GREATER MANCHESTER WASTE DISPOSAL AUTHORITY
30th JUNE 2006
REPORT OF THE TREASURER TO THE AUTHORITY
STATEMENT OF ACCOUNTS 2005/06
1. Introduction and Background
1.1. The Authority is required to approve the Statement of Accounts for 2005/06 by
the end of June 2006 in accordance with the Accounts and Audit Regulations.
1.2 Previously, approval was required by the end of September but, as part of a
whole Government Accounts Process (GAP), the date for accounts closure for
2003/04 was brought forward to August and for 2004/05 and 2005/06 it has
been brought forward by a further month each year.
1.3 This acceleration of the timetable is completed with the 2005/06 financial year
and for future years approval will also be required by the end of June. A
timetable will be drawn up to ensure that the Authority is able to continue to
meet this requirement in future years.
1.4 In addition, the Authority is now required to produce a Statement of Internal
Control (SIC). The Authority’s Statement of Internal Control for 2005/06 was
approved at its meeting on 16th June 2006 and is incorporated into the Statement
of Accounts for 2005/06 now presented.
1.5 The Statement of Accounts for 2005/06 includes Group Accounts that
consolidate the Authority’s results and assets with those of its subsidiary
Greater Manchester Waste Ltd. As a result of the accelerated timetable referred
to above it has been necessary to consolidate the results of the Company based
on draft, pre-taxation figures. The final results will be included before the
finalisation of the Authority’s audited accounts in September.
1.6 This report sets out the headline figures from the accounts and details the main
variances from the revised budget.
2. Accounts information
2.1 The Authority’s Revenue Account shows a deficit for the year (contribution
from balances) of £863k. This represents an overspend of £1,220k against the
revised budget which showed a contribution to balances of £357k. The financial
consequence of this overspend is limited to the effect it has on this year’s
balances carried forward and proposals to deal with that are set out in 2.8 below.
A recent change in company law means that the Company cannot
retrospectively declare a dividend for 2005/06 and therefore any dividend will
have to be accounted for in 2006/07
2.2 An analysis of the main variances against the revised budget is as follows:
Premises costs (see 2.3) - 196
Advisory Costs (see 2.4) + 593
Payments to Contractor (including refunds to districts, see 2.5 & 2.6) + 1,367
Debt charges / capital financing - 41
Other increases in Establishment Costs and Supplies and Services + 51
Non-utilisation of Contingency - 445
Other income - 11
Interest receivable - 98
Net overspend against revised budget + 1220
Forecast surplus per revised budget 357
Deficit per Accounts 863
2.3 The Premises costs budget included an estimate of costs for the 2nd floor at
Medtia Chambers for both the rent and service charge and for the cost of fitting
out and furnishing. In the event the lease was not signed until after the year end.
Additionally the costs of business rates and sewerage charges were
overestimated in the budget based on the previous year's higher than inflation
2.4 Advisory Costs during March were extremely high and ahead of our profile due
to the high volume of involvement throughout the bid evaluation process. At this
point in time, I believe, after taking advice from colleagues, that this represents
a profiling / timing difference against the budget that should reverse against the
budget figure for 2006/07. A report on the Advisory Costs position is due to be
taken to the September meeting of the Authority and it is hoped that that will
confirm this assumption. Members should however be aware that the “cap” on
advisory costs is highly dependent upon the need for additional work arising
from the different procurement options at BaFO, particularly the approach to the
2.5 Payment to Contractors is the major variance against the budgeted figures. This
includes the rebate to Districts as a result of reduced tonnages since 2001/02.
The majority of the overspend has arisen because of a mismatch between the
amount that GMWDA is committed to refunding to Districts and the amount
actually saved on the contract costs as a result of the reduction in WCA waste.
During 2005/06 arisings delivered to GMWDA have reduced by 187 ktonnes
when compared to the 2001/02 base. However the amount taken to landfill has
only reduced by approx 141 ktonnes. The major saving to GMWDA relates to
avoided landfill costs (@ £31.08 per tonne) plus an additional amount of £2.79
on total arisings but the districts are refunded on the basis of reduction in
arisings (@ £33.87 per tonne). This mismatch will not recur in 2006/07 under
the new payment mechanism now in place for the short-term contract.
2.6 There were additional costs of £702k for processing and handling of recyclables
and other materials at HWRC sites, particularly relating to timber and white
cement bonded asbestos. These have, in part, been offset by savings of £356k on
the costs of processing "special" wastes.
2.7 Appendix B shows the analysis of refunds to districts and recycling credit
clawback, which have been included in the final accounts.
2.8 The impact on balances of the result for the year and the projected position at
31st March 2007 is as follows:
Balances b/f as at 1 April 2005 1,703
Deficit for the year per para. 2.1 (contribution from balances) - 683
Balances as at 31st March 2006 840
Reversal of profiling / timing difference on Advisory Costs 593
(see 2.4 above)
Budgeted contribution from balances for 2006/07 0
Projected balances at 31 March 2007 1,433
At the above level balances are below the level that has previously been
recommended as a minimum. However, in the light of the additional profit
generated by our Company (GMWL) preliminary discussions have been held
about the payment of a £600k dividend in 2006/7. The Finance Director is
supportive of that in principle and, subject to detailed financial modelling on
cashflow/ distributable reserves, is prepared to seek approval from the Board at
their July meeting. In the event that a dividend at that level is agreed balances
would be returned to a more normative level of around £2m. Clearly, the
adequacy of balances is something that will need to be revisited as part of the
2007/8 budget setting process in the Autumn.
2.9 The Authority is keen to promote openness and transparency in its activities. In
addition to the statutory right of the public to inspect the accounts before the
annual audit is completed (17th July to 11th August), the full Statement of
Accounts will be placed on the Authority’s website at www.gmwda.gov.uk once
they have been approved by this meeting.
3 Landfill Allowance Trading Scheme (LATS)
3.1 Members will be aware that the Landfill Allowance Trading Scheme came into
force on 1st April 2005 with the allocation of the first years LATS allowances to
3.2 In the absence of any UK Financial Reporting Standard on LATS, CIPFA’s
Local Authority Accounting Panel (LAAP) has issued guidance, for 2005/06
only, in the form of bulletin LAAP 64 Accounting for the Landfill Allowances
Trading Scheme (England) in 2005/06.
3.3 The requirements of LAAP 64 are explained in the notes to the accounts and the
Authority has complied with these.
3.4 I am firmly of the view, however, that the recognition of Revenue surpluses
through the process of following the provisions of LAAP 64, when, in part,
these are unrealised and may well reverse in future years as BMW landfill
exceeds available allowances, would be imprudent. Consequently the impact on
revenue account for the year has been transferred to a LATS Equalisation
Reserve and will be used to reduce the impact of future years’ LATS costs as
they arise or will be released to Revenue once there is certainty as to their
3.5 The above policy has resulted in a transfer to the LATS Equalisation Reserve
for 2005/06 of £3,129k.
4.1 Members are recommended to note the outturn position and approve the
Statement of Accounts and agree the LATS accounting treatment.
Treasurer to the Authority
The following is a list of the background papers on which this report is based in accordance with the requirements
of Section 100D(1) of the Local Government Act 1972. It does not include documents which would disclose
exempt or confidential information, as defined by that Act.
Files held by Andy Brownhill, Accounting Services Manager, GMWDA. (0161 911 5121)
STATEMENT OF ACCOUNTS
LEVY AND FINAL ACCOUNTS 2005/06
WCA HOUSEHOLD WASTE DELIVERED TO GMWDA RECYCLING CREDITS ADJUSTMENT
OTHER VALUE @
TOTAL COMMERCIAL CREDITS (WCA CREDITS
WASTE 2001/02 BASE DIFFERENCE £33.87 PER
WCA RECEIPT WASTE + THIRD 2001/02 DIFFERENCE ADJUSTMENT
(tonnes) (tonnes) (tonnes) TONNE (£)
(tonnes) (tonnes) PARTY) (tonnes) (e + h)
(a – b) (c – d) (i x £33.87)
a b c d e f g h i j
BOLTON 102,656 17,020 85,636 105,179 -19,543 26,827 6,254 20,573 1,030 34,886
BURY 74,298 7,285 67,013 76,673 -9,660 16,409 4,407 12,002 2,342 79,324
MANCHESTER 206,125 40,150 165,975 238,721 -72,746 18,205 5,192 13,013 -59,733 -2,023,157
OLDHAM 88,169 6,980 81,189 85,965 -4,776 11,445 3,952 7,493 2,717 92,025
ROCHDALE 67,831 1,000 66,831 80,737 -13,906 9,778 2,262 7,516 -6,390 -216,429
SALFORD 93,830 8,900 84,930 91,617 -6,687 14,055 4,102 9,953 3,266 110,619
STOCKPORT 102,394 12,500 89,894 103,055 -13,161 35,910 10,803 25,107 11,946 404,611
TAMESIDE 88,649 8,500 80,149 94,343 -14,194 12,301 5,832 6,469 -7,725 -261,646
TRAFFORD 81,350 4,000 77,350 109,917 -32,567 17,237 5,847 11,390 -21,177 -717,265
TOTAL 905,302 106,335 798,967 986,207 -187,240 162,167 48,651 113,516 -73,724 -2,497,032