of Services as part of Non
        Distributed Costs.
       Interest cost - the expected increase in the present value of liabilities during the year as the move one-
        year closer to being paid. This is charged to Net Operating Expenditure.
       Expected return on assets - the annual investment return on the fund assets attributable to the Council,
        based on an average of the expected long-term return. This is credited to Net Operating Expenditure.
       Gains/losses on settlements and curtailments - the result of actions to relieve the Council of liabilities
        or events that reduce the expected future service or accrual of benefits of employees. These are charged
        to the Net Cost of Services as part of Non Distributed Costs.
       Actuarial gains and losses - changes in the net pensions liability that arise because events have not
        coincided with assumptions. These are not charged to revenue.
       Contributions paid to the London Borough of Newham Pension Fund. This is cash paid as employer's
        contributions to the Pension Fund.

Statutory provisions limit the Council raising council tax to cover the amounts payable by the Council to the
Pension Fund in the year. In the Statement of Movement on the General Fund balance there is an appropriation to
the Pensions Reserve after Net Operating Expenditure to remove the notional debits and credits for retirement
benefits and replace them with debits for the cash paid to the Pension Fund and any amounts payable to the fund
but unpaid at the year-end.

Discretionary Benefits

The Council also has restricted powers to make discretionary awards of retirement benefits in the event of early
retirements. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers)
are accrued in the year of the decision to make the award and accounted for using the same policies as are
applied to the Local Government Pension Scheme.

1.18. Prior Period Adjustments

The 2008/09 collection fund and balance sheet have been restated to reflect the changes to how the Collection
Fund is accounted for and to bring PFI contract assets on balance sheet.

1.19. Redundancy Costs
Payments made under the Council’s Redundancy Scheme, arising from budget reductions are charged to the
revenue account of the “employing” service, and are therefore included in the cost of services, and in operating
expenditure. Corporate provision has been made for redundancies as part of the Star Chamber reviews.
Provisions made for projected costs are shown against the appropriate service area.
1.20. Newham Homes
Newham Homes is a wholly owned subsidiary of the Council. It is an Arms Length Management Organ isation
(ALMO) with the main aim of delivering housing to an improved standard within Newham.

1.21. Joint Venture
Caboodle Solutions Ltd. was a joint venture limited company owned by London Borough of Newham and Steria
Holdings Ltd. and had been incorporated within the Council's group accounts as a joint venture up to March 2009.
Caboodle has discontinued operations and the Council sold its share in the joint venture during 2009/10.

1.22. Value Added Tax
All transactions are shown net of any Value Added Tax (VAT), whether capital or revenue, unless for some specific
reason it is not recoverable. As is the case for all Local Authorities, the Council is able to recover a major part of
VAT incurred from H.M. Revenue and Customs. Any balance due to the Council is included within the debtors
figure shown in the Consolidated Balance Sheet.


  Statement of Accounts 2009/10                                                                                    40
1.23 Private Finance Initiative (PFI) Schemes
The Council has entered into PFI contracts to oversee the building of four schools and housing initiatives in
Canning Town and Forest Gate.

Under IFRS, all previous PFI accounting entries shall be reversed, and entries required under IFRS put through
the accounts.

Control tests (a) and (b) below have been applied and met. In following section 4.3.2.1 of IFRS code (PFI
accounting arrangements), applies to PFI arrangements where: (a) the local authority controls or regulates what
services the operator must provide with the asset, to whom it must provide them, and at what price; and where (b)
the local authority controls – through ownership, beneficial entitlement or otherwise – any significant residual
interest in the asset at the end of the term of the arrangement.

IFRIC12 principles require the following: (a) recognition of the fixed asset at fair value, (b) match with financia l
liability to reflect requirement to pay for the asset over the period of the contract.

To allocate unitary payments between: (a) finance costs (charged as incurred), (b) operating costs (charged as
expenditure as incurred), and (c) repayment of financial liability (to reduce PFI creditor).

All PFI fixed assets were valued as at 01-04-2009 by the District Valuer. PFI assets are valued and depreciated in
the same way as other categories of Council assets.

In line with disclosure information required under the code, the value of assets held under PFI arrangements, value
of assets held under PFI arrangements and payments due to be made under PFI arrangements.




  Statement of Accounts 2009/10                                                                                   41
  Note 2. Movement in Revenue Resources
                                                                      Housing              Other                  Total
                                                          General
REVENUE / EARMARKED RESERVES                                          Revenue            Earmarked              Revenue
                                                           Fund
                                                                      Account             Reserves              Reserves
                                                            £000s         £000s                 £000s                £000s
Surplus / (Deficit) in 2008/09                             (1,926)         (991)                10,042                7,125
                               st
Balance brought forward at 1 April 2008                    17,518          6,338                46,272               70128
                                  st
Balance carried forward at 31 March 2009                   15,592          5,347                56,314               77,253
Surplus / (Deficit) in 2009/10                               9,458         (628)              (26,033)             (17,203)
Collection Fund Adjustment Account Prior Year                    0             0                 1,290                1,290
                             st
Balance brought forward at 1 April 2009                     15,592          5,346                56,314              77,252
                                  st
Balance carried forward at 31 March 2010                    25,050          4,718                31,571              61,339


  Note 2a. Other Earmarked Resources Analysis
                                                          Balance                    Balance                     Balance
                                                           At 1st    Movement        At 31st    Movement         At 31st
Earmarked Reserves
                                                           April      In Year         March      In Year          March
                                                           2008                       2009                        2010
                                                            £000s       £000s          £000s            £000s       £000s
Schools Balances
-Credit Balances                                   14,918         (727)     14,191      (5,118)       9,073
-Debit Balances                                    (1,564)          188    (1,376)          (43)    (1,418)
Total Schools Balances                             13,354         (539)     12,815      (5,160)       7,656
Capital Reserves
- Investment Strategy                                2,122        (350)      1,772        1,137       2,909
Total Capital Reserves                               2,122        (350)      1,772        1,137       2,909
Other Balances
- Housing Repairs                                    1,450          201      1,651        (294)       1,357
- NEWCO                                                 72          (72)         0             2          2
- HRA Bond Scheme Reserve                                0          140        140          168         308
- Equalisation Fund                                      0          486        486             0        486
- Reserves held for future spending                  6,531        3,470     10,001      (2,755)       7,246
- Education Bursar Reserve                               0             0         0          167         167
- Education 14-19 Diploma Service                        0             0         0          791         791
- Collection Fund Adjustment Account Prior                                                1,290
Year
- Collection Fund Adjustment Account                                                      (207)       1,083
- PFI Reserve - Residual                           11,978         4,591     16,569     (16,569)           0
- PFI Reserve - Education                            6,657        1,016      7,673      (8,294)       (621)
- PFI Reserve - HRA                                  4,108        1,099      5,207        4,980     10,187
 Other Balances Total                              30,796       10,931      41,727     (20,721)     21,006
Total Earmarked Reserves                           46,272       10,042      56,314     (24,744)     31,571
  Schools balances are earmarked for use by the Education service schemes and are held under a delegated
  schools scheme. PFI reserve accounts are for three Education PFI schemes and housing schemes in Canning
  Town and Forest Gate.
  Note 3. Trading Activity

      2008/09                          Trading Activity                                                     2009/10
     (Surplus)                                                                                             (Surplus)
       /Deficit                                                         Income         Expenditure          /Deficit
            £000s                                                           £000s            £000s               £000s
               (81)   Newham Catering and Cleaning Services               (21,857)          20,748              (1,109)
               381    NEWCO                                                (7,896)            7,896                   0
               300    Total                                               (29,753)          28,644              (1,109)
             (262)    Less credit/(debit) to HRA                                 0                0                   0
                      Shown in Income and Expenditure
                38    Account                                            (29,753)              28,644            (1,109)

  Statement of Accounts 2009/10                                                                                        42
Newham Catering and Cleaning Services provides cleaning services in respect of public buildings and
education buildings (including Secondary Schools) plus school meals to Primary and Secondary Schools.
NEWCO - This is part of Housing Services. This organisation provides employment opportunities for disabled
people. Activities include construction of kitchen units and windows.
Note 4. Pooled Budgets
The Council operates a pooled budget arrangement with Newham Primary Care Trust (PCT) for the Integrated
Community Equipment Service (ICES). In 2009/10, the Council contributed £1.2M in total against this service.
The gross revenue budget expenditure for the pooled venture was £1.8M against gross income of £1,8M. The
revised accumulated trading surplus for the pool is £0.1M.

                                                                          2009/10         2009/10      2009/10
     2008/09
                             Newham Primary Care Trusts
    Net Exp /                                                              Gross       Gross           Net Exp /
    (Income)                                                              Income    Expenditure        (Income)
         £000s                                                                £000s       £000s            £000s
                81   Integrated Community Equipment Service                   (1,756)          1,820              64
                81   TOTAL                                                    (1,756)          1,820              64


                                                                                                        2009/10
                           Newham Primary Care Trusts - Trading Surplus
                                                                                                        Surplus
                                                                                                            £000s
 Accumulated Trading Surplus as at 1st April 2009                                                               (232)
 Net deficit for year                                                                                              64
 Accumulated Trading Surplus at 31st March 2010                                                                 (168)
 Allocation of Trading Surplus
 - LB Newham                                                                                                    (277)
 - PCT                                                                                                            109
 TOTAL                                                                                                          (168)
The Income and Expenditure Account summarises the Council’s revenue income and expenditure                       for all
services during the year and shows the resultant change in the levels of reserves.
Note 5. Dedicated Schools Grant
The Council's expenditure on schools is funded by grant monies provided by the Department for Children,
Schools and Families, the Dedicated School Grant (DSG). DSG is ring-fenced and can only be applied to meet
expenditure properly included in the School's Budget. The School's Budget includes elements for a restricted
range of services provided on an authority-wide basis and for the Individual School's Budget, which is divided
into a budget share for each school. Over and underspends on the two elements are required to be accounted
for separately.
In accordance with DCSF requirements, Schools have been successful in reducing the upward trend in year end
balances during 2009/10.
      2008/09                                                            2009/10         2009/10       2009/10
                                Schools Budget Funded By                                Individual
                                 Dedicated School Grant                  Central
       Total                                                                             Schools        Total
                                                                       Expenditure
                                                                                          Budget
           £000s                                                               £000s          £000s        £000s
         245,355     Original grant allocation to Schools Budget              20,779        233,150      253,929
          (2,875)    Adjustment to finalised grant allocation                 (4,147)          2,853      (1,294)
         242,480     Dedicated Schools Grant receivable for the year          16,632        236,003      252,635
         246,894     Actual expenditure for the year                          18,667        241,027      259,694
          (4,414)    (Over) / underspend for the year                         (2,035)        (5,024)      (7,059)
          14,299     (Over) / underspend brought forward                      (2,930)        12,815         9,885
            9,885    (Over) / underspend carried forward                      (4,965)          7,791        2,826




Statement of Accounts 2009/10                                                                                          43
Note 6. Leased Assets - Rentals
Note 6a: Operating Leases - Lessor Income / Lessee Expenditure


            2008/09        2008/09           Operating Leases              2009/10             2009/10
            Income      Expenditure                                        Income            Expenditure
                £000s           £000s                                               £000s         £000s
                 (428)         37,862 Within 1 year                                  (500)        30,595
               (1,588)        119,515 Within 2-5 years                             (1,739)       121,002
               (2,043)         55,866 Over 5 years                                 (1,920)        23,838
               (4,059)        213,243 Total                                        (4,159)       175,435
All of the above operating leases relate to Land and Buildings.

Note 6b: Finance Leases

The Council entered into a finance lease arrangement during 2007/08 in respect of Newham Dockside, Royals
Business Park, Royal Albert Dock, London E16. The Council paid £75 million in 2007/08 for the Long Leasehold
interest (to 30th July 2202) in the building. The Ground Lease is a ‘peppercorn’ rent. Newham Dockside is
included as a fixed asset, at a value of £75million, on the Council’s Balance Sheet and will be depreciated on an
annual basis (from 2008/09) in accordance with accounting policies. Financing costs in respect of MRP became
payable from 2009/10.

Note 7. Levies

Under the Levying Bodies (General) Regulations 1990, from 1st April 1990 all levying bodies recover their
expenses from constituent Local Authorities by way of a charge per head of relevant (adult) population.
         2008/09                                                                                           2009/10
          £000s                                                                                             £000s
            222       Lee Valley Regional Park                                                                 230
            307       London Pensions Fund Authority                                                           363
            147       Environment Agency                                                                       150
            676       Total                                                                                    743

Note 8. Publicity Account
The Council is required to keep an account of expenditure on publicity, further details are given below:
         2008/09                                Publicity Account                                      2009/10
          £000s                                                                                         £000s
           1,406      Cost of staff engaged mainly on publicity                                          1,472
             967      Wholly or mainly recruitment advertising                                           1,350
              78      Statutory notices                                                                    123
              24      Promotion of Road Safety, Health and similar campaigns                               545
           1,421      Other publicity material                                                           2,074
           3,896      Total                                                                              5,564

Note 9. Building Control Account
The charges made to applicants who apply for approval of proposed building works under the National Building
Regulations are to cover the Council’s cost in providing such a service. The main activities are: processing and
validating applications; checking drawings and calculations for compliance; carrying out inspections and issuing
completion certificates. The information relating to these functions for 2008/09 and 2009/10 is:
          2008/09                               Building Control                                       2009/10
            £000s                                                                                        £000s
           (1,314)     Income Received                                                                  (1,187)
             1,294     Expenditure Incurred                                                               2,309
               (20)    (Surplus)/Deficit for year                                                         1,122



Statement of Accounts 2009/10                                                                                        44
Note 10. Agency Expenditure
The Council carries out work on an agency basis for which it is reimbursed, the main area being:
         2008/09                             Agency Expenditure                                          2009/10
          £000s                                                                                           £000s
             101 On behalf of the East London Waste Authority                                                  9
This expenditure is not included in the Income and Expenditure Account

Note 11. Pension Note
Teachers - In 2009/10 the Council paid £16 million (£15.3 million in 2008/09) to the Department for Children,
Schools and Families in respect of teachers’ pension costs. This was based on a contribution rate of 14.2%. In
addition, the Council is responsible for all pension payments relating to added years that it has awarded,
together with the subsequent pensions increases. In 2008/09 these amounted to £1.9 million.
The teachers’ scheme is a Defined Benefit Scheme. As it is a pooled scheme, the Authority is unable to identify
its share of the underlying assets and liabilities.
The capitalised cost of the additional benefits relative to those reserved for under FRS17 is calculated at £5.7
million.
Other Employees - As part of the terms and conditions of its officers and other employees, the Council offers
retirement benefits. Although these will not be payable until employees retire, the Council has a commitment to
make these payments, this commitment needs to be disclosed at the time that employees earn their future
entitlement.
The Council participates in the Local Government Pension Scheme. This is a Defined Benefit Statutory Scheme,
meaning that the Council and employees pay contributions into a fund, calculated at a level estimated to balance
the pension liabilities with investment assets.
In 2009/10, pension costs have been charged to the Income and Expenditure Account on the basis of current
service cost of contribution as determined by FRS17 (Accounting for Retirement Benefits).
In 2009/10, the Council paid an employer’s contribution of £37.4 million (£35.7 million in 2007/08) into the
Pension Fund, representing 22.7% of pensionable pay.
The contribution rate is determined by the Fund’s Actuary following an actuarial valuation that is carried out
every three years. Under Pension Fund Regulations, contribution rates are set to meet 100% of the overall
liabilities of the fund.
The contribution rates used in 2009/10 are based on the valuation at 31st March 2007, which recommended a
contribution rate of 22.7%. This level of contribution is set by the Actuary in order to reduce the shortfall in the
scheme’s funding. The contribution rate will remain at 22.7% for 2010/11.
The Council is responsible for all pension payments relating to added years it has awarded, together with
subsequent pension increases. In 2009/10 these amounted to £1.9 million, representing 1.15% of pensionable
pay (£2.3 million and 1.24% in 2008/09).
The capital cost of discretionary increases in pension payments agreed by the Council in 2008/09 is within the
                                  st
pension liability balance as at 31 March 2009. The capital cost for earlier years was £28.1 million (calculated in
accordance with FRS17 by the Actuary).
Further details on the Council Pension Fund Scheme are on note 39 (FRS 17) and the Pension Fund Account of
this publication

Pension Costs

Charges to the statements of performance

The amount charged to the Income and Expenditure Account, HRA Income and Expenditure Account and the
Statement of Total Recognised Gains and Losses for employees’ pensions should be in acc ordance with FRS
17 Retirement Benefits, subject to the interpretations set out in the SORP.

Pensions Reserve

The amount chargeable to the General Fund for providing pensions for employees is the amount payable for the
year in accordance with the statutory requirements governing the particular pension schemes or funds in which
the authority participates. Where this amount does not match the amount charged to the Income and

Statement of Accounts 2009/10                                                                                      45
Expenditure Account for the year the difference should be taken to the Pensions Reserve. Where the pension
costs charged to the Income and Expenditure Account are:

   larger than the amount payable for the year in accordance with the scheme requirements, the General Fund
    Balance should be credited and the Pensions Reserve debited; or
   smaller than the amount payable for the year in accordance with the scheme requirements, the General
    Fund Balance should be debited and the Pensions Reserve Credited. The debit or credit to the General
    Fund should be shown as a reconciling item in the Statement of Movement on the General Fund Balance.


The adjusted net return on assets is as follows:
     2008/09                                                                                           2009/10
       £000s                                                                                             £000s
       57,463    Interest on Pension Liabilities                                                         56,299
     (35,483)    Expected Return on Assets                                                             (30,316)
       21,980    Total Per Income and Expenditure Account                                                25,983



Note 12. Audit Fee Disclosure
      2008/09                                                                                           2009/10
       £000s                                                                                             £000s
         500     Fees payable to appointed auditors for external audit services work                       480
           58    Fees payable to Audit Commission for statutory inspection                                   20
           89    Fees payable to appointed auditors for certification of claims and returns                  92
           15    Fees payable for other services provided by the appointed auditor                            0
          662    Total Audit Fee                                                                            592


Note 13. Local Authority (Goods and Services) Act 1970
This Act enables local authorities to provide certain types of goods and services to other public bodies (including
other local authorities, Further Education Colleges, and Housing Associations). The Council provided a range of
services to a number of public bodies during 2009/10 - total income amounted to £2.3 million (£2.3 million in
2008/09) and fully covered the expenditure involved. The most significant individual supplies were as follows:
     2008/09                                        Supplies                                            2009/10
      £000s                                                                                              £000s
         152    Security Services to Newham Primary Care Trust and other Public Bodies                      963
       1,527    Translation Services to other local authorities and other Organisations                   1,905
         229    Warden Alarm Services to housing associations and other local authorities                   298
           0    Recycling services to LB Redbridge                                                            0
         380    Other                                                                                       156
       2,288    Total                                                                                     3,322


The total value of goods and services to the various types of public body was as follows:
     2008/09                                          Client                                            2009/10
      £000s                                                                                              £000s
          92    Newham Colleges and Universities                                                             87
          59    Other Colleges and Universities                                                             105
         149    Other Local Authorities                                                                     552
         271    Housing Associations                                                                        163
          19    Tenant Management Organisations                                                               0
         385    Healthcare bodies                                                                         1,423
       1,313    Other Public Bodies                                                                         992
       2,288    Total                                                                                     3,322




Statement of Accounts 2009/10                                                                                     46
 Note 14. Employee Emoluments
 The Accounts and Audit Regulations 2003 require local authorities to disclose the numbe rs of employees who
 earned £50,000 (taxable income and non-taxable compensation payments) or more in the financial year. This is
 to be shown in bands of £5,000. Note that 2008/09 non-teaching employees include 63 redundancy and
 severance payments.
       2008/09            2008/09         2008/09                                       2009/10         2009/10        2009/10
     Non Teaching         Teaching         Total                 Earnings Band        Non Teaching     Teaching         Total
      Employees          Employees       Employees                                     Employees      Employees       Employees
            71               257             328             50,000 – 54,999               88            300             388
            88               103             191             55,000 – 59,999               66            133             199
            29                42              71             60,000 – 64,999               19             53              72
            37                31              68             65,000 – 69,999               33             39              72
            30                22              52             70,000 – 74,999               16             26              42
            21                23              44             75,000 – 79,999               23             19              42
             7                 7              14             80,000 – 84,999                8             15              23
             9                 2              11             85,000 – 89,999                2              9              11
            11                 7              18             90,000 – 94,999                9              1              10
             6                 5              11             95,000 – 99,999                2              4               6
             3                 2               5            100,000 – 104,999               2              6               8
             0                 5               5            105,000 – 109,999               2              0               2
             7                 0               7            110,000 – 114,999               1              0               1
             2                 0               2            115,000 – 119,999               0              2               2
             2                 0               2            120,000 – 124,999               2              0               2
             1                 0               1            125,000 – 129,999               2              1               3
             2                 0               2            130,000 – 134,999               0              0               0
             1                 0               1            135,000 - 139,999               0              0               0
             0                 0               0            145,000 – 149,999               1              0               1
             2                 0               2            150,000 – 154,999               1              0               1
             0                 0               0            170,000 – 174,999               1              0               1
             0                 0               0            180,000 – 184,999               1              0               1
             1                 0               1            195,000 – 199,999               0              0               0
             1                 0               1            225,000 – 229,999               0              0               0
             0                 0               0            240,000 – 244,999               1              0               1
             1                 0               1            255,000 – 259,999               0              0               0
             1                 0               0            285,000 – 289,999               0              0               0
           333               506             838          Total £50,000 and over          280            608             888


 Senior Employees
 The remuneration of senior employees whose annual salary for the year was equal to or greater than £150,000
 (Pro Rata)
 2008-09
                        Name and position                               Salary Fees   Compensation      Council’s
                                                                            and         for loss of   contribution        Total
                                                                        Allowances     employment      to Pension      Remuneration
                                                                                                          Fund             d
                                                                                  £               £               £               £
Mr. J Duckworth - Chief Executive (see note 1)                              195,864               0          32,122         227,986
Mr. K Bromley Derry - Executive Director Children, Schools and
Families                                                                    151,720               0         22,264             173,984
Executive Director - Resources                                              135,756               0         22,264             158,020
Executive Director - Environment                                            122,406               0         20,075             142,481
Executive Director – Customer Services                                      110,235               0         18,079             128,314
Total                                                                       715,981               0        114,804             830,785


 Note 1 – Not full year costs – started 09/06/08


 Statement of Accounts 2009/10                                                                                                    47
   2009-10
                        Name and position                              Salary Fees   Compensation        Council’s          Total
                                                                           and         for loss of     contribution to   Remuneration
                                                                       Allowances     employment       Pension Fund          d
                                                                                 £                 £                 £              £
Mr. J Duckworth - Chief Executive                                          241,483                 0           39,602         281,085
Mr. K Bromley Derry - Executive Director Children, Schools and
Families                                                                  170,417                 0            27,887         198,304
Mr. R Heaton - Executive Director Resources                               151,826                 0            24,899         176,725
Mr C Dutton - Executive Director Regeneration and Property (see note
1)                                                                        120,417                 0             9,311         129,728
Executive Director - Environment                                          100,196                 0            16,890         117,086
Total                                                                     784,339                 0           118,589         902,928


   Note 1 - Not full year costs - started 28/09/09


   Note 15. Members’ Allowances
   The total of members’ allowances paid in 2009/10 (excluding National Insurance Contributions) was £1,299,000
   (£1,296,000 in 2008/09). Full details of members’ allowances paid are available on the website and upon
   request in writing to Member Services, 4th Floor, West Wing, Newham Dockside, London E16 2QU.




   Statement of Accounts 2009/10                                                                                                48
Note 16. Fixed Assets


                                     Total                    Other      Vehicles,                                Total         Assets                  Commercial    Total Non
                                                Council                                 Infra-    Community                                  Surplus                               TOTAL
                                  Intangible                Land and     Plant and                             Operational       under                      and       Operation
                                               Dwellings                              structure     Assets                                   Assets                                ASSETS
                                    Assets                  Buildings   Equipment.                               Assets       Construction               Industrial   al Assets
   Opening Values                     £000s       £000s        £000s         £000s       £000s        £000s          £000s          £000s      £000s         £000s        £000s       £000s
   Gross Value as at 31st March
                                       2,350   1,037,648      805,386       30,096     162,386        21,982      2,057,498            21     74,203        111,518     185,742    2,245,590
   2009
   Prior year adjustment                   0      78,081       48,873        1,128            0           0        128,082              0          0             0            0     128,082
   Revaluation’s as at 01/04/09            0       4,452       52,322            0            0           0         56,774              0     (8,913)       (2,927)     (11,840)     44,934
   Revaluation Impairment                  0    (89,502)     (84,642)            0            0           0       (174,144)             0          0             0            0    (174,144)
   01/04/09
   Value at 1st April 2009             2,350   1,030,679      821,939       31,224     162,386        21,982      2,068,210            21     65,290        108,591     173,902    2,244,462
   Transactions
   Additions                            467        1,203            0        8,054            0           0          9,257           5,641       719             0        6,360      16,084
   Transfers                              0      (2,549)        2,758            0            0           0            209               0     (209)             0        (209)           0
   Enhancements                            0     123,495       39,146            0       18,179        2,128       182,948              0          0           107          107     183,055
   Disposals/Scrapped                     0       (9,899)    (18,698)            0            0            0       (28,597)              0   (11,279)         (719)     (11,998)    (40,595)
                                        467      112,250       23,206        8,054       18,179        2,128       163,817           5,641   (10,769)         (612)      (5,740)    158,544

   Value at 31st March 2010            2,817   1,142,929      845,145       39,278     180,565        24,110      2,232,027          5,662    54,521        107,979     168,162    2,403,006

   Depreciation
   Cumulative at 01/04/09            (1,143)    (30,368)     (54,791)       (7,003)    (49,134)           0       (141,296)             0      (524)          (185)        (709)   (143,148)
   Prior year adjustment -
                                           0    (10,276)      (5,937)       (1,202)           0           0        (17,415)             0          0             0            0     (17,415)
   depreciation
   Depreciation written back on
                                           0      40,972       55,996            0            0           0         96,968              0        524           185          709      97,677
   Revaluation/Disposal/Scrap.
   Depreciation for the year           (465)    (28,829)     (13,517)       (5,917)     (2,966)           0        (51,229)             0      (183)             0         (183)    (51,877)
   Depreciation at 31st March
                                     (1,608)    (28,501)     (18,249)      (14,122)    (52,100)           0       (112,972)             0      (183)             0         (183)   (114,763)
   2010


   Net Value 31st March 2010           1,209   1,114,428      826,896       25,156     128,465        24,110      2,119,055          5,662    54,338        107,979     167,979    2,288,243
Note the above table reflects the removal of Forest Gate PFI properties from the Council Dwellings line of the balance sheet.


Statement of Accounts 2009/10                                                                                                                                                                  49
        Note 17. Analysis of Capital Expenditure 2009/10
                                                                                                                                                                                 Revenue
                                                  Total                                     Equipment                                                                  Total
                                                                              Community                      Asset                         Assets under                           funded       Total
   2008/09                                     Intangible   Infrastructure                   Plant and                     Housing                         Other      Fixed
                                                 Assets
                                                                                Assets                     Acquisition                     Construction                            under      Assets
                                                                                             Vehicles                                                                 Assets
                                                                                                                                                                                  Capital
     £000s                                         £000s             £000s         £000s         £000s           £000s         £000s              £000s     £000s       £000s        £000s      £000s
    31,120    Children and Young People               90                  0             0         2,678               0            0                5641   32,159      40,478         3,088    43,656
   101,128    Housing – HRA                           35                  0             0            54             110       88,127                   0          0    88,291         3,642    91,968
      7,802   Housing - General Fund                   0                  0             0             0             718            0                   0          0        718      10,760     11,478
      5,567   Culture and Community                    0                  0         1,711         1,125               0            0                   0     1,371       4,207           48      4,255
    29,846    Corporate                              335                  0             0         2,209               0            0                   0     5,620       7,829        1,406      9,570
      2,770   Adults                                   1                  0             0            81               0            0                   0       (68)         13        3,377      3,391
      6,799   Environment/Regeneration                 0              8,685             0            89               0            0                   0          0      8,774          114      8,888
      1,703   NDC                                      0                  0            72           119               0            0                   0          2        193          199        392
      5,789   Custom House and Canning Town            6              9,493           346         1,699           1,093          790                   0       169     13,590         3,300    16,896
   192,524    Total Expenditure                      467            18,178          2,129         8,054           1,921       88,917               5,641   39,253     164,093       25,934    190,494



               The main items of capital expenditure during the year were:                   £000s        Capital expenditure in the year was financed as follows:                 £000s
               Improvement and Modernisation of existing housing                            88,918        Supported Borrowing - SCE(R)*                                           83,089
               Disabled Facilities and Renovation Grants                                      1,451       Unsupported Borrowing                                                   17,110
               Private Sector Renewal Scheme (ELRP)                                           4,749       Capital Grants and Contributions                                        69,231
               Empty Property Programme                                                       1,664       Major Repairs Allowance                                                 17,051
               Building 1000                                                                  6,294       Use of Capital Receipts                                                   4,430
               Curwen School works                                                            3,479                                                                              190,911
               Essex School works                                                             2,329       Reduction in Capital Creditors                                            (417)
               Lister School works                                                            1,463       Total Expenditure                                                      190,494
               Children’s Centres                                                             4,433
               Building Schools for the Future Programme                                    22,262        Reconciliation to Note 16
               Schools Modernisation Programme                                                2,349       Additions                                                                16,083
               TFL Infrastructure Projects                                                    4,649       Enhancements                                                           183,054
               Custom House and Canning Town Project - Buybacks                               1,305       PFI additional cost included in enhancement above.                     (34,577)
               Custom House and Canning Town Project – Canning Town Roundabout                4,345       Revenue Expenditure Funded from Capital under Statute                    25,934
               Central Park Facilities                                                        1,292                                                                              190,494
               Stratford Town Centre Public realms works                                      1,174
               Newham Advanced Telecare and Whole Systems Demonstrator Programme              4,079       * SCE (R) - Supported Capital Expenditure (Revenue)


Statement of Accounts 2009/10                                                                                                                                                                            50
                Note 18. Fixed Assets Employed
                                                            PFI Assets       Prior Year                       Additions,
                                      Net Value 31st       adjustment to     adjustment                                                                                        Net Value 31st
                                                                                              Revaluation   Enhancements       Disposal    Impairment    Depreciation
                                       March 2009         opening balance                                                                                                       March 2010
                                                                                                            and Transfers
                                                 £000s                                             £000s              £000s       £000s         £000s            £000s                    £000s
            General Fund
            Intangible                           1,191                  0               0               0               432            0             0             (452)               1,171
            Infrastructure                     113,252                  0               0               0            18,179            0             0           (2,966)             128,465
            Land and Buildings                 741,768             42,936               0         53,488             38,941     (18,698)      (84,642)           42,407              816,200
            Community Assets                    21,982                  0               0               0             2,128            0             0                 0              24,110
            Equipment, Vehicles etc             23,082                776           (850)               0             8,000            0             0           (5,910)              25,098
            Non Operational                    132,858                  0               0         (6,906)             5,749      (6,629)             0               174             125,246
            Property
                                              1,034,133            43,712           (850)         46,582             73,429     (25,327)      (84,642)           33,253             1,120,290
            HRA
            Intangible                               16                 0                 0             0                35            0             0              (13)                   38
            Council Dwellings                 1,007,280            67,805                 0         4,452           122,149      (9,899)      (89,502)           12,143             1,114,428
            Land and Buildings                    8,827                 0                 0       (1,166)             2,963            0             0                72               10,696
            Equipment, Vehicles etc                  11                 0                 0             0                54            0             0               (7)                   58
            Non Operational                      52,175                 0                 0       (4,934)               509      (5,369)             0              352                42,733
            Property
                                              1,068,309            67,805               0         (1,648)           125,710     (15,268)      (89,502)           12,547             1,167,953
                                              2,102,442           111,517           (850)         44,934            199,139     (40,595)     (174,144)           45,800             2,288,243

                Note 19. Capital Receipts
                The table below shows the sums received by the Council and the use to which they were put in 2009/10.
                                                          Sales of Council Houses   Disposal of other Land and Buildings      Repayments of Grants and Loans       Other          Total
                                                                            £000s                                   £000s                                £000s     £000s           £000s
                Amounts available at 1st April 2009                             0                                   9,497                                    0             0       9,497
                Amounts received in 2009/10                                   759                                   1,617                                    0        140          2,516
                                                                              759                                  11,114                                    0        140         12,013
                Less
                Costs of Disposal                                               0                                      11                                    0          0             11
                Pooling Payments                                                0                                       0                                    0          0              0
                Amounts used toward expenditure                               759                                   3,531                                    0        140          4,430
                Balance available 31st March 2010                               0                                   7,572                                    0          0          7,572


Statement of Accounts 2009/10                                                                                                                                                                     51
Note 20. Capital Grants and Contributions
The following capital expenditure incurred in 2009/10 has been met from Government Grants and other
contributions.
       2008/09                                                                                   2009/10
        £000s                                                                                     £000s
                      Government Grants
                660   Housing Specified Capital Grant/Disabled Facilities Grant                           819
              1,705   New Deal for Communities                                                            390
              5,234   Transport for London                                                              4,725
             21,154   Department for Children, Schools and Families                                    31,855
              1,774   Department of Health                                                              2,121
              2,774   Department for Communities and Local Government                                   3,482
                133   Other Government Grants                                                             268
             33,434                                                                                    43,660


             10,684   Major Repairs Allowance                                                          17,051

                      Other Grants and Contributions
              1,975   Lottery Funds                                                                     2,408
              1,278   Sport England                                                                         9
                246   LDDC and successor bodies                                                            94
              7,170   GLA (including East London Renewal Partnership)                                   6,306
              3,855   London Thames Gateway Development Corporation                                     4,573
                  0   Homes and Communities Agency                                                      4,816
                260   Heritage Economic Regeneration                                                        0
              1,097   Football Foundation                                                                 548
              1,034   Developers Contributions (including Section 106 Agreements)                       3,224
              1,048   Leaseholder Contributions                                                           927
                310   Newham Primary Care Trust (Health Authority)                                        114
                359   Contributions from schools budgets                                                  748
                542   Other Contributions                                                                 804
             19,174                                                                                    24,571

             63,292   Total                                                                            86,282




Note 21. Capital Expenditure Commitments
The Council has authorised capital expenditure of £533 million under its Capital Investment Programme over the
three year period 2010/11 - 2012/13, of which £212 million has been committed at 31st March 2010 either through
contracts or by virtue of statutory obligations. A further £321 million relates to schemes and programmes approved
to proceed but which were not committed at that time. Further analysis is shown below:
                                          2010/11          2011/12                  2012/13             Total
                                           £000s             £000s                   £000s             £000s
  Committed                               186,301           21,430                    4,230           211,961
  Uncommitted                              89,154          144,077                   87,728           320,959
  Total                                   275,455          165,507                   91,958           532,920
Commitments include the following major schemes and programmes:
   Commitments (over £5 million)                                                                       £000s
   Housing Expenditure 2010/11 (Newham Homes)                                                          73,919
   Housing Expenditure 2010/11 (Non Newham Homes)                                                      13,153
   Building Schools for the Future (Wave 1) – Non PFI Element                                          41,600
   Canning Town Roundabout                                                                             18,438
   Stratford High Street Public Realm Improvements                                                      7,900

Statement of Accounts 2009/10                                                                                   52
Approvals to proceed include the following major items and schemes:
   Approvals to Proceed                                                                                  £000s
   Housing Expenditure (HRA) 2011/12 and 2012/13                                                         91,648
   Schools Capital Programmes (including Primary Capital Programme)                                      60,948
   Building Schools for the Future – Non PFI Element                                                     72,272
   Stratford Town Centre Public Realm Project                                                            12,760
   Customer Access – East Ham IFO                                                                        15,000
   Newham Town Hall                                                                                      12,500
   Highways Borough Roads                                                                                10,000
   Canning Town Buybacks                                                                                  7,350
   Transport for London Projects                                                                          9,200


The Council monitors its capital programme on a regular basis, taking action where necessary to ensure that its
expenditure does not exceed resources available.
The Council secures the majority of its new capital resources by bidding for specific projects or pro grammes. In
addition, “mainstream” resources from government departments are also targeted at specific schemes and
programmes. Thus, the majority of the Council’s capital resources are “earmarked” to specific schemes and
programmes and there is very little flexibility to move resources between schemes. While schemes may not yet be
committed in contractual or statutory terms, their postponement or cancellation would merely result in an equivalent
loss of capital resources. There would be little, if any, capital resource advantage, and it would not enable other,
currently unfunded, schemes to proceed.
Should expenditure exceed the levels identified above, in the absence of any further resources this additional
expenditure would need to be met from the Council’s remaining revenue reserves, possibly resulting in an increase
in Council Tax levels for future years.




Statement of Accounts 2009/10                                                                                     53
Note 22. Statement of Assets Held
Fixed Assets owned by the Council (and shown in the Balance Sheet) include the following:
                   ASSETS HELD                       Number at 31st March          Number at 31st March
                                                            2009                          2010
     Council Dwellings (HRA definition*)                             18,528                        18,342
     Operational Property
     Nursery Schools                                                         7                          7
     Primary Schools                                                        56                         58
     Secondary Schools                                                      11                         12
     Special Schools                                                         5                          4
     Youth Centres                                                           3                          3
     Other Educational Facilities                                            9                          9
     Housing District Offices                                                6                          6
     Municipal/Administrative Offices                                       18                         18
     Children’s Facilities                                                   6                          6
     Elder’s Facilities                                                      3                          3
     Mental Health Facilities                                                4                          4
     Social Services Area/Patch Offices                                      3                          3
     Other Social Services Facilities                                        5                          5
     Libraries                                                               7                          7
     Leisure/Sports Centres                                                  5                          5
     Children’s Recreational Facilities                                      3                          3
     Community Centres                                                       8                          8
     Museum Facilities                                                       3                          3
     Other Leisure Facilities                                                6                          6
     Depots (including those with offices)                                   3                          3
     Other Operational Assets                                               15                         15
     Garages                                                             1,436                      1,342
                                                                         1,622                      1,530
     Community Assets
     Parks and Open spaces (area in acres)                                 373                        373
     Museum Exhibits - Fine Arts (items)                                     6                          6
                     - Other Items                                           2                          2
                                                                           381                        381
     Infrastructure
     Length of road maintained (km)
                     - Principal Roads                                      55                         55
                     - Other Roads                                         347                        347
                                                                           402                        402

                     Asset Held                      Number at 31st March          Number at 31st March
                                                            2009                          2010
     Non Operational Property
     Assets Surplus to requirements                                        124                         99
     Under construction                                                      1                          3
     Commercial and Industrial Sites/Properties                            141                        138
                                                                           266                        240

  * The Council dwellings figures have been presented according to the HRA definition. As defined in the
    document guidance notes on the completion of Local Authority Housing Strategy Statistical Appendix (HSSA)
    2009/10 figure include PFI additions to balance sheet.




Statement of Accounts 2009/10                                                                                   54
Note 23. Revenue Expenditure Funded from Capital Under Statute
   2008/09        Revenue Expenditure Funded from Capital under Statute                                    2009/10
     £000s                                                                               £000s              £000s
     21,252 Expenditure in year                                                          25,934
          0 Prior year adjustment                                                           850
   (13,974) Less capital grant due                                                     (17,994)
    (7,278) Less written off to Income and Expenditure Account                                               (8,790)
          0 Balance at 31st March 2010                                                                             0
Revenue Expenditure Funded from Capital under Statute was previously known as deferred charges.

Note 24. Capital Adjustment Account
                  2008/09               CAPITAL ADJUSTMENT ACCOUNT                                           2009/10
      £000s          £000s                                                                     £000s          £000s
                (1,181,520)    Balance at 1st April                                                        (975,607)
                               Capital Financing in the year
    (11,173)                   Usable Capital Receipts                                        (4,430)
    (10,684)       (21,857)    HRA use of Major Repairs Allowance                            (17,051)       (21,481)

      (9,689)                  Minimum Revenue Provision                                     (11,330)
            0                  Minimum Revenue Provision - PFI Prior Years                    (5,586)
            0        (9,689)   Minimum Revenue Provision – PFI 2009/10                        (1,832)       (18,748)

      32,646                   Depreciation - HRA                                              29,140
      21,485         54,131    Depreciation - Non HRA                                          22,737        51,877

    192,581                    Impairment                                                    189,582
           0                   PFI Opening Values                                            (82,200)
      53,488                   Reduction in Housing Stock (Forest Gate PFI)                         0
    (10,940)                   Write Down of Revenue funded under Capital by Statute         (10,193)
    (59,079)                   PFI Reversionary Interest                                     116,397
       7,278        183,328    Write Down of Deferred Grants                                    8,790        222,376
                  (975,607)    Balance at 31st March 2010                                                  (741,583)


Note 25. Revaluation Reserve
        2008/09                               REVALUATION RESERVE                                       2009/10
            £000s                                                                                           £000s
         (188,879)     Balance at 1st April 2009                                                          (53,533)
          (70,703)     Revaluation gain                                                                  (118,101)
           194,226     Revaluation loss                                                                     18,364
                 0     Depreciation written back                                                                 0
               234     Depreciation in year                                                                      0
            11,589     Write out asset on disposal                                                           3,816
          (53,533)     Balance at 31st March 2010                                                        (149,454)


The closing balance on the Revaluation Reserve at 31st March 2010 only shows revaluation gains accumulated
since 1st April 2007.
Note 26. Contingent Liabilities
There is a contingent liability for stamp duty on the transfer of properties to Local Space. If this liability becomes
payable, then it would have to be financed from capital reserves. At present the situation is subject to legal review.
At this point in time it is not practicable to include an estimate.
Following the cessation of trading by the Caboodle joint venture during 2008/09, no assets and liabilities of the entity
remain by 31st March 2010. (see note 36 below).


Note 27. Related Party Transactions

Statement of Accounts 2009/10                                                                                          55
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.
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 (e.g. housing benefits).
Details of transactions with government departments are set out in a note relating to the Cash Flow Statement.
Pension Fund – during the financial year, the Pension Fund had an average balance of £4.5 million of temporary
surplus cash deposited with the Council. The Council paid the fund a total for interest of £25,505 on these deposits.
The Council charged the fund £301,000 expenses incurred in administering the fund
Companies and joint ventures – the Council has a controlling interest in Newham Homes (a wholly owned
subsidiary)
Community Links are an independent organisation that deliver a number of community projects, organise events
and provide activities, mainly for younger people in the Borough. The Council paid a total of £3.4 million to
Community Links for services provided during 2009/10. Councillor Kevin Jenkins OBE, who is employed as an
advisor by Community Links, was not involved with the decision making process to award service contracts to
Community Links.

Note 28. Financial Instruments Balance
Note 28a Disclosure of Financial Assets and Liabilities from 1st April 2009
The borrowings and investments disclosed in the Balance Sheet are made up of the following categories of financial
instruments:

                                                             Long Term                      Current
                                                      31st March 31st March         31st March 31st March
                                                         2009         2010             2009         2010
                                                           £000s                         £000s
      Financial liabilities (principal amount)          (722,684)    (907,684)      (274,582)     (238,505)
      Financial liabilities at amortised cost           (738,021)    (926,679)      (279,190)     (242,112)




                                                             Long Term                      Current
                                                      31st March 31st March         31st March 31st March
                                                         2009        2010              2009         2010
      Loans and Receivables (principal amount)             76,400     133,600        139,000        158,500
      Loans and receivables at amortised cost              79,396     136,256        142,841         160,831
      Available for Sale financial assets                       0           0               0              0
      Total Investments                                    79,396     136,256        142,841         160,831



Under accounting requirements the financial instrument value shown in the balance sheet include the principal
amount borrowed or lent and further adjustments for breakage costs or stepped interest loans (measured by an
effective interest rate calculation) including accrued interest. However accrued interest is shown separately in
current assets/liabilities where the payments/receipts are due within one year

The Council’s financial liabilities have increased as a result of borrowing to finance the Capital Programme.

During the year no financial instruments were re-classified. The Council also has not pledged any collateral for
financial liabilities, nor does it hold any collateral which it is permitted to sell or re-pledge. The amounts above
include the principal amounts of the impaired investments with Icelandic banks. Normal provisions have been made
for trade and similar debtors, and there have been no defaults of breaches.

Note 28b Financial instruments Gains/Losses


Statement of Accounts 2009/10                                                                                      56
The gains and losses recognised in the Income and Expenditure Account and STRGL in relation to financial
instruments are made up as follows.

                               Financial Instruments Gains and Losses 2009/10
                                       Financial                  Financial Assets
                                       Liabilities
                                        Liabilities    Loans and     Available-    Fair value           Total
                                      measured at     receivables     for-sale      through
                                     amortised cost                    assets      the IandE
                                                                                    Account
                                               £000s         £000s         £000s         £000s              £000s
Interest expense                            (54,029)              0             0           0           (54,029)
Losses on de-recognition                            0             0             0           0                  0
Impairment losses                                   0         (665)             0           0              (665)
Interest payable and         similar        (54,029)          (665)             0           0           (54,694)
charges
Interest income                                    0           7,114              0         365            7,479
Gains on de-recognition                            0               0              0           0                0
Interest and Investment Income                     0           7,114              0         365            7,479
Surplus arising on revaluation of                  0               0              0           0                0
financial assets
Net Gain / Loss for Year                    (54,029)           6,449              0         365         (47,215)




                               Financial Instruments Gains and Losses 2008/09
                                       Financial                  Financial Assets
                                       Liabilities
                                        Liabilities    Loans and     Available-    Fair value           Total
                                      measured at     receivables     for-sale      through
                                     amortised cost                    assets      the IandE
                                                                                    Account
                                               £000s         £000s         £000s         £000s              £000s
Interest expense                            (50,671)              0             0           0           (50,671)
Losses on de-recognition                            0             0             0           0                  0
Impairment losses                                   0         (949)             0           0              (949)
Interest payable and         similar        (50,671)          (949)             0           0           (51,620)
charges
Interest income                                    0         12,909               0           0          12,909
Gains on de-recognition                            0             52               0           0              52
Interest and Investment Income                     0         12,961               0           0          12,961
Surplus arising on revaluation of                  0              0               0           0               0
financial assets
Net Gain / Loss for Year                    (50,671)         12,012               0           0         (38,659)


The Financial asset at fair value through the I and E includes forward dealt investments. In March 2009 a £15m
investment was agreed to be settled in September 2009 for a period of one year; in October 2007 three forward deals
were agreed to be settled in October 2009, 2010 and 2011 for maturity in October 2012; these deals were intended to
cover the cash flow requirements for the potential interest payment of a loan commitment. The gain represents the
value compared with prevailing market rates as at the balance sheet date.




Statement of Accounts 2009/10                                                                                      57
Note 28c – Fair value of Assets and Liabilities carried at Amortised Cost
Financial liabilities and financial assets represented by loans and receivables are carried on the Balance Sheet at
amortised cost (in long term assets/liabilities with accrued interest in current assets/liabilities . Their fair value can
be assessed by calculating the present value of the cash flows that take place over the remaining life of the
instruments, using the following assumptions:
The fair values for financial liabilities have been determined by reference to the Public Works Loans Board (PWLB)
redemption rules and prevailing PWLB redemption rates as at each balance sheet date, and include accrued
interest. The fair values for non-PWLB debt have also been calculated using the same procedures and interest
rates and this provides a sound approximation for fair value for these instruments.

       For loans receivable prevailing benchmark market rates have been used to provide the fair value using the
        same method as above;
       Where an instrument has a maturity of less than 12 months or is a trade or other receivable the fair value is
        taken to be the carrying amount or the billed amount;
       The fair value of sundry trade and other receivables is taken to be the invoiced or billed amount.
The fair values calculated are as follows:

                                                          31st March 2009                  31st March 2010
                                                      Carrying         Fair value        Carrying        Fair value
                                                      Amount                             Amount
                                                           £000s             £000s            £000s          £000s
        PWLB Debt                                        635,491            837,273         623,084         792,997
        Non-PWLB Debt                                    381,720            394,938         545,707         600,279
        Total Debt                                     1,017,211          1,232,211       1,168,791       1,393,276
        Trade creditors - sundry                          43,154             43,154         114,949         114,949
        Total Financial Liabilities                    1,060,365          1,275,365       1,283,740       1,508,225

The fair value is greater than the carrying amount because the Council’s portfolio of loans includes a number of
fixed rate loans where the interest rate payable is higher than the rates available for similar loans in the market at
the Balance Sheet date.

                31st March 2009                                                            31st March 2010

            Carrying         Fair value                                                  Carrying     Fair value
            Amount                                                                       Amount
                 £000s             £000s                                                     £000s         £000s
               142,841            142,841    Money market investments less than             160,831       195,776
                                             1 year to maturity
                 79,396            79,396    Money market investments more                 136,256        103,280
                                             than 1 year to maturity
                 28,990           28,990     Trade debtors - sundry                         35,289              0
                251,227          251,227     Total Investments                             332,376        299,056

The amounts shown above include principal amounts for the Icelandic banks.

Note 29: Disclosure of nature and Extent of Risk Arising from Financial Instruments
The Council’s activities expose it to a variety of financial risks, the key risks are:
       Credit risk – the possibility that other parties might fail to pay amounts due to the Council;
       Liquidity risk – the possibility that the Council might not have funds available to meet its commitments to
        make payments;
       Re-financing risk – the possibility that the Council might be requiring to renew a financial instrument on
        maturity at disadvantageous interest rates or terms.
       Market risk - the possibility that financial loss might arise for the Council as a result of changes in such
        measures as interest rates movements.

Note 29a. Overall Procedures for Managing Risk

Statement of Accounts 2009/10                                                                                            58
The Council’s overall risk management procedures focus on the unpredictability of financial markets, and
implementing restrictions to minimise these risks. The procedures for risk management are set out through a legal
framework set out in the Local Government Act 2003 and the associated regulations. These require the Council to
comply with the CIPFA Prudential Code, the CIPFA Treasury Management in the Public Services Code of Practice
and Investment Guidance issued through the Act. Overall these procedures require the Council to manage risk in the
following ways:
       by formally adopting the requirements of the Code of Practice;
       by approving annually in advance prudential and treasury indicators for the following three years limiting:
            o   The Council’s overall borrowing;
            o   Its maximum and minimum exposures to fixed and variable rates;
            o   Its maximum and minimum exposures to the maturity structure of its debt;
            o   Its maximum annual exposures to investments maturing beyond a year.

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

These are required to be reported and approved at or before the Council’s Annual Council Tax Setting Budget or
before the start of the year to which they relate. These items are reported with the Annual Treasury Management
Strategy which outlines the detailed approach to managing risk in relation to the Council’s financial instrument
exposure. Actual performance is also reported annually to Members.

These policies are implemented by a central treasury team. The Council maintains written principles for overall risk
management, as well as written policies covering specific areas, such as interest rate risk, credit risk, and the
investment of surplus cash through Treasury Management Practices (TMPs). These TMPs are a requirement of the
Code of Practice and are reviewed regularly.

Note 29b. Credit risk

Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s
customers. Deposits are not made with banks and financial institutions unless they meet the minimum requirements
of the investment criteria outlined above.

This risk is minimised through the Annual Investment Strategy, which requires that deposits are not made with
financial institutions unless they meet identified minimum credit criteria, in accordance with the Fitch, Moody’s and
Standard and Poors Ratings Services. The Annual Investment Strategy also imposes a maximum amount and time to
be invested with a financial institution located within each category. Deposits are not made with banks and financial
institutions unless they meet the minimum requirements of the investment criteria outlined above.

The following analysis summarises the Authority’s maximum exposure to credit risk. The table (composite defaults
from Fitch, Standard and Poors and Moody’s) gives details of global corporate finance average cumulative default
rates (including financial organisations) for the period since at least 1990 to 2009. Defaults shown are by long term
rating category on investments out to 1 year, which are the most commonly held investments. The analysis excludes
the Icelandic banks.
                                                                                Adjustment
        Deposits with banks and              Amount at          Historic        For Market        Fair value at
        financial institutions               31st March       Experience       Conditions at          31st
                                                2010           of Default       31st March        March 2010
                                                                                   2010
                                                    £000s                %                 %             £000s
        AAA rated counterparties                     5,000             0.00             0.00                 0
        AA rated counterparties                    253,100             0.03             0.03                76
        A rated counterparties                      27,000             0.08             0.08                22
        Total Deposits                             285,100                                                  98
        Trade debtors - sundry                      35,289            12.00              12.00               0
        Total Deposits                             320,389                                                  98




Statement of Accounts 2009/10                                                                                         59
Early in October 2008, the Icelandic banks Landsbanki, Kaupthing and Glitnir collapsed and the UK subsidiaries Heritable and
Kaupthing Singer and Friedlander went into administration. At that time the authority had £5 million (principal) invested i n Glitnir
and £2million (principal) invested in Landsbanki. In accordance with accounting practice the Council has been notified of
objective evidence that impairment has occurred and the investments have been impaired according to accounting
requirements. The impact of the principal invested has been mitigated in the accounts according to government
regulations, although all related investment income has been fully impaired.
Icelandic Banks
Investments included in current assets figure in the Balance Sheet include the following investments that have been
impaired because of the financial difficulties experienced by Icelandic Banks.
                        Date               Maturity           Amount             Interest         Carrying           Impair-
   Bank
                        Invested           Date               Invested           Rate             Amount             ment
                                                                    £000s                 %             £000s            £000s
   Landsbanki                10/12/07           10/12/12             2,000              7.03             1,492               805
   Glitnir Bank              03/12/07           03/12/12             5,000              7.01             5,027               809
The carrying amounts of the investments included in the balance sheet have been calculated using the present value
of the expected repayments, discounted using the investment’s original interest rate.
The Balance Sheet shows the net impact of the impairment of the Icelandic Banks investment in the Financial
Instruments Adjustment Account. Regulations issued in March 2009 allow the authority to defer the impact of an
impairment loss on the General Fund. Such amounts are instead transferred to the Financial Instruments Adjustment
Account, an account that records the timing differences between charging these amounts to the General Fund in
accordance with proper practice and in accordance with the regulations. The Authority has taken advantage of the
regulations, and has transferred the amounts shown in the following table to the Financial Instruments Adjustment
Account.
                                                                     Amount Transferred to
                                    Bank                              Financial Instruments
                                                                       Adjustment Account
                                                                                      £000s
                                    Landsbanki                                          805
                                    Glitnir Bank                                        809
Under the regulations, the Authority must transfer the balance on the Financial Instruments Adjustment Account to
the General Fund no later than 31 March 2011and must also credit the Financial Instruments Adjustment Account
with interest earned until such time as the balance has been transferred to the General Fund. The Authority
estimates that the following credits will be made to the Financial Instruments Adjustment Account (FIAA):


   Bank                          Balance on               Interest          Change in               Capital-        Balance on
                                    FIAA at                during          Impairment                isation           FIAA at
                                     31/3/09              2009/10                                                       31/3/10

                                        £000s               £000s                 £000s                £000s               £000s
   Landsbanki                             271                (113)                  350                    -                 508
   Glitnir Bank                            27                (370)                  315                    -                 (28)
All monies within these institutions are currently subject to the respective administration and receivership processes.
The amounts and timing of payments to depositors such as the authority will be determined by the administrators /
receivers.
The current situation with regards to recovery of the sums deposited varies between each institution. Based on the
latest information available the authority considers that it is appropriate to consider an impairment adjustment for the
deposits, and has taken the action outlined below. As the available information is not definitive as to the amounts
and timings of payments to be made by the administrators / receivers, it is likely that further adjustments will be
made to the accounts in future years.

The Council requested a Capitalisation Direction to cover the expected impairment loss but this was refused by the CLG.




Statement of Accounts 2009/10                                                                                                      60
Glitnir Bank hf and Landsbanki
The impairment for Glitnir and Landsbanki in 2008/09 has been based on the assumption that local authority
deposits with the bank had priority status, and would therefore be repaid ahead of any creditors that did not have
priority status. This was based on the legal advice obtained by local authorities, and on announcements made by
the banks.
The Glitnir Winding-Up Board has since expressed the view that local authority deposits do not have priority status.
This may also impact on the Landsbanki position. Local authorities’ legal advice remains that deposits have priority
status under Icelandic law however decisions on the priority status of local authority deposits will be made by the
Icelandic courts. It is unlikely that the position on priority status will be known until 2011/12 however the impairment
for 2009/10 has been calculated on the basis that priority status for Glitnir will be confirmed and a 100% repayment
received in 2011/12, and for Landsbanki 94.86% received between October 2011 and October 2018.
Deposits with the Icelandic-domiciled banks were converted to Icelandic Krona on 22nd April 2009. Repayments by
the banks will be based on the value of the deposit in ISK; the sterling value received by authorities will depend on
the prevailing exchange rate, and may therefore be lower than the equivalent value on 22nd April 2009.
Therefore in calculating the impairment the council has made the following assumptions re timing of recoveries:

Glitnir: 100% recoverable in June 2011.

Landsbanki:
           Date                             Repayment        Date                              Repayment
           October 2011                     22.17%           October 2015                      8.87%
           October 2012                     8.87%            October 2016                      8.87%
           October 2013                     8.87%            October 2017                      8.87%
           October 2014                     8.87%            October 2018                      19.47%

If the Council does not receive priority status the expected repayments will be for Glitnir 29% between October 2011
and October 2015 and for Landsbanki 38.19% between October 2011 and October 2018.

The Council has decided to use part of the underspend (£1.245 million) on the capital financing budget in 2009/10
as a provision to fund the crystallised impairment charge in 2010/11.

Whilst the current credit crisis in international markets has raised the overall possibility of default the Council
maintains strict credit criteria for investment counterparties. As a result of these high credit criteria, we have
maintained historical default rates as a good indicator under these current conditions.
The Council does not generally allow credit for its trade debtors, such that £15.9 million of the debtors balance is
past its due date for payment. The past due amount can be analysed by age as follows:




                    Amount at       Age of Debtors                                      Amount at
                    31st March                                                          31st March
                       2009                                                                2010
                          £000s                                                               £000s
                           7,298    Less than 3 months                                        11,093
                           1,293    3 to 6 months                                                530
                           3,984    6 months to 1 year                                           722
                           5,044    More than 1 year                                           3,640
                          17,619    Total                                                     15,985


The Council has initiated a legal charge on property where clients require the assistance of social service s but
cannot afford to pay immediately. The total collateral at 31 March 2010 was £1.151m.




Statement of Accounts 2009/10                                                                                          61
Note 29c. Liquidity risk

The Council manages its liquidity position through the risk management procedures above (the setting and approval
of prudential indicators and the approval of the treasury and investment strategy reports), as well through cash flow
management procedures required by the Code of Practice. This seeks to ensure that cash is available when it is
needed.

The Council has ready access to borrowings from the Money Markets to cover any day to day cash flow need, and
whilst the PWLB provides access to longer term funds, it also acts as a lender of last resort to councils (although it
will not provide funding to a council whose actions are unlawful). The Council is also required to provide a balanced
budget through the Local Government Finance Act 1992, which ensures sufficient monies are raised to cover annual
expenditure. There is therefore no significant risk that it will be unable to raise finance to meet its commitments
under financial instruments.

Note 29d. Refinancing and Maturity Risk

The Council maintains a significant debt and investment portfolio. Whilst the cash flow procedures above are
considered against the refinancing risk procedures, longer term risk to the Council relates to managing the exposure
to replacing financial instruments as they mature. This risk relates to both the maturing of longer-term financial
liabilities and longer-term financial assets.

The approved prudential indicator limits for the maturity structure of debt and the limits placed on investments placed
for greater than one year in duration are the key parameters used to address this risk. The Council approved
treasury and investment strategies address the main risks and the central treasury team address the operational risks
within the approved parameters. This includes:
   monitoring the maturity profile of financial liabilities and amending the profile through either new borrowing or the
    rescheduling of the existing debt; and

   Monitoring the maturity profile of investments to ensure sufficient liquidity is available for the Council’s day to day
    cash flow needs, and the spread of longer term investments provide stability of maturities and returns in relation
    to the longer term cash flow needs.

The maturity analysis of financial liabilities is as follows:
                                                                                                        st
                 Amount at 31st                                                          Amount at 31
                  March 2009         Maturity Analysis of Financial Liabilities           March 2010
                            £000s                                                                  £000s
                           279,190  Less than 1 year                                             242,112
                          24,682 Between 1 and 2 years                                           102,960
                          74,044 Between 2 and 5 years                                            47,335
                          25,650 Between 5 and 10 years                                          136,861
                        613,645 More than 10 years                                               639,523
                      1,017,211 Total                                                          1,168,791
The maturity analysis of financial assets is as follows:

                    Amount at        Maturity Analysis of Financial Assets                  Amount at
                                                                                              st
                    31st March                                                              31 March
                       2009                                                                    2010
                          £000s                                                                   £000s
                         142,841     Less than 1 year                                            160,831
                          32,998     Between 1 and 2 years                                        59,716
                          10,955     Between 2 and 3 years                                        66,620
                          35,443     More than 3 years                                             9,920
                         222,237     Total                                                       297,087
                          28,990     Trade debtors                                                35,289
                         251,227     Total                                                       332,376

The amounts shown above include principal amounts for the Icelandic banks

Statement of Accounts 2009/10                                                                                           62
Note 29e. Market risk

Interest rate risk - The Council is exposed to interest rate movements on its borrowings and investments.
Movements in interest rates have a complex impact on the Council, depending on how variable and fixed interest
rates move across differing financial instrument periods. For instance, a rise in variable and fixed interest rates would
have the following effects:
   borrowings at variable rates – the interest expense charged to the Income and Expenditure Account will rise;

   borrowings at fixed rates – the fair value of the borrowing liability will fall;

   investments at variable rates – the interest income credited to the Income and Expenditure Account will rise;
    and

   Investments at fixed rates – the fair value of the assets will fall.

Borrowings are not carried at fair value on the Balance Sheet, so nominal gains and losses on fixed rate borrowings
would not impact on the Income and Expenditure Account or STRGL. However, changes in interest payable and
receivable on variable rate borrowings and investments will be posted to the Income and Expenditure Account and
affect the General Fund Balance, subject to influences from Government grants. Movements in the fair value of
fixed rate investments will be reflected in the STRGL, unless the investments have been designated as Fair Value
through the Income and Expenditure Account, in which case gains and losses will be posted to the Income and
Expenditure Account.


The Council has a number of strategies for managing interest rate risk. The Annual Treasury Management Strategy
draws together Council’s prudential indicators and its expected treasury operations, including an expectation of
interest rate movements. From this Strategy a prudential indicator is set which provides maximum and minimum
limits for fixed and variable interest rate exposure. The central treasury team monitors market and forecast interest
rates within the year to adjust exposures appropriately. For instance during periods of falling interest rates, and
where economic circumstances make it favourable, fixed rate investments may be taken for longer periods to secure
better long term returns, similarly the drawing of longer term fixed rates borrowing would be postponed.
.
The risk of interest rate loss is partially mitigated by Government grant payable on financing costs.
An increase of 1% in discount rates would affect fair value as follows:
            Amount at                                                                            Amount at
            31st March        Interest Rate Variance Calculation                                 31st March
               2009                                                                                 2010
                  £000s                                                                                £000s
                   1,455      Increase in interest payable on variable rate borrowings                139,891
                    (216)     Increase in interest receivable on variable rate investments              1,407
                   1,239      Impact on Income and Expenditure Account                               141,298


The approximate impact of a 1% fall in discount rates would be as above but with the movements being reversed.
These assumptions are based on the same methodology as used in the Note – Fair value of Assets and Liabilities
carried at Amortised Cost.


Price risk - The Council, excluding the Pension Fund, does not generally invest in equity shares and therefore is not
exposed to losses arising from movements in share prices.
Foreign exchange risk - The Council has no financial assets or liabilities denominated in foreign currencies. It
therefore has no exposure to loss arising from movements in exchange rates.
Cash investments are valued at nominal value.




Statement of Accounts 2009/10                                                                                         63
Note 30. Analysis of Debtors and Doubtful Debts
    31st March 2009                                                                               31st March 2010
                £000s                                                                                       £000s
                        Debtors
               35,610 Government Departments                                                               33,386
                 5,137 Other Statutory Authorities                                                          1,611
                   900 Other Local Authorities                                                              1,782
               26,958 Ratepayers/Charge payers                                                             31,118
               23,544 Housing Rents                                                                        24,092
                 2,399 Other Rents                                                                          2,432
                   513 Staff Loans                                                                            577
                 3,367 Housing Benefit Claimants (overpayments)                                             7,198
               28,990 Sundry Debtors                                                                       35,289
                 6,339 Prepayments                                                                          8,081
              133,757                                                                                     145,566
                        Doubtful Debts
               (3,513) NNDR                                                                                (4,553)
             (10,819) Council Tax                                                                         (10,801)
             (19,807) Housing Rents                                                                       (20,547)
               (3,271) Housing Benefit (overpayments)                                                      (4,362)
                 (878) NNDR Costs                                                                          (1,043)
                 (499) Residential Accommodation Charges                                                     (589)
               (3,689) Sundry Debts                                                                        (4,946)
             (42,476)                                                                                     (46,841)

Note 31. Analysis of Creditors
    31st March 2009                                                                                31st March 2010
              £000s                                                                                          £000s
            (57,972)    Government Departments                                                             (60,315)
               (287)    Other Statutory Authorities                                                           (538)
             (2,197)    Other Local Authorities                                                             (4,422)
             (5,320)    Ratepayers/Charge payers                                                            (5,400)
             (3,268)    Housing Rents                                                                       (3,247)
            (43,154)    Sundry Creditors                                                                  (114,949)
             (7,427)    Receipts in Advance                                                                (17,198)
           (119,625)                                                                                      (206,069)
Government department creditors include Building Schools for the Future grant of £10.3 million, £6.9 million for
Primary School Capital Programmes, and £7.8 million for East London Renewal Partnership.

Note 32. Stocks and Work in Progress
    31st March 2009                      Stocks and Works in Progress                            31st March 2010
               £000s                                                                                  £000s
                  931    Stocks                                                                               612
                  472    Work in Progress                                                                     132
                1,403    Total                                                                                744

Note 33. Provisions
The Council has made the following provisions;

    2008/09 Total               PROVISION                  Insurance              Other             2009/10 Total
             £000s                                                 £000s                £000s                £000s
                                    st
           (16,205)    Balance at 1 April 2009                    (5,543)              (6,833)             (12,376)
            (5,745)    Contribution to Provision                  (3,183)              (7,205)             (10,388)
             10,490    Charge to Provision                          2,639                6,572                9,211
              (916)    Transfer to/(from) Reserve                       0                  287                  287
           (12,376)    Balance at 31st March 2010                 (6,087)             (7,179,)             (13,266)


Statement of Accounts 2009/10                                                                                         64
Insurance - A provision of £6.1 million has been recognised for expected claims notified to the Council at 31st
March 2010 under the Council’s internal insurance arrangements. Further details are included in Note 34 below.
Timing of future cash flows is uncertain due to the nature of the settlement of insurance claims.
Other - There are other provisions of £7.2 million in place for matters yet to be resolved. This includes a £0.693
million provision for future re-organisation costs. A total of £13.1 million has been set aside in 2007/08, 2008/09 and
2009/10 for the cost of the Council’s continuing re-structuring. The medium term budget strategy has provided a
total of £17 million for the re-structuring process, the remaining £3.9 million will provided within the 2010/11 and
2011/12 budgets. The balance within the provision will be reviewed as the re-structuring progresses.
Note 34. Risks Covered by Internal Insurance Arrangements
The Council’s insurance arrangements involve both internal and external cover. Internal cover is provided by way of
a Provision for all claims notified to the Council at 31st March each year (the amount provided for those claims being
based on advice from the Council’s Insurers), and a Reserve for claims not yet reported but likely to have been
incurred. Some risks are not fully funded, with losses up to a specified amount being met from revenue as they
arise. The nature of risks covered by the internal arrangements is shown below:
                       Risk                                             Maximum Cover per Claim
   Employers Liability                                £100,000 - amounts in excess of this covered externally
   Third Party                                        As above
   Fire Damage                                        £150,000 - excess as above
   Fidelity Guarantee                                 £50,000 – excess as above
   Loss of School Contents                            All claims, but the first £400 is charged to the school
   Loss of School Computers/building                  The first £200 is charged to the school, but the first £400
                                                      when it is computers and building in one incident.
   Cash Loss                                          The first £100 of each claim is met by the service concerned
                                                      – amounts in excess of this are covered externally
   Loss of Computers                                  As in Cash Loss, but excess is £500
   Damage/Theft of Vehicles and Third Party           £100,000 – amounts in excess of this are covered externally
   risks.
The level of the Provision at 31st March 2010 was £6.1 million, with the balance on the Reserve within the General
Fund Account being £13.7 million. External cover is provided by way of premiums paid to the Council’s Insurers.
Following the insurance tender in December 2005, the level of its excess for liability was increased from £50,000 to
£100,000.

Note 35. Council Association with External Bodies
In order to achieve its aims and objectives, the Council pursues an active policy of “partnership” arrangements with
other bodies active in the Borough. In many cases these arrangements result in the Council having a formal
“association” with such bodies.
Local Authorities are able to enter into such arrangements. However, they must regularly review them to ensure
compliance with relevant statutory requirements and with accounting practices i.e.
   Local Authorities (Companies) Order 1995            Code of Practice on Local Authority Accounting
  Classification of Council’s interest as “Minority
                                                 Preparation of Group Accounts where the Local Authority has a
  Interest”, “Influence” or “Control”.           material interest in associated or subsidiary companies.
  Application of Local Authorities (Capital      Disclosure of details of “related third party” transactions
  Finance) Regulations 1997.                     (transactions between the Local Authority and others within the
                                                 “group”).
The Council’s formal association with other bodies would normally be via the appointment of Council
representative(s) to the board of the organisation. This association may lead to the Council having a financial
interest in the organisation e.g. through voting rights at board meetings, or the allocation of shares in the
organisation.
The Council reviews its appointments to other bodies at its meetings. Full details of all such appointments are
contained in minutes of the meetings. It is Council policy that its representatives serving on Management
Committees of voluntary organisations are there as observers without voting rights.
The Council has also reviewed its interests in other bodies, including share ownership and voting rights, and
considers that it does not have any material interests in other organisations that require disclosure under the
Accounts Code. However, while not requiring formal disclosure, the Council’s relationships with external bodies are
set out below for information:
Organisation              Purpose and Relationship

Statement of Accounts 2009/10                                                                                        65
London East              The London East Connexions service spans 10 Local Authorities. It provides integrated
Connexions               careers information, guidance and advice to young people and employers. The delivery of
Partnership (LECP)       the service is managed and monitored by local management groups. Newham
                         Connexions LMG is one such group. The Council appointments one member to the
                         group. This organisation was previously known as Newham Connexions Local
                         Management Group.
Gateway to London        To secure inward investment and business retention in Newham and associated Thames
Ltd                      Gateway Boroughs. Newham currently has one Councillor on the board of Gateway to
                         London representing Thames Gateway Partnership.
Greater London           To promote the economic regeneration of Greater London. The Council is one of 13
Enterprise Ltd (GLE)     “original ordinary members” of the company.
Newcred                  Newcred provides low cost loans and financial products to its members, who must live or
                         work within Newham. Two members of the Council are on a board of 12 directors.
Newham Education         To advance the education and training of children and young persons within the Borough,
Employer Partnership     with particular reference to future employment. Councillors were formerly members of
Ltd                      steering group, however steering group has now been disbanded.
Newham Music Trust       To provide tuition in musical instruments. The Council appoints three members to a board
                         of 12 Trustees.
Local Space              Housing Association with the aim of creating high quality, long-term social housing.
                         Merged with Passmore Urban Renewal to create a neighbourhood regeneration offer. The
                         Council appoints four members to board of fifteen
Royal Docks Trust        To support the community in that part of Newham that lies to the south of the A13. The
(London)                 Council appoints two members to a board of 7-17 (including co-optees) trustees.
Thames Gateway           To promote economic growth and inward investment for the regeneration of the Thames
London Partnership       Gateway. In partnership with the private sector and local community. It is the
                         unincorporated association of public bodies. Newham has two Councillors on a board of
                         ten.
Winsor Park              To monitor and maintain the integrity of reclamation works at Winsor Park, to maintain
Management               common landscaped areas and to recover costs by way of service charges. The Royal
Company                  Docks Trust (London) is a “special share” holder.
West Ham and             A community based regeneration programme funded by New Deal for Communities (NDC)
Plaistow New Deal        to improve the West Ham and Plaistow areas. The Council appoints three members to a
Partnership Ltd          board of 24.


Newham Homes is a wholly owned subsidiary of the Council. It has been classified as a group undertaking and
included in the Council's group accounts. Newham Homes accounts are available from 190 Strand, London, SE1
9SY.

Local Space is a provider of short term leased accommodation to Newham Council. Formed on the 10th February
2006 when the Council transferred 450 properties to Local Space providing the working capital required to enable
the acquisition of further accommodation. Newham Council appoints three members to a board of nine. The Council
does not have access to the profits of Local Space and as such it is not appropriate to consolidate Local Space
accounts within the Council group, instead this note to the accounts has been provided. Local Space had an
operating surplus in the year to 31st March 2010 of £16.3 million (£15.8 million to 31st March 2009). After financing
costs the overall surplus for the period was £8.0 million (£6.8 million to March 2009)

Note 36. Joint Venture - Caboodle Solutions Limited
Caboodle Solutions Ltd. was a joint venture limited company owned by London Borough of Newham and Steria
Holdings Ltd. At 31st March 2009, it had ceased operations and assets and liabilities were to be distributed to the
owners.
Note 37. Post Balance Sheet Events
The Statement of Accounts for 2009/10 was approved by Investment and Accounts Committee on 30th June 2010.
Any material post balance sheet events are considered before the final accounts receive audit opinion.


Note 38. Trust and Gift Funds


Statement of Accounts 2009/10                                                                                      66
The Council administered trust and gift funds with a value of £1.834 million at the end of the year (£1.994 million at
31st March 2008). These are not included in the Balance Sheet.

        2008/09                                Trust and Gift Funds                                       2009/10
         £000s                                                                                          £000s
                                       st
          1,357     Fund Balances at 1 April                                                                1,994
              767   Income                                                                                      612
            (130)   Payments                                                                                  (772)
                                       st
            1,994   Fund balances at 31 March                                                                 1,834
                    The following individual fund balances are held:
              251   Social Care Trust Funds                                                                     497
               10   Mayor's Benevolent Fund                                                                       0
            1,293   Newham Mayors’ Trust Fund                                                                 1,337
              440   Property                                                                                      0
            1,994   TOTAL                                                                                     1,834

These funds represent cash and investments held by but not belonging to the Authority. Property funds are those
amounts held on deposit from third party organisations occupying Newham Dockside offices. The deposits have
now been returned.


Note 39. Pension Commitments
As part of the terms and conditions of its officers and other employees, the Council offers retirement benefits.
Although these will not be payable until employees retire, the Council has a commitment to make these payments,
this commitment needs to be disclosed at the time that employees earn their future entitlement.

Actuarial Position - The level of contribution payable by the Council to the Fund during 2009/10 was based on the
                               st                                                             st
actuarial valuation as at 31 March 2007. An actuarial valuation was undertaken as at 31 March 2007 to set
contribution rates for the three years commencing 2008/09.
                                                st
The market value of the Fund’s assets at 31 March 2007 was £618.5 million, compared to liabilities of £862.2
million, representing 72% of the Fund’s accrued liabilities, allowing for future pay increases. The co ntribution rates
have been calculated using the projected unit actuarial method and the main actuarial assumptions used in the
2007 valuation are shown in the following table.

           Assumptions                          2004 Valuation                        2007 Valuation
 Rate of Return on Investments         6.7% Equities / 4.9% Bonds            6% Equities
 Rate of General Pay Increases         4.4% per annum                        4.9% per annum
 Rate of Increase to Pensions in       2.9% per annum                        3.1% per annum
 Payment (in excess of GMPs)
 Valuation of Assets                   Market value based on average         Market value based on average
                                       values of assets in the 12 months     values of assets in the 12 months
                                       prior to 31st March 2004              prior to 31st March 2008

The 2007 valuation set the required rate of contribution by the Council for 2009/10 at 22.7% of pensionable pay.
This rate of contribution is that which, when added to the contributions paid by the members, is sufficient to meet the
following;
            100% of the liabilities arising in respect of service after the valuation date; plus
            an adjustment over a period of 17 years to reflect the shortfall of the value of each
             participating employer’s notional share of the Fund’s assets from 100% of its accrued
             liabilities, allowing, in the case of members in service, for future pay increases.




Statement of Accounts 2009/10                                                                                         67
                                              st
The 2008 FRS17 exercise as at the 31 March 2010 calculated that the Council had the following overall assets and
liabilities for pensions:

                                                                               st                           st
              FRS17 Disclosure                                       As at 31 March 2009           As at 31 March 2010
   Assumptions                                     % per annum            % per annum                  % per annum
   Price Increases                                                                          3.3                            3.9
   Salary Increases                                                                         5.1                            5.7
   Pension Increases                                                                        3.3                            3.9
   Discount Rate                                                                            7.1                            5.5
                                                                                              st                             st
   Assets (Whole Fund)                               Long Term         Fund Value as at 31          Fund Value as at 31
                                                        Return                 March 2009                   March 2010

   Equities                                                   8.0                     284,951                        380,899
   Gilts                                                      4.5                        2.540                        66,243
   Other Bonds                                                5.5                      63,087                         16,561
   Property                                                   5.5                      35,143                         55,203
   Cash                                                       3.0                        2,964                          5,520
   Alternative Investments                                    5.0                      34,719                         27,601
   Total                                                      7.1                     423,404                        552,027


   Net Pension Assets                                                                   £000s                          £000s
   Estimated Employer Assets                                                          423,404                        552,027
   Total Value of Liabilities                                                       (801,788)                     (1,275,588)
   Newham Homes Pension Liabilities                                                  (14,985)                        (32,948)
   Net Pension Liability                                                            (393,369)                      (756,509)

   Analysis of Amount Recognised in
                                                      Year to 31st   Year to 31st   Year to 31st   Year to 31st    Year to 31st
   Statement of Total Recognised Gains and
                                                      March 2006     March 2007     March 2008     March 2009      March 2010
   Losses in Reserves
                                                           £000s          £000s          £000s          £000s           £000s
   Actual return less expected return on pension
                                                           79,521          7,990       (76,793)      (156,742)          93,886
   scheme assets
   Experience gains and losses arising on the
                                                            (165)              0       (23,945)        198,949       (429,827)
   scheme liabilities
   Changes in Financial Assumptions underlying
   the present value of the scheme                      (109,245)         96,757          (596)              0               0
   Actuarial gain/(loss) recognised in reserves          (29,889)        104,747      (101,334)         42,027       (335,941)

   Movement in Surplus/Deficit During the
                                                           £000s          £000s           £000s          £000s          £000s
   Year
   Surplus/(deficit) at beginning of the year           (377,100)      (429,743)       (323,280)      (428,306)      (393,369)
   Current Service Cost                                  (22,309)       (26,065)        (23,188)       (23,394)       (15,139)
   Employer contributions                                  28,950         31,374          35,754         33,527         33,456
   Contributions in respect of Unfunded Benefits            3,453          3,139           3,392          4,142          4,110
   Past service costs                                          (6)             0         (6,398)              0              0
   Impact of settlements and curtailments                   (568)          (600)           (958)          (754)        (5,680)
   Net return on assets                                  (13,231)       (11,221)         (9,034)       (21,980)       (25,983)
   Actuarial gains/(losses)                              (29,889)        104,747       (101,334)         42,207      (335,941)
   Newham Homes pension liability                        (19,043)          5,089         (3,260)          2,229       (17,963)
   Asset Value Restated                                          0             0               0        (1,040)              0
   Surplus/(deficit) at end of year                     (429,743)      (323,280)       (428,306)      (393,369)      (756,509)


Statement of Accounts 2009/10                                                                                                     68
                                                     Year to 31st     Year to 31st      Year to 31st    Year to 31st   Year to 31st
   History of Experience Gains and Losses
                                                     March 2006       March 2007        March 2008      March 2009     March 2010
                                                          £000s            £000s             £000s           £000s          £000s
   Difference between the expected and actual
   return on assets                                       79,521            7,990           (76,793)      (156,742)         93,886
   Value of assets                                      537,900           598,730           538,062         423,404        552,027
   Percentage of assets                                   14.8%              1.3%             14.2%            37%            37%
   Experience gains/(losses) on liabilities                 (165)               0           (23,945)        198,949        198,949
   Present value of liabilities                         948,600           908,056           950,194         801,788        801,788
   Percentage of the present value of liabilities           0.0%             0.0%               2.5%         24.8%          24.8%
   Actuarial gains/(losses) recognised in reserves      (29,889)           96,757               (596)             0              0
   Present value of liabilities                         948,600           908,056           950,194         801,788      1,275,588
   Percentage of the present value of liabilities         (3.2%)          (10.7%)             (0.1%)            0%             0%

An FRS17 pension liability of £33 million exists to provide for the pension deficit of Newham Homes employees as at
31st March 2010. Newham Homes liability relates to the period of service carried out by the ALMO’s employees up
to 1st December 2005, the point at which they transferred to the ALMO and to Newham Estate employees up to 1st
April 2008, the point at which they transferred.



Changes in actuarial assumptions

Demographic and Statistical Assumptions

The actuary adopted a set of demographic assumptions that are consistent with those used for the formal funding
valuation as at 31 March 2007 and these are the same as those used for the report for the period to 31 March 2009.
The post retirement mortality tables adopted were the PA92 Year of Birth Tables with the medium cohort projection
and a +2 year age rating.

The assumed life expectations from age 65 are:


                                                 Life Expectancy in years from
                                                             age 65
                                               Retiring today
                                               Males                         20.3
                                               Females                       23.2

                                               Retiring in 20 years
                                               Males                                 21.3
                                               Females                               24.1



Financial Assumptions


The financial assumptions used are set with reference to market conditions at 31 March 2010. The discount rate is
the yield on the iBoxx AA rated over 15 year corporate bond index as at this date which has been chos en to meet
the requirements of FRS17. The price increases and pension increases assumptions are based on the unadjusted
difference between conventional gilt yields and index-linked gilt yields at the accounting date using data published
by the Bank of England. Salary increases are then assumed to be 1.8% above price increases, as last year.

The liabilities have increased by about 65%, due to low AA rated bond yields required by FRS17 and higher
expected inflation, and although the assets have recovered well, with a return of about 30%, the overall result is a
large increase in the accounting deficit and projected cost for next year.




Statement of Accounts 2009/10                                                                                                         69
Note 40. Reconciliation of Net Revenue Surplus to Cash Inflow from Revenue Activities
    Newham -                                                                         2009/10      2009/10
     2008/09
          £000s     Revenue (Surplus)/Deficit for year:                                 £000s        £000s
         222,199    Net (Surplus) / Deficit on Income and Expenditure Account          203,743
        (220,273)   Net Additional Amounts required by statute and non-statutory     (213,201)
                    proper practices to be debited or credited to General Fund for
                    the year
             991      Housing Revenue Account                                              628
           1,713      Collection Fund deficit                                            (556)
           4,630                                                                                     (9,386)
                    Remove Expenditure not resulting in a cash movement
          (9,689)   Provision for loan repayments etc.                                 (18,748)
                0   Gains and Losses From Early Settlement of Debt                            0
            3,569   Provisions set aside in the year from revenue                       (5,255)
          (9,605)   Contributions (to)/from Reserves                                     26,033
         (11,095)                                                                                     2,030
               60   Change in Stocks/Work in Progress                                    (659)
                0   Movement on Creditors interest due on loans                              0
              372   Other Adjustments                                                        0
          (10663)                                                                                     (659)
           34,473   (Reduction)/Increase in Debtors                                    (11,809)
         (43,765)   Reduction/(Increase) in Creditors                                    86,444
         (19,955)                                                                                    74,635
                    Add Financing Items shown later in the Cash Flow Statement                       (5,984)
     (40,680)
         (60,635)   Cash Inflow from Revenue Activities                                              60,636



Note 41. Analysis of Revenue Grants
            2008/09                                     Grant                                      2009/10
             £000s                                                                                  £000s
              4,059    Asylum Seekers                                                                    0
                265    Connexion Funding - Young People's Career Advice                                  0
            273,051    Council Tax and Housing Benefit Subsidy                                     305,510
            261,356    Dedicated Schools Grant                                                     255,551
              1,405    Drug Action Team                                                                  0
             15,832    Education PFI grant                                                               0
             28,925    Housing Revenue Account subsidy                                              31,196
              5,571    Learning and Skills Council Grants                                            5,298
                  0    Local Area Agreement                                                              0
              1,426    New Deal For Communities                                                          0
             11,155    Schools Standards Grant                                                      12,212
             40,407    Standards Fund                                                               44,634
             11,843    Supporting People Grant                                                      12,458
             15,804    Sure start Grants (including general grant)                                  15,588
              1,587    Youth Justice Board (Youth Offenders)                                             0
              5,045    Other                                                                        26,882
            677,731                                                                                739,329




Statement of Accounts 2009/10                                                                                70
Note 42. Reconciliation of Net Cash Flow to Movement in Net Debt
         Restated                                                                                Balance
          Balance                                                                             31st March 2010
      31st March 2009
                 £000s                                                                                    £000s
                  9,003     (Decrease)/Increase in cash for the period                                   (5,917)
              (161,030)     Cash (inflow)/outflow from (increase)/decrease in debt                     (151,580)
                            financing
                   84,646   Cash inflow from increase in liquid resources                                 17,990
                 (67,381)   Movement in net debt in the period                                         (139,507)
                                          st
                (810,362)   Net Debt at 1 April                                                        (877,743)
                                           st
                (877,743)   Net Debt at 31 March                                                     (1,017,250)

Liquid resources are represented by:

Internally managed liquid resources consisting of sterling deposits not exceeding 364 days with banks, other
financial institutions and other Local Authorities. Externally managed investments consist of cash investmen ts with
one manager.

Restated 31st March 2008 figures – debt financing and liquid resource balances corrected.



Note 43. Analysis of Net Debt
                                                       Balance             Movement              Balance
                                                   31st March 2009         In the year       31st March 2010
                                                               £000s               £000s                  £000s
    Cash in hand                                              (3,373)             (5,917)                (9,290)
    Debt due after one year                                (738,021)            (188,658)             (926,679)
    Debt due within one year                               (279,190)               37,078             (242,112)
    Short Term Investments                                   142,841               17,990               160,831
    (Increase) / Decrease in Net Debt                      (877,743)            (139,507)           (1,017,250)

31st March 2008 balances have been restated to reflect late adjustments made to balance sheet in 2007/08
accounts.



Note 44. Area Based Grant

Area Based Grant (ABG) is made up of specific grants, many of which were previously made to the Council under
separate and specific performance and accountability arrangements. These are now part of a non-ring-fenced grant,
with no conditions imposed on its use as part of the grant determination, ensuring full local control over how funding
can be used.


Note 45. PFI Note to the Accounts

Currently the Council has four PFI schemes, two schemes for the building of new schools and another two schemes
for the refurbishment of Housing properties. The first school scheme involved the building of the following schools:
Kingsford Secondary, Plaistow and Kaizen Primary schools. The second school PFI scheme involve Cumberland
Secondary school. Both PFI school schemes are for twenty five (25) years. The two Housing PFI schemes involve
properties in Canning Town, and Forest Gate respectively. The Canning Town PFI scheme is for thirty (30) years,
while the Forest Gate PFI scheme is for twenty (20) years.


Further information regarding the Councils PFI schemes are disclosed in the tables shown immediately below:




Statement of Accounts 2009/10                                                                                      71
   PFI Disclosure Notes – Value of Assets and Movement



                                   Value of PFI Assets held on each Balance Sheet                                      Analysis of Movement

                                                                                                                                                      Total
                                     31/03/2009   31/03/2010     Movement    Revaluation    Depreciation   Additions   Enhancements   Disposal    Movement
                                          £000s          £000s      £000s           £000s         £000s        £000s          £000s      £000s        £000s

 3 Schools PFI (Schools PFI 1           23,029       41,592        18,563       19,173           (1,117)          0            507            0     18,563

 Cumberland school PFI                  20,683       34,668        13,985       13,786            (732)           0            930            0     13,984
 (Schools PFI 2)

 Canning Town PFI (Housing              56,410       54,902        (1,508)           211         (1535)           0              0       (184)      (1,508)
 PFI 1)

 Forest Gate PFI (Housing PFI           54,981       66,848        11,867           (468)        (1510)           0         13,846            0     11,868
 2)

                                       155,103      198,010        42,907       32,702           (4,894)          0         15,283       (184)      42,907




Statement of Accounts 2009/10                                                                                                                             72
   PFI Disclosure Notes – Value of Liabilities and Movement




                                                         Value of PFI Liabilities held on each Balance Sheet                  Analysis of Movement


                                                                                                                                                    Total
                                                            2008/09       2009/10   Movement      Cash Paid    Increase in     Adjustments
                                                                                                                                                Movement
                                                         31/03/2009    31/03/2010                                 Liability
                                                               £000s       £000s        £000s         £000s         £000s             £000s           £000s

            3 Schools PFI (Schools PFI 1                      23,344     22,712         (632)         (632)              0               0             (632

            Cumberland school PFI (Schools PFI 2)             21,988     21,167         (821)         (821)              0               0            (821)

            Canning Town PFI (Housing PFI 1)                  19,347     19,906         (251)         (251)              0               0            (251)

            Forest Gate PFI (Housing PFI 2)                    1,318     15,035       13,717          (129)       13,846                 0           13.717

                                                              65,997     78,010       12,013        (1,833)       13,846                 0           12,013




Statement of Accounts 2009/10                                                                                                                                 73
 PFI Disclosure Notes – Payments Due to be Made

                                   Value of PFI Assets held on each Balance Sheet                                                           Analysis of Movement

                       3 Schools PFI 1                   Cumberland School PFI 2                 Canning Town PFI 1                   Forest Gate PFI 2                   Total 20082009
                                                                                                                                                                                           Servic
                 Repay                     Service     Repay of                  Service     Repay                   Service     Repay                  Service     Repay of
                              Interest                              Interest                             Interest                           Interest                            Interest     e
                 of Liab                   Charge        Liab                    Charge      of Liab                 Charge      of Liab                Charge        Liab
                                                                                                                                                                                           Charge

   2008/2009
   Within 1 Yr       632         1,781          958         821        1,609          899        251        1,414       2,972         66          90          55       1,770       4,894     4,884
    Within 2-5     5,047         6,354        3,997       3.492        5,821        3,977      1,076        5,473      12,826        264         314         216       9,879      17,962    21,016
   Within 6-10     6,309         5,776        5,790       4,927        5,766        5,860      1,837        6,348      18,053        329         292         307      13,402      18,182    33,010
  Within 11-15     6,309         3,370        6,550       5,669        3,859        6,951      3,155        5,492      20,108        329         179         352      15,462      12,900    33,961
  Within 16-20     5,047           963        4,960       6,508        1,665        8,233      4,309        2,374      20,019        329          67         382      16,193       5,069    33,584
  Within 21-25         0             0            0         572           42         743,      6,660        2,303      25,865          0           0           0       7,232       2,345    26,608
  Within 26-30         0             0            0           0            0            0      2,059          179       5,821          0           0           0       2,059         179     5,821
                  23,344        18,244       22,255      21,989       18,762       26,653     19,347       23,583     105,664      1,317         942       1,312      65,997      61,531   155,884




                                     Value of PFI Assets held on each Balance Sheet                                                         Analysis of Movement

                            3 Schools PFI 1               Cumberland School PFI 2                 Canning Town PFI 1                   Forest Gate PFI 2                  Total 20082009
                                                                                                                                                                                           Servic
                  Repay                     Service     Repay of                  Service     Repay                   Service     Repay                  Service     Repay of
                               Interest                              Interest                             Interest                           Interest                           Interest     e
                  of Liab                   Charge        Liab                    Charge      of Liab                 Charge      of Liab                Charge        Liab
                                                                                                                                                                                           Charge

   2009/2010
   Within 1 Yr       1,262         1,733         938          840        1,549         937         246       1,396       3,076        791       1,024         586       3,139      5,702     5,537
    Within 2-5       5,047         5,969       4,160        3,582        5,566       4,132       1,133       5,394      13,191      3,165       3,557       2,559      12,927     20,486    24,042
   Within 6-10       6,309         5,295       5,934        5,065        5,406       6,068       2,058       6,214      18,444      3,956       3,233       3,622      17,388     20,148    34,068
  Within 11-15       6,309         2,888       6,714        5,830        3,444       7,189       3,369       5,261      20,668      3,956       1,886       4,157      19,464     13,479    38,728
  Within 16-20       3,785           578       3,550        5,830        1,189       7,428       4,688       3,872      23,657      3,165         539       3,514      17,488      6,178    38,149
  Within 21-25           0             0           0            0            0           0       7,206       1,816      25,261          0           0           0       7,206      1,816    25,261
  Within 26-30           0             0           0            0            0           0         396          29       1,484          0           0           0         396         29     1,484
                    22,712        16,463      21,296       21,167       17,154      25,754      19,096      23,982     105,781     15,033      10,239      14,438      78,008     67,838   167,269


Statement of Accounts 2009/10                                                                                                                                                                    74
HOUSING REVENUE ACCOUNT

The Housing Revenue Account (HRA) reflects a statutory obligation to account separately for Local Authority
housing provision as defined in particular in Schedule 4 of the Local Government and Housing Act 1989. It shows
the major elements of housing revenue expenditure – maintenance, management, capital charges, and how these
are met by rents, subsidy and other income.

     2008/09                                                                      2009/10     2009/10
                                HOUSING REVENUE ACCOUNT
      £000s                                                                        £000s      £000s        Note
                   Income
       (65,843)    Dwelling Rents                                                  (67,281)
        (3,323)    Non Dwelling Rents                                               (3,054)
        (5,496)    Leaseholder Service Charges                                      (5,844)
        (8,282)    Charges for Services and Facilities                              (7,998)
       (23,714)    Housing Revenue Account Subsidy receivable                      (31,196)
           (62)    Reduction in provision for bad debts                                   0
      (106,720)    Total Income                                                               (115,373)

                   Expenditure
         14,423    Repairs and Maintenance                                          12,931
            262    Trading Account Deficit                                               0
         41,849    Supervision and Management                                       34,994
          2,281    Property Leasing Costs                                            1,369
            788    Rent, Rates and Insurance                                           912
              0    Subsidy Transfer Limitation to General Fund                           0
            319    Debt Management Expenditure                                         358
              0    Increased Provision for Bad or Doubtful Debts                       230
                   Depreciation and Impairment of Fixed Assets
         32,260          - Dwellings                                                28,829
            386          - Other HRA Assets                                            310
         92,568    Total Expenditure                                                            79,933

       (14,152)    Net Cost of HRA Services per Authority Income and                           (35,440)
                   Expenditure Account

            600    HRA Services Share of Corporate and Democratic Core                             609
                   HRA Share of other Amounts included in the whole
               0   authority Net Cost of Services but not Allocated to
                   Specific Services
       (13,552)    Net Cost of HRA Services

         29,318    Interest Payable and Similar Charges                             34,724
          2,364    Amortisation of Premiums and Discounts                            1,854
          (400)    Interest and Investment Income                                    (146)      36,432
         17,730    (Surplus) or Deficit for the year on HRA Services                             1,601


STATEMENT OF MOVEMENT ON THE HOUSING REVENUE ACCOUNT BALANCE
        2008/09                                                                                  2009/10

         £000s                                                                                    £000s
         17,730    (Surplus) / Deficit for the year on the HRA Income and Expenditure                      1,601
                   Account
                   Net additional amount required by statute to be debited/ (credited) to
        (16,739)   the HRA balance for the year                                                             (973)
             991   (Increase)/ decrease in the Housing Revenue Account Balance                                628
         (6,338)   Housing Revenue Account (Surplus) brought forward                                      (5,346)
         (5,347)   Housing Revenue Account (Surplus) carried forward                                      (4,718)


Statement of Accounts 2009/10                                                                                       75
Note to the Statement of Movement on the Housing Revenue Account Balance
 2008/09                                                                                         2009/10

     £000s                                                                                    £000s      £000s
                Items included in the HRA Income and Expenditure Account but
                excluded from the Movement on HRA balance for the year
         0      Depreciation and Impairment of Fixed Assets                                        0
         0      Net Charges made for Retirement Benefits in accordance with FRS17                  0

                Items not included in the HRA Income and Expenditure Account but
                included in the Movement on HRA balance for the year
   (19,349)     Transfer to/ (from) Major Repairs Reserve                                   (15,799)
      2,470     Transfers to/ (from) PFI Reserve                                               7,315
        140     HRA Share of Contributions to/ (from) Pension Reserve                             93
          0     Voluntary set aside for Debt Repayment                                             0
          0     Minimum Revenue provision for Capital Financing                                7,418
          0     Capital Expenditure funded by the HRA                                              0       (973)
   (16,739)     Net Additional Amount required by statute to be debited or                                 (973)
                (credited) to the HRA Balance for the year


Note 1. Dwelling Rents
The total rent income from dwellings was £67.3 million compared to £65.8 million in 2008/09. This reflects the
reduction in stock numbers between the years, the void property levels and an increase in the average rent during
2009/10 of 3.1% or an average increase of £2.20 per week (for a 52 week year). An average of £4.84 a week is
charged for services such as care-taking and grounds maintenance. The total amount payable by tenants does not
change only the element classed as rent.

Note 2. Housing Subsidy
The Government pays a subsidy to the Housing Revenue Account. Subsidy is based on Government formulae that
are used to calculate a number of elements in a notional account.
              2008/09                      HRA Subsidy Entitlement                                         2009/10
                £000s                                                                                        £000s
              (37,981)   Management and Maintenance Allowance                                              (38,079)
              (13,297)   Major Repairs Allowance                                                           (13,341)
              (35,231)   Capital charges                                                                   (39,012)
               (2,193)   Other reckonable expenditure                                                       (1,326)
                67,628   Notional income from rent                                                           68,501
                     0   Rent Rebate / Limitation                                                                 0
               (2,470)   PFI Subsidy Allowance                                                              (7,315)
                     0   Rent Constraint Allowance                                                                0
                 (170)   Additional subsidy                                                                   (624)
              (23,714)   Total Subsidy Due For Year                                                        (31,196)
                 (741)   Previous Year Subsidy                                                                (473)
              (24,455)   Total Subsidy Income                                                              (31,669)

Note 3. Internal Trading Balances
Surpluses or losses on trading accounts are redistributed, pro rata, to the appropriate services. The table below sets
out the share allocated to the HRA. Repairs and Maintenance Division is now part of Newham Homes ALMO.


               2008/09                                                                              2009/10
                £000s                                                                                £000s
                     0    Repairs and Maintenance Division                                                0
                  262     NEWCO                                                                           1
                  262     Total surplus (Deficit)                                                         1




Statement of Accounts 2009/10                                                                                         76
Note 4. Rent Arrears and Provisions
At the end of the year the level of HRA rent arrears was £6.8 million (£7.1 million in 2008/09). During the year bad
debts of £0.5m were written out of the accounts. The provision for bad or doubtful debts was £5.9 million at the
year-end.
                2008/09                                                                  2009/10
                                                Rent Arrears at 31st March
      HRA       General         Total                                          HRA       General        Total
                 Fund                                                                     Fund
       £000s      £000s           £000s                                         £000s      £000s           £000s
        2,914      9,849          12,763    Former Tenants                       2,940     12,289          15,229
        4,175      5,010           9,185    Current Tenants                      3,870      3,748           7,618
        7,089     14,859          21,948                                         6,810     16,037          22,847
      (6,134)   (13,672)        (19,806)    less Provisions                    (5,900)   (14,647)        (20,547)
          955      1,187           2,142    Net Arrears                            910      1,390           2,300

Note 5. Depreciation
Depreciation for 2009/10 is charged on the Balance Sheet value of assets, based on their estimated useful life.
Depreciation for 2009/10 was £28.83 million for dwellings (£32.26 million in 2008/09), £0.31 million for other assets
(£0.39 million in 2008/09).

Note 6. Housing Stock
The Council was responsible for the management of an average of 18,435 dwellings during 2009/10 (18,483 in
2008/09). An analysis of Newham's housing stock at 31st March 2010 by age and type (based on Central
Government subsidy classifications) is given below.


  No. of Bedrooms                Pre 1919       1919-1944     1945-1964   1965-1974   1975-2000              Total
  1                                       379            90       1,912       2,275        1,320            5,976
  2                                       308           387       2,873       1,894          843            6,305
  3 or more                               505           706       2,386       1,179        1,284            6,060
  Total                                 1,192         1,183       7,171       5,348        3,447           18,341
  Of which:
  Low rise flats                          387           435       3,506       1,962        1,661            7,951
  Medium rise flats                        19            56       1,222         553          121            1,971
  High rise flats                           3             0       1,387       2,251            6            3,647
  Houses and Bungalows                    783           692       1,044         582        1,659            4,760
  Hostels                                   0             0          12           0            0               12
  Total                                 1,192         1,183       7,171       5,348        3,447           18,341

The change in the stock is detailed below:

                2008/09                              Housing Stock                                        2009/10
                 18,437     Dwellings at 1st April                                                         18,528
                     (16)   Right to buy sales                                                                 (4)
                     (89)   Demolitions                                                                       (92)
                     (48)   Other disposals                                                                 (110)
                     244    Additions (buy backs)                                                               19
                  18,528    Total at 31st March                                                            18,341




Statement of Accounts 2009/10                                                                                        77
  Note 7. Fixed Assets

                                                                           Other Land                        Non-
                                                                                         Equipment,
                                            Intangible     Dwellings          and                         operational        Total
                                                                                         Vehicles etc.
                                                                           Buildings                        Assets
                                              £000s           £000s          £000s          £000s           £000s           £000s
Balance Sheet value 1st April 2009                   16       1,007,280         8,827               11          52,175      1,068,309
PFI additions to opening balances 31/3/09             0           67,805            0                 0               0         67,805
Depreciation                                       (13)           12,143           72               (7)             352         12,547
Additions                                            35         122,149         2,963               54              509       125,710
Impairment                                            0         (89,502)            0                 0               0       (89,502)
Disposals                                             0          (9,899)            0                 0         (5,369)       (15,268)
Revaluation                                            0          4,452        (1,166)                0         (4,934)        (1,648)
Balance Sheet value 31st March 2010                   38      1,114,428        10,696                58         42,733      1,167,953

  In accordance with Government guidelines, dwellings have been valued at their ‘existing use with vacant
                                                                                                              st
  possession’ and then reduced to reflect ‘existing use for social housing’. The vacant possession value at 31 March
  2010 is estimated to be £3.01 million has which been reduced to £1.11 million to reflect social housing use. This
  social housing use value is included in the Balance Sheet. The reduction of £1.89 million is a measure of the
  economic cost to Government of providing Council Housing at less than open market rents.

  Note 8. Capital Expenditure
  Expenditure for capital purposes during 2009/10 and methods of financing are set out below.


                  2008/09                                                                                           2009/10
                   £000s       Expenditure in year                                                                      £000s
                   98,653      Fixed Assets                                                                             88,326
                    2,481      Revenue Expenditure Funded by Capital under Statute                                       3,642
                  101,134                                                                                               91,968
                               Methods of Financing
                 (10,684)      Major Repairs Reserve                                                                (17,050)
                 (86,523)      SCE (R)                                                                              (73,023)
                  (1,853)      Other Grant contributions                                                             (1,600)
                    (480)      Capital receipts                                                                            0
                  (1,048)      Leaseholders Contributions                                                              (927)
                    (546)      Increase / (Reduction) in Capital Creditors                                               632
                (101,134)                                                                                           (91,968)

  Note 9. Capital Receipts

  The gross capital receipts from the sale of dwellings, land and other property are as follows. Capital receipts are
  pooled, with 75% of sale of dwellings (net) proceeds being transferred to Central Government for distribution on
  Housing schemes. The balance is available to fund additional capital expenditure.

                          2008/09                                                                                   2009/10
                           £000s                                                                                     £000s
                            6,333     Dwellings                                                                         759
                                0     Land and other assets                                                               0
                            6,333     Total                                                                             759




  Note 10. Major Repairs Reserve

  Statement of Accounts 2009/10                                                                                                  78
This reserve is credited with the depreciation charged to the HRA each year, with an adjustment to ensure the net
credit in the year equals the Major Repairs Allowance, which forms part of the Housing Subsidy arrangements. The
reserve is only available for financing major repairs carried out to the housing stock. Any sums unspent are carried
forward to future years.

       2008/09                                                                                         2009/10
         £000s                                                                                           £000s
        (9,240)   Balance 1st April                                                                    (11,853)
       (32,646)   Depreciation charge to HRA (from the Capital Finance Account)                        (26,089)
         19,349   Adjusting transfer to HRA                                                              12,748
         10,684   Financing of Capital expenditure                                                       17,051
       (11,853)   Total                                                                                 (8,143)

Note 11. Housing Repairs Reserve
No contribution has been made in 2009/10 from the HRA to the Housing Repairs Reserve. This reserve, current
balance £1.36 million, will be used to help maintain the level of repairs to Council houses.

Note 12. Contribution to Pension Reserve
Under the requirements of FRS17, the cost of services within the HRA include only the employers share of pension
benefits earned in the year by employees chargeable to the HRA. The additional contribution for past service costs
are shown as a contribution to the Pensions Reserve. Details of the Pension Funds and the effect of FRS17 can be
found in the Statement of Accounting Policies.

Note 13. Newham Homes
In December 2005, the Council formed Newham Homes, an Arms Length Management Organisation (ALMO).
Newham Homes is responsible for the provision of services associated with the Council’s Housing stock (repairs,
lighting, cleaning). The housing stock remains in the ownership of the Council and rents are colle cted by Newham
Homes. The Council has entered into a contract with Newham Homes to provide these services. Newham Homes
is required by law to prepare a set of accounts which shows its management and administrative cost.

The transactions of Newham Homes have been incorporated within the Council's group financial statements.




Statement of Accounts 2009/10                                                                                     79
                                           COLLECTION FUND
                                   INCOME AND EXPENDITURE ACCOUNT
         2008/09                  COLLECTION FUND                                 2009/10    Note
          £000s                                                         £000s      £000s
                   Income
        (93,218)   Council Tax                                        (94,629)
        (73,828)   Non Domestic Rates                                 (77,319)
               0   Recovery of previous years’ Council Tax surplus       (575)   (172,523)
       (167,046)
                   Expenditure
                   Precepts and Demands
          68,870    Newham                                             70,782
          22,564    Greater London Authority (GLA)                     23,190      93,972
          91,434

                   Business Rate
          73,357    Payment to National Pool                           77,004
             351    Costs of Collection                                   339
             120    Appropriated credits to Balance Sheet creditors       (24)     77,319
          73,828
                   Provisions for non collection
           3,497    Council Tax                                                       676
           1,713   (Surplus)/Deficit for the year                                   (556)
             575   (Surplus)/Deficit at 1st April                                   2,288
           2,288   (Surplus)/Deficit at 31st March                                  1,732

                   (Surplus)/Deficit consists of:
                    Newham's Current year Council Tax
           1,290   (surplus)/deficit                                                1,723
                   Greater London Authority's Current year Council
             423   Tax (surplus) / deficit                                            565
                   Newham's Previous year Council Tax
             432   (surplus)/deficit                                                 (419)
                   Greater London Authority's Previous year Council
             143   Tax (surplus) / deficit                                          (137)
           2,288    (Surplus) / Deficit at 31st March                               1,732




Statement of Accounts 2009/10                                                                       80
Note 1. Council Tax
Council Tax income derives from charges raised according to the value of residential properties, which have been
classified into eight valuation bands with estimated values at 1st April 1991 being used for this specific pur pose.
Individual charges are calculated by estimating the amount of income required to be taken from the Collection Fund
by the Council and Greater London Authority (GLA) for the forthcoming year, and dividing by the Council Tax base
(the total number of properties in each band adjusted by a proportion to convert the number to a Band D
equivalent), and then adjusting for discounts which in 2009/10 were 10,633 (10,691 in 2008/09). This basic amount
of Council Tax for a Band D property of £1,255.45 (£1,255.45 in 2008/09) is multiplied by the proportion specified for
the particular band to give an amount due. Council Tax bills were based on the following proportions for bands A to
H:

                              Council Tax Band         Proportion of Band D Charge
                              Band A                               0.67
                              Band B                               0.78
                              Band C                               0.89
                              Band D                               1.00
                              Band E                               1.22
                              Band F                               1.44
                              Band G                               1.67
                              Band H                               2.00

The income from Council Tax in 2009/10, of £94.63 million was receivable from the following sources:
      2008/09                                                                                            2009/10
        £000s                                                                                              £000s
      (64,924)   Bills to Council Taxpayers                                                              (65,023)
      (28,294)   Council Tax Benefits                                                                    (29,606)
      (93,218)                                                                                           (94,629)

Note 2. National Non Domestic Rates
NNDR is organised on a national basis. The Council is responsible for collecting rates from the ratepayers in its area
which are calculated by multiplying their rateable values by a uniform rate specified by the Government. The
proceeds, less certain reliefs and other reductions, are paid into an NNDR pool administered by the Government
who then redistributes the sums back to Local Authorities’ General Funds on the basis of a fixed amount per head of
population.

The total non-domestic average rateable value for the Council’s area for 2009/10 was £191.9M as per the District
Valuer (£190.9M in 2008/09) and the national non-domestic multiplier for the year was 48.5p (46.2p in 2008/09)
resulting in notional NNDR income of £93.0million. The NNDR income for 2009/10 of £77.3 million (£73.8 million in
2008/09) is net of reliefs and provisions.

Note 3. Greater London Authority (GLA)
Following the creation of the GLA, there is now only one precept covering the Police, Fire and Emergency Planning,
and GLA/London-wide bodies. The precept was £23.19 million in 2009/10 (£22.56 million in 2008/09).

Note 4. Contributions to/from Collection Fund Deficits/(Surpluses)


                               Collection Fund                        GLA                Newham
                                                                            £000s             £000s
                         st
              Deficit 31 March 2009                                           566              1,722
              Recovery Of Previous Year’s Deficit                           (143)                (432)
              Balance Pre 2009-10                                             423                1,290
              Movement In Year                                                  5                   14
                        st
              Deficit 31 March 2010                                           428                1,304




Statement of Accounts 2009/10                                                                                       81
                                                  GROUP ACCOUNTS

The Group Accounts present the financial position of the Council's group of organisations. The Council's Group
includes Newham Homes, a wholly owned subsidiary.

                                GROUP INCOME AND EXPENDITURE ACCOUNT
  2008/09                                                     2009/10    2009/10                     2009/10
              GROUP INCOME AND EXPENDITURE ACCOUNT
                                                                Gross     Gross                        Net
                                                                                                                 Note
Net Spend                                                      Spend     Income                      Spend
     £000s    SERVICES                                           £000s       £000s                     £000s
    21,374    Central Services to the Public                     99,430    (81,405)                   18,025
      4,726   Corporate and Democratic Core                      74,774     (1,759)                   73,015
        197   Court and Probation Services                          205           0                       205
    69,777    Cultural, Environmental and Planning Services     109,075    (23,177)                   85,898
   216,591    Children’s and Education Services                 726,451   (610,840)                  115,611
    12,324    Highways, Roads and Transport Services             30,714    (15,404)                   15,310
    42,583    Local Authority Housing (HRA)                     138,771    (99,134)                   39,637
    24,458    Housing Services                                  438,145   (413,678)                   24,467
    79,614    Social Services                                   116,635    (35,590)                   81,045
      1,736   Non Distributed Costs                               2,654           -                     2,654
   473,380    NET COST OF SERVICES                            1,736,854 (1,280,987)                  455,867
          0   Gains or Loss on disposal of Fixed Assets
         38   Net (Surplus)/Deficit on Trading Accounts                                                (1,109)
        484   Reporting Authority Share of deficit on Joint                                              (224)
              Ventures
     50,671   Interest Payable and Similar Charges                                                     54,029
        108   Contribution to Housing Pooled Capital Receipts                                                0
        676   Levies                                                                                       743   7 LBN
     21,980   Pension Interest Cost / Expected Asset Returns                                           25,983    11 LBN
   (12,012)   Interest Receipts                                                                        (6,449)
              (Gains) and Losses On Repurchase/Early
         0    Settlement of Borrowing                                                                       0
  535,325     NET OPERATING EXPENDITURE                                                               528,840
              AMOUNT TO BE MET FROM GRANT AND
              LOCAL TAXES
   (68,870)   Demand On The Collection Fund                                                           (70,574)
          0   Contribution to Collection Fund Deficit                                                      433
   (32,264)   Revenue Support Grant                                                                   (40,860)
   (32,399)   Area Based Grant                                                                        (36,937)
      (387)   LABGI Income                                                                               (355)
  (178,722)   Distribution From The NNDR Pool                                                        (177,028)
    222,683   NET(SURPLUS)/DEFICIT FOR THE YEAR                                                        203,519

         RECONCILIATION OF AUTHORITY'S SURPLUS/DEFICIT TO THE GROUP SURPLUS/DEFICIT

    2008/09        Reconciliation of Newham's Deficit to Group Deficit                               2009/10
     £000s                                                                                            £000s
        222,199    (Surplus) / deficit for the year on the Income and Expenditure Account                203,743
              0    Add Joint Venture Dividend Income (Caboodle)                                                0
        222,199    Surplus in the Group Income and Expenditure Account                                   203,743
                   attributable to the authority
                   (Surplus) / deficit in the Group Income and Expenditure Account attributable to
                   group entities (adjusted for intra-group transactions):
              0    Subsidiaries                                                                                0
            484    Joint ventures                                                                          (224)
        222,683    (Surplus) / deficit for the year on the Group Income and                              203,519
                   Expenditure Account




Statement of Accounts 2009/10                                                                                        82
                                                       GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                          Restated
                                                                       STATEMENT OF TOTAL RECOGNISED                                                   2009/10
                          2008/09
                                                                             GAINS AND LOSSES
                           £000s                                                                                                                        £000s
                           221,393 (Surplus) / Deficit for the year on the Income and Expenditure Account                                               203,519
                           124,485 (Surplus) / Deficit arising on revaluation of Fixed Assets                                                           (33,201)
                            (1,744)(Surplus)/Deficit arising on revaluation of available-for-sale financial assets and Financial                         (1,817)
                                   Instruments
                         (44,890) Actuarial (gains)/losses on Pension Fund assets and liabilities                                                       353,904
                            2,614 Collection Fund                                                                                                          1,956
                            (319) Newham Homes Reserve movement                                                                                            (498)
                                0 Any other gains and losses required to be included in the STRGL                                                        (2,580)
                         301,539 Total recognised gains for the year                                                                                    521,283
Note: Reconciliation of items for the Group Statement of Total Recognised Gains and Losses


This statement brings together all the gains and losses of the Council for the year and shows the aggregate increase in the value of assets and liability.
                                                                                                                                                                       Movement
      Restated                                                         Movement      FIAA and                                                         Transfer and
                                                          Balance                                    Unrealised                                                         between
      Balance                                                             In        Available for                     Revaluation      Disposal       Other Capital
                                                           Sheet                                    Gains/Losses                                                       Capital and
       Sheet                                                             Year           sale                                                          Expenditure
                                                                                                                                                                        Revenue
       2008/09                                             2009/10      2009/10
       £000s                                               £000s        £000s          £000s           £000s              £000s         £000s            £000s           £000s
         53,533    Revaluation Reserve                     149,454       (95,921)               0               0           (99,794)         3,873               0                0
       975,607     Capital Adjustment Account              741,583       234,024                0               0                  0           484          24,512         209,028
          9,497    Usable Capital Receipts                    7,573         1,924               0               0                  0       (2,505)           4,430                0
         11,853    Major Repairs Reserve                      8,143         3,710               0               0                  0             0          32,850         (29,140)
       (13,226)    Financial Instrument Adj. Account       (11,773)       (1,453)         (1,817)               0                  0             0               0              364
                   Available For Sale Financial
              0                                                   0            0                0               0                 0               0                0             0
                   Instruments Reserve
          75,963   Revenue Reserve                           61,338       14,625                0          (2,580)                0             0            2,949          14,256
       (392,744)   Pension Reserve                        (755,884)      363,140                0         353,904                 0             0                0           9,236
           (432)   Collection Fund Account                   (2,388)       1,956                0            1,956                0             0                0               0
           (415)   Group Companies General Reserves              307       (722)                0            (498)                0             0                0           (224)
         719,636                    Total                   198,353      521,283          (1,817)         352,782          (99,794)         1,852           64,741         203,519




Statement of Accounts 2009/10                                                                                        83
                                       GROUP BALANCE SHEET


  2008/09     Group Balance Sheet at 31st March                                 2009/10        Notes

     £000s                                                             £000s         £000s
              FIXED ASSETS
              Intangible Fixed Assets
     1,207    Intangible Fixed Assets                                  1,209         1,209
              Tangible Fixed Assets
              Operational Assets
  1,007,280   Council Dwellings                                     1,114,428
    750,595   Other Land and Buildings                                826,896
    113,252   Infrastructure Assets                                   128,465
     21,982   Community Assets                                         24,110
     23,525   Equipment, Vehicles etc                                  25,747    2,119,646
              Non Operational Assets
    111,333   Industrial and Commercial                              107,980
     73,679   Surplus Properties                                      54,338
         21   Assets under Construction                                5,662       167,980
  2,102,874   Net Fixed Assets                                                   2,288,835
              Investment In Joint Venture
        271   - Share of Gross Assets                                      0
      (495)   - Share of Gross Liabilities                                 0             0
     79,396   Long Term Investments                                                136,256
    132,364   Long Term Debtors and Prepayments                                      (658)
  2,314,410   Total Long Term Assets                                             2,424,433
              CURRENT ASSETS
      1,892   Stocks and Work in Progress                               1,418                      8
   135,398    Debtors and Prepayments                                147,774                       6
   (42,581)   Less Provisions                                        (46,942)
   142,841    Investments                                            160,831
     18,548   Cash and Bank                                            30,152      293,233
              CURRENT LIABILITIES
  (279,190)   Borrowing Repayable on Demand or Within 12 months     (242,112)
  (122,055)   Creditors and Receipts in Advance                     (208,789)                      7
   (20,445)   Bank Overdraft                                         (38,094)    (488,995)
  (165,592)   Net Current Assets                                                 (195,762)
  2,148,818   Total Assets less Current Liabilities                              2,228,671
              OTHER LIABILITIES
  (738,021)   Borrowing Repayable Within a Period in Excess of 12   (926,679)
              months
  (283,880)   Government Grants Deferred                            (332,329)
      (467)   Deferred Capital Receipts                                 (467)
   (12,376)   Provisions                                             (13,266)                 33 LBN
  (394,438)   Liability Related to Defined Benefit Pension Scheme   (757,577)   (2,030,318)
    719,636   Total Assets less Total Liabilities                                   198,353




Statement of Accounts 2009/10                                                                 84
              Group Balance Sheet at 31st March
  2008/09                                               2009/10       Notes
              Reserves
              Financed by:
    975,607   Capital Adjustment Account                   741,583    LBN 24
   (13,226)   Financial Instrument Adjustment Account     (11,773)
     53,533   Revaluation Reserve                          149,454    LBN 25
  (392,744)   Pension Reserve                            (755,884)
      9,497   Usable Capital Receipts                         7,573
     11,853   Major Repairs Reserve                           8,143
     75,963   Revenue Reserves                              61,338
      (415)   Group Companies General Reserves                  307
      (432)   Collection Fund                               (2,388)
    719,636                                                198,353




Statement of Accounts 2009/10                                             85
                                   GROUP CASH FLOW STATEMENT
         Group                                                          Group
        2008/09                                                        2009/10       Notes
            £000s     Revenue Activities                                  £000s
                      Cash Outflows
          478,086     Cash Paid to and on behalf of Employees           699,013
          470,166     Other Operating Cash Payments                     423,973
          129,947     Housing Benefit Paid Out                          157,265
           73,708     Non-Domestic Rates Paid to National Pool           77,343
           22,564     Precepts Paid                                      23,191
                      Cash Inflows
         (41,783)     Rents (after rebates)                             (40,664)
         (62,513)     Council Tax receipts                              (62,635)
         (71,875)     Non Domestic Rate receipts - from ratepayers      (76,462)
        (180,435)     Non Domestic Rate receipts - from pool           (174,464)
         (32,264)     Revenue Support Grant                             (40,860)
        (273,051)     DSS grants for Benefits                          (305,510)
        (261,356)     Dedicated Schools Grant                          (255,551)
        (143,324)     Other Government Grants                          (178,268)       2
        (156,323)     Cash Received from Goods and Services            (171,174)
         (14,197)     Other Operating Cash Receipts                     (16,069)
         (62,650)     Cash Inflow from Revenue Activities                 59,127       1
                      Dividends from Joint Ventures
                      Cash Inflows
                  0   Dividends Received                                         0
                      Cash Outflows
           51,807     Interest Paid                                      24,834
           51,807                                                        24,834
                      Cash Inflows
          (11,127)    Interest Received                                  (6,272)
          (11,127)                                                       (6,272)
                      Capital Activities
                      Cash Outflows
          192,035     Purchase of Fixed Assets                          191,071
                0     Purchase of Long Term Investments                       0
              108     Contribution to Housing Pooled Receipts                 0
            1,279     Payment of Improvement Grants                       1,451
          193,422                                                       192,522
                      Cash Inflows
          (4,986)     Sales of Fixed Assets                               (2,365)
        (100,698)     Capital Grants Received                           (79,533)
               (8)    Other Capital Cash Receipts                       (49,273)
        (105,692)                                                      (131,171)
           65,760     Net Cash (Inflow) before Financing                 139,040       3
                      Management of Liquid Resources
           84,362     Net increase/(decrease) in Short Term Deposits     17,990
                0     Net Increase/(Decrease) in Other Liquid             (881)
                      Resources
                      Financing
                      Cash Outflows
          161,726     Repayments of Amounts Borrowed                    101,420
                      Cash Inflows
        (143,256)     New Loans Raised                                 (195,000)
        (179,500)     New Short Term Loans                              (58,000)
        (322,756)                                                      (253,000)
         (10,908)     (Increase)/Decrease in Cash                          4,569       3




Statement of Accounts 2009/10                                                                86
                                     NOTES TO THE GROUP ACCOUNTS
Note 1 Group Accounts
On 1st December 2005, the Council formed Newham Homes (ALMO). Newham Homes is responsible for the
provision of services associated with the Council’s Housing stock (repairs, lighting, cleaning). The housing
stock remains in the ownership of the Council and rents are collected by Newham Homes.

Newham Homes has been accounted for on the acquisition basis of accounting. As this is a wholly owned
subsidiary of the Council, there is a requirement to include its financial activities within the group accounts of
Newham Council. Therefore the income and expenditure of Newham Homes is included within the Group
Income and Expenditure Account. Its assets and liabilities are shown on the face of the Group Balance
Sheet.

Caboodle Solutions Limited is accounted for as a joint venture (the Council owned 49%). The Council's share
of the income and expenditure and of assets and liabilities is included within the Group Statements.
Caboodle discontinued operations during 2008/09; its liabilities will be shared between the owners.

Note 2. Reconciliation of Net Revenue Surplus to Cash Inflow from Revenue Activities


     Group                                                                                           Group
    2008/09                                                                           2009/10       2009/10

        £000s                                                                            £000s          £000s
                 Revenue (Surplus)/Deficit for year:
      222,199    Net (Surplus) / Deficit on Income and Expenditure Account             203,519

    (220,273)    Net Additional Amounts required by statute and non-statutory        (212,977)
                 proper practices to be debited or credited to General Fund for
                 the year
           991   Housing Revenue Account                                                    628
         1,713   Collection Fund deficit                                                  (556)        (9,386)
         4,630
                 Remove Expenditure not resulting in a cash movement
       (9,689)   Provision for loan repayments etc.                                    (18,748)
             0   Gains and Losses From Early Settlement of Debt                               0
         3,265   Provisions set aside in the year from revenue                          (5,251)
      (11,456)   Contributions (to)/from Reserves                                        25,535          1,536
      (13,250)
            56   Change in Stocks/Work in Progress                                        (474)
             0   Change in Other Balances                                                     0
             0   Movement on Creditors interest due on loans                                  0
           372   Other Adjustments                                                            0          (474)
      (12,822)
        35,745   (Reduction)/Increase in Debtors                                       (11,372)
      (44,893)   Reduction/(Increase) in Creditors                                       86,154         74,782
      (21,970)                                                                                          66,458
                 Add
      (40,680)   Financing Items shown later in the Cash Flow Statement                                (7,331)
      (62,650)   Cash Inflow from Revenue Activities                                                   59,127




Statement of Accounts 2009/10                                                                                87
 Note 3. Reconciliation of Net Cash Flow to Movement in Net Debt
        Restated                                                                              Balance
         Balance                                                                          31st March 2010
      st
   31 March 2009
                £000s                                                                                £000s
                10,908 (Decrease)/Increase in cash for the period                                   (4,569)
             (161,030) Cash (inflow)/outflow from (increase)/decrease in debt financing           (153,056)
                84,646 Cash inflow from increase in liquid resources                                 17,990
              (65,476) Movement in net debt in the period                                         (139,635)
                                     st
             (810,791) Net Debt at 1 April                                                        (876,267)
                                        st
             (876,267) Net Debt at 31 March                                                     (1,015,902)
 Restated 31st March 2008 figures – debt financing and liquid resource balances corrected.

 Liquid resources are represented by:

 Internally managed liquid resources consisting of sterling deposits not exceeding 364 days with banks, other
 financial institutions and other Local Authorities. Externally managed investments consist of cash
 investments with one manager.

 Note 4. Analysis of Net Debt
                                                         Balance            Movement In           Balance
                Group Net Debt
                                                      31st March 2009         the year         31st March 2010
                                                                 £000s              £000s                  £000s
Cash in hand                                                    (3,373)            (4,569)                (7,942)
Debt due after one year                                      (738,545)           (190,134)             (926,679)
Debt due within one year                                     (279,190)              37,078             (242,112)
Short Term Investments                                         142,841              17,990               160,831
(Increase) / Decrease in Net Debt                            (876,267)           (139,635)           (1,015,902)
  .

 Note 5. Movement in Group Reserves
                                                  Balance At 1st April     Movement          Balance At 31st
               Group Reserves
                                                         2009               In Year            March 2010
                                                               £000s            £000s                    £000s
Caboodle - Joint Venture                                         (224)            224                         0
Newham Homes – Subsidiary                                        (191)            498                       307
Total Group Reserves                                             (415)            722                       307

 Note 6. Analysis of Debtors and Doubtful Debts
 In addition to the figures in Note 30 (Page 60), the Group accounts includes a total of £2.21 million debtors
 and prepayments at year ending 31st March 2010, all of which were external to the group (£1.64 million at
 31st March 2009).

 Note 7. Analysis of Creditors
 In addition to the figures in Note 31 (Page 60), the Group Accounts includes a total of £2.19 million creditors
 at year ending 31st March 2010 (£2.43 million at 31st March 2009).
 Note 8. Stocks and Work in Progress
                Newham            Restated                                               Newham
 Council                                                                  Council                       Group
                 Homes             Group                                                  Homes
                                                                                                         st
31st March     31st March        31st March                             31st March      31st March    31 March
   2009           2009              2009                                   2010            2010          2010
      £000s      £000s             £000s                                  £000s           £000s         £000s
         931           311              1,242    Stocks                        612              327          939
         472           178                650    Work in Progress              132              347          479
       1,403           488              1,892    Total                         744              673        1,418

 Statement of Accounts 2009/10                                                                                88
                                         PENSION FUND - DRAFT
       2008/09                          FUND ACCOUNT                             2009/10       2009/10
         £000s                                                                    £000s         £000s
                  Contributions:
        11,036     Contributions from Members (note 2)                            11,298
        39,995     Contributions from Employers (note 2)                          42,150           53,448
         6,182     Transfer in                                                    10,209           10,209

                  Benefits:
       (24,630)    Pensions (note 3)                                             (27,264)
        (8,965)    Lump Sum Benefits (note 3)                                    (11,732)      (38,996)

                  Payments to and on account of leavers:
            (9)    Refunds of Contributions                                          (13)
        (4,465)    Individual transfers out to other schemes                      (8,392)          (8,405)
          (899)    Administration Expenses (note 8)                                 (793)            (793)

        18,245    Dealing With Members                                                             15,463

                  Return on Investments:
        (1,986)    Investment Management Expenses (note 10)                       (2,356)
      (143,249)    Gains and Losses on Investments (note 11)                     141,366

                   Unrealised
          6,820    Investment Income (note 9)                                      5,962
          (285)    Taxation                                                        (197)

      (138,700)   Net returns on investments                                                   144,775

      (120,455)   Net increase /(decrease) in the fund during the year                         160,238

       622,133    Opening Net Assets of the scheme                                             501,678
       501,678    Closing Net Assets of the scheme                                             661,916

       2008/09    NET ASSETS STATEMENT                                                         2009/10

       499,852    Investment Assets (Note 4)                                                   661,795
         2,655    Current Assets (Note 12)                                                        1,133
         (829)    Current Liabilities (Note 12)                                                 (1,012)

       501,678    Fund Balance at 31st March                                                   661,916

SORP accounts summarise the transactions and net assets of the Fund. They do not take account of
liabilities to pay pensions and other benefits in the future.




Statement of Accounts 2009/10                                                                         89
NOTES TO THE PENSION FUND

Note 1. Fund Operation and Membership
The Pension Fund provides pensions and other benefits for former, non-teaching employees of the Council
(teachers are covered by a separate Pension Fund). It is a statutory Defined Benefit scheme operated under
the Local Government Pension Scheme Regulations 2007. Subject to certain criteria, all non -teaching
employees may choose to join the scheme. Membership of the Fund at the year-end was as follows:

                                                       st                    st
                                                 At 31 March 2009      At 31 March 2010
                  Contributing Members                      6,943                 6,913
                  Current Pensioners                        5,900                 6,083
                  Deferred Pensioners                       5,115                 5,596

Deferred pensioners include 1,569 of frozen members at 31st March 2010 (1,553 at 31st March 2009) .
Benefits are financed by contributions from employees, Scheme employers, and by income from investments.
The employee's basic contribution are now based on salary bands and are vary from 5.5% to 7.2% of
pensionable pay for Officers and Manual Workers. Employers’ contribution for 2009/10, paid by the Council,
was 22.7% of pensionable pay.

Note 2. Contributions Benefits Payable

In addition to the Council, there are four scheduled bodies participating in the scheme: Newham Sixth Form
College (NewVIc), Newham College, Stratford School and Newham Homes, and five admitted bodies
Greenwich Leisure, Carpenters TMO, FM Conway, Mitie and Community Links. Contributions by employers
and employees in the Fund are as follows:
                                            Contribution           Employee’s            Employer’s
                                                                  Contributions         Contributions
           Participating Body                     Rate          2008/09 2009/10       2008/09   2009/10
                                                                 £000s      £000s      £000s      £000s
 LB Newham                                           22.70%       9,534      9,691     35,999     37,875
 Carpenters TMO                                      13.60%          11         11         22         22
 Community Links                                     13.20%          10         16         25         35
 FM Conway                                           15.50%           6          7         13         13
 Greenwich Leisure                                   15.20%          26         25         58         56
 Mitie                                               18.40%           0          4          0         13
 Newham College of Further Education                 18.30%         339        350        891        934
 Newham Homes                                        17.80%         985      1,058      2,747      2,954
 NewVlc                                               8.80%          93        104        128        139
 Stratford School                                    22.70%          32         32        112        109
 TOTAL                                                           11,036    11,298      39,995     42,150

The current funding and deficit funding contribution breakdown is outlined below:

                         Employers                            Total       Total
                                                               2008/09     2009/10
                         Employers                             £000s       £000s
                          LB Newham                             35,999      37,875
                          Scheduled                              3,878       4,136
                          Admitted                                  118         139
                          Employer Contribution Totals          39,995      42,150

                           Members
                           LB Newham                              9,534       9,691
                           Scheduled                              1,449       1,544
                           Admitted                                  53          63
                           Employee Contribution Totals          11,036      11,298



Statement of Accounts 2009/10                                                                         90
Contributions split between normal, augmentation and deficit funding are outlined below:

                   Employers                                        2008/09        2009/10
                                                                  £000s          £000s
                   Newham Pension Fund
                    Ongoing funding                                  20,590         21,089
                    Deficit funding                                  15,930         16,316
                    Early Retirement funding                          3,475          4,745
                   Employer Contribution Totals                      39,995         42,150

The Council administers the Fund’s investments. Specialist Fund Managers – Axa Rosenberg (AR), Legal
and General (LandG), Longview (LV), Neptune (NEP), Newton (NEW), Aberdeen Asset Management (AAM),
ING Real Estate (ING), Morgan Stanley (MS) – have been appointed to invest the majority of the Fund. In
addition, a small proportion of the Fund is held in venture capital. The Fund does not form part of the
Council’s consolidated accounts.

Note 3. Benefits Payable

Benefits are provided in accordance with the provisions of the Local Government Pension Scheme
regulations.

                                                 Pensions                Lump Sums
                         Participating        2008/09  2009/10         2008/0  2009/1
                             Body                                            9      0
                                              £’000        £’000       £’000   £000s
                      LB Newham                24,166       26,803      8,828  11,732
                      Scheduled Bodies            461          458        137       0
                      Admitted Bodies               3            3           0      0
                      TOTAL                    24,630       27,264      8,965  11,732



AVC Investments

Individuals hold assets invested separately from the main fund in the form of with profits, equity related, or
building society accounts, securing additional benefits on a money purchase basis for those members
electing to pay additional voluntary contributions (AVCs). Members participating in this arrangement each
                                            st
receive an annual statement made up to 31 March confirming the value of their account and the movements
in the year.

In accordance with Regulation 5(2) (c) of the Pension Scheme (Management and Investment of Funds)
Regulations 1998, AVCs are not recognised in the accounting records of the fund, but are included for
information only. The aggregate values of the AVC investments are as follows:-

                                                        2008/09      2009/10
                                                        £000’s       £000’s
                                 Clerical medical         415.7         539.6
                                 Equitable Life           284.6         341.0




Statement of Accounts 2009/10                                                                            91
       Note 4. Fund Managers’ Holdings
       The majority of the Fund is represented by investments. The statement below shows the market value of
                                                                                     st
       each type of investment held by the individual Fund Managers in £000s as at 31 March 2010.


Investment                   LandG         AAM       ING         AXA         HV       Arcus    NEP           LV        NEW        MS       Other TOTAL
      Fixed Interest (UK)       6,892          0        0             0          0         0        0           0           0         0         0   6,892
      Fixed Interest (OS)       2,914     52,381        0             0          0         0        0           0           0         0         0 55,295
       Index Linked (UK)       18,149          0        0             0          0         0        0           0           0         0         0 18,149
    Equities Quoted (UK)       70,218     13,163        0         6,163          0         0   12,942       3,577       7,703         0         0 113,766
    Equities Quoted (OS)       44,239          0        0        78,811          0         0   53,719      63,968      50,818         0         0 291,555
            Private Equity          0          0        0             0     22,628         0        0           0           0       606         0 23,234
             Partnerships           0          0        0             0          0         0        0           0           0         0     4,232   4,232
            Infrastructure          0          0        0             0          0    14,885        0           0           0         0         0 14,885
                 Property           0          0   68,648             0          0         0        0           0           0     3,226         0 71,874
                 Currency           0          0        0             0          0         0        0           0           0     8,883         0   8,883
            Senior Loans            0          0        0             0          0         0        0           0           0     8,805         0   8,805
            Global Macro            0          0        0             0          0         0        0           0           0     3,016         0   3,016
     European High Yield            0          0        0             0          0         0        0           0           0     4,293         0   4,293
            Hedge Funds             0          0        0             0          0         0        0           0           0    14,780         0 14,780
   Emerging Market Debt             0          0        0             0          0         0        0           0           0     7,435         0   7,435
            Commodities             0          0        0             0          0         0        0           0           0     6,502         0   6,502
       Frontier Emerging
                                    0         0            0            0         0       0          0             0       0      1,933         0
                  Markets                                                                                                                          1,933
  Investment Subtotal        142,412      65,543   68,648        84,974     22,628    14,885   66,661      67,545      58,521    59,479    4,232 655,529

 Cash and Liquid Assets
       Sterling Deposits            0         1       258           46            0       0        23            382     443      1,260       251     2,663
      Foreign Currency              0         0         0          520            0       0     2,814             30       0          0         1     3,366
      Other investment
                balances           0           0      113           217          0         0    (975 )       (34 )        509       408        0     237
     TOTAL HOLDING           142,412      65,544   69,018        85,757     22,628    14,885   68,524      67,922      59,473    61,148    4,484 661,795
   Percentage of total        21.5%        9.9%    10.4%         13.0%       3.4%      2.2%    10.4%       10.3%        9.0%      9.2%     0.7% 100.0%

                st
       The 31 March 2009 investment market values were as follows (in £000s):

                                                       Alliance            Axa     Legal and                           Long
 Investment                                AAM        Bernstein         Rosenberg General                Rreef         View       Others        Total
                   Fixed Interest (UK)           0                  0            0      5,002                  0             0           0         5,002
            Fixed Interest (Overseas)       46,042                  0            0      2,047                  0             0           0        48,089
                    Index Linked - UK            0                  0            0     13,141                  0             0           0        13,141
                 UK Equities - Quoted            0              4,574       13,532     72,252                  0         2,158           0        92,516
           Overseas Equities - Quoted       10,602             44,866       49,620    126,120                  0        16,959           0       248,167
              Alternative Investments            0                  0            0           0                 0             0      43,768        43,768
             Unit Trusts - UK Property           0                  0            0           0            39,434             0           0        39,434
                  Investment Subtotal       56,644             49,440       63,152    218,562             39,434        19,117      43,768       490,117

          Cash and Liquid Assets (UK)
                      Sterling Deposits          2                663            70             0          5,254         1,795          (5)           7,779
                     Foreign Currency            0              1,298           347             0              0             0          40            1,685
            Other investment balances            0                111           155             0              0             0            5             271
                    TOTAL HOLDING           56,646             51,512        63,724       218,562         44,688        20,912      43,808          499,852
                  Percentage of total         11%                10%           13%           44%             9%            4%          9%             100%

       Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include costs
       charged directly to the scheme such as fees, commissions, stamp duty and other fees. In addition to the

       Statement of Accounts 2009/10                                                                                                           92
transaction costs disclosed above, indirect costs are incurred through the bid-offer spread on investments
within pooled investment vehicles. The amount of indirect costs is not separately provided to the scheme.
Note 5. Actuarial Position
The level of contribution payable by the Council to the Fund during 2009/10 was based on the actuarial
                   st                                                                                      st
valuation as at 31 March 2007. This valuation sets the contribution rates for the three years commencing 1
April 2008.
                                              st
The market value of the Fund’s assets at 31 March 2007 was £618 million, compared to liabilities of £862
million, representing 72% of the Fund’s accrued liabilities, allowing for future pay increases. A full actuarial
report of the actuarial present value of promised retirement benefits can be found at www.newham.gov.uk.

The contribution rates have been calculated using the projected unit actuarial method and the main actuarial
assumptions used in 2007 are shown in the following table:

           Assumptions                         2004 Valuation                         2007 Valuation
 Rate of Return on Investments         6.7% Equities / 4.9% Bonds             6% Equities
 Rate of general pay increases         4.4% per annum                         4.9% per annum
 Rate of increase to pensions in
                                       2.9% per annum                         3.1% per annum
 payment (in excess of GMPs)
                                       Market value based on average          Market value based on average
 Valuation of Assets                   values of assets in the 12 months      values of assets in the 12 months
                                       prior to 31st March 2004               prior to 31st March 2008

The 2007 valuation set the required rate of contributions by the Council for 2009/10 at 22.7% pensionable
pay. This rate of contribution is that which, when added to the contributions paid by the members, is sufficient
to meet the following:

       100% of the liabilities arising in respect of service after the valuation date; plus
       an adjustment over a period of 17 years to reflect the shortfall of the value of each participating
        employer’s notional share of the Fund’s assets from 100% of its accrued liabilities, allowing, in the
        case of members in service, for future pay increases.

A triennial valuation will take place in 2010 with the employer contribution rate due to be set for the three year
period 2011/12 to 2013/14.

Note 6. Accounting Policies

The accounts have been compiled in accordance with chapter 2 of the Statement of Recommended Practice
“Financial Reports of Pension Schemes” (revised May 2007) (“the SORP”). The accounting policies have
been drawn up in line with recommended accounting principles as specified in the Code of Practice on Local
Authority Accounting and as disclosed below.

Accounting Standards - The Pension Fund Accounts have been prepared in accordance with the
accounting recommendations of the Financial Reports of Pension Schemes – a Statement of Recommended
Practice. However disclosures have been limited to those required by the Code of Practice on Local Authority
Accounting in the United Kingdom: a Statement of Recommend Practice.

Basis of Preparation - The accounts have been prepared on the accruals principle, with the exception of
transfer values which are included on a cash basis.

Valuation Principles - Investments are shown in the accounts at their market value that has been
determined as follows:

       Equities traded through the Stock Exchange Electronic Trading Service (SETS), are valued on the
        basis of the bid price. Other quoted investments are valued on the bid price quoted on the relevant
        stock market.
       Foreign currency is translated to sterling at the closing mid-market rate on the 31st March 2010.
       Unit Trusts and managed funds are valued at the bid prices.



Statement of Accounts 2009/10                                                                                 93
       Unquoted securities are valued by the fund managers at the end of the year in accordance with
        generally accepted guidelines - in accordance with the managers’ own valuation of the underlying
        securities or, where appropriate, at cost.
       The value of fixed interest investments in the Scheme’s investment portfolio excludes interest earned
        but not paid over at the Scheme year end, which is included separately within accrued investment
        income
       Costs of trading are included as appropriate within purchase costs or sales revenues.
       Derivatives are valued at the appropriate closing exchange rate or the bid spot or forward rates.
        Forward foreign exchange contracts are valued by determining the gain or loss that would arise from
        closing out the contract at the reporting date by entering into an equal and opposite contract at that
        date.

Investment Income – The following accounting policies are used:

       Income from equities is accounted for on the date stocks are quoted ex-dividend. Income from
        overseas investments is recorded net of any withholding tax where this cannot be recovered.
       Income from fixed interest and index-linked securities, cash and short-term deposits is accounted for
        on an accruals basis
       Income from other investments is accounted for on an accruals basis
       The change in market value of investments during the year comprises all increases and decreases in
        the market value of investments held at any time during the year, including profits and losses realised
        on sales of investments and unrealised changes in market value.
       Foreign currencies – Assets and liabilities in foreign currencies are expressed in sterling at the rates
        of exchange ruling at the year-end. Income from overseas investments is translated into sterling at
        an average rate for the period. Surpluses and deficits arising on conversion or translation are dealt
        with as part of the change in market value of investments.

Contributions – Normal contributions, both from the members and from employers, are accounted for in the
payroll month to which they relate at rates as specified in the rates and adjustments certificate. Additional
contributions from the employer are accounted for in accordance with the agreement under which they are
paid, or in the absence of such an agreement, when received.

Benefits Payable – Under the rules of the Scheme, members receive a lump sum retirement grant in
addition to their annual pension. Lump sum retirement grants are accounted for from the date of retirement.
Where a member can choose whether to take a greater retirement grant in return for a reduced pension,
these lump sums are accounted for on an accruals basis from the date the option is exercised. Other
benefits are accounted for on the date the members leaves the Plan or on death.

Any individuals’ retiring on the 31 March are accounted for in the new financial year. Similarly deaths on 31
March are accounted for in the new financial year.

Transfers to and from other schemes – Transfer values represent the capital sums either receivable in
respect of members from other pension schemes or previous employers or payable to the pension schemes
of new employers for members who have left the plan. They take account of transfers where the trustees of
the receiving scheme have agreed to accept the liabilities in respect of the transferring members before the
year end and where the account of the transfer can be determined with reasonable certainty.

Investment, Management and Administration - A proportion of relevant Council officers’ time, including
related on-costs, have been charged to the Fund on the basis of actual time spent on scheme administration
and investment related matters.

Other Expenses – Administration and investment management expenses are accounted for on an accruals
basis. Expenses are recognised net of any recoverable VAT.

Statement of Investment Principles - Details of the Council’s Statement of Investment Principles is
available for inspection on the Council website (www.newham.gov.uk).




Statement of Accounts 2009/10                                                                              94
Note 7. Related Party Transactions

Fund administration expenses payable to the administrating authority, the London Borough of Newham are
outlined below


             Related Party Transactions                                  2008/09        2009/10
                                                                      £000s            £000s
             Payroll Support                                               148.8          151.1
             Central Finance                                              111.86         108.90
             Accounting                                                     10.3           10.5
             Management cost                                                22.8           23.1
             General Charges                                                11.3             7.1
             Administration and other expenses borne by                   305.06          300.7
             fund

Note 8. Administration costs

Further analysis, supporting the information in the accounts is detailed below.

Administration Costs                                                               2008/09         2009/10
Scheme Administration.                                                              £000s           £000s
Officers’ salaries and related costs.                                                     636            568
Direct running costs                                                                       24              61
Audit fee                                                                                  38              51
Legal Fees                                                                                  7              10
Professional Fees                                                                         194            103
Administration and other expenses borne by fund                                           899            793

Note 9. Investment Income

Administration and Investment Management Costs                                     2008/09         2009/10
Investment Income                                                                   £000s           £000s
Interest                                                                                  572             48
Dividends                                                                               4,005          3,845
Rents                                                                                   1,914          2,032
Sub total                                                                               6,491          5,925

Bank Interest                                                                             329             37
Total                                                                                   6,820          5,962


Note 10. Investment Management Expenses

 Administration and Investment Management Costs                                    2008/09         2009/10
                                                                                    £000s           £000s
 Fund Management Expenses                                                               1,986          2,356




Statement of Accounts 2009/10                                                                            95
Note 11. Analysis of Purchases and Sales of Investments during 2008/09

                                                                               Change in
 Investments                        Value at     Purchases         Sales        Market           Value at
                                    31.03.09       At cost       Proceeds           Value        31.03.10
                                     £'000s        £'000s          £'000s           £'000s       £'000s
 Fixed Interest (UK)                    5,002          2,668          1,035                257      6,892
 Fixed Interest (OS)                   48,089            800              0              6,406     55,295
 Index Linked (UK)                     13,141          4,950            853                911     18,149
 Equities - Quoted (UK)                92,518         32,370         64,768            53,648    113,768
 Equities - Quoted (OS)              248,166         282,697        320,199            80,890    291,554
 Private Equity                        19,388          2,899            211                551     22,627
 Alternative Investments               24,380          3,413            927            (7,749)     19,117
 Property                              39,434         33,265          7,500              3,449     68,648
 Diversified Alternatives                   0         62,614          6,139              3,004     59,479

                                     490,118         425,676       401,632           141,367         655,529
 Cash deposits                         9,464           4,806         8,241                 0           6,029
                                     499,582         430,482       409,873           141,367         661,558
 Investment income due                   271                                                             237
                                     499,853         430,482       409,873           141,367         661,795

The change in market value of investments during the year comprises all increases and decreases in the
market value of investments held at any time during the year, including profits and losses realised on sales of
investments during the year.

Direct transaction costs are included in the cost of purchases and sale proceeds. Direct transaction costs
include costs charged directly to the scheme such as fees, commissions, stamp duty and other fees.

               Investment                              Profits        Losses           Net Profit
                                                       £000s           £000s            £000s
               Fixed Interest – UK                           297               35             262
               Fixed Interest – Overseas                       0                0                0
               Index Linked – UK                               0                0                0
               UK Equities – Quoted                       6,702            11,490         (4,788)
               Overseas Equities – Quoted                27,660            39,553        (11,893)
               Equities – Unquoted                             0                0                0
               Venture Capital                               635                0             635
               Property Trust                                  0            1,943         (1,943)
               Mark to Market                                781              232             549
               Currency                                   2,304             3,824         (1,520)
               Total                                     38,379            57,077        (18,698)




Statement of Accounts 2009/10                                                                                  96
Note 12. Current Assets and Liabilities

                     Current Assets                        2008/09       2009/10
                                                            £000s         £000s
                     Contributions from outside bodies           142            49
                     Cash and Bank Balances                    2,513         1,084
                     Total                                     2,655         1,133

                     Current Liabilities                   2008/09       2009/10
                                                            £000s         £000s
                     Tax payable to HMRC                       (190)          (188)
                     Fees due to Fund Managers                 (613)          (665)
                     Investment Advisor Fees                    (13)            (1)
                     Actuarial Fees                             (13)            (9)
                     Administrator fees                           (0)           (8)
                     Legal Fees                                   (0)           (4)
                     Custodian Fees                               (0)         (137)
                                                               (829)        (1,012)

Note 13. Investments exceeding 5% of total

 Fund Manager       Investment Type        Expected Performance                          £M       %
 Longview           Global equities        Outperform benchmark by 4%                     67.9    10.3
 Newton             Global equities        MSCI AC World + 4%                             59.3     9.0
 Neptune            Global equities        MSCI AC World + 4%                             68.3    10.4
 Legal and
 General            Global equities        Track the Benchmark                           142.4    21.7
 Axa Rosenberg      Global equities        Outperform benchmark by 2%                     85.6    13.0
 ING                Property               Outperform the IPD by 0.75%                    68.9    10.5
                                           Barclays Capital Nominal Swap 30 Year
                                           Coupon GBP Total Return and Barclays
                                           Capital UK RPI 20 Year Real Rate Swap Total
 Aberdeen           Fixed Interest         Return                                         65.5    10.0
 Morgan Stanley     Global equities        LIBOR plus 5.2%                                61.1     9.3
 Other
 Investments                                                                              38.1     5.8
                                                                                 Total   657,1   100.0




Statement of Accounts 2009/10                                                                    97
                                         GLOSSARY OF FINANCIAL TERMS

This glossary explains the meaning of commonly used
financial terms used within Local Government financial       Area Based Grant (ABG)
reporting.                                                   A category of government grant from 2008/09, which
                                                             replaces Local Area Agreement (LAA) grant
Accountancy Code                                             arrangements. It is made up of specific grants, many of
The way that costs are recorded within the general           which were previously made to the Council under
ledger. The coding structure enables costs to be             separate and specific performance and accountability
grouped according to service and type of expenditure.        arrangements. These are now part of a non-ring-fenced
                                                             grant, with no conditions imposed on its use as part of
Accounting Period                                            the grant determination, ensuring full local control over
The timescale during which accounts are prepared.            how funding can be used. It is paid directly to the
Local Authority accounts have an overall accounting          Council as part of a three-year settlement.
period (financial year) of one year from 1st April to 31st
March. In year monitoring is on a monthly basis.             Area Cost Adjustment (ACA)
                                                             The scaling factor applied to the Formula Grant
Accounting Standards                                         calculation to reflect higher costs (mostly pay) in some
A set of rules explaining how accounts are to be kept.       Council areas.
By law, local authorities must follow 'proper accounting
practices’. The hierarchy of proper accounting practices     Arms Length Management Organisations (ALMOs)
are set out in Acts of Parliament, then the CIPFA            An ALMO is a not-for-profit housing management
Statements of Recommended Practice (SORP) and if             company that is wholly owned and controlled by a Local
guidance is not set out within these then professional       Authority. The aim of an Arms Length Management
Financial Reporting Standards (FRS) or International         Organisation is to ensure that Councils invest their
Financial Reporting Standards (IFRS).                        housing resources efficiently, economically and
                                                             strategically to provide decent homes for tenants.
Accruals
An accounting principle where expenditure and income         Asset Management Plan
are taken into account in the year in which they are         This plan is prepared to assist the Council in managing
incurred rather than when invoices are actually paid         its property assets effectively and to contribute towards
and/or monies received.                                      the vision of making Newham a place where people
                                                             choose to live and work. The plan sets the framework
Acquisitions                                                 for how to manage assets and outlines the key actions
The Council spends funds from the capital programme          the Council needs to take during the coming year.
to buy assets such as land and buildings. In some
cases this is because a compulsory purchase order has        Asset Register
been made so that the land can be used for                   A record of Council assets including land and buildings,
development.                                                 housing, infrastructure, vehicles, equipment. This is
                                                             maintained for the purpose of calculating capital
Actuals                                                      charges that are made to service Revenue Accounts. It
Short for 'actual expenditure'. The term is usually used     is updated annually to reflect new acquisitions,
to denote the final amount spent against a particular        disposals, re-valuations and depreciation.
budget or by a service for the year. Also referred to as
the out-turn.                                                Audit Commission
                                                             The body responsible for the Appointment of external
Agency Services                                              Auditors to Local Authorities, co-ordinating audits
Services provided by or for another local authority or       throughout the country, setting standards and carrying
public body where the cost of carrying out the service is    out Comprehensive Performance Assessments (CPAs).
reimbursed.
                                                             Balances
Aggregate External Finance                                   The amount of money left over at the end of the year
Central government revenue support. It comprises             after allowing for all expenditure and income that has
revenue support grant (RSG), National Non-Domestic           taken place. These are also known as financial
Rates (NNDR) (in the case of net AEF). It also includes      reserves. There is no fixed statutory level for reserves.
certain specific grants (in the case of gross AEF).          The Council follows draft Audit Commission guidance
                                                             that General Reserves should be 5% of annual
Approved Capital Programme                                   operating expenditure plus the value of the Council’s
All projects in the capital programme, which have been       “Bellwin Scheme” threshold (a scheme under which
approved by the Council.                                     local authorities can claim financial support from the
                                                             government toward costs of dealing with emergencies
Approved Investments                                         and disasters e.g. flood or storm damage).
The investment of surplus cash by the Authority can be
broadly split into Specified and Non-Specified               Base Budget
investments.        Specified    investments    include      In broad terms this represents the budget that would be
investments of less than one year in highly credit rated     required to continue to provide services at their current
institutions. Non-specified investments cover all other      level. Base budgets for 2010/2011 were prepared in
categories of investment. Before the start of each           June and were used to establish cash limits for each
financial year, the Annual Investment Strategy is            service area. The budgets were then reviewed in detail
approved by Council setting out limits on each category      to bring spending requirements within the agreed cash
of investment.                                               limit.

Statement of Accounts 2009/10                                                                                   98
                                                             The account also records the resources set aside to
Base Budget Review                                           finance capital expenditure.
This is the process that turns the initial base into the
final base budget. It involves working out the detailed      Capital Charges
spending requirements for each area of service and           These are charges made to service revenue accounts,
moving budgets accordingly within the agreed cash            and represent the actual annual depreciation charged
limit.                                                       on capital assets used by each service.

                                                             Capital Expenditure
Best Value
                                                             Expenditure on the purchase, construction and
There is a statutory duty (required by law) on local
                                                             enhancement of Council assets such as houses, offices,
authorities (and some other public bodies) to make
                                                             schools, roads, etc. Expenditure can only be treated as
arrangements to achieve continuous improvements in
                                                             'capital' if it meets the statutory definitions and is in
the way their functions are carried out. This is achieved
                                                             accordance with proper accounting practices and
by providing services in a cost effective manner.
                                                             regulations.
Best Value Accounting Code of Practice (BVACOP)
                                                             Capital Financing Requirement (CFR)
BVACOP sets the financial reporting guidelines for
                                                             The Capital Financing Requirement is the measure of
Local Authorities under the best value regime. It
                                                             the Council’s underlying indebtedness as calculated
supplements the principles and practice set out in the
                                                             from its annual accounts. It increases by capital
Code of Practice on Local Authority Accounting (SORP),
                                                             expenditure and decreases by the application of capital
by establishing practice for consistent reporting below
                                                             receipts, other resources and the Minimum Revenue
the Statement of Accounts level. BVACOP provides
                                                             Provision
guidance in three key areas:
   The definition of total cost                             Capital Grants
   Trading accounts and in-house trading                    Monies received by service areas from Government and
   Service Expenditure Analysis (SEA)                       other statutory bodies towards the Council's capital
                                                             expenditure. The main sources include the Department
                                                             for Children, Schools and Families, East London
Billing Authority                                            Renewal Partnership, Greater London Assembly and
Those local authorities responsible for collecting Council   Transport for London (TfL) monies.
Tax i.e. London Boroughs and Districts.
                                                             Capitalisation
Budget Forecast                                              Costs are capitalised to the extent that they create or
An initial assessment of what next year's budgets will       improve any tangible Fixed Asset with a useful
look like. The assessment is prepared and updated by         economic life greater than one year.        The Local
Financial Services on a regular basis throughout the         Authority Statement of Recommended Practice (SORP)
year to give members an early indication of the issues       requires capitalisation and depreciation of tangible
that will have to be faced during the budget. Also           Fixed Assets.
included are projections for two further years to provide
a Medium Term Strategy - see 'Medium Term Strategy'.         Capital Investment Strategy
                                                             This document sets out the five-year plan that
Budget Head                                                  demonstrates how capital investment will support the
An individual budget against which costs are charged.        achievement of the Council's 'Vision'. This comprises
                                                             schemes approved by the Council to provide ongoing
Budget Monitoring                                            benefits to the community.
The comparison of the amount spent to date against the
approved budget to see if any under or over spending is      Capital Receipts
occurring. This process enables service areas to take        Monies received from the sale of the Council's assets.
corrective action in the event of any deviations and         These receipts are used to pay for additional capital
control their budgets.                                       expenditure. See Pooling Arrangements.

Budget Reduction                                             Cash Budgets/Cash Prices
A reduction in the amount of money that can be spent         The actual amount of money that can be spent during
on a particular service.                                     the year after allowing for pay awards and inflation. The
                                                             budget is expressed as 'cash prices'.
Budget Requirement
Budget requirement is the amount the Council estimates       Cash Limit
as its planned spending, after deducting any funding         An upper limit on the amount of money that can be
from reserves and any income it expects to raise (other      spent. This can either apply to an overall budget or
than from the Council Tax and general funding from           individual elements within it. The use of cash limits is an
government). General funding from government is              integral part of the budget process.
Revenue Support Grant, redistributed business rates
and some specific and special grants. The budget             Central Support Services
requirement is set before the beginning of the financial     The costs of central support services such as legal and
year.                                                        finance are reallocated to other service areas so as to
                                                             provide a more accurate picture of how much those
Capital Adjustment Account (CAA)                             services cost in their totality. In the case of the housing
This account records the consumption of historic cost        revenue account and trading accounts, the law requires
over the life of the asset and deferred charges over the     the reallocation of such costs
period that the authority benefits from the expenditure.

Statement of Accounts 2009/10                                                                                     99
Child and Adolescent Mental Health Services                   to establish provisions for such amounts, they are not
(CAMHS)                                                       accrued in the financial statements, but disclosed
A comprehensive range of services available within            separately in a note to the Balance Sheet.
local communities, towns or cities, which provide help
and treatment to children and young people who are            Contingency for Pay and Price Increases
experiencing emotional or behavioural difficulties, or        The base budget is initially prepared at pay and price
mental health problems, disorders and illnesses.              levels applicable in the current year. A sum of money is
                                                              then set aside centrally to reflect the cost of pay awards
Children's Fund                                               and price increases that are likely to take place in the
Part of the Government's strategy to tackle child poverty     'budget year'. This contingency is allocated to individual
and social exclusion. This primarily targets 5-13 year        service areas after the overall budget has been
olds at risk of social exclusion. The objective of the fund   approved to provide them with cash budgets .
is to provide additional resources over and above
mainstream statutory, specific programmes and specific        Corporate and Democratic Core (CDC)
earmarked funding streams.                                    Under CIPFA Codes of Practice, Local Authorities are
                                                              required to identify separately the costs of being a
CIPFA                                                         publicly accountable body. These are known as the
Is the Chartered Institute of Public Finance and              Corporate and Democratic Core, which is split between
Accountancy, which in common with other Chartered             Democratic Representation and Management (DRM)
Accountancy Bodies promotes best practice by issuing          and Corporate Management (CM). DRM includes all
guidelines and Codes of Practice. CIPFA has particular        costs relating to members’ allowances and expenses,
expertise in the field of Public Sector and Local             the costs associated with officer time spent on
Government Finance.                                           appropriate advice and subscriptions to the Local
                                                              Authority associations. CM concerns activities and
Collection Fund                                               costs which provide the infrastructure and the
A separate account kept by every billing authority into       information, which is required for public accountability.
which Council Tax and Business Rates are paid.
                                                              Cost Centre
Collection Rate                                               An individual function or service area for which a
The amount of Council Tax likely to be collected              specific budget is prepared and the costs are separately
expressed as a percentage of the total amount due. For        identifiable e.g. libraries, housing advice.
2010/2011 the Council's collection rate is estimated at
97%                                                           Cost Centre Management
                                                              A form of financial control where for every cost centre
Communities and Local Government (CLG)                        an officer is identified as the designated budget holder.
Formerly the Department for Communities and Local             He or she is then responsible for monitoring and
Government Created with a powerful remit to promote           controlling spending on the cost centre.
community cohesion and equality, as well as
responsibility for housing, urban regeneration, planning      Cost Increase Factor
and local government.                                         The indices used to uplift the budget from one price
                                                              base to another. Different percentages are used for
Comprehensive Area Assessment (CAA)                           each category of expenditure and income.
From 2009, Comprehensive Area Assessment (CAA)
replaced the Comprehensive Performance Assessment             Council Tax
(CPA). CPA focused on services provided by local              A local charge set by the Council and the precepting
authorities. CAA looks at the public services in an area      authority in order to collect sufficient revenue to provide
delivered by councils and their partners including the        Services. Council Tax is based on the value of the
private and voluntary sectors. CAA will provide               property and the number of residents. The Valuation
assurance about how well-run local public services are        Office assesses the properties in each district area and
and how effectively they use taxpayers’ money.                assigns each property to one of eight valuation bands; A
                                                              to H. The Council Tax is set on the basis of the number
Consultation                                                  of Band D equivalent properties. Tax levels for dwellings
A process the Council uses in reaching a decision.            in other bands are set relative to the Band D baseline.
Individuals can be consulted in three main capacities:
    As consumers, when they are asked for their views        Council Tax Benefit
     about particular services that they either deliver or    Reductions in the amount of Council Tax people have to
     might use.                                               pay based on their income and personal circumstances.
    As taxpayers, when consultation focuses on the
     balance between the level of services provided and       Creditors
     their cost; and                                          Amounts owed by the Authority at 31st March for goods
    As citizens, when consultation focuses on what           received or services rendered but not yet paid for.
     people think about policy questions, such as the
     type of development that might take place in their       Crime and Disorder Reduction Partnership (CDRP)
     community.                                               The Crime and Disorder Act 1998 required the
Local businesses can be consulted as service users, as        establishment of CDRP in each local authority area to
business ratepayers and as organisations with a wider         be invested with responsibility for crime and disorder
interest in the community.                                    reduction. The CDRP is a strategic body responsible for
                                                              the formulation and effective delivery of the Crime and
Contingent Liabilities                                        Drugs Strategy. The existing membership includes
Potential losses for which a future event will establish      Newham Council, Newham Police, Probation Service,
whether a payment is required. As it is not appropriate       London Fire Brigade, Primary Care Trust and an elected

Statement of Accounts 2009/10                                                                                     100
member from the Metropolitan Police Authority. There is     Costs which are automatically incurred by the Council
also representation from the Mental Health Trust,           when staff are employed. These comprise of the
University of East London, Crown Prosecution Service,       Employer's     National Insurance     and    Pension
Race Equality in Newham and East Thames                     Contributions.

Dedicated Schools Grant (DSG) \ Dedicated Schools           Environmental Works
Budget (DSB)                                                Work to improve the landscape (e.g. paving, clearing
DSG is a specific grant which must be used in support       derelict spaces).
of defined activities in the DSB. DSG is notified over a
multi-year funding period. We are in the middle of a        External Auditors
three funding cycle (2008-11). Future funding periods       The Auditor appointed by the Audit Commission to carry
will coincide with subsequent Comprehensive Spending        out an audit of the Council's accounts. Currently the
Review periods thereafter. The grant is geared to pupil     Council's auditors are PricewaterhouseCoopers, who
numbers. The DSBs covers expenditure both by schools        have statutory responsibilities in relation to:
and by the local authority on central items.                 Showing the accounts are ‘presented fairly’
                                                             Good corporate governance - oversee CAA process
Debtors                                                      Best Value Performance Plans, Fair Value
Amounts owed to the Authority which are collectable or       Overall duties relating to public accountability
outstanding at 31st March.
                                                            Fees
Deferred Charges                                            Projects require fees to pay for the design, costing and
Expenditure of a capital nature for which there is no       supervision of schemes. These are part of the cost of
tangible asset (e.g. improvement grants). From April        the scheme and are included in the capital programme.
2009 this expenditure is known as Revenue Expenditure
Funded from Capital under Statute.                          Financial Code of Practice (FCoP)
                                                            A set of rules about how service areas should monitor,
De Minimus                                                  control and report on their budgets. The Code of
Projects costing below £25,000 (£10,000 for vehicles)       Practice also contains rules on the investment of trading
are not considered to be 'large' enough to be called        surpluses and is approved each year by the Council.
capital, and must therefore be met from revenue. The
same term is used for assets considered 'too small' for     Financial Regulations
inclusion in the Asset Register.                            A set of rules about how service areas should monitor,
                                                            control and report on their budgets. The Code of
Depreciation                                                Practice also contains rules on the investment of trading
A provision made in the accounts to reflect the value of    surpluses and is approved each year by the Council.
assets used during the year. For example a vehicle
purchased for £10,000 with a life of five years would       Full-year Effects
depreciate on a straight-line basis at the rate of £2,000   New items of expenditure or savings are often
p.a. Depreciation is the 'capital charge' made to service   implemented part way through the financial year. When
Revenue Accounts.                                           this happens, only part of the additional costs or savings
                                                            will occur in the first year. The full year effects are the
Disposals                                                   additional costs or savings that arise in the following
Sale of Council assets - see Capital Receipts.              year.

Early Years                                                 Gearing Effect
Early Years service gives all children under five in        As RSG and NNDR are fixed, any increase in Council
Newham tailored access to Children's Services,              spending has to be met from Council Tax. Council Tax
including health, education and family support. It is a     only accounts for 25% of the Council's budget
part of the Extended Services provision within the          requirement, thus a 1% increase in the latter would
Children and Young Peoples Services.                        result in a 4% increase in Council Tax. This is known as
                                                            the 'gearing effect'.
Earmarked Reserves
Amounts set aside for a specific purpose to meet future     General Fund (GF)
commitments or potential liabilities, for which it is not   The Council's main Revenue Account that covers the
appropriate to establish provisions.                        net cost of all services other than the provision of
                                                            Council housing for rent.
East London Waste Authority (ELWA)
ELWA has the statutory responsibility for the disposal of   General Ledger
household, commercial, industrial and civic amenity site    The Council's computerised          financial   accounting
waste collected by the London Boroughs of Barking and       system.
Dagenham, Havering, Newham and Redbridge.
                                                            Gershon Efficiencies
Education Action Zone (EAZ)                                 Central government commissioned Sir Peter Gershon to
Education Action Zones allow local partnerships to          review and assess how the public sector could exploit
develop new and imaginative approaches to raising           opportunities for efficiency gains, so that resources
standards in disadvantaged urban and rural areas. Each      could be released for front-line public service delivery.
EAZ includes a cluster of two or three secondary            As a result, all Councils were set a year on year
schools with their supporting primaries working in          efficiency target by the government of 2.5% a year, until
partnership with LEAs, parents, business and other          2008/09. The scoring system used to establish
representatives from the local community.                   Council’s CPA ratings takes account of Gershon
Employee Overheads                                          efficiency gains actually achieved.

Statement of Accounts 2009/10                                                                                   101
                                                             Indirect Employee Expenses
Greater London Authority (GLA)                               Employee overheads and other costs incurred by
The Strategic Authority for London created on 1st July       employing staff apart from pay (e.g. training costs or
2000. (see preceptor).                                       employee insurance).

Growth                                                       Initial Base Budget
Expenditure on any item which is not included in the         The starting point in the budget process. The initial base
approved budget. The term is usually used to refer to        for next year is the current year's approved budget
new initiatives and service developments.                    adjusted for the full year effect of growth, savings etc.
                                                             The initial base provides a cash limit for each service
High Performing Newham                                       area.
High Performing Newham is the plan which will enable
Newham to achieve its vision. It comprises two main          Interest on Cash Balances
themes for the council - delivering the very best services   The interest earned on cash flow investment balances.
and being strong community leaders.
                                                             International Financial Reporting Standards (IFRS)
Historic Cost                                                Local Authorities are to prepare their accounts on an
The actual amount of money paid for a particular item.       International Financial Reporting Standards from 1 April
Assets such as buildings that have been bought in the        2010, The first accounts to be published will be for
past will often have a current value that is much greater    2010/11, authorities will need to restate their 2009/10
than their historic cost. However, other items tend to       accounts in line with these new regulations.
lose their value over time. This is known as
                                                             Investments
depreciation. Generally speaking, Council assets are
                                                             The investment of surplus cash by an authority is
now shown at net realisable value (open market value).
                                                             governed by CLG Investment Guidance (March 2004).
                                                             Before the start of each financial year, an Annual
Homes and Communities Agency (HCA)                           Investment Strategy is approved by Council setting out
The Homes and Communities Agency (HCA) is the                limits on each category of investment. Investments are
national housing and regeneration delivery agency for        broadly split into two categories: Specified and Non-
England. Their role is to create thriving communities        Specified investments. Specified investments include
and affordable homes. The HCA works with a wide              investments of less than one year in highly secure
range of organisations and groups for the benefit of         institutions. Non-specified investments cover all other
local people and jobs. By engaging with local authorities    categories of investment and there use must be
in a “Single Conversation” on all aspects of housing and     supported in detail in the Investment Strategy.
regeneration, the HCA aims to connect local ambitions
with national targets.
                                                             Investment Strategy
                                                             The Council has adopted a three-year strategy for the
Housing Benefit                                              redirection of annual revenue resources and the one-off
Rent rebates to Council tenants and rent allowances to       investment of reserves into strategies aimed at
private sector tenants.                                      achieving the Council's Vision for Newham.
Housing General Fund (HGF)                                   Leases
That part of the Housing service’s budget which does         Contracts granting the use of fixed assets, such as
not relate to the Council's landlord functions. This         building and computers, for a specified time in
includes the costs of homelessness and rent                  exchange for rent. The owner is called the lessor and
allowances. These services appear within the General         the user is referred to as the lessee. Finance Lease
Fund Budget.                                                 transfers substantially all the risks and rewards
                                                             incidental to ownership. If it is not a Finance Lease, it is
Housing Revenue Account (HRA)                                an Operating Lease.
A statutory account that contains all expenditure and
income on the provision of Council Housing for rent.         Leasing Charges
The HRA must be kept entirely separate from the              The annual rental payments on items under operating
General Fund and the account must balance i.e. income        leases such as vehicles and computers which have
must equal expenditure. Local Authorities are not            been leased by the Council and are charged to revenue.
allowed to contribute to any HRA deficit from the
General Fund.                                                Lender's Option Borrower's Option (LOBO)
                                                             A loan (usually a long-term loan from a bank) where the
Housing Subsidy                                              lender has the option of requesting an interest rate
The grant paid by Central Government to Local                increase at certain points in the term of the loan. The
Authorities to subsidise the cost of Council Housing.        borrower can accept the rate increase or use their
The grant is paid into the Housing Revenue Account.          option to repay the loan without any early repayment
                                                             penalties.
Incremental Budget
An approach to budgeting which starts with the current       Levies
year's budget and makes adjustments for price                Payments to London-wide bodies such as the Lee
changes, growth and savings. This is the opposite of         Valley Regional Park Authority. The cost of these bodies
zero-based budgeting (See definition)                        is borne by Local Authorities in the area concerned,
                                                             based on their Council Tax base and is met from the
                                                             General Fund.




Statement of Accounts 2009/10                                                                                     102
Local Area Agreement (LAA)                                    programmes is calculated as a percentage of the
A three year agreement between the Council and                Council's total outstanding non - HRA debt (4%). In the
Central Government covering the period 2007 to 2010.          accounts, the minimum revenue provision is included
It sets out agreed shared outcomes for each of the            within the Statement of Movement of Reserves Account.
themes in the Council's Community Strategy and pools          From 1st April 2008, MRP on capital schemes financed
and aligns a range of government funding streams.             from unsupported borrowing has MRP charged over the
                                                              useful life of assets. e.g. if some equipment has a life of
Local Authority Business Growth Incentives                    five years, the cost of the equipment will be charged to
(LABGIs)                                                      revenue over five years as MRP.
Local Authority Business Growth Incentives should
enable authorities to benefit from increases in non-          Multiplier (Rate in the £)
domestic (business) rate revenues. They aim to                The rates payable by businesses are calculated by
introduce    incentives  to    encourage    economic          multiplying the rateable value of the property by a
development partnerships with businesses at both local        multiplier (rate in the £), expressed in pence. The rates
and regional level.                                           payable on a particular property next year are the
                                                              rateable value x either 0.444 or 0.441 (as appropriate).
Local Strategic Partnership
Local Strategic Partnerships (LSPs) have been set up to       Non Domestic Rates (NDR)
tackle social exclusion and encourage the main service        Business rates are collected by Local Authorities and
providers in the Borough to work together to produce          paid over to the Government. They are then
better outcomes form local residents and to help create       redistributed on the basis of relevant population. The
sustainable development in the area. The Government,          NNDR pool is the fund operated by the Government into
the Council and other service providers are working           which all business rates are effectively paid and then
together to reallocate resources and adapt work               from which they are redistributed to Local Authorities.
programmes to meet objectives.                                Also referred to as Non-Domestic Rates or NNDR.

London Docklands Development Corporation                      NDR Pool
(LDDC)                                                        The NDR pool is the fund operated by the Government
An organisation set up in 1981 to regenerate the              into which all business rates are effectively paid and
Docklands area of East London. It was responsible for         then from which they are redistributed to local
an area of 8.5 square miles (22 km²) in Newham, Tower         authorities.
Hamlets and Southwark.
                                                              Neighbourhood Renewal Fund (NRF)
Looked After Children                                         Government funding which aims to enable the most
These are children who are in the care of and the             deprived authorities, in collaboration with their Local
responsibility of the local authority. They are children      Strategic Partnership (LSP), to improve services. NRF
who are either voluntarily accommodated under Section         monies can be spent in any way that provides help to
20 of Children act 1989 or they are subject to an             tackle deprivation. NRF funding ceased from 31st
Emergency Protection Order, Interim care Order or Care        March 2009.
Order under Children Act 1989.
                                                              New Deal for Communities (NDC)
Major Repairs Allowance (MRA)                                 A key programme in the Government’s strategy to tackle
This is the main housing subsidy for Local Authorities, it    multiple   deprivations   in   the   most     deprived
provides each authority with the estimated long term          neighbourhoods in the country, giving less wealthy
average amount of capital spending required to                communities the resources to tackle their problems in
maintain a Local Authorities stock to its current             an intensive and co-ordinated way. The aim is to bridge
standard.                                                     the gap between these neighbourhoods and the rest of
                                                              England. All of the NDC partnerships are tackling five
Management and Support Services (MSS)                         key themes: poor job prospects, high levels of crime,
Proper accounting regulations require that support            educational under achievement, poor health and
service costs are charged to all direct service, which        problems with housing and the physical environment.
benefit from that support. The same is true for service       NDC is a ten year programme ending March 2010.
management. Charges are called Management and
Support Service Charges.                                      November Prices
                                                              A costing of the budget at the prices ruling in the
Medium Term Strategy                                          November prior to the financial year in question. This
The Council has adopted a 'medium term' approach to           type of costing is based on constant prices and
its budget that enables it to plan ahead over a three-        therefore a separate provision has to be made for
year period. In this way, it is able to consider the impact   anticipated pay awards and price increases occurring
of any decisions and investments over the medium term         during the year. Many authorities, including Newham,
rather than concentrating on just one year. This              now use 'cash prices'.
approach enables budget and investment strategies to
be linked to the Vision for the borough and key aims          Oncosts
and objectives, all of which extend over a number of          The same as 'overheads' but usually expressed as a
years.                                                        percentage of direct costs.

Minimum Revenue Provision (MRP)                               Out-turn
The minimum amount that the Council must charge to            This is how much a Council (or individual service)
the Revenue Accounts in the year, in respect of the           spends in a financial year. Also known as 'actuals'.
repayment of principal of borrowing for capital purposes.
The minimum provision on supported borrowing                  Out-turn Budget
Statement of Accounts 2009/10                                                                                     103
Another term for the 'cash budget'                          A scheme where the Local Authority enters into public-
                                                            private partnership (PPP) with the private sector to
Overheads                                                   purchase a service associated with an asset such as a
Any costs to the Council, which do not relate directly to   school or leisure centre. The Council will not buy the
the provision of a service.                                 asset but instead pays for use of the asset held by the
                                                            private sector organisation.    The Council has PFI
Overhead Account                                            schemes to provide schools and housing.
An Overhead Account may be used to recover the cost
of overheads related to an activity e.g. a stores           Problem Budget
overhead account would be used to collect the costs of      A situation where expenditure is, or is projected to be, in
operating a store, and to recover these costs via an        excess of the budget available or an income budget is
overhead charged on stock issued.                           being under-achieved.

Partnerships                                                Provisions
An agreement relationship or contract between               Monies set aside for liabilities and losses which are
organisations, whereby the parties agree to work            likely to be incurred but where exact amounts or dates
together with the aim of enabling the service providers     on which they will arrive are uncertain.
to give the client a more effective service.
                                                            Provision for Losses on Collection
Part Year Effects                                           Local authorities are required to make an allowance for
Growth and budget reductions are often implemented          income, which is unlikely to be collected. A provision for
part way through a year. When this happens the full         losses has to be taken into account when calculating
cost or savings will not be realised until the following    the Council Tax levy - see 'collection rate'
financial year. The part year effects are the additional
expenditure or savings, which occur in the year of          Prudential Code (CIPFA)
implementation. Also see 'full-year effects'.               This code allows all Local Authorities to determine their
                                                            own borrowing levels to finance projects, thus allowing
Policy and Procedural Rules                                 more flexibility in establishing the most cost effective
The capital programme has strict rules that are a           way of funding a project. The Council has to
combination of legislation and Council policy. All          demonstrate that borrowing undertaken under the
spending is subject to the Council’s budget rules and       Prudential Code framework is affordable in the long
financial regulations                                       term.

Pooling Arrangements (Capital Receipts)                     Public-Private Partnership (PPP)
75% of “Right to Buy” capital receipts have to be paid to   A joint venture where the private sector partner agrees
central government (CLG). The remaining element can         to provide a service to a public sector organisation.
be used to finance capital expenditure. A proportion of     (also see PFI)
other housing receipts must also be paid over unless it
is intended to use the receipts for affordable housing or   Public Service Agreements (PSA)
regeneration projects.                                      An arrangement where a Local Authority agrees with the
                                                            Government to deliver stretching outcomes in key areas
Preceptor                                                   of activity (exceeding performances required under best
The Greater London Authority (GLA) is the only              value obligations) reflecting a mix of national and local
preceptor in London. The GLA calculates its total           priorities, in return for financial incentives and greater
spending needs for the year and sets its own Council        freedoms in terms of service delivery.
Tax in the same way as a London Borough. Each Billing
Authority then collects the tax for them.                   Rateable Value
                                                            The value of a property for rating purposes. The Inland
Price Base                                                  Revenue sets rateable values. The rate payable by a
The basis on which costs are shown in the budget.           business is calculated by multiplying the rateable value
Budgets can be either expressed at constant prices          of the property by the rate in £ set by the Government.
(usually November) i.e. the prices ruling at a particular
point in time, or at cash/outturn prices. Cash prices       Recharges
include an allowance for assumed pay and price              A change from one account to another to reflect the cost
increases during the period covered by the budget.          of a service provided. They are included under the
Budgets shown in this book are at cash prices.              heading of 'support services'.

Primary Care Trust (PCT)                                    Recharges to Capital
Newham Primary Health Care Trust exists to improve          The salaries of architects and other technical staff
the health of the local population and address health       working on capital schemes, the costs of which are
inequalities. It does this by providing a range of          charged initially to the revenue budget but are then
services in the borough including GP practices,             reallocated to the relevant schemes within the capital
pharmacies, opticians and dentists. Also clinical           programme. Also known as 'fees'.
psychology and counselling, foot health, physiotherapy,
occupational therapy, speech and language therapy,          Reserves
community and specialist nursing services, family           The amounts held by way of balances and funds that
planning and sexual health services.                        are free from specific liabilities or commitments. The
                                                            Council is able to earmark some of its reserves towards
Priority-Base Budgeting                                     specific projects, whilst leaving some free to act as a
                                                            working balance.
See zero-based budgeting.
                                                            Resource Accounting
Private Finance Initiative (PFI)
Statement of Accounts 2009/10                                                                                   104
The Government introduced a form of resource
accounting relating to the Housing Revenue Account           Service Area Support
from 1st April 2001 as part of its financial framework for   A service provided for other service areas within the
local authority housing aiming at encouraging more           Council rather than directly to the public. Examples
efficient use of housing assets, increasing the              include payroll, computing, central personnel and legal
transparency of the HRA and achieving consistency and        services.
comparability between all authorities' revenue accounts.
                                                             Service Area Support Costs
Resource Equalisation                                        The cost of service area management, administration
The way in which the formula grant system takes into         and support services. Under Accountancy Codes of
account a Council’s relative ability to raise Council Tax.   Practice, these are reallocated to each service area to
                                                             show the full cost of each function.
Revaluation Reserve (RR)
The revaluation reserve accounts for amount s where          Service Expenditure Analysis (SEA)
the current net book value of an asset is above its          The analysis of income or expenditure by reference to
historic cost.                                               its different purposes, usually different services.
                                                             Service Income
Revenue Contribution to Capital Outlay (RCCO)                Income received by the Council, which relates directly to
The use of revenue monies to pay for capital                 a service provided. The main examples are fees,
expenditure - also known as RCCO and Direct Revenue          charges and specific grants
Financing (DRF).
                                                             Service Level Agreements (SLAs)
Revenue Expenditure                                          Written contracts for internal services to be provided by
Expenditure on day to day items such as salaries,            one service area (the provider) to another (the client or
wages and running costs. These items are paid for from       user). They set out the service to be provided, the
service income, RSG, NNDR and Council Tax. Under             duration, the price and conditions of service and are
the Local Government Finance Act all expenditure is          agreed before the financial year begins.
deemed to be revenue unless it is specifically classified
as capital.                                                  Service Strategy and Regulation (SSR)
                                                             Under CIPFA codes of practice, local authorities are
Revenue Support Grant (RSG)                                  required to identify separately the costs of SSR. Service
The main grant payable to support Local Authorities          Strategy refers to the management task of Service
Revenue Expenditure.         A Local Authority's RSG         Policy rather than operational management. Regulation
entitlement is intended to make up the difference            refers to the costs involved in the management of the
between expenditure and income from the NNDR pool            local authority’s own staff, or of other third parties in
and Council Tax, so that if all Local Authorities spend in   order to maintain the standard of service provided to the
line with their FSSs, Council Tax would be the same          public.
throughout the country. Revenue Support Grant is
distributed as part of Formula Grant.
                                                             Slippage
                                                             This is where projects do not begin on time or are held
Right to Buy                                                 up, resulting in expenditure being different in a financial
The Council is legally required to sell Council homes to     period than originally planned.
tenants, at a discount, where the tenant wishes to buy
their home. The money received from the sale is a
                                                             Specific Grants
capital receipt of which only 25% can be spent on
                                                             A grant receivable from a Government Department that
capital expenditure. The remaining 75% must be paid
                                                             relates to expenditure incurred on providing a particular
over to central government (CLG) under pooling
                                                             service e.g. Education Standards Fund.
arrangements (see above).
                                                             Standards Fund
Ring-fencing
                                                             The Standards Fund is the Government’s main grant for
This term is usually applied to the Housing Revenue
                                                             targeting funds towards national Education priorities to
Account and describes the requirement that all
                                                             be delivered by LEAs and schools.
expenditure on the provision of housing for rent must be
met from HRA income. Local Authorities are no longer
                                                             Statement of Recommended Practice (SORP)
allowed to make a contribution to the HRA from the
                                                             Statements of Recommended Practice are guidance on
General Fund. In Newham, a similar arrangement is
                                                             accounting practices for specialised industries or
applied to the Housing capital programme. The
                                                             sectors. The Council is subject to the requirements of
Dedicated Schools Grant is also an example of ring-
                                                             the CIPFA Code of Practice on Local Authority
fencing.
                                                             accounting in the United Kingdom and the annually
                                                             published Statements of Recommended Practice.
Section 114 Responsibilities
Section 114 of the Local Government Finance Act 1988
                                                             Statutory Account
gives the Chief Financial Officer specific personal
                                                             Any account which the Council is, by law, required to
statutory duties to make reports to the Council if an item
                                                             maintain.
of spending is, or could be, unlawful and/or the Council
has or is about to spend in excess of its resources.
                                                             Subjective Analysis
Section 151 Responsibilities                                 A classification of the budget according to the nature of
Section 151 of the Local Government Act 1972 (as             the expenditure or income incurred (e.g. employee
amended) sets down responsibilities on the Council           costs, premises costs, transport costs, fees and
concerning the appointment of a Chief Financial Officer      charges, grants to voluntary sector, etc.).
and the management of its financial affairs.
Statement of Accounts 2009/10                                                                                     105
Supported Capital Expenditure (SCE)                           A payment to a person or organisation that does not
This is Capital Expenditure funded by Government;             result in a reciprocal benefit or service being provided to
either as a one-off Capital Grant (called SCE (Capital))      the Council. The main examples are mandatory student
or as part of the annual RSG settlement to cover annual       awards and housing benefit. In most cases the cost of
financing costs of monies borrowed, this is known as          transfer payment is either fully or partially reimbursed by
SCE (Revenue).                                                Central Government.

Support Service Framework (SSF)                               Turnover
It sets out the arrangements between service providers
and service users for the provision of support services       This term has two entirely different meanings:
                                                                 The value of work carried out by a trading
within the SSF. The SSF Code of Practice and
Handbook can be consulted for further details.                    organisation
                                                                 The rates at which staff change within the Council's
                                                                  employment.
Sure Start
Sure Start is the Government’s programme to deliver           This is usually expressed as a percentage; e.g. if there
the best start in life for every child by bringing together   are 50 staff in a service and 10 leave during the course
early education, childcare, health and family support.        of the year, the annual turnover is 20%. This should be
There are eight Sure Start local programmes in                allowed for when preparing a staffing budget as high
Newham. These are area-based initiatives delivered by         turnover will usually result in vacancies occurring
local partnerships with strong parental and community         between the time that staffs leave and new
involvement.                                                  appointments are made.

Tenant Management Organisation (TMO)                          Ultra Vires
An organisation set up by tenants to take over certain        This literally means 'beyond the powers'. Local
housing management responsibilities from the housing          authorities are only allowed to do things for which they
authority. TMOs have taken the opportunity offered by         have specific legal powers. If they spend money on
regulations to run their local housing services such as       anything else, this is illegal and is referred to as being
collecting rents and service charges, organising repairs      'ultra vires'
and maintenance: and making sure that buildings are
kept clean and tidy The Council will still own the homes      Unsupported Borrowing
but the TMO becomes a partner with the Council in             This is borrowing undertaken by the Authority to finance
providing services to the local community and Council         capital expenditure and which does not receive
representatives can be invited on to the committee.           government support. Any debt servicing costs (principal
Tenant Services Authority (TSA)                               repayment and interest) arising from any unsupported
The Tenant Services Authority (TSA) was created by the        loans has to be met from Council tax payer or housing
Housing and Regeneration Act 2008 and replaces the            rents.
Housing Corporation. The TSA has extensive powers to          Value for Money (VFM)
regulate social housing providers including local             A much-used term that describes a service or product
authorities. The powers reflect the TSA’s key role of         that demonstrates a good balance between its cost,
tenant protection and to enable a wider domain of             quality and usefulness to the customer. A VFM audit
housing providers than the Corporation was able to do.        takes into account the economy, efficiency and
These powers include: explicit power to set standards         effectiveness (known as the 'three Es') of a local
for social housing provision, particularly around key         authority service, function or activity.
areas such as tenancy terms, rents, tenant involvement,
viability and contributions to sustainable communities.       Variable Costs
                                                              Costs that vary directly according to the level of service
Thames Gateway London Partnership (TGLP)                      provided.
The London Thames Gateway is an area represented
by 11 local authorities, eight local universities and the     Virement
Strategic Health Authority. The TGLP is a strategic           The process by which one budget is increased and
advocacy and lobbying organisation representing all           another budget reduced by the same amount to reflect a
these bodies. The Council is a member and acts as an          change in spending priorities, (i.e. a switch of resources
accountable body for the partnership from April 2010.         between budget heads).
Total Cost
The Total Cost of an activity is defined as the sum of all    Volume Change
expenditure relating to the activity in question, whether     Changes in the amount of a service provided. This is in
or not it is recorded within one cost centre. For example     contrast to price changes, where the level of service
where there is a surplus or deficit on a Trading or           remains the same but the cost either increases or
Overhead Account, this should be reallocated to the           decreases.
activity for financial reporting purposes, in order to
assist in comparing information across Authorities.           Wellbeing Powers
                                                              Local Authorities now have powers to incur expenditure
Trading Account                                               that will benefit the general wellbeing of the
                                                              communities they serve.
The profit and loss accounts of a trading activity.
All support services operate on a trading account             Write-offs
basis.                                                        Income is recorded in the Council's accounts on the
                                                              basis of amounts due. When money owing to the
Transfer Payments                                             Council cannot be collected, the income is already show
                                                              in the accounts and has to be reduced or written off in
                                                              accordance with financial procedures.
Statement of Accounts 2009/10                                                                                     106
                                                                 The Newham 2012 Unit works to ensure that the
                                                                 Council has a co-ordinated and effective strategy to use
                                                                 the 2012 Olympic and Paralympics events as the
                                                                 platform for creating a long-term legacy within the
2012                                                             Borough. From April 2008, this Unit became part of
                                                                 Corporate       and       Strategic       management.




Reader Feedback

If there is any additional information that you would like to see in future editions of the Statement of Accounts, please
contact Barry Stratfull, the Council’s Chief Accountant and e-mail barry.stratfull@newham.gov.uk. This document can be
made available in different formats and languages upon request.

If you have any questions on the financial terms use within this document, please contact the Chief Accountant.




Statement of Accounts 2009/10                                                                                     107

				
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