The City of Edinburgh Council

Notice of Meeting and Agenda

Thursday, 28 June 2012 at 10 am in the City Chambers, High Street, Edinburgh

1 Order of Business

Including any notices of motion and any other items of business submitted as urgent for consideration at the meeting.

2 Declaration of Interests

Members should declare any financial and non-financial interests they have in the items of business for consideration, identifying the relevant agenda item and the nature of their interest.

3 Deputations

3.1 Proposals for the Future Location of Boroughmuir High School: Outcomes Arising from Statutory Consultation and Project Update

(a) Boroughmuir High School Parent Council – e-mail request (circulated)

4 Questions

4.1 By Councillor Edie – Care Home Co-operatives – for answer by the Convener of the Health, Social Care and Housing Committee

4.2 By Councillor Edie – Visit of His Holiness the Dalai Lama to Edinburgh – for answer by the Leader of the Council

4.3 By Councillor Rose – Meetings with Representatives of the Chinese Government – for answer by the Leader of the Council 5 Minutes

5.1 The City of Edinburgh Council of 26 April 2012 (circulated) – submitted for approval as a correct record

5.2 The City of Edinburgh Council of 17 May 2012 (circulated) – submitted for approval as a correct record

5.3 The City of Edinburgh Council of 24 May 2012 (circulated) – submitted for approval as a correct record

6 Appointments

6.1 Appointments – Committee Convener and Outside Bodies etc – report by the Director of Corporate Governance (circulated)

6.2 Festivals and Events Champion – report by the Director of Corporate Governance (circulated)

7 Reports from Committees

7.1 Leader’s Report (circulated)

7.2 SESplan Governance Review and 2012/13 Operating Budget – report from the Planning Committee (circulated)

8 New Business

8.1 Proposals for the Future Location of Boroughmuir High School: Outcomes Arising from Statutory Consultation and Project Update – report by the Head of Resources, Children and Families (circulated)

8.2 Unaudited Financial Statements 2011/12 – report by the Director of Corporate Governance (circulated)

Note: Appendix 1 (Financial Statements) is available in Group Rooms and at www.edinburgh.gov.uk/meetings

8.3 Lothian Pension Funds Annual Report 2011/12 – Unaudited – report by the Director of Corporate Governance (circulated)

8.4 Contract for Community Connecting Service – report by the Director of Corporate Governance (circulated)

8.5 Police and Fire Reform – Pathfinder Committee Proposal – report by the Director of Corporate Governance (circulated)

8.6 Corporate Governance Structure – Chief Financial Officer – report by the Director of Corporate Governance (circulated) 9 Reports from Neighbourhood Partnerships

9.1 Pentlands Neighbourhood Partnership – report by the Director of Services for Communities (circulated)

10 Notices of Motion for Debate at Council

10.1 By Councillor Heslop – Business Centre, City Chambers

“Council agrees that the Business Centre situated in the City Chambers should be renamed as the Queen Elizabeth Diamond Jubilee Business Centre in recognition of Her Majesty's 60 years as our Monarch; further notes Her Majesty's dedication to the City of Edinburgh and its people and feels that this would be a fitting tribute to mark this wonderful and special occasion and would invite Her Majesty to re-open the Centre should Council approve this move.”

10.2 By Councillor Day – North Edinburgh Women’s Group

“Council congratulates the work of the North Edinburgh Women's Group in their award for local community activity - outstanding achievement for adult learning (adult education awards).

Furthermore Council commends the highly successful community conference organised by North Edinburgh Fights Back and the Muirhouse Women's Group specifically in regards to highlighting poverty, inequality and fuel poverty.

Council welcomes the anti-poverty charter, and agrees to work with these groups in addressing poverty and inequalities.”

10.3 By Councillor Aldridge – Tram Inquiry

“Council, noting the commitment of the previous Leader of the Council to seek an inquiry into all aspects of the Edinburgh Tram project at the earliest possible opportunity, and welcoming the commitment in the manifesto of the Labour Party to seek an urgent inquiry, affirms its commitment to a full and wide ranging inquiry as soon as possible and instructs the Leader of the Council to enter into discussions with the First Minister to progress this matter.”

10.4 By Councillor Chapman – Community Empowerment and Renewal Bill

“Council:

1. Welcomes the consultation on the Community Empowerment Bill, which runs until 29 August 2012;

2. Notes the excellent work undertaken in several areas of the Council on community engagement and empowerment, including initiatives such as £eith Decides participatory budgeting and Donkeyfield Orchard, and the potential to build on these projects and extend the devolution of decision-making and management of community assets to community groups in other areas of the Council;

3. Believes that such processes contribute to community resilience, help build social capital, and aid the long term social, economic and environmental sustainability of communities;

4. Agrees to receive a draft response to this Bill at Policy and Strategy Committee on 7 August that highlights existing participatory and engagement projects as exemplars of community empowerment, identifies other key opportunities for the Council to further engage and empower communities, and outlines the required legislative changes that would enable such opportunities to be explored (such as urban right to buy).”

10.5 By Councillor Main – Lothian and Borders Police Force Reserves

“Council notes that on 31 March 2013 when the Lothian and Borders Police Force is dissolved, there will be a capital sum of around £1.5m returned to the City of Edinburgh Council from the Force Reserves;

Council notes that the vision of Lothian and Borders Police is creating community well-being with prevention very much at its heart;

Council notes that restorative justice in England and Wales has been shown to deliver 85% victim satisfaction for victims who choose to participate; and reduces the frequency of re-offending by 14% according to the latest Ministry of Justice evidence;

Council also notes the success of restorative justice projects in schools and the wider community across the UK, for example the two-year Restorative Justice pilot in Hull which resulted in schools having 73% fewer classroom exclusions and 81% fewer fixed term exclusion days;

Council agrees that the funds returned from the Lothian and Borders Police Force Reserves should be ring-fenced for restorative justice projects, and calls for a report on possible projects.”

10.6 By Councillor Booth – Third Sector Training and Information for Councillors

“Council:

1. Notes the valuable contribution made by the Third Sector to the lives of many people in the City, as service providers, employers, partners, advocates and trainers;

2. Acknowledges the diversity within the Sector, which includes voluntary organisations, social enterprises and other not-for- profit groups;

3. Recognises the increasing importance of this Sector to the Council, especially with the changing demographic profile of the city, increasing pressures on public finances, and the continuing focus on partnership working, co-production and community engagement;

4. Agrees to design a training and briefing programme for Councillors in consultation with EVOC and other key bodies that extends the induction sessions held over the last 8 weeks, to enable Councillors to better understand the Sector and its role in delivering services and supporting the work the Council does.”

10.7 By Councillor Lewis – Splashback – Community Bid for Leith Waterworld

“Council:

1. Notes the Council decision of 7 February 2012 to give Splashback six months until 7 August to produce a community bid for Leith Waterworld.

2. Notes the considerable work undertaken by the Splashback community group since February to put together a business case for the running of Leith Waterworld, and congratulates the group on this work and its intention to submit a bid in August.

3. Encourages the ongoing dialogue between Splashback and Council officers.

4. Thanks the Council officers in Culture and Sport, City Development, and Legal Services for the information and assistance they have given Splashback so far in preparation for this bid.

5. Notes that there is additional information still being compiled by Council officers and instructs that this and other information is made available to Splashback as soon as possible to allow the deadline to be met.”

Carol Campbell Acting Head of Legal and Administrative Services

Notes:

1) For remaining item of business, likely to be considered in private, see separate agenda.

2) If you have any questions about the agenda or meeting arrangements, please contact Allan McCartney, Committee Services, City of Edinburgh Council, City Chambers, High Street, Edinburgh, EH1 1YJ; 0131 529 4246; e-mail [email protected].

3) A copy of the agenda and papers for this meeting will be available for inspection prior to the meeting at the main reception office, City Chambers, High Street, Edinburgh.

4) The agenda, minutes and public reports for this meeting and all the main Council committees can be viewed online by going to www.edinburgh.gov.uk/meetings. Members and Officers of the Council can also view them by going to the Orb home page and clicking on Committee papers online.

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Notice of Meeting and Agenda

The City of Edinburgh Council

Thursday, 28 June 2012 at 10 am in the City Chambers, High Street, Edinburgh

Item likely to be taken in private

B1 Sir William Y Darling Bequest for Good Citizenship – report by the Director of Corporate Governance (circulated)

Carol Campbell Acting Head of Legal and Administrative Services

Notes:

1) The above report is not for publication as it falls within the description of exempt information and, consequently, is likely to be considered in private.

3) The agenda, minutes and public reports for this meeting and all the main Council committees can be viewed online by going to www.edinburgh.gov.uk/cpol. Members and Officers of the Council can also view them by going to the Council intranet home page and clicking on Committee Business.

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Item no 3.1(a)

Dear Rhona Further to our conversation yesterday, Boroughmuir High School Parent Council would like to make a formal deputation to next Thursday's Council meeting in respect of the item considering the report on the statutory consultation in respect of proposals for a new Boroughmuir.

Could you please put us on the Agenda and append the following submission for dissemination with it.

Currently our deputation will consist of: Alison Dunnett, Chair BHS PC New School Subgroup (NSSG); and Nicki Innes; NSSG member

I shall advise you separately of Alison & Nicki's contact details.

Many thanks and kind regards

Stew Green Chair, BHS PC

Item no 4.1

QUESTION NO 1 By Councillor Edie for answer by the Convener of the Health, Social Care and Housing Committee at a meeting of the Council on 28 June 2012

Question (1) The new Administration’s coalition deal states that the council will “examine ways to bring the Council, care home staff and users together into cooperatives to provide the means to make life better for care home users and care providers”.

Question (2) Can the Convener of Health, Social Care and Housing elaborate on what this means in practice?

Item no 4.2

QUESTION NO 2 By Councillor Edie for answer by the Leader of the Council at a meeting of the Council on 28 June 2012

Question (1) Did the Lord Provost meet with His Holiness the Dalai Lama on his visit to Edinburgh on 22 June 2012?

Question (2) If not why?

Item no 4.3

QUESTION NO 3 By Councillor Rose for answer by the Leader of the Council at a meeting of the Council on 28 June 2012

Question (1) What meetings have been held between the Council or its senior representatives with the Consul General of the People's Republic of China or other representatives of the Chinese Government since the beginning of 2012?

Question (2) Have any such meetings (which and who) discussed:

• the visit of the Dalai Lama? • Confucius Institute for Scotland or its work?

Item no 5.1

Committee Minutes

The City of Edinburgh Council Year 2011/2012

Meeting 13 – Thursday, 26 April 2012

Edinburgh, 26 April 2012 – At a meeting of The City of Edinburgh Council.

Present:-

LORD PROVOST

The Right Honourable George Grubb

COUNCILLORS

Elaine Aitken Alison Johnstone Ewan Aitken Colin Keir Robert C Aldridge Louise Lang Jeremy R Balfour Jim Lowrie Eric Barry Gordon Mackenzie Angela Blacklock Kate MacKenzie Mike Bridgman Marilyne A MacLaren Deidre Brock Mark McInnes Gordon Buchan Stuart Roy McIvor Tom Buchanan Tim McKay Steve Burgess Eric Milligan Andrew Burns Elaine Morris Ronald Cairns Joanna Mowat Steve Cardownie Rob Munn Maggie Chapman Gordon J Munro Maureen M Child Alastair Paisley Joanna Coleman Gary Peacock Bill Cook Ian Perry Jennifer A Dawe Alasdair Rankin Cammy Day Cameron Rose Charles Dundas Jason G Rust Paul G Edie Conor Snowden Nick Elliott-Cannon Marjorie Thomas Paul Godzik Stefan Tymkewycz Norma Hart Phil Wheeler Stephen Hawkins Iain Whyte Ricky Henderson Donald Wilson Lesley Hinds Norrie Work Allan G Jackson 2

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1 The New Portobello High School

Progress on the project to build the new Portobello High School on a site at Portobello Park was detailed.

(a) Deputations

The Council heard the following deputations:

PFANS (Portobello For A New School)

The deputation expressed concern at the delays in providing a new Portobello High School. They said that the current building was extremely flawed, the accommodation sub-standard and there was now no patience within the community for further legal arguments against the building of a new school.

The deputation expressed their gratitude for the support they had received from the Council for the new high school and urged them to support the recommendations in the report by the Director of Children and Families.

Portobello Park Action Group

The deputation stressed that they were in support of a new school for Portobello; their objection was to it being built on public parkland. They felt that the future of the golf course remained at risk as its future funding was only guaranteed for one year with no assurances that it would be safeguarded for recreation in perpetuity. They asked the Council to nominate the golf course as a Queen Elizabeth Field to demonstrate the Council’s commitment to its future.

The deputation felt that there had been no meaningful consultation through the six years planning process and that the Council had contravened its own Open Space planning policy. They urged the Council not to approve the recommendations in the report by the Director of Children and Families until the legal situation had been resolved.

Portobello High School Parent Council

The deputation were delighted to see the plans for the new school at Portobello reaching their final stage and felt that the Council should be proud of the way in which they had carried out their consultation and research which would result in a fabulous design for a fantastic school. They were of the view that the current school was preventing both pupils and staff reaching their full potential.

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The deputation stressed that the Portobello community were extremely enthusiastic about the proposals and that the majority recognised it as a good option for the area and a wonderful community resource. They urged the Council to support the recommendations in the report by the Director of Children and Families.

(Reference – e-mail requests, submitted.)

(b) Report by the Director of Children and Families

An update was given on the project to build the new Portobello High School, together with details of the status of the legal challenge to, and subsequent appeal against, the school’s construction on a site at Portobello Park. Approval was sought for the next steps in the process.

Motion

1) To note the contents of the report by the Director of Children and Families and the latest position relating to the progress of the project and the associated legal challenge.

2) To note the outcome of, and approve the responses to, the consultation exercise required by the Town and Country Planning (Scotland) Act 1959 as set out in the Director’s report.

3) To appropriate the land (as common good land) at Portobello Park as specified at paragraph 3.28 of the Director’s report for use as the site of the new Portobello High School and associated community facilities under the powers available within the Local Government (Scotland) Act 1973.

4) To appropriate the land (as open space and common good land) at Portobello Park as specified at paragraph 3.28 of the report for use as the site of the new Portobello High School and associated community facilities under the powers available within s20 of the Local Government in Scotland Act 2003.

5) To accept the tender from Balfour Beatty Construction Scottish & Southern Limited of £26,114,107 and to enter into a contract with them as the principal construction contractor to deliver the new Portobello High School on the condition that the existing appeal be first either successfully concluded in favour of the Council or withdrawn in each case to the satisfaction of the Chief Executive in consultation with the Director of Children and Families and the Director of Corporate Governance.

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6) To delegate authority to make the decision referred to in paragraph 5 above to the Chief Executive, in consultation with the Director of Children and Families and Director of Corporate Governance.

7) To receive a further report for information at the earliest opportunity following any decision having been taken in accordance with paragraph 6 above.

- moved by Councillor MacLaren, seconded by Councillor McIvor (on behalf of the Administration).

Amendment

To approve the motion and add:

8) To recognise that those supporting the new school were also supportive of open space provision and that those defending the park were not opposed to a new school.

9) Therefore, to call for a report, within three cycles, investigating the possibility of using the existing school site as compensatory green space, such compensation having been originally agreed in 2006.

10) Further, in order to guarantee the remaining open space around the school, including the golf course, would be protected from development, to designate it a Jubilee Park.

- moved by Councillor Chapman, seconded by Councillor Johnstone (on behalf of the Green Group).

Voting

The voting was as follows:

For the motion - 54 votes For the amendment - 3 votes

Decision

To approve the motion by Councillor MacLaren.

(References – Act of Council No 1 of 22 September 2012; report no CEC/102/11-12/CF by the Director of Children and Families, submitted.)

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2 Questions

Questions put by members to this meeting, written answers and supplementary questions and answers are contained in the Appendix to this minute.

3 Minutes

Decision

To approve the minute of the Council meeting of 15 March 2012 as a correct record.

4 Placing in Schools Appeal Committee – Appointments

Decision

To appoint to the Placing in Schools Appeal Committee:

1) Jenn Scott and Neil Clarkson to Panel 2.

2) David Fleming to Panel 3.

(Reference – report no CEC/108/11-12/CG by the Director of Corporate Governance, submitted.)

5 Leader’s Report

The Leader presented her report to the Council and referred to the successful bid by Global Infrastructure Partnership for Edinburgh Airport.

This was the last meeting of the present Council. The Leader and Leaders of each political group led tributes to:

• The Lord Provost and the Lady Provost for their hard work and dedication to their roles • Those elected members who had chosen not to stand for re-election to the Council • Staff in the Leader’s office • All Group support staff • The Chief Executive and her team and all Council staff.

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The following questions/comments were made:

Councillor Burgess - Edinburgh Airport – discussions with new owners on climate change

Councillor Kate MacKenzie - Community Council elections – postponement

Councillor Buchan - New Boroughmuir High School – club premises

Councillor McIvor - Spokes magazine feature – Edinburgh’s commitment to cycling

(Reference – report no CEC/107/11-12/L by the Leader, submitted.)

6 Urban Broadband Fund Bid – BT Efficiency Fund

The Finance and Resources Committee had recommended the release of £1.9m over three years from the BT Efficiency Fund to support the delivery of Edinburgh’s “Connected Capital” Programme.

Decision

1) To release £1.9m over three years from the BT Efficiency Fund to the “Connected Capital” Programme.

2) To note the recent announcement by the UK Government that Edinburgh would receive between £8m and £11m of capital funding from the government’s Urban Broadband Fund to create a ‘Super Connected City’ with the exact funding award to be confirmed when detailed delivery plans were submitted on 2 July.

3) To recognise and welcome the contribution of officers and partner organisations who had successfully developed the city's bid to the Urban Broadband Fund.

(References – Finance and Resources Committee 20 March 2012 (item 11); report no CEC/101/11-12/FARC by the Acting Head of Legal and Administrative Services, submitted.)

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7 4-8 Market Street

Approval, in principle, was sought to develop new offices for the Edinburgh- based French Consulate General in Scotland and the French Institute on the site of the derelict former police garage at 6-8 Market Street. Approval was also sought to explore options for the adjacent gap site at 4-5 Market Street, either as an Arts Hub (with or without an element of commercial development) or a wholly commercial development.

Motion

1) To approve, in principle, the proposal for a new Consulate General of France and French Institute for the city at 6-8 Market Street.

2) To instruct the Directors of Corporate Governance and Services for Communities to review the feasibility of an Arts Hub at 4-5 Market Street.

3) To delegate authority to the Directors of Services for Communities and Corporate Governance to negotiate provisional terms and conditions for the off-market sale of all or part of the property at 4-8 Market Street.

4) To instruct the Directors of Services for Communities and Corporate Governance to report to the Finance and Resources Committee by no later than six months from the date of this meeting on a final recommendation for the entire site at 4-8 Market Street.

- moved by Councillor Wheeler, seconded by Councillor Elliott-Cannon (on behalf of the Administration).

Amendment

To approve the motion and add:

5) To consider an architectural competition for this site in order to fulfil the promise to create ‘a once in a lifetime chance to create an inspirational new public place which respects and enhances its important setting’.

- moved by Councillor Mowat, seconded by Councillor Whyte (on behalf of the Conservative Group).

Voting

The voting was as follows:

For the motion - 44 votes For the amendment - 14 votes

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Decision

To approve the motion by Councillor Wheeler.

(Reference – report no CEC/104/11-12/CG&SfC by the Directors of Corporate Governance and Services for Communities, submitted.)

Declaration of Interests

Councillors Buchanan, Gordon Mackenzie, McKay and Rust declared a non- financial interest in the above item as Directors of EDI Group Ltd.

8 Scottish Cities Alliance

The Scottish Government, in collaboration with Aberdeen, Dundee, Edinburgh, Glasgow, Inverness (Highland) and Stirling Councils, had published an agenda for cities which focused on the role of Scottish cities and their regions in driving national economic growth.

Progress made in establishing the Scottish Cities Alliance (SCA), which facilitated closer working between the cities, and the Scottish Cities Investment Fund, which supported the work of the SCA, was provided. An outline of operational arrangements was given together with details of the cities’ strategic priorities and initial focus of collaborative working.

Decision

To approve:

1) The progress made in the formation of the Scottish Cities Alliance (SCA).

2) The principles of operation for the Scottish Investment Fund.

3) The strategic focus of the Alliance and short term priority project activities, including the lead roles being played by the City of Edinburgh Council.

(Reference – report no CEC/103/11-12/CD by the Director of City Development, submitted.)

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9 “Privilege” for The Royal Regiment of Scotland (SCOTS), The 3rd Battalion The Rifles and 40th Regiment Royal Artillery

Decision

To grant the “privilege” of marching through the city without prior permission “with drums beating, bayonets fixed and colours flying” to The Royal Regiment of Scotland (SCOTS), The 3rd Battalion The Rifles and 40th Regiment Royal Artillery.

(Reference – report no CEC/104/11-12/CG by the Director of Corporate Governance, submitted.)

10 Elected Member Scrutiny of the Work of the Edinburgh Alcohol and Drug Partnership

Options were presented to address the issue of elected member engagement in, and overview of, the work of the Edinburgh Alcohol and Drug Partnership.

Decision

1) To endorse the important principle of elected member representation on the Edinburgh Alcohol and Drug Partnership and to require officers to represent this principle in future discussions on governance arrangements.

2) To agree that a further report be presented to the Council following the outcome of the local and Scottish Government reviews of governance arrangements for community planning and the integration of health and social care which would also include recommendations on the political balance of elected member representation on the Edinburgh Alcohol and Drug Partnership.

(References – Policy and Strategy Committee 27 March 2012 (item 1); report no CEC/105/11-12/HSC by the Director of Health and Social Care, submitted.)

11 Green Bank – Motion by Councillor Balfour

The following motion by Councillor Balfour was submitted in terms of Standing Order 28:

“Council:

(i) welcomes the decision to establish the Green Bank headquarters in Edinburgh and the resultant opportunities for employment that this brings;

The City of Edinburgh Council 26 April 2012

(ii) notes that such investment has been possible due to Scotland being an integral part of the United Kingdom.”

Motion

To approve the motion.

- moved by Councillor Balfour, seconded by Councillor Buchan (on behalf of the Conservative Group).

Amendment 1

To approve paragraph (i) of the motion, to delete paragraph (ii) and replace it with:

(ii) To put on record the Council’s thanks to the wide range of public and private sector partners in Edinburgh and beyond – including Scottish Enterprise, Edinburgh Chamber of Commerce, all other Scottish cities and politicians of all political parties – who had helped secure Edinburgh’s success over 30 other bids to be the location of the Green Investment Bank.

(iii) To continue to work in partnership to make the Green Investment Bank Headquarters a success.

- moved by Councillor Dawe, seconded by Councillor Cardownie (on behalf of the Administration).

Amendment 2

To approve paragraph (i) of the motion, to delete paragraph (ii) and replace it with:

(ii) To agree that the Council Leader would make representation to the UK Government that the Green Investment Bank should be able to invest in early-stage marine renewable energy with a view to meeting 2020 renewable energy targets.

- moved by Councillor Burgess, seconded by Councillor Chapman (on behalf of the Green Group).

In accordance with Standing Order 30(7), amendment 2 was accepted as an addendum to amendment 1.

The City of Edinburgh Council 26 April 2012

Voting

The voting was as follows:

For the motion - 26 votes For the composite of amendments 1 and 2 - 32 votes

Decision

To approve the composite of amendment 1 by Councillor Dawe and amendment 2 by Councillor Burgess.

12 Scottish Cup Final – Motion by Councillor Wilson

The following motion by Councillor Wilson was submitted in terms of Standing Order 28:

“Council notes

• the success of both Hibernian and Hearts Football clubs in reaching the Scottish Cup final to face each other for the first time since 1896 • that the only time the final has been held outside Glasgow was in 1896 when both clubs last met in the final of the Scottish Cup.

Council therefore instructs the Chief Executive to work with officers and representatives of both clubs to seek a meeting with the SFA with a view to holding the Scottish Cup final at Murrayfield.”

Councillor Wilson withdrew his motion.

13 Powderhall Parking – Motion by Councillor Gordon Mackenzie

The following motion by Councillor Gordon Mackenzie was submitted in terms of Standing Order 28:

“Council notes the longstanding disagreement between owners, property developers and the Council regarding the provision and management of resident parking in Powderhall.

As a means to resolve this situation to mutual satisfaction, Council agrees to investigate the potential for ‘stopping-up’ those residents’ parking spaces which would be adopted by the Council, as Roads Authority, in order that these spaces can be managed by the residents themselves and report to the Transport, Infrastructure and Environment Committee in June.”

The City of Edinburgh Council 26 April 2012

Decision

To approve the motion by Councillor Gordon Mackenzie.

14 Queen Elizabeth Fields – Motion by Councillor Hawkins

The following motion by Councillor Hawkins was submitted in terms of Standing Order 28:

“Council notes the excellent commitment given to the commemoration of the Queen’s Diamond Jubilee by proposing 24 parks as dedicated greenspace by Fields in Trust. This act protects public greenspace and contributes to the advancement of equality of opportunity by ensuring that communities have access to recreational greenspace near to where they live.

Council will be aware of the contentious nature of building on Portobello Park, which forms a substantial area of parkland in Portobello and Joppa, whilst the continuation of Portobello Golf Course is uncertain in the medium term.

Therefore, Council agrees to include the area known as Portobello Golf Course as an addition to the agreed list to be dedicated as a Queen Elizabeth Field and instructs officers to conclude the necessary arrangements with Fields in Trust.”

The Lord Provost remitted the motion to the Transport, Infrastructure and Environment Committee in terms of Standing Order 28(3), subject to competency.

15 Scottish Cup Final 2012 – Motion by Councillor Dawe and Councillor Cardownie

The following motion by Councillor Dawe and Councillor Cardownie was submitted in terms of Standing Order 28:

“Council congratulates Edinburgh’s two senior football clubs, Heart of Midlothian and Hibernian, on reaching the final of the Scottish Cup. Council recognises that this is the first time in over a century that the Capital’s senior sides will meet in the final of the national football cup competition.

Council agrees that arrangements should be progressed for a civic reception to recognise the achievement of whichever club emerges victorious.

Council also instructs that work be progressed with relevant partners to identify the best open-top bus route for both potential outcomes.”

The City of Edinburgh Council 26 April 2012

Decision

To approve the motion by Councillor Dawe and Councillor Cardownie.

16 Energy Use in Schools – Motion by Councillor Johnstone

The following motion by Councillor Johnstone was submitted in terms of Standing Order 28:

“That this Council acknowledges the need to improve the energy performance of its school buildings in order to reduce energy use and emissions, optimise pupil comfort by managing temperatures more effectively and to cut financial costs, enabling savings to be spent on other priorities such as resource materials and therefore agrees to produce an updated detailed energy report that identifies undertaken and outstanding capital improvements to reduce energy consumption in schools, and ways of managing energy consumption to achieve these aims.”

Motion

To approve the motion.

- moved by Councillor Johnstone, seconded by Councillor Chapman (on behalf of the Green Group).

Amendment

1) To acknowledge the extensive work undertaken and ongoing in Edinburgh’s schools since 2007/8 to encourage energy efficiency and improve CO2 emissions and the considerable investment of over £3m committed for this purpose by the Administration.

2) Over this period, the Council had invested heavily in energy efficiency measures in Edinburgh’s schools which appeared to have had an impact on both gas and electricity consumption. All schools had been surveyed and Energy Performance Certificates had been produced for each building and would inform future work.

3) Works including upgrading boilers, lighting controls, loft insulation, water conservation, voltage optimisers, new window installations, smart metering and relocating thermostats had all been carried out.

4) To agree to a progress report on this issue going to the Education, Children and Families Committee in late summer.

- moved by Councillor MacLaren, seconded by Councillor McIvor (on behalf of the Administration). 14

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Voting

For the motion - 3 votes For the amendment - 55 votes

Decision

To approve the amendment by Councillor MacLaren.

17 Aung San Suu Kyi – Motion by Councillor Hinds

The following motion by Councillor Hinds was submitted in terms of Standing Order 28:

“Council warmly congratulates Aung San Suu Kyi on her party’s successes in recent elections.

Council notes reports that the pro-democracy leader and Nobel Peace Laureate plans to travel to Europe and possibly the UK this year.

Council further notes that, due to her house arrest, Ms Suu Kyi was unable to receive in person her Freedom of the City of Edinburgh.

Council therefore requests that the Council write to Aung San Suu Kyi inviting her to receive in person her Freedom of the City of Edinburgh.”

Decision

To approve the motion subject to the replacement of the last paragraph with:

To note that, as soon as the Council Leader learnt that Aung San Suu Kyi was to visit the UK, she contacted the Lord Provost to suggest that an invitation be extended to Aung San Suu Kyi to visit Edinburgh and to receive her Freedom of the City in person. The Lord Provost had written making such an invitation and to agree therefore to take no separate action in response to the motion.

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18 Approved Alterations to Listed Buildings – Motion by Councillor Mowat

The following motion by Councillor Mowat was submitted in terms of Standing Order 28:

“Council:

agrees to send a response to the Government's consultation on the introduction of Approved Alterations to Listed Buildings into the VAT schedule at 20% in order to communicate its concern that:-

i. it believes that this measure will affect Edinburgh disproportionately given that Edinburgh has one of the highest concentrations of listed buildings in the United Kingdom and is a World Heritage Site.

ii. the introduction of VAT on Approved Alterations could jeopardise the maintenance and conservation of these buildings by removing the incentive to apply for Listed Building Consent which allows the integrity and Outstanding Universal Values of the World Heritage Site to be maintained.”

Decision

To approve the motion by Councillor Mowat.

19 Pedal on Parliament – Motion by Councillor Burgess

The following motion by Councillor Burgess was submitted in terms of Standing Order 28:

“That this Council:

Welcomes ‘Pedal on Parliament’ which will assemble on the Meadows, Edinburgh, at 2 pm on Saturday 28 April for a mass cycle to the Scottish Parliament;

Recognises that the aim of Pedal on Parliament is ‘gathering cyclists from across the nation to cycle on Holyrood to tell our politicians that cycling matters, to show our need for safer cycling and cities fit for people’;

Notes Pedal on Parliament’s eight-point manifesto:

1) Proper funding for cycling 2) Design cycling into Scotland’s roads 3) Safer speeds where people, live, work and play 16

The City of Edinburgh Council 26 April 2012

4) Integrate cycling into local transport strategies 5) Sensible road traffic law and enforcement 6) Reduce the risk of HGVs to cyclists and pedestrians 7) A strategic and joined-up programme of road user training 8) Solid research on cycling to support policy-making;

Notes that Pedal on Parliament is also asking people to write to their MSPs and local councillors and encourage them to sign up to their eight-point manifesto.

Encourages anyone who cycles in Scotland, or who would like to cycle, to join the event with or without their bikes to help boost safe cycling in Scotland.”

Decision

To approve the motion by Councillor Burgess.

20 National Tenancy Deposit Scheme – Motion by Councillor Burgess

The following motion by Councillor Burgess was submitted in terms of Standing Order 28:

“That this Council:

Welcomes the national tenancy deposit scheme starting on 2 July;

Agrees to develop a publicity plan with the aim of ensuring that all tenants and landlords in the city are aware of the need to lodge tenancy deposits with one or more of the national schemes.”

Decision

To approve the motion by Councillor Burgess.

The City of Edinburgh Council 26 April 2012

Appendix (As referred to in Act of Council No 2 of 26 April 2012

QUESTION NO 1 By Councillor Rose answered by the Convener of the Finance and Resources Committee

Question Has an audit been carried out on the energy efficiency of the Council's Waverley Court building?

Answer Yes in February 2011.

The City of Edinburgh Council 26 April 2012

QUESTION NO 2 By Councillor Munro answered by the Convener of the Transport, Infrastructure and Environment Committee

Question (1) On 2 April 2012 the Convener undertook to secure a response to the questions I asked at Full Council in December 2011 about the number of private contractors employed by the Council to undertake refuse collection and street cleansing. Can he now provide the response to my questions, including supplementary questions?

Answer (1) There are currently five contractors who could be used under the contingency framework agreement for street cleaning and refuse collection.

However, currently in Waste Services the Council are not using any of the contingency contractors. We have Palm who collect recycling materials on our behalf and some additional agency staff filling in for absence.

The Council used Enterprise as an additional resource during the spring clean initiative. This resulted in a spend of £162k for the period covering late February 2012 to the end of March 2012. There are currently no contingency contractors being used in street cleaning.

Question (2) How many private contractors are currently used by the Council to undertake refuse collection and street cleansing?

What is the total value of the contracts?

How many people are employed in total?

What is the duration of each of the contracts?

On whose authority was it decided to go ahead with issuing these contracts?

The City of Edinburgh Council 26 April 2012

Answer (2) There are currently five contractors who can be used under the contingency framework agreement. None are currently being used.

This is a framework contract and payment is only made when work is requested by the Council. The value of the contract will depend on the number of requests made and the volume of work given in each request.

The number of people employed is determined by the contractor and depends on the volume of work given, which varies with each request.

The contract runs from June 2010 to December 2013.

The decision to procure the framework contract for waste and street cleaning contingencies was taken by Services for Communities Senior Management Team. The award of contract was signed off by the Director of Finance in accordance with the Council’s Standing Orders.

Supplementary I would like to thank the Convener for his answer and I Question would also thank his assistant for the explanation for the omission of the answer to the previous question in December. However, the answer provided by the Convener contradicts what is happening outside this Chamber. There is anecdotal evidence of Blue Arrow staff on routes and I have been informed of unsafe practices that have been observed on some routes where it has just been a driver and loader in Morningside. But there is also other evidence as well. Blue Arrow have actually advertised in the press for refuse supervisors at the rate of £12.07 an hour, three of them, and this is on temporary contracts but say it is permanent with the public sector and with the City of Edinburgh. So will the Convener now undertake to provide to Council details of the cost of past, present and planned future contract values that are contained within the contingency framework agreement?

The City of Edinburgh Council 26 April 2012

Supplementary That information has already been made available; the value Answer of contracts has already been made available. As Councillor Munro will be well aware, we have no control whatsoever over what a private company may wish to recruit for and what they may have in mind about that. I have no knowledge of their practices and nor do I need to. If you have any evidence of any practices which are contrary to health and safety you should direct them to the department and I am sure they will be investigated properly. But I would say that as a result of the additional funding that we put in and the additional work that was put into the spring clean initiative we do now have the highest overall percentage clean result awarded in CIMS surveys ever in the City of Edinburgh, in the March results which are yet to be published. So it has been well worthwhile investing in the cleanliness of our city.

The City of Edinburgh Council 26 April 2012

QUESTION NO 3 By Councillor Johnstone answered by the Convener of the Transport, Infrastructure and Environment Committee

Question To ask the Convener of the Transport, Infrastructure and Environment Committee what steps are being taken to optimise the excellent work of those involved in promoting and enhancing the world’s oldest short hole golf course at Bruntsfield Links?

Answer The Council has supported the use of Bruntsfield Links for golfing since the land was granted to the City by the Crown in 1508 and the laying out of the short hole course in 1895.

Last year the Council supported the 250th anniversary of the Bruntsfield Links Golfing Society by hosting a game using historical hickory sticks on a reconstructed Bruntsfield Links six-hole layout.

The Council still retains the “free to play” ethos of the course, which it promotes on its website and elsewhere.

Council representatives had a very productive meeting with representatives from Bruntsfield Short Hole Golf Club and an agreement on an ongoing maintenance regime has been agreed and implemented.

Item no 5.2

Committee Minutes

The City of Edinburgh Council Year 2012/2013

Meeting 1 – Thursday, 17 May 2012 (reconvened on 24 May 2012)

Edinburgh, 17 and 24 May 2012 – At a meeting of The City of Edinburgh Council.

Present – 17 May 2012:

LORD PROVOST

The Right Honourable Donald Wilson

COUNCILLORS

Elaine Aitken Ricky Henderson Robert C Aldridge Dominic R C Heslop Norma Austin Hart Lesley Hinds Nigel Bagshaw Sandy Howat Jeremy R Balfour Allan G Jackson Gavin Barrie Karen Keil Angela Blacklock David Key Chas Booth Richard Lewis Mike Bridgman Alex Lunn Deidre Brock Melanie Main Tom Buchanan Mark McInnes Steve Burgess Adam McVey Andrew Burns Eric Milligan Ronald Cairns Joanna Mowat Steve Cardownie Gordon J Munro Maggie Chapman Jim Orr Maureen M Child Lindsay Paterson Bill Cook Ian Perry Nick Cook Alasdair Rankin Gavin Corbett Vicki Redpath Cammy Day Cameron Rose Denis C Dixon Frank Ross Karen Doran Jason G Rust Paul G Edie Alastair Shields Catherine Fullerton Stefan Tymkewycz Nick Gardner David Walker Paul Godzik Iain Whyte Joan Griffiths Norman Work Bill Henderson

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Present – 24 May 2012:

LORD PROVOST

The Right Honourable Donald Wilson

COUNCILLORS

Elaine Aitken Ricky Henderson Robert C Aldridge Dominic R C Heslop Norma Austin Hart Lesley Hinds Nigel Bagshaw Sandy Howat Jeremy R Balfour Allan G Jackson Gavin Barrie Karen Keil Angela Blacklock David Key Chas Booth Richard Lewis Mike Bridgman Alex Lunn Deidre Brock Melanie Main Steve Burgess Mark McInnes Andrew Burns Adam McVey Ronald Cairns Eric Milligan Steve Cardownie Joanna Mowat Maggie Chapman Gordon J Munro Maureen M Child Jim Orr Bill Cook Lindsay Paterson Nick Cook Ian Perry Gavin Corbett Alasdair Rankin Cammy Day Vicki Redpath Denis C Dixon Cameron Rose Karen Doran Frank Ross Paul G Edie Jason G Rust Catherine Fullerton Alastair Shields Nick Gardner Stefan Tymkewycz Paul Godzik David Walker Joan Griffiths Iain Whyte Bill Henderson Norman Work 3

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

1 Chair

In accordance with Section 4(4) of the Local Government etc (Scotland) Act 1994, Sue Bruce, Returning Officer, presided at the meeting until the election of the Lord Provost.

2 Election of Lord Provost

The Council was invited to elect the Lord Provost.

Decision

To elect Councillor Donald Wilson as Lord Provost of the City of Edinburgh for the period 2012-2017.

The Lord Provost, having made the declaration de fideli, was invested with the insignia of office and took the Chair.

The Lord Provost thanked the members for the honour they had conferred on him.

3 Election of Depute Convener

The Council was invited to elect the Depute Convener.

Decision

To elect Councillor Deidre Brock as Depute Convener of the Council for the period 2012-2017.

4 Roll of Council

The Roll of Council showing the Councillors for the various wards of the City of Edinburgh was submitted as follows:

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Ward Name Ward Name

1 Almond Lindsay Paterson 10 Meadows/ Paul Godzik Alastair Gordon Shields Morningside Sandy Howat Norman James Work Melanie Main Mark McInnes 2 Pentland Hills Bill Henderson 11 City Centre Karen Doran Ricky Henderson Joanna Mowat Dominic R C Heslop Alasdair Rankin 3 Drum Brae/ Robert Aldridge 12 Leith Walk Angela Blacklock Gyle Ron Cairns Deidre Leanne Brock Karen Keil Maggie Chapman Nick Gardner 4 Forth Steve Cardownie 13 Leith Chas Booth Cammy Day Adam McVey Allan George Jackson Gordon Munro Vicki Redpath 5 Inverleith Nigel Bagshaw 14 Craigentinny/ Joan Griffiths Gavin Barrie Duddingston Alex Lunn Lesley Hinds Stefan Tymkewycz Iain Whyte 6 Corstorphine/ Jeremy Ross Balfour 15 Southside/ Steve Burgess Murrayfield Paul Edie Newington Jim Orr Frank Ross Ian Perry Cameron Rose 7 Sighthill/Gorgie Denis Charles Dixon 16 Liberton/ Norma Austin Hart Catherine Fullerton Gilmerton Tom Buchanan Eric Milligan Bill Cook Donald C Wilson Nick Cook 8 Colinton/ Elaine Aitken 17 Portobello/ Mike Bridgman Fairmilehead Richard Lewis Craigmillar Maureen Child Jason Geoffrey Rust David Walker 9 Fountainbridge/ Andrew Burns Craiglockhart Gavin Corbett David Key

5 Appointment of Members to Committees, Joint Committees and Joint Boards

The Council was invited to appoint members to Committees of the Council and to Joint Committees and Joint Boards in accordance with Standing Order 3. The Council was also invited to appoint the Convener and Vice-Convener of the Policy and Strategy Committee (known as the Leader and Deputy Leader of the Council).

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Decision

1) Whereas:

(a) a Local Government election had taken place on 3 May 2012.

(b) this was the first meeting of the Council since that election.

(c) the Labour Group and the SNP Group had entered into coalition for the administration of the City of Edinburgh Council.

(d) the intention of the Administration was to appoint the Lord Provost, Depute Convener, Leader of the Council and Deputy Leader of the Council at this meeting and for all other positions to be appointed on 24 May 2012.

(e) that the Lord Provost and Depute Convener had already been elected (see items 2 and 3 above).

2) Now therefore:

(a) To appoint Councillor Burns as a member and the Convener of the Policy and Strategy Committee and accordingly Leader of the Council.

(b) To appoint Councillor Cardownie as a member and the Vice- Convener of the Policy and Strategy Committee and accordingly Deputy Leader of the Council.

(c) To adjourn this meeting in terms of Standing Order 17 and continue the remaining business of the meeting to an adjourned meeting to take place immediately before the next meeting of the Council on 24 May 2012.

(Reference – report no CEC/01/12-13/CG by the Director of Corporate Governance, submitted.)

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

6 Resumption

The Lord Provost reconvened the meeting adjourned from 17 May on 24 May 2012.

7 Election of Bailies

Decision

To appoint five Bailies, 1 each from the Labour, Scottish National Party, Conservative, Green and Scottish Liberal Democrat Groups as follows:

Councillor Blacklock Councillor Main Councillor Work Councillor Aldridge Councillor Aitken

8 Appointment of Members to Committees, Joint Committees and Joint Boards

The Council was invited to appoint members to Committees of the Council and to Joint Committees and Joint Boards in accordance with Standing Order 3. The Council had appointed the Convener and Vice-Convener of the Policy and Strategy Committee (see item 5 above).

Motion

1) To agree the political balance on Committees, Joint Committees, Joint Boards and the Licensing Board as detailed in Appendix 1 to this minute.

2) To note that the SLD Group had not taken up their places on the Planning Committee/Development Management Sub-Committee and the Licensing Board and accordingly to allocate an additional place on the Planning Committee/Development Management Sub-Committee to the SNP Group and to appoint nine members to the Licensing Board.

3) To note that the Council had already appointed Councillor Burns and Councillor Cardownie as Convener and Vice Convener respectively of the Policy and Strategy Committee (known as Leader and Deputy Leader of the Council).

4) To appoint members to the Policy and Strategy Committee, six Executive Committees, the Audit Committee, the Planning Committee/ Development Management Sub-Committee/Local Review Body and the Regulatory 7

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Committee/Licensing Sub-Committee as detailed in Appendix 2 to this minute.

5) To appoint members to the Joint Committees, Joint Boards and the Licensing Board as detailed in Appendix 3 to this minute.

6) To recognise that, having been returned by Edinburgh citizens as the two largest political parties represented on the City of Edinburgh Council, the Edinburgh Labour Party and the Scottish National Party had agreed to form a coalition to build a more co-operative and prosperous Edinburgh that benefited every individual and community.

7) To agree that the coalition contract represented a fresh start for Edinburgh and reflected a Council that would listen to, and work with, local people and which would co-operate in a co-operative, fair, accountable and responsible manner.

8) To welcome the coalition Administration’s commitment to more democratic governance arrangements which facilitated greater consensus-based decision-making and which provided for strengthened scrutiny.

9) Therefore, to agree that a review of the political management governance arrangements should be reported to the August 2012 Council meeting for elected member consideration and determination. Further, to agree that the governance review should include specific recommendations for:

(i) proportionate, cross-party representation on committees;

(ii) strengthened scrutiny arrangements for the committee system of governance;

(iii) establishing a Petitions Committee to allow Edinburgh citizens to call for specific action to be taken by the Council;

(iv) establishing a cross-party Budget Committee open to representations;

(v) establishment of a Co-operative Development Unit to support implementation of the partnership’s coalition commitments;

(vi) establishing a city-wide Transport Forum of experts and citizens to consider our modern transport needs;

(vii) establishing a champion for Carers’ issues at senior elected member level;

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

(viii) establishing a champion for Third Sector issues at senior elected member level;

with recommended timescales for implementing these initiatives.

- moved by Councillor Burns, seconded by Councillor Cardownie (on behalf of the Capital Coalition).

Amendment 1

To approve the motion subject to the deletion of paragraphs 7, 8 and 9(iii).

- moved by Councillor Balfour (on behalf of the Conservative Group), seconded by Councillor Edie (on behalf of the Liberal Democrat Group).

Amendment 2

1) To approve paragraphs 1, 5 and 9 of the motion.

2) To note paragraphs 3, 6, 7 and 8 of the motion.

3) To note that the Liberal Democrat Group had not taken up their places on the Planning Committee/ Development Management Sub-Committee and the Licensing Board.

4) To note that the number of Green Group members appointed to the Planning/Development Management sub-Committee should be 2 (1.55 rounded up) and the number of SNP members 5 (4.66 rounded up). Accordingly to allocate the Liberal Democrat place on the Planning Committee/Development Management Sub-Committee to the Green Group and to appoint nine members to the Licensing Board,

5) To approve the appointment of members to the Policy and Strategy Committee, 6 Executive Committees, the Audit Committee and the Regulatory Committee/Licensing Sub-Committee as detailed in Appendix 2 to this minute.

6) However, to amend the appointments to the Planning Committee/ Development Management Sub-Committee/Local Review Body to appoint Green Councillors Bagshaw and Burgess in order to achieve political balance.

7) Further, to agree that the process of reviewing governance arrangements would be open and transparent and to this end:

(a) the governance review would commence from a position of openness, without any suggestion of a predetermined end point, 9

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

other than meeting the principles of proportionality and scrutiny, and other specific recommendations outlined above; and

(b) there would be regular discussion and consultation with all party groups about the different possible options during the process.

- moved by Councillor Burgess, seconded by Councillor Chapman (on behalf of the Green Group).

In accordance with Standing Order 30(7), paragraph 4 of amendment 2 was accepted as an addendum to amendment 1.

Voting

The voting was as follows:

For the motion - 37 votes For amendment 1 (as adjusted) - 14 votes For amendment 2 - 6 votes

Decision

To approve the motion by Councillor Burns.

(Reference – report no CEC/01/12-13/CG by the Director of Corporate Governance, submitted.)

9 Appointment of Religious and Teacher Representatives

The Council was invited to appoint religious and teacher representatives for the discharge of its education functions.

Motion

1) To confirm the appointment of the following persons for the discharge of the Council’s education functions:

A Craig Duncan (Church of Scotland) Ted Brack (Roman Catholic Church) Allan Crosbie (Teacher representative) Raymond George Simpson (Teacher representative)

2) To appoint Rev Thomas Couper (The Robin Chapel) as the third religious representative for the discharge of the Council’s education function.

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

3) To agree that the appointment of the religious and teacher representatives was conditional upon confirmation that they would comply with the Councillors’ Code of Conduct and on membership of the Protection of Vulnerable Groups Scheme.

- moved by Councillor Godzik, seconded by Councillor Bridgman (on behalf of the Capital Coalition).

Amendment

To approve paragraphs 1 and 3 of the motion and to replace paragraph 2 with:

2 To appoint Eric John Scott (Carrubbers Christian Centre) as the third religious representative.

- moved by Councillor Balfour, seconded by Councillor Jackson (on behalf of the Conservative Group).

Voting

For the motion - 37 votes For the amendment - 9 votes

Decision

To approve the motion by Councillor Godzik.

(Reference – report no CEC/02/12-13/CG by the Director of Corporate Governance, submitted.)

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Appendix 1 (As referred to in Act of Council No 8 of 17 May 2012)

Political Balance on Committees, Joint Committees and Joint Boards 2012/13

Policy and Strategy Committee 17 members – 6 Labour, 5 Scottish National Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

EXECUTIVE COMMITTEES

Culture and Leisure Committee 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Economic Development Committee 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Education, Children and Families 17 members – 6 Labour, 5 Scottish National Committee Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Finance and Resources Committee 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Health, Social Care and Housing 17 members – 6 Labour, 5 Scottish National Committee Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Transport, Infrastructure and 17 members – 6 Labour, 5 Scottish National Environment Committee Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

OTHER COMMITTEES

Audit Committee 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Planning Committee/Development 15 members – 5 Labour, 5 Scottish National Management Sub-Committee/Local Party, 3 Conservative, 1 Green, 1 Scottish Review Body Liberal Democrat

Regulatory Committee/Licensing 9 members – 3 Labour, 3 Scottish National Sub-Committee Party, 2 Conservative, 1 Green

JOINT COMMITTEES AND BOARDS, THE LICENSING BOARD AND LOTHIAN AND BORDERS COMMUNITY JUSTICE AUTHORITY

Lothian and Borders Fire Board 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Lothian and Borders Police Board 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Lothian Valuation Joint Board/Lothian 9 members – 3 Labour, 3 Scottish National Electoral Joint Committee Party, 2 Conservative, 1 Green

Forth Estuary Transport Authority 4 members – 1 Labour, 1 Scottish National Party, 1 Conservative, 1 Green

Licensing Board up to 10 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

SEStran (South East of Scotland 5 members – 2 Labour, 2 Scottish National Regional Transport Partnership) Party, 1 Conservative

Lothian and Borders Community 1 substantive member Justice Authority 1 substitute member

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Appendix 2 (As referred to in Act of Council No 8 of 17 May 2012)

Membership of Committees

Appointments for 2012/13

Policy and Strategy Committee - 17 members – 6 Labour, 5 Scottish National Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Leader of the Labour Group (Councillor Convener of the Finance and Resources Burns) (Convener) Committee Leader of the SNP Group (Councillor Convener of the Health, Social Care and Cardownie) (Deputy Convener) Housing Committee Leader of the Conservative Group Convener of the Transport, Infrastructure (Councillor Balfour) and Environment Committee Convener of the Green Group (Councillor Councillor Child Burgess) Councillor Munro Leader of the SLD Group (Councillor Councillor Brock Edie) Councillor Nick Cook Convener of the Culture and Leisure Councillor Mowat Committee Councillor Chapman Convener of the Economic Development Committee Convener of the Education, Children and Families Committee

EXECUTIVE COMMITTEES

Culture and Leisure Committee – 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Councillor Austin Hart Councillor Councillor Doran Councillor Balfour Councillor Gardner Councillor Paterson Councillor Milligan Councillor Booth Councillor Munro Councillor Shields Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor 14

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Economic Development Committee – 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Councillor Austin Hart Councillor Councillor Milligan Councillor Paterson Councillor Munro Councillor Rust Councillor Bill Cook Councillor Chapman Councillor Blacklock Councillor Edie Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor

Education, Children and Families Committee – 17 members – 6 Labour, 5 Scottish National Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Councillor Godzik Councillor Councillor Keil Councillor Nick Cook Councillor Child Councillor Jackson Councillor Redpath Councillor Rose Councillor Austin Hart Councillor Corbett Councillor Day Councillor Main Councillor Councillor Shields Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor

Finance and Resources Committee – 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Councillor Bill Cook Councillor Councillor Ricky Henderson Councillor Heslop Councillor Griffiths Councillor Whyte Councillor Walker Councillor Corbett Councillor Blacklock Councillor Aldridge Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor 15

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Health, Social Care and Housing Committee – 17 members – 6 Labour, 5 Scottish National Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Councillor Ricky Henderson Councillor Councillor Day Councillor Aitken Councillor Bill Cook Councillor Heslop Councillor Doran Councillor Rust Councillor Griffiths Councillor Chapman Councillor Lunn Councillor Corbett Councillor Councillor Edie Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor

Transport, Infrastructure and Environment Committee – 17 members – 6 Labour, 5 Scottish National Party, 3 Conservative, 2 Green, 1 Scottish Liberal Democrat

Councillor Hinds Councillor Councillor Lunn Councillor Jackson Councillor Walker Councillor McInnes Councillor Doran Councillor Mowat Councillor Perry Councillor Bagshaw Councillor Gardner Councillor Booth Councillor Councillor Aldridge Councillor Leader (ex officio) Councillor Deputy Leader (ex officio) Councillor

OTHER COMMITTEES

Audit Committee – 13 members – 5 Labour, 4 Scottish National Party, 2 Conservative, 1 Green, 1 Scottish Liberal Democrat

Councillor Child Councillor Councillor Godzik Councillor Councillor Ricky Henderson Councillor Jackson Councillor Munro Councillor Whyte Councillor Lunn Councillor Main Councillor Councillor Shields Councillor 16

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Planning Committee/Development Management Sub-Committee 15 members – 5 Labour, 6 Scottish National Party, 3 Conservative, 1 Green (paragraph 2 of the motion at item 8 of the minute of this meeting refers)

Councillor Perry Councillor Councillor Child Councillor Councillor Milligan Councillor Councillor Griffiths Councillor Heslop Councillor Blacklock Councillor Mowat Councillor Councillor Rose Councillor Councillor Bagshaw Councillor

Planning Local Review Body – All members of the Planning Committee comprising three panels of 5

Regulatory Committee/Licensing Sub-Committee – 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Councillor Gardner Councillor Councillor Blacklock Councillor Aitken Councillor Godzik Councillor Heslop Councillor Councillor Burgess Councillor

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Appendix 3 (As referred to in Act of Council No 8 of 17 May 2012)

Joint Committees and Boards, the Licensing Board and Lothian and Borders Community Justice Authority

Appointments for 2012/13

Lothian and Borders Fire and Rescue Board – 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Councillor Lunn Councillor Councillor Hinds Councillor Balfour Councillor Walker Councillor Rust Councillor Councillor Burgess Councillor

Lothian and Borders Police Board – 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Councillor Day Councillor Councillor Redpath Councillor Mowat Councillor Bill Cook Councillor Whyte Councillor Councillor Main Councillor

Lothian Valuation Joint Board/Lothian Electoral Joint Committee – 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Councillor Keil Councillor Councillor Perry Councillor McInnes Councillor Ricky Henderson Councillor Rust Councillor Councillor Bagshaw Councillor

Forth Estuary Transport Authority – 4 members – 1 Labour, 1 Scottish National Party, 1 Conservative, 1 Green

Councillor Hinds Councillor Paterson Councillor Councillor Booth

The City of Edinburgh Council 17 May 2012 (reconvened on 24 May 2012)

Licensing Board – up to 10 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green (paragraph 2 of the motion at item 8 of the minute of this meeting refers)

Councillor Walker Councillor Councillor Milligan Councillor Nick Cook Councillor Day Councillor Mowat Councillor Councillor Booth Councillor

SEStran (South East of Scotland Regional Transport Partnership) – 5 members – 2 Labour, 2 Scottish National Party, 1 Conservative

Councillor Hinds Councillor Gardner Councillor Councillor Councillor Mowat

Lothian and Borders Community Justice Authority – 1 member

Substantive member Substitute member Convener of Health, Social Care and Councillor Bill Cook Housing Committee

Item no 5.3

Committee Minutes

The City of Edinburgh Council Year 2012/2013

Meeting 2– Thursday, 24 May 2012

Edinburgh, 24 May 2012 – At a meeting of The City of Edinburgh Council.

Present:-

LORD PROVOST

The Right Honourable Donald Wilson

COUNCILLORS

Elaine Aitken Ricky Henderson Robert C Aldridge Dominic R C Heslop Norma Austin Hart Lesley Hinds Nigel Bagshaw Sandy Howat Jeremy R Balfour Allan G Jackson Gavin Barrie Karen Keil Angela Blacklock David Key Chas Booth Richard Lewis Mike Bridgman Alex Lunn Deidre Brock Melanie Main Steve Burgess Mark McInnes Andrew Burns Adam McVey Ronald Cairns Eric Milligan Steve Cardownie Joanna Mowat Maggie Chapman Gordon J Munro Maureen M Child Jim Orr Bill Cook Lindsay Paterson Nick Cook Ian Perry Gavin Corbett Alasdair Rankin Cammy Day Vicki Redpath Denis C Dixon Cameron Rose Karen Doran Frank Ross Paul G Edie Jason G Rust Catherine Fullerton Alastair Shields Nick Gardner Stefan Tymkewycz Paul Godzik David Walker Joan Griffiths Iain Whyte Bill Henderson Norman Work 2

The City of Edinburgh Council 24 May 2012

1 Appointments to Committees

The Council was invited to approve the political balance and appoint members to Committees in accordance with Standing Order 5 and to appoint the Conveners and Vice-Conveners of its six Executive Committees.

Motion

1) To agree the political balance of the Committees listed in paragraph 4.3(a)-(e) of the report by the Director of Corporate Governance as detailed in Appendix 1 to this minute.

2) To appoint Conveners and Vice Conveners of Committees of the Council as detailed in Appendix 2 to this minute and note that the remaining Committees and Neighbourhood Partnerships would appoint their own Conveners.

3) To appoint members of the Committees listed in paragraph 4.3(a)-(e) of the report by the Director of Corporate Governance as detailed in Appendix 3 to this minute.

4) To agree, in respect of appointments to the Committees, Joint Committees Joint Boards and the Licensing Board and others considered at the reconvened Council meeting of 17 May 2012 that the SNP Group be entitled to nominate and appoint specific Councillors to those positions in order to make up the political balance agreed by the Council.

5) To confirm the membership of the Committees listed in paragraph 4.3(f)- (h) of the Director’s report as detailed in Appendix 3 to this minute.

6) To confirm the number of Neighbourhood Partnerships at 12 and agree the appointment of members to each in accordance with the agreed constitutional arrangements as detailed in Appendix 4 to this minute.

7) Not to appoint a Vacation Committee at this time.

8) To appoint the Convener and Vice Convener of the Health, Social Care and Housing Committee, an SNP nominee and opposition spokespersons to the Joint Board of Governance for the Department of Health and Social Care.

- moved by Councillor Burns, seconded by Councillor Cardownie (on behalf of the Capital Coalition).

The City of Edinburgh Council 24 May 2012

Amendment 1

1) To approve paragraphs 1, 3, 4, 5, 6, 7 and 8 of the motion. To replace paragraph 2 with the following:

“2) To agree:

(i) To note that in the past 5 years an opposition Councillor had chaired the Audit Committee.

(ii) To note that in Audit Scotland’s most recent report they had confirmed that best practice was for an opposition Councillor to Chair the Audit Committee.

(iii) To note that a new Committee structure was being proposed and the Audit Committee might only sit once before the summer recess and no fundamental changes should be made until these changes were debated.

(iv) To appoint Councillor Allan Jackson as Convener of the Audit Committee and Councillor Melanie Main as the Vice-Convener of the Audit Committee.

(v) To approve the other Convener appointments.”

- moved by Councillor Balfour (on behalf of the Conservative Group), seconded by Councillor Edie (on behalf of the Liberal Democrat Group).

Amendment 2

1) To approve paragraphs 1, 3, 4, 5, 6, 7 and 8 of the motion.

2) However, to note that the previous Administration had given up places on Pensions and Trusts and the Discretionary Rates Relief Committees to Green Councillors which had achieved wider political representation on these Committees.

3) To amend the appointment of Conveners and Vice Conveners of Committees of the Council as detailed in Appendix 2 to this minute such that:

(a) the Audit Committee be convened and vice-convened by members of opposition parties in order to ensure greater scrutiny and maintain the principle established by the previous Council; and

The City of Edinburgh Council 24 May 2012

(b) in this instance appointing Councillor Allan Jackson as Convener and Councillor Melanie Main as Vice-Convener.

- moved by Councillor Burgess, seconded by Councillor Chapman (on behalf of the Green Group).

In accordance with Standing Order 30(7), amendment 2 was accepted as an addendum to amendment 1. Voting

The voting was as follows:

For the motion - 37 votes For the composite of amendments 1 and 2 - 20 votes

Decision

To approve the motion by Councillor Burns.

(Reference – report no CEC/03/12-13/CG by the Director of Corporate Governance, submitted.)

2 Appointments to Outside Bodies for 2012-2017

The Council was invited to appoint/nominate representatives to the various organisations, companies, outside bodies and joint working groups on which it was represented.

Decision

1) To make appointments/nominations to the organisations and bodies listed in Category 1(a) as detailed in Appendix 5 to this minute.

2) To make appointments/nominations to the companies and other organisations owned or controlled by the Council and Council joint venture companies listed in Category 1(b) as detailed in Appendix 6 to this minute.

3) To appoint/nominate a local ward member to the organisation and bodies listed in Category 2 as detailed in Appendix 7 to this minute.

4) To delegate to the Planning Committee the appointments to those organisations and bodies that fell within its remit as detailed in Appendix 4 of the report by the Director of Corporate Governance.

(Reference – reports nos CEC/04/12-13/CG and CEC/09/12-13/CG by the Director of Corporate Governance, submitted.)

The City of Edinburgh Council 24 May 2012

Declaration of Interests

Non-Financial Interests

Councillor Munro as a member of Port of Leith Housing Association. Councillor Gardner as Chair of Advocard. Councillor Perry as a Director of Changeworks.

Financial Interest

Councillor Whyte as a Director of NHS Lothian

3 Edinburgh Prison Visiting Committee – Appointment of Members

The Council was invited to consider the arrangements for appointing members to the Edinburgh Prison Visiting Committee.

Decision

1) To re-appoint the following nine members of the Edinburgh Prison Visiting Committee (EPVC) until 31 March 2013 or such other date as was necessary pending the introduction of the Scottish Government’s new arrangements and subject to an enhanced disclosure check:

Walter Ferguson Fiona Garwood Bruce Logan Gregor McNie Merri Scotney Graeme Sneddon Helen Marie Tuiwaiwai Jacqueline Warburton Fergus West

2) Given the particular circumstances in 2012/13, to take no action on filling the one remaining place, subject to a review if the number of members fell to a level that caused operational difficulties for the EPVC.

(References – Act of Council No 2 of 2 February 2012; report no CEC/05/12- 13/CG by the Director of Corporate Governance, submitted.)

The City of Edinburgh Council 24 May 2012

4 Elected Members Remuneration and Expenses

Arrangements for elected members remuneration and expenses were proposed. These were based on the Scottish Local Authorities Remuneration Committee (SLARC) guidance, confirmed by the Scottish Government.

Decision

1) To note:

(a) the regulations dealing with elected members remuneration and expenses including the expense limits and the principle concerning the production of receipts.

(b) the rates that would be payable for remuneration applicable to the Leader of the Council, Councillors and Conveners/Vice Conveners for Joint Boards which were stipulated within the regulations.

2) To approve:

(a) the remuneration to be paid to the Civic Head (Lord Provost) be set at the maximum allowed within the regulations (£36,528 per annum).

(b) the maximum amount payable under the regulations (£5,000) for the reimbursement of the Civic Head’s expenses.

(c) the remuneration proposed for Senior Councillors as shown in Appendix 3 to the report by the Director of Corporate Governance.

3) To review the remuneration proposed for Senior Councillors following the review of Governance.

(Reference – report no CEC/08/12-13/CG by the Director of Corporate Governance, submitted.)

5 Convention of Scottish Local Authorities – Nominations for President and Vice-President

The Council was invited to consider making nominations to the offices of President and Vice-President of the Convention of Scottish Local Authorities (COSLA).

The City of Edinburgh Council 24 May 2012

Decision

To take no action on the matter.

(Reference – report no CEC/06/12-13/CG by the Director of Corporate Governance, submitted.)

6 McCrae’s Battalion Trust – Commemorative Service at Contalmaison Cairn – 1 July 2012

Approval was sought for the Council to be represented at this year’s commemorative service at Contalmaison, France, on 1 July 2012.

Decision

To approve attendance of the Lord Provost, the Deputy Leader and the City Officer at the service of remembrance and associated events at Contalmaison on 1 July 2012.

(Reference – report no CEC/07/12-13?CE by the Chief Executive, submitted) 8

The City of Edinburgh Council 24 May 2012

Appendix 1 (As referred to in Act of Council No 1 of 24 May 2012)

Political Balance on Committees

2012-2013

Administration of Trust Funds Pensions and Trusts Committee 5 members – 2 Labour, 2 Scottish National Party, 1 Conservative

Committee on the Jean F Watson 8 members – 3 Labour, 2 Scottish National Bequest Party, 2 Conservative, 1 Green

Reviews and Appeals Committee on Discretionary Rating 5 members – 2 Labour, 2 Scottish National Relief Party, 1 Conservative

Personnel Appeals Committee 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Committee on Pupil/Student Support 5 members – 2 Labour, 2 Scottish National Party, 1 Conservative

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Appendix 2 (As referred to in Act of Council No 1 of 24 May 2012)

Committee Conveners and Vice-Conveners

2012-13

EXECUTIVE COMMITTEES

Culture and Leisure Committee Convener: Councillor Lewis Vice Convener: Councillor Austin Hart

Economic Development Committee Convener: Councillor Buchanan Vice Convener: Councillor Munro

Education, Children and Families Convener: Councillor Godzik Committee Vice Convener: Councillor Key

Finance and Resources Committee Convener: Councillor Rankin Vice Convener: Councillor Bill Cook

Health, Social Care and Housing Convener: Councillor Ricky Henderson Committee Vice Convener: Councillor Day

Transport, Infrastructure and Convener: Councillor Hinds Environment Committee Vice Convener: Councillor Orr

OTHER COMMITTEES

Audit Committee Convener: Councillor Child Vice Convener: Councillor Ross

Planning Committee and Convener: Councillor Perry Development Management Sub- Vice Convener: Councillor Howat Committee Regulatory Committee Convener: Councillor Barrie Vice Convener: Councillor Blacklock

Recruitment

Recruitment Committee Convener: Council Leader

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Appendix 3 (As referred to in Act of Council No 1 of 24 May 2012)

Membership of Committees

2012-2013

Administration of Trust Funds

Pensions and Trusts Committee – 5 members – 2 Labour, 2 Scottish National Party, 1 Conservative

Councillor Child Councillor Rankin Councillor Bill Cook Councillor Rose Councillor Orr

Committee on the Jean F Watson Bequest – 8 members plus one nominee of Friends of the City Arts Centre and three nominees of Director of Corporate Governance – 3 Labour, 2 Scottish National Party, 2 Conservative, 1 Green

Councillor Doran Councillor Fullerton Councillor Keil Councillor Aitken Councillor Redpath Councillor Paterson Councillor Lewis Councillor Burgess

Reviews and Appeals

Committee on Discretionary Rating Relief Appeals – 5 members – 2 Labour, 2 Scottish National Party, 1 Conservative

Councillor Day Councillor Work Councillor Griffiths Councillor Whyte Councillor Tymkewycz

Personnel Appeals Committee – 9 members – 3 Labour, 3 Scottish National Party, 2 Conservative, 1 Green

Councillor Austin Hart Councillor Key Councillor Redpath Councillor Aitken Councillor Perry Councillor Balfour Councillor Barrie Councillor Chapman Councillor Howat 11

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Committee on Pupil and Student Support – 5 members and one religious representative – 2 Labour, 2 Scottish National Party, 1 Conservative

Councillor Keil Councillor Dixon Councillor Godzik Councillor Rose Councillor Key One religious representative

Placing in Schools Appeals Committee – 3 persons drawn from three Panels as described in Standing Order 41

Panel 1 – All members of Council and religious and teacher representatives on the Education, Children and Families Committee

Social Work Complaints Review Committee – 3 persons drawn from a panel approved by the Council (does not include Councillors)

Recruitment

Recruitment Committee

Leader of the Council (Convener), Deputy Leader of the Council, Convener of the Finance and Resources Committee and the appropriate Executive Committee Convener and relevant opposition spokespersons (or nominees)

The City of Edinburgh Council 24 May 2012

Appendix 4 (As referred to in Act of Council No 1 of 24 May 2012)

Membership of Neighbourhood Partnerships

2012-2013

ALMOND

Councillor Paterson Councillor Work Councillor Shields

CITY CENTRE

Councillor Doran Councillor Rankin Councillor Mowat

CRAIGENTINNY/DUDDINGSTON

Councillor Griffiths Councillor Tymkewycz Councillor Lunn

FORTH

Councillor Cardownie Councillor Jackson Councillor Day Councillor Redpath

INVERLEITH

Councillor Bagshaw Councillor Hinds Councillor Barrie Councillor Whyte

PENTLANDS

Councillor Aitken Councillor Heslop Councillor Bill Henderson Councillor Lewis Councillor Ricky Henderson Councillor Rust

LEITH

Councillor Blacklock Councillor Gardner Councillor Brock Councillor McVey Councillor Booth Councillor Munro Councillor Chapman 13

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LIBERTON/GILMERTON

Councillor Austin Hart Councillor Bill Cook Councillor Buchanan Councillor Nick Cook

PORTOBELLO/CRAIGMILLAR

Councillor Bridgman Councillor Walker Councillor Child

SOUTH CENTRAL

Councillor Burgess Councillor McInnes Councillor Godzik Councillor Orr Councillor Howat Councillor Perry Councillor Main Councillor Rose

SOUTH WEST

Councillor Burns Councillor Key Councillor Corbett Councillor Milligan Councillor Dixon Councillor Wilson Councillor Fullerton

WESTERN EDINBURGH

Councillor Aldridge Councillor Edie Councillor Balfour Councillor Keil Councillor Cairns Councillor Ross

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Appendix 5 (As referred to in Act of Council No 2 of 24 May 2012)

APPOINTMENTS TO ORGANISATIONS, COMPANIES, OUTSIDE BODIES, WORKING GROUPS, ETC

2012-2017

Category 1a – External Organisations

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 1. Association for Public A not-for-profit local Substantive Member: Services for Service Excellence (APSE) government body working Councillor Hinds (L) Communities with over 300 councils Corporate throughout the UK Substitute Member: Governance promoting excellence in Councillor Rankin (SNP) public services. Chief Executive (or nominee) 2. Audience Business Trust - Primary agenda is to drive Councillor Lewis (SNP) Corporate Board public demand for Governance Edinburgh’s cultural programme, persuading more people to engage with more organisations more often. 15

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 3. Borders Railway Joint Partnership project Convener of the Service for Committee comprising Transport Transport, Infrastructure Communities Scotland, Network Rail, and Environment CEC, Midlothian and Committee (L) Scottish Borders Council Vacancy to deliver the Borders Railway. 4. Cammo Estate Advisory Committee to advise on Councillor Keil (L) Services for On a division (see Committee the Cammo Estate Councillor Work (SNP) Communities note 1 below) 5. Centre for the Moving To discover and promote Councillor Brock (SNP) Corporate Image (previously the very best in Governance Edinburgh International Film international cinema and Festival) to herald and debate changes in global filmmaking 6. Changeworks - Board An environmental charity Councillor Orr (SNP) Services for On a division (see and social enterprise Communities note 2 below) which works in collaboration with public and third sector organisations, schools, communities and businesses. 7. Children’s Panel Advisory Supports the work of the Councillor Godzik (L) Corporate Committee Children’s Panel – a group Vacancy Governance of unpaid volunteers who sit on Children’s Hearings on a rota basis. 16

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 8. Citizens Advice Edinburgh - Five advice centres and Councillor Rankin (SNP) Services for Observer 15 outreach points across Communities the city. Provides free, confidential, impartial and independent advice on issues including money, benefits, immigration, employment rights, housing, consumer issues, family problems and health services. 9. COSLA The representative voice Councillor Burns (L) Corporate of Scottish local Councillor Hinds (L) Governance government, lobbying on Councillor Cardownie behalf of Scotland’s 32 (SNP) councils. Councillor Rankin (SNP) Councillor Balfour (C) Councillor Chapman (G) 10. Craigmillar Opportunities A social enterprise that Councillor Child (L) City Development Trust (Cre8te) delivers services that help Councillor Buchanan to regenerate local (SNP) communities. 11. Dance Base - Board of Encourages and Councillor Fullerton (SNP) Corporate Management celebrates the potential for Governance dance in everyone. 17

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 12. Dean Orphanage and Works to keep young Vacancy Children and Cauvin’s Trust - Board people from living on the Families streets and provides a continuum of care to young people aged 15-21 as they make the transition from being looked after and accommodated to living independently in the community. 13. East of Scotland Institute of Disbanded Sport 14. Edinburgh Airport Advises the airport’s Substantive Member: Services for On a division (see Consultative Committee Managing Director about Councillor Hinds (L) Communities note 3 below) issues which concern the local communities, Substitute Member: travellers and other users Councillor Orr (SNP) of the airport and stimulates interest both within the airport community and local people 18

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 15. Edinburgh and Lothians Brings together local Councillor Munro (L) City Development Area Tourism Partnership players from across the Councillor Buchanan private and public sectors, (SNP) such as tourism operators, local tourism groups, Chambers of Commerce, local authorities and VisitScotland. 16. Edinburgh Community Develops and creates Councillor Ricky Health and Social Health Partnership investment in and helps Henderson (L) Care deliver innovative ways to Councillor Work (SNP) improve health and local authority services. 17. Edinburgh International Administers the affairs of Lord Provost (ex-officio) Corporate Festival Council - Directors the Edinburgh Councillor Austin Hart (L) Governance International Festival Councillor Munro (L) Society. Councillor Brock (SNP) Councillor Lewis (SNP) Councillor Mowat (C) Councillor Chapman (G) 18. Edinburgh International The Festival is hosted in Councillor Milligan (L) Corporate Jazz and Blues Festival – venues across the city Councillor Cardownie Governance Board of Directors with a selection of (SNP) performers from across Councillor Rust (C) the jazz and blues musical Vacancy spectrum, also hip-hop, funk and soul music. 19

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 19. Edinburgh Mela Ltd - Board The Festival aims to Councillor Cardownie Corporate reflect a range of cultural (SNP) Governance and intercultural influences through the selection of music, film, arts workshops and stalls. 20. Edinburgh Partnership The Community Planning Council Leader Corporate Board Partnership for the city. Leader of the Opposition Governance Convener of the Neighbourhood Partnership Conveners’ Forum Convener of Lothian and Borders Police Board Convener of Lothian and Borders Fire and Rescue Board 21. Edinburgh International An educational charity that Councillor Blacklock (L) Corporate Science Festival Limited encourages people of all Councillor Fullerton (SNP) Governance (Trading Company) ages and backgrounds to Councillor Rose (C) discover the wonder of the Vacancy world around them. 20

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 22. Edinburgh Technology A hub for the commercial Convener of the Economic City Development Transfer Centre – Board exploitation of the world- Development Committee class technology emerging (SNP) from the laboratories of Director of City the University of Development (or nominee) Edinburgh. Home to nascent companies formed, by academics, researchers and students, to become vehicles for that commercial exploitation. 23. Edinburgh UNESCO City of An independent Lord Provost (ex officio) Corporate Literature – Trustee organisation that works Governance through partnerships providing a focus and coordination for literary activity, reaching out to a wide audience to deliver clear benefits for the city and for Scotland. 24. Edinburgh University – The Curators have the Lord Provost Children and Curators of Patronage - right of nomination to the Councillor Lewis (SNP) Families Directors office of Principal and the Councillor McInnes (C) patronage of sixteen Chairs and a share in the patronage of a number of other Chairs. 21

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 25. Edinburgh University Court The Court is the Lord Provost Corporate – Assessor - Director University’s governing Governance body and the legal persona of the University. 26. Eurocities Network A network of major Substantive member: Corporate European cities which Lord Provost (L) Governance brings together the local governments of more than Substitute member: 140 large cities in over 30 Councillor Buchanan European countries. It (SNP) influences and works with the EU institutions to Chief Executive (as respond to common Liaison Officer for contact issues that affect the day- purposes) to-day lives of Europeans. 27. Fettes Trust (The Administers Fettes Councillor Balfour (C) Children and Governors of) - Director College. Families

28. George Heriots Trust Governs George Heriot’s Councillor Rose (C) Children and School. Families A person with experience in education 29. Handicabs (Lothian) Limited Charitable company to Councillor Hinds (L) Services for – Executive Committee provide accessible Communities (HcL – Dial-a-Ride, Dial-a- transport for people in Bus) - Observer Edinburgh and the Lothians. 22

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 30. Hawes/Longcraig Piers Oversees the use of the Councillor Shields (SLD) Services for User Committee Hawes Longcraig Piers at Councillor Work (SNP) Communities South Queensferry. 31. Heriot-Watt University – Regulates the affairs of Councillor Ricky Children and University Court the University. Henderson (L) Families

32. Imaginate - Directors Promotes and develops Councillor Austin Hart (L) Children and the performing arts for Councillor Key (SNP) Families children and young people Corporate in Scotland. Governance 33. John Watson Trust Awards grants to under 21 Councillor Godzik (L) Children and year olds with either a Families physical or learning Head of Schools and disability or who are in a Community Services situation of deprivation. 34. John Wilson/Robert Christie A fund for people over 60 Councillor Aitken (C) Corporate Bequest Fund Board of who are in need, live in Governance Management - Director Edinburgh or Midlothian and have an acutely painful disease. 35. Kirk of Greyfriars Society of A church community in the Councillor Mowat (C) Corporate Friends heart of Edinburgh which Governance welcomes visitors and tourists. 36. Life Care (Edinburgh) Ltd - Supports the Councillor Day (L) Health & Social Observers independence of older Councillor Work (SNP) Care people. Councillor Aitken (C) Vacancy 23

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 37. Local Authority Action for Assists in the Councillor Gardner (L) Corporate Southern Africa: National reconstruction of Southern Governance Steering Committee Africa following the defeat of apartheid and undertakes work on many critical issues facing the peoples of the region. 38. Local Authority Pension Promotes the investment Councillor Rose (C) Corporate Fund Forum– Executive interests of local authority Governance Committee pension funds and maximises their influence as shareholders whilst promoting social responsibility and corporate governance at the companies in which they invest. 39. Lothian Homes Trust - Promotes the education of Councillor Day (L) Children and Directors young people under the Councillor Key (SNP) Families age of 22 who are in need Councillor Balfour (C) of care or are living in Vacancy deprived circumstances or otherwise require assistance to become adjusted to living independent lives. 24

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 40. Lowland Reserve Forces’ One of 13 autonomous Councillor Bridgman Children and and Cadets’ Association Tri-Service bodies, (SNP) Families established to support the Reserve Forces and Cadets in the Lowlands of Scotland. 41. Merchant Company – Provides assistance to Councillor Ricky Children and Endowment Trust men and women who Henderson (L) Families meet the criteria. Councillor Key (SNP) Councillor McInnes (C) Vacancy Vacancy 42. NHS Lothian – Board The Board’s main role is Convener of Health, Health and Social to protect and improve the Social Care and Housing Care health of the people of (L) Lothian and plan services for the local population. 25

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 43. Nuclear Free Local Comprises member local Councillor Gardner (L) Services for Authorities UK and Ireland authorities from England, Communities Scotland, Wales, Northern Ireland and the Republic of Ireland and aims to increase local accountability over national nuclear policy, identify the impact of national nuclear policy on local communities and work to minimise nuclear hazards and increase public safety. 44. Nuclear Free Local See above Councillor Gardner (L) Services for Authorities Scotland Communities

45. (Directors of) One City Independent Trust which Lord Provost (ex-officio) Health and Social Limited, and thus as promotes social inclusion Councillor Day (L) Care Trustees of the One City in Edinburgh formed in Councillor Rankin (SNP) Trust 2003 as a recommendation of the Lord Provost’s Commission on Social Exclusion. 26

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 46. Our Dynamic Earth Raises awareness and Lord Provost (ex-officio) Corporate understanding of our Governance planet through the Dynamic Earth exhibition and promotes education and life-long learning in Earth and Environmental Science. 47. Pentland Hills Regional A forum to facilitate Councillor Walker (L) Services for On a division (see Park Consultative Forum consultation with Councillor Bill Henderson Communities note 4 below) landowners, communities (SNP) and other stakeholders on issues to do with the management of the regional park and implementation of the Regional Park Plan. The Council nominates two members. 27

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 48. Pentland Hills Regional Joint committee Councillor Walker (L) Services for Park Joint Committee comprising three Councillor Bill Henderson Communities representatives each from (SNP) Edinburgh and Midlothian Councillor Heslop (C) and one from West Lothian. Oversees the management of the regional park in the context of the Regional Park Plan. 49. Police Aided Clothing Provides clothing to Lord Provost (ex-officio) Children and Scheme - Directors children aged 5-18 from Families underprivileged Councillor Rose (C) backgrounds. Director of Corporate Governance (Honorary Auditor) 50. Princes Trust Gives practical and Councillor Godzik (L) Children and financial support to young Families people to develop key skills, confidence and motivation, enabling young people to move into work, education or training. 28

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 51. Queen’s Hall (Edinburgh) Offers a wide range of Councillor Austin Hart (L) Corporate On a division (see Ltd - Director events including classical, Governance note 5 below) jazz, blues, pop, rock, world, folk and comedy and is also home to the Scottish Chamber Orchestra. 52. Rosyth Local Liaison Forum for consulting with Councillor Child (L) Services for Committee local authorities on Councillor Work (SNP) Communities matters affecting public Councillor Paterson (C) protection from nuclear Councillor Shields (SLD) and radiation hazards arising from nuclear operations in Rosyth Business Park. 53. Royal Blind - Director A National Centre of Councillor Godzik (L) Children and Excellence in the Families education and care of young people who are blind or visually impaired. 29

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Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 54. Royal College of Surgeons A Sub-Committee of the Councillor Ricky Health and Social of Edinburgh – Lay Advisers Council of the College Henderson (L) Care Group comprised of a mixture of lay and clinician members formed to provide input on a range of clinical and non-clinical matters. The purpose of the group is to become involved in all the functions of the College so that the public can be assured that its processes are fair, equitable, efficient, economic and without bias to any social group and that the College acts in the best interests of the public. 55. Royal Edinburgh Military Each year, a substantial Lord Provost (ex-officio) Corporate Tattoo (Charities) Limited - proportion of surplus funds Governance Trustees generated by the Tattoo Chief Financial Officer as are distributed to Hon Treasurer (ex-officio) charitable arts and service benevolent organisations. 30

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 56. Royal Lyceum Theatre The Company is in Councillor Austin Hart (L) Corporate On a division (see Company – Non-Executive permanent residence in Councillor Lewis (SNP) Governance note 6 below) Directors the Lyceum building which it leases from the Council. It is one of the largest producing companies in the UK and the largest drama company in Scotland. 57. Royal Scottish National One of Europe's leading Councillor Austin Hart (L) Corporate On a division (see Orchestra – Board of symphony orchestras. Councillor Fullerton (SNP) Governance note 7 below) Directors 58. Scotland Excel The Centre of Councillor Rankin (SNP) Corporate Procurement Expertise for Councillor Whyte (C) Governance Scotland's local government sector. 59. Scottish Accident Brings together a range of Councillor Dixon (SNP) Services for Prevention Council bodies to formulate and Director of Services for Communities enhance the worth of Communities (or nominee) accident prevention. 60. Scottish Chamber One of Scotland’s five Councillor Lewis (SNP) Corporate Orchestra – Board of National Performing Arts Governance Directors Companies. Children and Families 31

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 61. Scottish Councils Provides a mechanism to Substantive Member: Services for Committee on Radioactive identify a common Councillor Gardner (L) Communities Substances (SOCCORS) Scottish local authority viewpoint on radioactive Substitute Member: waste management Councillor McVey (SNP) issues. 62. Scottish Enterprise East of Ensures the private sector Councillor Buchanan City Development Scotland and key stakeholders in (SNP) specific regions have an influential role in Scottish Enterprise’s strategy. Regionally-based boards advise on the best way to maximise the contribution of each region to Scotland’s economic growth. 63. Scottish Local Government Cross-party network of Substantive member: Health and Social Forum Against Poverty Scottish local authority Councillor Ricky Care members and officers, Henderson (L) together with other public and third sector Substitute member: organisations, with a Councillor Work (SNP) specific interest in anti- poverty and social justice policy issues. 32

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 64. Scottish National War Responsible for the Lord Provost (ex-officio) Corporate Memorial – Trustees administration of the Governance Scottish National War Memorial at Edinburgh Castle. 65. Spartan’s Community Aims to provide the Councillor Redpath (L) Corporate Football Academy - community of North Councillor Cardownie Governance Directors Edinburgh with a (SNP) community inspired, developed and managed facility, to help develop people of all ages sporting, social and life skills. 66. Theatre Workshop An inclusive producing Councillor McVey (SNP) Corporate (Edinburgh) theatre that represents Governance ‘the voices on the margins of society’. 67. Torness Local Liaison Discusses safety issues at Councillor Gardner (L) Services for Committee Torness Nuclear Power Vacancy Communities Station. Vacancy 68. Transform Scotland – Board The national alliance for Councillor Hinds (L) Services for sustainable transport, Communities bringing together organisations from the private, public and voluntary sectors. 33

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 69. Traverse Theatre - “Scotland’s new writing Councillor Lewis (SNP) Corporate Observer theatre” which has Governance launched the careers of some of Scotland’s best known writers. 70. Waste Recycling A not-for-profit business Councillor Cairns (SNP) Services for Environmental Ltd (WREN) that helps benefit the lives Communities – Advisory Panel of people who live close to landfill sites by awarding grants for community, conservation and heritage projects. 71. Wester Hailes Land and Promotes the Councillor Bill Henderson Services for Property Trust development of land and (SNP) Communities assets within Wester Hailes to the maximum benefit of the local community and provides a property management service to other community groups. 72. Worker's Educational Committed to equality of Councillor Godzik (L) Children and Association Scotland access to learning and Families (now WEA Scotland) - gives priority to providing Observer learning for educationally, socially and economically disadvantaged groups. 34

The City of Edinburgh Council 24 May 2012

Organisation Description Council Appointments Lead Comment for 20012/17 Directorate(s) 73. 6VT Youth Café Helps youths from all over Councillor Doran (L) Children and Edinburgh and the Councillor McVey (SNP) Families surrounding area.

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Appendix 6 (As referred to in Act of Council No 2 of 24 May 2012)

APPOINTMENTS TO ORGANISATIONS, COMPANIES, OUTSIDE BODIES, WORKING GROUPS, ETC

2012-2017

Category 1b – Companies and other organisations owned or controlled by the Council and Council joint venture companies

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 74. Capital City Partnership Ltd The delivery body for the Convener of Economic City Development city’s employability Development Committee strategy and programme. (SNP) Vice-Convener of Economic Development Committee (L) 36

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 75. CEC Holdings Limited Holding company with a Directors: City Development portfolio of operational Councillor Hinds (L) companies, namely, EDI Councillor Munro (L) Group, ElCC Ltd, New Councillor Buchanan Edinburgh Ltd, Waterfront Councillor Ross (SNP Edinburgh Limited, Councillor Rose (C) Shawfair Land Limited and Director of City PARC Ltd with the original Development (or nominee) purpose of ensuring tax Director of Corporate efficiency across the Governance (or nominee) operational company’s portfolio and enable Council’s Shareholder appropriate monitoring Representative: and control. Chief Executive (or nominee) 37

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 76. EDI Ltd Private company, owned Directors: City Development by the Council and run as Councillor Hinds (L) an arms-length operation. Councillor Munro (L) Main Council owned Councillor Blacklock (L) vehicle for property Councillor Buchanan development and (SNP) undertakes regeneration Councillor Ross (SNP) projects. It is Councillor Rust (C) redeveloping Craigmillar Councillor Chapman (G) through PARC Limited Director of City Development (or nominee) Director of Corporate Governance (or nominee)

Council’s Shareholder Representative: CEC Holdings (Chair) 38

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 77. Edinburgh International Owned by the Council and Directors: Corporate On a division Conference Centre Limited operates as an Councillor Munro (L) Governance (see note 8 independent commercial Councillor Bill Cook (L) City Development below) venture which provides Councillor Buchanan venues for conferences, (SNP) conventions and Councillor Ross (SNP) exhibitions and acts as Councillor Aldridge (SLD) agent for development of Director of Corporate Exchange district on Governance (or nominee) behalf of the Council. Council’s Shareholder Representative: CEC Holdings (Chair) 78. Edinburgh Leisure A not-for-profit company to Councillor Austin Hart (L) Corporate run the Council’s sport Councillor Lewis (SNP) Governance and leisure services. Councillor Cairns (SNP) Councillor Balfour (C) Councillor Booth (G) 79. Festival City Theatres Trust A registered charity which Councillor Austin Hart (L) Corporate - Directors is responsible for the Councillor Lewis (SNP Governance operation and Councillor Aitken (C) management of the Councillor Main (G) Festival and King’s Theatres. 80. Marketing Edinburgh - A public/private body set Councillor Buchanan City Development Director up to lead and facilitate (SNP) the promotion of Edinburgh. 39

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 81. Pacific Shelf 825 Limited Company which holds the Councillor Perry (L) City Development Council’s Shawfair landholdings.

82. PARC Craigmillar PARC is a joint venture Councillor Munro (L) Services for On a division (Promoting and between EDI Ltd and the Councillor Bridgman Communities (see note 9 Regenerating Craigmillar) City of Edinburgh Council (SNP) below) which is spearheading the Director of Services for regeneration of Communities (or nominee) Craigmillar. Director of City Development (or nominee) Chief Executive (or nominee) 83. Waterfront Edinburgh One of the three Directors: City Development On a division Limited companies leading the Councillor Day (L) (see note 10 waterfront regeneration; Councillor Redpath (L) below) owns 120 acres of prime Councillor Buchanan waterfront land at (SNP) Granton; promotes Director of Corporate economic and social Governance (or nominee) regeneration, as well as the physical Council’s Shareholder redevelopment of North Representative: Edinburgh. CEC Holdings (Chair) 40

The City of Edinburgh Council 24 May 2012

Appendix 7 (As referred to in Act of Council No 2 of 24 May 2012)

APPOINTMENTS TO ORGANISATIONS, COMPANIES, OUTSIDE BODIES, WORKING GROUPS, ETC

2012-2017

Category 2 – Local Organisations

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 84. Airth Benefaction Trust Grants provided to people Councillor Redpath (L) Corporate in need who are incapable (Ward 4 – Forth) Governance of gaining a livelihood. 85. Citadel Youth Centre Community based youth Councillor Munro (L) Children and work in Leith offering local Councillor McVey (SNP) Families children and young people (Ward 13 – Leith) opportunities for learning, leisure, friendship and other help and support. 86. Corstorphine Youth and An independent and Councillor Edie (SLD) Children and Community Centre inclusive community hub (Ward 6 – Corstorphine/ Families providing a range of Murrayfield) opportunities including playgroup, keep fit, sports and other activities for all age groups. 41

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 87. Gorgie/Dalry Community Provides community Councillor Milligan (L) Health and Social Association - Director facilities to promote Councillor Fullerton (SNP) Care education, health, social (Ward 7 –Sighthill/Gorgie) welfare, recreation and leisure to improve the condition of life for all participants. 88. Granton Information Centre Provides free, impartial Councillor Day (L) Health and Social On a division (see and confidential expert (Ward 4 – Forth) Care note 11 below) advice, information and representation to the residents of North Edinburgh on a range of issues and by a variety of methods. 89. Historic Cramond Working Group comprising Councillor Paterson (C) Corporate the Council’s Archaeology (Ward 1 – Almond) Governance Officer, the Cramond Association, the Cramond Heritage Trust and community members in Cramond. The Group ensure implementation of the Cramond Heritage Interpretation and Management Plan. 42

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 90. John Watt’s Trust Grants to people over 55 Councillor Munro (L) Corporate who have the name Watt (Ward 13 – Leith) Governance and who live in the parish of South Leith or have done so for at least ten years prior to application. People in need who have lived or are living in the City of Edinburgh or Midlothian can apply. 91. Leith Industrial School Trust Gives grants to organisers Councillor Munro (L) Children and of groups providing play or Councillor Booth (G) Families holiday activities for the (Ward 13 – Leith) benefit of children living in Leith. 43

The City of Edinburgh Council 24 May 2012

Organisation Description Appointments made for Lead Comment 2012/17 Directorate(s) 92. Pilton Central A community managed Councillor Cardownie Children and Association/West Pilton organisation that aims to (SNP) Families Neighbourhood Centre - maximise community (Ward 4 – Forth) observer influence, address poverty and bring economic and community benefits to the North Edinburgh area. West Pilton Neighbourhood Centre provides a varied programme of educational and recreational activities to meet the needs of the community. 93. William Brown Nimmo Provides grants to older Lord Provost (ex officio) Corporate Charitable Trust women on a low income Councillor Munro (L) Governance who were born and live in Leith or Edinburgh.

The City of Edinburgh Council 24 May 2012

Nominations to Outside Bodies Notes:

Nominations on behalf of the Labour Group were moved by Councillor Day, seconded by Councillor Burns.

Nominations on behalf of the SNP Group were moved by Councillor Brock, seconded by Councillor Bridgman.

Nominations on behalf of the Conservative Group were moved by Councillor Balfour, seconded by Councillor Aitken.

Nominations on behalf of the Green Group were moved by Councillor Burgess, seconded by Councillor Chapman.

Nominations on behalf of the SLD Group were moved by Councillor Edie, seconded by Councillor Aldridge.

Voting

1) Cammo Estate Advisory Committee (4)

Councillor Keil - 37 votes Councillor Work - 40 votes Councillor Paterson - 11 votes Councillor Shields - 3 votes

2) Changeworks – Board (6)

Councillor Orr - 43 votes Councillor McInnes - 11 votes

3) Edinburgh Airport Consultative Committee – Substitute Member (14)

Councillor Orr - 43 votes Councillor Paterson - 14 votes

4) Pentland Hills Regional Park Consultative Forum (47)

Councillor Walker - 37 votes Councillor Bill Henderson - 46 votes Councillor Heslop - 20 votes

5) Queen’s Hall (Edinburgh) Ltd (51)

Councillor Austin Hart - 38 votes Councillor Rose - 13 votes

The City of Edinburgh Council 24 May 2012

6) Royal Lyceum Theatre Company – Non-Executive Directors (56)

Councillor Austin Hart - 37 votes Councillor Lewis - 40 votes Councillor Whyte - 11 votes Councillor Shields - 4 votes

7) Royal Scottish National Orchestra (57)

Councillor Austin Hart - 37 votes Councillor Fullerton - 40 votes Councillor Balfour - 14 votes

8) Edinburgh International Conference Centre Limited (77)

Councillor Munro - 38 votes Councillor Bill Cook - 37 votes Councillor Buchanan - 40 votes Councillor Ross - 40 votes Councillor Whyte - 31 Votes Councillor Aldridge - 32 votes

9) PARC (Promoting and Regenerating Craigmillar (82)

Councillor Munro - 46 votes Councillor Bridgman - 46 votes Councillor Nick Cook - 11 votes

10) Waterfront Edinburgh Limited (83)

Councillor Day - 46 votes Councillor Redpath - 43 votes Councillor Buchanan - 40 votes Councillor Jackson - 20 votes

11) Granton Information Centre (88)

Councillor Day - 43 votes Councillor Jackson - 14 votes

Item no Report no

Appointments – Committee Convener and Outside Bodies etc

City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 To invite the Council to appoint a Convener of the Personnel Appeals Committee.

1.2 To update the Council on appointments to outside bodies.

2 Personnel Appeals Committee – Convener

2.1 Standing Order 37(1) states that each Committee will appoint its own Convener. The Personnel Appeals Committee is not in a position to appoint is own Convener as meetings are only called in order to hear specific cases. The Council is therefore asked to appoint the Convener of the Personnel Appeals Committee.

3 Appointments to Outside Bodies

The Council made nominations to outside bodies at its meeting on 24 May 2012. This report asks the Council to appoint the Chairperson of two organisations which the Council is required to appoint and identifies a number of vacancies which still exist where the Council may wish to make an appointment although there is no requirement to do so.

3.1 Appointment of Chairpersons – The Council is required to appoint the Chairpersons of the following Boards:

(a) EICC Ltd – the Council’s appointments to EICC are Councillors Munro, Bill Cook, Buchanan, Ross and Aldridge.

(b) Waterfront Edinburgh Ltd – the Council’s appointments to Waterfront Edinburgh Ltd are Councillors Day, Redpath and Buchanan.

3.2 Vacancies – Vacancies exist on the following outside bodies:

(a) Borders Railway Joint Committee – one place (current appointment Convener of the Transport, Infrastructure and Environment Committee).

(b) Children’s Panel Advisory Committee – one place available (current appointment Councillor Godzik).

(d) Edinburgh International Jazz and Blues Festival – one place available (current appointments Councillors Milligan, Cardownie and Rust).

(e) Edinburgh International Science Festival Limited – one place available (current appointments Councillors Blacklock, Fullerton and Rose).

(f) Life Care (Edinburgh) Ltd – one place available (current appointments Councillors Day, Work and Aitken).

(g) Lothian Homes Trust – one place available (current appointments Councillors Day, Key and Balfour).

(h) Merchant Company – Endowment Trust – 2 places available (current appointments Councillors Ricky Henderson, Key and McInnes).

(i) Torness Local Liaison Committee – 2 places available (current appointment Councillor Gardner).

4 Scottish Parliament Cross Party Group on Armed Forces Veterans

The Council has received an invitation from the Convener of the Cross Party Group on Armed Forces Veterans (The Rt Hon Alex Fergusson MSP) to appoint an elected member as a Veterans Champion. Nominations are being sought from each of Scotland’s 32 local authorities to form a network of local Champions to work with veterans’ groups and promote veterans’ issues within their Councils. The role of Champion involves acting as a link with veterans’ charities, the Scottish Parliament, the UK Government and the Cross Party Group to create a more robust system of support for veterans.

5 Recommendations

5.1 To appoint the Convener of the Personnel Appeals Committee.

5.2 To appoint the Chairpersons of the following Boards: • EICC Ltd • Waterfront Edinburgh Ltd

5.3 To consider appointing a member to each of the vacancies identified in paragraph 3.2 above.

5.4 To consider appointing a Veterans Champion.

Alastair Maclean Director of Corporate Governance

Appendices None

Contact/tel Carmel Riley 529 4830 or [email protected]

Wards affected City wide

Background Letter from the Rt Hon Alex Fergusson MSP 29 May 2012 Papers

Item no Report no

Festivals and Events Champion

The City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 The purpose of this report is to invite the Council to appoint an administration Councillor to the role of Festivals and Events Champion. 2 Main report

2.1 In 2001, the Council approved the Festivals Strategy and agreed the creation of a Festivals and Events Champion whose role is to: a) emphasise the Council’s commitment to the city’s major festivals and and events and promote their value to Edinburgh and Scotland; b) ensure that the Administration takes account of festivals and events in discussions on other strategic, developmental and investment matters, including the annual budget process; c) lead and encourage co-ordinated initiatives on behalf of the Council and its partners; and d) oversee contact with key stakeholders, funders, sponsors and the private sector, in order to secure increased investment in, and support for, the city’s major festivals and events.

2.2 The role of Festival and Events Champion is currently vacant and requires to be filled if the Council wishes to continue in accordance with the current strategy. 3 Financial implications

3.1 None.

4 Equalities impact

4.1 None.

5 Environmental Impact

5.1 None.

6 Recommendations

6.1 It is recommended that the Council appoint a Festivals and Events Champion.

Alastair D Maclean Director of Corporate Governance

Appendices None

Contact/tel/Email Lynne Halfpenny, Head of Culture and Sport, tel 529 3967 [email protected]

Wards affected All

Single Outcome Supports National Outcomes 1, 12 and 15 Agreement

Background Papers

June 2012 Leading from the front

I feel it is important that you know what this new Capital Coalition stands for and what we will deliver. I will be leading from the front along with my coalition colleague and Leader of the SNP Group Councillor, Steve Cardownie. My regular Leader’s Report will inform you about our Contract with the Capital and will highlight progress on our pledges. I will make sure you get an accurate account of the key changes we are making and honestly point out areas that are proving problematic.

There will be new ways that you can influence Council decision making and give your feedback. Over 50 pledges have been made and I’d like to think we will be judged on our record of delivering them as well as our record of honestly reconnecting and repairing our relationship with the public. As Council Leader I intend to be as accessible as possible and am arranging a series of visits to stakeholders to hear your views. ______

Decisions, decisions, decisions People on the doorstep told us, in no uncertain terms, that they wanted more influence over Council decisions. We are looking at ways of doing exactly that with our recent motion to Council. This work will help open up the relationship between the residents of Edinburgh and their elected representatives on the Council. Details will be published on the website and debated at the August Council meeting. Feedback is encouraged so give it a go. Email or call 0131 529 3654. ______

Moving in the right direction

Painful doesn’t even begin to describe the experience so far of the building of the trams and I have no doubt there is more to come in some areas. But, let’s not lose sight of the benefits they will bring in the longer term, increased footfall and visitors to the city centre and much better connectivity with other forms of transport including buses and park and ride. With my colleague Councillor Lesley Hinds in charge I think you will be noticing a step change in how things are done very quickly. York Place is the next big area to sort out and it will be difficult. ______

Balancing Act

Opening up a can of worms is how sorting out the Property Conservation issue might be described, but working with the Convener of Finance, Councillor Alasdair Rankin, we are determined to get to the bottom of all the problems and take firm action to create a new and better service that people can trust. This has and will take its toll in terms of cost and upheaval but it has to be done.

There will be a series of reports to the Council meeting in August this year, highlighting some of the complexities and how we will deal with them, including how to deal with the backlog of complaints, unpaid bills, and management shortfalls as well as the emergence of a new service. I’m aware that people want a service as we are getting asked daily for help to repair properties – but they want one that is appropriate, good quality and can be relied on. ______

Be in the picture

This is the most exciting time of the year in Edinburgh when you can look forward to and book your tickets for our Festivals and events.

When you want to promote our city to customers, clients or just plain boast to friends, our latest city accolades and achievements are always a good starting point.

Keep yourself in the picture with our news section online.

If you wish to unsubscribe please email us.

Item no Report no

SESplan Governance Review and 2012/13 Operating Budget

The City of Edinburgh Council

28 June 2012

Purpose of report

1 To refer to the Council the recommendations of the Planning Committee to delegate authority to the SESplan Joint Committee in respect of the Strategic Development Plan

Main report

2 At its meeting of 14 June 2012 the Planning Committee considered the attached report by the Director of Services for Communities advising of proposed amendments that should expedite Strategic Development Plan preparation and clarify SESPlan’s governance arrangements, without compromising the constituent councils’ democratic role, and seeking ratification of SESplan’s 2012/2013 operating budget approval of the payment of £49,000 as the Council’s contribution.

3 The Planning Committee agreed;

(a) To support the proposed amendments to SESplan’s constitution, scheme of delegation and financial regulations and to refer them to full Council for ratification;

(b) To ratify the proposed SESplan 2012/13 operating budget, as set out in Appendix 2 of the report by the Director of Services for Communities; and

For Decision

4 The Planning Committee has invited the Council to ratify and approve the proposed amendments to SESplan’s constitution, scheme of delegation and financial regulations outlined in paragraphs 3.5 to 3.12 in the attached report by the Director of Services for Communities.

Carol Campbell Acting Head of Legal and Administrative Services

Appendices Appendix – report by the Director of Services for Communities

Contact/tel. Alison Kirkwood, of Services for Communities Department, 0131 469 3590

Wards affected City Wide

Background None Papers

Item no Report no

SESplan Governance Review and 2012/13 Operating Budget

Planning Committee 14 June 2012

1 Purpose of report

1.1 To invite Committee to support proposed changes to SESplan’s governance framework and refer them to full Council for ratification.

1.2 To invite Committee to ratify SESplan’s 2012/2013 operating budget and approve the payment of £49,000 as this Council’s contribution.

2 Summary

2.1 SESplan’s constitution, scheme of delegation and financial regulations have been reviewed. The SESplan Joint Committee has agreed some amendments that should expedite plan preparation and clarify governance arrangements, without compromising the constituent councils’ democratic oversight role. The proposed amendments have been referred to the six councils for ratification. In Edinburgh, the authority to ratify the proposed changes lies with full Council.

2.2 The cost of running SESplan is shared equally between the six SESplan councils. The operating cost for financial year 2012/13 is just over £300,000 which includes a 10% contingency. By offsetting a 2011/12 underspend, this equates to £47,080 per authority for the financial year 2012/13.

2.3 To provide certainty in a context of changing variable costs over the next five years, SESplan has requested a contribution of £49,000 per authority. This level of funding is equal to an annual average requirement and is expected to remain constant for the next 5 years. However, it will still need to be reviewed and agreed annually.

2.4 In accordance with SESplan’s financial rules, the Council’s annual contribution, will be paid to Fife Council which is responsible for administering SESplan’s finances.

3 Main report

Background

3.1 SESplan is the Strategic Development Planning Authority for Edinburgh and south east Scotland. It comprises six councils: City of Edinburgh, East Lothian, Fife, Midlothian, Scottish Borders and West Lothian. SESplan operates through a Joint Committee made up of two members from each constituent council and is responsible for preparing a strategic development plan (SDP) for the capital city region.

3.2 SESplan’s constitution, scheme of delegation and financial regulations have been reviewed to make sure they remain fit for purpose. The governance framework is generally working well but some changes are now proposed to streamline and clarify procedures. On 5 December 2011, the SESplan Joint Committee agreed to amend each of the three documents and, as required by the constitution, refer the proposed changes to the constituent councils for ratification.

3.3 The context for the review, the proposed amendments in detail and their reasoned justification are set out in the SDP Manager’s report to the Joint Committee on 5 December 2011 (Appendix 1). This includes the revised versions of the three governance documents; the current versions have been placed in Group Rooms.

3.4 The proposed amendments can be summarised as follows.

SESplan Constitution

3.5 It is proposed to change the current requirement for the Joint Committee to meet not less than four times per year, to not less than twice.

3.6 It is also proposed to modify the constitution to delegate, to the Joint Committee, any decision not to modify the Proposed Strategic Development Plan (PSDP). The PSDP has already been ratified by all six Councils. It is not considered necessary to go back to each of the Councils to confirm no change to what has already been agreed. This change alone would shorten the SDP’s programme by almost four months, enabling the potential submission of the Proposed Plan to Ministers in July/August this year instead of November (assuming no modifications to the Plan). This could result in earlier approval of the SDP. The date of approval has implications for the Council’s Local Development Plan timetable as Local Development Plans cannot be submitted to Ministers until the SDP is approved.

SESplan Scheme of Delegation

3.7 Changes are proposed in four areas as detailed below.

3.8 To reflect the changes to the constitution, it is proposed to amend the scheme to delegate authority to the Joint Committee to submit the Proposed SDP directly to Scottish Ministers. This would only apply if the SESplan Committee agree not to modify the Plan in response to the representations submitted.

3.9 Secondly, it is proposed to clarify that the Joint Committee has delegated authority to approve, without seeking constituent council ratification, a range of background technical documents. These include the Equalities Impact Assessment, Schedule of Responses to the Main Issues Report, Monitoring Statement and Development Plan Scheme.

3.10 Thirdly, it is proposed to give the Joint Committee the authority to approve the Summary of Unresolved Issues document, without ratification, Again this will only apply if the SESplan Committee agrees not to modify the Plan in response to the representations submitted. This document will be SESplan’s main input to the development plan examination process. It will set out a summary of all the representations to the Proposed Plan and SESplan’s response defending the approach taken in the PSDP.

3.11 Fourthly, it is proposed to make a number of non-material edits to clarify the scheme of delegation.

Financial Regulations

3.12 One change is proposed: to require only two financial reports to be presented to the Joint Committee each year, instead of the current three.

3.13 In this Council, the authority to delegate powers to the SESplan Joint Committee lies with full Council. The Council meeting on 28 June 2012 provides the opportunity to formally ratify the proposed governance changes.

Operating Budget 2012/2013

3.14 The SESplan operating budget for financial year 2012/2013 was approved by the SESplan Joint Committee on 5 December 2011, subject to ratification by the six member councils. The SESplan report and the operating budget itself are appended to this report (Appendix 2).

3.15 It is estimated that SESplan’s fixed costs – mainly salaries, accommodation and consumables - will be £244,800 for the financial year 2012/13. Variable costs, made up of the costs associated with the development plan examination and a 10% contingency, total £62,000. The estimated total costs for the financial year 2012/13 are therefore £306,800, or £51,133 per member authority.

3.16 However, a carried forward 2011/12 underspend, supplemented by relatively modest receipts from the sale of documents and interest on revenue balances, totals around £24,000. This has been used to reduce individual member council 2012/13 contributions from £51,133 to £47,080.

3.17 The total SESplan cost for 2012/13 is almost identical to the previous year (2011/12 £306,300 and 2012/13 £306,800) However, individual council contributions have increased by £7,000 from £40,000 to £47,080 due to a lower underspend amount carried forward from the previous year.

3.18 Looking forward to the next 5 years, SESplan predicts that costs per authority could range between £47,000 and £54,000. This is because the Scottish Government’s SDP start up grant is coming to an end and variable costs are subject to cyclical trends, for example the additional costs of the examination stage. To address these cyclical financial demands and provide more certainty to member authorities and to SESplan, the level of 2012/2013 contributions has been set at £49,000. This figure is equal to an average annual requirement and is expected to remain constant for the next 5 years. However, it will need to be subject to annual review and agreement.

4 Financial Implications

4.1 There are no financial implications associated with the governance changes. The Council is required to make a contribution of £49,000 towards the SESplan operating costs. The sum will be paid from the approved revenue budget for 2012/2013 to Fife Council, the authority responsible for administering SESplan’s budget.

5 Equalities Impact

5.1 There is no relationship between the matters described in this report and the public sector general equality duty.

5.2 There is no direct equalities impact arising from this report.

6 Environmental Impact

6.1 There are no environmental impacts associated with this report.

7 Conclusions

7.1 The review of SESplan’s governance framework has confirmed that the arrangements are generally working well. However, some changes are proposed which would streamline and clarify decision-making without compromising the legitimate oversight role of the constituent councils.

7.2 The main change is to delegate more authority to the Joint Committee at the Proposed Plan submission stage but this would only apply where the agreed Plan was not to be modified. Ratification of SESplan decisions by the 6 Councils takes about 4 months and is not considered necessary at this stage. This change could speed up the Strategic Development Plan process, which is one of the aims of the new planning system. Safeguards would remain, including the statutory right of an individual council to submit its own plan, or section of a plan, directly to Scottish Ministers.

7.3 The SESplan operating costs have been calculated in line with the relevant financial rules and are similar to the previous year. However, member councils’ contributions for 2012/13 have increased by £9000 to £49,000 mainly as a result of a lower underspend amount carried forward from the previous year. This level of contribution is expected to remain constant for the next 5 years.

8 Recommendations

8.1 It is recommended that the Committee:

a) supports the proposed amendments to SESplan’s constitution, scheme of delegation and financial regulations; b) agrees to refer them to full Council for ratification; c) ratifies the proposed SESplan 2012/13 operating budget, as set out in Appendix 2; and d) approves the payment of this Council’s contribution of £49,000 for financial year 2012/13.

Mark Turley Director of Services for Communities

Appendices Appendix 1: Report by SDP Manager to SESplan Joint Committee: ‘Review of Governance’, Item 6, 5 December 2011

Appendix 2 : Report by SDP Manager to SESplan Joint Committee: ”Financial Update and Proposed Operating Budget for 2012/2013, Item 7 5 December 2011

Contact/tel/ Alison Kirkwood email 0131 469 3590 [email protected]

Wards affected Citywide

Single Outcome National Outcome 15 - Our public services are high Agreement quality, continually improving, efficient and responsive to local people’s needs.

Edinburgh Outcome - Our services are continually improving and efficient.

Background 1 SESplan Constitution, August 2008 Papers 2 SESplan Scheme of Delegation, August 2008

3 SESplan Financial Regulations, January 2009

4 Minute of 5 December 2011 meeting of SESplan Joint Committee (Item 6)

SESPLAN JOINT COMMITTEE 5 DECEMBER 2011

For Decision 

For Information Item 6 - Review of Governance Report by: Ian Angus, SESplan Manager

Purpose This report outlines proposed amendments to the SESplan governance scheme which deals with the process of agreeing the Strategic Development Plan with a view to making the process more expedient.

Recommendations

It is recommended that the Joint Committee, a) Approve the amendments to the SESplan Constitution as set out in Section 2.2 – 2.6 of this report; b) Approve the proposed amendments to the Scheme of Delegation, as set out in Section 2.8 – 2. 11of this report; c) Refer the amendment(s) to the SESplan Constitution and the Scheme of Delegation (a and b above) to the constituent Councils for ratification; and, d) Remit the Clerk to prepare a revised Scheme of Delegation and Constitution for execution by the SESplan constituent Councils on the amendments being duly ratified.

Resource Implications The changes proposed would potentially result in a reduction in member and officer time in dealing with ratification processes.

Legal & Risk Implications

There are no direct legal or risk implications for SESplan or the constituent authorities.

Policy & Impact Assessment No separate impact assessment is required.

1.0 Background

1.1 The governance framework for SESplan Strategic Development Planning Authority was established by the SESplan Joint Committee in August 2008 and subsequently ratified by the six member authorities. At the time, and in subsequent reports to this committee, it was agreed to keep these arrangements under review. Now, after several years in operation, a review has been undertaken of the Scheme of Delegation, the SESplan Constitution and the Financial Regulations to consider whether any amendments should be made to allow greater efficiency in the operational working of SESplan.

1.2 The process of delivering the first Strategic Development Plan is now well advanced. During this time there have been some minor areas raised relating to delegation and agreement. The majority of these have not posed significant problems, but if amended would provide greater clarity and speed up the delivery of the Strategic Development Plan in the SESplan area.

1.3 As with all parts of the planning system it is the aim of SESplan and its constituent authorities to carry out this function in the most expedient manner while providing the context for sound planning decisions and policy to be developed.

1.4 This is in the spirit of the new planning system which looks to speed up all aspects of planning policy production. It is within this context that the schemes of delegation and administration for SESplan have been reviewed by the six constituent authorities and the SESplan core team.

1.5 As stated in point (d) above, these decisions will require, under section 13.1 of the constitution, to be ratified by the six member authorities.

1.6 The remainder of this report outlines the proposed amendments to the SESplan Constitution, Scheme of Delegation and Financial Regulations. The Constitution, Scheme of Delegation and Financial Regulations are attached as Appendices 1-3 to this report.

2.0 Issues and Proposals

SESplan Constitution

2.1 The Constitution covers a range of areas to ensure the establishment and operation of the Joint Committee. This covers: commencement; members; period of office; vacancies in membership; quorum; standing orders; meetings; powers and duties of the Joint Committee; interim clerk; convenor, vice convenor and clerk to the Joint Committee, resources and the direction to prepare financial regulations and a Scheme of Delegation.

2.2 The Constitution sets out the number of Joint Committee meetings and states that the „Joint Committee shall meet not less than four times per year‟. It has been noted by SESplan‟s auditors that the Joint Committee has not required to hold four meetings in some years. It is proposed that the Constitution is amended to state that the Joint

Committee is to meet “not less than two times per year”. This better reflects the operational needs of the Strategic Development Planning Authority and still allows for more than two meetings in a year should that be required.

2.3 The need for ratification of key decisions in the Plan‟s preparation has also been considered further. To improve the delivery of the Strategic Development Plan and streamline decision making, it is proposed to delegate any decision not to modify the Proposed Plan to the Joint Committee. If these amendments are agreed then the situation would be as follows:

Where no modifications are made, then the Proposed Plan would be submitted directly to Scottish Ministers as it was published and approved by the Joint Committee and the constituent Councils. If modifications were agreed by the Joint Committee, this would require ratification by the six Councils.

2.4 Diagram 1 overleaf illustrates the process and shows the comparison of the current process and timescales (relevant to the current Plan) to that of the amended one which could result from this amendment to the Constitution and Scheme of Delegation. Diagram 1 highlights that this change to delegation would streamline the process and reduce the project plan at this stage by around 16 weeks by removing the need for ratification where the Joint Committee agrees that no modifications should be made to the Plan.

2.5 CURRENT PROPOSED

June 2012: Joint Committee June 2012: Joint Committee consider Proposed Plan and agree consider Proposed Plan to modify if no modifications to submit the or submit documents to Ministers.

June - Oct 2012: Ratification by Constituent Councils By End July 2012: Submission to Ministers

By mid Nov 2012: Submission to Ministers

2.6 It is therefore proposed to amend paragraph 12.2 of the Constitution. This currently provides that ‘All major decisions, for example about the content of the Strategic Development Plan, will require to be ratified by each of the six constituent member authorities’. It is proposed to amend this to the effect of delegating authority to the Joint Committee to determine not to modify the Proposed Strategic Development Plan under Sections 10 (3), and 12 A (5) of the Town and Country Planning (Scotland) Act 1997. Section 10 (3) relates to the stage when representations, if any, have been received following publication of the Proposed Plan.

SESplan Scheme of Delegation 2.6 The Scheme of Delegation sets out the functions of the Strategic Development Planning Authority from the Joint Committee to officers responsible for the progression of the Strategic Development Plan.

Delegation from the constituent Councils to the Joint Committee 2.7 In reviewing this delegation amendments are proposed in a few areas.

2.8 Firstly, in line with the amendments proposed to the Constitution, amend paragraph 2.5 to delegate responsibility to the Joint Committee for the submission of the Proposed Plan to Scottish Ministers, if following consultation, no amendments are proposed. Currently paragraph 2.5 (i) states: ‘...the exception is at the stage of submitting a proposed plan to Scottish Ministers. At that stage a majority vote by SESplan will be sufficient to refer a proposed plan to Member Councils for ratification’. It is proposed to amend this text to reflect the proposed change to the Constitution as outlined in paragraph 2.4 of this report.

2.8 Secondly, it is proposed that the Joint Committee should have the delegated authority to approve, without ratification, background documents including background technical papers, Equalities Impact Assessment, Schedule of Responses to the Main Issues Report, Monitoring Statement, Development Plan Scheme, and Adoption of the Action Programme at different stages of the Plan process. This change would provide greater clarity on the range of documents regarding which the Joint Committee has delegated authority. The need for such clarification has emerged through the preparation of the first Strategic Development Plan and as a result allowed reflection on relevant and appropriate changes to the delegation to to the Joint Committee.

2.9 Thirdly, the content of the Summary of Unresolved Issues document should be approved by the Joint Committee without ratification if it is agreed that there should be no modifications to the Proposed Plan. This document summarises the issues raised through the consultation which have not been taken account of either partially or fully through modifications to the plan. Essentially, this document will set out the issues raised, the proposed response, with reasons why relevant modification(s) are not recommended. This draft document will require to be considered by the Joint Committee ahead of making a decision on whether or not to modify the Proposed Plan.

2.10 Fourthly, it is proposed to make a series of minor edits to the Scheme of Delegation to clarify its functions. These will have no impact of the levels of delegation but simply make clearer what is intended under each and remove any ambiguity. These are highlighted in the Appendix 2 to this report.

2.11 These proposed changes to delegation, taken together with the proposed changes to the Minute of Agreement, would provide greater clarity and streamline the process.

FINANCIAL REGULATIONS 2.12 The Financial Regulations were approved by the Joint Committee in January 2009 and subsequently ratified by the six constituent Councils. Fife Council acts as the Lead Authority for the financial and employment arrangements and resources for the operation of the Strategic Development Planning Authority. This works effectively and there is only one change proposed to reflect a more effective practice.

2.13 Financial Regulations currently state that SESplan will submit ‘detailed monitoring reports to the SESplan Joint Committee at the 6, 9 and 12 month stages of each financial year’. A detailed report on the budget is considered in the December meeting to better align with budget setting timescales within the constituent Councils. To fit in with this timescale, it is proposed to amend the financial regulations to only require two reports to go to the Joint Committee, with one being at the end of each financial year.

Impact of Proposed Changes 2.14 The changes to the Constitution will not reduce the SESplan Constituent Authorities‟ opportunity to have a final say on strategic policy positions in the Strategic Development Plan. These changes would only become relevant if no changes were

proposed to the Strategic Development Plan previously approved by the Joint Committee and ratified by member authorities.

2.15 Such a decision not to change the Plan will already have been through the scrutiny of various levels of officer debate and a decision of the Joint Committee.

2.16 For a Plan that has been through this process, and where no changes are proposed, to then have to be presented to all the member authority committees does not represent a prudent use of resources and slows up the Strategic Development Plan process.

2.17 In the unlikely event that an authority did not agree with the decision of the Joint Committee not to make changes to the Strategic Development Plan, then it could submit to the Scottish Ministers an alternative section of the plan on which there was a disagreement. This provision is in the 2006 Planning Act and is not affected by the changes proposed in this report. Therefore these changes do not reduce in any way the Constituent Authorities ability to participate fully and influence the production of Strategic Planning Policy in the SESplan area.

2.19 The changes to the Scheme of Delegation pass control of more detailed technical documents to the Joint Committee such as the responses to the Main Issues Report and the background technical documents. This has a positive resource impact in that the number of documents being produced for each of the ratification stages by the member authorities is reduced.

2.20 The changes also encourage future key SESplan ratification stages including the Main Issues Report and Proposed Plan to concentrate on the main Plan documents and the debate at member authority committees to focus on the development of policy.

2.21 The changes to the financial regulations will not have any negative impact on SESplan‟s budgetary controls and are of a minor nature.

3.0 Conclusions

3.1 As with all Local Authorities and Partnerships, SESplan is obliged under the new planning system to carry out its planning function in the most expedient manner.

3.2 The six SESplan authorities have together identified amendments to the governance of SESplan which would facilitate the progress of the Strategic Development Plan as timeously as possible while still allowing the constituent authorities to retaining control of the key stages.

3.3 The changes proposed in this report do not diminish the Constituent Authorities control over strategic planning in their respective areas.

APPENDICES

Appendix 1 – SESplan Constitution Appendix 2 – SESplan Scheme of Delegation Appendix 3 – Financial Regulations for SESplan Joint Committee

All the above papers are available on the SESplan web site www.sesplan.gov.uk

BACKGROUND PAPERS Circular 1/2009: Development Planning, Scottish Government. Planning etc. (Scotland) Act 2006. The Town and Country Planning (Scotland) Act 1997. Town and Country Planning (Development Planning) (Scotland) Regulations 2008.

Report Contact

Report Agreed by Ian Angus, SESPlan Manager

Author Name: Robin Edgar Author‟s Job Title: Lead Officer SESplan

Appendix 1 – SESplan Constitution

Edinburgh and South East Scotland Strategic Development Plan Joint Committee: Constitution 1 Strategic Development Planning Authority Duties, Objectives and Powers 1.1 The following planning authorities comprise the Strategic Development Planning Authority (“the Authority”) for the Edinburgh city region: the City of Edinburgh Council, East Lothian Council, Fife Council, Midlothian Council, Scottish Borders Council and West Lothian Council. This group of authorities has a statutory duty under section 4 of the Planning etc. (Scotland) Act 2006 (“the Act”) to work together and prepare, and keep under review, a Strategic Development Plan (SDP) for the Edinburgh city region.

1.2 The Statutory duties of the Authority are to

a) submit to Scottish Ministers, within a period of three months from designation as an SDPA, a plan showing the proposed boundary of the SDP area, with a justification statement as required by Section 5 of the Act; and, b) prepare, monitor and keep under review a Strategic Development Plan for the strategic development area.

1.3 Its other aims shall be to:

c) agree programmes of joint working to deal with matters arising from the above;

d) advise and make recommendations to the six Member Councils on conformity of local plans and local development plans with the Strategic Development Plan and on other issues arising from the statutory duties;

e) liaise with and make representations to central Government, Scottish Enterprise and other bodies and agencies as necessary on matters of relevance to strategic planning in the SDP area;

f) respond to and comment on structure plans, planning applications and other development proposals submitted to the Joint Committee for comment by adjoining non-Member Councils;

g) receive reports from the Member Councils on development management matters that raise significant issues for strategies in structure plans or the SDP, or would have significant cross-boundary impact, according to a Scheme to be agreed by Member Councils; and

h) take such other action as may be necessary from time to time to sustain the policies contained in the SDP.

1.4 The Authority is empowered to do anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of these aims and objectives. Unlike Regional Transport Partnerships, primary and secondary legislation confers no independent powers to SDPAs. Specifically, the SDPA has no legal power to borrow money, give grants, employ staff, acquire land or enter into contracts. Where these are necessary, a constituent council will perform these functions on behalf of the SDPA.

2 The Joint Committee

2.1 The duties of the Authority will be carried out by a joint committee of members representing the constituent authorities. This will be called the Edinburgh and South East Scotland Strategic Development Plan Joint Committee (“the Joint Committee”). The following provisions set out a constitution for the Joint Committee.

3 Joint Committee Constitution

3.1 The Joint Committee will be advisory only. Its decisions will not be binding on constituent authorities but its advice and recommendations should be considered by those authorities when reaching their own decisions.

3.2 The Joint Committee shall have twelve members, to be appointed from the members of the six Member Councils. Each Member Council shall appoint two members to the Joint Committee.

3.3 The “constituent authorities” means the City of Edinburgh Council, East Lothian Council, Fife Council, Midlothian Council, Scottish Borders Council and West Lothian Council.

3.4 The Joint Committee is separate from, and independent of, the Edinburgh and the Lothians Structure Plan Joint Liaison Committee which will continue to exist until the Edinburgh and the Lothians Structure Plan 2015 is superseded by an approved SDP.

4 Appointment of Members by Member Councils

4.1 Each of the Member Councils shall appoint members to the Joint Committee and such members shall stay in office until re-appointed or replaced by the Member Councils. Each of the Member Councils, following an Ordinary Election, shall as soon as practicable appoint or re-appoint members.

4.2 A local authority member shall cease to be a member of the Joint Committee when he or she ceases to be a member of the constituent council which appointed him/her or on the appointment of another member in his/her place.

4.3 The Joint Committee shall have the ability to co-opt additional non-voting members to represent other interests or provide specialist expertise, for example, and representative from the regional transport partnership.

5 Appointment of Convener and Vice-Convener

5.1 The Joint Committee shall be convened and chaired by one authority and this role will rotate annually as below, starting on 1 January each year.

5.2 The Joint Committee shall appoint a Convener from the Committee members representing the authority which is currently chairing and servicing the Joint Committee, to hold office for the period to 31 December of the following year. The Joint Committee shall appoint a Vice-Convener from the Committee members representing the authority to next take on the role of convening and chairing the Joint Committee, as below.

5.3 The Convener, (or in his/her absence, the Vice-Convener) shall preside at any meeting. In the absence of (both) the Convener and the Vice-Convener, the members shall appoint another member to chair the meeting.

5.4 The Convenership of the Joint Committee will rotate annually among the member Councils. The Vice-Convenership of the Joint Committee will rotate annually among the member Councils, being from the authority to take on the role in the subsequent year. The sequence of rotation of Convenerships and Vice-Convenerships will be alphabetical by Council, unless otherwise determined by the Joint Committee.

5.5 The administration of the Joint Committee will be the responsibility of the convening authority. This role will also rotate annually, at the end of each calendar year, in the sequence set out in the preceding paragraph.

6 Substitution

6.1 Any member of the Joint Committee may be represented by another member of the same authority.

6.2 A person appointed as a substitute shall have the same powers at the meeting as the member whom he or she is representing.

7 Vacancies

7.1 Where a casual vacancy occurs the Member Council shall appoint a new member.

7.2 Where a vacancy occurs in the case of the Convener, the Vice-Convener shall assume the office of Convener until the anticipated expiry of the outgoing Convener’s term of office.

7.3 Where a vacancy occurs in the case of the Vice-Convener, the Joint Committee shall appoint a replacement until the anticipated expiry of the outgoing Vice-Convener’s term of office.

7.4 The proceedings of the Joint Committee shall not be invalidated by any vacancy or vacancies amongst members or any defects in the method of appointment of any of its members.

8 Quorum

8.1 The quorum of the Joint Committee shall be four, provided that not less than three Member Councils are represented.

9 Meetings

9.1 The Joint Committee shall meet not less than 2 times per year.

9.2 The Convener, in consultation with senior officers of the Member Councils shall fix the date, time and place of meetings, subject to any previous agreement by the Joint Committee.

9.3 A member council can request a special meeting in exceptional circumstances where a matter requires to be considered by the Joint Committee sooner than the schedule permits.

9.4 Meetings shall be held in public and the Local Government (Access to Information) Act 1985 shall apply.

9.5 All matters coming before the Joint Committee shall be decided by the majority of members present and voting thereon. In the case of equality of votes, the person presiding at the meeting will have a second or casting vote, except in the case of appointment of members, in which case the decision shall be by lot.

9.6 The Joint Committee, on simple majority, shall have the power to make representation on strategic planning matters and related issues to Member Councils or, where appropriate, the Scottish Government and other organisations. Documents can be published, and evidence given, in the name of the Joint Committee with the agreement of all Member Council. Individual councils have the right to separately put forward contrary views.

9.7 The Joint Committee shall have the power to adopt standing orders regulating its business. Any amendment to Codes of Practice covering referrals must be authorised by all six constituent authorities.

9.8 Senior officers of each authority will have the right to submit individual reports and recommendations to the Joint Committee.

10 Professional Support

10.1 Professional support for the work of the Joint Committee shall be provided by a Strategic Development Plan Manager and a small dedicated team of officers. The SDP Manager will be managed by a project board comprising senior officers from each of the Member councils. Its duties shall include agreeing reports to be presented to the Joint Committee.

10.2 From time to time, planning officers and technicians in the Member Councils may be required to provide professional and technical support to the work of the small dedicated team.

10.3 The Member Councils shall use their reasonable endeavours to meet any request from the Joint Committee or the SDP Manager for the secondment of appropriate/relevant staff to help prepare, monitor and review the SDP. Any such secondment will be on terms as may be agreed between the Member Council and the Joint Committee.

11 Financial Arrangements

11.1 The Joint Committee shall have no dedicated budget of its own. Financial support will be provided by the Member Councils on the basis of an equal, one-sixth share of all costs incurred in relation to the Joint Committee and its operations.

11.2 The level of financial devolution will be kept under review by the Joint Committee and can be amended with the agreement of all Member Councils.

11.3 For employment law purposes and to aid financial accountability, one SDPA Member Council will act as the employing authority, to be agreed by the Member Councils. The Member Councils will pay to that council one-sixth of the total costs reasonably incurred by it in connection with employing the dedicated team.

11.4 Financial contributions from the constituent authorities to the work of the Joint Committee generally, not including dedicated team staff costs, will be channelled through one council, to be agreed by the Member Councils.

12 Scheme of Delegation

12.1 The Joint Committee will agree a Scheme of Delegation with the Member Councils. This will define the nature and amount of authority delegated from those councils to the Joint Committee, and from the Joint Committee to officers.

12.2 All major decisions, for example about the content of the Strategic Development Plan but with the exception of submission of the Proposed Plan to Ministers when no Modifications are proposed, will require to be ratified by each of the six constituent member authorities,. The level of delegated authority to the Joint Committee from Member Councils, and from the Joint Committee to officers, shall be governed by a separate Scheme of Delegation to be agreed by the councils.

12.3 The Scheme of Delegation will be kept under review by the Joint Committee and can only be amended with the agreement of all the Member Councils.

13 Commencement and Variation

13.1 This constitution shall be deemed to have commenced on the XX 2012 and may be varied only by the agreement of all the Member Councils.

14 Consulting on Planning Proposals

14.1 The Joint Committee shall have an advisory role in relation to certain defined types of planning proposals referred to it from Member Councils. The mechanism governing referral and consideration shall be set out in a joint Code of Practice to be agreed and periodically reviewed by the constituent authorities.

15 Annual Report

15.1 The Joint Committee will prepare an annual report on its work to each of the Member Councils on or around 31 August each year.

Appendix 2 – SESplan Scheme of Delegation

1.0 SCHEME OF DELEGATION Powers delegated in this scheme must be carried out within the financial parameters set out by the separate minute of agreement on finance.

1.1 Commencement of the Scheme The scheme shall commence and have effect as from XX 2012.

1.2 The Interpretation of the Scheme In the scheme the following words shall have the meanings assigned to them, that is to say:-

Member Councils are the City of Edinburgh, East Lothian, Fife, Midlothian, Scottish Borders and West Lothian Councils;

2006 Act means the Planning etc. (Scotland) Act 2006;

“SESplan” means the Strategic Development Planning Authority for Edinburgh and South East Scotland;

“Officer” means an official carrying out a function of SESplan, whether the project board or its appointees, directly employed, seconded or otherwise.

Alteration of Scheme 1.3 This scheme of delegation will be kept under review and can be amended with the agreement of all Member Councils.

2.0 DELEGATION FROM MEMBER COUNCILS TO SESPLAN

2.1 Member Councils delegate to the joint committee (“SESplan”) the power to discharge the functions conferred by the 2006 Act on the Member Councils as joint SDPA authorities.

2.2 This delegation does not prevent any or all the member councils from discharging those statutory functions.

2.3 Delegation covers:

a) Approving responses to relevant consultations from other bodies

b) Managing work on SDP preparation, monitoring and review

c) Initiating public consultation and stakeholder engagement

d) Setting a programme for relevant studies to assist in the preparation of the SDP

e) Recruiting and managing staff in the SDP project team

f) Arrangements for team premises

g) Authorising spending within the financial parameters set out by the separate agreement on finance

h) Advising on certain defined types of planning proposals referred from member councils according to the Joint Code of Practice.

i) Advising and making recommendations to the Member Councils on conformity of local plans and local development plans with the strategic development plan.

2.4 Reports will be submitted to individual Member Councils, for information only, on substantive decisions taken and action authorised under delegated authority.

2.5 At the stage of submitting the Proposed Plan to Scottish Ministers the Joint Committee can decide to submit the Proposed Plan without making any modifications. Only in this circumstance, if the decision of the Joint Committee is to make no

changes, then the Joint Committee is authorised under delegated authority to submit the Proposed Plan directly to Scottish Ministers without requiring the decision to be ratified by the Member Councils. Delegation does not extend to any major decisions on SDP content.

2.6 All major decisions on SDP content will require to be ratified by all six Member Councils.

i. The exception is at the stage of submitting a proposed plan to Scottish Ministers. At that stage a majority vote by SESplan will be sufficient to refer a proposed plan to Member Councils for ratification.

ii. Ratification by at least four out of the six Member Councils will then be required to allow the proposed plan to be submitted to Ministers. The Act allows one or more Member Council to set out alternative proposals, along with their reasons for those alternatives.

2.6 Urgent Matters Where urgent decisions are required to be taken and do not fall within the scope of delegation to SESplan, Member Councils will convene special committee meetings, if necessary, to ensure that decisions can be made timeously and to prevent delay to the preparation of the SDP.

2.7 Disputes If SESplan fails to reach consensus on matters delegated to it, then the matter will be referred to individual Member Councils. This provision does not apply in the circumstances of para 2.5 above.

3.0 DELEGATION FROM SESplan TO OFFICERS

3.1 SESplan delegates to officers:

a) Recruitment below manager level, so long as such posts are within the approved structure and budget

b) Day to day management of staff in the SDP project team

c) Liaison with and representation of SESplan to central government and other bodies as necessary on matters relating to the SDP area

d) Implementation of financial resources as authorised by SESplan

e) Preparation of SDP up to drafting main stage outputs:

i. Preparation of main issues report and supporting documents – subject to approval by SESplan, and ratification by all Member Councils.

ii. Preparation of proposed plan – subject to approval by SESplan, and ratification by Member Councils

iii. Modification of proposed plan – subject to approval by SESplan and ratification by all Member Councils

f) Initiation and management of consultation exercises subject to agreement of SESplan

g) Responding to relevant consultations from other bodies

h) Commissioning studies to assist in the preparation of the SDP

3.2 The provisions of the scheme of delegation to officers are intended to assist in the efficient and effective management of SESplan‟s activities. Officers must pay due regard to the need for appropriate periodic reporting of delegated decisions to SESplan.

3.3 Urgent Matters Where urgent decisions are required to be taken to allow work on the SDP to progress and they do not fall within the scope of delegation to officers, SESplan will, if necessary, convene a special committee meeting.

Appendix 3 –Financial Rules for SESplan Joint Committee

SESplan FINANCIAL RULES

General

These rules apply to the operation of SESplan‟s finances. SESplan is the strategic planning authority for Edinburgh and South East Scotland. Its membership comprises East Lothian Council, City of Edinburgh Council, Fife Council, Midlothian Council, Scottish Borders Council and West Lothian Council (“the member councils”).

All transactions will be conducted in accordance with Fife Council‟s regulations, schemes and procedures.

Partner Liability

Fife Council, as Lead Authority, will adopt the role of “Partnership Banker” and will pay all legitimate approved expenditure including staffing & premises costs and hold all partnership balances which will be carried forward to the next financial year, unless agreed otherwise by the Joint Committee.

Fife Council, will ensure that any monies that it receives on behalf of SESplan under its role as „Partnership Banker‟ are clearly identified within its accounts and recorded separately from the rest of the Council‟s finances. Interest charged/accrued on any credit or debit on the SESplan budget will be retained within the identified SESplan accounts.

All partner authorities are liable equally for all legitimate approved expenditure and any other liabilities incurred. All partner authorities also have equal ownership over any SESplan assets.

Fife Council will invoice the other Partner Authorities at the beginning of each financial year to obtain their total annual contribution to the agreed SESplan budget.

This invoice will include VAT at the appropriate rate.

In the event that another partner authority incurs legitimate approved expenditure directly then they must invoice Fife Council, with VAT, to recover this. This expenditure will then be included in SESplan‟s costs.

Budget Setting

Operating Budgets for the next financial year should be proposed by the Strategic Development Plan (SDP) Manager , approved by the SESplan Joint Committee and ratified by the member councils by the end of December.

Authorising Expenditure

All expenditure relating to the SESplan budget is the responsibility of the Strategic Development Plan Manager and must be within budgets agreed by the Project Board.

No official may incur any expenditure beyond the agreed SESplan budget unless it has firstly been approved by the Project Board, in accordance with the SESplan Scheme of Delegation.

Suppliers’ Invoices

The Strategic Development Plan Manager will be responsible for ensuring that invoices are properly certified for payment and for approving other officers who may authorise invoices and the limits of their authority.

All Invoices must be made out to Fife Council, to ensure payment. Any Invoices that are made out to the partnership directly or any other authority cannot be paid by Fife Council.

External Funding.

Any external funding received in connection to the project from Central Government, Local Government and any other sources will be held by Fife Council.

Salaries and Wages

Appointments of all employees shall be made in accordance with the procedures approved by Joint Committee through the SESplan scheme of delegation and accord with the approved establishment, grade and rates of pay.

The processing and payment of salaries and wages shall be done through Fife Council‟s bureau payrol system.

Legitimate travel, hospitality and other expenses incurred in the course of duty, shall be reimbursed through Fife Council‟s bureau payroll system.

Audit

Expenditure & income will be recorded within Fife Council‟s financial ledger and will be audited as part of Fife Council‟s year End Audit unless there is a requirement to appoint an independent auditor for each SDPA.Fife Council‟s internal audit service will act as SESplan‟s internal auditors.

Reporting Requirements

Every SESplan Joint Committee report is required to include the financial consequences of proposals for the current and future years to be stated.

The Treasurer, who will be an identified employee of Fife Council, in conjunction with the Strategic Development Plan Manager, is required to submit detailed monitoring reports to the SESplan Joint Committee twice a year, with one occasion being at the end of each financial year. These reports will compare actual expenditure to date and projected/final outturn expenditure with the budget position.

Further Information

For further information regarding these Financial Rules, please contact Carol McAlear, Lead Officer (Finance), Fife Council, Fife House, North Street, Glenrothes, KY7 5LT. Telephone – 08451 55 55 55 extension 44 22 54. [email protected]

SESPLAN JOINT COMMITTEE 5TH DECEMBER 2011

For Decision 

For Information

Item 07 – Financial Update and Proposed Operating Budget for 2012 / 2013 Report by: Ian Angus, SESplan Manager

Purpose To present the six monthly financial report, seek Committee approval of the proposed operating budget for 2012-13 and present further information on the five year budget.

Recommendations

It is recommended that the Joint Committee;

a) Notes the Operating Budget 2011 / 2012 6 month financial position as set out in Appendix 1. b) Approves the proposed SESplan 2012 / 2013 Operating Budget as set out in Appendix 1. c) Approves member authority contributions for the year 2012/13 at £49,000 per authority, payable to Fife Council by the 30 April 2012. d) Instructs officers to invite Member Authorities to ratify recommendation b) and c) and to make their required contributions by the due date. e) Note the five year operating budget as context for the 2012/13 budget.

Resource Implications There are resource implications of these proposals as they involve changes to the levels of annual contributions from the member authorities to cover the costs of the operation of the Strategic Development Plan Authority.

Legal & Risk Implications

There are risks to the process if sufficient funding is not available to progress the SDP at a rate which provides the up to date strategic planning policy context for the timeous progression of the member authorities’ Local Development Plans, as is required by the relevant legislation.

There is also a risk associated with budgeting for the costs of the formal Examination into representations made on the current SDP. Although a reasonable estimate has been included in the budget the true cost cannot be ascertained until the extent of the Examination process is known which will be in mid 2012.

Policy & Impact Assessment No separate impact assessment is required.

1.0 Background

1.1 The Strategic Development Plan Authority Constitution requires that the spend against agreed budgets are regularly reported to the Joint Committee and that budgets for future years are presented for discussion and approval by the Committee, before ratification by the member authorities. This report covers these issues in three sections.

1.2 Firstly it presents the six monthly financial figures as required by the SDPA Constitution, highlighting any savings that have been made against the estimated approved budget.

1.3 Secondly it presents the draft SESplan operating budget for the financial year 2012/13 highlighting the expected costs of the process for the following year, opportunities for savings against previous budget estimates and outlining the level of member contributions.

1.4 Thirdly the report provides a commentary on a five year budget estimate. This is to provide the context for the discussion of the 2012/13 operating budget and an indication of the fixed costs and cyclical pressures that are expected to be exerted on the budget. It also provides a longer term picture of the financial strategy being undertaken for the prudent running of the finances associated with the SDPA process.

2.0 Issues and Options

2011 / 2012 Six Month Financial Position 2.1 Appendix 1 presents the 6 month financial position for 2011 / 2012 which estimates that £23,000 will be carried forward to 2012-13 compared to a carry forward of £16,577, previously predicted in the budget for the year. The reason for these savings are efficiencies that have been brought in around accommodation and the management of the Proposed Plan process.

2.2 Within the Fixed Costs element of the Operating Budget there is a small saving made by the relocation of the SESplan Core Team from McDonald Road to Claremont House in May 2011. The Fixed Costs provide for maternity cover of the Lead Officer post through two secondments on a job share basis from Fife Council which commenced on the 16 October 2011 for a period of a year.

2.3 Under the Variable Costs there is a forecast underspend of £13,400 on the Proposed Plan Printing and Publication. It is important to note that there is no provision in the Operating Budget for the printing and publication of a Modified Plan should this be required.

Proposed 2012/13 Operating Budget and Five Year Projected Budget 2.4 As is required under the SDPA Constitution a proposed budget has been prepared for the following financial year. Appendix 1 also sets out highlights the proposed operating budget for the year 2012/13.

2.5 To better understand the pressures being placed on the proposed 2012/13 SESplan budget it is helpful to view it within the financial context of recent years and expected budget requirements for the medium term.

2.6 Therefore, Appendix 1 provides a graphical picture of the expected budget trends over the next 5 years. As with all budget predictions, precise numbers are difficult to determine. However, it is clear that there is a process that the current and all future Strategic Development Plans will be expected to follow and that these will result in peaks and troughs in workloads, the resources required and the financial outlay. The key elements highlighted in both Appendix 1 and 2 are discussed in more detail below.

Fixed Costs 2.7 The key elements of the fixed costs are the accommodation costs and the staff costs. Efforts have been made to reduce the accommodation costs in the current financial year and these have been highlighted earlier in this report. The relocation of the Core Team to Claremont House is expected to continue to offer SESplan budget savings of around £2,000 per year compared to the previous office accommodation at McDonald Road.

2.8 For the 2012/13 budget the fixed costs estimate is £244,800, which is a saving of £10,000 on 2011 / 2012. Around 83% of this is staff costs associated with the Core Team. The Core Team in 2012 / 2013 would consist of the SDP Manager, Lead Officer (maternity cover until 17 October 2012 provided by two secondments on a job share basis from 16 October 2011), Planner and Temporary Planner (temporary contract until March 2013).

2.9 The staffing levels are proportionate to those employed in other Strategic Development Plan authorities in Scotland taking into consideration the scale of those partnerships, the planning issues arising and the areas involved. Seen in a longer term context from the establishment of SESplan in 2008, the fixed costs can be seen to reach a predicted peak in 2011/12 which is the first year when a full complement of staff have been employed for the full year in the Core Team.

2.10 Looking to the future, the fixed costs are not expected to rise and are estimated to be constant for the foreseeable future. Operating at the current level of staffing still represents a significant challenge due to the expected workload, particularly around the examination periods. However through the successful partnership working with the member authorities and key agencies that continues to be developed in the SESplan area it is envisaged that the current complement of staff will accommodate the challenging work programme.

Variable Costs

2.11 Variable costs are associated with the key consultation and representation stages, and, significantly, the Examination phase which is an essential part of the SDP process and inevitably substantial costs must be set against it. Other costs include printing and publication costs and technical work to support the progression of the plan.

2.12 Variable costs have been estimated at £62,000, a saving of £27,000 on 2011 / 2012. The variable costs for 2012 / 2013 relate mainly to the Examination on the Proposed Plan, the cost of which is required to be shared between SESplan and the Scottish Government on a 50:50 share. The full cost for the Examination is unknown as the Development Planning Examination Authority does not provide estimates until the extent of the issues to be considered is ascertained and at this time no SDPs have reached the examination stage. However a level of contingency has been added to ensure robustness based on the experiences of Local Authorities in Local Plan Examinations and estimates being prepared for other SDP’s.

2.13 Appendix 2 highlights that over the next five years the two key points where the variable costs increase are around the Examination stages, in 2011/12 and 2016/17.

Government Start up funding/Budget Carry Forward

2.14 This funding was provided as financial assistance to all the SDPA’s when they were created in 2008. As can be seen in Appendix 2 the benefits of this grant have been spread over the last few years and has helped to avoid the need for any increases in the annual contribution from each authority. However, next year will see the spending of the last of the start up funding.

2.15 Approaches have been made to the Scottish Government but these have not produced any guarantees of further funding. It therefore has to be assumed that this source of funding will no longer be available in the future.

2.16 Appendix 2 shows the Scottish Government funding combined with any carry forward which remains due to reduced staff levels at the beginning of the SDP process and other savings that have been made from the fixed and variable budgets.

Member Contributions

2.17 In 2008, the member authorities agreed a SESplan budget of £360,000 (£60,000 per authority). At the outset, due to staffing levels at that time and the government start up funding, the actual budget for 2008/09 only required a contribution of £17,000 per authority. This is highlighted in Appendix 2. This contribution has increased to £40,000 per authority for the remaining period to date (2009-2012) due to the core team having a full complement of staff and the costs of undertaking the first substantive stages of the SDP process in the form of the Main Issues Report and the Proposed Plan. This compares to £60,000 per authority in TAYplan.

2.18 Appendix 2 also highlights that the one off government grant and carry forward has been spent over the last few years and is coming to an end at the point when the costs of the SDP process are at its greatest. The graph clearly highlights the correlation between the decline in the remaining Scottish Government Grant, the cyclical rise in variable costs and the changes to the future Member Authority annual contributions.

2.19 Due to this combination of budget pressures it is apparent that for the budget 2012/13 there will require to be a modest increase in member contributions from that seen over the past three years.

2.20 Each member authority is liable for one sixth of the annual operating budget. Appendix 1 highlights the overall 2012 / 2013 Operating Budget is estimated at £306,800, equating to £51,133 per member. When offset against the forecast 2011 / 2012 savings, highlighted in paragraph 2.2 -2.3, this would give a figure of £47,080 contribution per authority.

2.21 However, due to the cost of the examination process and the reduction in any grant or carry forward funding, the cost per member authority for the five years from 2012 – 2017 would range between £47,000 and £54,000. This is illustrated in Appendix 2.

2.22 With these cyclical changes to the variable costs there would be a need to revisit the member contributions figures each year. Therefore, to address these cyclical financial demands and provide more certainty to member authorities and to SESplan, it is proposed to set the level of member contributions for the 2012/13 budget at a level equal to the average requirement over the next five years. As a result of this approach the average annual cost for funding SESplan from 2012-17 would be £294,000 per annum.

2.23 This results in the proposed member Contributions for the year 2012/13 being £49,000 per authority. This level of funding is expected to remain constant for the next 5 years until beyond the Examination on SDP2. However, this portion will require to be reviewed on an annual basis through financial reporting and budget setting by the Member Authorities.

Conclusions

2.24 As with all the member authorities the SESplan budget is under pressure from the demand to provide a statutory service while working within tight budget parameters.

2.25 Significant efforts have been made to reduce SDP related costs both from the fixed and variable parts of the budget. This has resulted in over £22,000 saving being carried forward to the year 2012/13. It is important to note that where savings have been made these have been set aside as a contingency against the Examination (scheduled for 2012), the costs for which are not yet confirmed.

2.26 The SDP process is currently entering its most challenging period in terms of work activity and budget pressures at a time where carry forward funding and the Scottish Government grant are reducing in size. As a result it is necessary to look at raising member contributions to meet the requirements of funding the SDP process.

2.27 The cyclical nature of the variable costs is such that over coming years there will be fluctuating demands on member authorities to provide SESplan contributions. To reduce these fluctuating financial demands it is proposed to set the member contributions at £49,000 per authority.

2.28 The financial rules state that members’ contributions be in place by the end of April each year – within one month of the start of the financial year. It is therefore requested that the £49,000 be paid to Fife Council on or before the 30 April 2012. It is requested that all member councils take steps now in their current budget setting rounds to ensure that contributions will be in place by the start of the next financial year.

APPENDICES

Appendix 1 Operating Budget 2011 / 2012 (6 Month) Financial Report and Proposed Operating Budget 2012 / 2013

Appendix 2 Five Year Operating Budget 2011 - 2017

All the above papers are available on the SESplan web site www.sesplan.gov.uk

BACKGROUND PAPERS SESplan Constitution SESplan Financial Regulations approved at SESplan Joint Committee 26 January 2009 Planning etc. (Scotland) Act 2006. The Town and Country Planning (Scotland) Act 1997. Town and Country Planning (Development Planning) (Scotland) Regulations 2008. SESplan Joint Committee report on 2011/2012 Operating Budget - approved at the Joint Committee on 7 February 2011. Financial Update report presented to the SESplan Joint Committee on 13 June 2011. Operating Budget for Financial Year 2009/10 – 26th January 2009.

Report Contact

Report Agreed by Ian Angus, SESPlan Manager

Author Name: Robin Edgar Author’s Job Title: Lead Officer, SESplan

Appendix 1 – 2011/12 - Six Month Operating Budget and Proposed 2012/13 Operating Budget

2011/12 2011/12 2011/12 Operating Cost per 2012/13 Operating Cost per Operating Budget 6 Member Operating Budget council pa Budget month Authority Budget Variance Forecast

FIXED COSTS Team salaries + oncosts (based on team 202,000 202,000 0 33,667 195,000 32,500 of 3, plus 1 temporary graduate planner) Team Accommodation, admin & IT 42,500 40,000 2,500 6,667 40,000 6,667 (based on Claremont House) one-off cost of moving to Claremont 0 11,000 -11,000 1,833 0 0 House Audit Fee 3,800 3,800 0 633 4,000 667

Consumables, travel, training, misc 6,000 6,000 0 1,000 5,800 967

TOTAL Fixed Costs 254,300 262,800 -8,500 43,800 244,800 40,800

VARIABLE COSTS

Technical Support Proposed/Modified Plan - Printing & Publication 68,400 55,000 13,400 9,167 0 0

Proposed Plan - Graphics 24,600 24,600 0 4,100 0 0

Accession Modelling 1,600 1,600 0 267 0 0 2012/13 Technical Support 0 0 55,000 9,167 Examination Add: 10% contingency 9,460 8,120 1,340 1,353 7,000 1,167

TOTAL Variable Costs 104,060 89,320 14,740 14,887 62,000 10,333

TOTAL COSTS 358,360 352,120 6,240 58,687 306,800 51,133

Balance Carried Forward From 133,937 133,937 0 0 22,817 3,803 Previous Year Sale of Plans 500 500 0 83 1,000 167

Interest On Revenue Balances 500 500 0 83 500 83

TOTAL INCOME 134,937 134,937 0 166 24,317 4,053

FUNDED BY Partner Contributions 240,000 240,000 0 40,000 282,483 47,080

TOTAL INCOME 374,937 374,937 306,800 51,133

Balance Carried Forward to Next Year 16,577 22,817 0 0

2011-12 budget approved by SESplan Joint Committee on 13th June 2011.

Appendix 2 – Five year budget projections

Item no Report no

Proposals for the future location of Boroughmuir High School: outcomes arising from statutory consultation and project update

City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 The purpose of this report is to:

• advise on the outcome of the statutory consultation exercise conducted on proposals for the location of Boroughmuir High School and associated minor catchment changes affecting Boroughmuir and Tynecastle High Schools and Bruntsfield and Dalry Primary Schools and respond to the issues raised during the consultation;

• provide an update regarding the Boroughmuir High School project and the wider Fountainbridge site; and

• make recommendations on how the proposals should be progressed.

2 Summary

2.1 The Council conducted a statutory consultation in February and March of 2012 seeking views on two options for the proposed redevelopment of Boroughmuir High School. These options were:

Either

A. Relocation of Boroughmuir to a new building on the Fountainbridge site and associated minor catchment change (the Council’s preferred option); or

B. Refurbishment and extension of Boroughmuir on its existing site with associated temporary decant to Burdiehouse.

2.2 Views expressed on both options were collected during the consultation process through written representations and verbally at four public meetings. The main issues raised by respondents are addressed in detail in the main report; the key outcomes can be summarised as follows:

• The significant majority of respondents favoured the new build proposal at Fountainbridge with only a small number favouring refurbishment; • A significant number of respondents expressed a desire for a larger site at Fountainbridge; and • Significant objections were expressed regarding the decant associated with the refurbishment option.

2.3 After taking account of the representations made, the issues arising and the costs associated with both options it is considered that implementation of Option A, new build on Fountainbridge, is the best way forward and is the recommendation. The reasons for reaching such a conclusion are that it offers clear educational and financial advantages, including delivering the optimum educational environment; avoids educational disruption; is the better value option; reduces the time and cost risks to the project and is the quicker option to deliver.

2.4 The report sets out the next steps for the project in terms of site assembly; design team appointment; and an update on the development strategy for the future development of the wider site.

3 Main report

Statutory Consultation Exercise

3.1 Council approval to consult on two options for the future development of Boroughmuir High School was given in November 2011. The consultation period ran from 20 February to 30 March 2012. The rationale for the proposals is set out in an excerpt from the consultation paper attached as Appendix 1. The full consultation paper can be accessed through the following link. www.edinburgh.gov.uk/BoroughmuirConsultation

3.2 Four public meetings were held between 5 and 14 March: one at Boroughmuir High School and one at each of the three feeder primary schools. At each meeting Council officials answered questions on both options following a short presentation. Records of each meeting are attached at Appendix 2.

3.3 Representations were also invited by letter and by e-mail. A total of 180 representations were received from 177 groups and mostly individuals (3 individuals submitted two responses). Of the 177 respondees, 152 expressed a distinct preference with 131 (86%) being for new build on the Fountainbridge site and 21 (14%) for refurbishment of the existing building. This proportion was reflected in an informal show of hands at the conclusion of one of the public meetings. The remaining 25 respondees expressed no distinct preference for either option.

3.4 Consultation with pupils was also undertaken through the Boroughmuir High School Pupil Council whose 42 pupil members are elected by their classmates. An initial meeting was held with the group where the process for deciding upon the location of the new Boroughmuir was explained. The pupils were also taken through the consultation document and encouraged to read it thoroughly 2

and engage in the feedback process. A straw poll at the beginning of the meeting showed an approximate 75%/25% split in favour of refurbishment. The meeting worked in groups and further discussed issues such as the decant process and location and the type of facilities they would ideally like to see at any new school. There was a very full question and answer session and from this it was clear that the pupils had a clear grasp of the process and possible issues. A further show of hands was taken at the end of the meeting which resulted in a 95%/5% split in favour of new build. The main reason given for the change in ‘voting’ was the issue of decant, both in terms of the upheaval and the chosen location.

3.5 Responses to all of the major issues raised during the consultation process are considered in the ‘Key Themes and Issues and Council Responses’ section which follows. A summary of all submissions is presented in Appendix 4, with copies of the full submissions being available in the Elected Members lounge for reference. The Council’s response to Education Scotland’s report on the educational aspects of the proposals is contained in section 4 of this report.

Key Themes and Issues and Council Responses

3.6 A number of points were recurrent in the public meetings and in the responses received during the consultation period. The following section draws out the most commonly recurring themes and issues together with the Council’s response.

Theme 1. New build as favoured option

Issues The majority of respondents (131 submissions) identified new build at Raised Fountainbridge as their preferred option, and in many cases, strongly advocated it. They felt it offered significant advantages including:

• Delivering a state of the art, educationally fit for purpose building and offering a creative design opportunity;

• Delivering a quicker solution for a new school;

• Avoiding the prospect of decant;

• Delivering greater opportunity for after hours community use of the school; and

• Delivering the prospect for enhanced dining to promote healthier eating options.

Council It is agreed that the delivery of a new building on a new site can deliver the Response optimal educational solution for the school. The spaces within the school can be purpose designed to meet the educational brief, to ensure that the right spaces are available in the right locations of the school, capturing synergies between faculty groupings. The site can also be used more efficiently to ensure that additional space can be created where possible. This can be achieved through the configuration of buildings on the site and also through innovative use of spaces that traditionally have been ‘dead’ space i.e. roofs.

It also avoids the need for any type of decant which allows the educational environment provided for the pupils to continue undisturbed for the duration of the project. For these reasons, this option was the Council’s expressed preferred option and is the recommended option going forward.

It is recognised that this option allows the school to be designed so that certain areas can be opened up for community use after hours without the necessity for the entire school to be open, which is one of the disadvantages of utilising the existing building.

A number of concerns were expressed about the current dining options available for pupils when they leave the current school site for lunch. It is anticipated that a better environment can be created within the school for dining on the Fountainbridge site, possibly in a canal side setting which will make remaining on site a far more attractive option for pupils. Experience in recent projects (Portobello and James Gillespie’s High Schools) has identified different types of dining options, more akin to café solutions, that can be delivered in new buildings which are more likely to be attractive for pupils.

Theme 2. Site Size at Fountainbridge

Issues A significant number of respondents (77 submissions), while preferring the Raised new build option, made the case for additional land being made available for the school site, particularly as the Council owns the much wider Fountainbridge site. Some queried whether other sites for the school within the wider Fountainbridge site were available.

Council When first considering purchasing the Fountainbridge site as an option for Response Boroughmuir the Council undertook an appraisal of the whole site. There were a number of factors which led the Council to conclude that the site to the west of Viewforth (i.e. the one subject to statutory consultation) was the optimum site for the school. The Council has an established view regarding the opportunities which the wider site presents for the City as a whole and the requirements which follow from this which must be considered alongside the delivery of a school in this location.

Firstly, the site offers one of the only places remaining in the City where the financial quarter can be expanded to provide a city centre location for the economic growth of the city over forthcoming decades. Thus it is expected that the site will deliver a significant amount of commercial floorspace at its eastern end.

Secondly it is anticipated that this site will provide a place that people will want to both live and work, with a vibrant, mixed use community being created with a strong element of mixed housing types. The canal side location gives it a special character that can make it a destination in its own right as a city wide resource. The fact that a school can be introduced into this mixed community is likely to enhance the sense of place. However, were the school to dominate the site, the opportunity to deliver these other significant objectives would be lost.

Accordingly, from a planning perspective, there are certain prerequisites the overall site must deliver in addition to the school. In order to deliver these, sufficient land must be safeguarded on the eastern side of the site.

In addition to these planning principles for the site, the Council must also be able to deliver a development to the east of Viewforth which is viable in financial terms. The purchase of the full site was made possible by using funding from the Children and Families Capital Investment Programme. There are a significant number of other priorities within the Children and Families physical estate for which capital funding is a necessity including the Council’s contribution towards the build cost of Boroughmuir High School. The Council must therefore divest the remainder of the site in order to release the funding for these projects.

Both the Planning and financial context for the site mean that it is not possible for the dedicated school site to extend to the east of Viewforth.

Over the course of the consultation period, consideration has been given to whether the school could share a building with other users on land to the east of Viewforth, with the school having some floors of the building. However, there are two issues with this concept. Firstly, there is no funding in place from Council resources to deliver any such separate building in this area nor is it clear what such a facility would deliver. Were such a building to be considered; this would introduce a significant risk of delay to the school project while funding for this building is sought with there being no certainty that funding could be identified. Nor is there a mechanism for the delivery of this building as it could not be delivered as part of the school project. Secondly, a building of this type would take up developable space on the east side of Viewforth; land that is required to be maximised to ensure that the Council can deliver its other priorities, commercial and residential use. Any reduction in land available on the east of the Viewforth reduces the amount which can be realised from disposal making it more difficult for the Council to recoup its initial outlay and release funds back to the Capital Investment Programme.

The school site size to the west of Viewforth is, however, still being considered and is described in more detail below.

Issues Many respondents queried why the park could not be incorporated or Raised reconfigured as part of the school site. A number of respondents highlighted their concern about the school site being split in two by the park. Conversely, a number of responses wrote in support of protecting the park and indicated concern about the phrase that the school ‘would spill out’ into the park.

Council The school site is adjacent to a park proposed as part of the student Response residences development for Napier University. The park has detailed planning consent and is a requirement of the delivery of the student residences; they are unable to be occupied without the completion of the park within certain timescales.

It is, however, recognised that the prospect of a school adjacent to the park has changed the context of what was originally envisaged here. It is therefore 5

proposed to continue to consider with Planning how the park could be best configured while meeting the needs of all users in the area: the local community; the student community and the school community. However in order to take a view on whether the park could offer opportunities for school use, Planning would have to have some idea of emerging designs for the school, which cannot be undertaken until the design team is appointed. It is accordingly proposed that should the Council select this option, this would be the first job of the design team; to consider various permutations of how the school floorspace could be delivered, including the opportunity to reconfigure the park.

Part of this evaluation would include whether elements of the school floorspace could be delivered under the park, by utilising the natural fall in the site from the canal to Dundee Street. As a very minimum, it is envisaged that, should the school boundary continue to follow that set out in the consultation document, the pupils will naturally be active users of the park with the building opening out onto the park, and there is opportunity for dedicated environmental space created for the school within the park area.

Issues Most of the concerns regarding site size related to the provision of outdoor Raised sports facilities and the continued need to bus pupils off site to use facilities at Meggetland. The potential for using Harrison Park for sports facilities was also raised.

Council The Council is clear that it cannot deliver full size playing pitches for the Response school on the Fountainbridge site. Doing so would prevent it from delivering the priorities set out above of creating a mixed community for commercial and residential uses. In addition, it would prevent the Council from divesting a significant part of the site, which would be unaffordable. From a planning perspective, the provision of large pitches in this city centre location would not be appropriate.

However the development of the school on the Fountainbridge site would offer the opportunity to provide a significant improvement to outdoor sporting facilities that could be offered on the existing site. By providing an outdoor sporting space on a roof deck, a larger element of the curriculum could be offered here, instead of the requirement to be bussed to Meggetland for every outdoor sports requirement as would exist with the current site. The suggestion of using Harrison Park for pitches has been raised. While Meggetland is further away, Meggetland offers superior facilities in both pitch quality and changing rooms. However, should the possibility of developing a community based facility at Harrison Park be feasible, then this would also be open to the school to use who could adjust their travel to which ever facility best suited their needs. Accordingly, the option of a community facility at Harrison Park will be explored further to determine whether a viable proposal could be created.

Issues It was queried whether the school site could be extended into the Raised neighbouring land occupied by Kwik Fit.

Council The Council owns the land occupied by Kwik Fit, opposite Fountain Park on Response Dundee Street. It is not contiguous with the proposed school site, with other landowners being in control of the land in between. The land is subject to a long term lease from the Council to the current occupants which has over 90 years left to run. To try and relocate the current occupiers would be likely to introduce significant delay and cost to the school project. Accordingly it is recommended that the school project proceeds without consideration of this additional land.

Issues It was questioned whether, by designing a school for a smaller roll, space Raised savings could be made (given the fact the roll comprised less than 70% catchment pupils).

Council In terms of floorspace, there are certain facilities that need to be provided with Response any size of school. Accordingly, providing for a smaller roll does not result in a pro rata decrease in the size of the floorspace required; the decrease is likely to be at the margins.

It would not be desirable from an educational perspective to decrease the size of the school. The curriculum choices on offer are a factor of the size of the roll; to decrease the size of the school could have a negative impact on the extent of the curriculum on offer. The proposed size of the school, at 1,150 places, also future proofs the school for the time when it is expected that catchment numbers will rise.

Theme 3. Concerns about the new build option

Issues Concern was raised regarding the narrowness of Viewforth as the access to Raised the Fountainbridge site, particularly the narrow canal bridge with poor sight lines. Dundee Street was highlighted as a busy road.

Council The access route to the site and the narrowness of the bridge is Response acknowledged as being an issue requiring a design solution as part of the project. Planning have always envisaged new pedestrian routes being created through this area as part of the redevelopment of the wider area, including a new bridge link over the canal, and this becomes of increased relevance with the pupil population using this as a route. The design team, once appointed, will actively consider a new crossing point for the school should this option be selected by the Council. In addition, the design of this section of Viewforth itself will be considered to improve the pedestrian environment, and improve linkages between the western and eastern parts of the site. In terms of entrance locations, to take best advantage of its setting, the school is likely to open out onto the canal side and the park, away from busy roads such as Dundee Street.

Issues A number of respondents were concerned about the reputation of Raised Boroughmuir if it moved to what they considered to be a ‘downmarket’ location. Other respondents countered this by considering the Fountainbridge area to be an exciting opportunity.

Council The Fountainbridge area is on the outskirts of Bruntsfield; indeed it is the type Response of successful, vibrant community that already exists in Bruntsfield that the Council wishes to see extended into the Fountainbridge area. This is an area of regeneration and ultimately, as new uses develop here (of which the school would be one), it is anticipated that the nature of the area will change to being a successful neighbourhood which becomes one of Edinburgh’s destinations in its own right, capitalising on its canal side setting.

Issues Some expressed the view that the new site was not well located in terms of Raised public transport. One submission suggested the additional distance would increase the walking time by 20-25 minutes.

Council It is recognised that the Fountainbridge site is located further away from Response established bus routes than the existing site. However the distance between the school sites is just 430m, which is around five minutes walking time.

Issues Concerns were noted about the potential neighbours for school: Raised • Fountain Park as a poor neighbour;

• The canal as a health and safety issue; and

• The construction work adjacent to the Fountainbridge site.

Council It is anticipated that the nature of the Fountainbridge area will change as it is Response regenerated through new developments; the school and the student housing will be the initial catalyst for change.

With regard to the canal, the school will work with the Council and the Design Team to ensure that the landscaping of the site is such that adequate measures are taken to prevent or deter ingress to the canal. The school would also seek to reinforce with pupils the dangers of playing near and in water. The school is confident that their pupils would soon accept their new surroundings, including the canal, and that the number of related Health and Safety issues would be minimal.

One of the benefits of locating the school on the west side of Viewforth is that this whole city block will be developed out by the time the pupils move in; the student housing is due for completion in 2013, and the school would form the remainder of the development on this side of the road. Construction on the wider site will be contained within separate city blocks. The school is likely to be designed to face the quieter elements of the site (the park and canal side) which will also minimise the impact of construction noise on the school.

Theme 4. New building design

Issues It was hoped that the new building would offer opportunities for sustainable Raised features in its design.

Council The Council places great emphasis on the sustainable approach to new Response design, and will consider all appropriate features for a new build to embed sustainable principles. The design process will target significant improvement in the environmental performance of the new buildings over the existing. Every opportunity will be taken to utilise low and zero carbon technologies which will improve energy efficiency and reduce carbon footprint. The new secondary school will include appropriate renewable technologies and develop learning and school project opportunities as part of these installations. Throughout the design and delivery stages, the implementation of Council policies on sustainability and the climate change aims and reduction targets will be adopted. An energy centre, if proposed, would include a combined heat and power unit and the proposals will consider natural passive ventilation solutions to the main teaching areas. Sedum roofs may also be appropriate in a number of areas.

Issues Concerns were noted about how a rooftop pitch could be delivered without Raised affecting daylighting underneath, and how exposed the pitch might be to the winds/weather.

Council The Council has seen a number of good examples of how roof top pitches can Response be delivered: by locating them on the roof of the gym hall they can occupy a good sized space without compromising the daylighting of the space below. The examples included pitches which were on upper storeys but surrounded by masonry walls – these would provide shelter and, indeed, from the street did not look like a rooftop pitch.

Issues Forth Canoe Club indicated the potential to work with the school and deliver a Raised new joint facility on the school site.

Council The opportunity to capitalise on the canal side location with activities such as Response canoeing would be welcomed, and the Council will explore the potential synergies in more detail with the Forth Canoe Club.

Theme 5. Refurbishment and Extension as preferred option

Issues A number of responses (21 submissions) indicated support for the Raised refurbishment and extension option citing reasons of:

• architectural value engendering a sense of gravitas and the building’s role in school ethos; • the school’s place in the fabric of the Bruntsfield community and economy; and • the sustainability benefits of reusing an existing building.

Council It is recognised that the existing building for Boroughmuir represents a sense Response of tradition for the school. However, the building is not considered to offer a good educational environment at present and, even when upgraded, will still not be able to offer the optimal educational environment.

It is noted that all the reasons cited for retention of the existing building relate to history and tradition, and do not refer to educational environment in any way. This consultation is focussed on delivering the best educational outcome for the school; the new build has been identified as the Council’s preference for delivering the best educational environment. The consultation exercise has not elicited any points to support the refurbishment over the new build as the better educational environment, and accordingly the Council remains of the opinion that the refurbishment option does not offer the educational advantages that could be achieved with new build.

It should also be noted that the future of the Boroughmuir building will be one of continued use. Even if it was no longer used as a school it would be converted to an alternative use such as flats. The building is listed category B and will not be lost to the townscape of Bruntsfield.

Issues Respondents indicated they did not believe the refurbishment option would Raised take longer than the new build option to deliver.

Council Before full design work can start, a dimensional survey and structural survey Response would need to be undertaken. These could only be carried out when the building is unoccupied, which in itself introduces programme delay. The existing building also houses both an electrical sub station, which serves the school and some of the local area, and a gas governor. Both of these would require to be moved before the main construction works could commence. With the building being listed, listed building consent would also be required in addition to normal planning consent. Once on site major construction works to an existing building are inherently more difficult and are often subject to many unforeseen issues, including asbestos removal. Accordingly, the indicative programme for the refurbishment project has additional allowances built in to cover the aforementioned issues.

Theme 6. Concerns about the refurbishment

Issues A number of respondents indicated they did not support the refurbishment for Raised the following reasons:

• It would result in a compromised educational environment;

• There were additional costs associated with this option for no resulting gain;

• It was more likely to run over budget and take longer because of the uncertainty associated with using an existing building; and

• It was predicated on a decant which was ‘a waste of money’.

Council The Council concurs with these viewpoints which is why the new build was Response expressed as the preferred option. While a good educational environment can be created in the existing building, it would not be an optimal solution.

There are inevitably higher risks associated with a project that involves opening up an existing building and one that requires approval for any changes to the building because of its listed status compared with a new build on a cleared site. These risks would impact on the construction programme, potentially leading to delay, and increased project costs.

Also of concern is that any decant, no matter where to, would incur significant revenue costs at a time when the Council is faced with the need to significantly reduce revenue budgets. The source of this funding, were that to be required, has not been identified.

Theme 7. Objections to the decant proposal

Issues Over 90 respondents raised concerns about the prospect of any decant, Raised citing learning environment issues (temperature and acoustic problems); maintaining school ethos and morale and discipline issues.

The principal objection to the decant was the location, raising concerns about the length and logistics of travel to and from school; lack of participation in after school activities and friction with neighbouring schools.

Council It is recognised that the accommodation provided in a decant situation, no Response matter where located, cannot compete with the type of accommodation found in a permanent building. The proposal would involve a series of rows of two storey temporary units, plus a separate large space for a gym. The configuration alone would require outdoor movement between classes.

It is recognised that the Burdiehouse site is some considerable distance from the existing school and that travel logistics would be more than difficult than presently exist. An extensive search of options was undertaken prior to selecting this site, including those within the catchment, an analysis of which is referred to below.

Issues Respondents queried why other options could not be found for the decant. Raised The principal query was why the Fountainbridge site could not be used as a decant location. Other suggested decant locations included Darroch, Tynecastle, NHS sites (Astley Ainslie/Royal Edinburgh), Craighouse, Meadowspot park, Fairmilehead park, TUs on the current site and phasing the building works to reduce the need for decant.

Council It should be noted that in all cases, the educational compromises of a Response decant, along with the significant financial revenue burden it would bring, would apply no matter where the decant was located.

The Fountainbridge site was bought as an option for the delivery of a new build school for Boroughmuir, with the requirement to divest the remainder of the site as soon as possible in order to reimburse the Children and Families Capital Investment Programme for the purchase. If the site is not chosen for the school then the Council will immediately enter into negotiations to divest the entire site. To do so with a requirement for a 11 decant village located on part of the site until 2019 (i.e. almost seven years hence) would unnecessarily fetter any prospective developers ability to plan for the site’s development. This in turn would be likely to compromise the Council’s ability to secure best value in the rate of return for the land purchase. In conducting a land transaction such as this, a better price can be secured for an unconditional release of land. Accordingly it is not considered appropriate that a decant could be located on the Fountainbridge site.

With regard to other decant location options, the following applies. Given the extensive work to the existing building that would be envisaged under a refurbishment, it would not be appropriate to retain some pupils on site and work around in them in phases. Nor, given the constrained site, the extent of new build still necessary and the need for contractors compounds, would there be sufficient room to accommodate part of the roll in temporary units on-site. In addition, working around existing pupils in phases would extend the length of the construction period significantly. Accordingly a whole school decant would be necessary. This rules out options such as the Darroch building which, in additional to already being used as a decant location for part of the roll at James Gillespie’s and therefore unavailable, can only accommodate a maximum of 500 pupils, less than half of the Boroughmuir roll.

The old Tynecastle school building was previously considered as an option for the decant for James Gillespie’s. It was ruled out given the proximity of the new Tynecastle High School meaning that 2,000 pupils would be using the same access at the same time off the busy Gorgie Road. The same would apply for Boroughmuir. In any case, the buildings are in such a poor state that significant clearance and replacement with temporary accommodation would still be necessary.

Other sites were considered within the Boroughmuir catchment area and across the city. Sites outwith Council ownership, such as the NHS sites, Scottish Water site or Craighouse campus have risks associated with them as the Council would be dependant on a third party for bringing forward the site for use at the appropriate time. As this would be outside the Council’s control, there would be significant risks of the project being delayed if the sites were not made available in time. There would also be revenue costs associated with renting that land, which would be in addition to the significant costs of temporary unit rental which have already been identified. The fact that this land would be needed until 2019 would also fetter those particular landowners in their own plans for those sites.

The use of parks for the decant would come with its own disruption for park users for a three year period. The two parks suggested are both currently used as facilities for Buckstone and South Morningside Primary Schools, given their own constrained facilities on small sites.

Theme 8. Alternative sites

Issues It was suggested that the project should wait until an alternative new build site Raised emerged – suggestions included the Scottish Water site; Craighouse Campus and Astley Ainslie.

Council As described during the consultation, the Council has been looking for a new Response site for Boroughmuir for many years. Many, including those listed, have been explored in depth. Some have been excluded on affordability grounds (such as the Scottish Water site) and others excluded on both affordability and time grounds – they would only become available at a much later date, if at all. To continue to explore other options would inevitably lead to extensive delay to the project and jeopardise its entire delivery. The Scottish Government has approved the project funding with the expectation that the school would be delivered for the 2017/18 academic session; this could be significantly compromised if alternative sites were sought.

Theme 9. Catchment review

Issues Bruntsfield Parent Council raised concerns about expanding the catchment Raised area, given that new housing would be proposed both on the remainder of the Fountainbridge site and the former Boroughmuir site, should the new build be selected.

Some respondents asked for the catchment area to be extended to incorporate the entire Fountainbridge area to create a cohesive community as part of the redevelopment of this area.

Council The change to the catchment area is a necessary consequence of the new Response build proposal, otherwise the high school would lie (just) outwith its own catchment area. Should this option be chosen, the redevelopment of the existing high school building is likely to be for flats, although flatted developments tend to generate very few pupils (seven pupils per 100 flats on average). The Fountainbridge development would be expected to generate more pupils as it is expected that a mix of housing types would be delivered here. The numbers would be monitored to ensure there would be sufficient primary school accommodation in the area to cater for these new catchment pupils.

However, with regard to extending the size of the catchment area further, the proposed boundaries have been identified on the basis of having minimal impact. Further extension would affect Tollcross and James Gillespie’s schools, as well Boroughmuir, Tynecastle, Bruntsfield and Dalry. Any further changes would require a further full statutory consultation to be undertaken, and it is not proposed to consider further realignment.

Theme 10. Procurement route and quality of build

Issues Concern was expressed about the type of procurement and the perceived low Raised quality of the buildings achieved through PFI.

It was queried how long the new build could be expected to last and support indicated for the current building which had functioned for more than 100 years.

There were concerns that a full comparison between the options of life cycle costs had not been made and that the refurbishment option would perform better than the new build.

Council The procurement route for both options – refurbishment or new build - would Response be the same. This is a condition of the Scottish Government funding that would require a revenue based Design, Build, Finance and Maintain funding model to be put in place.

With regard to the quality of new build, it should be noted that even with the refurbishment option, the present building would be extended by almost a third again with new build accommodation. The design and build quality for either option would be to the highest standard.

The key to ensuring that both options are built for the long term future are the maintenance arrangements which are put in place. Under the proposed procurement route, the private sector partner will have an obligation to maintain, repair and renew elements of the building during the first 25 years. Therefore, the asset will be in excellent condition when returned to the Council thereafter.

Life cycle costs have been considered for both options over a 30 year period, with no significant difference being identified between them.

Theme 11. Consultation Process

Issues Some respondents felt that the consultation was biased towards the new build Raised option.

One suggested the purchase costs had not been included in the financial appraisal which skewed the benefits towards new build.

Council The consultation paper made it very clear that the Council’s preferred option Response is for new build for many reasons including delivering the optimum educational environment; avoiding educational disruption and being the better value option; reducing the time and cost risks to the project; and being the quicker option to deliver. This has been construed as bias from some respondents, but the Council views it as a simple statement of fact.

With regard to the respective costs of each option, all land purchase and build costs have been included, with the costs expressed as net costs. The new build remains the better value option. 14

Issues Boroughmuir Parent Council asked for more detail on the academic aspects Raised of the proposals.

Council All Staff were involved in early consultations around the Strategic Educational Response Design Brief (SEDB) of the new school; regardless of it being a refurbishment or a new build. Staff were asked to look at what type of spaces they saw being necessary to deliver a ‘Curriculum for Excellence’ effectively in any ‘new’ school. Staff looked at how to ‘future proof’ the teaching spaces that a ‘new’ school would deliver by looking at how they teach now and how they would like to teach in the future. The use of flexible/adaptable teaching spaces was a common theme along with well designed break out spaces that can be used for specific groups of learners in a variety of ways. Also the adjacencies of subject areas to allow effective interdisciplinary learning was explored and is a key outcome of the SEDB. The ability to get useable outdoor learning and sports facilities is also a common theme. The SEDB has been a major driver in the outline ‘shape’ of any ‘new’ building.

The Senior Management Team of the school believe that it is far better to have a building with the elements of 21st Century teaching and learning built in at source i.e. flexible spaces, break out spaces and outdoor space rather than trying to adapt existing spaces within the constraints of a listed building.

The school have expressed that they are highly excited by a new Boroughmuir High School being part of a new urban development on the canal side location of Fountainbridge. They are convinced it will provide a new dynamic to the school and provide an environment which is urban but with the canal and park being enhancing elements of this regenerated landscape. This can only enhance the experience for the pupils in terms of learning opportunities, learning environments and will also provide a social space around the school with a much softer feel than the highly constrained Viewforth site.

They believe the great tradition and reputation of Boroughmuir will only be enhanced in a state of the art new build, and are striving to make all pupils modern, relevant and adaptable for a life in the 21st century.

Issues One community council objected to the style of the consultation and sought to Raised gather the views of parents across the several communities affected.

One resident objected to not being formally consulted.

Council The terms of the consultation are set out in the Schools (Consultation) Response (Scotland) Act 2010, which prescribes who the Council should consult with. The Council has complied with this Act and indeed gone beyond the requirement set out in the Act which is to consult with parents whose children are either at the school or would be expected to commence at the High School in the next two years. The Council has conducted extensive consultation with all school communities in the school cluster as the proposal is wide reaching and would affect far more than just incoming cohorts in the next two years.

This is a consultation into the education merits of the proposals as prescribed under the Act. There will be formal consultation with the local communities, including neighbours, as and when proposals for the buildings are brought forward through the planning process. This would apply both to any new building at Fountainbridge and any changes proposed for the existing high school building.

Issues Bruntsfield Parent Council asked how much the school’s SMT position on the Raised proposals was informed by staff’s views within the school.

Council Staff at Boroughmuir have been kept informed of progress on all issues Response relating to the new school and were actively encouraged to express their views as part of the statutory consultation process. They were also made aware of, and welcomed to attend, the public meetings. Individual or departmental views were not sought by the Senior Management Team. It was felt that the response to the proposals should be a strategic educational response and as such was one that should be made solely by the Senior Management Team.

Issues Bruntsfield Parent Council questioned how much parental engagement there Raised would be as part of the ongoing design development.

Council To date, development of the brief has focussed on the pedagogical styles of Response the teaching profession and the type of environments best suited to learning. Views of the pupils have also been sought to give a user perspective. The next stage will be the appointment of the design team to start translating this brief into school designs. Initial engagement on these designs will take place with the teaching staff. This will be followed by a full public consultation, including parents, through the pre-planning process, prior to a planning application being submitted.

Issues Some queried the validity of the consultation process given the fact that the Raised Fountainbridge site had already been purchased.

Council If the new build option on the Fountainbridge site were to become a Response deliverable option, the Council had no choice but to make a purchase prior to conducting the necessary statutory consultation on the options. The sale of the site by Lloyds Banking Group was a competitive process conducted in less than four months in which the Council was just one of many bidders.

Were the Council to have conducted a six month consultation process in advance of purchase it would not have secured the site. Prior to making the purchase, the Council evaluated the options and considered that there were clear benefits of new build compared to refurbishment, which is why it expressed the new build as its preferred option. However, ultimately the Council could still decide to follow the refurbishment route and sell off the entire Fountainbridge site had the consultation exercise brought forward a significant degree of concern regarding the new build option.

4 Education Scotland

Legislative Context

4.1 The Schools (Consultation) (Scotland) Act 2010 requires that the authority refer the proposals to Education Scotland so that they may prepare a report on the educational aspects of the proposal. In producing their report, which is included in Appendix 4, Education Scotland considered the proposals of the authority as set out in the consultation document and the verbal and written responses received during the consultation period.

4.2 The Act requires that the Council’s consultation report include ‘a statement of the authority's response to Education Scotland’s report’. Some of the issues raised in the Education Scotland report were also raised by other respondents and the Council response is incorporated in Section 3 of this report.

4.3 Education Scotland state that the present building is no longer fit for purpose and this position has been repeated in successive inspection reports. They indicate that young people would benefit from significantly improved social and educational facilities in a building with well-resourced accommodation designed to promote flexible learning and teaching approaches consistent with Curriculum for Excellence, as set out in the Council’s specification.

4.4 They indicate that either option would bring a clear educational gain to young people compared with the present building. They state that the new build at Fountainbridge would be to the overall educational advantage of the young people involved. They would expect the option to deliver a high quality educational experience whilst avoiding any disruption caused by decant. They also recognise the continuity of provision for community users that this option would provide, rather than the programme being disrupted during a decant period. They indicate that this is their view despite the limitations of space and the continued need for young people to use Meggetland for part of their physical education programme.

4.5 In taking forward the new build proposal, they highlight two factors for particular consideration by the Council:

• Seeking to maximise the amount of space available at Fountainbridge for outdoor activity; and

• Minimising the impact of any potential traffic risks to young people.

4.6 With regard to the refurbishment option, they note the potential negative impact of the decant. Their concerns relate to the restricted educational experience; the limited social facilities for young people and the logistical and travel issues associated with the location in Burdiehouse. They also highlight that it would take longer for young people to benefit from an enhanced educational environment with the refurbishment than it would with the new build.

4.7 Education Scotland conclude by indicating that the educational benefits of the new build option clearly outweigh those of the refurbishment option.

Response to Education Scotland

4.8 The Council concurs with the views expressed by Education Scotland regarding the new build option clearly outweighing the benefits of the refurbishment option. There are two issues with the new build identified by Education Scotland, both of which are addressed in Section 3 of this report. The Council will continue to explore all possible options to maximise the space for the school on the west side of Viewforth, to allow the maximum available space to be offered to the school for outdoor activity. It should be noted that the park itself, even if not within the dedicated boundary for the school, can offer a significant potential resource for outdoor activity. The issue of pedestrian access to the school site is also one that will be actively examined, with the potential for a new pedestrian crossing of the canal explored. Both of these issues will be explored in detail as part of the design process for the school once the design team are appointed.

5 Statutory Consultation Conclusions

5.1 The response to the consultation has been significant and very strongly in favour of the establishment of a new school on the Fountainbridge site. There has been limited support for the refurbishment option, which has focussed on the history of the building rather than the educational environment that can be achieved. Education Scotland have considered the proposals and all the responses made to the consultation and concluded that new build on a new site offers clear advantages over refurbishment.

5.2 It is considered that the new school on the Fountainbridge site offers clear advantages including delivering the optimum educational environment; avoiding educational disruption; being the better value option; reducing the time and cost risks to the project and being the quicker option to deliver. Accordingly it is recommended that this option is approved as the way forward.

6 Project Update

Site size regulations

6.1 Legislation relating to school site sizes is set out in the School Premises Regulations 1967. These prescribe overall site sizes for schools of varying sizes. For a school of the size proposed for Boroughmuir High School, a site size of 2.6 hectares is prescribed. Many of the schools in the city do not meet the Regulations, and the existing site of Boroughmuir, at 0.9ha, is one of them. The proposed new site at Fountainbridge is a minimum dedicated site of 1.0ha, and new build here would present opportunities to maximise this space, through for example provision of decks for sports space and play.

6.2 As the proposed new site would not meet the Regulations however, the consent of the Scottish Ministers would be required to progress with this site. In line with the intent indicated in the consultation paper, following conclusion of the consultation process the Council wrote to Scottish Ministers to seek this consent in order to allow Council to have a clear position on this matter in advance if it’s decision. Scottish Ministers have now formally confirmed that it would be impractical to apply the standards of the 1967 School Premises

Regulations should the Council opt to relocate Boroughmuir to the site at Fountainbridge. Accordingly they have given their approval to the 1ha site applied for.

Site Assembly

6.3 Prior to the purchase of the Fountainbridge site, Elected Members were briefed regarding the fact that a site to the north of the land in Lloyd’s ownership, at the corner of Dundee Street and Viewforth (55-63 Dundee Street), lay under separate ownership and was outwith the land for sale. This corner plot forms part of the site consulted upon for school use. Negotiations have commenced with the landowner regarding the purchase of this site and will continue to endeavour to find a Best Value solution. However, Council should be aware that it may be necessary to commence procedures for a Compulsory Purchase Order (CPO) to secure the land for the school. The Education (Scotland) Act 1980 makes provisions for Councils in Scotland to acquire land for educational institutions and, as 55-63 Dundee Street is required for the new school, should the Council select this option it would be appropriate to promote the acquisition under this legislation. In advance of this the Council would, however, have to obtain Planning Consent for the School site. Should Council select Option A, new build at Fountainbridge as the approved project, and a negotiated purchase of 55-63 Dundee Street proves impossible, Council authority is sought to commence CPO proceedings under S20 of the Education (Scotland) Act 1980.

6.4 Considerable debate during the consultation centred on the site size and the use and configuration of the public park adjacent to the proposed school site at Fountainbridge. Discussions on this subject will continue with Planning once design proposals for the school start to emerge after the design team is appointed. The park itself, and the neighbouring access roads, which was a condition of the sale of the land from Lloyds are in the shared ownership between the Council and the owner of the student housing development. Once opportunities are identified, discussions can recommence with the shared landowners of this area of land to consider how these opportunities can be implemented.

Design team appointment

6.5 A selection process for a multi disciplinary, architecturally led design team commenced in December 2011 under the Official Journal of European Union (OJEU) procedures. A design team for both options was pursued to cover each eventuality of the outcome of the statutory consultation process. A very high level of interest was achieved including internationally recognised architectural practices.

6.6 The details of the tender process and associated outcomes are set out in Appendix 5. Following interviews of a strong shortleet for both options, the following appointments are recommended to the Council as being the most economically advantageous:

• Allan Murray Architects, should the Council select new build at Fountainbridge as the approved project; or

• John McAslan and Partners, should the Council select the refurbishment/extension option on the existing site.

6.7 The next action in accordance with OJEU regulations would be to notify all bidders of the results of the tendering process and start the mandatory 10-day standstill process for any feedback and/or challenge by the unsuccessful contractors before the actual contract was awarded.

Wider Fountainbridge site

Terms of Engagement of EDI

6.8 At its meeting on 24 November 2011, Council delegated authority to the Directors of City Development, Corporate Governance and Children and Families to consider and finalise the proposed involvement with EDI regarding the future development of the wider Fountainbridge site. This has not yet been concluded and this work will continue under that delegated authority.

6.9 Options for the future development of the remaining site have been reviewed in conjunction with EDI and their advisers appointed to consider the investment strategy for the site. Options evaluated include immediate sale; development through a joint venture partnering agreement; or direct development by EDI. This work is important given that future financial returns from any sale and/or development form a component part of the Business Plan for the new school.

6.10 Alongside the assessment of the development strategy, initial feasibility work has been undertaken by the Masterplan design team appointed by EDI to assess the status of the current Planning Permission in Principle (secured by Lloyds Banking Group in 2011). Initial work has been undertaken to evaluate how the Council’s wider aspirations can be delivered whilst also delivering the school on the west part of the site. It is proposed to discuss with elected members in more detail their priorities for the site to set out an overall development framework which will inform the most appropriate strategy for the site’s future development.

School project delivery mechanism

6.11 The school project is attracting a significant proportion of its funding from the Scottish Government’s Scotland’s Schools for the Future Programme; this is described further under the Financial Implications section. In order to comply with the requirements of the programme, the Council must follow a Design, Build, Finance and Maintain procurement route. There are two procurement routes to explore for the delivery of the project:

• Delivery through Hub South East; or

• Delivery through a Non Profit Distributing model as defined by the Scottish Government.

6.12 Both options are currently being explored in detail to establish which would be the better route for the delivery of Boroughmuir High School. It is proposed to report back to Council on the recommended route at a later stage in the project.

7 Financial Implications

7.1 The Scottish Government will provide funding of approximately two-thirds of the cost of construction of the new school based on the delivery of like for like facilities. Therefore, for example, any costs associated with the provision of a sports pitch would require to be funded 100% by the Council. They would not provide any support towards the cost of any land required for a new build option nor for any decant costs associated with the refurbishment/extension option.

7.2 In addition, there is a maximum level of funding which they will provide based on current capacity and an assumed construction cost per m2 and area per pupil. For a new build based on an assumed construction cost of £1,900 per m2 this would equate to funding of approximately £16.5m (before any provision for inflation, with a base date of Quarter 2 2011); the contribution for a refurbishment/rebuild option would be lower due to the lower construction cost.

7.3 The Children and Families Capital Investment Programme 2011-2015 currently includes £9.5m in 2014/15 of unallocated funding in respect of the Wave 3 Schools Projects. Beyond this timeframe the 10 year capital investment programme contains a further £7m allocation each year to the Wave 3 Schools Programme which, together with expected repayments of essential maintenance works from elsewhere within the capital budget, would leave net available funding for the Wave 3 programme of approximately £36m in the period to 2017/18 which would be available for the Boroughmuir project and the other remaining Wave 3 schools – St John’s Primary School and St Crispin’s Special School. This obviously assumes that the level of capital funding reflected in the capital investment programme is maintained.

7.4 The funding for the project from the Scottish Government will be a revenue based model and hard facilities management services will require to be provided under the contract as a condition of this funding. The options available to the Council will be a Design, Build and Finance and Maintain model procured through the South East Territory Hub Company, or a Non-Profit Distributing model procured through a competitive OJEU processes.

7.5 In either case, the Council would be required to cover the Hard FM (Facilities Management) and Lifecycle costs through an annual unitary charge over a period which is likely to be 25 years. This is similar to the existing PPP contracts, however, there would be elements of the unitary charge (such as their agreed proportion of construction costs, all Special Purpose Vehicle running costs and all financing interest and fees) which the Scottish Government would cover as part of their contribution. The capital contribution from the Council would be paid on completion of the build project.

7.6 It should be noted that either route will entail an additional revenue cost to the Council in future years which is as a result of the necessity to use this revenue based funding model. Such costs would not arise in this regular way on projects financed fully by capital funding (such as the new Portobello) for which the cost of ongoing hard FM and lifecycle would be accommodated as and

when the need was identified and based on the timing of expenditure being determined by the Council. As an illustration, the ongoing revenue costs in respect of the new James Gillespie’s High School which requires to follow the same funding model have been estimated at £400,000 per annum.

7.7 An initial appraisal of the project build costs has been undertaken based on the Council’s current experience with both Portobello and James Gillespie’s High Schools, to inform the relative financial aspects of the two options subject to consultation, referred to below. This assessment is set out below. However, full detail of the project costs will be further developed once an option is approved by Council, and the project team assembled to consider the design permutations of the approved project in more detail.

7.8 Both options have been costed using the same methodology; construction costs, fees, development costs and contingency. In addition to this, land purchase, disposal receipts, any necessary decant costs and anticipated Scottish Government funding have been factored in to arrive at comparable costs for each option. This results in the refurbishment option being £5m more expensive to deliver than the new build option.

7.9 The main cost for both options is the cost of construction. The cost per square metre used for Boroughmuir is above current school benchmarks and is considered to be sufficient to deliver the quality aspirations and design permutations for either option. It should be noted that the construction cost and associated Scottish Government funding assistance for the refurbishment option are lower than the new build to reflect the re-use of an existing building.

7.10 Within the overall cost comparison, the refurbishment option includes £7.7m of revenue costs associated with the decant, for which a budget has not been identified.

7.11 It should be noted that provision has been made for the acquisition of 55-63 Dundee Street within the outline business case for the delivery of the school. Any CPO costs would include the Council's legal costs, any compensation plus any reasonable surveyors and/or legal fees incurred by the owners.

7.12 Given that design development is required to examine the various design permutations that may emerge for the new school, for example, how the park may be incorporated within the school design under the Fountainbridge option, it is proposed that a further report will be brought to the Council at stage D; the submission of an application for planning permission. This report would give a project update and seek authority for the funding of the full project together with the estimated ongoing Hard FM and lifecycle revenue costs. It is accordingly recommended that approval is given to allocating funding of up to £1.25m to take the project to Stage D. This would be met from the Children and Families Capital Investment Programme. External sources of additional funding will also be explored to determine whether a viable proposal could be developed to enhance the community sports facilities at Harrison Park.

8 Equalities Impact

8.1 The Council has undertaken a consultation that meets the requirements of the Schools (Consultation) (Scotland) Act 2010 and, in doing so, has given the 22

parents and pupils of Boroughmuir High School and all the feeder primary schools, equal opportunity to have their say in the future development of the school.

8.2 This report has considered the issues raised during the consultation and, in doing so, has assessed the benefits and disadvantages of both options.

8.3 For these reasons, the overall equalities relevance score is 3 (out of a possible 9). Accordingly, a full Equalities Impact Assessment is not required.

9 Environmental Impact

9.1 The development of the entire Fountainbridge site represents the regeneration of a brownfield site previously occupied by heavy industry. The strategic coordination of this site's development could enable innovative responses to be delivered, for example shared heat sources across the site. Examining how sustainable measures can be incorporated into the school design will be an integral part of the design process. Sustainable principles will be fundamental to the design strategy, informing strategic decisions such as building orientation and ventilation strategies. Every opportunity will be taken to utilise low and zero carbon technologies, and focus on improving energy efficiency. The principles that might apply to the school design are set out in Section 3 of this report.

9.2 With regard to the existing high school building, it is envisaged that this will be sold for conversion into an alternative, viable use, securing its future for the long term.

10 Conclusions

10.1 Considerable support has been expressed through the statutory consultation exercise for the relocation of Boroughmuir High School into a new building on the Fountainbridge site. This option is also the clear preference of Education Scotland. It is considered that the new school on the Fountainbridge site offers clear advantages including delivering the optimum educational environment; avoiding educational disruption; being the better value option; reducing the time and cost risks to the project; and being the quicker option to deliver. Accordingly it is recommended that this option is approved as the way forward.

10.2 It is proposed that the first action of the design team is to consider how the site to the west of Viewforth is configured to maximise the potential for the school, whilst also respecting community use of this area.

11 Recommendations

11.1 It is recommended that Council:

(i) Approves new build on Fountainbridge as the project for the replacement of Boroughmuir High School;

(ii) Approves minor revisions to the catchment area of Boroughmuir, and Tynecastle High Schools and Bruntsfield and Dalry Primary Schools, as

set out in the consultation proposals, implemented from the academic year within which the new Boroughmuir High School will open;

(iii) Approves that a Compulsory Purchase Order is pursued if necessary to secure the site at the corner of Viewforth and Dundee Street under S20 of the Education (Scotland) Act 1980;

(iv) Approves the acceptance of the tender from Allan Murray Architects and that a contract be entered into with them as the design team to deliver the new school project on the Fountainbridge site;

(v) Approves a budget of £1.25m from the Children and Families Capital Investment Programme for design fees and other necessary costs to take the project forward to Stage D (submission of planning);

(vi) Notes the intention for a further report to be submitted to Council on the project status and budget at Stage D; and

(vii) Notes that the strategy for the future development of the wider site is progressing.

Billy MacIntyre Head of Resources, Children and Families

Appendices 1 Rationale for Proposals – Excerpts from the Consultation Paper 2 Record of Public Meetings 3 Summary of Consultation Submissions 4 Education Scotland Report 5 Design Team Appointment

Contact/tel/Email [email protected]

Wards affected City Centre; Colinton/Fairmilehead; Fountainbridge/Craiglockhart; Meadows/Morningside; Sighthill/Gorgie

Single Outcome Supports National Outcome 4 - ‘Our young people are successful Agreement learners, confident individuals, effective contributors and responsible citizens.’

Background Boroughmuir High School: Purchase of Fountainbridge Site and Papers Options for Future Development – Report to Council, 24 November 2011

APPENDIX 1

RATIONALE FOR PROPOSALS – EXCERPTS FROM THE CONSULTATION PAPER

The consultation paper released in February 2012 set out the options for the future location for Boroughmuir High School, together with the associated implications for each option. Excerpts from the paper are replicated below.

Option A – new building on the Fountainbridge site (Council preferred option)

Site description

The proposed new school site is located immediately to the west of Viewforth, adjacent to the canal and the proposed public park. The site is located less than 500m to the north of the existing school site. The site size is 1.3 hectares in total, including 0.3 hectares currently designated as public park space.

The site is bounded by Viewforth to the east, Dundee Street to the north, and to the south has a long frontage along the canal side. The other principal use of this block of land within the site will be student housing. The existing plan will see a public park being delivered alongside the school as part of the student housing development. It is the intention to review the exact configuration of this park as part of the revised master planning exercise. This particular area has been identified for the school from within the wider Fountainbridge site following consultation with the Council’s planning division.

The proposed building would be built to an overall space budget of 13,110 square metres. This equates to 11.4 square metres per pupil and is consistent with the space standards allocated to the other current Wave 3 secondary schools projects.

Educational advantages

• The new build offers the opportunity to fully respond to the Strategic Educational Design Brief, by creating a purpose designed building. It allows the optimum configuration of each faculty, setting the collaboration spaces at the heart of each faculty, and ensuring the desired adjacencies between subject areas can be achieved. • All the spaces created can fully meet the design brief requirements, including all room sizes and sports facilities. • The location offers the opportunity to create outdoor learning environments in the park. • The canal side location offers an excellent potential learning and sports resource for the school. • Outdoor sports facilities, in the form of a Multi Use Games Area or a seven a-side all weather pitch, could be delivered which, along with the indoor sports facilities, would meet almost all of the sports curriculum requirements. • It would allow for the school to move directly from the old building to the new facility, with none of the educational disadvantages associated with a decant. • The adjacency to both business and further education communities could offer the opportunity for excellent synergies e.g. the business faculty. • The enhanced facilities delivered by the completed project could be available to pupils and the community at least 1 year earlier than the refurbishment and extension option.

1 • There would be no disruption to community education programmes during the construction period.

• All school accommodation would be located on a single site.

Educational disadvantages

• This option will have limited on-site sports facilities and cannot deliver a full size pitch adjacent to the school. The school would continue to use Meggetland when it required access to a full size pitch. • The Fountainbridge site would entail a slightly longer travelling distance to school for many pupils albeit that for some this would be mitigated by the provision of bus passes.

Option B – refurbishment and extension of existing building

Site description

Boroughmuir High School is located on a small site (0.9ha), with the main school building being located fairly centrally on the site. The main building is supplemented by accommodation in a number of more recent ad hoc additions or stand alone buildings on the northern half of the site. Limited playground space wraps round the southern half of the main building. The main building is listed category B, which means its removal to make way for a new building is not an option. The main building currently offers just over 10,000m2 of space. The site is bounded on all sides by high density residential buildings, comprising four storey tenements and two and three storey town houses.

The accommodation is further supplemented by an annexe in St Oswald’s Hall in Montpelier Park, providing around 800 square metres of accommodation. This space delivers all drama facilities; examination accommodation; music and drama productions and other whole school events.

To deliver the accommodation requirements, the new school needs to have minimum available space of 13,110m2 which equates to 11.4m2 per pupil. With the removal of the various ad hoc additions to allow new build, the existing main building would be able to provide just under 10,000m2. A further 3,000m2 of new space would require to be built on the site to deliver the necessary floorspace.

Educational advantages

• It is considered that this option could provide a reasonably good fit with the Strategic Educational Design Brief. The majority of the faculties could be arranged appropriately within the new building, and opportunities are offered to create new collaboration spaces to enhance the learning environment. Many of the required adjacencies between subjects could be achieved. • There would be no change to the existing catchment area for any pupils albeit that the numbers of pupils affected by Option A are very small. • All school accommodation would be located on a single site.

2 Educational disadvantages

• One of the faculties (maths and science) will be difficult to fit within any single floorplate of the existing building. • Some classroom sizes are likely to be significantly compromised to fit with existing spaces. • The collaboration spaces are likely to be smaller, dispersed spaces, rather than a central, larger space in each faculty. • There are no opportunities to create any type of outdoor sporting facility. • It is difficult to envisage how any opportunities for enhancement to the outdoor learning environments could be achieved. • The requirement to introduce new buildings will further reduce the already limited outdoor space available on the site. • There are educational disadvantages associated with an off-site decant for three years, including the more limited learning environment that could be achieved in temporary buildings, and the risk of fewer extra curricular activities being achievable. • There would be disruption to the community education programme that is currently hosted by Boroughmuir High School – it is difficult to see where this could be accommodated in the centre of the city for the duration of the decant.

Proposed Site for new build school at Fountainbridge – Option A (Including Public Park)

3 Existing Site of Boroughmuir High School – Option B

APPENDIX 2

Record of Meeting

Consultation Meeting on the Proposals for the Location of Boroughmuir High School

The meeting was held on 5 March 2012 in Boroughmuir High School

Present:- There were approximately 50 members of the public.

In Attendance:- Tom Wood (Independent Chair), Billy MacIntyre (Head of Resources, Children and Families), Lindsay Glasgow (Asset Planning Manager, Children and Families), David Dempster (Acting Head Teacher), Jack Hamilton (Seconded Head Teacher), Alastair Wallace (Project Manager, Thomas & Adamson) and Riccardo Marini (City Design Leader, Services for Communities).

Introduction

Tom Wood explained that he had been invited by the Council as an independent person to chair this consultation meeting. The meeting was the first of four meetings being arranged as part of the consultation process on a proposal for the location of Boroughmuir High School. Officers from the Children and Families Department would be asked to give a presentation explaining the proposals in more detail and then to answer any questions.

Convener’s Statement

Councillor MacLaren, Convener of the Education, Children and Families Committee, stated that she was pleased to be at a consultation presenting two potential options for the location of Boroughmuir High School. The location of a new school for Boroughmuir had been a longstanding issue during her time as a Councillor which had been frustrating for staff, pupils and parents alike. A variety of sties had been discussed and debated over the years but none had come to fruition. Because of the previous problems in identifying a new site for Boroughmuir High School, the Council had taken the opportunity when the Fountainbridge site came up for sale, to purchase the site and then to consult on whether this was the best option for the school. Councillor MacLaren confirmed that the recommendation in the report was the Council officials’ recommendation and that the final decision would be taken by Councillors at the full Council meeting on 28 June 2012, whereupon the report including the results of the consultation would be considered. She asked all present to think ambitiously about what the school could be and what facilities it could have.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Presentation

Lindsay Glasgow (Children and Families) explained the background to the proposals. The Scottish Government in December 2010 had announced that Boroughmuir High School would receive funding support from the Scotland’s Schools for the Future programme. The Scottish Government’s expectation was that the completed school should be delivered by 2017/18 at the latest. An Investment Steering Group had been established to manage and progress the project and had identified two options which were thought to be the most appropriate solution; a new build on a new site or the refurbishment and extension of the existing building with an associated decant.

The two options were then outlined in more detail.

Option A – The Council had purchased the Fountainbridge site as a potential site for the new build school. The site was located on 430m from the existing school and was 1.3 hectares in total including 0.3 hectares currently designated as public park space. The size of the proposed Fountainbridge site did not comply with the relevant minimum school site size regulations from the Scottish Government but it was considered that a case could be demonstrated that the overall benefits of the proposal represented a significant improvement compared with the existing site. This was based on the opportunity to configure indoor space more effectively and use the site more efficiently so that the space was optimised for different uses. The proposed building would be built on an overall space budget of 13,100sqm and would accommodate a roll of 1,150 pupils. There was a potential for sport pitches on a roof deck as had been achieved successfully elsewhere in the UK particularly in London. The actual design for the school would only emerge following the conclusion of the consultation and the subsequent appointment of the design team. Access to full size pitches would remain at Meggetland. If the new build option was approved by the Council the timescale for full completion was the Summer of 2016. The new build option was the preferred option of the Council officials.

Option B - The second option was the refurbishment and the extension of the existing building. The existing building was located on a site of 0.9 hectares and was supplemented by an annex in St Oswald’s Hall in Montpelier Park. It would also accommodate a roll of 1,150 pupils on a floor space of 13,100m², but this would be achieved by extending the existing building. Access to all outdoor sports facilities would remain at Meggetland. Due to the extensive refurbishment works proposed, it would be necessary to decant pupils offsite for the duration of the works. The site of the former Burdiehouse Primary School had been proposed as the location of the decant site. This was principally due to the location on a bus route from the existing Boroughmuir catchment area. The decant site was located 4.3 miles from the Boroughmuir school building and it would be necessary to create a decant village on the site. Fountainbridge was not an option for the decant location as it had been purchased for the location of the potential new school and if it was not chosen for the school the Council intended to sell the site on as soon as possible. This option was expected to be completed by January 2018. 3

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

There were catchment implications associated with Option A as the Fountainbridge site currently lay just outside the high school catchment area. Two residential streets, Gibson Terrace and Murdoch Terrace would require to be added to the Boroughmuir catchment area which would have a knock on effect on the catchment areas of Tynecastle High School and Bruntsfield and Dalry Primary Schools.

The Council officials felt that the new build site offered far more educational advantages than the refurbishment and extension option. The design would be able to fully respond to the educational brief and offer outdoor learning opportunities as well as space for outdoor sports facilities. The refurbishment option would also fit the design brief and would allow the whole school to be located on a single site. It would also be a significant improvement on the existing facility. However it did compromise the educational space and the external social space and would create significant disruption through the decant.

The Scottish Futures Trust would be providing two thirds of the funding for the project on a like for like basis, up to a cost and space limit. They would not provide any support towards the cost of any land for Option A nor for any decant costs associated with Option B. It was estimated that the new build option would be £5m cheaper than the refurbishment, mainly as a result of decant costs of £7.76m. The Council had identified capital funding for the project, however, revenue funding for the decant would have to be found through budget savings.

The consultation exercise would run up to 30 March 2012 after which the Council would seek Education Scotland’s views. All comments which had been received and the points that had been raised at the meeting tonight would be considered and responded to in a report that would go to the full Council. The report would be published on 7 June 2012 and would be considered at the Council meeting on 28 June 2012.

Questions and Answers

Tom Wood invited the audience to ask questions of any representatives of the Council or to articulate any concerns they might have about any aspect of the proposals.

The questions and answers, in summary, were as follows –

Question 1 – Had any research been done on how the decant would affect the education of children taught in temporary classrooms?

Answer (L Glasgow) – It was very difficult to compare different cohorts of children who had gone through a decant and those who had not. A number of schools who had experienced a decant had been visited to ascertain the effects on pupil’s attainment but it was difficult to come to any conclusive results.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Answer (J Hamilton) – The most recent decant in Edinburgh was from St Thomas of Aquin’s where there had been no real negative or positive impact on attainment levels. He believed that the children of Boroughmuir High School would perform in almost any circumstance and should be able to learn effectively in a decant situation.

Question 2 – Why could the full site at Fountainbridge not be used for the new school? There was already a compromise before picking this option.

Answer (B MacIntyre) – There were two main reasons why the whole site could not be used, one was planning and the other was financial. When the Fountainbridge site came up for sale there were numerous discussions internally in the Council whether the site should be bought for a new school. This was coupled with the significant constraints on the Capital budget due to reduced funding. However, the Council felt that with the site available a fantastic development for the school could be accommodated.

Answer (R Marini) – The Fountainbridge site had been subject to master planning for a long time and the Planning Authority had approved a masterplan for that area. When the subject of a school being on the site arose, it did not comply with the planning objectives for that site. It was thought that a school on this site would mean that a mixed use for the site which created a vibrant, lively place could not be delivered. However, with an urban school which did not have “unfriendly” fenced playing fields with restricted access but a public green space instead, it would be able to provide a fantastic school and a vibrant lively place where people would want to live, work and visit.

Question 3 – What benefits are there in the refurbishment of the old school option compared to building a new school?

Answer (Billy MacIntyre) – The Council officials believed that the educational benefits of a new school far outweighed the educational benefits of the refurbishment option.

Answer (R Marini) – The benefit of refurbishing the old school was in maintaining the collective memories that exist with the school. The memories of people who had an understanding of what the school meant. The new build though provided opportunities and would provide a fantastic learning environment, using the canal adjacent to it and providing a destination which people would want to be a part of.

Tom Wood at this juncture asked a member of the public who had been involved in plans for refurbishing the school previously to provide his view.

Question 4 – I have concerns with the restriction of space at the new site and would encourage the Council to explore whether the park could be placed at the other side of the road with the current park area being utilised for the school. The school should not be compared, as we have seen today, with schools in London but with its nearest comparator. That would be James Gillespie’s School which was to be built on a large 5

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

site, surrounded by the nice shops of Bruntsfield rather than a tight site across the road from a bowling alley and a cinema. The sustainability of the old building was also excellent and would last far longer than the new build. I also can not understand why the refurbishment would take two years longer than the new build? If the Council did decide to go with the refurbishment option then the decant should take place on the Fountainbridge site.

Answer 4 (A Wallace) – The refurbishment option would take longer than the new build option for a variety of reasons. The refurbishment option would require Listed Building Consent as well as Planning Consent which would take longer to gain approval. In addition, on-site surveys would have to be undertaken such as structural and asbestos surveys. There also had been time built in for the refurbishment itself where issues such as moving an existing sub-station would involve dialogue with Scottish Power. Additional to that a refurbishment of an old building always contained unseen work which had to be planned for. The combination of these factors explained the additional two year period of time for the refurbishment option.

Answer (B MacIntyre) – The refurbishment option was more costly because of the decant and the need to build a temporary village. These costs had been produced and analysed by external consultants. In regard to the concern about the sustainability of a new building, the funding from the Scottish Government required that the building was fully maintained over that period. It was the Council’s opinion that the new building would last longer than 50 years and would be no less durable than the old building. The decant to Fountainbridge was not an option due to the significant financial burden of the site if it was not sold on immediately.

Question 5 – How well does the financial position of the new build stack up? How would the decant affect the pupils at the school and which option did the Senior Management Team of the school prefer?

Answer (B MacIntyre) – The Council believed that the new build would be considerably cheaper than the refurbishment option.

Answer (D Dempster) – David Dempster indicated that the School’s Senior Management Team’s preferred option was the new build. A considerable disadvantage of the refurbishment option was the need to decant to an area four miles away. The school had consulted with children and discussed the various options. Initially the children were split 50-50, on whether to go for the new build or the refurbishment option, but after hearing details of the decant almost everybody felt that the refurbishment option was unpalatable and supported the new build option.

Answer (J Hamilton) – In 2008, there was real interest in the refurbishment option due to the number of false dawns for a new site for Boroughmuir High School. The current school was tired and Roy Jobson (former Director of Children and Families) had previously stated that it was not fit for purpose. The refurbishment option did not provide adequate provision of school social space and there were great possibilities in a new site which could create a school for the 21st and hopefully 22nd century. 6

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Question 6 – The existing school, if properly maintained, would last considerably longer than the 50 years stated for the new school. You could possibly have two new schools within the lifetime of the existing building. Surely this made a difference to the cost comparison?

Answer (B MacIntyre) – The new school, if that option was chosen, would be high quality and would be engineered to last. The new build option was not a building for the short-term and there was no reason why it could not last as long as the existing school.

Question 7 – One of the advantages that had been talked about for the new location was outdoor learning opportunities. What did this actually mean?

Answer (D Dempster) – The current outdoor space and social space of the existing school was insufficient. The schools in London that had been recently visited were innovative and highly exciting. In one of the schools in Hackney almost every curricular area had an outdoor learning space. The new build option could allow field work near the canal, art classes on the roof terraces and would provide a new way of working for the children and the teachers. In discussions with Head Teachers in London, they all said it was a significant change for the children, providing them with further and new opportunities. The new build option for Boroughmuir was also not like the recent new builds in Edinburgh and would provide far more in terms of facilities and opportunities.

Question 8 – The refurbishment option seemed to be a practical solution that could maintain the collective history of the school. An urban school would change the ethos of the school and damage the society that had grown up around the school. This was not purely a financial or an educational issue and a range of factors would be damaged by choosing the new build.

Answer (B MacIntyre) – Finance was not the only reason that the Council favoured the new build option. However, the educational reasons were the overriding priority for the Council. Educational advantages of the new school far outweighed the refurbishment of the old school and it was the priority of the Council to provide a better education for the children.

Question 9 – I would request that the decant to Burdiehouse was reconsidered as it was a non-starter and meant that the refurbishment option would be rejected solely because of the decant. Additionally, St Oswald’s Hall in Montpelier Park was a useful resource and much could be achieved if this was included in the refurbishment option. 7

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Answer (B MacIntrye) – The Council officials had already explained why the Fountainbridge site had been discounted as a decant site and those reasons still stood but your point was noted. Neither option assumed the retention of St Oswald’s Hall, although its future had not yet been decided. This was because there was a wish to have the accommodation of the High School all on one site. In regard to St Oswald’s Hall the Council would be interested in hearing the public’s views on what its future should be.

Question 10 – I am unsure and unhappy about why the park had been included as an area of the school. I am still not convinced about the argument about it being an outdoor space for the school and originally I believed it was dedicated space for the school rather than a public park. Could you shed light on the circumstances surrounding the park?

Answer (L Glasgow) – A student housing development had gained planning consent for the area prior to the purchase of the land for the school. A condition of that consent was that there should be a public park in the vicinity. Since the option to site a school there had arisen further discussions were necessary with Planning to see what the options were surrounding the park. One of those options would be to investigate if there could be extra dedicated space for the school within the park. However, even if the space was not dedicated then the school was likely to open up into the park so it would inevitably be used by the school. Parents could be assured though that the officials in Children and Families would be pushing Planning to determine how much of the park the school could use.

Question 11 – I work for Historic Scotland and in my job I have come across many instances of successfully refurbished buildings. You have provided information on the new schools that were visited but have you visited any refurbished schools? Would the decant site be one with muddy fields with portacabins or would the high costs provide better accommodation?

Answer (J Hamilton) – Trinity Academy was an example of a refurbished school in a historic building. The benefit that Trinity Academy had though was space, which was one commodity that Boroughmuir did not have. Moreover, the specifications which could be provided by the new school would be far superior to those provided at Trinity Academy.

Answer (B MacIntyre) – The quality of the decant accommodation would be high. If this option was chosen there would be consultation with the school on facilities but he could confirm that there would not be a muddy site and there would be hard standing flooring.

Question 12 – Would the decant accommodation look like a school?

Answer (B MacIntyre) – The decant accommodation would look like a school and an example could be viewed in Aberfeldy. The quality of the decant accommodation was much improved over that available in previous years. 8

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Question 13 – I am concerned that the school roll was almost full and that consideration should be given to increasing the school roll.

Answer (L Glasgow) – The intake at Boroughmuir was currently 200 pupils per year and it was proposed that this remained at 200 per year. The school roll was currently high due to the higher stay on rates of pupils and many placing requests from non- catchment pupils. It was expected that school rolls would rise in the future but the school would be of appropriate size to accommodate all catchment pupils. It was not expected that the school roll would go above 1,150.

Question 14 – Was it not true that catchment pupil numbers may increase with the new school as parents chose the new school over private schools?

Answer (L Glasgow) – Council policy would be to accommodate all catchment pupils and this would be at the expense of the non-catchment intake. It was the Council’s aim that catchment pupils went to their catchment school.

Question 15 – Would the number 11 bus be subsidised and how would it cope with 1,150 children?

Answer (L Glasgow) – It was envisaged that the school children travelling to Burdiehouse would be going in the opposite direction to the main commuter traffic and it was considered that there would be sufficient capacity. The Council policy for free school travel would be applied, which meant that pupils who lived three or more miles away from the school would be issued with free bus passes. Pupils living in Bruntsfield and significant parts of South Morningside would be eligible for free travel.

Comment – The existing building was completely unique. There were not many buildings like this in Edinburgh and a refurbished building could provide a radical change but still maintain a historic building in its current setting.

Question 16 – Did the Council own the park and the area marked A in the map provided in the presentation?

Answer (L Glasgow) – The Council owned the area designated as a park and the two areas marked A which were both identified to be part of the new school.

Question 17 – Should we be letting the decant make the decision on whether we should have a new school or refurbish the old school? The Council should wait to see if it could find a superior decant site. Additionally, what was the plan for the existing building if the option chosen was the new build? 9

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 5 March 2012

Answer (B MacIntyre) – Burdiehouse was the best site that the Council currently had for the decant and it was not considered viable to hold on for an indeterminate period for a better decant site to become available. There was also an expectation from the Scottish Government that the Council deliver a new school and a need to do this sooner rather than later. The intention would be to sell the existing building and this had been included in the financial projections.

Question 18 – If the Council owned the whole site was there a possibility of using the area not earmarked for student housing?

Answer (B MacIntyre) – The Council only owned part of the site, which was the park area and that which was marked A on the map. The student housing and the area at the top of the site was owned by a party other than the Council.

Closing Statement by Councillor MacLaren

The Council was facing severe financial pressure over the next three years but there was an opportunity to provide the best possible school with the money that the Council had. The new building at Boroughmuir provided the opportunity for people to think big and to be ambitious and to fully take advantage of the Curriculum for Excellence. The design of the building should not define how it would be used but the use should define the design of the building. The most fantastic designs had been looked at which were completely different from anything else that existed in the city.

The Chair of the Parent Council stated that a range of different views had been provided tonight but it was clear that everyone had the best interests of the school and the pupils at heart.

Tom Wood thanked everyone for attending and for their contribution.

Record of Meeting

Consultation Meeting on the Proposals for the Location of Boroughmuir High School

The meeting was held on 6 March 2012 in Buckstone Primary School

Present:- There were approximately 80 members of the public.

In Attendance:- Tom Wood (Independent Chair), Bill MacIntyre (Head of Resources, Children and Families), Lindsay Glasgow (Asset Planning Manager, Children and Families), David Dempster (Acting Head Teacher), Jack Hamilton (Seconded Head Teacher), Alastair Wallace (Project Manager, Thomas & Adamson) and Riccardo Marini (City Design Leader, Services for Communities).

Introduction

Tom Wood explained that he had been invited by the Council as an independent person to chair this consultation meeting. The meeting was the second of four meetings being arranged as part of the consultation process on a proposal for the location of Boroughmuir High School. Officers from the Children and Families Department would be asked to give a presentation explaining the proposals in more detail and then to answer any questions.

Convener’s Statement

Councillor MacLaren, as Convener of the Education, Children and Families Committee, stated that she was pleased to be at the consultation and presenting two options for the location of Boroughmuir High School. This had been a longstanding issue during her time as a Councillor and it had been frustrating for staff, pupils and parents as a variety of sites had been discussed and debated over the years but had resulted in nothing. Because of the longstanding search for a new site for Boroughmuir High School, the Council took the opportunity when the Fountainbridge site came up for sale to purchase the site and then to consult on whether this was the best option for the school. Councillor MacLaren confirmed that the recommendation in the report was the responsibility of Council officials but that the final decision would be taken by Councillors at the full Council meeting on 28 June 2012 when the report, including the results of the consultation, was considered. She asked all involved in the discussions on the proposals for the location of Boroughmur High School to think ambitiously about what the school should be and what facilities it could have. 2

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

Presentation

Lindsay Glasgow (Children and Families) outlined the background to the proposals and explained that the Council had been looking for an appropriate site for Boroughmuir High School for a number of years.

In December 2010, the Scottish Government had announced that Boroughmuir would receive funding support from the Scottish Schools for the Future Programme. An Investment Steering Group had been established to oversee delivery of the project and an educational design brief had been developed. The Steering Group had identified two options: Option A – a relocation to a new building on the Fountainbridge site and an associated catchment change (this was the preferred option of the Council), or Option B – a refurbishment and extension on the existing site with an associated temporary decant to Burdiehouse.

The two options were then outlined in more detail.

Option A – The Council had purchased the Fountainbridge site as a potential site for the new High School. The site was located around 430m from the existing high school and comprised 1.3 hectares in total, including 0.3 hectares currently designated as space for a public park. The Council was currently investigating if it was possible to reconfigure the area set aside for the public park. The proposed new building would have a floor space of 13,100m² and would accommodate a school roll of 1,150 pupils. The Fountainbridge site did not comply with the minimum school size regulations from the Scottish Government, however, it was felt that the overall benefits of the proposal represented a significant improvement on the existing site. Access to full sized pitches would remain at Meggetland. There was potential to accommodate a sports pitch on the roof deck of the building as had been achieved successfully in some schools in London. A visit to London had shown that incorporating sport pitches on upper levels was a matter of course for many schools in urban locations. If approved, the timescale for the completion of the new build option was summer 2016.

Option B – was the refurbishment and extension of the existing school building. The existing building was located on a 0.9 hectare site. It would also accommodate a roll of 1,150 pupils on a floor space of 13,100m², but this would be achieved by extending the existing building. Access to all outdoor sports facilities would also remain at Meggetland. Due to the extensive refurbishment works proposed, it would be necessary to decant pupils offsite for the duration of the works. The site of the former Burdiehouse Primary School had been identified as the location for the decant, principally as it was on a main bus route from the Boroughmuir catchment area. The decant site was approximately 4.3 miles from the Boroughmuir High School building and it would be necessary to construct a temporary decant village. The Fountainbridge site was not an option for the decant as it had been specifically purchased for the potential new school and, if this option was not chosen, the Council 3

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

intended to sell the land as quickly as possible. If Option B was selected, the timescale for completion was January 2018.

The educational benefits of both options were then outlined. Overall the Council officials felt that Option A (new build) offered more educational benefits than Option B (refurbishment and extension).

Questions and Answers

Tom Wood invited the audience to ask any questions of any representatives of the Council or to articulate any concerns they might have about any aspect of the proposals.

The questions and answers, in summary, were as follows –

Q 1 – Why was no report provided on how to make the maximum potential of the site which did not appear to be much different to the current site, before the consultation process started? Was the proposed style of construction the best type to be provided in the site available?

Q2 – Why could more land not be made available and why were Finance and Planning considerations taken into account and no detailed report on these matters provided?

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

Q3 – Why were urban schools in London looked at and not those in the Edinburgh and surrounding areas and what where the actual financial projections for the development?

Answers 1, 2 and 3 – Billy MacIntyre indicated that the approach taken to the design development had been school driven. He explained that this was the maximum size of the site that was available and that the Council had had to move at a quick pace in assimilating a business plan and taking this forward to secure the site. He indicated that they had undertaken some of the work on the maximum size of the site available before the consultation commenced. This had been inconclusive and he had taken the view to take a bit longer and carry on this work while the consultation ran in tandem would provide the best result by exploring all the options available. It was important to move the project forward and if they delayed the consultation until June this would then delay the project start by three to four months. He indicated that the refurbishment project would be more expensive and that if the Fountainbridge land was not used for new build it would be sold and committed to funding new schools. He stressed that they had inspected schools in London to see what opportunities there were to do something different and that it was not about attainment or achievements within those schools. It was not possible for the Council to obtain additional land as they were constrained by financial implications.

Riccardo Marini explained that the development was constrained by its very urban location and they were eager to provide the very best environment possible. He indicated that a single or two storey school within an urban context would not be suitable for the area and that this was an opportunity to deliver a fantastic learning environment.

Q4 – How could parents be asked to make a decision on ideas on what “might” be possible as there were no guarantees and no in-depth thought as to how the outdoor space may be used?

Q5 – What approach was being taken for long-term needs and the maximising of space?

Q6 – Would it be possible to purchase a larger part of the site available?

Answers 4, 5 and 6 – Billy MacIntyre indicated that at the moment there was no design for either new build or refurbishment of the old building. They were unable to give guarantees of what may be possible but there was sufficient capital investment set aside to deliver a fabulous school. The costings had been based on the projects at James Gillespie’s and Portobello. He indicated that the need for the future had been driven by the school (Head Teacher/Pupils/Parents/Staff). At the moment they had received 35 notes of interest from throughout the world from various Companies interested in acting as the design team for the project. He stressed that the Council were dealing with a number of factors that would determine what would happen next and at the moment it would be wrong of them to set expectations that could not be delivered. 5

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

Riccardo Marini explained that he felt that it could be one of the best new school projects as it responded to the needs of the users and area surrounding. He felt that it had the potential to be a creative use of the site. He also explained that the idea of providing a sports pitch on the roof of one of the buildings had been met with sceptism but this was an element which was provided worldwide and he felt that this could provide some of the best facilities on the size of site available.

Q7 – Can we not make the new building even better by having sports facilities available on site?

Q8 – Do we expect to sprout temporary huts in the area surrounding the new school?

Q9 – Did they anticipate any problems with continuing the use for sports facilities at Meggetland?

Answers 7, 8 and 9 – David Dempster advised that at the moment 60% of sports facilities were provided off site and that a new campus would mean that they had room for improvement of this. If they were to agree the project for refurbishment of the current site it would deliver a vastly improved school but not sports facilities. A new facility would work well with the use of more outdoor space but the school would always have to use Meggetland for its sports facilities. He indicated that attainment at Boroughmuir was good and could improve and it was their intention to integrate technology at the design phase.

Jack Hamilton indicated that it was important that physical education was provided for all pupils and he stressed that the building of a new school would be a great opportunity for the physical health and wellbeing of all pupils. He advised that they did not require huge facilities on campus and Meggetland would enhance the provision available there.

Q10 – While supporting a new build it had been disheartening to hear that a previous consultation meeting had been reluctant to accept this.

Q11 – At the moment the school roll stood at around 1,128, would a new building have the flexibility to increase this?

Q12 – The school at Boroughmuir was currently about 99 years old and with the introduction of the curriculum for excellence the way of teaching had moved to five facilities, what risks to the building were there for going down this line?

Answers 10, 11 and 12 – Lindsay Glasgow indicated that Boroughmuir currently had an intake of 200 pupils at S1 per year. There were currently a significant number of out of catchment pupils and they did not foresee a problem in the future for catchment area pupils. It was expected that the roll would sit at around 1,130 with a maximum capacity of 1,150.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

David Dempster indicated that the school had moved to a formal faculty structure in the past month which meant at the moment they had 10 faculties. He felt that this would give more flexibility to learning with cross departmental and cross curriculum work across subject areas.

Jack Hamilton provided his support to Head Teachers in the change to faculty working to support the structures for the Curriculum for Excellence. He stressed that this was a great opportunity for Boroughmuir High School to put the faculties together within a brand new building.

Riccardo Marini indicated that Portobello and James Gillespie’s had moved from standard classrooms to much more social spaces.

Councillor MacLaren advised that she sympathised with worries regarding the space on site. She indicated that the first recommendation had been that the Council should only bid for part of the site but that it had then been agreed to bid for the whole site. The planners were to be flexible in their approach and investigate the possibility of sharing facilities such as libraries/drama/sport.

Q13 – Whichever option is chosen, can it be guaranteed that the education of the children will not be compromised during the project?

Q14 – What are the problems of building a sports facility on top of the building regarding light entering the building and are there any problems regarding car parking availability at the proposed new facility.

Q15 – Is it anticipated that revenue could be generated at the new building by the use by local community of the building?

Answer 13, 14 and 15 – David Dempster explained that there would be little disruption if a new build was to be provided. If however they were to agree to refurbish the current building the pupils would be decanted for four years. He indicated that St Thomas of Aquin’s had been decanted during their rebuild and attainments had not reduced. However, he expressed concern at the use of portacabins in the long-term and would prefer if that could be avoided.

Jack Hamilton indicated that over the past 12 years they had maintained the building and facilities to the best of their ability and at the same time Boroughmuir had been the highest attaining school in the City of Edinburgh. He stressed that the building of a brand new school could provide fantastic opportunities for something great in the future.

Lindsay Glasgow explained that they would be investigating the avenues for car parking within the area and that this would be done in conjunction with the school at the detailed design stage and looking at the various levels of the site. 7

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 6 March 2012

Billy MacIntyre indicated that the Council were taking a large leap of faith and that had already been shown with the purchase of the site. It was clear that parents would prefer more space on the site and therefore it would be up to the design team to seek to maximise the best potential for the school’s benefit.

Conclusion

Tom Wood thanked everyone for attending and their contribution to the debate. He reminded everyone that the consultation process would run up to 30 March 2012.

The Parent Council Chair thanked everyone for attending and their respective contributions to the debate which she felt had been very useful.

Record of Meeting

Consultation Meeting on the Proposals for the Location of Boroughmuir High School

The meeting was held on 13 March 2012 in South Morningside Primary School

Present:- There were approximately 100 members of the public.

In Attendance:- Tom Wood (Independent Chair), Billy MacIntyre (Head of Resources, Children and Families), Lindsay Glasgow (Asset Planning Manager, Children and Families), David Dempster (Acting Head Teacher, Boroughmuir High School), Jack Hamilton (Seconded Head Teacher), Alastair Wallace (Project Manager, Thomas & Adamson), Riccardo Marini (City Design Leader, Services for Communities) and Morris Smith (Committee Services).

Apology – Councillor MacLaren (Convener, Education, Children and Families Committee).

Introduction

Tom Wood advised that he had been invited by the Council to act as an independent Chair of the consultation meeting. This meeting was the third of four meetings being arranged as part of the consultation process on the proposal for the location of Boroughmuir High School. He welcomed members of the public and officers to the meeting and explained that it was his intention to make sure that as many members of the public as possible had a chance to ask questions of the officials present.

He explained that officers from the Council would give a presentation outlining the proposals in more detail and then members of the public would be given an opportunity to ask any questions.

Presentation

In December 2010, the Scottish Government had announced that Boroughmuir would receive funding support from the Scottish Schools for the Future Programme. 2

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

An Investment Steering Group had been established to oversee delivery of the project and an educational design brief had been developed. The Steering Group had identified two options: Option A – a relocation to a new building on the Fountainbridge site and an associated catchment change (this was the preferred option of the Council), or Option B – a refurbishment and extension on the existing site with an associated temporary decant to Burdiehouse.

The two options were then outlined in more detail.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

The educational benefits of both options were then outlined. Overall the Council officials felt that Option A (new build) offered more educational benefits than Option B (refurbishment and extension)

Statement by the Acting Head Teacher of Boroughmuir High School

David Dempster advised that he had been liaising closely with the Parent Council regarding the proposals for the high school. The school’s Senior Management Team fully supported the new build option (Option A). Given the choice between refurbishment and a brand new bespoke building he would prefer the new build option as issues such as ICT could be incorporated into the construction. He had spoken to Head Teachers from other new schools all of which had been very enthusiastic about their new surroundings. Moreover, they had indicated that it had revolutionised the way they, and their school, worked. On the visit to London he had seen many new school buildings on tight urban sites and he was convinced that the new build was the correct option for Boroughmuir. If he had any doubts, the decant option had made up his mind as it would be totally unpalatable for him and his pupils.

Statement from Seconded Head Teacher

Jack Hamilton felt this was a fantastic opportunity for Boroughmuir and his preferred option would also be for the new build option. This offered the possibility of creating 21st century facilities from scratch without the need for a decant. In his opinion, the decant could have a negative impact on attainment levels at the school. 4

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

Questions and Answers

Tom Wood invited the audience to ask any questions of the officials present or to articulate any comments or concerns about any aspects of the proposals.

The questions and answers, in summary, were as follows:-

Questions/Comments

Q1 – One of the presentation slides showed the different school faculties and their relationships. How does this fit in with the slide showing the building on the Fountainbridge site being split into one main building and other ancillary buildings?

Q2 – What is the life expectancy of the new building?

Q3 – Why can’t the public park area be incorporated into the school proposal?

Answers 1, 2 and 3

Lindsay Glasgow explained that the drawing showing the buildings on a split site at Fountainbridge was only indicative. A design team had not yet been appointed so it was still possible for the school to be configured into a single building. It was the officer’s view that some faculties could be provided in ancillary buildings and the dining facility in particular might work well if located beside the canal.

David Dempster advised that he was not keen on satellite buildings and there was still much work to be done on the design of the new building. The split nature of the building shown in the presentation slide would not be his preferred option.

Jack Hamilton advised that a campus style layout was being proposed for the new James Gillespie’s High School and the nearby George Watson’s College also had some satellite buildings. He suggested that art, drama and music might work well in a separate building. However, he stressed that at this stage nothing had been determined as regards the layout of the new building.

Alastair Wallace advised that the new building had been modelled on a 50-60 year life cycle. The building would be subject to a 25 year life cycle maintenance contract before being handed back to the Council. Riccardo Marini pointed out that the structural elements of the new building should last much longer if maintained properly.

Lindsay Glasgow explained that the area designated as a public park space was as a result of a planning condition for the nearby student housing. This consent was in place before the site for the school had been purchased. A consultant had been engaged to revise the master plan for the entire Fountainbridge area and the Council would look at the possibility of reconfiguring the park as part of that process.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

Q4 – Assuming the park could be reconfigured, was the Council committed to delivering a replacement green space of the same size?

Q5 – Part of the children’s school day is spent off-site. Has any thought been given to where the children will spill out to?

Q6 – The virtues of the refurbishment option had not been put forward vigorously enough. The new building seemed extremely constrained compared to the proposal for the new James Gillespie’s school. There was no reason why the Council could not allocate the site at Fountainbridge as the decant site and still sell the site at a later date. Also, there did not appear to be any reason why Option B should take 18 months longer than Option A.

Answers 4, 5 and 6

Lindsay Glasgow explained that she would be speaking to the Planning Division to see what was required in terms of a replacement park. It was hoped that the size of the park could be reduced with further space provided on the other side of the road to school site. However, this would have to be looked at in greater detail.

David Dempster indicated that it was the school’s desire to encourage children to remain onsite by providing improved catering facilities with more desirable menus. He was convinced the new site was the better option particularly as the current site was surrounded by residential properties on three sides which occasionally led to conflict with residents.

Jack Hamilton advised that many of the schools they visited in London did not allow pupils out at lunchtime at all. He felt it was important to educate the children to manage their behaviour and be respectful of their surroundings.

Riccardo Marini explained that there were often tensions between schools and local residents in urban settings. If the school was to be built at the Fountainbridge site there would be an opportunity to create a new mixed use neighbourhood consisting of the school, shops, offices and houses. The canal was a fantastic resource and the school would enhance the area significantly.

Billy MacIntyre confirmed that, for educational reasons, the officers’ preferred option was the new build. He disagreed with the suggestion that the James Gillespie’s site was far larger and pointed out that it had its own constraints and had also not been able to accommodate a full sized sports pitch. The reason the refurbishment option would take longer was because issues around obtaining listed building consent would significantly delay the project. If the Fountainbridge site was not utilised for the new build it was important that it was sold on quickly, otherwise the capital would be tied up and not available for other important educational projects.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

Q7 – The park did not appear to offer much utility therefore it made sense to relocate it to another part of the site. Given the Council’s previous history on contracts, it was unlikely the new school would be provided on budget so why not just use the Fountainbridge site for the decant?

Q8 – How long would planning or the landowners be given to sort out the issue of the park?

Q9 – What is the land to the right of the proposed school site to be used for, and what is the process for the decant?

Answers 7, 8 and 9

Billy MacIntyre advised that it was his responsibility to make sure that the school was provided on budget. The new schools for Portobello and James Gillespie’s were currently under-budget and he was confident that the budget set-aside for the new Boroughmuir High School was sufficient, based on the budgets for those other two schools.

Lindsay Glasgow reiterated that the Council was keen to reconfigure the park but highlighted that it had its challenges. Dialogue with the planners was scheduled to start later this week. Discussions would also be held with the consultant engaged to revise the master plan. The master planners were required to set the boundaries of the school by the end of June 2012 and a large amount of effort would be put into resolving the issue of the park. With regard to the question about land to the right of the school site, this section was included in the existing master plan and planning permission had been granted in principle for a number of uses such as commercial and residential use.

The site of the former Burdiehouse Primary School had been identified as the location for the decant. The previous primary school building had now been demolished. The site was located approximately four miles from the current High School building. It was envisaged that portacabins would be provided to act as temporary classrooms, with a separate gym facility. The Council had looked at a similar decant in Aberfeldy which had worked very well. Pupils would be asked to use the number 11 bus service with the decant site located a ½ km walk from the bus stop.

Jack Hamilton pointed out that the decant area would be outwith the school catchment area and one serious disadvantage was likely to be the provision of basic facilities.

Q10 – Are there any plans to make major changes to the current Boroughmuir catchment area?

Q11 – The most important thing was to do what was right for the children in the area. As all the major areas of concern were within the Council’s control it was important 7

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

that the children were not denied the correct outcome because of issues that the Council could, and should, have resolved.

Q12 – Has the impact of the Craighouse residential development been taken into consideration?

Q13 – How far did the size of the school deviate from the Scottish Government’s regulations?

Q14 – Could the Council exercise its statutory powers to acquire adjacent sites to the left of the proposed school site for use as part of the school?

Answers 10, 11, 12, 13 and 14

Lindsay Glasgow confirmed that the slight changes to the catchment as a result of the Fountainbridge site would affect less than 5 pupils. She confirmed that there were no plans to make any major changes to the remaining Boroughmuir catchment area. With regard to the Craighouse development, the Council expected it to generate approximately 20 children which the school would be able to accommodate as catchment children.

The regulations stated a size of site for a 1150 pupil school roll would be 2.6 hectares, which was larger than the proposed new site and bigger than the existing school site. She pointed out that the new school would not simply replicate existing spatial configurations but offered an opportunity to optimise space to the curricular and organisational requirements of the school.

While the Council did own the land to the left of the school site boundary, these buildings had been let on a 99 year lease. It was possible that they might become available in future, however, there was very little opportunity at the moment and it would be advisable not to delay the project.

Billy MacIntyre reiterated that this was a once in a lifetime opportunity for the school. He accepted that the space at Fountainbridge was less than people had wanted, but the Council was doing its best to work within the parameters and constraints of the site. The focus of Children and Families was to provide the best facilities for the children of Boroughmuir.

Q15 – I have concerns about the possible disruption to children from the proposed decant. What facilities would the Burdiehouse site provide for science, music and sport?

Q16 – Why are the master planners not present at this meeting to answer questions?

Q17 – Could St Crispin’s Special School also be included as part of the development on the Fountainbridge site?

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

Q18 – Can a straw poll be taken on both the options being proposed? Answers 15, 16, 17 and 18

Lindsay Glasgow advised that as the former Burdiehouse Primary School had been demolished, there was no possibility of using any of its previous facilities. If the decant was to go ahead, appropriate facilities for music, science and sports would be provided.

Billy MacIntyre advised that the master planners had not been invited to this meeting as it was primarily a consultation about the educational benefits of the proposed move. The master planners would be looking at the issues raised at the four consultation meetings, taking into account the competing drivers for the overall Fountainbridge site.

St Crispin’s was on the Wave 3 school’s project but was ranked fifth out of the five sites identified. It would not be possible to incorporate St Crispin’s within the site identified for Boroughmuir.

Tom Wood agreed that a straw poll of the two options would be a good idea and indicated that he would conduct a poll at the conclusion of the meeting.

Q19 – The current catchment roll at Boroughmuir is around 770 pupils. Is it an option to build a smaller school to accommodate a roll of say 900?

Q20 – I am not sure that Option B has been fully explored or that the Council has looked closely enough at using the Fountainbridge site for the decant. I have visited the site of the Aberfeldy decant which works very well, so do not be put off by the thought of using portacabins as temporary classrooms.

Q21 – It has been stated that the proposed new site is smaller than the Scottish Government regulations. Does the school meet the Head Teacher’s needs and, if not, is it constrained by site, budget or planning issues?

Answers 19, 20 and 21

Lindsay Glasgow explained that building a smaller school would mean that some of the existing children who currently attended Boroughmuir would have to be relocated. It was not Council policy to uproot children mid-year. Even if the size of the school was reduced to accommodate 900 pupils, it would not save much floor space as many of the same facilities would have to be provided.

Billy MacIntyre felt that Option B had been fully explored by the Council. As he had previously explained, using Fountainbridge for the decant would tie up funding that could be used for other educational projects.

While the overall school site did not meet the minimum Scottish Government standards, each pupil would be provided with 11.4m² of space. This was in excess of 9

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

the Scottish Government standard of 11m² per pupil. He was aware of some schools in other parts of the country who were only delivering 9m² per pupil and he was very happy with the levels of space being provided which was similar to the levels at the new Portobello and James Gillespie’s High Schools.

David Dempster pointed out that the current Boroughmuir site had a floor space of approximately 10,000m² whereas the new site would be providing a significantly greater floor space of approximately 13,100m².

Jack Hamilton advised that he had previously been offered the possibility of refurbishment if the school roll was reduced. This offer had been refused on the grounds that it would result in a reduction in teaching posts and school facilities, with the breadth of curriculum on offer being reduced.

Q22 – The local boating club was looking to secure new facilities along the canal which they would be happy to let the school make use of.

Q23 – I note that as part of the decant proposals it is suggested that children use the number 11 bus service out of town. It is my experience that this service is very busy and will almost inevitably result in an increase in the school run. As the children from Boroughmuir would be out of the catchment for the Burdiehouse area, could it result in conflict with the other children in the area?

Q24 – Is there an Option C, i.e. to wait for another, better, site to come along?

Answers to questions 22, 23 and 24

Lindsay Glasgow welcomed the offer by the boating club but pointed out that it would for the school to determine if they wished to take up the offer. She accepted that the decant would be difficult and that issues of transport and potential problems that may arise from the mixing of the children from the Gracemount catchment area would have to be addressed.

If the Council waited for a new site to come along it could possibly be another generation before anything suitable was identified.

Straw Poll

Tom Wood referred to question 18 above where he indicated that a straw poll would be taken at the end of the meeting. He asked the public present to indicate their preference for the two options. On a show of hands the majority favoured the new build at Fountainbridge (Option A).

Following the straw poll it was suggested that a further option should have been presented which would have been a refurbishment and extension of the existing building with a decant to Fountainbridge. Slightly more hands were shown in favour of this scenario but the majority continued to favour new build. 10

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 13 March 2012

Conclusion

Tom Wood thanked everyone for attending and their contribution to the debate. He reminded everyone that the consultation process would run up to 30 March 2012.

Elizabeth Grierson (Head Teacher, South Morningside Primary School) also thanked everyone for attending and for their respective contributions to the lively debate.

Record of Meeting

Consultation Meeting on the Proposals for the Location of Boroughmuir High School

The meeting was held on 14 March 2012 in Bruntsfield Primary School

Present:- There were approximately 90 members of the public.

In Attendance:- Tom Wood (Independent Chair), Billy MacIntyre (Head of Resources, Children and Families), Lindsay Glasgow (Asset Planning Manager, Children and Families), David Demptster (Acting Head Teacher, Boroughmuir High School), Jack Hamilton (Seconded Head Teacher), Alastair Wallace (Project Manager, Thomas and Adamson), Riccardo Marini (City Design Leader, Services for Communities), Carol-Anne Kyle (Head Teacher, Bruntsfield Primary School) and Blair Ritchie (Committee Services).

Apologies – Councillor MacLaren (Convener, Education, Children and Families Committee).

Tom Wood welcomed everyone to the consultation meeting, the last of four such meetings. The purpose of the consultation process was to discuss the proposals for the relocation of Boroughmuir High School. There had been good, robust debates at the previous meetings. He explained his role as the Independent Chair which was to ensure that everyone present was given the opportunity to express their views. He described the process whereby officers from the Council would give a brief presentation, outlining the proposals in more detail and then members of the public would be given the opportunity to ask questions.

He explained that there had been many questions for the School Management Team as the parents of school children were keen to find out what the school establishment thought of the proposals.

Presentation

In December 2010, the Scottish Government had announced that Boroughmuir would receive funding support form the Scottish Schools for the Future Programme. 2

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

An Investment Steering Group had been established to oversee delivery of the project and an educational design brief had been developed. The Steering Group had identified two options: Option A – a relocation to a new building on the Foutainbridge site and an associated catchment change (this was the preferred option of the Council), or option B – a refurbishment and extension of the existing site, with an associated temporary decant to Burdiehouse.

The two options were then outlined in more detail.

Option A – The Council had purchased the Foutainbridge site as a potential site for the new High School. The site was located around 430m from the existing high school and comprised 1.3 hectares in total, including 0.3 hectares currently designated as space for a public park. The Council was currently investigating if it was possible to reconfigure the area set aside for the public park. The proposed new building would have a floor space of 13,100 square metres and would accommodate a school roll of 1,150 pupils. The Foutainbridge site did not comply with the minimum school size regulations from the Scottish Government, however, it was felt that the overall benefits of the proposal represented a significant improvement on the existing site. Access to full sized pitches would remain at Meggetland. There was potential to accommodate a sports pitch on the roof deck of the building, as had been achieved successfully in some schools in London. A visit to London had shown that incorporating sport pitches on upper levels was a matter of course for many schools in urban locations. If approved, the timescale for the completion of the new build option was summer 2016.

Option B – was the refurbishment and extension of the existing school building. The existing building was located on a 0.9 hectare site. It would also accommodate a roll of 1,150 pupils on a floor space of 13,100 square metres but this would be achieved by extending the existing building. Access to all outdoor sports facilities would also remain at Meggetland. Due to the extensive refurbishment works proposed, it would be necessary to decant pupils offsite for the duration of the works. The site of the former Burdiehouse Primary School had been identified as the location for the decant, principally as it was on a main bus route from the Boroughmuir catchment area. The decant site was approximately 4.3 miles from the Boroughmuir High School building and it would be necessary to construct a temporary decant village. The Fountainbridge site was not an option for the decant as it had not been specifically purchased for the potential new school and, if this option was not chosen, the Council intended to sell the land as quickly as possible. If Option B was selected, the timescale for completion was January 2018.

There were catchment implications associated with Option A as the Foutainbridge site currently lay just outside the high school catchment area. Two residential streets, Gibson Terrace and Murdoch Terrace would require to be added to the Boroughmuir catchment area which would have a knock on effect on the catchment areas of Tynecastle High School and Bruntsfield and Dalry Primary Schools.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

The educational benefits of both options were then outlined. Overall, the Council officials felt that Option A (new build) offered more educational benefits than Option B (refurbishment and extension).

The consultation exercise would run up to 30 March 2012 after which the Council would seek Education Scotland’s views. All comments which had been received and the points that had been raised at the meeting tonight would be considered and responded to in a report that would go the full Council. The report would be published on 7 June 2012 and would be considered at the Council meeting on 28 June 2012.

Statement by the Acting Head Teacher of Boroughmuir High School

David Dempster indicated that his Parent Council had asked for his position in December and he had made his views clear to them. The School Management Team supported the proposed new build (Option A). The existing structure was a fine building, but it was old and he was convinced that the new building was what was needed. He had spoken to Head Teachers in new builds who had indicated that the pupils’ lives had been transformed for the better. Additionally, the tour by officers of new schools in London underpinned his views. He had spoken to various Head Teachers in these schools and they were enthusiastic about them. In respect of Option B and the proposed decant to Burdiehouse, he would not support this as he did not want his pupils to be educated in portacabins.

Statement from Seconded Head Teacher

Jack Hamilton advised that there had been high expectations and no outcomes regarding the routes explored since 2001 in relation to Boroughmuir High School. The Director of Children and Families said then that the school was “not fit for purpose” and since then there had been no improvement. There had been the possibility of the school being included in the Public Private Partnership project, but this did not come to fruition. Various sites had been considered, but these had not been progressed. The proposal was a great opportunity to take Boroughmuir into the 21st century, he therefore urged that the parents should support Option A.

Tom Wood thanked the Panel Members for their presentation and statements. In respect of the consultation tonight, there was the welfare of thousands of children to be considered, this process was therefore very important. He asked for questions 4

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

from parents of children from the feeder primary schools first, as they were the ones who would be most affected.

Questions and Answers

Question 1 – Could the status of Option A for the proposed new build at Fountainbridge be clarified and how certain was it of being approved?

Question 2 – The new build did not meet Scottish Government regulations, would the site therefore still be approved? If not, what could be done?

Question 3 – There had been discussion in relation to the public park. What was the likelihood of the area being set aside for the public park being reconfigured?

Question 4 - What was meant by there being potential for a pitch on the roof of the new school?

Answers to Questions 1, 2, 3 and 4

It was advised that Option A was the preferred site and the authority would not ask elected members to commit to a site which would incur great expense without that preference. An assessment had been undertaken, taking into account both the positive and negative aspects of the proposals and the proposed new build had emerged as the best option. If this option was not supported by officers, it would not have been recommended to the elected members.

For the next stage of the process, the public meetings provided an opportunity to get feedback from parents, whose views would be included in the report to the elected members in June 2012. The authority also wanted to be informed if anything had been omitted from the consultation paper. This was a genuine consultation.

It was explained that the authority was trying to progress matters in respect of the new build’s compliance with Scottish Government regulations. A design team would be appointed and it would be necessary to set out the case and obtain the views of the Scottish Government. It could be assured that the authority would present a good case.

Supplementary Question – What would happen if the Scottish Government did not approve Option A?

Answer

If the Scottish Government did not approve Option A, then it could not be implemented. It was difficult to confirm what the alternative would be, as there had been no precedent for this occurrence.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

It was explained that the authority was considering the possibility of reconfiguring the area set aside for the public park. It might be possible to reduce the size of the park. The existing plan would allow for the delivery of a public park alongside the school as part of the student housing development. As part of the master planning exercise, it was intended to review the exact reconfiguration of the park.

It was advised that there was no design team yet to finalise the details in respect of the potential for a pitch on the roof, However, it was possible for a pitch of this type to be included in the design as had been demonstrated in schools in London.

Question 5 – In respect of the Master Plan, had other locations for the new build been considered?

Question 6 – The Council had a track record in procuring quality schools. What issues had been learned in respect of quality related procurement?

Question 7 – Would it be possible to have a full school assembly in the new school?

Question 8 - Should the capital saved be put back to improve the quality of schools and what would be the funding arrangements?

Question 9 - If Option A was implemented, the capital saved should be put back in to the schools. Would this therefore be derived from a central fund?

Answers 5, 6, 7, 8 and 9

It was explained that officers had considered plans of schools at different locations within the Fountainbridge area and Option A was the final location as detailed in the proposals. In September 2011, various locations for the proposed new school had been considered and it might have been one of these locations that the member of the public was referring to. The consideration of a number of possible locations was part of the planning process. There had been extensive discussions in respect of the location of the school and a considerable amount of work had been carried out.

It was advised that lessons had been learned from the procurement of quality of schools and from the replacement of schools in the 2004 second schools Public Private Partnership (PPP) project. The design of the proposed new build was different from schools associated with the PPP project. It was necessary to get the views of the school and this would help form the design brief for the architect. In respect of quality, the same process would apply for Boroughmuir High School as applied to the other current “Wave 3” secondary schools; James Gillespie’s High School and Portobello High School. Jack Hamilton and other senior officers would be involved in the process and the quality of the new build would be of the highest standard.

In respect of funding, the estimated net overall cost of the new build would be £5m cheaper than the refurbishment option. There would be significant gains from the 6

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

sale of the present site at Boroughmuir. There were significant challenges presented by the revenue budget. The refurbishment option would, however, still require significant revenue funding to be identified to meet the decant option for which no current provision currently existed. This was in the context that there was already a projected budget deficit in Council revenue funding over the next few years. The disposal of surplus land at Fountainbridge to developers was part of the business case.

It was indicated that to deliver the required accommodation requirements, the new school needed to have minimum available space of 13,110 square metres, which equated to 11.4 square metres per pupil. This was in excess of the Scottish Future Trust’s benchmarks.

It was advised that school assemblies were held every day in Boroughmuir, therefore, assemblies could be held in the new build. Assembly space, social space and exam space was also required for preliminary and national exams. There was ongoing consultation with the feeder primary schools about the space proposed in the new building; this was a unique process to Edinburgh.

Question 10 – What about the question of the “spill out” of pupils into the street at lunchtime? It was not desirable for pupils to spill out to retail outlets in Fountainbridge. What, therefore, would be done to address this?

Question 11 – In respect of design for schools, what was the cost of schools in London and what were their budgets?

Question 12 - There should be a balance to the discussions, however, there was a clear bias towards Option A. Why therefore was Option B being considered at all?

Question 13 - The proposed site in Option A was much more constrained than the existing site. With the exception for the canal, the location at Fountainbridge was not so desirable. Additionally, where exactly would the park be located in Option A?

A member of the public was not convinced that Option B would take longer to complete. The diagram suggested that the existing school building would be transformed for the better. The site size was compared with the larger site of James Gillespie’s High School.

Burdiehouse Primary School was not a good site for a decant and the Council would not lose out financially. Something “inspirational” could therefore be achieved. Could a decant at Fountainbridge, an “Option C” not be considered?

Answers to questions 10, 11, 12 and 13

It was explained that it made good sense to involve the Planning Division, regarding the control of activities around the site. The authority did not want a excess of fast food shops to emerge. In respect of “spill outs” at lunch time, the school would prefer 7

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

the pupils to remain at school and have their lunch at a school facility. Schools in London did not allow pupils out at lunchtime, with the exception of senior pupils. The authority would be looking at ways to manage the spill out and encourage healthy eating. This was an issue with every school.

Significantly, when St Thomas’ of Aquin’s RC High School decanted, educational attainment was not affected, but in overall terms, it was not an ideal experience for pupils and staff.

In respect of the budget for schools in London, it was difficult to provide exact figures as the schools, the consultants and the builders all provided different figures. The City of Edinburgh Council was delivering high quality schools and creating budgets for that purpose. Fountainbridge had an assumed construction cost of approximately £2,240 per square metre.

There was no developer who would offer the free use of a decant site. The Council was working with EDI, the arms length development company of the Council, to dispose of the land at Fountainbridge if it was not chosen for the school. There was an amount of capital tied up in the site and if this capital was not released, there would be adverse consequences for the Children and Families Department funding. If the site was not sold, this would affect the programme for the Children and Families Department who needed the release of the funds. The authority therefore had a preference for Option A. From the educational point of view, this would create the best learning environment for the future. The panel also wanted to hear the views of the pupils and asked the members of the public to share them with the panel.

It was explained that the new site was small compared to James Gillespie’s High School, however, the schools were not in competition. Both were good facilities and had high achievement rates.

Regarding the size of the Fountainbridge site, it had been demonstrated that much could be achieved with small sites in London. The authority was also considering ways to configure the site with the park.

Regarding the refurbishment option, the Planning Division had given written comfort indicating that it should be possible to add floor space to the existing site, if this option was approved. However, the design and details of the proposed extended space was not yet available, so a risk remained. Planning had been asked about the gym hall and had stated that it would not be possible to use the roof of the gym hall for outdoor space because of the proximity of residential properties.

Both options were significant projects, but Option B would take many months longer and there were currently no designs for either site. Fountainbridge was a brownfield site and was therefore a known quantity, however, there was greater uncertainty with the refurbishment option. A considerable amount of work would be required before the design could progress with Option B. Option A required only planning consent, however Option B required planning consent and listed building consent. The 8

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

existing building had an electricity sub-station located within the school grounds and no works could be carried out until this and any other unforeseen issues had been addressed.

The Foutainbridge site could not be considered for the decant, as it had been specifically purchased for the potential new school and if this was not chosen, the land would have to be sold as soon as possible.

Question 14 – The Senior Management Team was firmly in favour of the new build. But were there any disadvantages to the new build?

Question 15 – Was Upper Gilmore Place a viable option for a decant?

Question 16 – Would the proposed school at Fountainbridge be of adequate size and did the Senior Management Team take into account the number of children in the catchment area increasing in future? Was there scope for expanding the school?

Answers 14, 15 and 16

It was explained that those advocating the decant option seemed to be hopeful that more open space would be available in the area for pitches, however, it had not been established that this would be the case. The Senior Management Team (SMT) was convinced of the merits of Option A because they had spoken to Head Teachers who had moved to new schools who had confirmed that they were a big improvement on the older schools. The SMT had also seen new schools operating successfully in London. Every effort would be made to further improve the design of Option A over the coming months.

It was advised that with Option B, if Darroch in Upper Gilmore Place was used as a decant site, this would accommodate only 500 pupils and would delay the project for at least one year.

The catchment roll at Boroughmuir was currently 770 pupils. In future, as catchment numbers rose, there would be fewer non-catchment pupils attending, which was in accordance with Council policy.

Question 17 - A member of the public stated that she was not convinced that there would be a one year delay if the Darroch decant option was adopted. At the school she attended 40 years ago, there was a decant and she was happy that her school went through the process.

Regarding the longevity of the school and the proposed timescale, Bruntstfield Primary School had lasted for 150 years, however, the proposed new build would have a much shorter lifetime.

Question 18 – What was the extent of outdoor space for the second option?

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

Question 19 – What was the future of “After School Hours” and adult education classes in the new build?

Answers 17, 18 and 19

It was explained that the new build would endure for much longer than 20 years. The official figures were based on building quality schools which would last 50 or 60 years. One of the options available to the Council for the new build was a Design, Build, Finance and Maintain Model. The contractors would build the school and the authority would pay an annual charge to ensure that the building was maintained. After the contract expired, the building should still be in a good condition. The building would not therefore suffer from lack of repair.

In respect of the decant option, a significant amount of funds were bound up in the Fountainbridge site which would not be available for a period of time. Alternatives were to either tie up capital for a long time or put it towards better use. There were projects for the replacement of other schools and if the decant was adopted this would push the replacement of these schools into the future.

It was explained that it was not possible to carry out an estimate of outdoor space for Option B as there were no designs yet for either options A or B.

It was advised that the new build would have “After School Hours” and adult education. It was essential to ensure that the communities should benefit from the new school.

Question 20 – The proposals were difficult for most people to understand, therefore, there was a need to know the fuller picture. It was felt that neither option A or B was satisfactory.

Question 21 - How would the proposals be affected by the absence of the Master Plan?

Question 22 - From an environmental point of view, what message was given by building a new school that conflicted with the ethos of this neighbourhood? After 30 years, would more work not be required to repair the fabric of the building?

Answers 20, 21 and 22

There were challenges to be addressed with both options. Local opinion was clearly divided and there were issues regarding the use of the local park and how this was linked in to the planning process. If the refurbishment option was adopted, it would be necessary to enlarge and increase the mass of the existing building. The Fountainbridge site was a brownfield site and would be easier to deliver, however, there was no design team established yet for either option.

Consultation Meeting on the Proposals for the Location of Boroughmuir High School 14 March 2012

It was advised that the Indicative Master Plan for the area had been approved. This area was vibrant and Fountainbridge could become an equally vibrant area. The canal could be used to expand and transform Fountainbridge and upgrade the area, and the new school could be a catalyst for this process. The existing structure was a fantastic building, however, the new build could be an exiting addition to the Fountainbridge area.

In respect of sustainability, the new build could have sustainable power generation and would last at least 50 years. If the authority did not invest in the existing building, it would have to be demolished, or in 20 years, there would have to be extensive replacement of components. But the new build would provide quality of space, would be great environmentally and the pupils would enjoy the school. For the new build, sustainability and energy efficiency were at the forefront of the agenda and the authority would promote renewables as far as possible. The new build would be carbon friendly and energy efficient.

Conclusion

Tom Wood indicated that 350 people had attended the four consultation meetings, which was the best response in his experience and there had been a great quality of debate. The newly elected council would make a decision on the proposals in June 2012. He reminded those present that the consultation process would run until 30 March 2012.

The Chair of Parent Council thanked everyone for coming to the meeting and for asking questions. This would encourage people to contribute to the consultation.

Carol-Anne Kyle, the Head Teacher, thanked the members of the public and the panel for attending the meeting and would tell the school children about the well thought out questions from their parents.

Abbreviations BHS = Boroughmuir High School CEC = City of Edinburgh Council DBFO = Design, Build, Fund and Operate HS = High School PS = Primary School APPENDIX 3 SEDB = Strategic Education Design Brief SMT = Senior Management Team

ID Address Comments 1 Buckstone, 20 February 2012 Buckstone PS Parent • Supports Option A (New Build at Fountainbridge location).

2 Boroughmuir HS 20 February 2012 Feeder Primary • Inquiry relating to Feasibility Report prepared by Malcolm Fraser. Catchment Area Parent 3 Local resident 20 February 2012 • Inquiry re: provision of sporting facilities at Fountainbridge Site.

4 Boroughmuir HS 20 February 2012 Parent • Supports Option B (Refurbishment at existing location). • Proposed site is not suitable in terms of transport/ distance. • Proposed Burdiehouse decant is not acceptable due to increased distance and time. • The proposed Fountainbridge site is not acceptable. • Concerned about the use of public finances to purchase land without public consent. • Concerned that the consultation exercise is a cosmetic exercise. 5 Unison Edinburgh 21 February 2012 • Inquiry: Assuming that some dialogue has already taken place with the affected staff and parents, ‐ do they have a preferred option?

6 Bruntsfield, 21 February 2012 Boroughmuir HS and • Supports Option A. Bruntsfield PS Parent • Proposed site is next to the Canal and close to the existing site. • Option A achieves economies of scale and presents an opportunity to have a brand new school. • Opposed to Option B. 1 • Existing building is not of exceptional historic value. • The building will not be demolished and will be re‐used. • The existing site is constrained with no opportunity for expansion. • Concerned about the quality of education associated with the decant option. • Proposed Burdiehouse decant is not acceptable due to increased distance and time. • Increase in car journeys. • Increase in lateness and absenteeism. • Temperature and sound issue at decant school. • Adverse impact on extracurricular activities. • School children would have less time and energy for homework due to excessive travel. • Potential friction between the Boroughmuir children and local children. • Staff recruitment issues. • Parents less likely to engage with general ‘life of the school’ due to distance and travel time issues. • Discipline issues associated with teaching in temporary units. • Potential adverse impact on relationship between feeder primary and associated secondary schools. • Parents of children in S4 and above will not be affected by the decant. They are therefore less likely to oppose this option. 7 Address not Supplied 23 February 2012 • Supports Option B as there is no change to school catchment areas. 8 Balgreen, 1 March 2012 Boroughmuir HS • Supports Option A. Parent • Proposed Burdiehouse decant not acceptable due to disruption to children and increased distance and travel time. • School children would have less time and energy for homework due to excessive travel. • The existing site is constrained with no opportunity for expansion. • Sports facilities will still be inadequate under Option B – at least there will be some provision under Option A. 9 Boroughmuir HS 6 March 2012 Parent • Proposed site is not suitable in terms of transport and travel times. • Walking to school would not be an option for many with associated youth obesity concerns. • School forms an integral part of the local community and its removal would undermine the social ‘fabric’ of the area. • A new location will have an adverse impact on the “name” and “reputation” of Boroughmuir High School. • Disposal of the existing site will be problematic. 10 Local resident 6 March 2012 • Both options are inadequate. • Fountainbridge site is constrained and does not represent parity with the extensive site for James Gillespie’s HS. • The vicinity and surrounding amenity of James Gillespie’s will be superior to that of Boroughmuir HS. 2 • The Fountainbridge site could be used as a decant to refurbish existing site. • A refurbished Boroughmuir would be more economical as the building has a longer projected life‐time. • Option B could be an exemplar project showcasing modern innovative building renewal/ refresh techniques. 10A Local resident 30 March 2012 • Fountainbridge is suitable for a decant. • CEC’s presentations of the options have been unbalanced. • Fountainbridge: the site is tiny and surrounding area would be unlikely to attain the vibrancy of the small businesses and setting of Bruntsfield. • Timescale: The CEC assessment of the Viewforth programme taking 18 months longer is simply incorrect. Unlike the Fountainbridge option the design for Viewforth is well‐developed with a ‘letter of comfort’ from CEC Planning Dept. • Decant Impact: It was recognised that a decant causes no disruption to pupil’s educational attainment and even, on occasion, a small rise in it. • Decant site: denying the school the obvious decant option, and instead directing it to a very difficult and unpopular alternative, is hugely ‐ and entirely unnecessarily damaging to CEC’s “non‐preferred” option. • Cost and Longevity: Option B would have hundreds of years of life in it. Option A would have not much more than 40 years. Aside form the inherent “sustainability” of Option B any financial model based on long‐term good would recognise its long‐term good‐value. • Viewforth site: the Council team visited tight urban schools, but did not visit any joyfully and comprehensively renewed old one – because such a thing does not really exist. This option presents the ability for Edinburgh to lead the way, producing an environment for learning that combines the best of the past with a visionary future. 11 Address not supplied 6 March 2012 • Enquiry regarding the funding model for redeveloping Boroughmuir. • Concerned that the new school would be mortgaged to a private company in the long run. 12 Address not supplied 6 March 2012 • Supports Option A. • Proposed Burdiehouse decant is not acceptable due to disruption to school children. • New site offers more scope for developing the new school. 13 EH10 6 March 2012 • Supports Option A. • Proposed Burdiehouse decant is not acceptable due to educational disruption. • Supportive of relatively minor catchment changes associated with Option A. • Would urge CEC to maximise the space available at the Fountainbridge site to create a flagship school. • The new school has the potential to harmonise with its surroundings and generate income from sports and adult/ evening educational activities.

3 14 EH10 6 March 2012 • Supports Option A. • New build represents better value for money and is logistically deliverable as it would not require an educationally disruptive decant which would threaten children’s life chances. • The Fountainbridge site offers sports opportunities and a healthier environment. • New school must be built to the highest design standards. Wood cladding is not suitable to withstand the rigours of the Scottish climate. 15 Buckstone, 7 March 2012 Buckstone PS Parent • Supports Option A. • Option A is an opportunity for a new and innovative school with modern flexible facilities. • Feels that the majority of parents are in favour of Option A. 16 Buckstone, 7 March 2012 Boroughmuir HS • Supports Option A. Feeder Primary • Option A is an opportunity for a new and innovative school with modern flexible facilities. Catchment Area • Supporting Option B on basis of nostalgia is not progressive and limits educational opportunities. Parent • Proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. 17 Address not Supplied 7 March 2012 • I am probably in favour of the rebuild. • If Option A proceeds, will construction noise on surrounding development sites impact on pupils? 18 Buckstone PS Parent 7 March 2012 • Supports Option A. • The majority of parents are in favour of a new school. • New build is the only viable and sensible option. • Proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. • There would be social tensions between the Boroughmuir pupils and local youths in the Burdiehouse area. • The local shops would not be able to cope in the event of a decant to Burdiehouse. 19 Boroughmuir HS & 8 March Bruntsfield PS Parent • Supports Option A. • Requests the maximum sports/ open space provision throughout the whole of the available space at the Fountainbridge site. • Notes that Meggetland remains the main sports facility for both Options. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time.

4 • The refurbishment option would not provide the same educational opportunities offered by new build at Fountainbridge. • The existing Boroughmuir building is prime location for housing, offices or other use. 20 Boroughmuir HS & 8 March 2012 Bruntsfield PS Parent • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. 21 Bruntsfield PS Parent 9 March 2012 • Supports Option A. • New build represents better value for money and is logistically deliverable as it would not require an educationally disruptive decant which would threaten children’s life chances. • Concerned that Fountainbridge site is almost as constrained as the existing one. • Requests the maximum sports/ open space provision throughout the Fountainbridge site. 22 Craiglockhart, 10 March 2012 Boroughmuir HS • Supports Option A. Parent • A new build will allow aims of Strategic Educational Design Brief to be met. • The School Senior Management Team supports Option A. Their expertise puts them in a unique position to make a recommendation which other interested parties cannot be in. Trust their professional recommendations. • To maintain the character of the school it is important to utilise a site near to the existing school building. • Agrees with CEC’s view that providing full‐sized pitches at Fountainbridge would make it harder to build up a vibrant community in the area which is currently under development. 23 Buckstone, 11 March 2012 Boroughmuir HS & Supports Option A for the following reasons: Buckstone PS • Encourages a ‘faculty’ based educational approach. Grandparent • Park and Canal area presents opportunity for creative use of space. • ‘Campus’ style atmosphere could be created. • Overlap between pupils and site construction can be avoided. • Option A delivers SEDB more easily than Option B. • Innovative design has to compensate for site being only 50% of School Premises Regs size. • Roof sports deck would have safety issues which would need to be addressed. • Adjacency to the canal would have safety issues which would need to be addressed. Comments on Option A: • Maximise use of the Park Area and fully explore space sharing at east side of the site. • Optimise use of the site as the available space is limited. • Investigate scope to create “basement” space.

5 • It is not realistic to expect much open space on any City Centre site such as this. • The school is completed earlier under Option A. • Option A avoids completely an undesirable temporary decant. • The end result is an all “under one roof” in an attractive configuration. • The continued use of Meggetland applies to both options. Comments on Option B: • The present site has a very small footprint and is “landlocked” on all sides. • The “free space” remaining after refurbishment on this site would be minimal. • The proposed decant will have a substantial impact on educational performance and extra‐curricular activities are likely to be seriously curtailed. Travel options to Burdiehouse are limited and local shops/services are inadequate. Costs • Option A looks £5m cheaper than Option B. • Future maintenance costs are likely to be higher for Option B. 24 Address Not Supplied 11 March 2012 • Supports Option A. • Provides a significant upgrade in facilities that the school desperately needs. 25 Forth Canoe Club 12 March 2012 • Siting a new boathouse next to a new school would be excellent for us as we thrive on working with the local community and developing young people’s appreciation of sport. • The strip of land next to the canal and Gibson Terrace would be an excellent location for a boathouse. • Jim Lowrie, the local councillor and chair of the planning committee is supportive of this proposal and would align with CEC’s Canal Strategy. • The Scottish Canoe Association is also supportive and a coach from them funded by SportScotland is based at Forth Canoe Club. 26 EH17 9 March 2012 • This community fought to prevent the closure of Burdiehouse Primary School. Most galling to be informed that £7.3M is proposed to provide temporary accommodation for Boroughmuir pupils on the Burdiehouse site. • Grossly insulting to this community who were deprived of their local primary school. • Option B would be deeply resented by Burdiehouse Southhouse residents. • The only sensible option is Option A. 27 South Morningside PS 12 March 2012 Parent • Supports Option A. • Proposed decant would be disruptive.

6 28 Buckstone, 12 March 2012 Buckstone PS Parent • Supports Option A. • We believe the educational benefits to be greater with Option A than Option B. • Concerned proposed decant would be disruptive. 29 South Morningside PS 12 March 2012 & Nursery Parent • Supports Option A in preference to refurbishment.

30 South Morningside PS 12 March 2012 & Nursery Parent • Supports Option A. • A modern new building is preferable to a refurbishment. • The proposed Burdiehouse decant is not viable. 31 Boroughmuir HS 14 March 2012 Parent • Supports Option A. • The rebuild proposal is unattractive as the Burdiehouse decant option is totally unsuitable due to educational disruption, increased travel times to Meggetland for sports and potential tension with local schools. • In terms of the new build the following points are made: o one building is preferable to a split building approach. o Switching the park to the site between the student housing and the canal seems the simplest and most obvious solution. Why not put park up onto the roof space if it can be done for play area? 32 Address not supplied 14 March 2012 • Supports Option A. • Having seen a view of the (Fountainbridge) site it’s not ideal that the park separates the buildings. • CEC should allocate some of this space to the school or move the park area if possible. • The proposed Burdiehouse decant is not an option. • There would be social tensions between the Boroughmuir pupils and local school children in the Burdiehouse area. 33 Address not supplied 14 March 2012 • Supports Option A. • I would like to request that the park is either removed entirely and that land is used for the school, or that it is relocated away from the school site. It will be a small urban park that is not at the heart of either a residential or a commercial area, and such parks have a tendency to be unloved and to degenerate, attracting high levels of anti‐ social behaviour. I do not thin it is likely to benefit either the area or the school. 34 Address not supplied 14 March 2012 • Supports Option A • The presentation and Q & A session was well organised and provide a good outline of both options.

7 • CEC needs to ensure the new build has as much space as possible from the area designated as public park space. • Significant analysis should be carried out to try to resolve the issue of lack of outdoor space to avoid the use of other venues e.g. Meggetland as far as possible. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. 35 Bruntsfield, 15 March 2012 Bruntsfield PS Parent • Supports Option A. • Issues to address: o Integrating of the proposed park with the school o Dundee Street is a very busy road. Pupil access to the school should be designed to minimise spill directly onto this road. o It is a concern that it is not currently known what will be built on the remainder of the brewery site on the other side of Viewforth. I would hope that the presence of a school would influence ant planning decisions on that site, particularly as any housing would be “in catchment” for Bruntsfield and Boroughmuir. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. • The decision should be made on educational grounds only. Opinions relating to architecture and geographical prejudices are not relevant to the decision‐making process. • The proposed location for Option A would benefit the local area/ community. 36 Buckstone PS Parent 16 March 2012 • Supports Option A. 37 Boroughmuir HS 16 March 2012 Parent • Both options still require children to have their sports at Meggetland, Meadowbank and Niddrie. • Unacceptable to invest in a new build option that would have inadequate sports ground available to the new school. • CEC need to obtain all the land around the proposed new school site in order to provide adequate sports facilities. • The Water Board site at Buckstone is the best and only solution as this will have sufficient space for sports provision which negates the need for bus travel. • The area around Tollcross in unsafe and dangerous and not suitable for secondary age children. • Travel time from the Buckstone area to the location of the proposed catchment school would be unacceptably long. 38 EH10 16 March 2012 • Option A is favoured subject to resolving the park issue. • Maximum use has to be made of available space and buildings co‐located. • The proposed park needs to be utilised by the school due to the already constrained nature of the site. 8 • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. Also potential for local rivalry. • “Option C”: This option assumes that the park issue in B cannot be removed satisfactorily. This option was not presented, but was discussed at the meeting. Refurb the existing school, but used the new school site for a temporary school instead of the Burdiehouse site. The reasons for not being able or willing to do this were insufficient when compared to the simplicity it provides the school children affected. 39 Buckstone PS Parent 16 March 2012 • Supports Option A. 40 Buckstone PS Parent 16 March 2012 • Supports Option A. 41 South Morningside PS 16 March 2012 Parent • Why was the Fountainbridge site chosen and purchased by CEC for the new build option, when it is clearly not suitable? o The site is not located within the current Boroughmuir HS catchment area. o traffic safety concerns with the school ‘spilling’ on to the Viewforth, Fountainpark, Dundee St and a canal o the proposed site is only 0.1ha larger than the existing one. o There are more suitable sites for a new build such as the Scottish Water site at Fairmilehead and the Craighouse Campus. 42 South Morningside PS 16 March 2012 Parent • Supports Option A. o No decant required (or if decant required it will be for very short time). o The pupils deserve the very best start in their secondary education and a new, state of the art building certainly allows for this. o Believe the views of the Head Teacher at Boroughmuir need to be taken into consideration and they are strongly in favour of the new build. 43 Address not supplied 16 March 2012 • Supports Option A. • Also requests that some of the adjacent land currently designated for public park space be used to increase the size of the new build. 44 Boroughmuir HS 16 March 2012 Feeder Primary • Supports Option A. Catchment Area • The new‐build option should include adequate sporting facilities. Parent • There is land available for providing adequate sports facilities.

9 45 Buckstone, Buckstone 16 March 2012 PS Parent • Supports Option A. • Refurbishment of existing school would take longer, cause greater disruption and would be a poorer end result. • Should explore acquisition of more land at Fountainbridge site to provide more sports and outdoor recreation space. • Consider cost and environmental impacts of the continued bussing of pupils to Meggetland for sports, when facilities could be sited on the school grounds on a larger use of the overall site. • The pupil generation of the residential development at Water Board site should be considered too. 46 Buckstone, 16 March 2012 Boroughmuir HS • Every effort must be made to change the size of the site and to increase the sports facilities provision at the Feeder Primary Fountainbridge site. Catchment Area • It is unacceptable that schoolchildren should have to waste time sitting on buses between the school and sports Parent facilities for PE lessons. The new school should incorporate a swimming pool as well as sports pitch.

47 EH10 16 March 2012 • Every effort must be made to change the size of the site and to increase the sports facilities provision at the Fountainbridge site. • It is unacceptable that schoolchildren should have to waste time sitting on buses between the school and sports facilities for PE lessons. • The new school should incorporate a swimming pool as well as sports pitch. 48 Boroughmuir HS & 16 March 2012 Buckstone PS Parent • Supports Option A. • Refurbishment would be too complicated. • A move to a new school would be relatively simple and good for morale of both staff and children. • The proposed Burdiehouse decant is not acceptable due to disruption and additional cost. 49 EH10 16 March 2012 • Fails to comprehend why the refurbishment option should take an extra 18 months as opposed to the new build option and CEC should engage with a Main Contractor to study how the programme can be reduced. • CEC’s reasoning for not using the Fountainbridge for decant is weak. • The Option A site is too small. • The canal is a potential Health and Safety risk. • People will move to James Gillespie’s catchment as Fountainbridge area is deprived and regeneration a long way off. • There will be insufficient budget for decked sports pitch. • CEC are unwilling to enlarge the site by using neighbouring CEC owned land (currently used by Kwik Fit). • The refurbishment option could be a very exciting solution which retains the history by remaining on the site. If 10 the barriers could be lifted and the solution which is already in place be presented then this may well be a better solution than a squeezed new build.

50 Address not supplied 17 March 2012 • Supports Option A.

51 Bruntsfield PS Parent 18 March 2012 • Supports Option A as least disruptive. • Very against decant option. • The relocation of the school may also regenerate Fountainbridge area which seems an additional positive benefit. • Appalled by parent who suggests that Fountainbridge area is ‘downmarket’ ‐ no reason to refurbish current school. 52 Buckstone, 18 March 2012 Boroughmuir HS • Feel strongly that new build will add to the learning experience. Feeder Primary • Every effort should be made to acquire additional land to provide more outdoor recreation and sports space. Catchment Area • Renovation of the current site would be expensive, disruptive and will not achieve the degree of improvement in Parent environmental enrichment that out children deserve in an urban school. 53 South Morningside, 18 March 2012 Boroughmuir HS • Disappointed new site is so small. Urge CEC revisit master plan with aim of increasing space and identifying Parent possible shared facilities. • The proposed Burdiehouse decant is not acceptable. 54 Buckstone, 19 March 2012 Catchment Primary • Supports Option A. School Parent • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. 55 Address not supplied 19 March 2012 • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and additional costs. • Every effort should be made to acquire additional land to provide more suitable outdoor recreation and sports space at the Fountainbridge site. • If the up front cost of the land is an issue (which I suspect in current time it is) I am sure that the parent council of Boroughmuir, past pupils, feeder schools and prospective pupils could form a fund‐raising initiative, which when viewed alongside a saving of £40k per annum would meet a significant part of this cost.

11 56 Catchment Primary 20 March 2012 School Parent • Are the SMT and wider Project team actively listening to teachers and support staff, how has this been done to date? And what are the issues being raised by the staff group? What opportunities do Boroughmuir teaching and support staff have, other than the Education Spec, to engage and participate in the renewal of the school? To ensure that all school staff continue to be involved throughout all the project phases? 56A Catchment Primary 30 March 2012 School Parent • We ought to actively promote sustainability and deliver an exceptional building for an exceptional school. Not to seriously consider the alternatives to a new build is short sighted, short term economics and poor reflection on Edinburgh with its lack of vision. • Recycle, reinvigorate and refurbish NOT reduce, regress and regret. • Burdiehouse decant is an unacceptable option • Use of the Fountainbridge site for a decant to facilitate the refurbishment should be re‐visited and considered further. • Without Malcolm Fraser’s informed and constructive comments in both ‘consultation’ meetings I attended many parents would have come away with quite a depressing view of the initiative. 57 Buckstone PS Parent 20 March 2012 • Supports Option A. • Can see no purpose in spending £7m on decant when funds could be used elsewhere. 58 Buckstone PS Parent 20 March 2012 • Supports Option A. • The following should be considered at the project planning stage: o School sustainability, eco friendly use of solar panels and the canal as resources to keep bills down a free education budgets for other uses. o Links with other related facilities to ensure the site is used in conjunction with the school i.e. new library and sporting facilities. 59 South Morningside, 20 March 2012 South Morningside PS • Supports Option A.Rationale for this: Parent o Potential increase of ‘outside’ space. o Support of the School Leadership team. o Time and cost benefits. o Avoidance of Burdiehouse decant. • Recommend following actions: o Investigate requirement for public park to see if this can be made available to increase the available footprint for the school. o After the forthcoming catchment change no more catchment changes for 10 years. o Creative and innovative thinking is used to maximise and optimise the use of space available to new 12 school. o Ensure the strict management of this project within work programme and project budget.

60 Boroughmuir HS & 20 March 2012 South Morningside PS • Supports Option A. Parents • The cost of decant strengthens the case for option A and the proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to the travel. 61 Boroughmuir HS 20 March 2012 Grandparent • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to the travel. • There would be social tensions between the Boroughmuir pupils and local youths in the Burdiehouse area. 62 Boroughmuir HS & 21 March 2012 South Morningside PS • Supports Option A. Parents • Option A offers a superior educational environment for the pupils and the teachers. • Option A offers a better social/ recreation/ sporting environment for the pupils. • Any proposed decant is not acceptable due to educational disruption and increased distance and travel time. • Every effort should be made to acquire additional land to provide more suitable outdoor recreation and sports space at the Fountainbridge site. 63 Boroughmuir HS 21 March 2012 Feeder Primary School • Every effort should be made to acquire additional land to provide more suitable outdoor recreation and sports Parent space at the Fountainbridge site. • I would like it to be made mandatory that all S1‐S4 pupils are not allowed out in breaks and lunch. I would be concerned about their safety due to the proximity of the canal to the proposed school site. • Satisfaction expressed with regard to the consultation process. 64 Morningside PS Parent 21 March 2012 • Supports Option A. • Every effort should be made to acquire additional land to provide more suitable outdoor recreation and sports space at the Fountainbridge site. • New school MUST have adequate catering facilities to discourage pupils accessing local ‘fast food’ catering establishments. Consideration should be given to keeping pupils within the school perimeter during the school day to encourage healthy eating.

13 65 Boroughmuir HS 22 March 2012 Parent • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • Every effort should be made to acquire additional land to provide more suitable outdoor recreation and sports space at the Fountainbridge site. 66 Boroughmuir HS 22 March 2012 Feeder • Supports Option A. Primary School Parent • It is not ideal that the small part separates the 2 new school buildings. It would be sensible that CEC allocates all of the current Park space for the new school build and move the park space elsewhere. • The proposed Burdiehouse decant is not acceptable – potential for friction and disruptive. 67 Boroughmuir HS & 22 March 2012 Bruntsfield PS Parent • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • I feel that CEC offers the Burdiehouse decant option in the knowledge that most parents will not countenance this so that Option A (the preferred option) garners most support. • Reservations with Option A with regard to proposed level of sports provision. • It is not ideal that the small part separates the 2 new school buildings. It would be sensible that CEC allocates all of the current Park space for the new school build and move the park space elsewhere. • I feel that CEC’s priority is more about money than education needs. • I would like a guarantee that the new site will be bigger than the one CEC is currently offering. • I would like assurance that the new build school will not fall apart after 10 years. • I would like the assurance that more will be done in terms of sports provision. 68 Boroughmuir HS & 22 March 2012 South Morningside PS • Supports Option A. Parent • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. 69 Address not supplied 22 March 2012 • Supports Option A. • If there is significantly higher stay on rates in S5/S6 would this mean that there was a lower intake at S1? • A criticism of the existing BHS site is the lack of space. Why should a new school be built if the school is going to suffer from a lack of space? • It is imperative, therefore, that as much space as possible should be allocated to the new school site. The school should be the priority for the Fountainbridge site rather than a mixture of secondary school education and other economic objectives.

14 • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks associated with travelling such distances. 70 Boroughmuir HS 22 March 2012 Catchment Parent • The only real options are the new build (my preference) or a decant to the Fountainpark site concurrent with re‐ furb. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • I would take my children out of Boroughmuir and pursue other schools such as James Gillespie’s in the event of the Burdiehouse decant. 71 Primary School 22 March 2012 Catchment Parents • Supports Option A. • Satisfaction expressed with regard to the consultation process. 72 Primary School 22 March 2012 Catchment Parents • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased costs. • Acquire additional land to provide more suitable outdoor recreation and sports space at the Fountainbridge site. 73 Address not supplied 23 March 2012 • Totally against decant option. • Every effort should be made to acquire additional land to provide suitable gym and drama space at the Fountainbridge site. RC High School new developments have had no problem getting full quota of land so why not act in a fair manner.

74 South Morningside PS 23 March 2012 Parents • Supports Option A. • Although there remain drawbacks (plans for the sports areas and student housing) it would appear to be a less disruptive option for all pupils. 75 Boroughmuir HS & 23 March 2012 South Morningside PS • Option A minimises potential disruption to children’s education. Parent 76 Address not supplied 23 March 2012 • Supports Option A. • We would like as much space as possible for the school on the new site to include sports facilities which could be used for the whole south side of the city, which is lacking in such facilities. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and 15 travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance.

77 Buckstone PS Parents 24 March 201 • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to disruption and limited learning environment. • Other reasons for support are the following weaknesses of refurbishment (Option B): o Difficulty in providing maths and sciences faculties. o Classroom sizes and provision of adequate ‘collaboration spaces’ are likely to be compromised under the refurbishment option. o There are no opportunities to create any type of outdoor sporting facility. o Limited scope for enhancement of the outdoor learning environment. o Requirement for any new buildings will further reduce the already limited outdoor space. o Disruption to the community education that is currently hosted at Boroughmuir HS. • Raise the following concerns as regard Option A: o The are limitations with size of the site at Fountainbridge. o Incorporating a further 0.3ha (currently designated as public park space) would allow more space specifically for outdoor education. o Lack of availability for dedicated outdoor spaces. 78 Address not supplied 25 March 2012 • Supports Option A. It will cost less and be more suitable. • The traditions and identity of the old school have not been lost in the new building. • A Burdiehouse decant is not acceptable due to educational disruption and poor learning environment. 79 EH10 25 March 2012 • Supports Option A. • Every effort should be made to acquire additional land to provide more space for exercise. • We would like as much space as possible for the school on the new site to include community and sports facilities which could be used for the whole south side of the city, which is lacking in such facilities. • Future‐proofing: What strategy is being considered for a replacement of the new build school in 25 years? • With regard to the Water Board site what plans are there to ‘manage’ the additional school children generated by potential residential development? 80 Bruntsfield, 25 March 2012 Bruntsfield PS Parents • We would like to confirm our support of Option A but concerned that the justifications of the new build are not guaranteed (in that the timescales are movable, the costs can escalate and the available land can be reduced in size). • Is it possible to provide assurances that these issues do come with some sort of guarantee, including that the 16 monies allocated by the Scottish Executive cannot be re‐allocated away from this project?

81 Primary School 25 March 2012 Catchment Parent • Supports Option A. • I don’t think even the smartest architect could provide as good a school on the existing site due to various constraints including Listed Building status. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • I would like as much space as possible for the school on the new site to include improved sports facilities such as a football space and additional recreation space. 82 Local resident 25 March 2012 • There should be no compromise made in the new build, in order to accommodate large spaces for collaborative/ group learning, which would mean a reduction in the size of “teaching spaces” i.e. classrooms for individual subjects and individual teachers. • A larger site footprint should be considered along with the need for additional green spaces for community uses. These areas should be as large as possible to accommodate spill out at break times during the school day. • A constrained site at Fountainbridge will be to the detriment of both the school and the wider community. 83 Primary School 26 March 2012 Catchment Parent • Supports Option A. • The proposed Burdiehouse decant is not an option. • I believe that the new school building has a priority for space, amenities and safety – over any other business that takes space in the complex. 84 Boroughmuir HS & 26 March 2012 Buckstone PS Parents • Supports Option A. • No amount of refurbishment can detract from the outdated existing building. • The new build should have as much space as possible given over to PE or outdoor activities. • CEC needs to allocate more space to the school for play and sport. 85 Brunstfield PS Parents 26 March 2012 • Option A is flawed as the site purchased is too small and constrained. This makes this option unattractive. • Option B is also flawed due to the proposed decant to the former Burdiehouse PS. • We would support Option A if more land is acquired for the new‐build. 86 South Morningside PS 26 March 2012 Parents • Supports Option A. • Less disruptive, quicker and cheaper option.

17 87 Bruntsfield, 26 March 2012 Boroughmuir HS Supports Option B for the following reasons: Parent • Relocation of school to the north of the canal significantly changes the identity of the school which will become Fountain Park High School. • The setting of Fountainbridge and the canal area is far less appealing than the Bruntsfield/ Links area and will result in increased truancy and anti‐social behaviour to the detriment of education. • The proposed site is smaller than the existing grounds and the loss of St Oswald’s Hall would be unacceptable. • The sports provision under Option A would be inadequate. • Fountainbridge is a hugely polluted area with heavy lorries whilst Boroughmuir enjoys a tranquil setting. • Fountainbridge will remain an unattractive building site for years to come. • The positive connection with Brunstfield Primary School will be broken and will inevitably be linked to James Gillespie’s. • A refurbished and extended Boroughmuir would retain all the historical benefits (including the generous class room’s daylight provision) and be a new school with state of the art facilities. We do not need a new site to achieve this. • The impact on the community and businesses in Bruntsfield will be devastating. The school kids bring a massive amount of business to the independent retailers. • Statistics show that educational attainment does not suffer in a decant – in fact it improves. The Fountainpark site could be used for a temporary decant building. • Travelling to the new school from Buckstone will be tortuous. • Option B offers everything a new building can and more because there is an amazing historic purpose built building in situ. In fact it has been the poor quality alterations in more recent times which have compromised its fine stature. • It would be extremely sad to see this fine school disappear. 88 Boroughmuir HS & 27 March 2012 Buckstone PS Parent • Supports Option A. • Many problems when converting old property and often new costs are uncovered as the project progresses. • The proposed Burdiehouse decant would be disruptive and a poor learning experience. 89 Boroughmuir HS & 27 March 2012 feeder PS parent Supports Option A It sounds marvellous 90 Bruntsfield PS Parent 27 March 2012 • Supports Option A. • Old building can be re‐used and new building ‘green’ design. • Heartened that all pupils would remain with school grounds during the school day.

18 • The proposed Burdiehouse decant is not acceptable and an unbudgeted cost. • The new‐build presents an opportunity to regenerate the Fountainbridge area.

91 Boroughmuir High 27 March 2012 School submission Supports Option A. • The current building has been identified as ‘not fit for purpose’ by a variety of organisations, most recently HMIe in 2008. There is no debate about the need for a total refurbishment of the existing building or a new build. • Educational Design Brief: staff consultation exercise forms the basis of desired outcome. • As a result of the London visit and regularly attending new build schools in Edinburgh, surer than ever of the quality and flexibility that a new build can deliver. • Convinced that the Fountainbridge location will provide a new dynamic to the school and provide us with an environment which is urban but with the canal and park being enhancing elements of this regenerated landscape. • Option A avoids the decant of pupils. The educational experience that pupils would receive in a decant situation would be hugely diminished from that they currently receive. • Despite the affinity and connection we have with this lovely old building, it is bound by the constraints of being a listed building which limits the extent of any refurbishment. • Option A offers a better setting that being hemmed in by residential neighbours on all four sides. • We believe the great tradition and reputation of the school will only be enhanced in a state‐of‐the‐art new build. 92 Boroughmuir HS 27 March 2012 Parent • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. Impact on extra curricular activities. • I would prefer that school children were able to stay on the existing site while the new build option is pursued. 93 South Morningside PS 27 March 2012 Parent • Supports Option A.

94 Buckstone, 27 March 2012 Boroughmuir HS • Supports Option A. Parent • No amount of refurbishment can detract from the outdated existing building. • There can be many problems when converting old property and often new costs are uncovered as the project progresses. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • Delighted to see the open green spaces proposed at the new site.

19 95 South Morningside PS 27 March 2012 Parent • Supports Option A.

96 Boroughmuir HS 27 March 2012 Parent • Supports Option A. • Is it possible to fit the new school with solar and wind technology, ground heat source pumps, heat converters and brown water collection and numerous other ideas that could be incorporated into the school. • Maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. 97 South Morningside PS 27 March 2012 Parents • Supports Option A. 98 EH10 27 March 2012 • Supports Option A. • Economic concerns for the Bruntsfield area should not be taken into consideration on the basis that the quality of education provision should take precedence. • The proposed Burdiehouse decant is not acceptable due to educational disruption and additional costs. 99 Bruntsfield PS Parent 27 March 2012 Supports Option A. However I am concerned about the following issues: • On‐site sports facilities/ playing fields/ greenspace: new facilities at the new school would make a positive contribution to the local community. Urge CEC to look at every possibility for creating new greenspace on part of the remainder of the Fountainbridge site not already identified for the school. • Lunch‐time ‘spill‐out’: improved dining facilities are to be welcomed along with preventing pupils exiting school grounds and staggering lunchtimes to improve access to school dining options. • Overall insufficient space: making more of the site available for the school would provide greater scope for the provision of on‐site sports facilities/ playing fields/ greenspace. • Decant: I find the idea of my children having to attend a decant school in portacabins in Burdiehouse for a significant proportion for their secondary school careers totally unacceptable. 100 Buckstone, 27 March 2012 Buckstone PS & • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and Nursery Parent travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • The Option A site would provide slightly more space than is currently the case.

20 101 Boroughmuir HS 27 March 2012 Parents • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. • Maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. 102 Boroughmuir HS 28 March 2012 Parent • Supports Option B. 102A Boroughmuir HS 30 March 2012 Parent • Supports Option B. • Refurbishment is a far more sustainable option as the existing building can provide many more years of use on the existing site. I question the value of investing millions of pounds in a new school that will deliver only 0.1 of a hectare of additional space. This appears to be very poor value for money and contrary to the Scottish Government recommended requirement of 2.6ha. • I am extremely concerned that the consultation process appears to be weighted in favour of the new build option. • Parents are being pressurised by the scare tactic of the Burdiehouse decant and CEC had not provided a creditable reason why the decant to Fountainbridge could not take place. • The weighting of the consultation options is frankly unfair and an abuse of the democratic process. 103 South Morningside PS 28 March 2021 Parent • Supports Option B. • Refurbishment is a far more sustainable option as the existing building can provide many more years of use on the existing site. • Building a new school will be more expensive than refurbishing an existing one. • Options for sports provision in neighbouring buildings should be investigated. 104 Boroughmuir HS 28 March 2012 Feeder PS Parents • Supports Option A.

105 James Gillespie’s, 28 March 2012 Boroughmuir HS • Supports Option A. Feeder Catchment • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a Parent facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. It is also potentially unsafe with greater health and safety risks related to travelling such distance. 106 Bruntsfield PS Parents 28 March 2012 Supports Option A for the following reasons: • The logistics and expense associated with the Burdiehouse decant are not sustainable for CEC, school staff and 21 pupils. • The decant would have a detrimental impact on our children’s education. • New build is better suited to delivering the Curriculum for Excellence whereas a refurbished Listed Building presents too many constraints. • There will be a sustainable re‐use for the existing school building in the form of flats. 107 Buckstone PS Parent 28 March 2012 • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and not conducive to learning. 108 Bruntsfield PS Parent 28 March 2012 • Supports Option A. • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • Increase area for sporting activities. • The proposed Burdiehouse decant is not desirable. 109 Boroughmuir PS 28 March 2012 Parent • Supports Option A. • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • The proposed Burdiehouse decant is not desirable. 110 Address not supplied 28 March 2012 • Supports Option A. • Budget – new school will be cheaper than refurbishment of existing school. • Timeframe – new build would be completed well in advance of the refurbishment. • The proposed Burdiehouse decant is not desirable. • We would like as much space as possible for the school on the new site to include community and sports facilities which could generate income. 111 South Morningside, 28 March 2012 Boroughmuir HS & • Supports Option A. South Morningside PS • Refurb would be a compromise. Parent • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • The proposed Burdiehouse decant is not desirable and would be expensive. 112 Address not supplied 28 March 2012 Supports Option A and would like to make the following comments: • The proposed site is too small for the proposed building.

22 • The proposal needs to allocate parking/ bus drop and pick up. • The school should have its own playing field with this supplemented by Meggetland. • Concerns regarding the proposed roof top sports pitch: o Prevents natural daylight o Increase in structure weight and expense o Long term water ingress due to flat roof construction o Net will be required over the pitch to prevent sports equipment landing on road etc. • The proposed building will be several storeys high which will prevent natural light entering the centre of the school. • Could land for the sports/ outdoor recreation be reallocated from the canal/ barge basin area? • Has closing Viewforth at the canal and using this space for the school been considered? • The new school needs to be allocated the space it requires. There is only one chance to get this right. • Consider location the new school on the site between Viewforth and Gilmore Park as it appears to be a bigger site. • I got the impression at the Buckstone PS meeting that CEC has already reached its position. I found the planner was there to justify the smaller site and I found him unconvincing. 113 Boroughmuir HS and 28 March 2012 Feeder Primary School Observations Parent • Disappointment that a top priority project identified in 2004 remains in such a preparatory stage. • Frustration that the impressive structural and educational facilities to be enjoyed by future Boroughmuir generations have been denied to the current generation. • Reservations about the capability (professional and financial) of CEC to commission the project within the proposed timescale, budget or funding conditions. • It seems probable that the economic environment and specific CEC capital and revenue funding facilities will continue to deteriorate, leading to inevitable delay, re‐design, dispute and overspend. Conclusions • We urge CEC to secure as much land as possible in order to maximise the potential of the site. • We reject the proposal to refurbish the existing school, primarily on the grounds that decanting the population of the schools is educationally and logistically disruptive, impractical and unacceptable. • How do CEC and teaching staff allay parents concerns that the present and next generations of pupils are not inconvenienced, overlooked or even sacrificed in the understandable rush of enthusiasm for the new school project? 114 Boroughmuir HS & 28 March 2012 Bruntsfield PS Parent • Supports Option A. • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. 23 • The proposed Burdiehouse decant is not desirable. • With regards to sports facilities alternatives to bussing to Meadowbank should be considered such as using Harrison Park and utilising sports pitches associated with George Watson’s College. 115 South Morningside PS 28 March 2012 Parent • Supports Option A as no decant needed. • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • The proposed Burdiehouse decant is not desirable. 116 South Morningside, 28 March 2012 Boroughmuir HS & Supports Option A for the following reasons: South Morningside PS • New build option brings significant educational advantages over both the status quo and the refurbishment Parent option. • New facilities would be available considerably earlier under Option A than Option B. • Option A avoids the undesirable decant associated with Option B. • Option A avoids the compromises on educational provision associated with Option B. • Securing planning consent for Option B would be complex, subject to delay and with uncertain outcome. 117 South Morningside, 28 March 2012 Feeder Primary School • Supports Option A. Parent 118 Bruntsfield, 28 March 2012 Boroughmuir HS • Supports Option B. Parent • Further investigation of utilising Fountainbridge site as a decant option is required. • Refurbishment is a far more sustainable option as the existing building can provide many more years of use on the existing site. • Building a new school will be more expensive than refurbishing an existing one. • Options for sports provision in neighbouring buildings should be investigated. • Refurbishment is a far more sustainable option as the existing building can provide many more years of use on the existing site. • I question the value of investing millions of pounds in a new school that will deliver only 0.1 of a hectare of additional space. This appears to be very poor value for money and contrary to the Scottish Government recommended requirement of 2.6ha. • The location of the Fountainbridge site is not child‐friendly. It is, on the north side, near a busy bus route and adjacent commercial entertainment park. On the east side is a narrow road (Viewforth) which at the canal bridge has very poor sight‐lines for drivers. • We applaud CEC for planning to commit substantial resources into producing a high quality school, at either site,

24 and we urge you to choose the existing site for the reasons set out above.

119 Address not supplied 29 March 2012 • A smaller classroom ensures fewer students and a better teacher/ pupil ratio. • Boroughmuir has retained these small classrooms because it is old and I think the parents have aright to demand that any new school does not surreptitiously increase class size because of budget restraints. • Politician after politician has promised smaller classes and failed to deliver. Smaller rooms could be regarded as a pre‐emptive stomach stapling – a means of ensuring that the classes don’t swell to become lecture halls. 120 South Morningside, 29 March 2012 Boroughmuir HS & • Supports Option A. South Morningside PS • The proposed decant would have a negative impact on education. Parent • Encouraged that new build option will increase the size of the school compared to the current Boroughmuir. 121 Buckstone, 29 March 2012 Boroughmuir HS • Supports Option A. Parent • The proposed Burdiehouse decant is not acceptable due to educational disruption. • I am not convinced that that refurbishment of the existing building would be anything more than a compromise to fit what will still be an old shell. 122 Boroughmuir High 28 March 2012 School Parent Council 1. The Process • While the detail on the two options is limited in the Consultation Paper overall the analysis of the two options is slightly biased towards creating positive impressions for the new build and negative ones for the refurbishment. • The Paper does not provide sufficient detail on the academic aspects to allow and informed view on the two options. • The Q and A format did not allow for any follow up to answers given by the panel and not an open forum for debate. 2. Parental Views • The balance of opinion favours Option A. • A number of parents, primarily within the Bruntsfield area, do have a level of attachment to the existing building and support the inherent sustainability benefits of the refurbishment option. • The amount of space being allocated for the new school is a source of major concern. Option A • Many parents expect CEC to find a planning solution which allows for a larger area of land. • Many parents call for full sports pitches to be provided, however we do recognise the difficulties of locating outdoor playing fields on an urban site.

25 • We acknowledge the need to have open space in the form of a park within the overall Fountainbridge site. Re‐ location of the park to the east side of Viewforth should be considered. As well as increasing the dedicated space available to the school, such a move would enable more cohesive use to be made of the proposed school site. Option B • There is considerable opposition to the Burdiehouse decant proposal. • For some parents the prospect of any decant is seen as unacceptably disruptive. 3. Summary • Majority of parents are in favour of Option A. • There is only limited support for Option B. • Key concerns with Option A: o Lack of space for the school; and insufficient sports/ recreation provision; and The siting of the park 123 Buckstone PS Parent 29 March 2012 • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption and increased distance and travel time. • Maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. 124 Merchiston 29 March 2012 Community Council • Supports Option A for the following reasons: o New‐build allows the chance to optimise the design of the school to fully meet future educational developments. o The school should have accommodation of the highest standard. o Apart from a sports pitch all of the accommodation would be on one site. o An undesirable decant would be unnecessary. o Decant would have a detrimental impact on education. o Presents better opportunities for use of the facilities by the wider community outside of school hours. o A new school in the Fountainbridge area would contribute to its regeneration and social improvement. • We welcome the revision of the catchment area to ensure that pupils resident in the Fountainbridge area attend their local high school. • We do have a reservation about the new school “spilling over” into the park. • We hope that it may be possible to utilise a larger piece of land than is proposed so that a new‐build school site would provide adequate recreational opportunities as per the Scottish Government’s Land Use Strategy. We would hope that the Director of Planning, who is on the board of Central Scotland Green Network, would support its principles and argue for creation of a healthy and green environment in the surroundings of the proposed new school.

26 125 Boroughmuir HS 29 March 2012 Parent • Supports Option A. • Maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. 126 Morningside 29 March 2012 Community Council • We feel strongly that it would be beneficial to have a full public consultation to gather the views of parents across the several communities involved. • We feel that the financial aspects have been over‐emphasised at the expense of the community and environmental perspective. • The space per pupil at the proposed new site is not significantly greater than the status quo. • Unconvinced by the benefits of proximity to a proposed new canal‐side park, welcome though a new park will be. • The proposed new site is not well served by public transport making it inaccessible from southerly parts of the catchment including Morningside and Fairmilehead. • We are confident that the expertise and creativity resident in Edinburgh makes Option B technically possible. • Many parents will not support Option B as this will involve the unpalatable proposed decant to Burdiehouse. • We feel that Option B is presented in an unduly limited way. • We would like to see a local decant explored more fully; refurbishment may then be assessed differently by parents. 2 options that occur are Darroch or temporary accommodation in situ. 127 Buckstone, 28 March 2012 Boroughmuir HS & Main concerns regarding the proposals: Buckstone PS Parent Educational Design Brief • The document appears to be dominated by mentions of cafes and restaurants whilst there is no mention of either the playground or disability. Sport is not mentioned much either. Consultation Document • I would have expected the financial assessment to be based on whole life costs and benefits (i.e. as per the HM treasury “Green Book”) and also take into account the carbon‐intensity of each option. Allocated Site Size • Both options provide a school on sites of very limited size which offer no potential to meet any possible requirement for additional space over the lifetime of the school. • The consultation document suggests that a rooftop pitch may be a possibility. However, there is no analysis of how the noise and light pollution problems associated with such an asset would be considered by the local community. Nor is there any estimate of how often such an elevated facility would be unusable due to adverse weather (particularly high winds). Conclusion • The public consultation meetings were specifically designed to stifle debate. The chair also allowed panel complete freedom to interpret the questions and answer them (sometimes) at undue length. • I would urge CEC to “maximise the site’s potential for the school. 27 • Rather than focussing on in‐built costs, consideration should be given to whole life costs AND benefits. Until these points have been resolved I cannot see how CEC can objectively choose between the competing options. • If CEC does opt for a new‐build school I would hope that as well as a cultural link to the current building, an architectural link is also maintained. Specifically, I feel that consideration should be given to incorporating the War Memorial into any new‐build school. 128 South Morningside PS 29 March 2012 Parents • Supports option A. • The proposed Burdiehouse decant is not acceptable due to disruption and increased distance and travel time. 129 Boroughmuir HS 29 March 2012 Parent & Feeder • Supports Option A. Primary School Parent • Refurbishment of the existing school is regarded, at best, a short‐term fix. • The proposed Burdiehouse decant is not desirable. 130 South Morningside PS 29 March 2012 Parent • Supports Option A. 131 Address not supplied 29 March 2012 • Supports Option A. • The proposed Burdiehouse decant is not desirable. • The proposed design is less constrained than that of Option B meaning that a better school will result. • I feel that the school will have the most flexibility to use the space provided if the site can be brought into one continuous space. Splitting the school site across the park will mean that something is going to be away from the main school. If there is no way to bring the site into one, then more space will no doubt be better than less, but I think that every effort should be made to bring them together. 132 Buckstone PS Parent 29 March 2012 • Supports Option A. • It would be sensible to try to allocate a larger site and full size sports pitches should also be provided. 133 Buckstone, 29 March 2012 Boroughmuir HS • Supports Option A. Feeder Primary Parent • I would like it to be one school building housing all pupils and facilities. • I would like to see the school of the maximum size recommended for the number of pupils anticipated to attend. • I would like to see sports facilities (also of sufficient size for the numbers of pupils) on the land next to the school i.e. no travel for the kids to do sports. 134 Boroughmuir HS & 29 March 2012 Buckstone PS Parent • Supports Option A. • Refurbishment projects, by their very nature, tend to overrun on programme and on budget. This is a consequence of encountering unforeseen issues that occur when dealing with an existing structure. 28 • A new school on an open site has fewer unknowns and therefore greater degree of cost and programme certainty. • A new build provides a better opportunity to meet the design brief as opposed to an existing building that you are trying to force your aspirations on in order to make it work. • If possible add to the overall footprint of the site by utilising the adjacent council land. 135 Address not supplied 29 March 2012 Supports Option B. • The meeting held at Bruntsfield Primary School regarding the two options was shockingly one‐sided. • The new build Option lacks adequate athletics provision. • Old buildings are being adapted in architecturally exciting and innovative ways – why not Boroughmuir HS? • The environmental message CEC is sending out by pursuing new build is totally irresponsible. Adaptive use is always more environmentally responsible than new build. • The new build would not fit with cultural landscape of its surroundings. • The area is unappealing with a student dormitory, a canal and a grim shopping centre in close proximity. • Fountainbridge/ Dundee Street are busy and dangerous. CEC is being wilfully naïve about these issues. • Where did CEC get its budget projections for new build versus an adaptive use project? • How many architects were consulted for an adaptive use project? It seemed CEC used figures that supported their preferred option: a new build. • I strongly believe that historic fabric should be inhabited, adapted and used. Is CEC more interested in turning a profit by selling the old school site for development into luxury flats? 136 Address not supplied 29 March 2012 • Supports Option A. • My hope is that the site size and spacing requirement per pupil can be resolved for the best interests for those pupils who will attend. 137 South Morningside, 29 March 2012 Boroughmuir HS & • Supports Option A. South Morningside PS • I hope it will be possible re‐think the site, enabling all of the school building to be built together. This will require Parent the planned park to move somewhat and even be reduced in size. • I’m sure a good refurbishment is achievable – however the proposed decant to Burdiehouse is not a desirable solution. An alternative, with the decant taking place at the Fountainbridge site would seem to be a better option. 138 South Morningside, 29 March 2012 South Morningside PS • Supports Option A. Parent • The refurb option would be a huge upheaval for the school community for what seems comparatively little overall benefit. The proposed decant to Burdiehouse is not a desirable solution. • The new build option keeps community continuity and is near the same bus routes as the existing school building and provides a better outside space and setting with the canal. 29 139 South Morningside, 29 March 2012 South Morningside PS Supports Option B. Parent • There is no direct public transport link between the proposed Fountainbridge site, and the majority of the catchment area. This is contrary to CEC’s own “safer routes to school” programme. • There is no clear advantage in increased space at the new site. Many sporting activities will still be restricted to by lack of space or will have to take place in facilities elsewhere. The new site will, in fact, be further from the nearest significant green space of Bruntsfield Links and the Meadows. • It is a national planning policy that the best use of a listed building, such as the existing Boroughmuir school building, is for that building to be RETAINED in its original use. • During the last consultation regarding a move to the Fairmilehead site detailed proposals were presented for the refurbishment of the existing school. No explanation has been offered as to why these proposals have not been re‐issued as part of the current consultation. • It does not appear that the CEC have considered a single refurbishment scheme for the existing building. It does not seem possible to present a proper recommendation one way or the other without more balanced information. • Burdiehouse has been identified as the proposed decant option. There is no indication of what alternatives, if any, were considered. This information should have been made available as part of the consultation process. • As regards using the Fountainbridge as a site for temporary decant accommodation a phased disposal would not necessarily reduce the overall value of the site, and any costs involved in temporary occupation of the site might be offset by the potential increase in value over the period. • A short delay in the project would mean that Darroch would be available as a decant: there has been no attempt to find out if the option of a short delay would be acceptable to the school community. • To insist, therefore, that the only decant option is at Burdiehouse is inaccurate, and gives the impression that CEC wishes to discourage any interest in the refurbishment option by loading additional disadvantages on it. • From the consultation paper it is clear that full life‐cycle costing of the two alternatives has not been carried out. 140 Boroughmuir HS, & 29 March 2012 Catchment Primary • The proposed Fountainbridge site is not large enough for its purpose Parent • Reallocation of the park area to the east side of Viewforth and use of the full 1.3 ha on the west side next to the student housing for the school should be considered. It would be a cohesive and sensible use of that piece of land. • With a larger site there will be more design freedom within the project allowing the delivery of facilities which the wider community can also benefit from improving its links with the local community. Once in a lifetime opportunity. 141 Bruntsfield PS Parent 29 March 2012 • Supports Option A. • This option will lead to a better school in a pleasant setting by the canal and, very importantly, it would avoid the need for a decant to Burdiehouse. 30 142 Bruntsfield PS Parent 29 March 2012 • Supports Option A. • I have considerable reservations about the refurb option as the existing site is small and constrained and overshadowed by surrounding buildings. • If Option A is to proceed and receive support additional land should be acquired to improve its educational viability. • Whilst the decant to Burdiehouse is unacceptable CEC has “loaded the dice” against Option B by proposing it at all. • Why is not an option to use the site to the east for Viewforth? • The full amount of budget should be allocated to this important project. 143 Address not supplied 30 March 2012 • Supports Option A. • Small site is very limiting ‐ maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. The new school should be drawn into one building rather than split into two on one campus as this has a great bearing on positive behaviour within the school. 144 Boroughmuir HS & 30 March 2012 Buckstone PS Parents • Supports Option A. • The proposed decant to Burdiehouse would be hugely disruptive and unacceptable. 145 Boroughmuir HS & 30 March 2012 Bruntsfield PS Parent • Supports Option A. • The proposed decant to Burdiehouse would be disruptive and unacceptable. • A new school would best serve the educational needs of children providing an opportunity for CEC to deliver a facility that is bespoke, modern, innovative and best suited to educational provision in the 21st century. • Maximise and optimise use of space to deliver curriculum for excellence and sports opportunities. • The new school should be brown into one building rather than split into two on one campus as this has a great bearing on positive behaviour within the school. 146 Address not supplied 30 March 2012 • Supports Option B. • The existing building should be refurbished – it is a magnificent building and should be preserved for the purpose it was built for. Surely it is of huge importance to the city to protect and care for all existing schools and their pupils and indeed all the history behind them and for their future. 147 Bruntsfield PS Parent 30 March 2012 • Supports Option B. • Refurbishment is a far more sustainable option as the existing building can provide many more years of use on the existing site.

31 • The existing school’s location is the source of its sense of belonging, tradition and sense of history. All very important to education. • Decanting to the Fountainbridge site would be ideal. Failing that, then perhaps waiting for Darroch to become available is an option. But whatever the location of the decant, I would always support refurbishment over a rebuild. 148 Boroughmuir HS 30 March 2012 Parent Supports Option B. • The Burdiehouse decant proposal is disingenuous as it forces parents to support Option A. There are no statistics to support the “fact” that decant will affect attainment levels. It doesn’t appear that other site options have been fully investigated. Fail to understand why the purchased site cannot be used as a decant location for temporary buildings. • The Fountainbridge site is small constrained and not significantly better than the current one. The surroundings are less secure and there is no increased provision of sports facilities that could not be proved on the existing site. The canal is potentially dangerous. Harrsion Park is not far from the new school site; I don’t understand why options have not been explored for potential sports facilities there to make relocation work better. • I believe Malcolm Fraser when he maintains that the new curriculum can be delivered via refurbishment and adaptation of the existing school. Listed Building status should not pose as much of a constraint as CEC has stated. The current school location benefits from proximity to bus links and proximity to open space at Bruntsfield Links; too much is being played about the proposed pocket park within the emerging masterplan for Fountain Park. There is little comparison to make. The surrounding residential land use of the existing school provides natural surveillance leading to a sense of safety. • The building contributes to the Edinburgh skyline and gives the school a sense of gravitas and place that will not be achieved by a new school within the Fountain Park environment. A small spend from lots of pupils helps the character of Bruntsfield to survive which benefits the local economy. These will be huge losses in the relocation. • In summary, staying on site is a more sustainable solution and short term benefit is being promoted rather than long term investment. 149 EH10 30 March 2012 I strongly object to the context of the proposals for the location of Boroughmuir High School as follows: • The Fountainbridge site is not an appropriate site for Boroughmuir HS as it is almost outside its existing catchment boundary. The school would be in a commercial area away from essential amenities. It is also too small and constrained as a site for a new school. • The park space would be shared with the public and divides the development site. • Object to the so‐called commercial sensitivity stated by CEC as grounds to not divulge the purchase price for the Fountainbridge site. • The site could well be utilised as a decant site for the existing school and subsequently sold off. • Promoting Burdiehouse as the only possible decant site for Option B is an obvious strategy for discouraging school 32 parents from considering Option B. • Option B is more environmentally sustainable in the long term. • Other sites such as Astley Ainslie should be investigated before proceeding with the one proposed. 150 Bruntsfield Primary 30 March 2012 School Parent Council We do not express a preference for either option but rather seek to reflect the key concerns which have arisen amongst parents about each option. Option A: New build on the Fountainbridge Site • The site is a small area of land relative to Scottish Government guidelines. • Lack of on‐site sports facilities. Urge CEC to think creatively about using other local open space such as Harrison Park in addition to space immediately around the school building. • The impact on the school catchment. What plans does CEC have to ensure that Bruntsfield PS does not become repeatedly over‐subscribed in years to come with in‐catchment pupils at P1 entry? Option B: Refurbishment and extension of the existing building • Burdiehouse is not a tenable decant option. Parents find it difficult to understand how a decant site closer at hand cannot be found, and indeed why the Fountainbridge site itself cannot be utilised. • With reference to both options we would ask to what extent teaching and support staff outwith the SMT at BHS have been involved in and been given the opportunity to influence the SMT position. • We feel that the Educational Design Brief is lacking in many respects, and there was no consultation with the Parents Councils during its preparation. • It will therefore be important whichever option is chosen to engage meaningfully over the detailed design of the building, and with Cluster Parents Councils to ensure it meets their needs and aspirations for delivering Curriculum for Excellence (and any successive curricula) over years to come. 151 Buckstone, 30 March 2012 Buckstone PS Parents • Supports Option A. • This will have the best educational benefits for all children. • As much of the new site as possible should be used for the school and its outdoor space. • The proposed Burdiehouse decant is not acceptable due to educational disruption. 152 Buckstone PS Parent 30 March 2012 • Supports Option A. • The proposed Burdiehouse decant is not acceptable due to educational disruption. • The purchase of additional land at the new site would further enhance the quality of educational life for the pupils. 153 Address not supplied 30 March 2012 • Supports Option B. • Whilst appreciating the costs involved, the strength of argument on the grounds of the school’s history, its sense of identity and the architecture’s aesthetic appeal is far greater. 33 • Option B would be a more valuable use of budget in terms of a legacy to lie down for the school’s future generations of pupils.

154 Address not supplied 30 March 2012 • I think that CEC is being disingenuous in the way you are deliberately proposing a decant proposal for the refurb option that you know categorically will be unattractive to parents, and I don’t think you are open to considering alternatives which you should be. • The new site with the split building approach is too small and constrained. • This option should not be promoted as it discriminates against the refurb option which given the new build option it is actually preferable. 155 Buckstone PS Parents 30 March 2012 • Supports Option A. • This will have the best educational benefits for all children. • The proposed Burdiehouse decant is not acceptable due to educational disruption. 156 Grosvenor Britain & 30 March 2012 Ireland • Ultimate owner (through a company called Fountain North Limited) of a large element of development land in Fountainbridge. Comment in regard to the proposed catchment boundary • It is vitally important for any school to be a hub for community life beyond the normal school hours. • The school could divide the community and effectively alienate itself from those who could benefit the most. • We would like to see the catchment area considered not just in terms of the location of the new school but with wider consideration for the opportunity surrounding it. • I would suggest most strongly that the present recommendation for the school’s catchment be amended to include the new Fountainbridge development area, which will significantly benefit the area’s new and emerging community. 157 EH4 30 March 2012 • As residents of Admiral Terrace we are deeply shocked and anxious that we have not been approached, informed or consulted about the proposed change that will impact directly on lives and indeed the value of our property should the school be sold on to developers. • If the school is abandoned and sold on to property developers it will no doubt be turned into housing. That will impact directly on all residents. There will be an enormous rise in noise, traffic and of course huge impact on the already ridiculously pressurised parking situation. 158 The EDI Group 30 March 2012 • EDI have a development position in relation to the former brewery site, part of which is the proposed location for the new build option. • EDI considers that the catchment area boundary should consider the wider regeneration of the Fountainbridge

34 area. Further, there are better physical boundaries on which to promote the boundary change. • The current proposals do not reflect the potential for the school’s significant position at the heart of the Fountainbridge area and as a result could result in a lost opportunity to assist the wider regeneration of the area. • To this end the catchment area all the land formerly occupied by the brewery which, collectively, will form the future community of Fountainbridge. The current proposals could divide the community and effectively alienate those who could benefit most. • The proposal should be amended to include the wider new Fountainbridge development area, which will significantly benefit the area’s new and emerging community. 159 DTZ representing West 30 March 2012 Register • West Register are owners of a site on the south side of Fountainbridge adjacent to and to the west of Edinburgh Quay, part of the former Scottish & Newcastle site, and previously referred to as “The Tartan Club”. • The concern is that the current proposal does not reflect a catchment which places the school at the heart of the Fountainbridge community. The new school due to the current catchment boundary could have the effect of dividing the Fountainbridge community. • The revised catchment should take the opportunity to encompass the entire Fountainbridge community, and take the opportunity to help bind it together. • I would propose that the present recommendation for the school’s catchment is amended to include the new Fountainbridge development area, which will significantly benefit the area’s new and merging community. 160 EH10 30 March 2012 • Irritated by bias towards the new build option. • Many of the facts presented are not only wrong but are a misrepresentation: o Cost of the two options: looking at the comparison of the two options over a life cycle of say 60 years where capital and revenue costs are compared along with life cycle replacement of the building elements would result in the refurbishment option being even more cost effective than the new build. o Programme: the reasons given for the difference in programme period are flawed. o Sustainability: Option B is the more sustainable option. The reuse of a Victorian/ Edwardian purpose‐built school which, if refurbished properly, will last for another 100 years is significantly more environmentally friendly than constructing a new build school using modern methods of construction. o In terms of disposal of the current site there is currently no market for residential flats and no appetite from developers. • The consultation paper is heavily weighted in favour of new build. • I am aware of a developer who has an alternative proposal which has been put to CEC which would allow it to refurbish the existing school at no capital cost whilst decanting the school to an alternative site close to its existing location. This has not been mentioned in either the consultation paper or at public meeting.

35 161 Address not supplied 30 March 2012‐ • Supports Option A. • I believe this is the strongest option which would best serve the interests of students, present and in the future. 162 Boroughmuir HS & 30 March 2012 Buckstone PS Parent • Supports Option A. • A new building will allow a far netter match to the Education Design Brief and as well as allowing for minimum disruption and a shorter development programme. • CEC should consider the increasing the size of the site for the new build as this seems to makes sense i.e. make optimum use of the site purchased by the council. 163 Boroughmuir HS 30 March 2012 Catchment Parents • Supports Option A. • This is the best educational option for the children plus the best for our community in helping to regenerate a part of town desperately in need of some soul. • It is encouraging that the new school can accommodate areas for the children to dine on the premises. 164 Bruntsfield PS Parent 30 March 2012 Supports Option B for the following reasons: • Longer term cost projections than 40 year life cycle change projected value for money. • The existing building when refurbished will be the better building in the longer term. • The canal site is too constrained for the purpose of a modern secondary school. • Option B is the more environmentally sustainable option. • Feasible non‐Burdiehouse decant options can be investigated and identified. • Demographics/ catchment issues. • Decant is not necessarily harmful to education. 165 Primary School 30 March 2012 Catchment Parent • What I am really concerned about is the small area of land available for the new school. • The school should be shared with the community. Classrooms can be used for adult education and sports facilities are useful for local people and nearby primary schools. • During the school holidays schools can be used by the wider community. • I strongly hope that most of the available area will be used for the new school. It will help the environment, health and actually money in the future. • Please ensure that the extent teaching and support staff outwith the Senior Management Team at Boroughmuir HS will be given sufficient time to reflect their suggestion. 166 Boroughmuir HS 30 March 2012 Parent Supports Option B for the following reasons: • The existing building is structurally sound and can be adequately refurbished to meet educational needs.

36 • This option allows the retention of St Oswald’s Hall for a creative arts centre that the wider community can enjoy outside of school hours. • The school should be preserved within the Bruntsfield community in a physical and economic sense. • The small area to the east Viewforth with the Foutainbridge development site should be dedicated to sports facilities to be utilised by the school and the wider community. • A more sensible decant option than Burdiehouse should and can be identified. • With regards to Option A the following problems must be resolved during the planning process: o The proposed site is too small o The constrained site will produce “spill over” into an area with heavy and dangerous traffic levels. o Proximity to a public park and student residences will be a security risk for pupils of the school. o The Fountainpark Leisure Park presents a risk to school pupils which must be managed in some way. o Local sports facilities must be provided to avoid bussing pupils to Meggetland etc. o The wider plan for Fountainbridge redevelopment must account for the particular nature of a high school. 167 Bruntsfield, Bruntsfield 30 March 2012 PS Parents Supports Option A for the following reasons: • We are content with CEC’s conclusion that Option A represents the best option in all the circumstances. • The space for the school (esp. green space) must be maximised. • Selection process must give weight to architects with experience of innovative and effective school designs rather than the DBFO delivery route. • Partial use of Harrison Park should be considered with regards to sports provision. • Excited about the proximity of the canal opening up possibilities for outdoor recreation and sport on the canal. • We have very serious concerns about road safety. An additional, dedicated, footbridge over the canal at Viewforth or at the other end of Horne Terrace should be seriously considered. • Should be sensitive ‘disposal’ of the existing building – family housing rather than flats would seem the better option. • Future of St Oswald’s Hall also needs to be considered so that an excellent educational/ concert venue is not lost. 168 South Morningside 30 March 2012 Parent • Supports Option A. 169 Bruntsfield PS Parent 2 April 2012 • Completely opposed to a possible decant to Burdiehouse in the case for the refurbishment option. The complicated, long and inconvenient journey this would impose is untenable. • With regard to the new build option it is imperative that better provision is made for on‐site sports facilities. 170 Buckstone, 31 March 2012 Feeder Primary School • Supports Option A. Parent • The proposed decant to Burdiehouse is unacceptable. • I think it would be great if the school site could be bigger and accommodate full facilities on site; however my 37 focus is on the new build proposal.

171 Feeder Primary School 30 March 2012 Parents In our view both options are flawed. Option A: • The size of the site is too small. We do not favour the park splitting the school as currently proposed. • CEC should acquire more land to deliver additional space for the proposed new build school. • The allocation of additional space would also address our concerns about the lack of dedicated outdoor school space. • We are also far from convinced about having outdoor sports facilities on the roof of the building. Option B: • This option is ill‐conceived and of no real merit. • The associated decant proposal is not at all attractive. • We are concerned that Option B could persuade parents not to send their children to BHS and to explore other options. • CEC have promoted Option A to the exclusion of Option B. 172 Boroughmuir HS & 30 March 2012 South Morningside PS • Supports Option A. Parent • The proposed decant to Burdiehouse is unacceptable. • A new build will be a great environment for the children and would be the less expensive option. • Why could the Fountainbridge site not be used as decant location? • Has the option of using BOTH the existing Viewforth site and the Fountainbridge location to make a 2‐site school of far larger area been considered? 173 Brunstfield PS Parent 30 March 2012 • Supports Option A. • The thought of a decant to any location and the fact that the refurbishment would not deliver as good an environment for my children and cost more in the long term makes this a “no‐brainer” for me. 174 EH3 2 April 2012 • I will object very strongly to any “Spill out” of the new school into the public park for the following reasons: o The idea that the new school could “spill out” to the park or the canal side, which is owned by British Waterways and historic building is untested, unapproved and therefore misleading. o Attempted “spill out” will lead to a reduction of public amenity which had replaced a public park on Dundee Street which Cityheart was given permission to build on only if they created the new canal side Park.

38 o A new school will require to be secured from public access and the boundaries between it and the park will require to be fenced to exclude the public. Thus any “spill out” will require to have the public excluded and thus reduce the public amenity.

175 EH10 30 March 2012 • Supports Option A. • Concerned that the proposed site by the canal would still not have sufficient space. • I would hope that if a new school is to be built CEC would make the most of the opportunity to create a state‐of‐ the‐art school for our children, providing them with an excellent place of learning. 176 Feeder Primary School 30 March 2012 Parent • How will the data collected from the consultation process be processed? Will it be independently collated? • Do views of Boroughmuir SMT reflect wider staff views? • The counter‐arguments to the preferred option were not adequately presented. • We have a right to protect iconic assets such as Boroughmuir HS. • Concern that adequate space is proposed for sports facilities. • There is concern that CEC have been disingenuous with the inclusion of the Burdiehouse decant proposal. There are other options that should be considered. • If a new build emerges as the only option CEC has a responsibility to ensure that it is fit for purpose and children are not being transported to indoor and outdoor sports facilities. 177 South Morningside, 30 March 2012 Boroughmuir HS Supports Option B. Feeder Primary School • This will preserve, update and utilise a listed building which is the heart of a very traditional and successful school. Parent • Moving the school to the north does not make sense in the long term for the school estate. • I do not support the proposed Burdiehouse decant. Why can nearer available premises such as Polwarth CEC buildings or CEC Parks etc not be utilised for a decant? • Why would Option A take apparently so much longer than ‘new build’? • I am concerned that the upper level 7 a side pitch may not be delivered. • I support refurbishment with a revised, more local and time shrunk ‘decant plan’.

39 APPENDIX 4

Consultation proposal by The City of Edinburgh Council

Report by Education Scotland, addressing educational aspects of the proposal for the location of Boroughmuir High School and associated catchment area changes affecting Boroughmuir and Tynecastle High Schools and Bruntsfield and Dalry Primary Schools.

1. Introduction

1.1 The City of Edinburgh Council is consulting on options to improve Boroughmuir High School. Its consultation proposal sets out two options. Option A, the council’s preferred option, is to relocate Boroughmuir High School to a new building on the Fountainbridge site. This is a short distance from the present building at Viewforth. This option also requires a minor associated catchment area change. Option B is to refurbish and extend Boroughmuir High School on its existing site at Viewforth with an associated temporary decant to Burdiehouse on a site over four miles from the present school.

1.2 The report from Education Scotland is required under the terms of the Schools (Consultation) (Scotland) Act 2010. It has been prepared by HM Inspectors in accordance with the terms of the Act.

1.3 HM Inspectors undertook the following activities in considering the educational aspects of the proposal:

• attendance at one of the four public meetings held in March 2012 in connection with the council’s proposals;

• consideration of all relevant documentation provided by the council in relation to the proposal, specifically the educational benefits statement and related consultation documents, written and oral submissions from parents and others;

• visits to Boroughmuir High School, including discussion with relevant consultees, and to the sites proposed for the building of a new school under Option A and for the decant arrangements required under Option B.

1.4 HM Inspectors considered:

• the likely effects of the proposal for children and young people of the school; any other users; children likely to become pupils within two years of the date of publication of the proposal paper; and other children and young people in the council area;

• any other likely effects of the proposal;

• how the council intends to minimise or avoid any adverse effects that may arise from the proposal; and

1 • benefits which the council believes will result from implementation of the proposal, and the council’s reasons for coming to these beliefs.

2. Consultation process

2.1 The City of Edinburgh Council undertook the initial consultation on its proposals with reference to the Schools (Consultation) (Scotland) Act 2010. The consultation included an invitation for written submissions. There were four public consultation events, which gave parents and other members of the public the opportunity to hear presentations from and ask questions of council officials and senior members of Boroughmuir staff. The consultation events included presentations showing the location and configuration of the new school at the Fountainbridge site under Option A, and the site proposed for the decant under Option B.

2.2 The council received written responses from 177 groups and individuals to the consultation. Of those expressing a preference, almost 90% were in favour of Option A, the new build at Fountainbridge. However almost half of those who favoured this option expressed varying degrees of concern in relation to aspects of the proposed provision. These concerns mainly related to the constraints of space in the proposed Fountainbridge site, especially for sport, and to the positioning of the proposed public park at Fountainbridge relative to the planned school buildings.

2.3 Just over 10% of those written consultation responses expressing a preference favoured the refurbishment Option B. There were a variety of reasons given for this preference including a view that this option had better long term sustainability than Option A, preserved better the tradition of education in the Viewforth area and that an imaginative refurbishment would produce an exciting educational environment. Some of those favouring Option B, also had concerns in relation to safe walking routes to the Fountainbridge area from the bus stops used by young people and in relation to the physical environment in the area around Fountainbridge.

2.4 Consultation responses demonstrated a high degree of concern over the decant proposal within the refurbishment Option B proposal. Altogether, of the 177 written responses, just under half included expressions of concern about the proposed decant to Burdiehouse. This number included around 60% of those who favoured Option A but also over half of those favouring Option B. The Burdiehouse decant was generally regarded as highly disruptive to children’s education as well as being very problematic in terms of travel arrangements. The most common alternative suggested to the Burdiehouse decant was instead to decant to the Fountainbridge site (the proposed location for the new build in Option A).

2.5 Around 15% of the 177 written responses expressed no clear preference for either of the council’s two Options. A significant proportion of these, as well as some of those favouring both Option A and Option B, expressed to varying degrees the opinion that the choice of Burdiehouse as the decant site for the refurbishment proposal (Option B), had resulted in the consultation being skewed in favour of the new build at Fountainbridge (Option A). A few of those who stated an overall preference for Option A made it clear that, had there been an alternative

2 arrangement proposed for the decant, they might have favoured instead the refurbishment option. However other parents explicitly stated that they would not have been in favour of a decant regardless of the location of the site.

2.6 The council had not taken a systematic approach to gathering the views of children and young people on its proposal. However, the main aspects of the two options had been shared with the Boroughmuir pupil council earlier this session. This representative group, after initially favouring a refurbishment of the existing building, changed its preference overwhelmingly to the new build at Fountainbridge option, after taking into account the implications of the Burdiehouse decant. A group of S1–S3 pupil council members interviewed by HM Inspectors were very strongly of the view that a decant to Burdiehouse was not in their best interests. They felt that it would be better to have continuity of education in the present building followed by a smooth transition to a new build school at Fountainbridge.

2.7 As part of the process leading to the council’s specification for the new school, teaching staff were consulted on a subject department basis on the type of accommodation they would wish to have to enable them to deliver a modern education. They are to be consulted again at a more detailed level on specific points in the planning for the refurbished or new building following a decision on which option is to proceed. HM Inspectors met with a representative group of teaching staff. This group were all in favour of Option A and felt that other teachers from their departments would take the same view. They felt that the Burdiehouse decant would pose significant problems in terms of its location, travel arrangements, facilities on site and the resulting delay in the move to a modern teaching environment. They also felt that some parents might move their children to another city school rather than have them educated in a temporary site in an inconvenient location. At the same time this group had some concern about the lack of space for outdoor education and sport at Fountainbridge and hoped that a way might be found of allocating more space for the dedicated use of the school. A small group of administrative and support staff interviewed had mixed views but most favoured the refurbishment option for a variety of reasons.

2.8 The headteacher and the senior management team strongly supported the new build at Fountainbridge, Option A. The school’s Parent Council provided a written report to the council which also indicated very strong parental support for the new build at Fountainbridge. However, the Chair of the Parent Council confirmed that parents had important reservations in relation to the limitations of space at Fountainbridge, the lack of outdoor sports provision and the location of the park in relation to the school. Many parents felt that the council should now make every effort to find additional space dedicated to school use from the area of land now owned by the council at Fountainbridge. They felt it should be possible to find space to provide the school with additional dedicated outdoor sporting facilities without unduly restricting the ability of the council to use the remaining space in a way appropriate to wider regeneration development. The Merchiston Community Council submission also supported Option A. However, the Morningside Community Council submission expressed concerns about limitations of space and the location of the new build site in relation to Option A. It favoured refurbishment but also requested that the council consider alternatives to the Burdiehouse decant.

3 3. Educational aspects of the proposal

3.1 There is general agreement that the present quality of the school’s accommodation is no longer suitable for 21st Century education. In 2004 the council placed the school as the top priority for replacement in its second schools Public Private Partnership project. This followed an HM Inspectorate of Education (HMIE) inspection in 2001 which evaluated the school’s accommodation as having important weaknesses and recommended that the school’s accommodation should be improved as resources allowed. The council however experienced great difficulty in finding a suitable and affordable site for a new building. Another HMIE inspection in 2008 recommended that the school and education authority should ‘actively address the inadequate accommodation and facilities’. The school had in fact already been included in the council’s Wave 3 school replacement programme. Following a Government offer of funding in 2010 towards the cost of the construction of a new school, the council purchased the Fountainbridge site in order to enable the option of a new school to be built.

3.2 In 2011 the council employed an experienced education design advisor to lead a project to develop a Strategic Educational Design Brief (SEDB) for the new school. This development involved consulting school staff so that their vision for learning and teaching and how this might be organised within a new building could be taken fully into account. The resulting SEDB specifies the accommodation requirements to enable young people to experience a quality education fully in line with Curriculum for Excellence. It incorporates an approach to organising and locating subject departments within five faculty zones with a layout which supports interdisciplinary work with larger groups of learners as well as class and individual/smaller group learning. The SEDB would provide significantly enhanced facilities for learners and staff. As such, a school built to the SEDB specification would provide the facilities suitable for a modern education and enable the school to meet fully its aspirations in relation to Curriculum for Excellence. A new build at Fountainbridge would provide a building fully meeting the SEDB specification. However, the council has indicated that, if Option B were pursued, the constraints of the old Viewforth building mean that there would inevitably be compromises in the layout giving a reasonably good but not perfect fit with the SEDB specification. Nevertheless, either of the council’s two proposals, Options A or B, would provide learners with a considerably enhanced learning environment over and above the present provision.

3.3 The council recognises that neither of the two options being proposed will result in a school fully meeting the requirements of the Schools Premises Act 1967 with regard to the size of the site. Under either option the council is planning for a school roll of 1150 which it considers sufficient for projected future school intake. The Fountainbridge Option A site would provide 1.0 hectares with access to a proposed 0.3 hectare public park which the council considers the school could utilise for both recreational and learning opportunities. The council has made a submission to Scottish Ministers requesting dispensation for a new build at Fountainbridge under the 1967 site size regulations. The Option B refurbishment proposal would be undertaken within the present and smaller Viewforth site. The overall floor space in the building within the SEDB specification for either option meets or exceeds the requirement of the 1967 Act.

4 3.4 The facilities proposed under Option A at Fountainbridge represent a significant improvement on the present accommodation. The total area of space for educational use would be significantly greater than at the present Viewforth site without the need for young people to travel to another building for parts of their education. This is presently the case at Viewforth where young people have to cross a road and walk along a public street to reach the building used for aspects of expressive arts provision. The positioning of the park, which is integral to the planning permission already granted for halls of residence for Napier University students at Fountainbridge, was a matter of concern for some parents who would prefer this space to be given to the school for additional sport facilities. The council is presently investigating the possibility of making some alteration to the park configuration. However, even with no change to the present plan, there would undoubtedly be advantage to the school in having a small park area in close proximity to the school to be used at times for educational purposes and for young people to use at lunch times. For the latter purpose the park area would provide a suitable area without any need for young people to cross streets.

3.5 At present the school makes use of outdoor playing fields at Meggetland some 1.4 miles from the Viewforth site, an arrangement which has been criticised in the past by HM Inspectors. Both of Options A and B require a continued need to make use of Meggetland, which is also 1.4 miles from the Fountainbridge site. Although the sporting and changing facilities at Meggetland have been upgraded significantly, the need to bus pupils to and from the school remains a weakness in the school’s provision and is costly both in terms of time and money. The importance of improving young people’s heath and fitness is now a Scottish Government priority. These factors strengthens the argument, supported by a high proportion of those responding to the consultation, that the council should do everything in its power to maximise facilities for sport and outdoor activity at the Fountainbridge site. The council intends that under Option A, the new building at Fountainbridge would have a multi-use games area or outdoor pitch through innovative use of roof decks. It has confirmed the feasibility of this through investigating similar approaches in some London schools. Staff in the school feel it may be possible as part of option A to develop an area which could be used for sport and exercise both by the school and by members of the community at evenings and weekend. Limitations of space and probable planning constraints at Viewforth prevent any comparable additional sports facilities within Option B. Although the roof deck proposal within Option A is a welcome strengthening of the school’s sporting facility, the council should continue to explore all options within the Fountainbridge site to provide additional space for sport and outdoor activity.

3.6 The important weaknesses identified in the accommodation at the present Viewforth site continues to place limitations on the quality of young people’s educational experiences. In particular, the layout of the accommodation restricts the extent to which teachers are able to employ imaginative and stimulating approaches in line with Curriculum for Excellence. It is therefore desirable that the new school is built as soon as possible. The council’s proposal paper outlines a timescale for each option. It is envisaged that the new build at Fountainbridge Option A would start on site in the summer of 2014 with a completion in summer 2016 ready for the 2016/17 school session. As a result, the current S1 cohort would benefit from the new school when in S6. For the refurbishment Option B, the council expects that it would be late

5 2014 before work could start on-site and that the refurbished building would not be completed until early 2018. As a result, none of the present Boroughmuir High School pupils would benefit from the new building. Those currently in P7 would move into the refurbished building towards the end of their S6 year.

3.7 Under Option B, there would be a need to decant the whole school to alternative premises for the three year duration of the refurbishment. There is reasonable and widespread parental and teaching staff concern about the impact of this on young people’s educational experiences. After considering a large number of potential decant sites, the site of the former Burdiehouse Primary School was selected as the location for the construction of a school decant village. This would consist of temporary accommodation including two-storey modular units with a 700 square metre temporary gym hall for sports and assembly. There would be some play space. The council recognises that the location of the site, well outside the catchment area and some 4.3 miles from the present school building is problematic. The area is well served by a bus route connecting it to the Boroughmuir catchment area. However, because of the distance involved over 500 young people would require bus passes for the duration of the decant. At the moment, fewer than 30 require bus passes. Those directly affected under the planned timescale would include young people presently in P2 through to those currently in S3. The most significant impact would be on seven cohorts of pupils from the present P3 to the present S2 who would all be decanted for more than one session.

3.8 At present, Boroughmuir is one of the most utilised schools in the city for adult evening education. Option A would allow these classes to continue at Viewforth and then move to the new school at Fountainbridge without disruption. Under Option B, the situation is less clear as for a three year period accommodation for the evening classes would have to be found elsewhere in the city. The situation under Option B is further complicated by the fact that at the nearby James Gillespie’s High School, major construction work and a partial decant would, for at least a year, overlap with the closure of the Viewforth building for the Boroughmuir refurbishment. In consequence the space available in the local area for adult education would be significantly reduced. Alternative provision in other areas of the city may not be attractive or convenient for many adult users.

3.9 The new building at Fountainbridge under Option A would be marginally outside the present catchment area so that this option includes a proposal to extend the Boroughmuir catchment area to the north. This is a relatively minor change which affects only two residential streets with a very small number of school aged children.

3.10 In the case of both options there are factors to be considered in relation to the routes taken by young people to school. In the case of Option A, the proposed Fountainbridge site is some 430m north of the existing site. This means that many young people getting off the bus at Bruntsfield Place would have further to walk to school. The council is aware of the importance, if this option is chosen, of ensuring that any necessary changes to traffic and canal crossing arrangements are made to ensure the safest possible route to school and has begun to investigate the possibility of a new pedestrian bridge to the planned school site. In the case of Option B, the council would have to consider how best to ensure young people’s

6 safety given the likelihood of increased traffic in the area. In addition, there would have to be careful consideration of whether existing bus capacity would be sufficient for the additional volume of young people likely to be travelling to and from one part of the city to another.

4. Summary

4.1 The present Boroughmuir High School building is no longer fit for purpose and there is general agreement that a new school should be built or the present building refurbished. The council has developed a specification for a new school. A building meeting this specification would provide learners and staff with very good facilities for meeting the requirements of a modern 21st century education. Young people would benefit from significantly improved social and educational facilities in a building with well-resourced accommodation designed to promote flexible learning and teaching approaches consistent with Curriculum for Excellence.

4.2 Either of the council’s proposals would result in a school campus of limited size and with a continued need to make use of playing fields some 1.4 miles from the school building. However, given that these arrangements for sport are a continuation of the present situation, and that either option would meet the council’s SEDB specification, there is no doubt that those young people attending such a school would have a clear educational gain as compared to their being taught in the present building.

4.3 Despite the limitations of space and the continued need for young people to make use of Meggetland for part of their physical education programme, HM Inspectors are of the view that the new build option at Fountainbridge, Option A, is to the overall educational advantage of the young people concerned. A building meeting the council’s SEDB specification has the potential to enable staff to deliver a high quality educational experience. The new build option also has the great merit of not requiring any decant thus avoiding any disruption to young people’s education as the school can continue to make use of its present accommodation at Viewforth until the new building is ready. This option also allows community users to continue to benefit from the use of a local school. If this option is chosen it will be important for the council, while taking into consideration the needs of the wider community and the need for regeneration of the local area, to seek to maximise the amount of space at the Fountainbridge site for outdoor activity. In taking forward its proposal, the council needs to also give careful consideration to any potential traffic risks to young people and take appropriate steps to minimise these.

4.4 In the case of the refurbishment Option B, despite an eventual educational gain in relation to the present accommodation, there is the potential negative impact of the proposed three year decant to the Burdiehouse site to consider. The overall impact of a decant over such a long period on young people’s education is not easy to predict. However, there are several adverse factors associated with the decant which cumulatively raise concerns about the overall impact of this option. These relate to a number of factors. These include the inevitably restricted educational experience in a decant site of the kind proposed, the very limited social facilities for young people and the logistical and travel issues involved in large numbers of young people having to travel over four miles to Burdiehouse. Option B also delays further

7 the benefit to young people of a move to a learning environment suitable for 21st century education, as this would not take place until 2018, while under Option A the move would take place in 2016. The educational benefits of Option A clearly outweigh the benefits of Option B.

HM Inspectors Education Scotland May 2012

8 APPENDIX 5

Boroughmuir High School Design Team Appointment

1.1 Procurement of the multi disciplinary design team for the renewal of Boroughmuir High School has been undertaken for two lots; Lot 1 being the new build option at Fountainbridge, and Lot 2 being the refurbishment and extension option on the existing site. The team comprises the core disciplines of architect, structural/civil engineering services, landscape architects/public realm designers and mechanical and engineer services engineer (including sustainability, BREEAM and EPC specialists).

1.2 The formal tendering process has now been concluded for both lots with five short-listed teams for each lot returning tenders on 24th April 2012. The process was administered by the Council’s Procurement Division and included a two stage process to evaluate quality. The assessment processes and procedures were carried out in compliance with the Public Contracts (Scotland) Regulations 2006. The Council’s Legal Services section provided advice during the selection process to ensure compliance with procurement legislation. The weightings for the selection of the team were 70/30 (quality/price) to reflect the aspirations for the project.

1.3 A total of 68 teams submitted Pre-Selection Questionnaires for Lots 1 and 2. These were assessed against pre-set criteria. With regard to Lot 1, the five bidders short-listed to the tender stage and invited to submit tenders were:

• Allford Hall Monaghan Morris • Allan Murray Architects • BDP • Feilden Clegg Bradley Studios • John McAslan and Partners

1.4 With regard to Lot 2, the five bidders short-listed to the tender stage and invited to submit tenders were:

• Atkins • BDP • JM Architects • John McAslan and Partners • Keppie

1.5 The ten tender returns were checked for technical compliance and all were deemed compliant. Interviews were held on 24 May 2012 for Lot 1 and 30 May 2012 for Lot 2 with the panel comprising representatives from the City of Edinburgh Council and the external project team.

1.6 The process required all tenders to first be scored for quality. The commercial tenders were then opened for those who passed the quality threshold. The costs were examined and scored in accordance with pre-determined criteria.

1.7 The five short-listed teams’ scores for Lot 1 were as follows:

Lot 1 – Design team procurement scores Company Quality Price Combined Score Score* Total Bidder 1 57.00 29.02 86.02 Bidder 2 56.00 30.00 86.00 Bidder 3 59.50 20.82 80.32 Bidder 4 45.00 0.00 45.00 Bidder 5 35.50 0.00 35.50

1.8 The five short-listed teams’ scores for Lot 2 were as follows:

Lot 2 – Design team procurement scores Company Quality Price Combined Score Score Total Bidder 1 59.00 24.12 83.12 Bidder 3 53.00 30.00 83.00 Bidder 4 49.00 27.98 76.98 Bidder 4 45.00 0.00 45.00 Bidder 5 44.00 0.00 44.00

1.9 Following this detailed analysis of the tender returns, the most economically advantageous tender for Lot 1 was that of Allan Murray Architects in the sum of £1,505,680.

1.10 The most economically advantageous tender for Lot 2 was that of John McAslan and Partners in the sum of £1,637,300.

1.11 These fees are lump sums associated with an anticipated contract value of £27m. Should the actual contract value vary by more than +/- 5%, the fees would be adjusted accordingly on a pro rata basis.

2 Item no Report no

Unaudited Financial Statements 2011/12

City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 To present the unaudited financial statements 2011/12 for Council’s consideration

2 Summary

2.1 The Council’s unaudited financial statements have been completed, with due regard to proper accounting practice, and will be submitted to the Controller of Audit by 30 June, as required by the Local Authority (Scotland) Regulations 1985.

2.2 The Unaudited Financial Statements 2011/12 were considered by the Audit Committee at its meeting on 26th June 2012. The Audit Committee will have the opportunity to refer any comments on the Unaudited Financial Statements onto this meeting of Council.

3 Main report

3.1 The unaudited financial statements are submitted in accordance with the requirements of regulation four of the Local Authority (Scotland) Regulations 1985. The unaudited financial statements are shown at Appendix 1.

3.2 The 2011/12 financial statements present the financial position for the Council and its Group in the following statements:

• Movement in Reserves Statement (pages 15 - 17)

• Comprehensive Income and Expenditure Statements for the Group (page 18) and the Council (page 19)

• Balance Sheets for the Group (pages 20 - 21) and the Council (pages 22 – 23)

3.3 The consolidated group accounts include the results of the following subsidiaries, associates and trusts:

(i) Subsidiaries – CEC Holdings Limited, Lothian Buses and tie Limited; 1

(ii) Associates – Edinburgh Leisure, Festival Theatres Trust, Lothian and Borders Fire and Rescue Board, Lothian and Borders Police Board and Lothian Valuation Joint Board;

(iii) Trusts – International Conference Centre Income Trust and International Conference Centre Expenditure Trust.

3.4 The 2011/12 unaudited financial statements also include a remuneration report. This covers the Council’s Leader, Civic Head, Senior Councillors and Conveners of Joint Boards, Senior Employees and Senior Employees within the Council’s subsidiary companies (pages 137-147).

3.5 The value of investments on the Council’s Balance Sheet will require to be reviewed once audited accounts are received from the subsidiary bodies. This may result in changes to the financial statements.

Outturn Summary

3.6 The Council’s outturn position has resulted in an in-year surplus of £0.361m. The main variances in the Council’s outturn position arose in the following areas:

• An overspend on General Fund services of £2.704m, including unbudgeted expenditure relating to trams and statutory repairs, together with a reduced contribution of £1.643m from the Council's significant trading operations, partially offset by service underspends. General Fund services include costs that are not directly chargeable to specific services, with budgets being held centrally. For the third year in succession, all services returned underspends against their approved budgets;

• A reduction of £3.419m on loan charges / interest on revenue balances, primarily resulting from effective treasury management on the investment of surplus funds and slippage in the capital programme;

• Council tax income exceeded budget by £1.514m, as a result of reduced levels of exemptions and discounts in prior years' tax. This was partly offset by a shortfall of £0.286m in the net cost of council tax benefit.

3.7 In addition, a sum of £11.042m was returned from the provisions previously set aside for equal pay and modernising pay. This funding was partly used to meet the costs arising from the review of bad debt and other provisions, with the residual sum of £7.342m being set aside in the Council priorities fund held within earmarked balances.

3.8 For the purposes of closing the 2011/12 accounts, the in-year surplus of £0.361m has been also been set aside within the Council priorities fund. Members are asked to note that they will be asked to decide on the appropriate treatment of the surplus when the detailed outturn report is presented to the Finance and Resources Committee in July 2012. A reconciliation of the

Comprehensive Income and Expenditure Statement to the above surplus is shown in Appendix 2.

3.9 The Housing Revenue Account (HRA) returned a surplus of £3.514m. In addition, £4m of Housing Revenue Account debt was repaid during the year in accordance with the approved budget and the thirty year business plan.

3.10 Capital expenditure, including expenditure on the tram project and the HRA totalled £338.924m, compared to a revised budget of £400.811m, thus showing slippage of £61.887m, or 15.4% of budget. Slippage occurred on a range of projects across all departments compared with their initial spending profile in the capital programme.

3.11 Capital income totalled £108.741m, compared to a revised budget of £117.592m, resulting in a shortfall of £8.851m, reflecting the impact of the economic climate on realising capital receipts.

3.12 In total, £230.183m was funded through borrowing, of which £187.805m relates to the General Fund and £42.378m to the HRA. The revenue costs arising from this borrowing have been provided for in the 2012-13 budgets and are containable within the Council’s Long-Term Financial Plan.

3.13 The outturn report, together with the agreed capital carry forward budgets, will be reported in greater detail to the Finance and Resources Committee in July 2012.

3.14 The Financial Statements will be re-submitted to the Audit Committee, together with the ISA260 report from the External Auditor in September 2012 and to Council after conclusion of the audit.

Reserves

3.15 At 31 March 2012, the total General Fund balance had risen to £103.818m. The level of reserves is reviewed annually by Council as part of the revenue budget process. This review considers the level of balances held, the financial risks which could be realised and the arrangements in place to manage these.

3.16 The unallocated General Fund balance remains at £13.025m at 31 March 2012. The remaining £90.793m is earmarked for specific purposes. These earmarked balances are held for a number of reasons:

• Balances set aside for specific financial risks which are likely to arise in the medium term future – examples include monies earmarked for equal pay and the insurance fund. The Council holds £45.876m against these future risks. It should be noted, however, that the approved budget for 2012/13 includes use of £5.945m of funding, primarily from these earmarked balances.

• Balances set aside, primarily from grant income, due to timing differences between the receipt of grants income and contributions and the planned expenditure thereof. The Council holds £38.551m of income which has been received in advance of planned expenditure.

• Balances set aside to enable the Council to undertake investment in specific projects, which will deliver savings in future years. These savings are used, initially, to reimburse the earmarked balances. The Council holds £3.447m of balances for such projects.

• Balances held under the Devolved School Management scheme, which permits balances held on individual school budgets to be carried forward to the following financial year. The interim assessment of the balance as at March 2012 is £2.919m.

3.17 Details of the earmarked balances are shown in Appendix 3.

Pension Liability

3.18 The financial statements have been prepared as determined under International Accounting Standard (IAS) 19, Employee Benefits. Under IAS19, the Council’s net pension liability now stands at £381.215m, an increase of £45.313m from the balance of £335.902m at 31 March 2011. The actuarial valuation will consider the appropriate employer’s rates and this, together with revenues generated from the investments, will be utilised to meet the fund’s future commitments.

4 Financial Implications

4.1 For the third year in a row, all Council departments have contained expenditure within budgets.

4.2 The in-year surplus of £0.361m and the residual funding of £7.342m returned from the equal pay provision have been set aside in the Council priorities fund.

4.3 The revenue consequences arising from borrowing of £230.183m referred to in 3.12 above have been provided for in future General Fund and HRA budgets.

5 Equalities Impact

5.1 There is no relationship between the matters described in this report and the public sector general equality duty.

5.2 There are no equalities implications arising from this report.

6 Environmental Impact

6.1 There are no adverse environmental impacts arising from this report.

7 Conclusions

7.1 The 2011/12 unaudited financial statements have been compiled, as required by regulation, in compliance with IFRS.

7.2 Members are asked to note the satisfactory revenue outturn for 2011/12, with all departments reporting an underspend against budget.

7.3 As in previous years, there was significant slippage, in the latter stages of the financial year, on the capital programme. The Council’s Corporate Asset Management Group is currently reviewing capital budget phasing and the capital monitoring process, including acceleration of projects to ensure the best use of available resources.

8 Recommendations

8.1 Council is requested to:

a) Note the unaudited financial statements for 2011/12 and that these will be submitted to the Controller of Audit; b) Note that a detailed report on the outturn position will be reported to the Finance and Resources Committee in July 2012; c) Note that the financial statements will be re-submitted to the Audit Committee in September 2012, at the conclusion of the audit and thereafter to Council.

Alastair D Maclean Director of Corporate Governance

Appendices 1 Unaudited Financial Statements 2011/12 2 Summary of the Comprehensive Income and Expenditure Statement to the reported surplus 3 Revenue balances

Contact/tel/Email Alison Henry: 0131 469 3172: [email protected]

Wards affected All

Single Outcome All Agreement

Background Financial Statements and departmental working papers Papers

2011/2012 UNAUDITED STATEMENT OF ACCOUNTS The City of Edinburgh Council Statement of Accounts

Year to 31 March 2012

CONTENTS Page

Explanatory Foreword 3

Statement of Responsibilities for the Statement of Accounts 14

Movement in Reserves Statement 15

Comprehensive Income and Expenditure Statement - Group 18

Comprehensive Income and Expenditure Statement - Council 19

Balance Sheet - Group 20

Balance Sheet - Council 22

Cash Flow Statement - Group 24

Cash Flow Statement - Council 25

Notes to the Financial Statements 26

Housing Revenue Account 122

Council Tax Income Account 125

Non-Domestic Rates Income Account 126

Common Good Fund 127

- Movement in Reserves Statement 127

- Comprehensive Income and Expenditure Statement 128

- Balance Sheet 129

- Notes to the Common Good Fund Financial Statements 130

Annual Governance Statement 134

Remuneration Report 137

Independent Auditor's Report 148

1 2 EXPLANATORY FOREWORD

Introduction The Unaudited Statement of Accounts presents the financial position and performance of the Council, together with the financial position of the wider Council Group for the year to 31 March 2012.

The Statement of Accounts has been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12 and the Service Reporting Code of Practice.

● Financial Statements and Their Purpose The Council has an interest in a number of companies and joint ventures. Where material, the financial results of the Council’s subsidiaries, associates and joint ventures are consolidated into Group Accounts. The aim of these accounts is to show the full picture of the Council's sphere of control and influence over service provision, resources and exposure to risk that the Council has taken on through its involvement in various entities.

The following statements show the position for the Group and the Council separately:

- Movement in Reserves Statement - Comprehensive Income and Expenditure Statement - Balance Sheet - Cash Flow Statement.

The Statement of Accounts comprise the following financial statements and accompanying explanatory notes:

● Statement of Responsibilities for the Statement of Accounts This statement sets out the respective responsibilities of the Authority and the Chief Financial Officer for the accounts.

● Movement in Reserves Statement This statement shows the movement in the year on the different reserves held by the Group and the Council. Reserves are analysed into 'usable reserves' (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The surplus on the provision of services line shows the true economic cost of providing the authority's services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund balance and the Housing Revenue Account for Council Tax setting and dwelling rent setting purposes respectively. The net increase / decrease before transfers to earmarked reserves line shows the statutory General Fund and Housing Revenue Account balances before any discretionary transfers to or from earmarked reserves undertaken by the Council.

● Comprehensive Income and Expenditure Statement This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Council raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

● Balance Sheet The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Group and the Council. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Group and the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example, the capital receipts reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves are those that the Group and the Council is not able to use to provide services. This category of reserves include reserves that hold unrealised gains and losses (for example, the revaluation reserve) where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 'adjustments between accounting basis and funding basis under regulations'.

3 EXPLANATORY FOREWORD

Introduction - continued ● Financial Statements and Their Purpose - continued ● Cash Flow Statement This statement shows the changes in cash and cash equivalents of the Group and the Council during the reporting period. The statement shows how the Group and the Council generate and use cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations are funded by way of taxation and grant income or from the recipients of services provided by the Group and the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Group and the Council's future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Group and the Council.

● Housing Revenue Account Movement in Reserves Statement and Comprehensive Income and Expenditure Statement These statements present the position, as previously described, for the Housing Revenue Account.

● Council Tax Income Account The Council Tax Income Account shows the gross income raised from Council Taxes levied and deductions made under statute. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the Council.

● Non-Domestic Rate Account The Non-Domestic Rate Account is an agent's statement that reflects the statutory obligation for billing authorities to maintain a separate Non-Domestic Rate Account. The statement shows the gross income from the rates and deductions made under statute. The net income is paid to the Scottish Government as a contribution to the national Non-Domestic Rate pool.

● Common Good Fund This presents the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement and the Balance Sheet for the Common Good Fund.

● Annual Governance Statement This explains how the Council conducts its business, both internally and in its dealings with others. The statement details the review of effectiveness of the code of governance and outlines any enhancements underway.

● Remuneration Report This presents information on the remuneration of senior elected members, senior officers within the Council and the most senior employee within each of its subsidiary companies.

● Newly Adopted Accounting Standards Heritage assets have been recognised in the Financial Statements, for the first time, under the requirements of FRS30 Heritage Assets.

Heritage assets are those assets that are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations. Examples include historical buildings and museum and gallery collections.

Recognition of heritage assets has been accounted for as a prior year adjustment. These Financial Statements therefore include a re-stated Balance Sheet as at 1 April 2010 and as at 31 March 2011. Further details on heritage assets can be seen in note 17, and the impact of the prior year adjustment on the previously published Balance Sheets in note 48.

4 EXPLANATORY FOREWORD

Financial Performance Revenue The Council's financial performance is presented in the Comprehensive Income and Expenditure Statement, which can be seen on page 19. This statement has been prepared using International Financial Reporting Standards. To show the net position of the Council, it is necessary to adjust the Comprehensive Income and Expenditure Statement for statutory items that require to be taken into account in determining the position on the General Fund and Housing Revenue Account for the year. These are shown in the Movement in Reserves Statement (pages 15 to 17).

The outturn position for the General Fund, excluding accounting practice adjustments, compared to budget is summarised below. Further details will be provided in the report to the Finance and Resources Committee in August 2012, which will be available on the Council's website. Budget Actual (Under) 2011/12 2011/12 Spend £000 £000 £000 General Fund services 882,455 885,159 2,704 Dividend income (net) -3,000 -3,000 0 Significant trading operations -8,046 -6,403 1,643 Loans charges / interest on revenue balances 106,193 102,774 -3,419 Contribution to earmarked balances 4,646 4,646 0 Budgeted contribution to unallocated general reserve 000

Total expenditure to be funded 982,248 983,176 928 Council tax -226,125 -227,639 -1,514 Net cost of council tax benefit -561 -275 286 Total - council tax income account -226,686 -227,914 -1,228 Community charge income 0 -61 -61 General revenue funding -458,120 -458,120 0 Distribution from non-domestic rate pool -297,442 -297,442 0 Funding -982,248 -983,537 -1,289

General Fund surplus for the year 0 -361 -361

Net sum released from provisions (relating to previous years) 0 -7,342 -7,342

Transfer to Council Priorities Fund 0 -7,703 -7,703

Fees and charges levied by the Council have been offset against the cost of providing services and are included within the actual cost of General Fund Services shown above.

Budget performance - General Fund The main variances in the Council's outturn position arose in the following areas:

● An overspend on General Fund services of £2.704m, including unbudgeted expenditure relating to trams and statutory repairs, together with a reduced contribution of £1.643m from the Council's significant trading operations, partially offset by service underspends. General Fund services includes costs that are not directly chargeable to specific services, with budgets being held centrally. For the third year in succession, all services returned underspends against their approved budgets. ● A reduction of £3.419m on loan charges / interest on revenue balances, primarily resulting from effective treasury management on the investment of surplus funds and slippage in the capital programme. ● Council tax income exceeded budget by £1.514m, as a result of reduced levels of exemptions and discounts in prior years' tax. This was partly offset by a shortfall of £0.286m in the net cost of council tax ● A sum of £11.042m was returned from the provisions previously set aside for equal pay and modernising pay. This funding was partly used to meet the costs arising from the review of bad debt and other provisions, with the residual sum of £7.342m being set aside in the Council Priorities Fund held within earmarked balances. ● The in-year surplus of £0.361m was also transferred to the Council Priorities Fund. 5 EXPLANATORY FOREWORD

Financial Performance - continued Principal Sources of Funding The principal sources of funding used by the Council during the year were: £000 Council tax / community charge income (net of cost of benefits) 227,975 General revenue funding 458,120 Distribution from non-domestic rates pool 297,442 Total 983,537

Reconciliation to Amounts Reported for Resource Allocation Decisions Note 32 to the Financial Statements shows the amounts reported for resource allocation decisions. The service income and expenditure shown in note 32 can be reconciled back to the total shown for General Fund services as follows: Net Expenditure Income Expenditure £000 £000 £000 Children and Families 401,640 -14,875 386,765 City Development 15,121 -3,766 11,355 Corporate Governance 112,692 -43,310 69,382 Health and Social Care 244,886 -62,692 182,194 Joint Boards 70,452 -1,906 68,546 Services for Communities 387,533 -255,229 132,304 Net cost of benefits 221,912 -220,961 951 Other non-departmental specific income and expenditure 36,828 -9,844 26,984 1,491,064 -612,583 878,481

General Fund services (as shown on page 5) 885,159 Significant trading operations (as shown on page 5) -6,403 Net cost of council tax benefit (as shown on page 5) -275 878,481 Reserves The Council's General Fund comprises two elements:

● The unallocated General Fund; and

● Balances earmarked for specific purposes.

The unallocated General Fund is held against the risk of unanticipated expenditure or reduced income arising in any particular year. The level on this reserve is reviewed annually by the Council as part of the revenue budget process. This review considers the level of balances held, the financial risks which could be realised and the arrangements in place to manage these.

The latest review was in February 2012, as part of the 2012-2015 budget setting process. The unallocated General Fund balance remains at £13.025m. There were no planned contributions to the unallocated General Fund for 2011/12.

In addition, the Council has a further £90.793m of balances earmarked for specific purposes. These are held for a number of reasons:

● Balances set aside for specific financial risks which are likely to arise in the medium term future - examples include monies earmarked for equal pay and the insurance fund. The Council holds £45.876m against these future risks. It should be noted, however, that the approved budget for 2012/13 includes use of £5.945m of funding, primarily from these earmarked balances.

● Balances set aside, primarily from grant income, due to timing differences between the receipt of the grant income and the planned expenditure thereof. The Council holds £38.551m of income which has been received in advance of planned expenditure.

6 EXPLANATORY FOREWORD

Reserves - continued ● Balances set aside to enable the Council to undertake investment in specific projects which will deliver savings in future years. These savings are used, initially, to reimburse the earmarked balances. The Council holds £3.447m of balances for such projects.

● Balances held under the School Board Delegation Scheme (DSM), which permits balances on individual school budgets to be carried forward to the following financial year. The current balance is £2.919m.

In summary, the level of reserves at 31 March 2012, together with the forward strategy, are considered appropriate in view of the financial liabilities and risks likely to face the Council in the short to medium term.

Impact of Current Economic Climate and Financial Stability For the third consecutive year, all service areas maintained expenditure within budgeted levels in 2011/12. In addition, the Scottish Local Government Finance Settlement for 2012/13 to 2014/15 made provision for each local authority to receive no less than 85% of the per capita average grant for Scotland as a whole, equating to additional funding for Edinburgh of around £23 million in each of the years concerned. Given these factors and having previously re-established unallocated reserves to a level consistent with the risk the Council faces, a number of non-recurring service investments were therefore able to be included in the Council’s 2012/13 Budget.

Looking forward, however, in the face both of an overall level of grant funding that is decreasing in real terms and on-going increases in demographic-related demand, further service efficiencies and a greater emphasis upon service prioritisation will be required to address a projected savings requirement of around £60 million over the period from 2013/14 to 2015/16. It is within this context that the Council’s Priority-Based Planning project is proceeding. This initiative seeks to link the Council’s spending more closely to its priority outcomes through scrutiny of individual services to assess the extent to which they contribute to key outcomes and/or could be delivered in different ways. A further focus of the project is on addressing a number of themes common to a range of Council services, including examining opportunities around investment in early intervention and prevention, community capacity-building and review of business processes. This work complements separate on-going projects to deliver savings through better procurement and making better use of the Council's property estate.

Modernising Pay The Council implemented its modernising pay scheme on 4 October 2010. However, there remain a number of significant financial issues as a result of historical pay inequalities which have continuing implications for the Council's financial strategy.

As at 31 March 2012, £79.4m has either been paid or provided for to meet actual and potential future settlement of equal pay claims. From the date of implementation, employees whose new salaries and wages are lower than their previous earnings are contractually entitled to a three-year pay protection period. This has already resulted in additional liabilities as settlement discussions roll out to deal with eligible claims from both solicitors' clients and other unrepresented claimants. The costs associated with equal pay settlement negotiations will have implications for future years and this will be taken into account in the Council's financial strategy.

Housing Revenue Account The Council has a statutory obligation to maintain a revenue account for its housing provision in accordance with the Housing (Scotland) Act 1987. The Housing Revenue Account records all expenditure and income relating to the Council's own housing stock. Revenue expenditure on housing management, repairs and maintenance is funded from rent paid by tenants.

The Council is also pursuing a major capital investment programme to improve its housing stock to meet the Scottish Housing Quality Standard by 2015. This programme is funded largely through prudential borrowing with the costs of borrowing met from rental income.

7 EXPLANATORY FOREWORD

Housing Revenue Account - continued The Housing Revenue Account broke even at the end of the financial year, after making a contribution, via the General Fund, of £3.514m to the renewal and repairs fund. In addition, £4m of Housing Revenue Account debt was repaid during the year in accordance with the approved budget and the thirty year business plan.

Good progress was maintained towards meeting the Scottish Housing Quality Standard with 75% of dwellings compliant as at 31 March 2012, compared to 70% as at 31 March 2011.

In March 2009, the Council approved a programme to build up to 1,300 new homes for sale and rent under the 21st Century Homes programme. Construction work on the council phase in Gracemount is complete, with the first Council homes handed over in February 2012. This site will provide 215 new homes of which half will be affordable, including social rent, mid rent and low cost home ownership with the first phase of affordable housing being released in July 2012. Planning permission in principle has been granted for the site in North Sighthill, and construction of the remaining phases at Pennywell and Craigmillar is due to start in 2012/13.

Significant Trading Operations The provisions contained in the Local Government in Scotland Act 2003 require the Council to consider all services provided and determine which are Significant Trading Operations. The Act requires statutory trading accounts to be maintained for Significant Trading Operations and that they should break even over a three- year rolling period. 2011/12 is the tenth year of trading for the areas identified as Significant Trading Operations.

Direct Cleaning, Edinburgh Catering Services - Other Catering and Refuse Collection (including Trade Waste) failed to achieve their statutory obligation to break even over the three-year period 2009-10 to 2011-12. Excluding costs relating to equal pay, Direct Cleaning would have met their statutory targets to break even over a three-year period. Refuse Collection did not have any equal pay costs. Further details can be seen in note 33 to the Financial Statements.

The surplus of £6.403m in the table on page 5 represents the overall outturn from all the Significant Trading Operations, excluding IAS 19 and other adjustments. In the Comprehensive Income and Expenditure Statements (pages 18 and 19), the results are included in 'Net Surplus from Trading Undertakings', Exceptional Expenditure or within the relevant service as stated in note 33 to the Financial Statements. £000 Surplus -6,403 IAS 19 Charges -1,058 Other adjustments, including non distributed costs and holiday accrual -638 Net income included in Comprehensive Income and Expenditure Statement -8,099

Included in individual services in Comprehensive Income and Expenditure Statement -2,598 Included in net surplus from trading accounts (see notes 12 and 33) -5,501 Net income included in Comprehensive Income and Expenditure Statement -8,099

The 2009/10 surpluses and deficits included in the statutory requirement to breakeven have not been re- stated to include the impact of the costs for accrued holiday leave entitlement, although the figures included in the Comprehensive Income and Expenditure Statement have been re-stated. The figures for 2010/11 and 2011/12 include these costs.

Following a formal period of consultation to identify savings, BlindCraft closed on 29 July 2011. Further details can be seen in note 33 to the Financial Statements

8 EXPLANATORY FOREWORD

Capital Expenditure The outturn position for capital expenditure is summarised below: Revised Budget Actual (Slippage) / 2011/12 2011/12 Acceleration £000 £000 £000 Capital expenditure General Fund services 352,561 289,621 -62,940 Housing Revenue Account 48,250 49,303 1,053 Total capital expenditure 400,811 338,924 -61,887

Capital receipts and other contributions - General Fund services -33,698 -22,477 11,221 - Housing Revenue Account -4,300 -3,033 1,267 Government and other grants - General Fund services -79,044 -79,339 -295 - Housing Revenue Account -550 -3,892 -3,342 Total capital income -117,592 -108,741 8,851

Balance to be funded through borrowing - General Fund services 239,819 187,805 -52,014 - Housing Revenue Account 43,400 42,378 -1,022 Total advances from loans fund 283,219 230,183 -53,036

Expenditure on General Fund services slipped by £62.940m. Of this, £11.318m related to the tram project. Further detail on the tram project can be seen on page 10. The remainder of the slippage related to a number of projects across the programme, the most significant of which include flood prevention, asset management works, environmental projects funded through the zero waste fund, private sector housing grant, Niddrie Burn / Edinburgh Royal Infirmary link road, public realm works, grants to registered social landlords projects and the Edinburgh International Conference Centre - additional function space, . Expenditure on the Housing Revenue Account was accelerated by £1.053m.

The Council received £48.655m of general capital grant. This includes £1.906m which was passed to Lothian and Borders Police Board. The support provided through general capital grant enables the Council to direct resources to its own priorities.

Capital expenditure for the year totalled £338.924m. Of this amount, £49.303m was spent on Council housing through the Housing Revenue Account programme with a further £29.610m on social housing through the housing development fund. £130.049m was spent on tram works, roads and other infrastructure, £21.832m on recreational venues and £29.727m on educational properties, including the purchase of land at Fountainbridge for the potential future location of Boroughmuir High School. In addition, £23.025m was spent through General Fund services on construction of additional function space and offices at Edinburgh International Conference Centre (EICC).

Funding of capital expenditure included £83.231m from government and other grants. The Council received £29.998m of Government grants relating to housing development funding and the trams project. A further £8.421m was generated from the sale of assets and other receipts. Additionally, £17.089m of funding was received from developers and other bodies. The remaining £230.183m was funded through borrowing.

The current economic climate continues to have a serious impact on the property market and this in turn has impacted on the Council's ability to raise income to fund capital projects through the sale of assets. The residential market has been particularly affected and this is where the Council's largest capital receipts were anticipated. As this is not expected to improve in the immediate future, the Council has had to re-align its capital programme to ensure that it remains affordable.

9 EXPLANATORY FOREWORD

Capital Expenditure - continued Major capital projects undertaken during the year included:

● Continuing investment in roads and other infrastructure ● Construction and refurbishment of schools ● Continuation of the tram project ● Refurbishment of the Assembly Rooms and Royal Commonwealth Pool ● Construction of additional function space and office at the EICC ● Purchase of a 4.7 hectare site at Fountainbridge for the potential future location of Boroughmuir High School and other uses.

Tram Project During 2011-12 revised governance and project management arrangements were put in place. The Council has taken executive control of the project and appointed Turner and Townsend to provide project management support to the Infraco contract and utility related issues. In addition, Transport Scotland has taken a more visible role in the project going forward. tie Ltd no longer has any involvement in the tram project. Lothian Buses have now been appointed as the operator to prepare for operations and is actively involved in the governance of the project.

As a result of mediation, the contractor and the Council reached agreement on a settlement to build the project from the airport to St Andrew Square / York Place. The additional requirement for funding was reported to and approved by Council on 2 September 2011. The total revised project cost is now forecast at £776m with the additional £231m being funded by the Council. The project remains on the revised budget and on target for completion by summer 2014.

As of 28 April 2012, £605m had been incurred on the project. Works undertaken include:

● The first major milestone was reached with the handover of the Gogar depot in December 2011, the same month that dynamic testing began; ● 27 tram vehicles are complete and factory tested, 12 have been delivered to the depot; ● The crossover section of track at Haymarket Yards was completed in February 2012; ● Remaining utility works were completed in Shandwick Place in February 2012 and in St Andrew Square in March 2012, allowing main infrastructure works to commence; ● The underpass at the A8 / Gogar roundabout was completed in April 2012.

Long-term Borrowing The Council is required, by regulation, to have regard to the Prudential Code, which was established by CIPFA to support local authorities in taking their capital investment decisions, in undertaking its duties. The key objectives of the Prudential Code are to ensure, within a clear framework, that the capital plans of local authorities are affordable, prudent and sustainable. Revenue costs arising from long-term borrowing are provided for within the framework of the Long-Term Financial Plan.

A further key objective is to ensure that treasury management decisions are taken in accordance with professional guidance and best practice. The Prudential Code also has the objectives of being consistent with and supporting local strategic planning, local asset management planning and proper option appraisal.

The Council borrowed money throughout the year to meet anticipated capital expenditure requirements and to refinance maturing loans after allowing for debt repayments. The borrowing strategy is prepared in accordance with the Code of Practice on Treasury Management in Local Authorities. The majority of the Council's borrowing comes from the Public Works Loan Board with the remainder from the European Investment Bank and market and other loans. Further details are provided at note 31 to the Financial Statements.

10 EXPLANATORY FOREWORD

Investments The Council's approach to the investment of its surplus funds has always been to prioritise the security of its investments rather than to seek the greatest return possible on them. Throughout the 'credit crunch' the Council has continued to manage its counterparty exposure accordingly to protect its funds. More details can be found under credit risk on pages 112 and 113. Public Private Partnership - Provision of School Buildings In November 2001, the Council entered into a public private partnership with Edinburgh Schools Partnership, for the provision of school buildings, property maintenance and other facility management services. This was supplemented by a further agreement in April 2004. The project provides for a total of eighteen new or refurbished schools and other facilities throughout the city. In April 2007, the Council entered into a second public private partnership with Axiom Education Limited for the provision of school buildings, property maintenance and other facilities. This project provides for replacement of six secondary schools and two primary schools. Further details are provided at note 41 to the Financial Statements. Property used in providing services under PPP contracts is now recognised as an asset on an authority's balance sheet. International Accounts Standard 19 - Employee Benefits IAS 19 - Employee Benefits covers all types of employee benefits. It covers benefits payable during employment, termination benefits and post-employment benefits. The adoption of IAS 19 requires the Council to include the cost of paid annual leave in the Financial Statements. The cost of annual leave that employees have earned the right to that remains unused as at 31 March is included in the net cost of services in the Comprehensive Income and Expenditure Statement (CIES), with a corresponding adjustment made in the Movement in Reserves Statement, thus avoiding any impact on the Council's funding position. The requirement to account for retirement benefits, is based on the principle that an organisation should account for retirement benefits at the point at which it commits to paying them, rather than when payment actually falls due. The net cost of services in the Comprehensive Income and Expenditure Statement therefore includes an appropriate amount for the retirement benefits the Council has committed to pay, while the effect on the amount to be met from government grant and local tax payers has been balanced through inclusion of pensions interest costs and a transfer from the pensions reserve. This is because the Council bases its budget on the agreed employer's pension contributions payable and payments to pensioners in the year rather than benefit entitlements earned by employees. Terms and conditions for Scottish teachers have changed during 2011/12, with the introduction of school closure days. Some days within school holiday periods are now 'school closure days' and are non- accumulating absence days within the annual leave calculations.

Costs relating to teachers within the annual leave calculation have decreased from £13.151m in 2010/11 to £7.073m in 2011/12. This is mainly attributable to the introduction of 'school closure days'.

The total amount paid during the year for termination benefits can be seen in the Remuneration Report on page 143.

Net Pension Liability The net pension liability, shown in note 43 to the Financial Statements, in accordance with the requirements of IAS19 Employee Benefits, amounts to £381.215m. This exceeds current General Fund reserves of £103.818m. It should be noted that this is a snapshot of the position at 31 March 2012. The actuarial valuation, which takes a longer term view, will consider the appropriate employer's contribution rates and this, together with employee contributions and revenues generated from fund investments, will be utilised to meet the fund's commitments.

11 EXPLANATORY FOREWORD

Provisions The Council has made provision within its Financial Statements against both non-collection of income and obligations arising from past events.

● As can be seen from note 20.4 to the Financial Statements, the Council has made provision for £238.534m against non-collection of outstanding income, mainly comprising council tax and community charge. During the year, a net additional amount of £11.431m was set aside in these provisions for impairment of debtors, including statutory repair notices.

● Note 24 to the Financial Statements shows that the Council has provided for £35.290m for potential costs arising from past events, a net decrease of £92.407m from the previous year, mainly relating to settlement of costs relating to the tram project and equal pay and the reversal of provisions relating to equal pay and modernising pay. Within the total amount, £6.964m relates to the tram scheme and £23.849m for equal pay claims.

Financial Ratios This is the first year that financial ratios have been included in the Financial Statements. Ratios have been provided across three headings - reserves, Council Tax and debt and borrowing.

2011/12 2010/11 ● Reserves ● Unallocated General Fund 1.33% 1.30% The unallocated General Fund balance has balance as a percentage remained constant at £13.025m. The increase in of annual budgeted net the ratio is due to a reduction in annual budgeted expenditure net expenditure.

● Movement in the £0 £4m As shown on page 5, there was no planned unallocated General Fund contribution to the unallocated General Fund balance 0.00% 44.30% balance in 2011/12. The contribution of £4m in 2010/11 enabled the Council to meet its medium term reserves strategy one year ahead of schedule.

● Council Tax ● In-year collection rate94.60% 94.30% This shows the % of Council Tax collected during the financial year that relates to bills issued for that year. It does not include collection of funding relating to previous financial years.

● Council Tax income as a 23.20% 22.60% This shows the proportion of total funding that is percentage of overall derived from Council Tax. funding

● Debt and Borrowing - Prudence ● Capital Financing £1,563.6m £1,412.1m The capital financing requirement represents the Requirement underlying need to borrow to fund expenditure on assets. Further details can be seen in note 39 to the Financial Statements

● External debt levels£1,660.7m £1,555.5m External debt levels include long-term commitments in respect of finance leases (mainly schools provided through PPP schemes).

External debt levels exceed the capital financing requirement as borrowing is based on market conditions and therefore may be undertaken in advance of need.

12 EXPLANATORY FOREWORD

Financial Ratios - continued 2011/12 2010/11 ● Debt and Borrowing - Affordability ● Financing costs to net 10.45% 9.74% These ratios show the proportion of total revenue revenue stream - General funding that is used to meet financing costs. The Fund ratios exclude any voluntary repayments of debt Financing costs to net 35.97% 35.85% made during the year revenue stream - Housing Revenue Account

● Impact of capital 2.30% 4.05% These ratios show incremental impact of investment on Council financing costs (the increase in financing costs Tax from the previous financial year) as a percentage Impact of capital 2.19% 2.70% of Council Tax, in respect of costs payable investment on house rents through the General Fund and house rents, in respect of costs payable through the Housing Revenue Account.

Group Accounts The Council's arms-length companies have also been affected by the economic climate. A number of the companies are involved in the property market and have seen the values of their property portfolios decrease as a direct result of the current economic conditions.

The Group Balance Sheet, shown on pages 20 and 21 shows net assets for 2011/12 of £841.555m. Within this total, the Group has a combined pension liability of £1,623.324m. This reflects the inclusion of pension liabilities relating to Council, police and fire officers, other employees, including subsidiary companies and the incorporation of joint boards as associates within the group. This exceeds the value of distributable reserves held by the Group. It should be noted that this is a snapshot of the position at 31 March 2012. The actuarial valuation, which takes a longer term view, will consider the appropriate employers' contribution rates and these, together with employee contributions and revenues generated from fund investments, will be utilised to meet the financing of these liabilities. It is therefore appropriate to adopt a going concern basis for the preparation of the group financial statements.

KAREN KELLY Chief Financial Officer 14 June 2012

13 STATEMENT OF 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, including group interests, and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority, that officer is the Chief Financial Officer. ● to manage its affairs to secure economic, efficient and effective use of its resources and safeguard its assets.

The Chief Financial Officer's Responsibilities The Chief Financial Officer is responsible for the preparation of the Authority's Statement of Accounts which, in terms of the CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom ('the Code of Practice'), is required to present a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year (ended 31 March 2012).

In preparing this statement of accounts, the Chief Financial Officer has:

● selected suitable accounting policies and then applied them consistently; ● made judgements and estimates that were reasonable and prudent; ● complied with the Code of Practice, except where stated in the Policies and Notes to the Accounts.

The Chief Financial Officer has also:

● kept proper accounting records which were up to date; ● taken reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of Accounts

The Statement of Accounts presents a true and fair view of the financial position of the Council as at 31 March 2012, and its income and expenditure for the year ended 31 March 2012.

KAREN KELLY, CPFA, Chief Financial Officer 14 June 2012

14 MOVEMENT IN RESERVES STATEMENT

This statement shows the movement in the year on the different reserves held by the Council and its Group members. Reserves are analysed into 'usable reserves' (i.e. those that can be applied to fund expenditure or reduce local taxation), most of which is already earmarked and other, unusable reserves. The surplus or deficit on the provision of services line shows the true economic cost of providing the Group's services, more details of which are shown in the Group Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund balance and the Housing Revenue Account for Council Tax setting and dwelling rent setting purposes. The net increase / decrease before transfers to earmarked reserves line shows the statutory General Fund and Housing Revenue Account balances before any discretionary transfers to or from earmarked reserves undertaken by the Council. Group reserves are shown as either usable or unusable reserves. Housing Renewal General Revenue and Capital Fund Account Repairs Receipts Balance Balance Fund Reserve 2011/12 £000 £000 £000 £000 Balance at 31 March 2011 -89,634 0 -15,404 0 Movement in reserves during 2011/12 (Surplus) or deficit on the provision of services -20,971 2,093 0 0 Other Comprehensive Income and Expenditure 0 0 0 -8,421 Total Comprehensive Income and Expenditure -20,971 2,093 0 -8,421 Adjustments between accounting basis and 6,634 -5,607 0 8,421 funding basis under regulations (Note 9.) Net (increase) / decrease before transfers to statutory reserves -14,337 -3,514 0 0 Transfer (to) / from other statutory reserves (Note 10.3) 153 3,514 -3,589 0 Minority interest and other consolidation adjustments 0000 (Increase) / decrease in year -14,184 0 -3,589 0 Balance at 31 March 2012 -103,818 0 -18,993 0

Capital Council's Grants Total Group Unapplied Capital Usable Usable Account Fund Reserves Reserves 2011/12 £000 £000 £000 £000 Balance at 31 March 2011 -1,541 -16,390 -122,969 -17,848 Movement in reserves during 2011/12 (Surplus) or deficit on the provision of services 00-18,878 58,267 Other Comprehensive Income and Expenditure 0 0 -8,421 -16,597 Total Comprehensive Income and Expenditure 0 0 -27,299 41,670 Adjustments between accounting basis and -5,992 99 3,555 -55,406 funding basis under regulations (Note 9.) Net (increase) / decrease before transfers to statutory reserves -5,992 99 -23,744 -13,736 Transfer (to) / from other statutory reserves (Note 10.3) 0 -78 0 2,696 Minority interest and other consolidation adjustments 000 0 (Increase) / decrease in year -5,992 21 -23,744 -11,040 Balance at 31 March 2012 -7,533 -16,369 -146,713 -28,888

15 MOVEMENT IN RESERVES STATEMENT

Total Council's Group Usable Unusable Unusable Total Reserves Reserves Reserves Reserves 2011/12 £000 £000 £000 £000 Balance at 31 March 2011 -140,817 -1,716,665 919,424 -938,058

Movement in reserves during 2011/12 (Surplus) or deficit on the provision of services 39,389 0 0 39,389 Other Comprehensive Income and Expenditure -25,018 -35,017 123,002 62,967 Total Comprehensive Income and Expenditure 14,371 -35,017 123,002 102,356 Adjustments between accounting basis and funding basis under regulations (Note 9.) -51,851 -3,555 55,406 0 Net (increase) / decrease before transfers to statutory reserves -37,480 -38,572 178,408 102,356 Transfer (to) / from other statutory reserves (Note 10.3) 2,696 0 -2,696 0 Minority interest and other consolidation adjustments 0 0 71 71 (Increase) / decrease in year -34,784 -38,572 175,783 102,427

Balance at 31 March 2012 -175,601 -1,755,237 1,095,207 -835,631

Housing Renewal General Revenue and Capital Fund Account Repairs Receipts Balance Balance Fund Reserve 2010/11 Comparative Data £000 £000 £000 £000

Balance at 31 March 2010 -73,113 0 -13,779 0

Movement in reserves during 2010/11 (Surplus) or deficit on the provision of services -251,018 12,832 0 0 Other Comprehensive Income and Expenditure 0 0 0 -8,435 Total Comprehensive Income and Expenditure -251,018 12,832 0 -8,435 Adjustments between accounting basis and funding basis under regulations (Note 9.) 240,399 -14,446 0 8,435 Net (increase) / decrease before transfers to statutory reserves -10,619 -1,614 0 0 Transfer (to) / from other statutory reserves (Note 10.3) -5,902 1,614 -1,625 0 Minority interest and other consolidation adjustments 00 00 (Increase) / decrease in year -16,521 0 -1,625 0 Balance at 31 March 2011 -89,634 0 -15,404 0

16 MOVEMENT IN RESERVES STATEMENT

Capital Council's Grants Total Group Unapplied Capital Usable Usable Account Fund Reserves Reserves 2010/11 Comparative Data £000 £000 £000 £000

Balance at 31 March 2010 -27,207 -22,467 -136,566 12,942

Movement in reserves during 2010/11 (Surplus) or deficit on the provision of services 00-238,186 -87,327 Other Comprehensive Income and Expenditure 00-8,435 -19,182 Total Comprehensive Income and Expenditure 0 0 -246,621 -106,509 Adjustments between accounting basis and 25,666 164 260,218 72,944 funding basis under regulations (Note 9.) Net (increase) / decrease before transfers to statutory reserves 25,666 164 13,597 -33,565 Transfer (to) / from other statutory reserves (Note 10.3) 0 5,913 0 -512 Minority interest and other consolidation adjustments 000 3,287 (Increase) / decrease in year 25,666 6,077 13,597 -30,790 Balance at 31 March 2011 -1,541 -16,390 -122,969 -17,848

Total Council's Group Usable Unusable Unusable Total Reserves Reserves Reserves Reserves 2010/11 Comparative Data £000 £000 £000 £000 Balance at 31 March 2010 -123,624 -1,254,564 1,059,659 -318,529

Movement in reserves during 2010/11 (Surplus) or deficit on the provision of services -325,513 0 0 -325,513 Other Comprehensive Income and Expenditure -27,617 -201,883 -59,698 -289,198 Total Comprehensive Income and Expenditure -353,130 -201,883 -59,698 -614,711 Adjustments between accounting basis and funding basis under regulations (Note 9.) 333,162 -260,218 -72,944 0 Net (increase) / decrease before transfers to statutory reserves -19,968 -462,101 -132,642 -614,711 Transfer (to) / from other statutory reserves (Note 10.3) -512 0 512 0 Minority interest and other consolidation adjustments 3,287 0 -8,105 -4,818 (Increase) / decrease in year -17,193 -462,101 -140,235 -619,529 Balance at 31 March 2011 -140,817 -1,716,665 919,424 -938,058

17 GROUP COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

This statement shows the accounting cost in the year of providing services for the Group in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Council raises taxation to cover its expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. for the year ended 31 March 2012

Gross Net 2010/11 Expend. Income Expend. £000 Notes £000 £000 £000 SERVICES 344,011 Education Services 353,280 -12,816 340,464 275,313 Social Work 347,227 -63,311 283,916 -1,757 Housing Revenue Account 76,676 -91,476 -14,800 42,072 Other Housing Services 294,634 -263,666 30,968 47,759 Cultural and Related Services 85,572 -16,761 68,811 71,662 Environmental Services 92,371 -20,424 71,947 35,989 Roads and Transport 318,145 -266,306 51,839 33,914 Planning and Development 62,975 -24,048 38,927 46,846 Police Joint Board Requisition 45,628 -1,906 43,722 22,753 Fire Joint Board Requisition 21,051 0 21,051 13,302 Corporate and Democratic Core 12,400 -1,130 11,270 20,162 Non-Distributed Costs 19,352 0 19,352 5,479 Services to the Public 21,470 -15,414 6,056 8,761 Other Operating Expenditure 43,394 -35,837 7,557 -162,301 Exceptional Items 49. -10,071 0 -10,071 -63,808 Associates and Joint Ventures Accounted 230,233 -166,051 64,182 for on an Equity Basis 740,157 COST OF SERVICES 2,014,337 -979,146 1,035,191

-2,168 Other Operating Expenditure 11. -1,812 64,147 Financing and Investment Income and Exp. 12. 55,463 -1,127,649 Taxation and Non-Specific Grant Income 13. -1,049,453

-325,513 DEFICIT / (SURPLUS) ON PROVISION OF SERVICES 39,389 -50,023 Surplus on Revaluation of Non-Current -110,880 Assets -161,242 Actuarial (Gains) / Losses on Pension 66,159 Liabilities -77,933 Other Unrealised (Gains) / Losses 107,688 -289,198 Other Comprehensive Income and Expend. 62,967

TOTAL COMPREHENSIVE (INCOME) -614,711 AND EXPENDITURE 102,356

An analysis of minority interest shares in the Group Comprehensive Income and Expenditure Statement can be seen in note 7.1.

18 COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

This statement shows the accounting cost in the year of providing Council services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Council raises taxation to cover its expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. for the year ended 31 March 2012

Gross Net 2010/11 Expend. Income Expend. £000 Notes £000 £000 £000 SERVICES 344,011 Education Services 353,280 -12,816 340,464 275,313 Social Work 347,227 -63,311 283,916 -1,757 Housing Revenue Account 76,676 -91,476 -14,800 42,072 Other Housing Services 294,634 -263,666 30,968 49,881 Cultural and Related Services 82,157 -11,064 71,093 71,662 Environmental Services 92,371 -20,424 71,947 64,588 Roads and Transport 99,612 -42,725 56,887 34,055 Planning and Development 58,592 -21,945 36,647 46,846 Police Joint Board Requisition 45,628 -1,906 43,722 22,753 Fire Joint Board Requisition 21,051 0 21,051 13,302 Corporate and Democratic Core 12,400 -1,130 11,270 20,162 Non-Distributed Costs 19,352 0 19,352 5,479 Services to the Public 21,470 -15,414 6,056 2,697 Other Operating Expenditure / (Income) 38,175 -31,511 6,664 -162,301 Exceptional Items 49. -10,071 0 -10,071 828,763 COST OF SERVICES 1,552,554 -577,388 975,166

-867 Other Operating Expenditure 11. -2,033 64,447 Financing and Investment Income and Exp. 12. 56,503 -1,130,529 Taxation and Non-Specific Grant Income 13. -1,048,514

-238,186 SURPLUS ON PROVISION OF SERVICES -18,878 -50,023 Surplus on Revaluation of Non-Current -110,880 Assets -161,242 Actuarial (Gains) / Losses on Pension 66,159 Liabilities 947 Other Unrealised (Gains) / Losses 1,283 -210,318 Other Comprehensive Income and Expend. -43,438

TOTAL COMPREHENSIVE (INCOME) -448,504 AND EXPENDITURE -62,316

RECONCILIATION OF THE COUNCIL'S POSITION TO THE GROUP POSITION £000 £000 -448,504 Total Comprehensive (Income) and Expenditure on the Council's -62,316 Comprehensive Income and Expenditure Statement (CIES) -1,231 Subsidiary and associate transactions included in the Council's CIES 1,840 (Surplus) / deficit arising from other entities included in the Group Accounts -40,495 Subsidiaries -1,822 -124,481 Associates 164,654 -614,711 Group total Comprehensive (Income) and Expenditure for the year 102,356

19 GROUP BALANCE SHEET

The Balance sheets shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Group. The net liability of the Group (assets less liabilities) represents the total net loss of the Group. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Group may use to provide services. The second category of reserves are those that the Group is not able to use to provide services. This category of reserves include reserves that hold unrealised gains and losses (for example, the revaluation reserve) where amounts would only become available to provide services if the assets are sold.

(re-stated) (re-stated) 1 April 31 March 2010 2011 31 March 2012 £000 £000 Notes £000 £000

2,320 2,476 Intangible Assets 16. 979 1,005,705 1,009,675 Council Dwellings 1,028,599 1,653,166 1,635,322 Other Land and Buildings 1,708,131 111,194 99,205 Vehicles, Plant, Furniture and Equipment 107,499 629,419 728,855 Infrastructure Assets 809,389 12,016 12,756 Community Assets 11,618 19,706 40,175 Surplus Assets 39,115 40,350 62,737 Assets under Construction 93,808

3,471,556 3,588,725 Property, Plant and Equipment 14. 3,798,159

8,477 7,258 Investment Properties 15. 7,200 37,478 37,605 Heritage Assets 17. 37,232 2,812 7,975 Assets Held for Sale 22. 11,077 0 0 Available for Sale Financial Assets 643 327 307 Deferred Tax 7,380 6,004 7,739 Long-Term Investments 10,409 48,242 42,376 Investments in Associates and Joint Ventures 37,190 55,668 59,248 Long-Term Debtors 20. 59,136

3,632,884 3,753,709 Long-Term Assets 3,969,405

12,193 33,118 Short-Term Investments 22,304 3,200 5,357 Assets Held for Sale 22. 3,185 25,081 21,954 Inventories 19. 14,788 202,005 191,704 Short-Term Debtors 20. 103,830 135,808 224,360 Cash and Cash Equivalents 21. 209,808

378,287 476,493 Current Assets 353,915

-28,029 -48,909 Short-Term Borrowing -35,610 -253,411 -220,189 Short-Term Creditors 23. -212,422 -52,851 -129,704 Provisions 24. -38,817

-334,291 -398,802 Current Liabilities -286,849

20 GROUP BALANCE SHEET

(re-stated) (re-stated) 1 April 31 March 2010 2011 31 March 2012

£000 £000 Notes £000 £000

-1,216,180 -1,274,809 Long-Term Borrowing -1,401,717

-247,050 -225,497 Other Long-Term Liabilities -219,606

-16,831 -17,570 Deferred Tax -8,643

-1,153,399 -1,023,053 Liabilities in Associates and Joint Ventures -1,182,522

-722,288 -346,559 Other Long-Term Liabilities (Pensions) -382,428 -3,355,748 -2,887,488 Long-Term Liabilities -3,194,916 321,132 943,912 Net Assets 841,555

-769,093 -808,914 Revaluation Reserve -906,510

-1,251,384 -1,329,289 Capital Adjustment Account -1,306,950

56,848 55,768 Financial Instruments Adjustment Account 54,276

679,608 335,902 Pensions Reserve 381,215

29,457 29,868 Employee Statutory Adjustment Account 22,732

1,059,659 919,424 Group Unusable Reserves 1,095,207 -194,905 -797,241 Unusable Reserves 26. -660,030

-27,207 -1,541 Capital Grants Unapplied Account -7,533

-22,467 -16,390 Capital Fund -16,369

-13,779 -15,404 Renewal and Repairs Fund -18,993

-73,113 -89,634 General Fund -103,818

12,942 -17,848 Group Usable Reserves -28,888 -123,624 -140,817 Usable Reserves 10. -175,601 -318,529 -938,058 Total Group Reserves -835,631

-2,603 -5,854 Minority Interest -5,924

-321,132 -943,912 Total Reserves -841,555

KAREN KELLY, CPFA, Chief Financial Officer 14 June 2012

21 BALANCE SHEET

The Balance sheets shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example, the capital receipts reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves are those that the Council is not able to use to provide services. This category of reserves include reserves that hold unrealised gains and losses (for example, the revaluation reserve) where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 'adjustments between accounting basis and funding basis under regulations'.

(re-stated) (re-stated) 1 April 31 March 2010 2011 31 March 2012 £000 £000 Notes £000 £000

2,320 2,476 Intangible Assets 16. 979

1,005,705 1,009,675 Council Dwellings 1,028,599 1,604,706 1,588,189 Other Land and Buildings 1,685,840 39,483 31,170 Vehicles, Plant, Furniture and Equipment 31,379 626,639 726,364 Infrastructure Assets 807,186 12,016 12,756 Community Assets 11,618 19,706 40,175 Surplus Assets 39,115 39,911 61,342 Assets under Construction 93,808

3,348,166 3,469,671 Property, Plant and Equipment 14. 3,697,545

2,227 2,288 Investment Properties 15. 2,120

37,478 37,605 Heritage Assets 17. 37,232

2,812 7,975 Assets Held for Sale 22. 11,077

23,335 23,335 Long-Term Investments 26,813

59,668 62,748 Long-Term Debtors 20. 62,636

3,476,006 3,606,098 Long-Term Assets 3,838,402

12,193 33,118 Short-Term Investments 22,304

3,200 5,357 Assets Held for Sale 22. 3,185

1,870 2,028 Inventories 19. 2,800

158,175 168,924 Short-Term Debtors 20. 92,052

117,384 207,464 Cash and Cash Equivalents 21. 195,831

292,822 416,891 Current Assets 316,172

-28,029 -46,863 Short-Term Borrowing -33,564

-178,102 -173,300 Short-Term Creditors 23. -183,712

-50,668 -127,697 Provisions 24. -35,290

-256,799 -347,860 Current Liabilities -252,566

22 BALANCE SHEET

(re-stated) (re-stated) 1 April 31 March 2010 2011 31 March 2012 £000 £000 Notes £000 £000

-1,213,186 -1,281,119 Long-Term Borrowing 18. -1,408,752

-228,105 -218,474 Other Long-Term Liabilities 18. -210,091

-679,608 -335,902 Other Long-Term Liabilities (Pensions) 43.7 -381,215

-2,120,899 -1,835,495 Long-Term Liabilities -2,000,058

1,391,130 1,839,634 Net Assets 1,901,950

-769,093 -808,914 Revaluation Reserve -906,510

-1,251,384 -1,329,289 Capital Adjustment Account -1,306,950

56,848 55,768 Financial Instruments Adjustment Account 54,276

679,608 335,902 Pensions Reserve 381,215

29,457 29,868 Employee Statutory Adjustment Account 22,732

-1,254,564 -1,716,665 Unusable Reserves 26. -1,755,237

-27,207 -1,541 Capital Grants Unapplied Account -7,533

-22,467 -16,390 Capital Fund -16,369

-13,779 -15,404 Renewal and Repairs Fund -18,993

-73,113 -89,634 General Fund -103,818

-136,566 -122,969 Usable Reserves 10. -146,713

-1,391,130 -1,839,634 Total Reserves -1,901,950

KAREN KELLY, CPFA, Chief Financial Officer 14 June 2012

23 GROUP CASH FLOW STATEMENT

The Cash Flow Statement shows the changes in cash and cash equivalents of the Group during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Group are funded by way of taxation and grant income or from the recipients of services provided by the Group. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Group's future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Group.

Year ended 31 March 2012

2010/11 £000 OPERATING ACTIVITIES Notes £000 £000 -230,245 Taxation -227,735 -1,160,557 Grants -1,254,895 -62,431 Housing rents -81,512 -458,872 Sales of goods and rendering of services -497,923 -4,528 Interest and investment income received -6,792 -1,916,633 Cash inflows from operating activities -2,068,857

571,762 Cash paid to and on behalf of employees 562,007 184,953 Housing benefits paid out 192,749 813,223 Cash paid to suppliers of goods and services 982,326 2,479 Taxation paid 2,176 94,854 Interest paid 100,348 1,667,271 Cash outflows from operating activities 1,839,606 -249,362 Net cash flows from operating activities 27. -229,251

236,960 Net cash flows from investing activities 28. 336,719

-76,150 Net cash flows from financing activities 29. -92,916 -88,552 Net decrease / (increase) in cash and cash equivalents 14,552

-135,808 Cash and cash equivalents at 1 April -224,360

-224,360 Cash and cash equivalents at 31 March 21. -209,808

24 CASH FLOW STATEMENT

The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period.

Year ended 31 March 2012

2010/11 £000 OPERATING ACTIVITIES Notes £000 £000 -229,895 Taxation -226,015 -1,160,557 Grants -1,137,607 -62,431 Housing rents -81,512 -316,276 Sales of goods and rendering of services -352,951 -4,409 Interest and investment income received -6,779 -1,773,568 Cash inflows from operating activities -1,804,864

553,430 Cash paid to and on behalf of employees 561,178 184,953 Housing benefits paid out 192,749 702,532 Cash paid to suppliers of goods and services 735,078 93,816 Interest paid 99,585 1,534,731 Cash outflows from operating activities 1,588,590 -238,837 Net cash flows from operating activities 27. -216,274

231,443 Net cash flows from investing activities 28. 330,045

-82,686 Net cash flows from financing activities 29. -102,138 -90,080 Net decrease / (increase) in cash and cash equivalents 11,633

-117,384 Cash and cash equivalents at 1 April -207,464

-207,464 Cash and cash equivalents at 31 March 21. -195,831

25 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies The Annual Accounts for the year ended 31 March 2012 have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12: A Statement of Recommended Practice, (the Code) and the Service Reporting Code of Practice. This is to ensure that the Annual Accounts 'present a true and fair view' of the financial position and transactions of the Council.

1.1 Accruals of Income and Expenditure ● The revenue and capital accounts have been prepared on an accruals basis in accordance with the Code of Practice. ● Provision has been made in the relevant accounts for bad and doubtful debts.

1.2 Debt Redemption ● The Council operates a consolidated loans fund under the terms of the Local Government (Scotland) Act 1975. Capital payments made by services are financed from the loans fund and repaid on an annuity basis. ● Gains or losses arising on the repurchase or early settlement of borrowing are recognised in the Comprehensive Income and Expenditure Statement in the period during which the repurchase or early settlement is made. Where the repurchase of borrowing is taken with a refinancing or restructuring option, gains or losses are recognised over the life of the replacement borrowing.

1.3 Cash and Cash Equivalents Cash and cash equivalents includes: ● credit and debit funds held in banks; and ● investments maturing within three months of the Balance Sheet date.

1.4 Contingent Liabilities Contingent liabilities are not recognised in the accounting statements. Where there is a possible obligation that may require a payment or transfer of economic benefit, this is disclosed in the notes to the financial statements.

1.5 Employee Benefits ● Accruals of Holiday Leave Cost of services' within the Comprehensive Income and Expenditure Statement includes a charge for annual leave to which employees are entitled, but have not taken, as at the Balance Sheet. The Council is not required to raise Council Tax to cover the cost of accrued annual leave. These costs are a reconciling item in the Movement in Reserves Statement for the General Fund and Housing Revenue Account balances by way of an adjusting transaction with the employee statutory adjustment account. ● Pensions The Council participates in two different pension schemes which meet the needs of employees in particular services. Both the schemes provide members with defined benefits related to pay and service. The schemes are as follows: ● Teachers This is an unfunded scheme administered by the Scottish Public Pensions Agency. The pension cost charged in the accounts is the contribution rate set on the basis of a notional fund. ● Other Employees Other employees, subject to certain qualifying criteria, are eligible to join the Local Government Pension Scheme (LGPS). The LGPS is a defined benefit statutory scheme, administered in accordance with the Local Government Pension Scheme (Scotland) Regulations 1998, as amended.

26 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.5 Employee Benefits - continued ● Pensions - continued ● Other Employees - continued The Financial Statements have been prepared including pension costs as determined under International Accounting Standard 19 - Employee Benefits (IAS19). The cost of services includes expenditure equivalent to the amount of retirement benefits the Council has committed to during the year. Pensions interest costs and the expected return on pension assets have been charged to 'financing and investment income' in the Comprehensive Income and Expenditure Statement. The pension costs charged to the Comprehensive Income and Expenditure Statement in respect of employees are not equal to contributions paid to the funded scheme for employees. The amount by which pension costs under IAS19 are different from the contributions due under the pension scheme regulations are disclosed in the Movement in Reserves Statement for the General Fund and Housing Revenue Account. Pension assets have been valued at bid value (purchase price), as required under IAS19. Under pension regulations, contribution rates are set to meet 100% of the overall liabilities of the Fund. 1.6 Financial Instruments ● Financial Liabilities Financial liabilities are initially measured at fair value and carried at their amortised cost. Annual charges to the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. For the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement. Gains and losses on the repurchase or early settlement of borrowing are credited and debited to surplus or deficit on provision of services in the Comprehensive Income and Expenditure Statement in the year of repurchase / settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discounts is respectively deducted from or added to the amortised cost of the new loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain / loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement for the General Fund Balance. ● Financial Assets Loans and receivables are initially measured at fair value and carried at their amortised cost. Annual credits to the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the loans that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. However, the Council has made three loans to a related party at less than market rates (soft loans). When soft loans are made, a loss is recorded in the Comprehensive Income and Expenditure Statement for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal. Interest is credited at a marginally higher effective rate of interest than the rate receivable from the related party, with the difference serving to increase the amortised cost of the loan in the Balance Sheet.

27 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.6 Financial Instruments - continued ● Financial Assets - continued Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Comprehensive Income and Expenditure Statement.

Any gains and losses that arise on the de-recognition of the asset are credited / debited to the Comprehensive Income and Expenditure Statement.

Surplus funds on behalf of the Council and associated bodies and cash monies of Lothian Pension Funds are now managed by the Council under a formal management agreement in a pooled investment arrangement. While the monies continue to be shown as investments in Lothian Pension Funds' accounts, they are no longer shown as both liabilities and investments in the Council's accounts. ● Available-for-Sale-Financial Instruments The Council has a significant financial interest in several companies and trusts which have been set up for specific purposes. Details of these appear in note 7 to the Financial Statements. These financial interests have been assessed under the requirements of FRS26 Financial Instruments: Measurement.

The Council's investments in Lothian Buses plc, CEC Holdings Limited and tie Limited have been assessed as outwith the scope of FRS26.

Unless otherwise stated, the accounts of these companies may be obtained on application to the Chief Financial Officer, Waverley Court, 4 East Market Street, Edinburgh EH8 8BG.

1.7 Government and non-Government Grants and Contributions ● Revenue Revenue grants and contributions have been included in the financial statements on an accruals basis.

Where such funds remain unapplied at the Balance Sheet date, but approval has been given to carry these funds forward to the next financial year, these amounts have been set aside in the General Fund. ● Capital Capital grants and contributions are recognised in the Comprehensive Income and Expenditure Statement except to the extent there are conditions attached to them that have not been met.

Where there are no conditions attached to capital grants and contributions, these funds are a reconciling item in the Movement in Reserves Statement for the General Fund and Housing Revenue Account by way of an adjusting transaction with the capital adjustment account, where expenditure has been incurred and the unapplied capital grants account where expenditure has not been incurred.

Where there are conditions attached to capital grants and contributions that have not been met at the Balance Sheet date, the grant or contribution will be recognised as part of capital grants receipts in advance. Once the condition has been met, the grant or contribution will be transferred from capital grants receipts in advance and recognised as income in the Comprehensive Income and Expenditure Statement, as above.

1.8 Intangible Assets ● Intangible Assets Intangible fixed assets represent software licences purchased by the Council. ● Recognition Expenditure on the acquisition, creation or enhancement of intangible fixed assets has been capitalised on an accruals basis. ● Measurement Intangible fixed assets are initially measured at cost.

28 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.8 Intangible Assets - continued ● Depreciation Software licences are depreciated over the period of the licence, commencing in the year after acquisition.

1.9 Inventories Inventories are measured at the lower of cost and net realisable value.

Inventories acquired through a non-exchange transaction are measure at their fair value as at the date of acquisition.

Inventories held for distribution at no charge or a nominal charge are measured at the lower of cost and current replacement cost.

Work-in-progress for BlindCraft has been valued at material cost plus labour costs. This does not comply with the Code of Practice, which requires work-in-progress to be valued at cost plus attributable profit less foreseeable losses. The difference is not considered to be material.

1.10 Investment Properties ● Measurement Investment properties are initially measured at cost. After initial recognition, investment properties are measured at fair value. Any gains or losses arising from a change in the fair value of investment properties are recognised in the Comprehensive Income and Expenditure Statement for the period in which they arise.

● Revaluation Investment properties are revalued annually. ● Depreciation Investment properties held at fair value are not depreciated. ● De-recognition Investment properties are de-recognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits or service potential is expected from its disposal. The gain or loss on arising from the retirement or disposal of an investment property is recognised in the 'surplus or deficit on provision of services' within the Comprehensive Income and Expenditure Statement in the period of the retirement or disposal. 1.11 Leases ● Operating Leases ● Leased-in Assets Rental payments, net of benefits received, under operating leases are charged to the relevant service on a straight line basis over the life of the lease. ● Leased-out Assets Rental income received under operating leases is credited to the relevant service in accordance with the terms specified in the lease agreement. ● Finance Leases ● Leased-in Assets Finance leases, which have substantially transferred to the authority the benefits and risks of ownership of a non-current asset, are treated as if the asset had been purchased outright. Assets acquired under finance leases are included in non-current assets at the lower of the fair value or the present value of the minimum lease payments. The capital element of the lease is included as obligations under finance leases / creditors.

29 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.11 Leases - continued ● Finance Leases - continued ● Leased-in Assets - continued The lease rentals comprise capital and interest elements. The capital element is applied to reduce the outstanding obligation and the interest element is charged to revenue on a straight line basis over the terms of the lease.

1.12 Current and Non-Current Assets held for Sale Current assets held for sale are assets that the Council has identified as surplus to requirement, are being actively marketed and it is expected that the sale will be realised within twelve months of the Balance Sheet date. Non-current assets held for sale are assets that the Council has identified as surplus to requirement, are being actively marketed, but it is not expected that the sale will be realised within twelve months of the Balance Sheet date. ● Measurement Assets held for sale are measured at the lower of carrying value and fair value less costs to sell at the Balance Sheet date. Where the sale is expected to occur in more than twelve months, the cost is measured at present value. ● Depreciation Current and non-current assets held for sale are not depreciated.

1.13 Overheads The costs of support services are allocated to direct services. The allocations are made on a basis appropriate to the service provided, in order to match costs to service usage. Certain support service costs are recovered through direct charges during the year.

1.14 Public Private Partnership - School Buildings, Maintenance and Other Facilities Public Private Partnership (PPP) contracts are agreements to receive services, where the responsibility for making available the non-current assets required to provide the services passes to the PPP contractor. As the Council is deemed to control the services that are provided under this scheme and as ownership of the schools and other facilities will pass to the Council at the end of the contracts for no additional charge, the Council carries the non-current assets used under the contracts on its Balance Sheet. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as other assets owned by the Council.

The amounts payable to the PPP operators each year are analysed into five elements: ● fair value of the services received during the year - debited to education services in the Comprehensive Income and Expenditure Statement. ● finance cost - an interest charge of 7.35% (PPP1 scheme) and 5.004% (PPP2 scheme) on the outstanding balance sheet liability - debited to 'financing and investment income' in the Comprehensive Income and Expenditure Statement. ● contingent rent - increases in the amount to be paid for the property arising during the contract - debited to 'financing and investment income' in the Comprehensive Income and Expenditure Statement. ● payment towards liability - applied to write down the value of the finance lease on the Balance Sheet. ● lifecycle replacement costs - recognised as non-current assets on the Balance Sheet.

30 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.15 Property, Plant and Equipment ● Categories of Assets Property, plant and equipment is categorised into the following classes: Council dwellings Other land and buildings Vehicles, plant, furniture and equipment Infrastructure assets, e.g. roads and footways Community assets, e.g. parks Assets under construction Surplus assets (assets that are surplus to requirements, but there are no clear plans to sell these at the current time.) ● Recognition Expenditure on the acquisition, creation or enhancement of non-current assets has been capitalised on an accruals basis. ● Measurement Infrastructure, community assets and assets under construction are measured at historical cost. All other classes of property, plant and equipment are measured at fair value. ● Other land and buildings - fair value is the amount that would be paid for the assets in its existing use. ● Council dwellings - fair value is measured at existing use value - social housing. ● Vehicles, plant, furniture and equipment - fair value is the amount equivalent to depreciated historical cost. ● Depreciation Depreciation is provided on all property, plant and equipment, other than community assets and assets under construction. The Council does not depreciate its non-current assets in the year of acquisition. The Council operates a five-year rolling revaluation programme for assets and provides for depreciation on a straight line basis on the opening book value over the remaining useful life of the asset. Thus the charge to the Comprehensive Income and Expenditure Statement for the year is not impacted by changes in asset value during the year arising from either revaluation or enhancements. Component accounting is applied as part of the revaluation process. As a result, where a building asset is split down into further components for the first time in year, the depreciation charge is based on the opening book value over the opening remaining useful life of the asset rather than subsequent component values and associated lives. The difference is not considered material. ● Charges to Revenue for use of Non-Current Assets Service revenue accounts, support services and trading accounts are debited with the following amounts to record the real cost of holding non-current assets during the year: ● depreciation attributable to the assets used by the relevant service. ● impairment losses attributable to the clear consumption of economic benefits on property, plant and equipment used by the service and other losses where there are no accumulated gains in the Revaluation Reserve against which they can be written off. The Council is not required to raise council tax to cover depreciation or impairment losses. Depreciation and impairment losses are therefore a reconciling item in the Movement in Reserves Statement for the General Fund and Housing Revenue Account by way of an adjusting transaction with the capital adjustment account.

31 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.15 Property, Plant and Equipment - continued ● Revaluations Where assets are included in the Balance Sheet at fair value, revaluations are carried out at intervals of no more than five years. The Council operates a rolling programme for revaluations. The determination of fair value of land and buildings is undertaken by the Council's Property Manager (Property Management and Development).

● De-recognition An asset is de-recognised either on its disposal, or where no future economic benefits or service potential are expected from its use or disposal. The gain or loss arising from de-recognition of an asset is included in 'surplus or deficit on the provision of services' within the Comprehensive Income and Expenditure Statement when the asset is de-recognised.

The gain or loss on de-recognition of property, plant and equipment assets is a reconciling item in the Movement in Reserves Statement for the General Fund and Housing Revenue Account.

● Components Component accounting is applied to all assets that comprise land and buildings. Land and buildings are treated as separate components of an asset and accounted for separately.

The building component of an asset is separated into further components primarily to those with a carrying value of over £5 million approximately. This policy is also applied to buildings with a carrying value of less than £5 million where enhancement expenditure is considered significant in relation to the overall carrying value of the building component.

Where it is necessary to break a building down into further components, the following categories are applied:

● Structural - includes external and internal walls, traditional roofing, doors, etc.

● Non traditional roofing - includes flat roof, non-traditional roof coverings and industrial type roofs.

● Finishes - includes doors, windows and room finishes.

● Mechanical and electrical services - includes water, heat, ventilation, electrical, lifts, fire and communications.

● Fittings and furnishings - includes fittings, furnishings and sanitary appliances.

1.16 Heritage Assets ● Categories of Assets Heritage assets comprise the following:

Monuments and statues Civic regalia and artefacts

Archival collections Libraries special collections

Museum and gallery collections

Intangible heritage assets represent three private vehicle registration plates.

It has not been practical or possible to split out all heritage assets belonging to the common good fund, charities or trusts. Therefore, the Council's Balance Sheet may hold elements of heritage assets that belong to other entities.

● Recognition Expenditure on the acquisition, creation or enhancement of heritage assets has been capitalised on an accruals basis.

32 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.16 Heritage assets - continues ● Measurement Heritage assets valuations may be made by any method that is appropriate and relevant. Furthermore valuations need not be carried out by external valuers and there is no prescribed minimum period between valuations. The following measurement basis have been applied to heritage assets based on the most relevant and appropriate information available. This is set in the context where it is not practicable to obtain up to date valuations for all heritage assets at a cost which is commensurate with the benefits to users of the Council's financial statements.

● Monuments and statues Historic value ● Civic regalia and artefacts Insurance purposes valuation ● Archival collections Insurance purposes valuation, based on restoration costs only ● Libraries special collections Insurance purposes valuation ● Museum and gallery collections Insurance purposes valuation ● Private vehicle registration plates Cost or current value information is not readily available, therefore these assets have not been recognised on the Council's Balance Sheet ● Depreciation Heritage assets are deemed to have indeterminate lives and a high residual value; hence it is not considered appropriate to charge depreciation.

1.17 Provisions The value of provisions is based upon the Council's obligations arising from past events, the probability that a transfer of economic benefit will take place and a reasonable estimate of the obligation. 1.18 Reserves Reserves held on the Balance Sheet are classified as either usable or unusable reserves. Usable reserves hold monies that can be applied to fund expenditure or reduce Council Tax. Unusable reserves cannot be applied to fund expenditure. ● Usable Reserves The Council operates the following usable reserves: ● Capital receipts reserve - this represents capital receipts available to finance capital expenditure in future years. ● Capital grants unapplied account - holds capital grants and contributions that have been received towards specific works that have yet to be completed. ● Capital fund - under Schedule 3 of the Local Government (Scotland) Act 1975, certain receipts derived from the sale of property may also be used to create a capital fund "to be used for defraying any expenditure of the authority to which capital is properly applicable, or in providing money for repayment of the principal of loans". ● Renewal and repairs fund - holds monies set aside for the renewal and repair of Council property. This fund is operated under the terms of Schedule 3 to the Local Government (Scotland) Act 1975. ● General Fund - held to mitigate financial consequences of risks and other events impacting on the Council's resources. Monies within the General Fund can be earmarked for specific purposes.

33 NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies - continued 1.18 Reserves - continued ● Unusable Reserves The Council operates the following unusable reserves: ● Revaluation reserve - holds unrealised gains arising since 1 April 2007 from holding non-current assets. ● Capital adjustment account - provides a mechanism between the different rates at which assets are depreciated and are financed through the capital controls system. ● Financial instruments adjustment account - provides a mechanism between the different rates at which gains and losses (such as premiums on the early repayment of debt) are recognised under the Code and are required by statute to be met from the General Fund. ● Pension reserve - represents the net monies which the Council requires to meet its pension liability, as calculated under IAS19, Employee Benefits. The Council operates a pensions reserve fund under the terms of the Local Government Pension Reserve Fund (Scotland) Regulations 2003. ● Employee statutory adjustment account - represents the net monies which the Council requires to meet its short-term compensated absences for employees under IAS19.

1.19 Revenue Expenditure Funded from Capital Under Statute Expenditure that may be capitalised under statutory provisions that does not result in the creation of assets for the Council has been charged to the 'net cost of services' in the Comprehensive Income and Expenditure Statement. These costs are a reconciling item in the Movement in Reserves Statement for the General Fund by way of an adjusting transaction with the capital adjustment account.

1.20 Value Added Tax Value added tax (VAT) is excluded from the financial statements unless it is not recoverable from HM Revenues and Customs.

1.21 Group Account Consolidation Group accounts have been prepared on the following basis:

● Accounting policies for group members have been aligned where possible.

● The following methods of consolidation have been used:

● Subsidiaries - line-by-line basis;

● Associates - equity method.

● Lothian Buses' and CEC Holdings Limited's reporting periods are to 31 December. As this is within three months of the Council's reporting period (to 31 March), no consolidation adjustments have been made.

● Inter-company transactions have been eliminated on consolidation.

● Minority interests have been disclosed separately within the Group Balance Sheet and in Note 7.1 to the Financial Statements.

● Group members' financial statements have been prepared on an accruals basis, with the exception of the International Conference Centre Income Trust and International Conference Centre Expenditure Trust, which have been prepared on a cash basis.

34 NOTES TO THE FINANCIAL STATEMENTS

2. Accounting Standards that have been Issued but not yet Adopted Amendments have been made to IFRS7 - Financial Instruments: Disclosures (transfers of financial assets). These were issued in October 2010 and are intended to assist users of financial statements evaluate the risk exposures that relate to transfers of financial assets and the effect of those risks on the Council's financial position.

The Council is not aware of any transfers that are covered by the change to IFRS7.

3. Judgements Made in Applying Accounting Policies In applying the accounting policies set out in Note 1 to the Financial Statements, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. The most significant judgements made in these Financial Statements are detailed below:

3.1 Tram Project Mediation has been undertaken in relation to the Edinburgh Tram project. The Council has now signed a settlement agreement with the contractor for a reduced project scope, from the airport to St Andrew Square / York Place, with an overall budget of £776m.

3.2 Provision of School Buildings The Council is deemed to control the services provided under the Public Private Partnership agreements (PPP1 and PPP2) for the provision of school buildings, maintenance and other facilities with Edinburgh Schools Partnership (PPP1) and Axiom Education Limited (PPP2).

The accounting policies for public private partnerships have been applied to these arrangements and the schools (valued at net book value of £519.396m at 31st March 2012) are recognised as Property, Plant and Equipment on the Council's Balance Sheet.

3.3 Group Membership The Council has an interest in a number of subsidiary and associate companies, joint ventures and trusts. Full details of these interests are shown in note 7 to the Financial Statements. The most significant of these companies in terms of the size of trading operations and other factors are included in the Group Accounts.

The following companies have been assessed as subsidiaries of the Council:

Shareholding

CEC Holdings Limited 100.00% Lothian Buses plc 91.01% tie Limited 100.00% Edinburgh Convention Bureau 100.00% Edinburgh, Lothian and Scottish Borders Screen 100.00% Industries Office Limited Marketing Edinburgh Limited 100.00% Pacific Shelf 825 Limited 100.00%

The following companies, trusts and joint boards have been assessed as associates of the Council:

Edinburgh Leisure 33.33% Board representation Festival City Theatres Trust 36.36% Board representation International Conference Centre Income Trust 100.00% International Conference Centre Exp. Trust 100.00% Lothian and Borders Fire and Rescue Board 53.17% Funding percentage Lothian and Borders Police Board 54.67% Funding percentage Lothian Valuation Joint Board 61.22% Funding percentage

35 NOTES TO THE FINANCIAL STATEMENTS

4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty The Financial Statements contain estimated figures that are based on assumptions made by the Council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.

The following details uncertainties on assumptions and estimates, and outlines the potential effect if actual results differ from the assumptions made.

Effect if Actual Results Differ Item Uncertainty from Assumptions Property, Assets are depreciated over useful lives that If the useful life of assets is reduced, Plant and are dependent on assumptions about the depreciation increases and the carrying Equipment level of repairs and maintenance that will be value of the assets falls. incurred in relation to individual assets. A reduction in spending on repairs and It is estimated that the annual depreciation maintenance would bring into doubt the charge would increase and the carrying useful lives assigned to the assets. value would fall by £10.307m for each year that useful lives were reduced.

Provisions The Council has made a provision of Should the settlement values increase by £23.849m in respect of the remainder of 10% this would have the effect of adding anticipated equal pay settlements. This is £2.316m to the provision required. based on the number of potential claimants and assumes similar settlement terms to that achieved previously. There is uncertainty surrounding both of these assumptions.

Pensions Estimation of the net liability to pay pensions The effects on the net pensions liability of Liability depends on a number of complex changes in individual assumptions can be judgements relating to the discount rate measured. used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied.

Arrears At 31 March, the Council had a balance of If collection rates were to deteriorate, a sundry debtors of £27.210m A review of doubling of the amount of the impairment significant balances suggested that an of doubtful debts would require an impairment of doubtful debts of £3.327m additional £3.327m to be set aside as an (12%) was appropriate. In the current allowance. economic climate it is not certain that this will be sufficient.

VAT The Council's accounts are prepared on the If the Council were to exceed its 5% de Recovery assumption that VAT charged on its minimis level, a minimum repayment of Status purchases is fully recoverable and that it will £5.811m would be due to HM Revenues not become partially exempt. and Customs.

36 NOTES TO THE FINANCIAL STATEMENTS

4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty - continued Effect if Actual Results Differ Item Uncertainty from Assumptions Council Tax ArrearsThe Council makes an assumption on If collection rates were to deteriorate, the level of Council Tax that will be an increase of 1% in the amount to be collected over a number of years. impaired would require an additional The Council currently assumes that £2.403m to be set aside as an 96.3% of Council Tax will be allowance. collected. An impairment for doubtful debts of £8.917m has been provided for. In the current economic climate it is not certain that this would be sufficient.

House Rent Arrears At 31 March, the Council had a If collection rates were to deteriorate, balance of housing rent arrears of an increase of 10% in the amount to be £2.091m A review of significant impaired would require an additional balances suggested that an £0.209m to be set aside as an impairment of doubtful debts of allowance. £1.340m (64%) was appropriate. In the current economic climate it is not certain that this will be sufficient.

Edinburgh Trams Project Following mediation, the Council The revenue impact on the Council of signed a settlement agreement with borrowing the additional £231m to the contractor in September 2011 for complete the project will be £15m per a reduced project scope, with an annum. Each additional £10m of overall budget of £776m. borrowing over and above this sum would cost the Council an additional £0.664m per annum, based on a thirty year repayment period.

Long-Term Contracts The Council's approved budget If inflation were to increase by 1%, this provides for inflationary uplifts on long-would result in an additional cost of term contracts. £0.62m per annum.

This list does not include assets and liabilities that are carried at fair value based on recently observed market prices.

5. Material Items of Income and Expense Provisions - the Council used £13.043m of the provision previously set aside for equal pay to offset costs arising during the year. The provision set aside for equal pay was reduced by £11.042m, based on the current level of settlements. The effect of this reduction is included within exceptional items in the Comprehensive Income and Expenditure Statement.

6. Events After the Balance Sheet Date No material post balance sheet events have been identified at the date of signing the unaudited financial statements.

37 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates The Council holds shares in various trading companies, either as a controlling or minority shareholder.

The Council is also represented on the Boards of various companies that are limited by guarantee and have no share capital. It participates in these companies by means of Board membership and the provision of funding and management support.

Unless otherwise stated, the accounts of the companies may be obtained on application to the Chief Financial Officer, Waverley Court, 4 East Market Street, Edinburgh EH8 8BG.

The following entities have a significant impact on the Council's operations and have been consolidated into the Group Accounts: Subsidiaries: Associates: ● CEC Holdings Limited ● Edinburgh Leisure ● Lothian Buses plc ● Festival City Theatres Trust ● tie Limited ● Lothian and Borders Fire and Rescue Board ● Lothian and Borders Police Board ● Lothian Valuation Joint Board Trusts: ● International Conference Centre Income Trust ● International Conference Centre Expenditure Trust The following companies are not consolidated into the Group Accounts. An assessment has been carried out on these companies and their activities and the level of Council control. These companies are not considered to be a material part of the Group and have therefore been excluded from the Group Accounts: ● Common Repairs Grant Trust ● Edinburgh Convention Bureau (voluntary strike-off initiated January 2012) ● Edinburgh, Lothian and Scottish Borders Screen Industries Office Limited (wound up May 2012) ● Pacific Shelf 825 Limited ● Marketing Edinburgh Limited (new company) ● Capital City Partnership Limited (Council became the sole member January 2012)

7.1 Analysis of Minority Interest Shares in the Group Comprehensive Income and Expenditure Statement Attributable shares of income and expenditure Minority 2011/12 Authority Interests Total £000 £000 £000 (Surplus) or Deficit on the Provision of Services 40,187 -798 39,389 Other Comprehensive Income and Expenditure 62,239 728 62,967 102,426 -70 102,356

2010/11 Comparative Data £000 £000 £000 (Surplus) or Deficit on the Provision of Services -323,175 -2,338 -325,513 Other Comprehensive Income and Expenditure -288,285 -913 -289,198 -611,460 -3,251 -614,711

38 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates - continued 7.2 Subsidiary Companies ● Capital City Partnership The company is a private company limited by guarantee. It is a charitable organisation. The Council is the sole member. The principal activities of the company are to promote community regeneration, by bringing together key statutory, voluntary, community and private sector bodies. The company's unaudited accounts were not available at the time these Unaudited Financial Statements were issued. ● CEC Holdings Limited The principal activities of the company are property development and the operation of an international conference centre. The company is wholly owned by the City of Edinburgh Council. The most recent unaudited results of the company are as follows: 31.12.2011 31.12.2010 £000 £000 Net assets 17,490 17,869 Net loss before taxation 4,816 6,791 Retained loss carried forward -52,607 -50,090 The Council inherited its interest in CEC Holdings Limited following the reorganisation of local government in 1996. It is considered that this was on an acquisition basis, however, as no consideration was given for these interests, there was no goodwill involved in these transactions. ● Edinburgh Convention Bureau The company's assets have been transferred to Marketing Edinburgh Limited and a voluntary strike- off of the company was initiated in January 2012. ● Edinburgh, Lothian and Scottish Borders Screen Industries Office Limited The company's assets have been transferred to Marketing Edinburgh Limited and the company was wound up in May 2012. ● Lothian Buses plc The City of Edinburgh Council is the major shareholder in Lothian Buses plc, a company incorporated to operate buses in the City of Edinburgh and its surrounding area. The Council's shareholding comprises 5,824,139 (91.01%) £1 ordinary shares (fully paid). (re-stated) The most recent results of the company are as follows: 31.12.2011 31.12.2010 £000 £000 Net assets 69,346 51,577 Net profit before taxation -9,792 -30,283 Profit and loss account reserve 56,190 38,281 Dividend 3,296 2,198 The Council inherited its interest in Lothian Buses plc, following the reorganisation of local government in 1996. It is considered that this was on an acquisition basis, however, as no consideration was given for these interests, there was no goodwill involved in these transactions. A copy of the latest accounts can be obtained by writing to the Finance Director, Lothian Buses plc, Annandale Street, Edinburgh, EH7 4AZ. ● Marketing Edinburgh Limited The company is a private company limited by guarantee. The Council is the sole member. The principal activities of the company are to increase economic activity within the Edinburgh areas by promoting it as a destination to live, work, study etc. The assets of Edinburgh Convention Bureau and Edinburgh, Lothian and Scottish Borders Screen Industries Office Limited were transferred to Capital City Partnership in 2011/12. The company's unaudited accounts were not available at the time these Unaudited Financial Statements were issued.

39 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates - continued 7.2 Subsidiary Companies - continued ● Pacific Shelf 825 Limited The City of Edinburgh Council wholly owns 100% of the company. The principal activity of the company during the period was leasing land and property. The company's assets have been transferred to Shawfair Land Limited, a subsidiary of CEC Holdings Limited. The company will be wound up in 2012/13 ● tie Limited The principal activity of the company is to promote, support and / or effect the development, procurement and implementation of projects defined in, or referred to in the Local Transport Strategy of the City of Edinburgh Council. The Council owns 100% (1,000 shares) of the issued share capital through Transport Edinburgh Limited, a dormant company. The most recent unaudited results of the company are as follows: 31.03.2012 31.03.2011 £000 £000 Turnover (112,694) (63,951) Net liabilities (521) (521) Net profit before taxation 0 (951) Retained profit / (loss) carried forward (522) (522) The company is in the process of being wound up, with most of the activities transferring to the Council and Lothian Buses. 7.3 Associates ● Edinburgh Leisure This is a non-profit-distributing company limited by guarantee and registered as a Charity. Each member has undertaken to contribute an amount not exceeding £1 towards any deficit arising in the event of the company being wound up. The principal activity of the company is the provision of recreation and leisure facilities. The City of Edinburgh Council is represented on the company's Board of Directors and contributes a substantial sum to the company towards the cost of operating sport and leisure facilities. The City of Edinburgh Council leases its sport and leisure centres to the company. The most recent unaudited results of the company are as follows: 31.03.2012 31.03.2011 £000 £000 Net (liabilities) / assets 750 7,194 Net operating loss / (income) 402 (5,153) Fund balances carried forward (750) (7,194) The net incoming resources are prior actuarial gain / (loss) on pension scheme. Although Edinburgh Leisure is included in the Group Accounts, due to the nature of its activities being a core part of the Council's policy, the Council has no legal interest in the assets or liabilities of the company. The group share of the results of Edinburgh Leisure, based on 33.33% (2010/11 33.33% ) Board Representation, is as follows: 31.03.2012 31.03.2011 £000 £000 Incoming resources -8,638 -8,565 Net loss / (surplus) 2,148 -1,718 Net assets / (liabilities) 250 2,398 Total usable reserves -250 -2,398

40 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates - continued 7.3 Associates - continued ● Festival City Theatres Trust This is a non-profit-distributing company limited by guarantee and registered as a Charity.

The City of Edinburgh Council is represented on the trust's board of directors and gives substantial financial assistance. The City of Edinburgh Council leases the King's Theatre and the Festival Theatre to the trust.

The most recent unaudited results of the company are as follows: 31.03.2012 31.03.2011 £000 £000 Net assets 4,576 5,054 Net outgoing resources 382 1,400 Fund balances carried forward (4,576) (5,054)

Although Festival City Theatres Trust is included in the Group Accounts, due to the nature of its activities being a core part of the Council's policy, the Council has no legal interest in the assets or liabilities of the company.

The group share of the results of the Festival City Theatres Trust, based on 36.36% (2010/11 33.33%) Board Representation, is as follows: 31.03.2012 31.03.2011 £000 £000

Incoming resources -2,460 -2,196 Net outgoing resources 139 467 Net assets 1,664 1,685 Total usable reserves -1,664 -1,685

● Lothian and Borders Fire and Rescue Board The South Eastern Combined Fire Services Area Administration Scheme 1995 requires the Joint Board to comprise 18 members appointed from the constituent authorities as follows: two members from East Lothian, Midlothian and Scottish Borders Councils; three from West Lothian Council; and nine from the City of Edinburgh Council.

Costs are apportioned according to the estimated cost of service provision within the area of each constituent authority.

The group share of the results of the Lothian and Borders Fire and Rescue Board, based on 53.17% (2010/11 53.24%) funding percentage is as follows: 2011/12 2010/11 £000 £000 Funding - requisitions -21,051 -22,753 Other income -4,237 -3,759 Total income -25,288 -26,512

Deficit / (surplus) for the year 12,005 -10,700

Net liabilities -178,838 -160,520

Usable reserves -1,251 -1,877 Unusable reserves 180,089 162,397 Total reserves 178,838 160,520

41 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates - continued 7.3 Associates - continued ● Lothian and Borders Police Board The Lothian and Borders Combined Police Area Amalgamation Scheme 1995 requires the Joint Board to comprise 18 members appointed from the constituency authorities as follows: two members from East Lothian, Midlothian and Scottish Borders Councils; three from West Lothian Council; and nine from the City of Edinburgh Council. The Amalgamation Scheme 1995 provides that the estimated expenditure of the Board in each financial year shall be apportioned among constituent authorities according to the cost of the provision of services by Lothian and Borders Police within the area of each constituent authority. The group share of the results of the Lothian and Borders Police Board, based on 54.67% (2010/11 55.74%) funding percentage is as follows: 2011/12 2010/11 £000 £000 Funding - requisitions -43,722 -46,846 Other income -81,804 -109,631 Total income -125,526 -156,477

(Surplus) / deficit for the year 44,909 -61,048

Net liabilities -1,001,161 -859,956

Usable reserves -4,131 -6,129 Unusable reserves 1,005,292 866,085 Total reserves 1,001,161 859,956

● Lothian Valuation Joint Board The Lothian Valuation Joint Board provides Valuation Appeals, Lands Valuation, Electoral Registration and Council Tax Valuation Services. The Board comprises 16 members of whom nine are elected by the City of Edinburgh, three by West Lothian and two each by East and Midlothian Councils. Costs incurred by the Lothian Valuation Joint Board are apportioned in accordance with the non- domestic rateable subjects and dwellings valued for council tax within the areas of each constituent authority. The group share of the results of the Lothian Valuation Joint Board, based on 61.22% (2010/11 61.57%) funding percentage is as follows: 2011/12 2010/11 £000 £000 Funding - requisitions -3,744 -3,780 Other income -199 -44 Total income -3,943 -3,824

Surplus for the year -140 -2,098

Net liabilities -2,523 -2,787

Usable reserves 0 0 Unusable reserves 2,523 2,787 Total reserves 2,523 2,787

42 NOTES TO THE FINANCIAL STATEMENTS

7. Subsidiaries and Associates - continued 7.4 Audit Opinions noted on the Accounts of the Companies Unless otherwise indicated, all the companies noted have an unqualified audit opinion. 7.5 Shareholder Support to Council Companies A number of companies within the group are currently dependent on the continued financial support of the Council. The companies are EICC Limited, a subsidiaries of CEC Holdings Limited - the Council owns 100% of the shares in CEC Holdings Limited, Festival Theatres Trust and Edinburgh Leisure.

7.6 Financial Impact of Consolidation The effect of inclusion of subsidiaries and associates on the Group Balance Sheet is to decrease both reserves and net assets by £1,060.395m (2010/11 £895.722m) representing the Council's share of the realisable surpluses or deficits in these companies. As noted in the foreword to the accounts, the financial impact on consolidation of the group mainly arises from the inclusion of pension liabilities. This is a snapshot of the position at 31 March 2012. The actuarial valuation, which takes account of the longer term view, will consider the appropriate employers' contribution rates and these together with employee contributions and revenues generated from fund investments will be utilised to meet the financing of these liabilities. 8. Trusts ● Common Repairs Grants Trust This Trust was set up to hold funds provided by the City of Edinburgh Council and by private owners for the grant-aided repair of multiple-ownership housing in the city. The balance of unexpended funds held at 31 March 2012 was £0.536m (2011 £0.543m). ● International Conference Centre Expenditure Trust This Trust was set up to hold funds provided by the Council for its development of the Edinburgh International Conference Centre. The balance of unexpended funds held at 31 March 2012 was £5.252m (2011 £4.006m). The increase in the balance of £1.246m from last year is due to an approved transfer of £1.202m from the International Conference Centre Income Trust to provide a sinking fund to meet capital expenditure on the Edinburgh International Conference Centre (EICC) and interest accrued on the fund during the year of £0.044m. ● International Conference Centre Income Trust This Trust was set up to hold funds received from the sale of land at the Edinburgh International Conference Centre site, pending their use for development and other costs of the centre. The balance of unexpended funds held at 31 March 2012 was £9.432m (2011 £14.520m). The decrease of £5.088m in the balance from last year comprises £3.559m for payment for construction and development costs of the EICC extension and office development in Morrison Street; £1.202m transferred to the International Conference Centre Expenditure Trust; a further investment of £0.452m in EICC operations less interest received during the year of £0.125m. 9. Adjustments Between Accounting Basis and Funding Basis Under Regulations This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Council in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Council to meet future capital and revenue expenditure.

43 NOTES TO THE FINANCIAL STATEMENTS

9. Adjustments Between Accounting Basis and Funding Basis Under Regulations - continued

Usable Reserves Housing General Revenue Capital Fund Account Receipts 2011/12 Balance Balance Reserve £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES) Charges for depreciation and impairment of non-current assets -146,795 -27,163 0 Movements in the market value of investment properties -168 0 0 Amortisation of intangible assets -1,621 0 0 Capital grants and contributions applied 61,084 3,893 0 Revenue expenditure funded from capital under statute -33,811 0 0 Insertion of items not debited or credited to the CIES Statutory provision for the financing of capital investment 62,542 17,787 0 Capital expenditure charged against General Fund and 33,811 0 0 HRA balances Adjustments primarily involving the Capital Grant Unapplied Account Application of grants to capital financing transferred to the 0 0 0 Capital Adjustment Account Adjustments primarily involving the Capital Receipts Reserve Transfer of cash sale proceeds credited as part of the gain / 2,759 -726 0 loss on disposal of assets Use of the Capital Receipts Reserve to finance new capital 0 0 8,421 expenditure Adjustments primarily involving the Financial Instruments Adjustment Account Amount by which finance costs charged are different from 1,054 399 0 finance costs chargeable in the year in accordance with statutory requirements Adjustments primarily involving the Pensions Reserve Reversal of items relating to retirement benefits debited -40,456 -318 0 or credited to the CIES Employer's pension contributions and direct payments to 61,055 565 0 pensioners payable in the year Adjustments primarily involving the Employee Statutory Adjustment Account Amount by which officer remuneration charges to the CIES 7,180 -44 0 are different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments 6,634 -5,607 8,421

44 NOTES TO THE FINANCIAL STATEMENTS

9. Adjustments Between Accounting Basis and Funding Basis Under Regulations

Usable Reserves Capital Movement Grants in Unapplied Capital Unusable 2011/12 Account Fund Reserves £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES) Charges for depreciation and impairment of non-current assets 0 0 173,958 Movements in the market value of investment properties 0 0 168 Amortisation of intangible assets 0 0 1,621 Capital grants and contributions applied -6,274 0 -58,703 Revenue expenditure funded from capital under statute 0 0 33,811 Insertion of items not debited or credited to the CIES Statutory provision for the financing of capital investment 0 0 -80,329 Capital expenditure charged against General Fund and 0 0 -33,811 HRA balances Adjustments primarily involving the Capital Grant Unapplied Account Application of grants to capital financing transferred to the 282 99 -381 Capital Adjustment Account Adjustments primarily involving the Capital Receipts Reserve Transfer of cash sale proceeds credited as part of the gain / 0 0 -2,033 loss on disposal of assets Use of the Capital Receipts Reserve to finance new capital 0 0 -8,421 expenditure Adjustments primarily involving the Financial Instruments Adjustment Account Amount by which finance costs charged are different from 0 0 -1,453 finance costs chargeable in the year in accordance with statutory requirements Adjustments primarily involving the Pensions Reserve Reversal of items relating to retirement benefits debited 0 0 40,774 or credited to the CIES Employer's pension contributions and direct payments to 0 0 -61,620 pensioners payable in the year Adjustments primarily involving the Employee Statutory Adjustment Account Amount by which officer remuneration charges to the CIES 0 0 -7,136 are different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments -5,992 99 -3,555

45 NOTES TO THE FINANCIAL STATEMENTS

9. Adjustments Between Accounting Basis and Funding Basis Under Regulations - continued

Usable Reserves Housing General Revenue Capital Fund Account Receipts 2010/11 Comparative Data Balance Balance Reserve £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES) Charges for depreciation and impairment of non-current assets -134,267 -36,147 0 Movements in the market value of investment properties 61 0 0 Amortisation of intangible assets -262 0 0 Capital grants and contributions applied 134,318 1,158 0 Revenue expenditure funded from capital under statute -44,820 0 0 Movements in donated assets 171 0 0 Insertion of items not debited or credited to the CIES Statutory provision for the financing of capital investment 59,443 17,483 0 Capital expenditure charged against General Fund and 44,820 0 0 HRA balances Adjustments primarily involving the Capital Grant Unapplied Account Application of grants to capital financing transferred to the 0 0 0 Capital Adjustment Account Adjustments primarily involving the Capital Receipts Reserve Transfer of cash sale proceeds credited as part of the gain / 1,730 -863 0 loss on disposal of assets Use of the Capital Receipts Reserve to finance new capital 0 0 8,435 expenditure Adjustments primarily involving the Financial Instruments Adjustment Account Amount by which finance costs charged are different from 785 289 0 finance costs chargeable in the year in accordance with statutory requirements Adjustments primarily involving the Pensions Reserve Reversal of items relating to retirement benefits debited 120,853 3,113 0 or credited to the CIES Employer's pension contributions and direct payments to 58,018 480 0 pensioners payable in the year Adjustments primarily involving the Employee Statutory Adjustment Account Amount by which officer remuneration charges to the CIES -451 41 0 are different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments 240,399 -14,446 8,435

46 NOTES TO THE FINANCIAL STATEMENTS

9. Adjustments Between Accounting Basis and Funding Basis Under Regulations

Usable Reserves Capital Movement Grants in Unapplied Capital Unusable 2010/11 Comparative Data Account Fund Reserves £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement (CIES) Charges for depreciation and impairment of non-current assets 0 0 170,414 Movements in the market value of investment properties 0 0 -61 Amortisation of intangible assets 0 0 262 Capital grants and contributions applied -478 0 -134,998 Revenue expenditure funded from capital under statute 0 0 44,820 Movements in donated assets 0 0 -171 Insertion of items not debited or credited to the CIES Statutory provision for the financing of capital investment 0 0 -76,926 Capital expenditure charged against General Fund and 0 0 -44,820 HRA balances Adjustments primarily involving the Capital Grant Unapplied Account Application of grants to capital financing transferred to the 26,144 164 -26,308 Capital Adjustment Account Adjustments primarily involving the Capital Receipts Reserve Transfer of cash sale proceeds credited as part of the gain / 0 0 -867 loss on disposal of assets Use of the Capital Receipts Reserve to finance new capital 0 0 -8,435 expenditure Adjustments primarily involving the Financial Instruments Adjustment Account Amount by which finance costs charged are different from 0 0 -1,074 finance costs chargeable in the year in accordance with statutory requirements Adjustments primarily involving the Pensions Reserve Reversal of items relating to retirement benefits debited 0 0 -123,966 or credited to the CIES Employer's pension contributions and direct payments to 0 0 -58,498 pensioners payable in the year Adjustments primarily involving the Employee Statutory Adjustment Account Amount by which officer remuneration charges to the CIES 0 0 410 are different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments 25,666 164 -260,218

47 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves 10.1 Transfers to and from Usable Reserves This note sets out the amounts set aside in the Group's and the Council's usable reserves and the amounts posted back from these reserves to meet expenditure during the year. Comparative data is included for 2010/11. Net Net Balance Transfers Transfers Balance at Out In at 01.04.10 2010/11 2010/11 31.03.11 Group Reserves £000 £000 £000 £000 Subsidiaries CEC Holdings Limited Revenue reserves 45,340 4,753 0 50,093 Capital grants unapplied account 0 0 -7,122 -7,122 Lothian Buses Revenue reserves 4,986 0 -33,291 -28,305 Tie Limited Revenue reserves 2,206 0 -1,684 522 Capital grants unapplied account -1,341 552 0 -789

Total Usable Reserves - Subsidiaries 51,191 5,305 -42,097 14,399 Associates and Joint Ventures Common Good Fund Earmarked revenue reserve -1,637 6 0 -1,631

Edinburgh Leisure Capital contribution -144 144 0 0 Earmarked revenue reserve -180 0 -189 -369 Revenue reserves 1,037 0 -3,066 -2,029 International Conference Centre Trusts Income Trust -26,231 11,711 0 -14,520 Expenditure Trust -601 0 -3,405 -4,006 Festival City Theatres Trust Earmarked capital reserve -2,453 416 0 -2,037 Revenue reserves 147 204 0 351 Lothian and Borders Fire and Rescue Board Earmarked capital reserve -44 0 -7 -51 Capital Grants Unapplied Account 0 0 -152 -152 Revenue reserves -2,118 444 0 -1,674

Lothian and Borders Police Board Earmarked capital reserve 0 0 -120 -120 Capital Grants Unapplied Account 0 0 -109 -109 Revenue reserves -6,025 125 0 -5,900

Total Usable Reserves - Associates and Joint Ventures -38,249 13,050 -7,048 -32,247

Total Usable Reserves - Subsidiaries, Associates and Joint Ventures 12,942 18,355 -49,145 -17,848

48 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves - continued 10.1 Transfers to and from Usable Reserves - continued Net Net Balance Transfers Transfers Balance at Out In at 01.04.11 2011/12 2011/12 31.03.12 £000 £000 £000 £000 Group Reserves Subsidiaries CEC Holdings Limited Revenue reserves 50,093 2,464 0 52,557 Capital grants unapplied account -7,122 536 0 -6,586

Lothian Buses Revenue reserves -28,305 0 -22,836 -51,141

Tie Limited Revenue reserves 522 0 0 522 Capital grants unapplied account -789 0 152 -637

Total Usable Reserves - Subsidiaries 14,399 3,000 -22,684 -5,285

Associates and Joint Ventures Common Good Fund Earmarked revenue reserve -1,631 7 0 -1,624

Edinburgh Leisure Capital contribution 0000 Earmarked revenue reserve -369 2 0 -367 Revenue reserves -2,029 2,146 0 117

International Conference Centre Trusts Income Trust -14,520 5,088 0 -9,432 Expenditure Trust -4,006 0 -1,245 -5,251

Festival City Theatres Trust Earmarked capital reserve -2,037 47 0 -1,990 Revenue reserves 351 0 -25 326

Lothian and Borders Fire and Rescue Board Earmarked capital reserve -51 0 -18 -69 Capital Grants Unapplied Account -152 17 0 -135 Revenue reserves -1,674 627 0 -1,047

Lothian and Borders Police Board Earmarked capital reserve -120 120 0 0 Capital Grants Unapplied Account -109 3 0 -106 Revenue reserves -5,900 1,875 0 -4,025

Total Usable Reserves - Associates and Joint Ventures -32,247 9,932 -1,288 -23,603

Total Usable Reserves - Subsidiaries, Associates and Joint Ventures -17,848 12,932 -23,972 -28,888

49 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves - continued 10.1 Transfers to and from Usable Reserves - continued

Balance Transfers Transfers Balance at Out In at 01.04.10 2010/11 2010/11 31.03.11 £000 £000 £000 £000 Council's Usable Reserves General Fund Unallocated General Fund -9,025 1,614 -5,614 -13,025 Balances held by schools under Devolved School -1,000 0 -900 -1,900 Management (DSM) Balances set aside under budget flexibility scheme -5,597 3,416 -1,014 -3,195 Contingency funding - priority outcomes 0 0 -6,643 -6,643 Dilapidations fund -734 47 -3,780 -4,467 Energy efficiency fund -679 166 -179 -692 Funding set aside for equal pay liabilities -13,800 5,158 -59 -8,701 Insurance Fund -8,462 0 -1,688 -10,150 Licensing Income -908 99 -177 -986 Recycling balances -4,847 600 -5,601 -9,848 Revenue grants and contributions received in -18,380 8,275 -8,367 -18,472 advance of planned expenditure Savings in the BT contract set aside for IT projects -1,051 3,463 -3,717 -1,305 Second home discounts on Council Tax set aside for -5,177 0 -2,944 -8,121 payments to registered social landlords Spend to Save Fund -2,837 1,833 -479 -1,483 Other earmarked balances -616 0 -30 -646 Surplus on Housing Revenue Account transferred to 0 1,614 -1,614 0 Renewal and Repairs Fund Total General Fund -73,113 26,285 -42,806 -89,634

Housing Revenue Account Balance 0 1,614 -1,614 0

Renewal and Repairs Fund -13,779 48 -1,673 -15,404

Capital Fund -22,467 6,174 -97 -16,390

Capital Receipts Reserve 0 8,435 -8,435 0

Capital Grants Unapplied Account -27,207 26,144 -478 -1,541

Total Usable Reserves - Council -136,566 68,700 -55,103 -122,969

Total Usable Reserves - Group -123,624 87,055 -104,248 -140,817

50 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves - continued 10.1 Transfers to and from Usable Reserves - continued

Balance Inter-Fund Transfers Transfers Balance at Transfer Out In at 01.04.11 01.04.11 2011/12 2011/12 31.03.12 £000 £000 £000 £000 £000 General Fund Unallocated General Fund -13,025 0 3,514 -3,514 -13,025 Balances held by schools under DSM -1,900 0 0 -1,019 -2,919 Balances set aside under budget flexibility -3,195 2,332 0 0 -863 Contingency funding - priority outcomes -6,643 -2,332 2,140 -11,702 -18,537 Dilapidations fund -4,467 0 0 -712 -5,179 Energy efficiency fund -692 0 27 -195 -860 Funding set aside for equal pay liabilities -8,701 0 0 -2,169 -10,870 Insurance Fund -10,150 0 800 -1,077 -10,427 Licensing Income -986 0 0 -404 -1,390 Recycling balances -9,848 0 4,700 0 -5,148 Revenue grants and contributions -18,472 0 4,777 -6,989 -20,684 received in advance of planned expend. Savings in the BT contract set aside for IT -1,305 0 3,781 -5,062 -2,586 projects Second home discounts on Council Tax -8,121 0 0 -2,939 -11,060 set aside for payments to registered social Spend to Save Fund -1,483 0 1,511 -28 0 Other earmarked balances -646 0 409 -33 -270 Surplus on Housing Revenue Account 0 0 3,514 -3,514 0 transferred to Renewal and Repairs Fund

Total General Fund -89,634 0 25,173 -39,357 -103,818

Housing Revenue Account Balance 0 0 3,514 -3,514 0

Renewal and Repairs Fund -15,404 0 0 -3,589 -18,993

Capital Fund -16,390 0 100 -79 -16,369

Capital Receipts Reserve 0 0 8,421 -8,421 0

Capital Grants Unapplied Account -1,541 0 282 -6,274 -7,533

Total Usable Reserves - Council -122,969 0 37,490 -61,234 -146,713

Total Usable Reserves - Group -140,817 0 50,422 -85,206 -175,601

10.2 Devolved School Management A net credit balance of £2.919m (2010/11 £1.900m) is held within the General Fund in accordance with the Devolved School Management scheme.

51 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves - continued 10.3 Reconciliation of transfers to and from earmarked reserves in Movement of Reserves Statement to Transfers to and from Usable Reserves

2011/12 Renewal Capital General HRA / Repairs Receipts Fund Balance Fund Reserve £000 £000 £000 £000

Transfers out 25,173 3,514 0 8,421 Transfers in -39,357 -3,514 -3,589 -8,421 Total movements in fund -14,184 0 -3,589 0

Recognised in Comprehensive Income and Expenditure Statement -14,337 -3,514 0 0 Minority interest and other consol. adjusts. 0 0 0 0 Transfers to other earmarked reserves 153 3,514 -3,589 0 Total movements in fund -14,184 0 -3,589 0

Capital Group Grants Capital Usable Unapplied Fund Reserves Total £000 £000 £000 £000

Transfers out 282 100 12,932 50,422 Transfers in -6,274 -79 -23,972 -85,206 Total movements in fund -5,992 21 -11,040 -34,784

Recognised in Comprehensive Income and Expenditure Statement -5,992 99 -13,736 -37,480 Minority interest and other consol. adjusts. 0 0 0 0 Transfers to other earmarked reserves 0 -78 2,696 2,696 Total movements in fund -5,992 21 -11,040 -34,784

2010/11 Comparative Data Renewal Capital General HRA / Repairs Receipts Fund Balance Fund Reserve £000 £000 £000 £000 Transfers out 26,285 1,614 48 8,435 Transfers in -42,806 -1,614 -1,673 -8,435 Total movements in fund -16,521 0 -1,625 0

Recognised in Comprehensive Income and Expenditure Statement -10,619 -1,614 0 0 Minority interest and other consol. adjusts. 0 0 0 0 Transfers to other earmarked reserves -5,902 1,614 -1,625 0 Total movements in fund -16,521 0 -1,625 0

52 NOTES TO THE FINANCIAL STATEMENTS

10. Usable Reserves - continued 10.3 Reconciliation of transfers to and from earmarked reserves in Movement of Reserves Statement to Transfers to and from Usable Reserves - continued

2010/11 Comparative Data Capital Group Grants Capital Usable Unapplied Fund Reserves Total £000 £000 £000 £000

Transfers out 26,144 6,174 18,355 87,055 Transfers in -478 -97 -49,145 -104,248 Total movements in fund 25,666 6,077 -30,790 -17,193

Recognised in Comprehensive Income and Expenditure Statement 25,666 164 -33,565 -19,968 Minority interest and other consol. adjusts. 0 0 3,287 3,287 Transfers to other earmarked reserves 0 5,913 -512 -512 Total movements in fund 25,666 6,077 -30,790 -17,193

11. Other Operating Expenditure 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 (Gains) / losses on the disposal of -1,812 -2,033 -2,168 -867 non-current assets -1,812 -2,033 -2,168 -867

12. Financing and Investment Income and Expenditure 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Interest payable and similar charges 72,491 71,460 68,714 67,366 Pensions interest cost and expected return -7,765 -4,623 3,869 4,444 on pension assets Interest receivable and similar income -6,069 -4,814 -4,185 -3,112 Income and expenditure in relation to 1,494 -19 -257 -257 investment properties and changes in their fair value Other investment costs 279 0 0 0 Net surplus from trading activities -4,967 -5,501 -3,994 -3,994 55,463 56,503 64,147 64,447

13. Taxation and Non-Specific Grant Income 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Council Tax income -227,975 -227,975 -226,583 -226,583 Non-domestic rates -297,442 -297,442 -188,733 -188,733 Non-ring fenced government grants -458,120 -458,120 -579,737 -579,737 Capital grants and contributions -64,977 -64,977 -135,476 -135,476 Taxation expenses -939 0 2,880 0 -1,049,453 -1,048,514 -1,127,649 -1,130,529

53 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment 14.1 Depreciation No depreciation is provided in the year of the asset's purchase. Assets in the course of construction are not depreciated until they are brought into use. Where depreciation is provided for, assets are depreciated using the straight line method over the following periods:

Council dwellings 50 years

Buildings 50 years (assets not subject to component accounting)

Buildings - structural 50 years

Buildings - non-traditional roofing 35 years

Buildings - finishes 25 years

Buildings - mechanical and electrical 20 years

Buildings - fittings and furnishings 15 years

PPP Schools 40 years (PPP1 schools) and 35 years (PPP2 schools)

Infrastructure assets 20 years

Vehicles, plant, furniture and equipment 5 years to 7 years, to reflect estimated useful life 3 years to 15 years, Group Companies

14.2 Capital Commitments At 31 March 2012, the Council had entered into a number of contracts for the construction or enhancement of property, plant and equipment in 2011/12 and future years. These are budgeted to cost £249.078m. Similar commitments at 31 March 2011 were £205.018m. Expected £000 Completion Date Tram infrastructure contracts (including project management) 145,366 2014 Edinburgh Int. Conference Centre - additional function space 32,403 2013 Wester Hailes healthy living centre 12,000 2013 HRA - kitchens and bathroom programme 10,050 2013-2014 Drumbrae care home 8,600 2013 Water of Leith flood prevention works 5,500 2012-2013 HRA - external fabric works 4,700 2013-2014 Edinburgh North neighbourhood office 4,336 2012 HRA - Greendykes / Wauchope House - over cladding / heating 3,900 2013-2014 HRA - gas heating programme 3,700 2013-2014 Assembly Rooms 2,520 2012 HRA - neighbour environmental partnerships programme 2,150 2012-2013 Niddrie Burn Restoration and ERI Link Road phase one 1,900 2012 Edinburgh Military Tattoo - new grandstands 1,435 2012 James Gillespies High School Wave 3 essential works 1,300 2013 Road construction 1,200 2012-2013 Boroughmuir High School Wave 3 essential works 1,200 2014 HRA - external door programme 1,100 2013-2014 Kings Theatre 1,040 2012-2013 Mercury abatement plant - Mortonhall Crematorium 1,015 2012 Other capital commitments 3,663 various 249,078

54 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.3 Movements on Balances - Group Accounts Movements in 2011/12 Vehicles, Plant, Other Furniture Council Land and and Infrastructure Dwellings Buildings Equipment Assets £000 £000 £000 £000 Cost or Valuation At 1 April 2011 1,039,517 1,722,278 192,776 950,213 Additions 47,555 50,390 30,026 126,708 Revaluation increases / (decreases) -412 83,071 0 0 recognised in the Revaluation Reserve Revaluation increases / (decreases) -7,915 -65,719 0 0 recognised in the Surplus on the Provision of Services Derecognition - disposals -3,543 -242 -2,942 0 Assets reclassified (to) / from -473 -1,990 0 0 held for sale Other movements in cost or 0 211 -4,424 0 valuation At 31 March 2012 1,074,729 1,787,999 215,436 1,076,921 Accumulated Depreciation and Impairment At 1 April 2011 -29,842 -86,956 -93,571 -221,358 Depreciation charge -16,595 -40,018 -20,414 -45,875 Depreciation charge written out to 15 24,775 0 0 Revaluation Reserve Depreciation written out to the 119 17,198 0 0 Surplus on the Provision of Services Derecognition - disposals 149 164 2,196 0 Impairment losses recognised in 0 0 -573 -299 the Surplus on the Provision of Services Other movements in cost or 24 4,969 4,425 0 valuation At 31 March 2012 -46,130 -79,868 -107,937 -267,532

Net book value At 31 March 2012 1,028,599 1,708,131 107,499 809,389

At 31 March 2011 1,009,675 1,635,322 99,205 728,855

55 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.3 Movements on Balances - Group Accounts Movements in 2011/12 Total Assets Property Community Surplus Under Plant and Assets Assets Construction Equipment £000 £000 £000 £000 Cost or Valuation At 1 April 2011 12,756 40,345 62,737 4,020,622 Additions 493 233 60,212 315,617 Revaluation increases / (decreases) 147 4,689 0 87,495 recognised in the Revaluation Reserve Revaluation increases / (decreases) -1,878 -992 0 -76,504 recognised in the Surplus on the Provision of Services Derecognition - disposals 0 -80 0 -6,807 Assets reclassified (to) / from 0 -1,109 0 -3,572 held for sale Other movements in cost or 100 -3,607 -29,141 -36,861 valuation At 31 March 2012 11,618 39,479 93,808 4,299,990

Accumulated Depreciation and Impairment At 1 April 2011 0 -170 0 -431,897 Depreciation charge 0 -241 0 -123,143 Depreciation charge written out to 0 0 0 24,790 Revaluation Reserve Depreciation written out to the 0 34 0 17,351 Surplus on the Provision of Services Derecognition - disposals 0 0 0 2,509 Impairment losses recognised in 0 0 0 -872 the Surplus on the Provision of Services Other movements in cost or 0 13 0 9,431 valuation At 31 March 2012 0 -364 0 -501,831

Net book value At 31 March 2012 11,618 39,115 93,808 3,798,159

At 31 March 2011 12,756 40,175 62,737 3,588,725

56 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.4 Movements on Balances - Group Accounts 2010/11 Comparative Data Vehicles, Plant, Other Furniture Council Land and and Infrastructure Dwellings Buildings Equipment Assets £000 £000 £000 £000 Cost or Valuation At 1 April 2010 1,020,315 1,712,428 196,389 801,470 Additions 37,358 35,652 9,509 148,743 Revaluation increases / (decreases) 5,350 33,913 0 0 recognised in the Revaluation Reserve Revaluation increases / (decreases) -18,472 -42,215 0 0 recognised in the Surplus on the Provision of Services Derecognition - disposals -4,418 -446 -13,120 0 Assets reclassified (to) / from -616 -9,643 0 0 held for sale Other movements in cost or 0 -7,411 -2 0 valuation At 31 March 2011 1,039,517 1,722,278 192,776 950,213 Accumulated Depreciation and Impairment At 1 April 2010 -14,610 -59,262 -85,195 -172,051 Depreciation charge -16,110 -35,154 -21,398 -40,639 Depreciation charge written out to 320 2,686 0 0 Revaluation Reserve Depreciation written out to the 412 4,710 0 0 Surplus on the Provision of Services Derecognition - disposals 127 31 13,022 -8,668 Impairment losses recognised in 0 0 0 0 the Surplus on the Provision of Services Other movements in cost or 19 33 0 0 valuation At 31 March 2011 -29,842 -86,956 -93,571 -221,358

Net book value At 31 March 2011 1,009,675 1,635,322 99,205 728,855

At 31 March 2010 1,005,705 1,653,166 111,194 629,419

57 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.4 Movements on Balances - Group Accounts 2010/11 Comparative Data Total Assets Property Community Surplus Under Plant and Assets Assets Construction Equipment £000 £000 £000 £000 Cost or Valuation At 1 April 2010 14,665 19,760 40,350 3,805,377 Transfer to heritage assets -2,649 0 0 -2,649 Re-stated at 1 April 2010 12,016 19,760 40,350 3,802,728 Additions 986 4 30,277 262,529 Revaluation increases / (decreases) 0 7,660 0 46,923 recognised in the Revaluation Reserve Revaluation increases / (decreases) -127 -1,917 0 -62,731 recognised in the Surplus on the Provision of Services Derecognition - disposals 0 0 0 -17,984 Assets reclassified (to) / from -56 -218 0 -10,533 held for sale Other movements in cost or -63 15,056 -7,890 -310 valuation At 31 March 2011 12,756 40,345 62,737 4,020,622

Accumulated Depreciation and Impairment At 1 April 2010 0 -54 0 -331,172 Depreciation charge 0 -206 0 -113,507 Depreciation charge written out to 0 0 0 3,006 Revaluation Reserve Depreciation written out to the 0 90 0 5,212 Surplus on the Provision of Services Derecognition - disposals 0 0 0 4,512 Impairment losses recognised in 0 0 0 0 the Surplus on the Provision of Services Other movements in cost or 0 0 0 52 valuation At 31 March 2011 0 -170 0 -431,897

Net book value At 31 March 2011 12,756 40,175 62,737 3,588,725

At 31 March 2010 12,016 19,706 40,350 3,471,556

58 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.5 Movements on Balances - City of Edinburgh Council Movements in 2011/12 Vehicles, Plant, Other Furniture Council Land and and Infrastructure Dwellings Buildings Equipment Assets £000 £000 £000 £000 Cost or Valuation At 1 April 2011 1,039,517 1,641,136 81,650 943,544 Additions 47,555 49,173 13,378 126,708 Revaluation increases / (decreases) -412 83,071 0 0 recognised in the Revaluation Reserve Revaluation increases / (decreases) -7,915 -65,719 0 0 recognised in the Surplus on the Provision of Services Derecognition - disposals -3,543 -15 -248 0 Assets reclassified (to) / from -473 -1,990 0 0 held for sale Other movements in cost or 0 30,855 0 0 valuation At 31 March 2012 1,074,729 1,736,511 94,780 1,070,252 Accumulated Depreciation and Impairment At 1 April 2011 -29,842 -52,947 -50,480 -217,180 Depreciation charge -16,595 -39,707 -12,413 -45,587 Depreciation charge written out to 15 24,775 0 0 Revaluation Reserve Depreciation written out to the 119 17,198 0 0 Surplus on the Provision of Services Derecognition - disposals 149 0 65 0 Impairment losses recognised in the 0 0 -573 -299 Surplus on the Provision of Services Other movements in cost or 24 10 0 0 valuation At 31 March 2012 -46,130 -50,671 -63,401 -263,066

Net book value At 31 March 2012 1,028,599 1,685,840 31,379 807,186

At 31 March 2011 1,009,675 1,588,189 31,170 726,364

59 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.5 Movements on Balances - City of Edinburgh Council Movements in 2011/12 Total Assets Property Community Surplus Under Plant and PPP Assets Assets Construction Equipment Assets £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2011 12,756 40,345 61,342 3,820,290 551,571 Additions 493 233 59,814 297,354 53 Revaluation increases / 147 4,689 0 87,495 -465 (decreases) recognised in the Revaluation Reserve Revaluation increases / -1,878 -992 0 -76,504 0 (decreases) recognised in the Surplus on the Provision of Services Derecognition - disposals 0 -80 0 -3,886 0 Assets reclassified (to) / 0 -1,109 0 -3,572 0 from held for sale Other movements in cost 100 -3,607 -27,348 0 0 or valuation At 31 March 2012 11,618 39,479 93,808 4,121,177 551,159

Accumulated Depreciation and Impairment At 1 April 2011 0 -170 0 -350,619 -20,973 Depreciation charge 0 -241 0 -114,543 -11,419 Depreciation charge written 0 0 0 24,790 629 out to Revaluation Reserve Depreciation written out to 0 34 0 17,351 0 the Surplus on the Provision of Services Derecognition - disposals 0 0 0 214 0 Impairment losses 0 0 0 -872 0 recognised in the Surplus on the Provision of Services Other movements in cost 0 13 0 47 0 or valuation At 31 March 2012 0 -364 0 -423,632 -31,763

Net book value At 31 March 2012 11,618 39,115 93,808 3,697,545 519,396

At 31 March 2011 12,756 40,175 61,342 3,469,671 530,598

The disclosure for PPP assets is for information only the costs and depreciation are included in 'Other Land and Buildings'.

60 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.6 Movements on Balances - City of Edinburgh Council 2010/11 Comparative Data Vehicles, Plant, Other Furniture Council Land and and Infrastructure Dwellings Buildings Equipment Assets £000 £000 £000 £000 Cost or Valuation At 1 April 2010 1,020,315 1,630,821 76,706 794,801 Additions 37,358 35,483 4,944 148,743 Revaluation increases / (decreases) 5,350 33,913 0 0 recognised in the Revaluation Reserve Revaluation increases / (decreases) -18,472 -42,215 0 0 recognised in the Surplus on the Provision of Services Derecognition - disposals -4,418 -57 0 0 Assets reclassified (to) / from -616 -9,643 0 0 held for sale Other movements in cost or 0 -7,166 0 0 valuation At 31 March 2011 1,039,517 1,641,136 81,650 943,544 Accumulated Depreciation and Impairment At 1 April 2010 -14,610 -26,115 -37,223 -168,162 Depreciation charge -16,110 -34,229 -13,257 -40,350 Depreciation charge written out to 320 2,686 0 0 Revaluation Reserve Depreciation written out to the 412 4,710 0 0 Surplus on the Provision of Services Derecognition - disposals 127 1 0 0 Impairment losses recognised in 0 0 0 -8,668 the Surplus on the Provision of Services Other movements in cost or 19 0 0 0 valuation At 31 March 2011 -29,842 -52,947 -50,480 -217,180

Net book value At 31 March 2011 1,009,675 1,588,189 31,170 726,364

At 31 March 2010 1,005,705 1,604,706 39,483 626,639

61 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.6 Movements on Balances - City of Edinburgh Council 2010/11 Comparative Data Total Assets Property Community Surplus Under Plant and PPP Assets Assets Construction Equipment Assets £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2010 14,665 19,760 39,911 3,596,979 552,861 Transfer to heritage assets -2,649 0 0 -2,649 0 Re-stated at 1 April 2010 12,016 19,760 39,911 3,594,330 552,861 Additions 986 4 29,321 256,839 1,150 Revaluation increases / 0 7,660 0 46,923 2,874 (decreases) recognised in the Revaluation Reserve Revaluation increases / -127 -1,917 0 -62,731 -3,314 (decreases) recognised in the Surplus on the Provision of Services Derecognition - disposals 0 0 0 -4,475 0 Assets reclassified (to) / -56 -218 0 -10,533 0 from held for sale Other movements in cost -63 15,056 -7,890 -63 -2,000 or valuation At 31 March 2011 12,756 40,345 61,342 3,820,290 551,571

Accumulated Depreciation and Impairment At 1 April 2010 0 -54 0 -246,164 -11,942 Depreciation charge 0 -206 0 -104,152 -11,291 Depreciation charge written 0 0 0 3,006 1,592 out to Revaluation Reserve Depreciation written out to 0 90 0 5,212 668 the Surplus on the Provision of Services Derecognition - disposals 0 0 0 128 0 Impairment losses recognise 0 0 0 -8,668 0 the Surplus on the Provision of Services Other movements in cost 0 0 0 19 0 or valuation At 31 March 2011 0 -170 0 -350,619 -20,973

Net book value At 31 March 2011 12,756 40,175 61,342 3,469,671 530,598

At 31 March 2010 12,016 19,706 39,911 3,348,166 540,919

The disclosure for PPP assets is for information only the costs and depreciation are included in 'Other Land and Buildings'.

62 NOTES TO THE FINANCIAL STATEMENTS

14. Property, Plant and Equipment - continued 14.7 Council Dwellings, Other Land and Buildings and Investment Properties The Council carries out a rolling programme of revaluations that ensures that all property, plant and equipment required to be measured at fair value is revalued at least every five years. All valuations were carried out internally. Valuations of land and buildings were carried out under the direction of the Council's Property Manager (Property Management and Development), W. Miller FRICS, in accordance with the Statements of Asset Valuation Practice and Guidance Notes of The Royal Institution of Chartered Surveyors. Fixtures and fittings are included in the valuation of the buildings where appropriate.

The significant assumptions applied in estimating fair value are:

● Unless otherwise stated, all properties with a greater than de minimis value were assumed to be in a reasonable state of repair and have a life expectancy of more than fifty years.

● The valuations were prepared using information from the Council's internal records, together with the valuation roll produced by Lothian Valuation Joint Board.

● Not all properties were inspected.

The following statement shows the progress of the Council's five-year rolling programme for the revaluation of property, plant and equipment. Vehicles, Plant, Other Furniture Council Land and and Infrastructure Council assets Dwellings Buildings Equipment Assets £000 £000 £000 £000 Carried at historical cost 94,583 13,646 94,780 1,070,252 Valued at fair value as at: 31 March 2012 79 794,362 0 0 31 March 2011 2,333 82,814 0 0 31 March 2010 1,200 404,319 0 0 31 March 2009 976,067 376,601 0 0 31 March 2008 467 64,769 0 0 Total cost or valuation 1,074,729 1,736,511 94,780 1,070,252

Assets Community Surplus Under Council assets Assets Assets Construction Total £000 £000 £000 £000 Carried at historical cost 11,618 129 93,808 1,378,816 Valued at fair value as at: 31 March 2012 0 5,479 0 799,920 31 March 2011 0 21,035 0 106,182 31 March 2010 0 12,757 0 418,276 31 March 2009 0 0 0 1,352,668 31 March 2008 0 79 0 65,315 Total cost or valuation 11,618 39,479 93,808 4,121,177

63 NOTES TO THE FINANCIAL STATEMENTS

15. Investment Properties 15.1 Income and Expenses on Investment Properties The following items of income and expense have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Rental income from investment properties -187 -187 -196 -196

Direct operating expenses arising from 0000 investment property -187 -187 -196 -196

There are no restrictions on the Council's ability to realise the value inherent in its investment properties or on the Council's right to the remittance of income and the proceeds of disposal. Within the Group, £4.5m of investment properties represents the Council's share of land at Shawfair, which is held jointly with Midlothian Council. The disposal of this would therefore require the consent of Midlothian Council.

15.2 Movement in Fair Value The following table summarises the movement in the fair value of investment properties over the year. 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Value at 1 April 7,258 2,288 8,477 2,227

Additions: - Purchases 0 0 225 0

Disposals -170 0 -225 0

Net (loss) / gain from fair value adjustments -1,681 -168 -1,731 61

Transfers 0000 - (to) / from Inventories 0 0 300 0 - (to) / from Property, Plant and Equipment 1,793 0 212 0

Value at 31 March 7,200 2,120 7,258 2,288

16. Intangible Assets Intangible assets represent purchased software licences.

Software is given a finite useful life, as set out below, based on the period of the licence purchased.

2 Years GLOW Software, Mosaic Household directory, Digilog VRA solution

3 Years Jadu software

5 Years Weighbridge, Arcview, Adobe Acrobat, GIS, Anite Swift, Online Ticketing software

6 Years Data encryption software

64 NOTES TO THE FINANCIAL STATEMENTS

16. Intangible Assets - continued The carrying amount of intangible assets is amortised on a straight-line basis. The amortisation of £1.621m in 2011/12 (2010/11 £0.262m) was charged to the following services.

2011/12 2010/11 £000 £000 Housing Services 1,149 0 Education services 421 225 Cultural and related services 33 33 Environmental services 1 1 Allocable overheads 17 3 Value at 31 March 1,621 262

The movement on intangible asset balances during the year is as follows:

2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Balance at 1 April Gross carrying amount 2,898 2,898 2,480 2,480

Less: Accumulated amortisation -422 -422 -160 -160 Net carrying amount at 1 April 2,476 2,476 2,320 2,320

Additions during the year - Purchased intangible assets 124 124 418 418

Amortisation for the period -1,621 -1,621 -262 -262 Net carrying amount at 31 March 979 979 2,476 2,476

Comprising: Gross carrying amounts 3,022 3,022 2,898 2,898

Accumulated amortisation -2,043 -2,043 -422 -422 Net carrying amount at 31 March 979 979 2,476 2,476

The Council held an intangible asset in the form of nomination rights representing support for the construction of houses for rent by Housing Associations (carrying value of £1.149m at 1st April 2011).

In 2011/12 the Council determined it no longer holds these nomination rights due to Housing Associations agreeing to shortlist their properties under the Council's social housing allocation policy.

This intangible asset has therefore been fully amortised in year (£1.149m).

The following items of capitalised software are individually material to the financial statements. Remaining Carrying Amount Amortisation 2011/12 2010/11 Period £000 £000 at 31.03.12 Anite Swift 311 467 2 years

Data encryption software 223 279 4 years

GLOW Software 320 391 1 year

65 NOTES TO THE FINANCIAL STATEMENTS

17. Heritage Assets 17.1 Reconciliation of the Carrying Value of Heritage Assets Movements in 2011/12 Civic Monuments Regalia and and Archival Statues Artefacts Collections Cost or Valuation £000 £000 £000 At 1 April 2011 2,790 2,047 6,797

Additions 8 0 0

Revaluation increases / (decreases) recognised in the -381 0 0 Surplus on the Provision of Services At 31 March 2012 2,417 2,047 6,797

Accumulated Impairment At 1 April 2011 0 0 0 At 31 March 2012 0 0 0

Net book value At 31 March 2012 2,417 2,047 6,797

At 31 March 2011 2,790 2,047 6,797

Museum Libraries' and Total Special Gallery Heritage Collections Collections Assets Cost or Valuation £000 £000 £000 At 1 April 2011 1,675 24,296 37,605

Additions 0 0 8

Revaluation increases / (decreases) recognised in the 0 0 -381 Surplus on the Provision of Services At 31 March 2012 1,675 24,296 37,232

Accumulated Impairment At 1 April 2011 0 0 0

At 31 March 2012 0 0 0

Net book value At 31 March 2012 1,675 24,296 37,232

At 31 March 2011 1,675 24,296 37,605

66 NOTES TO THE FINANCIAL STATEMENTS

17. Heritage Assets - continued 17.1 Reconciliation of the Carrying Value of Heritage Assets - continued Comparative Movements in 2010/11 Civic Monuments Regalia and and Archival Statues Artefacts Collections Cost or Valuation £000 £000 £000 At 1 April 2010 2,663 2,047 6,797

Additions 88 0 0

Revaluation increases / (decreases) recognised in the 55 0 0 Revaluation Reserve

Revaluation increases / (decreases) recognised in the -16 0 0 Surplus on the Provision of Services At 31 March 2011 2,790 2,047 6,797

Accumulated Impairment At 1 April 2010 0 0 0 At 31 March 2011 0 0 0

Net book value At 31 March 2011 2,790 2,047 6,797

At 31 March 2010 2,663 2,047 6,797

Museum Libraries' and Total Special Gallery Heritage Collections Collections Assets Cost or Valuation £000 £000 £000 At 1 April 2010 1,675 24,296 37,478

Additions 0 0 88

Revaluation increases / (decreases) recognised in the 0 0 55 Revaluation Reserve

Revaluation increases / (decreases) recognised in the 0 0 -16 Surplus on the Provision of Services At 31 March 2011 1,675 24,296 37,605

Accumulated Impairment At 1 April 2010 0 0 0

At 31 March 2011 0 0 0

Net book value At 31 March 2011 1,675 24,296 37,605

At 31 March 2010 1,675 24,296 37,478

67 NOTES TO THE FINANCIAL STATEMENTS

17. Heritage Assets - continued 17.2 Details of Heritage Assets ● Monuments and Statues are valued on an historic basis and valuations are carried out under the direction of the Council's Property Manager (Property Management and Development). ● Civic Regalia and artefacts include items such as the Lord Provosts Badge and Chain of Office and the Roseberry Jewel. The value of these assets is based on an insurance purposes valuation carried out in 1998. ● Archival collections include historical records which relate to the history of Edinburgh and it surrounding areas. The value of these assets is based on a current insurance purposes valuation based on restoration costs only. This valuation has not changed since 2008/09. ● Libraries special collections include items such as rare book collections and pictures in Calotype. The value of these assets is based on an insurance purposes valuation carried out in 2007. ● Museums and Gallery collections include various collections held at a number of museums across Edinburgh. They include items held within the Social History, Applied Art, Writers Museum, Lauriston Castle, Childhood, City Art Centre and Picture Loan Scheme. The value of these assets is based on insurance purposes valuations carried out in 2003 with a small minority of the assets being based on insurance purposes valuations carried out in 1996. ● The valuations for heritage assets have all been carried out internally and although they are from earlier periods, they are considered the most appropriate and relevant. Carrying out valuations for the majority of collections held is very costly and time consuming so it is not practicable to obtain recent valuations at a cost which is commensurate with the benefits to users of the financial statements. The carrying amounts of these heritage assets will be reviewed with sufficient regularity in the future to ensure they are brought up to date and remain appropriate. ● It has not been practical or possible to split out all heritage assets belonging to common good, charities or trusts. Therefore, the Council's balance sheet may hold this element of heritage assets that belong to other entities. ● The Council has three private vehicle registration plates which meet the definition of intangible heritage assets. These have not been recognised on the balance sheet due to lack of information on cost or current value. They are limited registration numbers that rarely becomes available for sale and therefore no relevant or appropriate current value can be placed on these.

18. Financial Instruments 18.1 Categories of Financial Instruments The following categories of financial instrument are carried on the Council's Balance Sheet

Long-Term Current 31.03.12 31.03.11 31.03.12 31.03.11 Investments £000 £000 £000 £000 Loans and receivables 3,478 0 235,547 268,628 Unquoted equity investment at cost 23,335 23,335 0 0 Total investments 26,813 23,335 235,547 268,628

Debtors Loans and receivables 3,500 3,500 25,213 33,306 Total debtors 3,500 3,500 25,213 33,306

Borrowings Financial liabilities (principal amount) -1,400,073 -1,272,805 -34,912 -54,969 Accrued interest 0 0 -18,206 -16,652 Amortised cost -8,679 -8,314 0 0 Total borrowings -1,408,752 -1,281,119 -53,118 -71,621

68 NOTES TO THE FINANCIAL STATEMENTS

18. Financial Instruments - continued 18.1 Categories of Financial Instruments - continued Long-Term 31.03.12 31.03.11 £000 £000 Other Long-Term Liabilities PPP and finance lease liabilities -209,741 -218,124 Deferred liability -350 -350 Total other long-term liabilities -210,091 -218,474

Further detail on the PPP and finance lease liabilities can be seen in notes 40 and 41. Current 31.03.12 31.03.11 Creditors £000 £000 Financial liabilities at amortised cost -13,741 -19,735 PPP and finance leases due within 1 year -8,666 -9,432 Total creditors -22,407 -29,167

Lothian Regional Council entered into an agreement for the disposal of Norton Park Annex to the Tudor Trust. The terms of the disposal included the creation of a Title Company with share capital of 100 ordinary shares, held by the Tudor Trust, and 350,000 £1 preference shares held by City of Edinburgh Council. The preference shares carry rights that, in the event of the company being wound up or the property sold, the Council will receive the first £0.35m of the sale proceeds. This is reflected in the Balance Sheet as 'Other Long-term Liabilities' of £0.35m, as shown above and as a long-term investment.

18.2 Income, Expenses, Gains and Losses Financial Financial Liabilities: Assets: Measured at Loans Amortised and Cost Receivables Total £000 £000 £000 Interest expense -71,021 16 -71,005 Impairment losses 0 -13 -13 Total expense in Surplus on the Provision of Services -71,021 3 -71,018

Interest income 0 2,446 2,446

Net gain / (loss) for the year -71,021 2,449 -68,572

In addition to the above interest expense, £1.858m (2010/11 £1.858m) (of which £1.810m [2010/11 £1.804m] related to the Council) was charged to the loans pool from the financial instruments adjustment account during the year, but not reflected in the Comprehensive Income and Expenditure Statement. It also excludes £0.439m (2010/11 £0.363m) of loans fund expenses charged to the Council.

18.3 Fair Value of Assets and Liabilities Financial liabilities and financial assets represented by loans and receivables are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions:

● 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.

69 NOTES TO THE FINANCIAL STATEMENTS

18. Financial Instruments - continued 18.3 Fair Value of Assets and Liabilities - continued ● for loans and receivables, the prevailing benchmark market rates have been used to provide the fair value. ● no early repayment of impairment is recognised. ● where no instrument will mature in the next twelve months, carrying amount is assumed to approximate to fair value. ● the fair value of trade and other receivables is taken to be the invoiced or billed amount. The fair values are calculated as follows: 31.03.12 31.03.11 Carrying Fair Carrying Fair Amount Value Amount Value £000 £000 £000 £000 Public Works Loans Board -1,141,294 -1,485,312 -1,027,666 -1,202,579 European Investment Bank -286 -306 -457 -526 Market debt -293,111 -320,584 -292,300 -343,962 Temporary borrowing -7,625 -7,625 -7,558 -7,558 Other bodies -19,554 -19,554 -24,758 -24,758 Other long-term liabilities -350 -350 -350 -350 Trade creditors -5,076 -5,076 -10,302 -10,302 Finance Leases -218,406 -218,406 -227,556 -227,556 Financial liabilities -1,685,702 -2,057,213 -1,590,947 -1,817,591

The fair value is higher than the carrying amount because the authority’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 at the Balance Sheet date. This commitment to pay interest above current market rates increases the amount that the authority would have to pay if the lender requested or agreed to early repayment of the loans. 31.03.12 31.03.11 Carrying Fair Carrying Fair Amount Value Amount Value Investments £000 £000 £000 £000 Loans and receivables 238,740 238,718 268,628 268,630 Unquoted equity investment at cost 2,335 23,335 23,335 23,335 Debtors Loans and receivables 3,500 3,500 3,500 3,500 Other trade debtors 25,213 25,213 33,306 33,306 Total Investments 269,788 290,766 328,769 328,771

19. Inventories Items 19.1 Group - Movements in 2011/12 Provided Construction at Nil or and Other Items Fuel Nominal Raw Held for Stocks Charge Materials Sale £000 £000 £000 £000 Balance at 1 April 627 609 1,143 146 Purchases 26,669 1,529 16,790 212 Held by a third party 0 27 0 0 Recognised as an expense in the year -26,681 -1,331 -16,142 -300 Stock written off 0 0 -14 0 Balance at 31 March 615 834 1,777 58

70 NOTES TO THE FINANCIAL STATEMENTS

19. Inventories - continued 19.1 Group - Movements in 2011/12 - continued Clothing Work in and Catering Progress Equipment Stocks Total £000 £000 £000 £000 Balance at 1 April 19,243 76 110 21,954

Purchases 1,434 281 1,973 48,888

Held by a third party 0 0 0 27

Recognised as an expense in the year -109 -278 -1,972 -46,813

Stock written off -9,252 -2 0 -9,268 Balance at 31 March 11,316 77 111 14,788

19.2 Group - Comparative Movements in 2010/11 Items Provided Construction at Nil or and Other Items Fuel Nominal Raw Held for Stocks Charge Materials Sale £000 £000 £000 £000 Balance at 1 April 563 191 1,171 329

Purchases 23,382 1,270 24,149 811

Donations 0 170 0 0

Held by a third party 0 45 0 0

Recognised as an expense in the year -23,318 -1,067 -24,042 -971

Stock written off 0 0 -135 -23 Balance at 31 March 627 609 1,143 146

Clothing Work in and Catering Progress Equipment Stocks Total £000 £000 £000 £000 Balance at 1 April 22,572 143 112 25,081

Purchases 602 294 1,993 52,501

Donations 0 0 0 170

Held by a third party 0 0 0 45

Recognised as an expense in the year -3,870 -359 -1,995 -55,622

Stock written off -61 -2 0 -221 Balance at 31 March 19,243 76 110 21,954

71 NOTES TO THE FINANCIAL STATEMENTS

19. Inventories - continued 19.3 Council - Movements in 2011/12 Items Provided Construction at Nil or and Other Items Fuel Nominal Raw Held for Stocks Charge Materials Sale £000 £000 £000 £000 Balance at 1 April 184 609 901 146

Purchases 3,106 1,529 8,408 212

Held by a third party 0 27 0 0

Recognised as an expense in the year -3,107 -1,331 -7,759 -300

Stock written off 0 0 -14 0 Balance at 31 March 183 834 1,536 58

Clothing Work in and Catering Progress Equipment Stocks Total £000 £000 £000 £000 Balance at 1 April 2 76 110 2,028

Purchases 108 281 1,973 15,617

Held by a third party 0 0 0 27

Recognised as an expense in the year -109 -278 -1,972 -14,856

Stock written off 0 -2 0 -16 Balance at 31 March 1 77 111 2,800

19.4 Council - Comparative Movements in 2010/11 Items Provided Construction at Nil or and Other Items Fuel Nominal Raw Held for Stocks Charge Materials Sale £000 £000 £000 £000 Balance at 1 April 150 191 909 329

Purchases 2,977 1,270 9,469 811

Donations 0 170 0 0

Held by a third party 0 45 0 0

Recognised as an expense in the year -2,943 -1,067 -9,342 -971

Stock written off 0 0 -135 -23 Balance at 31 March 184 609 901 146

72 NOTES TO THE FINANCIAL STATEMENTS

19. Inventories - continued 19.4 Council - Comparative Movements in 2010/11 - continued Clothing Work in and Catering Progress Equipment Stocks Total £000 £000 £000 £000 Balance at 1 April 36 143 112 1,870 Purchases 602 294 1,993 17,416 Donations 0 0 0 170 Held by Third Party 0 0 0 45 Recognised as an expense in the year -621 -359 -1,995 -17,298 Stock written off -15 -2 0 -175 Balance at 31 March 2 76 110 2,028

20. Debtors 20.1 Long-term Debtors 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Central government bodies 7,949 7,949 4,709 4,709 Other local authorities 31,745 31,745 35,201 35,201 Other entities and individuals 187,217 190,717 183,091 186,591 Total long-term debtors before provision 226,911 230,411 223,001 226,501 for impairment Less: Provision for impairment -167,775 -167,775 -163,753 -163,753 Total net long-term debtors 59,136 62,636 59,248 62,748

20.2 Analysis of Long-term Debtors Long-term debtors comprise the following elements: 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Capital advances Lothian / Borders Police Board 24,347 24,347 26,711 26,711 Lothian / Borders Fire / Rescue Board 7,250 7,250 8,490 8,490 Further Educ. Colleges (pre 1996 debt) 148 148 165 165 Council Tax 95,606 95,606 91,395 91,395 Community Charge 72,516 72,516 72,571 72,571 Non-Domestic Rates 1,037 1,037 5,656 5,656 CEC Holdings 0 3,500 0 3,500 Edinburgh Marketing loan 60 60 81 81 Edinburgh Leisure loan 0 0 216 216 House rents 1,882 1,882 1,794 1,794 Car loan scheme 140 140 185 185 Other debtors 23,925 23,925 15,737 15,737 226,911 230,411 223,001 226,501

Long-term debtors include £24.347m (2010/11 £26.711m) and £7.250m (2010/11 £8.490m) for sums recoverable from Lothian and Borders Police and Fire and Rescue Boards respectively. These sums relate to monies advanced to the joint boards for capital expenditure.

The Edinburgh Leisure Loan is repayable in July 2012 and has been transferred to current debtors.

73 NOTES TO THE FINANCIAL STATEMENTS

20. Debtors - continued 20.3 Current Debtors 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Central government bodies 23,920 22,913 61,921 60,376 Other local authorities 7,893 7,574 4,827 6,488 NHS bodies 1,083 1,082 7,348 7,346 Public corporations and trading funds 1,167 1,167 1,953 1,953 Other entities and individuals 140,526 130,075 179,004 156,110 Total current debtors before provision 174,589 162,811 255,053 232,273 for impairment Less: Provision for impairment -70,759 -70,759 -63,349 -63,349 Total net current debtors 103,830 92,052 191,704 168,924

20.4 Provision for Impairment 2011/12 2010/11 Group Council Group Council Long-term provision for impairment £000 £000 £000 £000 Community charge -72,516 -72,516 -72,571 -72,571 Council tax -88,046 -88,046 -83,711 -83,711 Non-Domestic rates -737 -737 -947 -947 Sundry debtors -6,476 -6,476 -6,524 -6,524 Total long-term provision for impairment -167,775 -167,775 -163,753 -163,753

Current provision for impairment £000 £000 £000 £000 Community charge -50 -50 -60 -60 Council tax -59,529 -59,529 -56,951 -56,951 Non-Domestic rates -94 -94 -626 -626 Sundry debtors -11,086 -11,086 -5,712 -5,712 Total current provision for impairment -70,759 -70,759 -63,349 -63,349

21. Cash and Cash Equivalents The balance of cash and cash equivalents comprises the following elements. Investments maturing within three months of the balance sheet are deemed to be cash and cash equivalents.

2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Cash held 510 486 554 528

Bank current accounts -4,659 -17,612 -13,803 -28,573

Short-term deposits: With banks or building societies 117,574 116,574 124,314 122,214 With other local authorities 38,004 38,004 94,376 94,376 With money market fund 31,567 31,567 18,919 18,919 With H.M. Treasury 26,812 26,812 0 0 209,808 195,831 224,360 207,464

74 NOTES TO THE FINANCIAL STATEMENTS

22. Assets Held for Sale 2011/12 2010/11 Group Council Group Council 22.1 Non-Current Assets £000 £000 £000 £000 Balance at 1 April 7,975 7,975 2,812 2,812 Assets newly classified as held for sale: Property, Plant and Equipment 5,655 5,655 5,822 5,822 Additions 92 92 23 23 Revaluation gains/(losses) recognised in the revaluation reserve -1,736 -1,736 124 124 Revaluation gains/(losses) recognised in Surplus on the Provision of Services -21 -21 -5 -5 Assets declassified as held for sale: Property, Plant and Equipment -254 -254 0 0 Assets sold -134 -134 -1 -1 Transfers from non-current to current -500 -500 -800 -800 Balance at 31 March 11,077 11,077 7,975 7,975

2011/12 2010/11 Group Council Group Council 22.2 Current Assets £000 £000 £000 £000 Balance at 1 April 5,357 5,357 3,200 3,200 Assets newly classified as held for sale: Property, Plant and Equipment 449 449 4,692 4,692 Additions 229 229 21 21 Revaluation gains/(losses) recognised in the revaluation reserve 542 542 -83 -83 Revaluation gains/(losses) recognised in Surplus on the Provision of Services 1,014 1,014 -52 -52 Assets declassified as held for sale: Property, Plant and Equipment -2,325 -2,325 0 0 Assets sold -2,581 -2,581 -3,221 -3,221 Transfers from non-current to current 500 500 800 800 Balance at 31 March 3,185 3,185 5,357 5,357

23. Creditors 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Central government bodies -22,372 -19,218 -8,058 -2,144 Other local authorities -13,921 -9,246 -10,948 -9,167 NHS bodies -274 -267 -431 -424 Public corporations and trading funds -625 -625 -1,543 -1,543 Other entities and individuals -175,230 -154,356 -199,209 -160,022 -212,422 -183,712 -220,189 -173,300

75 NOTES TO THE FINANCIAL STATEMENTS

24. Provisions Provision has been made within the Group Financial Statements for outstanding payments of £38.817m (2010/11 £129.704m).

Of this amount, £35.290m (2010/11 £127.697m) relates to the Council. These include estimates of settlements on outstanding equal pay, compensation and insurance claims, land acquisition costs and costs arising from the mediation process for the tram project and Council Tax discounts payable to Registered Social Landlords. The precise amount of these payments is unknown, however, provision has been made in the accounts, as summarised below, based on a Council assessment of the costs.

Equal Pay Council Tax Trams Claims Discounts £000 £000 £000 Balance at 1 April 2011 -75,435 -47,934 -1,252 Additional provisions made during the year -2,082 0 -215 Amounts used during the year 70,553 13,043 0 Transferred to debtor impairments 0 0 0 Unused amounts reversed during the year 0 11,042 0 Balance at 31 March 2012 -6,964 -23,849 -1,467

Housing Benefit Insurance Other Subsidy Claims Provisions £000 £000 £000 Balance at 1 April 2011 -642 -611 -1,823 Additional provisions made during the year -150 -231 -2,191 Amounts used during the year 336 516 494 Transferred to debtor impairments 0 0 0 Unused amounts reversed during the year 306 0 986 Balance at 31 March 2012 -150 -326 -2,534

Total Council Group Total Provisions Provisions Provisions £000 £000 £000 Balance at 1 April 2011 -127,697 -2,007 -129,704 Additional provisions made during the year -4,869 -1,727 -6,596 Amounts used during the year 84,942 1,732 86,674 Transferred from other long-term liabilities 0 -1,525 -1,525 Unused amounts reversed during the year 12,334 0 12,334 Balance at 31 March 2012 -35,290 -3,527 -38,817

76 NOTES TO THE FINANCIAL STATEMENTS

25. Usable Reserves Movements in the Group and the Council's usable reserves are detailed in the Movement in Reserves Statement (on pages 15 to 17) and Note 10.

26. Unusable Reserves 26.1 Summary of Unusable Reserves Balance as at: 31 March 31 March 1 April 2012 2011 2010 £000 £000 £000 Revaluation Reserve -906,510 -808,914 -769,093 Capital Adjustment Account -1,306,950 -1,329,289 -1,251,384 Financial Instruments Adjustment Account 54,276 55,768 56,848 Pensions Reserve 381,215 335,902 679,608 Employee Statutory Adjustment Account 22,732 29,868 29,457 Total Council Unusable Reserves -1,755,237 -1,716,665 -1,254,564 Subsidiaries, Associates and Joint Ventures 1,095,207 919,424 1,059,659 Total Group Unusable Reserves -660,030 -797,241 -194,905

26.2 Revaluation Reserve The revaluation reserve contains the gains made by the Council arising from increases in the value of its property, plant and equipment. The balance is reduced when assets with accumulated gains are:

● revalued downwards or impaired and the gains are lost; ● used in the provision of services and the gains are consumed through depreciation; or ● disposed of and the gains are realised.

The reserve contains unrealised gains accumulated since 1 April 2007, the date the reserve was created. Accumulated gains arising before 1 April 2007 were consolidated into the capital adjustment account. 2011/12 2010/11 £000 £000 Balance at 1 April 2010 n/a -734,264

Recognition of heritage assets n/a -34,829

Re-stated at 1 April 2010 n/a -769,093

Balance at 1 April -808,914 -769,093 Upward revaluation of assets -150,195 -91,952 Downward revaluation of assets and 39,315 41,929 impairment losses not charged to the Surplus on the Provision of Services Surplus on revaluation of non-current assets -110,880 -50,023 not posted to the Surplus on the Provision of Service Difference between fair value depreciation 11,021 8,473 and historical cost depreciation Accumulated gains on assets sold 2,263 1,729 Amount written off to the capital adjustment 13,284 10,202 account Balance at 31 March -906,510 -808,914

77 NOTES TO THE FINANCIAL STATEMENTS

26. Unusable Reserves - continued 26.3 Capital Adjustment Account The capital adjustment account provides a balancing mechanism for timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (CIES) (with reconciling postings from the revaluation reserve to convert fair value figures to a historical cost basis). The account is credited with the amounts set aside by the Council to finance the costs for acquisition, construction and enhancement of non-current assets. The account holds accumulated gains and losses on investment properties. The account also holds revaluation gains accumulated on property, plant and equipment prior to 1 April 2007, the date the revaluation reserve was created to hold such gains. Note 9 provides details of the source of the transactions posted to this account, except those involving the revaluation reserve. 2011/12 2010/11 £000 £000 Balance at 1 April -1,329,289 -1,251,384 Reversal of items relating to capital expenditure debited or credited to the CIES Charges for depreciation and impairment of 112,503 109,788 non-current assets Revaluation losses on property, plant and 58,542 57,592 equipment, heritage assets and assets held for sale Amortisation of intangible assets 1,621 262 Revenue exp. funded from capital under statute 33,811 44,820 Amounts of non-current assets written off on -2,033 -867 disposal or sale as part of the gain / loss on disposal to the CIES 204,444 211,595 Adjusting amounts written out of the -13,284 -10,202 revaluation reserve Net written out amount of the costs of non- 191,160 201,393 current assets consumed in the year Capital financing applied in the year: Use of the capital receipts reserve to finance -8,421 -8,435 new capital expenditure Capital grants and contributions credited to the -58,702 -134,998 CIES that have been applied to capital financing Application of grants from the capital grants -380 -26,308 unapplied account / capital fund Statutory provision for the financing of capital -77,417 -73,893 investment charged against the General Fund and HRA balances Capital expenditure charged against the General -33,811 -44,820 Fund and HRA balances -178,731 -288,454 Movement in donated assets 0 -171 Movements in the market value of investment 168 -61 properties credited to the CIES Other unrealised losses debited to the CIES 9,742 9,388 Balance at 31 March -1,306,950 -1,329,289

78 NOTES TO THE FINANCIAL STATEMENTS

26. Unusable Reserves - continued 26.4 Financial Instruments Adjustment Account The financial instruments adjustment account provides a balancing mechanism between the different rates at which gains and losses (such as premiums on the early repayment of debt) are recognised under the Code and are required by statute to be met from the General Fund and Housing Revenue Account. This account also holds the equivalent interest rate adjustment on lender option / borrower option loans. 2011/12 2010/11 £000 £000 Balance at 1 April 55,768 56,848

Proportion of premiums incurred in previous -1,810 -1,804 financial years to be charged against the General Fund and HRA balances in accordance with statutory requirements

Proportion of equivalent interest rate calculation on 357 730 lender option / borrower option loans (LOBOs) Amount by which finance costs charged to the -1,453 -1,074 Comprehensive Income and Expenditure Statement are different from finance costs chargeable in accordance with statutory requirements

Proportion of premiums incurred in previous -47 -53 financial years relating to Joint Boards

Proportion of equivalent interest rate calculation on LOBOs relating to Joint Boards 9 22 Net amount relating to Joint Boards -38 -31

Difference between actual interest paid and interest -1 25 rate assumed in equivalent interest rate calculation on transition Balance at 31 March 54,276 55,768

The Council operates a loans pool on behalf of Lothian and Borders Fire and Rescue and Police Boards as well as the General Fund and Housing Revenue Account. A proportion of the premiums and discounts therefore relate to debt incurred by the joint boards. Although these amounts are held on the Council's Balance Sheet, the corresponding charges are not reflected in the Comprehensive Income and Expenditure Statement.

26.5 Pensions Reserve The pensions reserve provides a balancing mechanism arising from the different arrangements for accounting for post employment benefits (pension costs) and for funding pensions in accordance with statutory provisions. The Council accounts for pensions in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs.

Statutory arrangements, however, require benefits to be financed as the Council makes its contributions to Lothian Pension Fund or pays any pensions for which it is directly responsible.

The debit balance on the pension reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources that the Council has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits require to be paid.

79 NOTES TO THE FINANCIAL STATEMENTS

26. Unusable Reserves - continued 26.5 Pensions Reserve - continued 2011/12 2010/11 £000 £000 Balance at 1 April 335,902 679,608 Actuarial gains or losses on pension assets and liabilities 66,159 -161,242 Reversal of items relating to retirement benefits debited or credited to the 40,774 -123,966 Surplus on the Provision of Services in the Comprehensive Income and Expenditure Statement Employer's pension contributions and direct payments to pensioners -61,620 -58,498 payable in the year Balance at 31 March 381,215 335,902

26.6 Employee Statutory Adjustment Account The employee statutory adjustment account provides a balancing mechanism arising from the different arrangements that would otherwise impact on the General Fund and HRA balances from accruing for compensated absences earned but not taken in the year (annual leave entitlement carried forward at 31 March). Statutory arrangements require that the impact on the General Fund and HRA balances is mitigated by transfers to or from this account. 2011/12 2010/11 £000 £000 Balance at 1 April 29,868 29,457

Settlement or cancellation of accrual made at the -29,868 -29,457 end of the preceding year

Amount accrued at the end of the current year 22,732 29,868 Amount by which officer remuneration charged to -7,136 411 the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements Balance at 31 March 22,732 29,868

Terms and conditions for Scottish teachers have changed during 2011/12, with the introduction of school closure days. Some days within school holiday periods are now 'school closure days' and are non-accumulating absence days within the annual leave calculations. Costs relating to teachers within the annual leave calculation have decreased from £13.151m in 2010/11 to £7.073m in 2011/12. This is mainly attributable to the introduction of 'school closure days'. The impact of this can be seen in the employee statutory adjustment account.

26.7 Unusable Reserves - Group Members Balance as at: 31 March 31 March 1 April 2012 2011 2010 Subsidiaries £000 £000 £000 CEC Holdings Limited Capital adjustment account -60,383 -58,456 -50,386 Capital contribution -7,196 -6,770 -4,720

Lothian Buses Revaluation reserve -6,150 -28,274 -28,641

Total Unusable Reserves - Subsidiaries -73,729 -93,500 -83,747

80 NOTES TO THE FINANCIAL STATEMENTS

26. Unusable Reserves - continued 26.7 Unusable Reserves - Group Members - continued Balance as at: 31 March 31 March 1 April 2012 2011 2010 £000 £000 £000 Associates and Joint Ventures Common Good Capital adjustment account -12,669 -13,849 -14,146 Revaluation reserve -6,300 -4,287 -3,321

Lothian and Borders Fire and Rescue Board Capital adjustment account -16,477 -15,231 -15,261 Employee statutory adjustment account - pensions 10,475 9,583 12,187 Employee statutory adjustment account - other 318 223 255 Financial instrument adjustment account 24 31 45 Pension reserve 189,650 172,489 212,478 Revaluation reserve -3,902 -4,907 -5,126

Lothian and Borders Police Board Capital adjustment account -30,294 -28,796 -35,878 Employee statutory adjustment account - pensions 53,905 43,979 48,649 Employee statutory adjustment account - other 1,591 1,494 1,167 Financial instrument adjustment account 84 102 136 Pension reserve 991,051 860,164 942,937 Revaluation reserve -11,043 -10,858 -7,664

Lothian Valuation Joint Board Capital adjustment account -284 -322 -326 Employee statutory adjustment account 50 53 46 Pension reserve 2,757 3,056 7,228

Total Unusable Reserves - Associates and Joint Ventures 1,168,936 1,012,924 1,143,406

Total Usable Reserves - Subsidiaries, Associates and Joint Ventures 1,095,207 919,424 1,059,659

27. Cash Flow Statement - Operating Activities The cash flows for operating activities include the following items:

2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Interest received -3,792 -3,779 -2,528 -2,409

Interest paid 100,348 99,585 94,854 93,816

Dividends received -3,000 -3,000 -2,000 -2,000

81 NOTES TO THE FINANCIAL STATEMENTS

28. Cash Flow Statement - Investing Activities 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Purchase of property, plant and equipment, 315,638 308,576 189,302 183,825 investment property and intangible assets

Purchase of short- and long-term investments 25,782 25,782 33,856 33,119

Other payments for investing activities 43,694 41,217 63,724 61,118

Proceeds from the sale of property, plant and -8,424 -8,157 -10,314 -8,436 equip., inv. property and intangible assets

Proceeds from short- and long-term investments -33,289 -33,119 -12,193 -12,193

Other receipts from investing activities -6,682 -4,254 -27,415 -25,990 Net cash flows from investing activities 336,719 330,045 236,960 231,443

29. Cash Flow Statement - Financing Activities 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Cash receipts of short- and long-term borrowing -137,006 -136,925 -90,752 -90,723

Other receipts from financing activities -1,573 -1,573 -10,057 -10,057

Cash payments for the reduction of the 21,250 11,946 19,226 12,660 outstanding liabilities relating to finance leases

Repayments of short- and long-term borrowing 24,413 24,414 5,433 5,434 Net cash flows from investing activities -92,916 -102,138 -76,150 -82,686

30. Analysis of Change in Financing Activities Balance Cash Non Cash Balance 01.04.2011 Trans. Trans. 31.03.2012 Group £000 £000 £000 £000 Debt due within 1 Year -48,909 14,853 -1,554 -35,610 Debt due after 1 Year -1,274,809 -126,542 -366 -1,401,717

Total debt due -1,323,718 -111,689 -1,920 -1,437,327

Other liquid resources 54,056 -3,157 1,573 52,472

Finance leases -237,847 2,913 -2,913 -237,847 Total -1,507,509 -111,933 -3,260 -1,622,702

Council £000 £000 £000 £000 Debt due within 1 Year -46,863 14,853 -1,554 -33,564 Debt due after 1 Year -1,281,119 -127,267 -366 -1,408,752 Total debt due -1,327,982 -112,414 -1,920 -1,442,316

Other liquid resources 54,044 -1,787 215 52,472

Finance leases -227,556 12,063 -2,913 -218,406 Total -1,501,494 -102,138 -4,618 -1,608,250

82 NOTES TO THE FINANCIAL STATEMENTS

31. Reconciliation of Movements in Cash Receipts and Repayments of Short- and Long-Term Borrowing Balance Cash Non Cash Balance 01.04.2011 Trans. Trans. 31.03.2012 Group £000 £000 £000 £000 Financing Temporary loans -7,559 -66 0 -7,625 PWLB -1,027,666 -112,512 -1,116 -1,141,294 Market loans -292,300 0 -811 -293,111 European Investment Bank -457 164 7 -286 Other Borrowing 4,264 725 0 4,989 Net financing -1,323,718 -111,689 -1,920 -1,437,327

Council £000 £000 £000 £000 Financing Temporary loans -7,559 -66 0 -7,625 PWLB -1,027,666 -112,512 -1,116 -1,141,294 Market loans -292,300 0 -811 -293,111 European Investment Bank -457 164 7 -286 Net financing -1,327,982 -112,414 -1,920 -1,442,316

Accrued interest is included in the carrying value of investments and loans.

32. Amounts Reported for Resource Allocation Decisions The analysis of income and expenditure by service shown in the Comprehensive Income and Expenditure Statement is that specified by the Best Value Accounting Code of Practice. However, decisions about resource allocations are taken by the Council on the basis of budget reports analysed across departments. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular:

● no charges are made to departments in relation to capital expenditure, whereas depreciation, revaluation and impairment losses in excess of balances on the revaluation reserves are charged to services in the Comprehensive Income and Expenditure Statement.

● the cost of retirement benefits is based on the payment of employer's contributions to Lothian Pension Fund rather than the current service cost of benefits earned during the year.

● expenditure on support services is budgeted for within the relevant departments that provide the support services and not charged directly to services receiving the support services.

The income and expenditure for the Council's main service areas is shown separately on the following pages. Income and expenditure for the subsidiary, associate and joint venture companies is shown in total.

83 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.1 Departmental Income and Expenditure Children and City Corporate 2011/12 Families Devt. Governance £000 £000 £000 Fees, charges and other service income -7,585 -992 -27,897 Government grants and other contributions -7,290 -2,774 -15,413 Total Income -14,875 -3,766 -43,310

Employee expenses 254,752 4,912 44,071 Other service expenses 146,888 10,209 68,621 Total Expenditure 401,640 15,121 112,692

Net Expenditure / (Income) 386,765 11,355 69,382

Health Housing Services and Social Revenue Joint for Care Account Boards Communities £000 £000 £000 £000 Fees, charges and other service income -17,273 -90,328 0 -214,240 Government grants and other contributions -45,419 -1,612 -1,906 -40,989 Total Income -62,692 -91,940 -1,906 -255,229

Employee expenses 89,565 9,690 0 127,076 Other service expenses 155,321 72,456 70,452 259,138 Support service recharges 0 6,280 0 1,319 Total Expenditure 244,886 88,426 70,452 387,533

Net Expenditure / (Income) 182,194 -3,514 68,546 132,304

Net Other Cost of Equal Group Benefits Pay Members Total £000 £000 £000 £000 Fees, charges and other service income 0 0 -214,096 -572,411 Income from associates 0 0 -170,811 -170,811 Government grants and other contributions -220,961 0 -23,652 -360,016 Total Income -220,961 0 -408,559 -1,103,238

Employee expenses 0 -11,042 75,589 594,613 Other service expenses 221,912 0 148,642 1,153,639 Expenditure on associates 0 0 234,994 234,994 Support service recharges 0 0 0 7,599 Depreciation, amortisation and impairment 0 0 9,359 9,359 Total Expenditure 221,912 -11,042 468,584 2,000,204

Net Expenditure / (Income) 951 -11,042 60,025 896,966

84 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.1 Departmental Income and Expenditure - continued

Children and City Corporate 2010/11 Comparative Data Families Devt. Services Finance £000 £000 £000 £000 Fees, charges and other service income -6,941 -56,550 -50,371 -6,447 Government grants and other contributions -9,957 -6,674 -7,223 -6,726 Total Income -16,898 -63,224 -57,594 -13,173

Employee expenses 256,266 31,225 39,579 19,962 Other service expenses 143,651 49,785 77,080 7,709 Support service recharges 0 0 513 0 Total Expenditure 399,917 81,010 117,172 27,671

Net Expenditure / (Income) 383,019 17,786 59,578 14,498

Health Housing Services and Social Revenue Joint for Care Account Boards Communities £000 £000 £000 £000 Fees, charges and other service income -11,071 -86,376 0 -132,029 Government grants and other contributions -39,989 -1,282 -2,126 -51,199 Total Income -51,060 -87,658 -2,126 -183,228

Employee expenses 90,672 9,768 0 94,293 Other service expenses 132,887 70,267 75,649 233,895 Support service recharges 0 6,009 0 1,755 Total Expenditure 223,559 86,044 75,649 329,943

Net Expenditure / (Income) 172,499 -1,614 73,523 146,715

Net Other Cost of Equal Group Benefits Pay Members Total £000 £000 £000 £000 Fees, charges and other service income -1 0 -100,418 -450,204 Income from associates 0 0 -210,116 -210,116 Government grants and other contributions -214,907 0 -86,982 -427,065 Total Income -214,908 0 -397,516 -1,087,385

Employee expenses 0 18,416 71,976 632,157 Other service expenses 215,198 0 79,743 1,085,864 Expenditure on associates 0 0 146,307 146,307 Support service recharges 0 0 0 8,277 Depreciation, amortisation and impairment 0 0 10,500 10,500 Total Expenditure 215,198 18,416 308,526 1,883,105

Net Expenditure / (Income) 290 18,416 -88,990 795,720

85 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.2 Reconciliation of Departmental Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statements for the Group and the Council

2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Net expenditure in departmental analysis 896,966 836,941 795,720 884,710

Net expenditure of services and support -61,188 -61,188 -409,048 -409,048 services not included in the dept. analysis

Amounts in the Comprehensive Income and 255,532 255,532 407,989 407,605 Expenditure Statement (CIES) not reported to management in departmental analysis

Amounts included in departmental analysis -61,620 -61,620 -58,498 -58,498 not included in CIES

Amounts included in the departmental 5,501 5,501 3,994 3,994 analysis included below Cost of Services in the CIES Cost of Services in CIES 1,035,191 975,166 740,157 828,763

32.3 Reconciliation to Subjective Analysis Services Not Group Dept. not in Reported 2011/12 Analysis Analysis to Mgmt. £000 £000 £000 Fees, charges and other service income -572,411 39,594 6,801 Income from associates and joint ventures -170,811 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions -360,016 7,862 0 Total Income -1,103,238 47,456 6,801

Employee expenses 594,613 -41,682 79,953 Other service expenses 1,153,639 -66,962 -6,801 Expenditure on associates and joint ventures 234,994 0 0 Support service recharges 7,599 0 0 Depreciation, amortisation and impairment 9,359 0 175,579 Total Expenditure 2,000,204 -108,644 248,731

Net Expenditure / (Income) 896,966 -61,188 255,532

86 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued Reported Not Below Allocation Group Included Cost of of 2011/12 in CIES Services Recharges £000 £000 £000 Fees, charges and other service income 0 40,916 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions 0 28,919 0 Total Income 0 69,835 0

Employee expenses -61,620 -17,274 3,105 Other service expenses 0 -47,060 4,494 Expenditure on associates and joint ventures 0 0 0 Support service recharges 0 0 -7,599 Depreciation, amortisation and impairment 0 0 0 Total Expenditure -61,620 -64,334 0

Net Expenditure / (Income) -61,620 5,501 0

Group Cost of Corporate 2011/12 Services Amounts Total £000 £000 £000 Fees, charges and other service income -485,100 -39,422 -524,522 Income from associates and joint ventures -170,811 0 -170,811 Interest and investment income 0 -6,069 -6,069 Income from Council Tax 0 -227,975 -227,975 Government grants and other contributions -323,235 -849,458 -1,172,693 Total Income -979,146 -1,122,924 -2,102,070

Employee expenses 557,095 17,274 574,369 Other service expenses 1,037,310 46,934 1,084,244 Expenditure on associates and joint ventures 234,994 0 234,994 Support service recharges 0 0 0 Depreciation, amortisation and impairment 184,938 0 184,938 Interest payments 0 64,726 64,726 Gain on disposal of assets 0 -1,812 -1,812 Total Expenditure 2,014,337 127,122 2,141,459

Net Expenditure / (Income) 1,035,191 -995,802 39,389

87 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued Services Not Council Dept. not in Reported 2011/12 Analysis Analysis to Mgmt. £000 £000 £000 Fees, charges and other service income -358,315 39,594 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions -336,364 7,862 0 Total Income -694,679 47,456 0

Employee expenses 519,024 -41,682 79,953 Other service expenses 1,004,997 -66,962 0 Support service recharges 7,599 0 0 Depreciation, amortisation and impairment 0 0 175,579 Total Expenditure 1,531,620 -108,644 255,532

Net Expenditure / (Income) 836,941 -61,188 255,532

Reported Not Below Allocation Council Included Cost of of 2011/12 in CIES Services Recharges £000 £000 £000 Fees, charges and other service income 0 40,916 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions 0 28,919 0 Total Income 0 69,835 0

Employee expenses -61,620 -17,274 3,105 Other service expenses 0 -47,060 4,494 Support service recharges 0 0 -7,599 Depreciation, amortisation and impairment 0 0 0 Total Expenditure -61,620 -64,334 0

Net Expenditure / (Income) -61,620 5,501 0

88 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued

Council Cost of Corporate 2011/12 Services Amounts Total £000 £000 £000 Fees, charges and other service income -277,805 -40,935 -318,740 Income from associates and joint ventures 0 0 0 Interest and investment income 0 -4,814 -4,814 Income from Council Tax 0 -227,975 -227,975 Government grants and other contributions -299,583 -849,458 -1,149,041 Total Income -577,388 -1,123,182 -1,700,570

Employee expenses 481,506 17,274 498,780 Other service expenses 895,469 47,060 942,529 Support service recharges 0 0 0 Depreciation, amortisation and impairment 175,579 0 175,579 Interest payments 0 66,837 66,837 Gain on disposal of assets 0 -2,033 -2,033 Total Expenditure 1,552,554 129,138 1,681,692

Net Expenditure / (Income) 975,166 -994,044 -18,878

Services Not Group Dept. not in Reported 2010/11 Comparative Data Analysis Analysis to Mgmt. £000 £000 £000 Fees, charges and other service income -450,204 36,982 1,590 Income from associates and joint ventures -210,116 0 11,101 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions -427,065 4,015 0 Total Income -1,087,385 40,997 12,691

Employee expenses 632,157 -369,498 236,929 Other service expenses 1,085,864 -80,547 -1,589 Expenditure on associates and joint ventures 146,307 0 -11,101 Support service recharges 8,277 0 0 Depreciation, amortisation and impairment 10,500 0 171,059 Total Expenditure 1,883,105 -450,045 395,298

Net Expenditure / (Income) 795,720 -409,048 407,989

89 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued Reported Not Below Allocation Group Included Cost of of 2010/11 Comparative Data in CIES Services Recharges £000 £000 £000 Fees, charges and other service income 0 42,660 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions 0 29,805 0 Total Income 0 72,465 0

Employee expenses -58,498 -20,531 3,382 Other service expenses 0 -47,924 4,895 Expenditure on associates and joint ventures 0 0 0 Support service recharges 0 0 -8,277 Depreciation, amortisation and impairment 0 -16 0 Total Expenditure -58,498 -68,471 0

Net Expenditure / (Income) -58,498 3,994 0

Group Cost of Corporate 2010/11 Comparative Data Services Amounts Total £000 £000 £000 Fees, charges and other service income -368,972 -42,917 -411,889 Income from associates and joint ventures -199,015 0 -199,015 Interest and investment income 0 -4,185 -4,185 Income from Council Tax 0 -226,583 -226,583 Government grants and other contributions -393,245 -933,751 -1,326,996 Total Income -961,232 -1,207,436 -2,168,668

Employee expenses 423,941 20,531 444,472 Other service expenses 960,699 50,804 1,011,503 Expenditure on associates and joint ventures 135,206 0 135,206 Support service recharges 0 0 0 Depreciation, amortisation and impairment 181,543 16 181,559 Interest payments 0 72,583 72,583 Gain on disposal of assets 0 -2,168 -2,168

Total Expenditure 1,701,389 141,766 1,843,155

Net Expenditure / (Income) 740,157 -1,065,670 -325,513

90 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued

Services Not Council Dept. not in Reported 2010/11 Comparative Data Analysis Analysis to Mgmt. £000 £000 £000 Fees, charges and other service income -349,786 36,982 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions -340,083 4,015 0

Total Income -689,869 40,997 0

Employee expenses 560,181 -369,498 236,929 Other service expenses 1,006,121 -80,547 0 Support service recharges 8,277 0 0 Depreciation, amortisation and impairment 0 0 170,676

Total Expenditure 1,574,579 -450,045 407,605

Net Expenditure / (Income) 884,710 -409,048 407,605

Reported Not Below Allocation Council Included Cost of of 2010/11 Comparative Data in CIES Services Recharges £000 £000 £000 Fees, charges and other service income 0 42,660 0 Income from associates and joint ventures 0 0 0 Interest and investment income 0 0 0 Income from Council Tax 0 0 0 Government grants and other contributions 0 29,805 0 Total Income 0 72,465 0

Employee expenses -58,498 -20,531 3,382 Other service expenses 0 -47,924 4,895 Support service recharges 0 0 -8,277 Depreciation, amortisation and impairment 0 -16 0 Total Expenditure -58,498 -68,471 0

Net Expenditure / (Income) -58,498 3,994 0

91 NOTES TO THE FINANCIAL STATEMENTS

32. Amounts Reported for Resource Allocation Decisions - continued 32.3 Reconciliation to Subjective Analysis - continued

Council Cost of Corporate 2010/11 Comparative Data Services Amounts Total £000 £000 £000 Fees, charges and other service income -270,144 -42,917 -313,061 Income from associates and joint ventures 0 0 0 Interest and investment income 0 -3,112 -3,112 Income from Council Tax 0 -226,583 -226,583 Government grants and other contributions -306,263 -933,751 -1,240,014 Total Income -576,407 -1,206,363 -1,782,770

Employee expenses 351,965 20,531 372,496 Other service expenses 882,545 47,924 930,469 Support service recharges 0 0 0 Depreciation, amortisation and impairment 170,660 16 170,676 Interest payments 0 71,810 71,810 Gain on disposal of assets 0 -867 -867 Total Expenditure 1,405,170 139,414 1,544,584

Net Expenditure / (Income) 828,763 -1,066,949 -238,186

33. Trading Operations The Council operates the following significant trading operations under the terms of the Local Government in Scotland Act 2003. The results are included within the Comprehensive Income and Expenditure Statement as shown below: 2011/12 2010/11 £000 £000 £000 £000 Included in Educational Services Edinburgh Catering Services - School 194 -195 and Welfare Catering Equal Pay included in Exceptional Expend. 0 426 Included in Roads and Transport Edinburgh Road Services 1,231 946 Included in Environmental Services Open Space Maintenance 490 30 Refuse Collection (including Trade Waste) 683 -42 Total Surplus / (Deficit) Included in Cost of 2,598 1,165 Services Included in Financing and Investment Income BlindCraft n/a -523 City Fleet Maintenance Services 327 345 Direct Cleaning 607 -435 Edinburgh Building Services 4,553 3,945 Edin. Catering Services - Other Catering 14 -144 Equal Pay included in Exceptional Expend. 0 806 Total Surplus Included in Financing and 5,501 3,994 Investment Income Total Surplus on Trading Operations 8,099 5,159

92 NOTES TO THE FINANCIAL STATEMENTS

33. Trading Operations - continued 33.1 Edinburgh Catering Services - School and Welfare Catering Edinburgh Catering Services - School and Welfare Catering provides catering services to primary, secondary and special schools as well as welfare catering (lunch clubs) for Social Work.

2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 5,166 4,759 5,262

Surplus / (deficit) 194 -195 41 40

Edinburgh Catering Services - School and Welfare Catering achieved its statutory obligation to break even over the three-year period. The cumulative surplus achieved was after meeting costs of £0.426m in 2010/11 and £0.362m in 2009/10 relating to equal pay claims.

33.2 Edinburgh Road Services Edinburgh Road Services provides repair and maintenance of carriageways, footways and street lighting. 2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 23,307 23,177 23,813

Surplus 1,231 946 1,367 3,544

The surplus of £1.367m in 2009/10 was after meeting impairment costs for its Sighthill depot of £0.247m. There were no impairment costs in 2010/11 or 2011/12.

Edinburgh Road Services achieved its statutory obligation to break even over the three-year period.

33.3 Open Space Maintenance Open Space Maintenance is responsible for keeping roads, pavements and grassed areas free from litter and dumping. The grounds maintenance section maintains most of the civic amenity green spaces, including public parks and school playing fields. It also provides forestry services for the city's tree stock. 2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 18,404 18,454 18,941

Surplus 490 30 185 705

Open Space Maintenance achieved its statutory obligation to break even over the three-year period.

33.4 Refuse Collection (including Trade Waste) This STO provides a weekly refuse collection for over 227,000 households, with the majority of these properties being served by a containerised waste collection system. Trade waste provides a collection and disposal service to producers of commercial waste throughout the city. In addition the service provides uplifts of bulky household refuse. 2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 15,872 16,213 14,849

Surplus / (deficit) 683 -42 -1,760 -1,119

Refuse Collection failed to achieve its statutory obligation to break even over the three-year period.

Service improvements are being implemented which have resulted in a surplus being achieved in 2011/12. These improvements, which include new shift patterns and changes to routing are on-going and once fully implemented in 2012/13 will bring additional savings.

93 NOTES TO THE FINANCIAL STATEMENTS

33. Trading Operations - continued 33.5 BlindCraft BlindCraft provided supported employment for blind, visually impaired and other people with disabilities, and produced a range of goods which were sold through various outlets.

In recent years, BlindCraft has made significant deficits which have been funded by the Council, although the deficit stabilised at £1m per annum, before the contribution from the Health and Social Care department, this level of funding was not sustainable.

Following a formal period of consultation no agreement was reached on how to reduce the funding levels. At a meeting on 10 February 2011 Council members voted to close BlindCraft. A further period of statutory consultation was undertaken to mitigate the number and effects of redundancy on the staff affected. BlindCraft closed on 29 July 2011. Redundancy costs were provided for in the 2010/11 accounts.

The Council has provided on-going employment support for disabled people through the approval of a budget of £0.415m.

In the year to 31 March 2012, BlindCraft returned a surplus of £0.041m, after a subsidy of £0.415m from the Health and Social Care department. This figure is included within the Social Work heading in the Comprehensive Income and Expenditure Statement

As a result of the closure, BlindCraft has not been included within trading operations for 2011/12.

Trading results for 2010/11 and 2009/10 were as follows: 2010/11 2009/10 Cumulative £000 £000 £000 Turnover 1,199 1,522 (Deficit) / Surplus -523 10 -513

33.6 City Fleet Maintenance Services City Fleet Maintenance Services provides a full range of vehicle and plant maintenance services.

2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 4,146 4,388 4,262 Surplus 327 345 420 1,092

City Fleet Maintenance Services achieved its statutory obligation to break even over the three-year period.

33.7 Direct Cleaning Direct Cleaning provides a daily internal building cleaning service to all departments of the Council. It also undertakes specialist cleaning when required.

2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 6,847 6,506 6,928 Surplus / (Deficit) 607 -435 -347 -175

Direct Cleaning failed to achieve its statutory obligation to break even over the three-year period. The cumulative deficit shown is after meeting costs of £0.724m in 2010/11 and £0.966m in 2009/10 relating to equal pay claims. Excluding these exceptional items, Direct Cleaning would have broken even over the three-year period.

94 NOTES TO THE FINANCIAL STATEMENTS

33. Trading Operations - continued 33.8 Edinburgh Building Services Edinburgh Building Services is a multi-trade property maintenance trading operation providing a full repairs service to its clients.

2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 28,514 27,849 27,315 Surplus 4,553 3,945 4,750 13,248 Edinburgh Building Services achieved its statutory obligation to break even over the three-year period.

33.9 Edinburgh Catering Services - Other Catering Edinburgh Catering Services - Other Catering provides staff catering and hospitality in five Council buildings. 2011/12 2010/11 2009/10 Cumulative £000 £000 £000 £000 Turnover 1,206 1,296 1,358 (Deficit) / Surplus 14 -144 -22 -152 Edinburgh Catering Services - Other Catering failed to achieved its statutory obligation to break even over the three-year period. The cumulative deficit shown was after meeting costs of £0.084 in 2010/11 and £0.055m in 2009/10 relating to equal pay claims.

Excluding costs relating to equal pay, Edinburgh Catering Services - Other Catering returned a deficit of £0.06m in 2010/11 and a surplus of £0.033m in 2009/10, with a cumulative deficit of £0.013m over the three-year period, excluding costs relating to equal pay claims.

Edinburgh Catering Services - Other Catering has produced a surplus for the first time in recent years. This improvement is due to careful cost management within the service, which now operates from a reduced cost base. It is hoped that further surpluses will be achieved in the coming years and in the process will turn the rolling three-year period into a surplus position.

34. Financial Support and Guarantees 34.1 Loans and guarantees The Council has made loans to the following organisations. 2011/12 2010/11 £000 £000 Edinburgh Leisure 230 230 Forth Sector 110 135

The Edinburgh Leisure loan is due to be repaid in July 2012. The Forth Sector loan is being repaid over two years, with two instalments having been paid in 2011/12 and an account invoiced for a third, although this was outstanding at 31 March.

Both of these loans have been made on an interest-free basis. Adjustments have been made under the requirements of IAS 39 as required by the Code.

34.2 Shared Equity Scheme In 2010/11, the Council approved a pilot scheme for a Council-backed shared equity scheme to help buyers purchase homes from PARC (a subsidiary of CEC Holdings Limited) and support the regeneration of Craigmillar. The Council provided assistance to sixteen purchasers, at a cost of £0.484m. There was no further assistance provided in 2011/12.

The monies are required to be repaid to the Council either on sale of the property or after twenty years, whichever occurs earlier.

Interest for the period up to the first five years is charged to PARC and thereafter to the purchasers.

95 NOTES TO THE FINANCIAL STATEMENTS

35. Agency Income and Expenditure The Council has entered into agency agreements with other local public bodies to provide and receive services, the income and expenditure for which is included in the Comprehensive Income and Expenditure Statement. The main activities were: 2011/12 2010/11 Expenditure £000 £000 Payments to other local authorities in respect of: Area waste project 460 417 Educational services for children 1,796 1,731 Care services for children 246 148 Others Police officers 2,641 2,641 Lothian and Borders Police - cab inspection 384 407 Total Expenditure 5,527 5,344

Income Receipts in respect of library services: Health Boards -26 -29 Scottish Prison Service -13 -5 Receipts in respect of translation and Interpretation services: Lothian Health Board -803 -689 Receipts from other local authorities in respect of: Child protection officer 0 -34 Criminal justice services -880 -899 Educating pupils -557 -680 Pentland Hills Regional Park management -66 -78 Care services for children -523 -374 Risk Factory -48 -53 Social work undertakings -2,739 -2,754 Total Income -5,655 -5,595 36. Audit Costs The fees payable to Audit Scotland in respect of external audit services undertaken in accordance with the Code of Audit Practice are £0.697m (2010/11 £0.761m). The Council also received a rebate of £0.06m in respect of the 2010/11 audit. The Council has re-charged £0.049m of the 2011/12 audit fee to Lothian Pension Funds in respect of its audit (2010/11 £0.054m). In addition, the Council is responsible for paying fees to Geoghegans for the audit of tie's 2011/12 accounts. The fee payable to them is £0.023m and this is included in the Council's Comprehensive Income and Expenditure Statement 37. Grant Income Grants and contributions credited to the Comprehensive Income and Expenditure Statement include the following: 2011/12 2010/11 Credited to Taxation and Non-Specific Grant £000 £000 £000 £000 Income Revenue Funding Credited to taxation and non-specific grant income General revenue funding -458,120 -579,737 Non-domestic rates -297,442 -188,733 -755,562 -768,470 Credited to services Government grants -21,760 -30,744 Department of Works and Pensions - Housing Benefits -191,313 -178,990

96 NOTES TO THE FINANCIAL STATEMENTS

37. Grant Income - continued 2011/12 2010/11 £000 £000 £000 £000 Credited to services - continued N.H.S. Lothian -23,859 -21,366 Scottish Water -1,420 -1,343 Other Local Authorities -4,568 -4,597 Capital City Partnership -25 -2,353 Edinburgh International Conference Centre -54 -128 Edinburgh Leisure -195 -95 EventScotland 0 -138 Lothian and Borders Community Justice 0 -45 Lothian and Borders Fire and Rescue Board 0 -10 Lothian and Borders Police 0 -179 Lottery funding -132 -673 Scottish Enterprise -10 -116 SportScotland -789 -829 Winter Festivals (including rental income) -945 -826 -245,070 -242,432 Credited to Council Tax Income Department of Works and Pensions - Council Tax Benefits -29,194 -29,473 Total -1,029,826 -1,040,375

Capital Funding Transport Scotland -48,071 -90,465 Less: Accrued into 2010-11 47,704 n/a Scottish Government -51,593 -31,561 International Conference Centre Income Trust 0 -6,493 Scottish Enterprise -6,624 -1,852 Scottish Sports Council -224 -1,417 Other grants and contributions, including -1,397 -1,519 contributions from developers and individuals Usher Hall Trust 0 -600 Stevenson College 0 -267 Lothian Health Board -680 -250 Forth Estuary Transport Authority -118 -247 Royal Institute for the Blind 0 -193 Scottish Futures Trust -1,187 -176 Edinburgh World Heritage Trust -271 -176 Lothian and Borders Safety Camera P/ship 0 -146 Edinburgh Leisure 0 -105 Scottish and Southern Energy -1,000 0 Waste Recycling Environmental Grant -183 0 Parc Craigmillar -178 0 Cruden Homes -800 -9 Lottery funding -25 0 SportScotland -330 0

Total -64,977 -135,476

97 NOTES TO THE FINANCIAL STATEMENTS

38. Related Parties During the year, the Council entered into a number of transactions with related parties. The most material of these transactions, not disclosed elsewhere, are shown below.

38.1 Subsidiaries and Other Organisations - Revenue Income and Expenditure 2011/12 2010/11 £000 £000 ● Revenue Expenditure CEC Holdings (including EDI Group, EICC, Waterfront Edinburgh, and PARC) 482 213 Edinburgh Festival Theatres 968 1,193 Edinburgh Leisure Limited Revenue funding 8,733 9,080 Other expenditure 364 94 Edinburgh World Heritage Trust 260 300 Lothian and Borders Police Board Capital grant 1,906 2,126 Lothian Buses Limited Supported bus services 495 579 Other expenditure 495 11 NHS Bodies 1,775 0 Other Local Authorities 1,054 0 Scottish Government 405 0 Subsidiaries / Voluntary Organisations 16,837 Criminal Justice Bodies 859 0 Edinburgh International Festival Society 2,389 0 Festivals Edinburgh Ltd 326 0 Handicab 448 0 Health Projects 842 0 Lifecare Edinburgh 494 0 Marketing Edinburgh 885 0 Royal Lyceum Theatre Co Ltd 640 0 tie Limited 2,561 0 Total Revenue Expenditure 26,381 30,433

● Revenue Income CEC Holdings Limited (EDI Group Limited) Loan interest -221 -224 Rent - car parks -739 -795 Edinburgh Festival Theatres -256 -277 Edinburgh Leisure - prudential investment costs 0 -108 Professional services, other grants and funding CEC Holdings Limited (including EICC Limited) -235 -170 Lothian and Borders Fire and Rescue Board 0 -106 Lothian and Borders Police Board -220 -77 Other Local Authorities -822 -891 Scottish Government -727 -446 tie Limited 0 -57

98 NOTES TO THE FINANCIAL STATEMENTS

38. Related Parties - continued 38.1 Subsidiaries and Other Organisations - Revenue Income and Expenditure - continued 2011/12 2010/11 £000 £000 ● Revenue Income - continued Lothian Health Board Change Fund -4,917 0 Resource transfers -20,329 -20,271 Other Grants and Fees -111 -222 SESTRAN - various grants and fees 0 -50 tie Limited -578 -801 Total Revenue Income -29,155 -24,495

● Joint Board Requisitions Lothian and Borders Fire and Rescue Board 21,051 22,753 Lothian and Borders Police Board 45,628 46,848 Lothian Valuation Joint Board 3,773 3,924 SESTRAN 71 3 Total Interest on Revenue Balances 70,523 73,528

● Central Support Income Forth Estuary Transport Authority -98 -69 Lothian and Borders Fire and Rescue Board -302 -269 Lothian and Borders Police Board -129 -136 Lothian Valuation Joint Board -64 -54 Pension Funds -594 -684 Total Central Support Income -1,187 -1,212

● Interest on Revenue Balances Forth Estuary Transport Authority -12 -11 Lothian and Borders Fire and Rescue Board 10 10 Lothian and Borders Police Board -4 32 Lothian Valuation Joint Board 3 3 Pension Funds 23 25 SESTRAN 23 Total Interest on Revenue Balances 22 62

● Loans Charges Recovered Further Education Colleges (pre 1996 expenditure) -27 -26 Lothian and Borders Fire and Rescue Board -1,655 -1,572 Lothian and Borders Police Board -3,465 -3,403 Total Loans Charges -5,147 -5,001

● Lothian Pension Fund Cessation payments on behalf of other organisations 4,891 0 Transfer of Contributions to Lothian Pension Fund (incl. deficit funding) 62,577 59,690 Pension Strain Costs 2,497 4,135 Total Lothian Pension Fund 69,965 63,825

99 NOTES TO THE FINANCIAL STATEMENTS

38. Related Parties - continued 38.2 Subsidiaries and Other Organisations - Capital Expenditure 2011/12 2010/11 ● Capital Expenditure £000 £000 Edinburgh Leisure 165 541 Edinburgh Military Tattoo 6,170 2,645 tie Limited 42,819 79,108 Total Capital Expenditure 49,154 82,294

38.3 Related Parties - indebtedness The following represent material amounts due to / (by) the Council, at 31 March 2012. ● Capital CEC Holdings Limited (EDI Group Ltd) 0 3,500 SUSTRANS 430 0 International Conference Centre Trust 0 1,213 tie Limited 0 13,607 Transport Scotland 686 1,213 NHS Lothian 355 0 1,471 19,533 ● Revenue CEC Holdings Limited (including all subsidiaries) 2,781 254 NHS Bodies 771 0 Department for Work and Pensions -1,345 -1,371 Edinburgh Leisure Limited 213 0 Edinburgh Military Tattoo 203 0 Festival City Theatres Trust 0 400 Forth Estuary Transport Authority 620 2,753 Lothian and Borders Criminal Justice Authority -912 0 Lothian and Borders Fire Board -768 -3,172 Lothian and Borders Police Board 3,550 3,956 Lothian Valuation Joint Board -750 -608 Pension Funds -12,089 -4,994 Scottish Government 975 0 SESTRAN 1,643 352 Transport Scotland 0 50,834 -5,108 48,404 ● Other Indebtedness HM Revenues and Customs - VAT 10,182 4,544 HM Revenues and Customs - PAYE and NI -12,458 -12,128 -2,276 -7,584 ● Investments held on behalf of, and repayable to: CEC Holdings -47 -73 Common Good -1,578 -1,566 Lothian and Borders Fire Board -14,895 -20,108 Lothian and Borders Police Board -3,034 -3,011 tie Limited 0 -25,305 -19,554 -50,063

100 NOTES TO THE FINANCIAL STATEMENTS

39. Capital Expenditure and Capital Financing The total amount of capital expenditure incurred during the year is shown below (including the value of assets acquired under finance leases and PPP contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years through charges to revenue (loan charges), capital expenditure results in an increase in the capital financing requirement. This shows the amount of capital expenditure that has yet to be financed. The capital financing requirement is analysed below. 2011/12 2010/11 £000 £000 £000 £000 Opening capital financing requirement 1,412,064 1,400,470

Capital Investment Property, plant and equipment 297,354 256,839 Heritage Assets 8 88 Assets held for sale 321 44 Intangible assets 124 418 Revenue expenditure funded from capital 33,811 44,820 under statute Minor adjustments to PPP schools during 215 0 the year (reflected in finance leases) 331,833 302,209 Sources of Finance Capital receipts -8,421 -8,558 Government grants and other contributions -92,918 -206,252 Loans fund / finance lease repayments -79,007 -75,805

-180,346 -290,615 Closing capital financing requirement 1,563,551 1,412,064

Explanation of movements in year Increase in underlying need to borrow 0 21,274 (supported by government financial assistance) (Decrease) / increase in underlying need to 155,390 -5,699 borrow (not supported by government financial assistance) Voluntary debt repayment - HRA -4,000 -4,000 Assets acquired under finance leases 97 19 Assets acquired under PPP contracts 0 0 Increase in capital financing requirement 151,487 11,594

From 2011/12 onwards, the Scottish Government has withdrawn notional capital consent. This means that previously, where the Finance Settlement included loan charge support towards £21.274m of borrowing, from 2011/12 onwards, capital support is provided solely in the form of capital grant. The increase in the underlying need to borrow (unsupported by government financial assistance) is mainly attributable to expenditure on the tram project. This expenditure and subsequent additional borrowing is based on the revised project cost of £776m, resulting in an additional £231m being funded by the Council over the life of the project.

101 NOTES TO THE FINANCIAL STATEMENTS

40. Leases 40.1 Assets Leased in - Finance Leases The Council has acquired two buildings, and its IT and copying equipment under finance leases. The assets acquired under these leases are included in property, plant and equipment in the Balance Sheet at the following net amounts: 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Value at 1 April 17,529 7,238 26,399 10,354 Additions during the year 11,299 97 19 19 Repayments during the year -10,122 -3,014 -8,889 -3,135 Value at 31 March 18,706 4,321 17,529 7,238

Other land and buildings 508 508 610 610 Vehicles, plant, equipment and furniture 18,198 3,813 16,919 6,628 Value at 31 March 18,706 4,321 17,529 7,238

The Council is committed to making minimum lease payments under these leases, comprising settlement of the long-term liability for the interest in the assets acquired and finance costs that will be payable by the Council in future years while the liability remains outstanding. The minimum lease payments are shown below: 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 Finance lease liabilities: Current 7,435 2,206 8,168 2,995 Non-current 11,271 2,115 9,361 4,243

Finance costs payable 392 392 640 640 Minimum lease payments 19,098 4,713 18,169 7,878

The minimum lease payments will be payable over the following periods:

Minimum Finance Lease Repayments at 31.03.12 at 31.03.11 Group Council Group Council £000 £000 £000 £000 Not later than one year 7,632 2,403 8,425 3,252 Later than one year and not later than five 6,279 2,310 9,642 4,524 years Later than five years 5,187 0 102 102 19,098 4,713 18,169 7,878

Finance Lease Liabilities £000 £000 £000 £000 Not later than one year 7,435 2,206 8,168 2,995 Later than one year and not later than five 6,084 2,115 9,259 4,141 years Later than five years 5,187 0 102 102 18,706 4,321 17,529 7,238

102 NOTES TO THE FINANCIAL STATEMENTS

40. Leases - continued 40.2 Assets Leased in - Operating Leases The Group leases in property and vehicles financed under the terms of operating leases. The amount charged to the Comprehensive Income and Expenditure Statement under these arrangements and the value of future payments under operating leases is shown below.

The amounts recognised as an expense during the year include £0.400m of contributions paid by employees towards cost of car leasing (2010/11 £0.421m).

Under these operating leases, the Group is committed to paying the following sums, of which £0.588m is recoverable from employees (2010/11 £0.621m):

2011/12 2010/11 Group Council Group Council Future Repayment Period £000 £000 £000 £000 Not later than one year 6,310 5,975 6,351 6,066 Later than one year and not later than five 11,916 10,939 13,689 13,655 years Later than five years 6,830 6,103 7,415 7,192

25,056 23,017 27,455 26,913

Value at 31 March Other land and buildings 23,489 21,450 25,119 24,577 Vehicles, plant, equipment and furniture 1,567 1,567 2,336 2,336

25,056 23,017 27,455 26,913

Recognised as an expense during the year 6,928 6,634 6,851 6,317

40.3 Assets Leased Out by the Council - Operating Leases The Council leases out property and equipment under operating leases for a number of purposes, including:

● for economic development purposes, including regeneration and to provide suitable affordable accommodation for local businesses.

● to arms' length companies for the provision of services such as sport and leisure and theatres.

The future minimum lease payments receivable under non-cancellable leases in future years are:

2011/12 2010/11 £000 £000 Not later than one year 11,567 10,812 Later than one year and not later than five years 29,376 29,496 Later than five years 149,355 150,384

190,298 190,692

The Council has a number of leases that are agreed for a period of over 100 years, the majority of which relate to land.

103 NOTES TO THE FINANCIAL STATEMENTS

41. Public Private Partnerships and Similar Contracts 41.1 PPP - Education Projects

In 2001, the Council entered into a Public Private Partnership (PPP1) for the provision of school buildings, maintenance and other facilities with Edinburgh Schools Partnership. This agreement was supplemented by a further agreement in April 2004, which now requires Edinburgh Schools Partnership to either replace or substantially renovate ten primary, five secondary and two special schools, together with one close support unit and a community wing, and to maintain these schools to a high standard. When the agreement ends in July 2033 the schools will be handed to the Council with a guaranteed maintenance-free life of five years.

In April 2007, the Council entered into a second Public Private Partnership (PPP2) for the provision of school buildings, maintenance and other facilities with Axiom Education Limited. This required Axiom Education Limited to replace six secondary schools and two primary schools and to maintain these schools to a high standard. When the agreement ends in July 2038 the schools will be handed to the Council with a guaranteed maintenance-free life of five years.

Under the agreements the Council is committed to paying the following sums as detailed in the contractor's final bid model:

Payment Reimburse. for of Capital Services Expenditure Interest Total £000 £000 £000 £000 Payable in 2012/13 14,499 6,459 16,584 37,542 Payable within two to five years 79,758 35,485 80,617 195,860 Payable within six to ten years 98,415 37,384 74,390 210,189 Payable within eleven to fifteen years 120,488 39,009 66,113 225,610 Payable within sixteen to twenty years 135,836 50,253 56,118 242,207 Payable within twenty one to twenty five years 82,662 43,046 36,815 162,523 Payable within twenty six to thirty years 6,375 2,449 1,790 10,614 538,033 214,085 332,427 1,084,545

Payments due under the PPP1 scheme have been inflated by 1.11% per annum and those due under the PPP2 scheme have been inflated by 1.67% per annum, reflecting the terms of the separate contracts.

The amounts disclosed as reimbursement of capital expenditure are included in other long-term liabilities on the Balance Sheet.

The unitary charges paid to the service providers include amounts to compensate the providers for the capital expenditure incurred and interest payable whilst the capital expenditure remains to be reimbursed. The liability outstanding to pay the service providers for capital expenditure incurred is as follows: 2011/12 2010/11 £000 £000 Balance at 1 April 220,318 226,848 PPP unitary charge restatement adjustment 215 0 Repayments during the year -6,448 -6,530 Balance at 31 March 214,085 220,318

104 NOTES TO THE FINANCIAL STATEMENTS

41. Public Private Partnerships and Similar Contracts - continued 41.2 Provision of Information Technology services In 2001 the Council entered into a ten year Public Private Partnership for the provision of information technology services. This contract has now been extended for another five years.

Under the agreement the Council is committed to paying the following sums in cash terms (assuming an inflationary uplift at the level shown):-

Future Repayment Inflationary Period £000 Uplift 2012-13 26,422 3.6% 2013-14 27,479 4.0% 2014-15 28,276 2.9% 2015-16 29,125 3.0%

111,302

The equipment assessed as a finance lease within this contract is included in note 40.1. The above payments include the elements relating to the finance lease for the equipment.

The cost of information technology is included in overheads and is thus allocated to direct services.

41.3 Provision of Parking Enforcement The Council has entered into a five year contract with National Car Parks for the provision of parking enforcement. A two-year extension to the contract has now been granted for the period to November 2013.

Under the agreement the Council is committed to paying the following sums in cash terms (assuming an inflationary uplift at the level shown):-

Future Repayment Inflationary Period £000 Uplift 2012-13 6,160 5.0% 2013-14 4,310 5.0%

10,470

41.4 Waste Disposal The Council entered into a twenty year contract with Viridor in 2000 to supply waste to their landfill site in Dunbar. The contract requires the Council to supply an agreed tonnage to the landfill site each calendar year. Fees are subject to review twice a year, based on civil engineering indices.

Under the agreement the Council is committed to paying the following sums in cash terms (assuming an increase of 5% per annum):-

Future Repayment Period £000 2012 - 2013 3,181 2013 - 2018 22,769 2018 - 2020 6,434

32,384

41.5 Other Rolling Contracts The Council has entered into a number of rolling contracts to provide services, which are mainly care orientated through 'Supporting People'. The annual value of these contracts is £19.761m. There are a further £34.180m per annum of rolling contracts for services provided to adults by Health and Social Care.

105 NOTES TO THE FINANCIAL STATEMENTS

42. Pension schemes accounted for as defined contribution schemes

The Scottish Teachers' Superannuation Scheme is an unfunded scheme administered by the Scottish Public Pensions Agency. The scheme is excluded from the accounting requirements of IAS 19 as it is a national scheme which does not allow for the identification of pension liabilities consistently and reliably between participating authorities. The accounts, therefore, only include the payments made by the Council to the scheme in year and do not reflect the estimated pension assets or liabilities of the scheme. The exception to this are payments in relation to unfunded pension enhancements for members of the scheme as they are administered through the Local Government Pension Scheme and are taken into consideration in accounting for pension costs under IAS 19. 2011/12 2010/11 £000 % £000 % Amount paid to Scottish Government in respect 18,223 18,640 of teachers' pension costs As a percentage of teachers' pensionable pay 14.90 14.90 Amount paid in respect of added years 0 0 As a percentage of teachers' pensionable pay 0.00 0.00 Capitalised value of discretionary awards entered 21,054 20,338 into prior to 2011/12 At 31 March 2012, creditors include £2.183m (2010/11 £2.229m) in respect of teachers' superannuation.

43. Defined Pension Schemes 43.1 Participation in Pension Scheme Employees other than teachers are eligible to join the Local Government Pension Scheme. The pension costs charged to Services in respect of these employees have been calculated under IAS 19 - Employee Benefits.

In terms of this scheme in 2011/12, the Council paid an employer's contribution of £52.052m (2010/11 £51.310m) into the Lothian Pension Fund, representing 21.3% (2010/11 20.6%) of pensionable pay. The contribution rate was determined by the Fund's Actuary based on triennial actuarial valuations as at 31 March 2008. Contributions for 2012/13 will be based on the results of the March 2011 actuarial review.

In accordance with the Code of Practice guidance on the application of IAS19, Employee Benefits, the Comprehensive Income and Expenditure Statement recognises the true economic cost of retirement benefits earned by employees in 2011/12, irrespective of when benefits are due to be paid. These costs are based upon an assessment by the Fund's Actuary of the share of fund assets and liabilities attributable to the City of Edinburgh Council at 31 March 2008.

The Fund's Actuary is unable to provide an analysis of IAS19 pension costs by individual service. The charge in the Comprehensive Income and Expenditure Statement applied against each service included in 'Cost of Services' reflects an apportionment of costs in line with the actual cash payments made by the Council to Lothian Pension Fund.

43.2 Transactions Relating to Post-Employment Benefits The cost of pension benefits, as assessed by the Fund's Actuary and reflected within 'Cost of Services', differed from the cash payment to the Fund charged against Council Tax. The following summarises the entries reflected within the Comprehensive Income and Expenditure Statement in respect of accounting for pensions under IAS19. The amount by which pension costs calculated in accordance with IAS19 are different from the contributions due under the pension scheme regulations is included in the Movement in Reserves Statement.

106 NOTES TO THE FINANCIAL STATEMENTS

43. Defined Pension Schemes - continued 43.2 Transactions Relating to Post-Employment Benefits - continued

2011/12 2010/11 % of % of Comprehensive Income and £000 £000 pay £000 £000 pay Expenditure Statement (CIES) Cost of services: Current service costs 42,786 18.0% 53,243 20.7%

Past service costs / (gains) 1,207 0.5% -182,340 (70.9%)

Settlements and curtailments 1,404 0.6% 687 0.3% 45,397 -128,410 Financing and investment income: Interest cost 101,164 42.6% 108,317 42.1%

Expected return on scheme assets -105,787 (44.5%) -103,873 (40.4%) -4,623 4,444 Total post employee benefit charged 40,774 -123,966 to the surplus on provision of services benefits in accordance with the Code Other post employment benefit charged to the CIES Actuarial (losses) / gains on plan -102,303 -25,531 assets

Actuarial gains / (losses) on 36,144 186,773 obligation Total actuarial gains and losses -66,159 161,242 charged to the CIES

Movement in Reserves Statement Reversal of net charges made to the 20,846 182,464 surplus on provision of services for post employment benefits in accordance with the Code

Actual amount charged against the General Fund Balance for pensions in the year: Employer's contributions payable to 55,193 52,430 the scheme

Contributions in respect of unfunded 6,427 6,068 costs 61,620 58,498

The cumulative amount of actuarial gains and losses recognised in the Comprehensive Income and Expenditure Statement to 31 March 2012 is a loss of £517.425m (2010/11 £451.266m loss).

107 NOTES TO THE FINANCIAL STATEMENTS

43. Defined Pension Schemes - continued 43.2 Transactions Relating to Post-Employment Benefits - continued The amounts charged to the Comprehensive Income and Expenditure Statement are based on employer and employee contributions up to 31 March 2012 and the number of employees, deferred pensioners and pensioners as at 31 December 2011 in order to estimate the position for the year to 31 March 2012.

From October 2006, members retiring are able to elect an additional tax-free lump sum in lieu of part of their pension ("commutation"). Allowance has been made for future retirees to elect to take 50% of the maximum additional tax-free cash up to HM Revenues and Customs limits for pre-April 2009 service and 75% of the maximum tax-free cash for post-April 2009 service.

43.3 Asset and Liabilities in Relation to Post Employment Benefits Reconciliation of the present value of the scheme liabilities (defined benefit obligation):

2011/12 2010/11 £000 £000 Defined benefit obligation at 1 April 1,843,330 2,096,893 Current service cost 42,786 53,243 Interest cost 101,164 108,317 Contributions by members 15,477 16,072 Actuarial (gains) / losses -36,144 -186,773 Past service costs 1,207 -182,340 Losses on curtailments and settlements 1,404 687 Estimated unfunded benefits paid -6,427 -6,068 Estimated benefits paid -62,536 -56,701

Defined benefit obligation at 31 March 1,900,261 1,843,330

Reconciliation of the fair value of the scheme assets: 2011/12 2010/11 £000 £000 Defined benefit obligation at 1 April 1,507,428 1,417,285 Expected return on assets 105,787 103,873 Contributions by members 15,477 16,072 Contributions by the Council 55,193 52,430 Contributions in respect of unfunded benefits 6,427 6,068 Actuarial losses -102,303 -25,531 Unfunded benefits paid -6,427 -6,068 Benefits paid -62,536 -56,701

Defined benefit obligation at 31 March 1,519,046 1,507,428

The expected return on assets is based on the long-term future expected investment return for each asset class as at the beginning of the period (i.e. as at 31 March 2011 for the year to 31 March 2012, or date of joining the fund if later).

Assets have been valued at bid value, as required under IAS19.

The actual return on scheme assets in the year was £31.969m (2010/11 £78.687m)

108 NOTES TO THE FINANCIAL STATEMENTS

43. Defined Pension Schemes - continued 43.4 Scheme History 2011/12 2010/11 2009/10 2008/09 2007/08 £000 £000 £000 £000 £000 Fair value of employer assets 1,519,046 1,507,428 1,417,285 1,038,933 1,296,168 Present value of defined benefit obligation -1,900,261 -1,843,330 -2,096,893 -1,315,114 -1,394,315 Deficit -381,215 -335,902 -679,608 -276,181 -98,147 Experience gains / (losses) on assets -102,303 -25,531 293,067 -355,405 -135,790 Experience gains / (losses) on liabilities 72,144 13,778 -6,282 45,059 5,968 Actuarial gains / (losses) on -102,303 -25,531 293,067 -355,405 -135,790 employer assets Actuarial gains / (losses) on 36,144 186,773 -697,195 161,963 284,268 obligation Actuarial gains / (losses) -66,159 161,242 -404,128 -193,442 148,478 recognised in Movement in Reserves Statement The net pension liability of £381.215m exceeds current general fund reserves of £103.818m by £277.397m. The actuarial valuation will consider the appropriate employer's rates and this, together with revenues generated from the investments, will be utilised to meet the fund's commitments. The total contributions expected to be made to Lothian Pension Fund by the Council in the year to 31 March 2013 are £50.628m.

43.5 Basis for Estimating Assets and Liabilities Hymans Robertson, the independent actuaries to Lothian Pension Fund, have advised that the financial assumptions used to calculate the components of the pension expense for the year ended 31 March 2012 were those from the beginning of the year (i.e. 31 March 2011) and have not been changed during the year. The main assumptions in the calculations are: Expected return on assets As % of plan assets 2011/12 2010/11 2011/12 2010/11 Equity investments 6.2% 7.5% 79% 79% Bonds 4.0% 4.9% 8% 8% Property 4.4% 5.5% 11% 10% Cash 3.5% 4.6% 2% 3% Average future life expectancies at age 65: Current pensioners male 20.4 years 20.8 years Current pensioners female 22.8 years 24.1 years Future pensioners male 22.6 years 22.3 years Future pensioners female 25.4 years 25.7 years Inflation / pension increase rate 2.5% 2.8% Salary increase rate (see below) 4.8% 5.1% Expected return on assets 5.8% 7.0% Discount rate 4.8% 5.5% Note: The salary increase assumption used for 2011/12 is 1.0% p.a. for the first three years, moving to 4.8% p.a. from year three. For 2010/11, it was 1% until 31 March 2013 thereafter rising to 5.1%.

109 NOTES TO THE FINANCIAL STATEMENTS

43. Defined Pension Schemes - continued 43.6 History of Experience Gains and Losses The actuarial gains and losses identified as movements on the pensions reserve can be analysed into the following categories, measured as a percentage of assets or liabilities at 31 March. 2011/12 2010/11 2009/10 2008/09 2007/08 % % % % % Experience gains and (losses) on (6.7%) (1.7%) 20.7% (34.2%) (10.5%) assets Experience gains and (losses) on (1.9%) (10.1%) 33.2% (12.3%) (20.4%) liabilities 43.7 Pension Reserves - Group Position The pension reserves shown in the Group Balance Sheet relate to the Council. Pension reserves for the Police, Fire and Valuation joint boards are included in unusable reserves, as these are statutory accounts under the Code. Local government legislation provides that local authorities have an obligation to meet the expenditure of the joint boards of which they are constituent members. As a consequence, the City of Edinburgh Council has obligations to meet the liabilities arising from the joint board pension deficits as they fall due. Pension reserves for other companies in the group are included in usable reserves. The value of the pension reserves is shown separately below.

2011/12 2010/11 Pension Pension Pension Reserve Pension Reserve Reserve (Injuries) Reserve (Injuries) Unusable Reserves £000 £000 £000 £000 Council 381,215 0 335,902 0 Lothian and Borders Police Board 991,051 53,905 860,164 43,979 Lothian and Borders Fire and Rescue Board 189,651 10,474 172,489 9,583 Lothian Valuation Joint Board 2,757 0 3,056 0 1,564,674 64,379 1,371,611 53,562

2011/12 2010/11 Usable Reserves £000 £000 CEC Holdings 691 1,136 Festival City Theatres Trust 77 44 Edinburgh Leisure -582 1,429 Lothian Buses -6,437 8,190 tie limited 522 522 -5,729 11,321 43.8 Strain on the Pension Fund Lothian Pension Fund has the right to require the Council to make additional payments to the pension fund to reflect the extra cost to the pension fund of immediate payment of benefits to employees who retire early on efficiency, redundancy or voluntary grounds. This amounted to £2.497m, excluding accrued payments, in 2011/12 (2010/11 £4.135m). The future value of payments, based on employees who have retired on the above grounds amounts to £0.209m (2010/11 £0.764m). Payments on behalf of employees who have left the Council since 1 April 2009 require to be paid in full to Lothian Pension Fund at the time of leaving. 43.9 Cessation Value Payments If an employer becomes insolvent and it, or its guarantor, is unable to meet any deficit, additional contributions will be required from each remaining employer in the Fund, in proportion to their liabilities. This means that the majority of any deficit will fall on the large employers. However, where it has been established that there is a link between the employer and the Council then the Council requires to meet the total of any deficit. During the year, the Council paid £4.891m to Lothian Pension Fund in respect of cessation values for two organisations.

110 NOTES TO THE FINANCIAL STATEMENTS

43. Defined Pension Schemes - continued 43.10 Further Information Further information on Lothian Pension Fund can be found in the Council's Pension Fund's Annual Report which is available upon application to the Investments and Pensions Service Manager, Waverley Court, 4 East Market Street, Edinburgh, EH8 8BG.

44. Contingent Assets and Liabilities 44.1 Contingent Assets ● There are no contingent assets at 31 March 2012. 44.2 Contingent Liabilities ● The recent Supreme Court judgement in relation to mesothelioma (asbestos) claims ruled that the insurer who was on risk at the time of an employee's exposure to asbestos was liable to pay compensation. As a result, the Council's insurers may charge an additional levy on to the Council in order to meet compensation claims. The actual cost and timing of any levy cannot be estimated with reasonable accuracy and consequently no provision has been made in the financial statements in respect of this levy. ● The provision for equal pay claims includes an estimate of the costs for all known staff groups who have, or may have, an equal pay claim against the Council. In addition, the provision includes an estimate of a potential liability as a result of pay protection costs since the introduction of the new scheme to 31 March 2012. ● Whilst the Council has made an impairment provision against statutory repairs, there may also be further liability claims against the Council in relation to works carried out under statutory repair notices served by the Council. The actual cost of these claims cannot be estimated with reasonable accuracy. It is also not possible to estimate precisely when these claims could become due.

45. Nature and Extent of Risks Arising from Financial Instruments 45.1 Overall Procedures for Managing Risk The Council’s overall risk management procedures focus on the unpredictability of financial markets, and implementing restrictions to minimise these risks. The Council complies with the CIPFA Prudential Code and has adopted the CIPFA Treasury Management in the Public Services Code of Practice. 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 indicators for the following three years limiting: the Council’s overall borrowing; its maximum and minimum exposures to fixed and variable rates; its maximum and minimum exposures in the maturity structure of its debt; ● by selecting investment counterparties in compliance with the Council’s Treasury Policy Statement.

The annual treasury management strategy which incorporates the prudential indicators was approved by the Council on 15 March 2012 and is available on the Council's website. The key issues within the strategy are: ● The authorised limit for 2012/13 has been set at £1.873bn. This is the maximum limit for external borrowings or other long term liabilities. ● The operational boundary for 2012/13 has been set at £1.826bn. This is the expected level of debt and other long term liabilities during the year. ● The maximum amounts of fixed and variable interest rate exposure were set at 100% and 75% of the Council's net debt respectively. The prudential indicators are reported and approved as part of the Council's annual budget setting process. Actual performance is also reported annually to members of the Council.

111 NOTES TO THE FINANCIAL STATEMENTS

45. Nature and Extent of Risks Arising from Financial Instruments - continued 45.2 Key Risks 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.

45.3 Credit Risk Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s customers. Deposits are with banks, building societies, and other institutions in line with the Council’s prevailing counterparty limits as set out in the Council’s treasury policy statement. Investment decisions are considered daily as part of the daily cash flow management by the Council’s Treasury Team who can, and do, restrict the list further in light of market conditions.

The Council's funds are managed along with those of Lothian Pension Fund, the Forth Estuary Transport Authority and some other related organisations which are pooled for investment purposes as a treasury cash fund. Management of the cash fund is on a low risk, low return basis, with security of the investments the key consideration while at the same time seeking innovative and secure cash investment opportunities. This arrangement has allowed a better management of the Council's risk in the exceptional financial and market circumstances in recent years.

As well as lending monies to other local authorities, the Council has purchased UK Government Treasury Bills as well as Bonds and Floating Rate Notes with an explicit UK Government Guarantee. At 31st March 2012, all of the Council's short term investments were represented by loans to other local authorities. Of the net Cash and Cash Equivalents, 33% are either loans to local authorities or invested in instruments with an explicit UK Government Guarantee on the capital and interest. A further 16% was held in a AAA rated Money Market Fund. All of the monies held on deposit at 31 March 2012 were in call or near call accounts with banks, with the exception of £6.387m held in a fixed term deposit maturing 20 April 2012 with a UK building society.

The Council's cash holding under its treasury management arrangements at 31 March 2012 was £219.1 million (31 March 2011: £243.8m). This was held with the following institutions:

Principal Carry Fair Carry Outstanding Value Value Value 31.03.12 31.03.12 31.03.12 31.03.11 Summary Rating £000 £000 £000 £000 Money Markey Funds Deutsche Bank AG, London AAA 28,971 28,981 28,981 0 Standard Life AAA 0 0 0 17,176 Bank Call Accounts Bank of Scotland A 18,599 18,608 18,608 20,367 Royal Bank of Scotland A 20,175 20,183 20,183 20,410 Santander UK A+ 17,238 17,252 17,252 27,142 Barclays Bank A+ 17,087 17,095 17,095 25,658 Svenska Handelsbanken AA- 27,498 27,498 27,498 0 Bank Near-Call Accounts Clydesdale Bank (15 Day Notice) BBB+ 4 4 4 17,026 Bank Certificates of Deposit Rabobank AA 0 0 0 347

112 NOTES TO THE FINANCIAL STATEMENTS

45. Nature and Extent of Risks Arising from Financial Instruments - continued 45.3 Credit Risk - continued Principal Carry Fair Carry Outstanding Value Value Value 31.03.12 31.03.12 31.03.12 31.03.11 Summary - continued Rating £000 £000 £000 £000 Building Society Fixed Term Deposits Nationwide Building Society A+ 6,387 6,388 6,388 0 UK Pseudo-Sovereign Risk Instruments Local Authorities (see Note 1) n/a 58,439 58,562 58,537 108,347 UK Govt Guaranteed FRNs n/a 24,525 24,616 24,621 0 UK Govt Guaranteed Bonds n/a 0 0 0 7,397 218,923 219,187 219,167 243,870 Note 1 Local Authorities are generally assumed to have a pseudo-sovereign credit rating (which in the UK at 31 March 2012 would have been 'AAA') due to their tax raising powers and the perceived government support. Very few have their own credit rating, but of the £58.5m above, £21.7m is with a local authority which has a 'Aa1' credit rating from Moodys, one notch down from 'AAA'.

In addition to the deposits outstanding on 31 March 2012, the Council had also committed to placing a one year deposit, with a value of £1.277m, with another local authority with a start date in April 2012.

The Council's maximum exposure to credit risk in relation to its direct investments in banks and building societies of £107.0m cannot be assessed generally as the risk or any institution failing to make interest payments of repay the principal sum will be specific to each individual institution. Recent experience has shown that it is rare for such entities to be unable to meet their commitments. A risk of irrecoverability applies to all of the Council's deposits, but the Council takes a low risk approach to investment. Despite continuing concerns over the European Sovereign Debt crisis and the effects that this might have on the banking system, there was no evidence at 31 March 2012 that this risk was likely to crystallise.

No breaches of the Council's counterparty criteria occurred during the reporting period and the Fund does not expect any losses from non-performance by any of its counterparties in relation to deposits. In October 2008 the Icelandic banking sector defaulted on its obligations. The Fund has never had any exposure to Icelandic banks and had no investment in the sector at that time.

In line with the Investment Regulations governing local authorities introduced in 2010, the Council approved an annual investment strategy and treasury policy statement for both the Council and the Cash Fund at its March 2012 meeting. The papers are available on the Council's website. A full list of the deposits outstanding at 31 March 2012 is contained in the Treasury Cash Fund Investment Report for Quarter 1 2012. This is available on request from the Council's Treasury Section - Waverley Court, 4 East Market Street, Edinburgh, EH8 8BG.

All Council invoices become due for payment on issue. Excluding pre-payments of £2.733m (2010/11 £2.585m), trade debtors past due date can be analysed by age as follows:

2011/12 2010/11 £000 £000 Less than two months 9,390 13,325 Two to four months 2,208 6,297 Four to six months 956 1,608 Six months to one year 2,612 2,683 More than one year 10,047 9,393 Total 25,213 33,306

Collateral – During the reporting period the Council held no collateral as security.

113 NOTES TO THE FINANCIAL STATEMENTS

45. Nature and Extent of Risks Arising from Financial Instruments - continued 45.4 Liquidity risk The Council carries out short and medium term cash flow management to ensure that it will have sufficient liquidity to cover all of its payment obligations. This includes monitoring the maturity profile of investments to ensure sufficient liquidity is available for the Council’s day to day cash flow needs. The Council also has ready access to borrowings from the money markets to cover any day to day cash flow needs. While this has not been needed for normal cash flow requirements, it was used for tactical temporary borrowing during 2008/09 when the Council considered that interest rates were going to fall and that medium to long-term borrowing would be disadvantageous at that time.

Whilst the PWLB provides access to longer term funds, it also acts as a lender of last resort to the Council. The Council is also required by statute to provide a balanced budget, 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.

The Council manages its liquidity position through the risk management procedures above (the setting and approval of prudential indicators and the approval of the treasury and investment strategy reports), as well as through cash flow management procedures required by the Code of Practice.

45.5 Re-financing and Maturity Risk The Council maintains significant debt and investment portfolios. The re-financing risk to the Council relates to managing the exposure to replacing financial instruments as they mature. As shown in the chart in 45.6, the majority of the Council's debt portfolio consists of fixed rate longer term loans, and as such, the Council has a relatively low re-financing risk on its liabilities. However, the Council has market debt which allows the lender the option to ask for a rate increase at set dates and at that point the Council may choose to repay the loan at no additional cost. This gives a potential re-financing risk which the Council monitors and manages.

The Council's approved treasury strategy addresses the main risks and the treasury team address the operational risks within the approved parameters. This includes monitoring the maturity profile of financial liabilities and amending the profile through either new borrowing or the rescheduling of the existing debt. However, with the increase in new borrowing rates announced in the Government's Comprehensive Spending Review in October 2010, it is now unlikely that there will be much scope for any substantial debt rescheduling.

The maturity analysis of the principal outstanding on the Council’s financial liabilities is as follows:

2011/12 2010/11 £000 £000 Less than one year -43,577 -64,401 Between one and two years -36,301 -16,369 Between two and five years -146,140 -123,323 Between five and ten years -301,837 -286,097 More than ten years -1,125,536 -1,065,140 Financial Liabilities -1,653,391 -1,555,330

All trade and other payables are due to be paid in less than one year and trade creditors of £5.076m (2010/11 £10.302m) are not shown in the table above. The above figures show the principal outstanding, therefore, neither accrued interest of £18.206m (2010/11 £16.652m) nor net equivalent interest rate (EIR) adjustments of £8.679m (2010/11 £8.314m) to the carrying amounts of market debt shown in the financial liabilities are included.

The only investment which the Council has, other than £3.5m in EDI loan stock, with a maturity greater than one year is a loan of £3.193m to Fife Council maturing in August 2013. The Council had also committed to placing a deposit of £1.277m with another local authority which had a start date of 30 April 2012 and a maturity date of 29 April 2013.

114 NOTES TO THE FINANCIAL STATEMENTS

45. Nature and Extent of Risks Arising from Financial Instruments - continued 45.6 Market risk Interest rate risk The Council is exposed to interest rate movements on its borrowings and investments. Movements in interest rates have a complex impact on the Council, depending on how variable and fixed interest rates move across differing financial instrument periods. For instance, a rise in variable and fixed interest rates would have the following effects:

● borrowings at variable rates – the interest expense charged to the Comprehensive Income and Expenditure Statement will rise; ● borrowings at fixed rates – the fair value of the borrowing liability will fall; ● investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise; 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 Comprehensive Income and Expenditure Statement or Movement in Reserves Statement. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the Comprehensive Income and Expenditure Statement 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 Movement in Reserves Statement, unless the investments have been designated as fair value through the Comprehensive Income and Expenditure Statement.

The Council has a number of strategies for managing interest rate risk. The annual treasury management strategy includes a forecast for short and longer term interest rates. The treasury team continue to monitor market and forecast interest rates during the year and adjust investment policies accordingly. 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. Any such strategy is run within the short and medium term liquidity requirements of the Council.

The following chart shows the source of the Council's borrowing. Most of the Council's borrowings are from the Government by way of the Public Works Loans Board, and since we are at the bottom of the interest rate cycle, none of the PWLB borrowing was variable rate.

LOBO - Inverse EIB 2.83% 0.02% Temporary Loans LOBO 0.54% 17.01%

PWLB - Fixed 79.60% Source of Borrowing 31-Mar-12

115 NOTES TO THE FINANCIAL STATEMENTS

45. Nature and Extent of Risks Arising from Financial Instruments - continued 45.6 Market risk - continued Price Risk The Council does not generally invest in equity shares but does have shareholdings to the value of £23.335m (2010/11 £23.335m) in a number of Council owned Companies and joint ventures. Whilst these holdings are generally illiquid, the Council is exposed to losses arising from movements in the prices of the shares.

As the shareholdings have arisen in the acquisition of specific interests, the Council is not in a position to limit its exposure to price movements by diversifying its portfolio.

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.

46. Business Improvement District Scheme The Council acts as the Billing Authority for Edinburgh’s Central Business Improvement District (BID). The Council collects a levy from the business rate payers on behalf of the BID body, Essential Edinburgh. 2011/12 2010/11 £000 £000 Monies to be recovered from ratepayers at 1 April 163 137

BID Levy Income 893 943

Less: Payments made / due to Essential Edinburgh -895 -917 Monies still to be recovered from ratepayers at 31 March 161 163

The monies raised through the BID are used to fund activities around four key themes, including:

● area promotion - advertising, marketing and events ● clean and attractive area - cleaning teams, street décor, cleanliness surveys ● safe and secure area - CCTV, improved lighting ● accessibility - pedestrian friendly environment.

47. The City of Edinburgh Council Charitable Funds The City of Edinburgh Council administers a number of charitable funds. At the start of the year this included 51 Scottish charities registered under the Charities and Trustee Investment (Scotland) Act 2005 and 50 other charitable funds, mainly educational endowments. During the year, the Council made progress with its plan to re-organise the funds. This resulted in the transfer of 39 funds to external charities and the consolidation of 23 funds into a new charity, the Edinburgh Education Trust.

47.1 Purpose, and financial position, of the largest of the charitable funds ● Jean F. Watson Bequest (Scottish Charity Reg. No. SC018971) The purpose of the fund is to purchase works of art by artists who have connections with the city. The financial results of the fund are as follows: 31.03.12 31.03.11 £000 £000 Income (See Note 1, page 119) (12) (23) Expenditure 3 4 Assets 1,610 1,587 Liabilities (13) (6)

116 NOTES TO THE FINANCIAL STATEMENTS

47. The City of Edinburgh Council Charitable Funds - continued 47.1 Purpose, and financial position, of the largest of the charitable funds - continued ● Surplus Fire Fund (Scottish Charity Reg. No. SC018967) The purposes of the fund are to offer relief to persons that have suffered as the result of a fire and to recognise meritorious service in connection with fires. In both cases the fire must have occurred in the Edinburgh area.

In March 2012 the decision was made to transfer the future administration of the fund to the Edinburgh Voluntary Organisations Trust (SC031561). An application to approve the transfer has been made to the Office of the Scottish Charity Regulator (OSCR).

The financial results of the fund are as follows: 31.03.12 31.03.11 £000 £000 Income (See Note 1, page 119) (17) (34) Expenditure 5 35 Assets 1,142 1,118 Liabilities 0 (5)

47.2 The main funds are: Scottish Charity Market Value Registration 31.03.12 31.03.11 Scottish Registered Charities Number £000 £000 Jean F. Watson SC018971 1,597 1,582 Surplus Fire Fund SC018967 1,142 1,113 City of Edinburgh SC025067 513 506 Nelson Halls SC018946 188 188 Edinburgh Education Trust SC042754 122 n/a Usher Hall Appeal SC030180 70 70 Trinity College Hospital (Note 1) SC018969 0 7,773 Sir James Steel (Note 1) SC025067 0 1,476 John McGibbon (Note 1) SC018977 0 1,145 Alexander Mortification (Note 1) SC018949 0 864 John Watson (Note 1) SC018972 0 488 Sir William Watson (Note 1) SC018973 0 391 George Boyd Anderson (Note 2) SC025067 0 362 Other Funds Various 196 636 Total market value 3,828 16,594

Other Funds Catherine Cowper n/a 47 45 Other Funds n/a 5 118 Total market value 52 163

Notes: 1. Transferred to Elizabeth Finn Care (SC040987)

2. Decision taken to expend the capital of the trust on the purposes stated in the benefactor's will.

3. The funds do not represent assets of the Council and are not included in the Balance Sheet.

117 NOTES TO THE FINANCIAL STATEMENTS

47. The City of Edinburgh Council Charitable Funds - continued 47.3 Financial Position of the Scottish Registered Charity Funds

(re-stated) 2010/11 Income and Expenditure Account 2011/12 £000 Note £000 Income (430) Investment income 1 (84) (15) Other non-investment income (15) (445) (99) Expenditure 1,014 Prizes, awards and other expenses 2 351 93 Administrative expenses 42 1,107 393 662 Deficit for the year 294

(re-stated) 2010/11 Balance Sheet 2011/12 £000 £000 £000 Long-Term Assets 13,449 Investments 2,128 850 Artworks - Jean Watson Trust 854 586 Heritable property 3 19 14,885 Total Long-Term Assets 3,001 Current Assets 41 Sundry debtors 13 1,768 Cash and bank 1,061 1,809 1,074 Current Liabilities (100) Creditors (247) (100) (247) 16,594 Total Assets less Liabilities 3,828

(16,634) Capital at 1 April (16,594) 662 Deficit for the year 294 (611) Unrealised gains (258) (20) Capital introduced 0 (1) Transfer from Council unregistered funds (88) 10 Trusts transferred to external charities 12,784 0 Transfer of fishing rights to Lagganlia Outdoor Centre 34 (16,594) Capital at 31 March (3,828)

At the request of the Office of the Scottish Charity Regulator, a separate Trustee's Report and Accounts has been prepared which gives further information on the Scottish registered charities in the trusteeship of the Council. A copy of this document may be obtained from the Council's Investment and Pensions Division - Level 3.3, Waverley Court, 4 East Market Street, Edinburgh, EH8 8BG.

118 NOTES TO THE FINANCIAL STATEMENTS

47. The City of Edinburgh Council Charitable Funds - continued 47.4 Financial Position of Other Funds (re-stated) 2010/11 Income and Expenditure Account 2011/12 £000 £000 Income (4) Investment income (1) (4) (1) Expenditure 7 Prizes, awards and other expenses 0 (1) Administrative expenses 0 6 0 2 (Surplus) / Deficit for the year (1) (re-stated) 2010/11 Balance Sheet 2011/12 £000 £000 £000 Long-Term Assets 94 Investments 0 94 Total Long-Term Assets 0 Current Assets 10 Sundry debtors 1 225 Cash and bank 170 235 171 Current Liabilities 0 Creditors -1 -166 Balance with City of Edinburgh Council -118 (166) (119) 163 Total Assets less Liabilities 52

(161) Capital at 1 April (163) 2 Surplus for the year (1) (5) Realised and unrealised gains on investments (3) 1 Transfer to Council Registered Funds 88 0 Trusts transferred to external charities 25 0 Compensation fund paid 2 (163) Capital at 31 March (52)

Notes 1. Income Investment arrangements for the funds of the remaining Trusts have been revised. The Trusts due to be transferred in 2012/13 now have their funds held in cash, while the remaining Trusts have new investments in unit trusts. These unit trusts have different distribution dates to the previous investments and this is reflected in a lower income figure being shown in the 2011/12 accounts compared to previous years. 2. Expenditure Expenditure has reduced due to the transfer of several large poverty Trusts, which paid out pensions, to Elizabeth Finn Care. The Usher Hall appeal made a one-off disbursement of £0.6m in 2010/11. 3. Heritable Property The reduction in heritable property relates mainly to the transfer of Trinity College Hospital to Elizabeth Finn Care (£0.532m) and fishing rights (George Boyd Anderson) to Lagganlia Outdoor

119 NOTES TO THE FINANCIAL STATEMENTS

47. The City of Edinburgh Council Charitable Funds - continued 47.5 Transferred Trusts As part of its ongoing charity re-organisation project, the Council has transferred a number of trusts to external parties during the year: Value £000 £000 To Elizabeth Finn Care (SC040987) Scottish Registered Charity Funds Trinity College Hospital 7,941 Sir James Steel 1,499 John McGibbon 1,164 Alexander Mortification 878 John Watson 491 Sir William Watson 394 Other smaller trusts 413 12,780 Other Funds Ada Noble 8 Schools Benevolent Fund 13 Irvine Trust 4 25 Total value transferred to Elizabeth Finn Care 12,805

To Edinburgh Voluntary Organisations Trust (SC031561) Scottish Registered Charity Funds Sir William Y Darling 4 Total value of transferred trusts 12,809

48. Prior Period Adjustments For 2011/12 the Council has recognised heritage assets under the requirements of FRS 30. Previously, heritage assets were either recognised as community assets in the property, plant and equipment classification or were not recognised in the Balance Sheet.

The 1 April 2010 and 31 March 2011 Balance Sheets and 2010/11 comparative figures have thus been restated in the 2011/12 statement of accounts to apply the new policy.

The following notes explain the material differences between the amounts presented in the 2010/11 financial statements and the equivalent amounts presented in the 2011/12 financial statements for the Council and show how these affect community assets, heritage assets and the revaluation reserve within the Balance Sheet.

2010/11 Newly 01.04.10 Opening 1 April 2010 Balance Sheet Statements Reclassified recognised Re-stated £000 £000 £000 £000 COUNCIL Property, Plant and Equipment Community Assets 14,665 (2,649) 0 12,016

Long-Term Assets Heritage Assets 0 2,649 34,829 37,478

Unusable Reserves Revaluation Reserve -734,264 0 (34,829) -769,093

120 NOTES TO THE FINANCIAL STATEMENTS

48. Prior Period Adjustments - continued

2010/11 Newly 31.03.11 31 March 2011 Balance Sheet Statements Reclassified recognised Re-stated £000 £000 £000 £000 COUNCIL Property, Plant and Equipment Community Assets 15,532 (2,776) 0 12,756

Long-Term Assets Heritage Assets 0 2,776 34,829 37,605

Unusable Reserves Revaluation Reserve -774,085 0 (34,829) -808,914

49. Exceptional Expenditure Exceptional expenditure comprises the following amounts: 2011/12 2010/11 Group Council Group Council £000 £000 £000 £000 IAS 19 - Retirement Benefits - Past 0 0 -183,226 -183,226 Service Costs Equal pay settlements and -10,071 -10,071 20,925 20,925 implementation of single status -10,071 -10,071 -162,301 -162,301 IAS 19 - Retirement Benefits The Chancellor of the Exchequer announced in his emergency budget on 22 June 2010 that the consumer price index rather than the retail price index would be the basis for future public sector pension increases. The impact of this change on the past services costs shown under IAS19 was a credit of £183.226m in 2010/11, of which £3.612m related to the Housing Revenue Account. Due to the materiality of the impact of this one-off change, this has been included as 'negative expenditure' within exceptional expenditure in the Comprehensive Income and Expenditure Statement. Modernising Pay Exceptional expenditure includes payments and movements on provisions relating to equal pay settlements and costs associated with implementing single status.

121 HOUSING REVENUE ACCOUNT

INCOME AND EXPENDITURE STATEMENT for the year ended 31 March 2012 The Housing Revenue Account (HRA) Income and Expenditure Statement shows in more detail the income and expenditure on HRA services included in the Council's Comprehensive Income and Expenditure Statement.

2010/11 £000 EXPENDITURE £000 £000 27,248 Repairs and maintenance 26,134 17,652 Supervision and management 19,357 36,147 Depreciation and impairment of non-current assets 27,163 4,309 Other expenditure 4,022 85,356 76,676 INCOME -71,543 Dwelling rents -76,203 -639 Non-Dwelling rents (gross) -860 -14,931 Other income -14,413 -87,113 -91,476 -3,612 Exceptional Items - Past Service Costs under IAS19 0 -5,369 Net cost of HRA Services (as included in the Council's -14,800 Comprehensive Income and Expenditure Statement) 136 HRA share of corporate and democratic core 394 235 HRA share of other amounts included in the Council's 253 Net Cost of Services but not allocated to specific services -4,998 Net expenditure for HRA Services -14,153 HRA share of other operating expenditure included in the Council's Comprehensive Income and Expenditure Statement 863 Loss on sale of HRA fixed assets 726 18,139 Interest payable and similar charges 19,614 -102 Interest and investment income -102 88 Pensions interest cost and expected return on -99 pension assets 18,988 20,139 -1,158 Non-Specific Grant Income -3,893 12,832 Deficit for the year on HRA services 2,093

122 HOUSING REVENUE ACCOUNT

MOVEMENT ON THE HRA STATEMENT

2010/11 £000 £000 0 Balance on the HRA at the end of the previous year 0

12,832 Deficit for the year on the HRA Income and Exp Account 2,093

-14,446 Adjustments between accounting basis and funding basis -5,607 under statute -1,614 Net increase before transfers to reserves -3,514

1,614 Contribution to renewal and repairs fund, via the General Fund 3,514 0 Balance on the HRA at the end of the current year 0

Adjustments Between Accounting Basis and Funding Basis Under Regulations £000 £000 Adjustments primarily involving the Capital Adjustment Account

Reversal of items debited or credited to the Income and Expenditure Statement

-36,147 Charges for depreciation and impairment of non-current assets -27,163

1,158 Capital grants and contributions applied 3,893

Insertion of items not debited or credited to the Income and Expenditure Statement

17,483 Statutory provision for the financing of capital investment 17,787

Adjustments primarily involving the Capital Receipts Reserve

-863 Transfer of cash sale proceeds credited as part of the gain / loss on -726 disposal of assets

Adjustments primarily involving the Financial Instruments Adjustment Account 289 Amount by which finance costs charged are different from finance costs 399 chargeable in the year in accordance with statutory requirements

Adjustments primarily involving the Pensions Reserve 3,113 Reversal of items relating to retirement benefits debited or credited to -318 the Income and Expenditure Statement 480 Employer's pension contributions and direct payments to pensioners 565 payable in the year Adjustments primarily involving the Employee Statutory Adjustment Account 41 Amount by which officer remuneration charged to the Income and -44 Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements -14,446 -5,607

123 HOUSING REVENUE ACCOUNT

Notes to the Housing Revenue Account

1. The number and types of dwellings in the authority's housing stock at 31 March 2012 are as follows:

(re-stated) 2012 2011 Annual Annual Average Average Types of Houses Number Rent (£) Number Rent (£) Main provision Council dwellings 1 Apartment 330 3,041.91 310 2,802.00 2 Apartment 5,508 3,384.53 5,698 3,146.00 3 Apartment 10,456 3,923.16 10,735 3,646.00 4 Apartment 3,550 4,516.85 3,579 4,198.00 5 Apartment 546 4,857.25 550 4,515.00 6 Apartment 10 4,893.11 10 4,548.00 7 Apartment 3 4,738.16 3 4,403.00 8 Apartment 2 4,738.16 2 4,403.00

Mid-market rent dwellings 3 Apartment 12 6,614.35 12 6,115.87 4 Apartment 7 7,317.42 7 6,783.66 20,424 20,906

The stock figure represents all types of residential properties, including furnished tenancies, sheltered housing and homelessness units.

2. The amount of rent arrears included as debtors in the Council's Balance Sheet was £2.091m (2010/11 £1.880m) against which a provision amounting to £1.340m (2010/11 £1.192m), has been created in respect of non collectable debts.

3. Significant non-residential income includes ground rent at Broomhouse Drive of £0.160m per annum.

4. The total value of uncollectable void rents for main provision properties was £0.362m (2010/11 £0.444m). This has been netted against rental income.

5. The Chancellor of the Exchequer announced in his emergency budget on 22 June 2010 that the consumer price index rather than the retail price index would be the basis for future public sector pension increases.

The impact of this change on the past services costs shown under IAS19 was a credit of £3.612m in 2010/11. Due to the materiality of the impact of this one-off change, this has been included within exceptional expenditure in the Housing Revenue Account Income and Expenditure Statement.

124 COUNCIL TAX INCOME ACCOUNT for the year ended 31 March 2012

2010/11 £000 £000 £000

-288,786 Gross council tax levied and contributions in lieu -290,661 49,423 Less: - Exemptions and other discounts 49,582 8,825 - Provision for bad debts 8,889 -351 - Net cost of benefits -275 3,198 - Other reductions 3,283 61,095 61,479 -227,691 -229,182 1,207 Previous years' adjustments 1,268 -226,484 Total transferred to General Fund -227,914

Notes to the Council Tax Income Account The in-year collection rate for Council Tax was 94.6% (2010/11 94.3%).

Each household or occupied dwelling is allocated to a council tax band by the Assessor. The charge per council tax band is calculated as a proportion of band D - these proportions are determined by legislation.

A council tax bill is reduced by 25% where a dwelling has only one occupant or, with certain exceptions, 10% where the property is empty or a second home. For council tax purposes, students and certain other categories of people are not regarded as occupants. Reductions in council tax payable are also granted for physically disabled people.

Charges in respect of water and sewerage are the responsibility of Scottish Water. The Council collects both water and sewerage charges and makes payment to the Water Authority.

Calculation of the Council Tax Base 2011/12

Number of Disabled Effective Ratio to Band D Charges Band Properties Relief Exemptions Discounts Properties Band D Equivalents per Band

A Up to £27,000 23,188 88 -2,903 -3,384 16,989 6/9 11,326 £779.33 B £27,001 - £35,000 46,540 66 -3,514 -6,923 36,169 7/9 28,131 £909.22 C £35,001 - £45,000 42,872 -31 -3,273 -5,378 34,190 8/9 30,391 £1,039.11 D £45,001 - £58,000 36,269 47 -3,078 -4,105 29,133 9/9 29,133 £1,169.00 E £58,001 - £80,000 38,566 -11 -3,503 -3,607 31,445 11/9 38,433 £1,428.78 F £80,001 - £106,000 23,289 -17 -1,194 -1,947 20,131 13/9 29,078 £1,688.56 G £106,001 - £212,000 20,032 -113 -517 -1,256 18,146 15/9 30,243 £1,948.33 H Over £212,000 3,701 -29 -135 -188 3,349 18/9 6,698 £2,338.00

Total 203,433

Add: Contributions in Lieu 549 Less: Provision for Non-Payment 7,547

Council Tax Base 196,435

125 NON-DOMESTIC RATES INCOME ACCOUNT for the year ended 31 March 2012 2010/11 £000 £000 £000 -374,401 Gross rates levied and contributions in lieu -392,287 75,555 Less: - Reliefs and other deductions 79,694 50 - Payment of interest 3 3,509 - Provision for bad and doubtful debts 3,825 79,114 83,522 -295,287 -308,765 7,867 Previous years' adjustments 6,941 -287,420 Net Non-Domestic Rates Income -301,824

Allocated to: -287,759 Contribution to National Non-Domestic Rates Pool -302,108 339 Adjustments for years prior to introduction of National Non- 284 Domestic Rates Pool -287,420 -301,824

Notes to the Non-Domestic Rates Income Account Rateable Value Rateable Values as at 1 April 2011 Number £000 Shops, offices and other commercial subjects 13,189 646,062 Industrial and freight transport 2,741 78,894 Telecommunications 8 15 Public service subjects 342 47,360 Miscellaneous 2,765 145,437 19,045 917,768

Contribution to / from National Non-Domestic Rates Pool The contribution to the National Non-Domestic Rates Pool of £302.108m (2010/11 £287.759m) is the non- domestic rates contributed by the Council through the pooling arrangements for government grant purposes. The amount distributed to the Council under these pooling arrangements was £297.442m (2010/11 £188.733m). In contrast to previous years where all non-domestic rates income raised in a council area was remitted to a national pool to be redistributed on the basis of authorities' respective populations, with effect from 2011/12, authorities retain in full the income raised locally up to the baseline level assumed in the Local Government Financial Settlement. Any variation from this assumed level is then met by means of a corresponding transfer of funds to or from the Scottish Government. Poundage Occupiers of non-domestic property pay rates based on the valuation of the property within the valuation roll for Edinburgh. The non-domestic rate poundage is determined by the Scottish Ministers, and was 42.6p per £ in 2011/12 (2010/11 40.7p per £). Properties with a rateable value greater than £35,000 (2010/11 £35,000) had their rate charges calculated using the poundage of 43.3p per £ (2010/11 41.4p per £). From 1 April 2008, the Scottish Government introduced the Small Business Bonus Scheme. Business properties with a rateable value of £18,000 or less may have received relief as set out below:

100% Relief £10,000 50% Relief £12,000 25% Relief £18,000 Upper limit for combined rateable value £25,000

126 COMMON GOOD FUND

The Common Good Fund stands separate from the Council's accounts and has been described as "the ancient patrimony of the community". It was originally derived from the grants by the Sovereigns of Scotland at various times. The present fund is an amalgam of the funds of the City and Royal Burgh of Edinburgh and the Royal Burgh of South Queensferry.

A report on the (Edinburgh) Common Good prepared by the Town Clerk and City Chamberlain in 1905 set out the historical background of the fund and listed its then assets in some detail. The report also stated a "General Principle" that the Fund should be administered "for the purpose of upholding the dignity and suitable hospitality of the City; performing the duties incumbent upon a Royal Burgh ..... maintaining the municipal establishment and managing the municipal affairs; vindicating or extending the corporate rights of the community and defending its interests; acquiring additional land or property for the corporate benefit, or improving existing corporation property, and generally for any purpose which in the bona fide judgement of the Town Council is for the good of the community as a whole, or in which the inhabitants at large may share, as distinct from the separate interests or benefit of any particular individual or class, however deserving or needy. The purpose must be limited to those which concern the City and its interests".

The Local Government etc. (Scotland) Act 1994 confirms this interpretation that use of the Fund shall "… have regard to the interests of all the inhabitants" of the area.

The Fit For Future reserve represents funds set aside from certain Common Good properties to assist in the funding of the Fit For Future office accommodation project.

The market value of investments at 31 March 2012 was £1.580m (2011 £1.566m).

COMMON GOOD FUND - MOVEMENT IN RESERVES STATEMENT

Common Capital Good Adjust. Reval. Total Fund Account Reserve Reserves 2011/12 Movements £000 £000 £000 £000

Balance at 31 March 2011 -1,630 -13,850 -4,287 -19,767 Movement in reserves during 2011/12 Deficit on the provision of services 1,278 0 0 1,278 Other Comprehensive Income and Expenditure 0 0 -2,104 -2,104 Total Comprehensive Income 1,278 0 -2,104 -826 and Expenditure Adjustments between accounting basis and funding basis under regulations: Depreciation and impairment of non-current -1,272 1,181 91 0 assets Net increase / decrease before 6 1,181 -2,013 -826 transfers to earmarked reserves Transfer to / from earmarked reserves 0 0 0 0 Increase / decrease in year 6 1,181 -2,013 -826 Balance at 31 March 2012 -1,624 -12,669 -6,300 -20,593

127 COMMON GOOD FUND - MOVEMENT IN RESERVES STATEMENT

Common Capital Good Adjust. Reval. Total Fund Account Reserve Reserves 2010/11 Comparative Data £000 £000 £000 £000

Balance at 31 March 2010 -1,637 -14,146 -3,321 -19,104 Movement in reserves during 2010/11 Deficit on the provision of services 411 0 0 411 Other Comprehensive Income and Expenditure 0 -64 -1,010 -1,074 Total Comprehensive Income 411 -64 -1,010 -663 and Expenditure Adjustments between accounting basis and funding basis under regulations: Depreciation and impairment of non-current -404 360 44 0 assets Net increase / decrease before 7 296 -966 -663 transfers to earmarked reserves Transfer to / from earmarked reserves 0 0 0 0 Increase / decrease in year 7 296 -966 -663 Balance at 31 March 2011 -1,630 -13,850 -4,287 -19,767

COMMON GOOD FUND - COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

2010/11 2011/12 £000 £000 £000

421 Common Good Fund 1,290

421 COST OF SERVICES 1,290

Financing and Investment Income -10 Interest and investment income -12 411 DEFICIT ON PROVISION OF SERVICES 1,278

-1,010 Surplus on revaluation of non-current assets -2,104

-64 Other unrealised gains 0

-1,074 Other Comprehensive Income and Expenditure -2,104 -663 TOTAL COMPREHENSIVE (INCOME) AND EXPENDITURE -826

128 COMMON GOOD FUND - BALANCE SHEET

(re-stated) (re-stated) 1 April 31 March 2010 2011 31 March 2012 £000 £000 £000 £000

16,319 16,923 Other Land and Buildings 17,758 863 926 Community Assets 926 211 208 Surplus Assets 205 17,393 18,057 Property, Plant and Equipment 18,889 95 100 Heritage Assets 100 1 1 Long-term Investments 2 96 101 Long-term Assets 102

407 193 Short-Term Investments 170 1,208 1,416 Cash and Cash Equivalents 1,432 1,615 1,609 Current Assets 1,602

19,104 19,767 Net Assets 20,593

-3,321 -4,287 Revaluation Reserve -6,300 -14,146 -13,850 Capital Adjustment Account -12,669 -17,467 -18,137 Unusable Reserves -18,969

-1,637 -1,630 Common Good Fund -1,624 -1,637 -1,630 Usable Reserves -1,624 -19,104 -19,767 Total Reserves -20,593

KAREN KELLY, CPFA Chief Financial Officer 14 June 2012

129 COMMON GOOD FUND - NOTES TO FINANCIAL STATEMENTS

1. Property, Plant and Equipment and Heritage Assets 1.1 Movements on Balances Total Other Property, Land and Community Surplus Plant and Heritage Buildings Assets Assets Equipment Assets £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2011 17,238 926 214 18,378 100 Revaluation increases / 2,104 0 0 2,104 0 (decreases) recognised in the Revaluation Reserve Revaluation increases / -1,394 0 0 -1,394 0 (decreases) recognised in the Surplus on the Provision of Services At 31 March 2012 17,948 926 214 19,088 100

Accumulated Depreciation At 1 April 2011 -315 0 -6 -321 0 Depreciation charge -413 0 -3 -416 0 Depreciation written out to the 538 0 0 538 0 Surplus on the Provision of Services At 31 March 2012 -190 0 -9 -199 0

Net Book Value At 31 March 2012 17,758 926 205 18,889 100

At 31 March 2011 16,923 926 208 18,057 100

130 COMMON GOOD FUND - NOTES TO FINANCIAL STATEMENTS

1. Property, Plant and Equipment and Heritage Assets - continued 1.1 Movements on Balances - continued Total Other Property, Land and Community Surplus Plant and Heritage Buildings Assets Assets Equipment Assets £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2010 16,394 958 214 17,566 0 Transfer to heritage assets 0 -95 0 -95 95 Re-stated at 1 April 2010 16,394 863 214 17,471 95 Revaluation increases / 989 0 0 989 5 (decreases) recognised in the Revaluation Reserve Revaluation increases / -145 0 0 -145 0 (decreases) recognised in the Surplus on the Provision of Services Other movements in cost or 0 63 0 63 0 valuation At 31 March 2011 17,238 926 214 18,378 100

Accumulated Depreciation At 1 April 2010 -75 0 -3 -78 0 Depreciation charge -259 0 -3 -262 0 Depreciation charge written out 16 0 0 16 0 to Revaluation Reserve Depreciation written out to the 30030 Surplus on the Provision of Services At 31 March 2011 -315 0 -6 -321 0

Net Book Value At 31 March 2011 16,923 926 208 18,057 100

At 31 March 2010 16,319 863 211 17,393 95

1.2 Information on Assets Held Assets owned by the Common Good Fund at 31 March 2012 include:

Monuments and statues 20 Parks and open spaces and other properties 31 Shops, industrial units and other commercial lettings 17

131 COMMON GOOD FUND - NOTES TO FINANCIAL STATEMENTS

2. Usable Reserves Movements in the Common Good's usable reserves are detailed in the Movement in Reserves Statement (on page 127).

3. Unusable Reserves 3.1 Revaluation Reserve The revaluation reserve contains the gains made by the Common Good Fund arising from increases in the value of its property, plant and equipment. The balance is reduced when assets with accumulated gains are:

● revalued downwards or impaired and the gains are lost;

● used in the provision of services and the gains are consumed through depreciation; or

● disposed of and the gains are realised.

Upward revaluation of assets -2,869 -1,031

Downward revaluation of assets and 765 21 impairment losses not charged to the Surplus on the Provision of Services

Surplus on revaluation of non-current assets -2,104 -1,010 not posted to the Surplus on the Provision of Service

Difference between fair value depreciation 91 44 and historical cost depreciation

Amount written off to the capital adjustment 91 44 account Balance at 31 March -6,300 -4,287

132 COMMON GOOD FUND - NOTES TO FINANCIAL STATEMENTS

3. Unusable Reserves - continued 3.2 Capital Adjustment Account The capital adjustment account provides a balancing mechanism for timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction of enhancement of those assets under statutory provisions. The account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (CIES) (with reconciling postings from the revaluation reserve to convert fair value figures to a historical cost basis).

The account also holds revaluation gains accumulated on property, plant and equipment prior to 1 April 2007, the date the revaluation reserve was created to hold such gains. 2011/12 2010/11 £000 £000 £000 £000 Balance at 1 April -13,850 -14,146 Reversal of items relating to capital expenditure debited or credited to the CIES Charges for depreciation of non-current assets 416 262 Revaluation losses on property, plant and 856 142 equipment 1,272 404 Adjusting amounts written out of the -91 -44 revaluation reserve Net written out amount of the costs of non- 1,181 360 current assets consumed in the year Capital financing applied in the year: Movements in the market value of Long Term 0 -1 Investments debited to the CIES Other unrealised losses debited to the CIES 0 -63 Balance at 31 March -12,669 -13,850

133 ANNUAL GOVERNANCE STATEMENT

Scope of Responsibility The City of Edinburgh Council is responsible for ensuring that its business is conducted in accordance with the law and appropriate standards, and that public money is safeguarded, properly accounted for, and used economically, efficiently, effectively and ethically. The Council also has a duty to make arrangements to secure continuous improvement in the way its functions are carried out. In discharging these responsibilities, elected members and senior officers are responsible for implementing effective arrangements for governing the Council’s affairs, and facilitating the effective exercise of its functions, including arrangements for the management of risk. To this end, the Council has approved and adopted a Local Code of Corporate Governance that is consistent with the principles of the CIPFA / SOLACE framework Delivering Good Governance in Local Government. This statement explains how the City of Edinburgh Council delivers good governance and reviews the effectiveness of those arrangements. It also includes a statement on internal financial control. This statement also covers the organisations included in the Council’s Group Accounts, a list of which is included at page 35 of the Accounts. The Group's Governance Framework The governance framework comprises the systems, processes, cultures and values by which the Group is directed and controlled. It also describes the way it engages with, accounts to and leads the community. It enables the Group to monitor the achievement of its objectives and consider whether those objectives have led to the delivery of appropriate, cost-effective services. The Council's Local Code of Corporate Governance is supported by evidence of compliance which is regularly reviewed and available for inspection. The rest of the Group observes the principles of the Code. The Council has implemented arrangements for monitoring each element of the framework and providing evidence of compliance. The Chief Internal Auditor reviewed the arrangements and is satisfied that the Code continues to be adequate and effective. The framework meets the principles of effective governance. Within the overall control arrangements the system of internal financial control is intended to ensure that assets are safeguarded, transactions are authorised and properly recorded, and material errors or irregularities are either prevented or would be detected within a timely period. The key elements of the Council's governance framework include financial regulations, financial monitoring, financial and administrative procedures (including segregation of duties, management supervision, and a system of delegation and accountability. The system includes: ● budgeting systems; ● reviews of financial and performance reports against forecasts; ● the preparation of regular financial reports which indicate actual expenditure against the forecasts; ● consideration of external and internal audit reports by the audit committee. These arrangements also include: ● identifying the Council’s objectives in the Single Outcome Agreement; ● monitoring of the achievement of objectives by the Council and senior officers; ● a systematic approach to monitoring service performance at elected member, senior officer and board and project level; ● reporting performance regularly to Council committees and/or boards of directors; ● describing the role of the Council and committees in Standing Orders, which also set out the decision- making powers delegated to officers; ● Financial Regulations (or equivalent) that specify the controls over budgeting, income, expenditure and financial performance; ● the Council's Monitoring Officer who ensures compliance with laws and regulations; ● an Audit Committee whose core functions comply with CIPFA standards; ● comprehensive budget and expenditure monitoring systems;

134 ANNUAL GOVERNANCE STATEMENT

These arrangements also include - continued ● targets against which financial and operational performance can be assessed; ● clearly defined capital expenditure guidelines; ● formal project management disciplines; ● a Code of Guidance for the governance of Council-owned companies; and ● Codes of conduct for both elected members and officers. A significant part of the governance framework is the system of internal control, which is based on an ongoing process to identify and prioritise risks to the achievement of the Group's objectives. While the system is designed to enable the Council as the lead organisation in the Group to manage risk effectively, it cannot eliminate all risk of failure to implement policies and achieve objectives. Therefore, it provides a reasonable, but not absolute, assurance of effectiveness. Determining the Authority’s purpose, its vision for the local area and intended outcomes for the Community The Edinburgh Single Outcome Agreement (SOA) 2009-12, which was submitted to the Scottish Government in May 2009, provides a statement of the context in which the Council and its partners are working. It sets out the strategic priorities for 2009-12 as: ● developing the city and regional economy, including transport and housing, and mitigating the impact of the economic downturn; ● environmental sustainability, including action on climate change, waste, and the city’s cleanliness; ● health, wellbeing and social inclusion, including care and support services, improving health, and tackling deprivation and inequality; ● services for children, including supporting early years development and educational excellence, and protecting vulnerable children; ● working in partnership to improve community safety and the quality of life in our communities. Appropriate outcomes have been identified and are monitored using indicators and targets that have been developed by the Council and its partners. Regular reports are made to the Council, its partners, the public and the Scottish Government. Accountability for the outcomes has been clearly specified and the Council follows the Scottish Government’s advice on SOA governance matters. Review of Effectiveness The Local Code of Governance details the Council’s arrangements for monitoring each element of the framework and providing evidence of compliance. The Chief Internal Auditor has reviewed the effectiveness of the Code and will report the results to the Audit Committee. The Internal Audit Section operates in accordance with CIPFA’s Code of Practice for Internal Audit and complies with the ISO 9001/2008 quality standard. The Section undertakes an annual work programme based on an agreed audit strategy and formal assessments of risk that are reviewed regularly. During the year, the Chief Internal Auditor reported directly to the Chief Financial Officer but had free access to the Chief Executive, all directors and elected members, and reported to the Audit Committee in his own name.

The Chief Internal Auditor has provided an assurance statement on the effectiveness of the system of internal control, which was informed by: ● departmental directors’ certified assurances; ● Council officers’ management activities; ● Internal Audit’s review work; ● Audit Scotland’s review work leading to its Annual Audit Report; ● risk management procedures; ● reports by external, statutory inspection agencies.; ● assurances provided by the Chief Executives / Directors of Finance of group companies.

135 ANNUAL GOVERNANCE STATEMENT

In compliance with standard accounting practice, the Chief Financial Officer has provided the Chief Executive with a statement of the effectiveness of the Group’s internal financial control system for the year ended 31st March 2012. It is the Chief Financial Officer's opinion that reasonable assurance can be placed upon its effectiveness. Each service director has reviewed the arrangements in his / her department and reported on their assessment of the effectiveness of control arrangements, together with any potential areas requiring improvement, to the chief executive. Where improvement actions are identified, an action plan will be developed and subject to regular monitoring. In reviewing the overall governance framework, the Council has also considered any relevant third party reviews and recommendations. Reliance has also been placed on each organisation’s most recent audited accounts together with Council officers detailed knowledge of these organisations as a consequence of their continued involvement with these companies. These reviews have identified actions that will be taken to continue improvement in the following activities:

By the Council: ● the scrutiny and governance arrangements of the Council Committees; ● the control environment covering the authorisation and approval of expenditure; ● the control framework within a customer centred statutory repairs service; ● the delegation of authority to officers below Directors; ● the processes to ensure compliance with policies and procedures; ● the mitigation of risks during a time of change of structures and service delivery; ● the procurement activities of the Council; ● the awareness and understanding of the employee code of conduct; ● the processes to ensure income is timeously received by the Council; ● the implementation of action plans agreed with external inspection agencies; ● the implementation of actions identified by service directors; ● the management of major projects through a dedicated programme office; and ● the delivery of the internal improvement plans. By the Group: ● the long term financial planning and the links to outcomes; ● the mitigation of the effects of the economic downturn; and ● the completion of group restructuring including governance arrangements. Certification It is our opinion that in light of the foregoing, reasonable assurance can be placed upon the adequacy and effectiveness of City of Edinburgh Council and its Group systems of governance. The annual review demonstrates sufficient evidence that the Code is operated effectively and the Council and its Group complies with the Local Code of Corporate Governance in all significant respects.

SUE BRUCE ANDREW BURNS ALASTAIR MACLEAN Chief Executive Council Leader Director of Corporate Governance 14 June 2012 14 June 2012 14 June 2012

136 REMUNERATION REPORT

The Council is required, under statute to provide information on the remuneration of each senior officer and each senior elected member, together with any other officer not otherwise included whose remuneration is over £150,000 per annum. In addition, the Council is required to provide information for the most senior employee within each of its subsidiary companies, together with all other employees whose remuneration exceeds £150,000 per annum. All information disclosed in the tables on pages 137 to 147 in this remuneration report will be audited by Audit Scotland. The other sections of the remuneration report will be reviewed by Audit Scotland to ensure that they are consistent with the Financial Statements. Remuneration Arrangements Councillors The remuneration of councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No. 2007/183) as amended by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2008 (SSI 2008/415). The Regulations provide for the grading of councillors for the purposes of remuneration arrangements, as either the Leader of the Council, the Civic Head (the Lord Provost), senior councillors or councillors. The Leader of the Council and the Civic Head cannot be the same person for the purposes of payment of remuneration. A senior councillor is a councillor who holds a significant position of responsibility in the Council's political management structure. When determining the level of remuneration for councillors, the Scottish Ministers consider the recommendations of the Scottish Local Authority Remuneration Committee (SLARC). SLARC is an advisory non-departmental public body set up in 2005 to advise Scottish Ministers on the remuneration, allowances and expenses incurred by local authority councillors. The salary that is to be paid to the Leader of the Council is set out in the Regulations. For 2011/12, the salary for the Leader of the City of Edinburgh Council was £48,704. The Regulations permit the Council to remunerate one Civic Head. The Regulations set out the maximum salary that may be paid to the Civic Head (the Lord Provost). For 2011/12 this was £36,528. The Council's policy is to pay the Lord Provost at the national maximum. The Regulations also set out the remuneration that may be paid to senior councillors and the total number of senior councillors the Council may have (24 for the City of Edinburgh Council). The maximum yearly amount that may be paid to a senior councillor is 75% of the total yearly amount payable to the Leader of the Council. The total yearly amount payable by the Council for remuneration of all of senior councillors shall not exceed £633,144. The Council is able to exercise local flexibility in the determination of the precise number of senior councillors and their salary within these maximum limits. The Council's policy is summarised below: % of amount payable to Number of Leader of Posts the Council Depute Leader of the Council 1 75% Depute Convener 1 50% Conveners of Culture and Leisure, Economic Development, Education, 8 65% Children and Families, Finance and Resources, Health, Social Care and Housing, Planning, Regulatory and Transport, Infrastructure and Environment Committees Convener of Licensing Board 1 60% Convener of Audit Committee 1 50% Vice-Conveners of Culture and Leisure, Economic Development, 6 45% Education, Children and Families, Finance and Resources, Health, Social Care and Housing and Transport, Infrastructure and Environment Committees Vice-Conveners of Planning and Regulatory 2 40% Opposition Group Leaders - Labour and Conservative 2 50% Opposition Group Leaders - Green 1 40%

137 REMUNERATION REPORT

Councillors - continued In addition, the Council remunerates the Conveners and Vice Conveners of the Joint Boards. The Council has an arrangement with the Joint Boards to reimburse the Council for the additional costs for councillors that arise from them being a Convener or Vice Convener of the Joint Boards.

Senior Employees The salary of senior employees is set by reference to national arrangements. The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services sets the salaries for Chief Executives of Scottish local authorities. Circular CO/144 set the amount of salary for the Chief Executive of the City of Edinburgh Council for the period 2008 to 2011. The annual review of the national salary points is pending. It will be considered as part of a wider review of Chief Officer terms and conditions by the SJNC.

There is no formal percentage relationship for salaries between the Chief Executive and other chief officers. The national salary points to be applied to Corporate Directors and Head of Service posts are determined using the Hay job evaluation method. The decision on whether there is to be an annual pay increase applied to the national salary points, and at what level, for Chief Executive and Chief Officer posts is made by the SJNC for local authority services and thereafter applied locally by the Council.

The Director of Health and Social Care is a joint appointment and the terms and conditions, including pay for the post, are those set by NHS Lothian, who employ the post holder directly.

The Council's role in determining the remuneration policies for its companies is currently under review.

Remuneration Paid The following tables provide details of the remuneration paid to the Council's Senior Councillors, Senior Employees and the remuneration paid to the Chief Executive (or the most senior manager of that body) of each of the Council's subsidiary bodies. Non-Cash Salary, Expenses Total Total Fees and Taxable / Benefits- Remun. Remun. Allowances Expenses -in-kind 2011/12 2010/11 Council's Leader, Civic Head £ £ £ £ £ and Senior Councillors J. Dawe, Leader of the Council 48,704 35 1,407 50,146 50,271 G. Grubb, Lord Provost 36,528 0 533 37,061 37,567 S. Cardownie, Depute Leader of 36,528 30 536 37,094 37,243 the Council R. Munn, Depute Convener and 30,112 0 753 30,865 25,186 Convener of Regulatory from 17.06.11 T. Buchanan, Convener Economic 31,658 102 2,049 33,809 33,376 Development D. Brock, Convener Culture and 31,658 40 958 32,656 32,563 Leisure M. MacLaren, Convener 31,658 0 787 32,445 32,108 Education, Children and Families G. Mackenzie, Convener 31,658 0 629 32,287 32,247 Transport, Infrastructure and Environment P. Edie, Convener Health, Social 31,658 0 205 31,863 32,529 Care and Housing J. Lowrie, Convener Planning 31,658 0 162 31,820 31,715 C. Keir, Convener Regulatory until 5,276 0 33 5,309 31,997 17.06.11

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Remuneration Paid - continued Non-Cash Salary, Expenses Total Total Fees and Taxable / Benefits- Remun. Remun. Allowances Expenses -in-kind 2011/12 2010/11 Council's Leader, Civic Head £ £ £ £ £ and Senior Councillors (cont'd) P. Wheeler, Convener Finance 31,658 190 1,778 33,626 32,061 and Resources and Convener of FETA Board A. Jackson, Convener Audit 24,352 0 0 24,352 24,352 M. Thomas, Convener Licensing 29,222 20 378 29,620 29,927 Board N. Elliott-Cannon, Vice Convener 21,917 0 837 22,754 22,457 Finance and Resources T. McKay, Vice Convener 21,917 33 1,092 23,042 22,839 Economic Development D. Beckett, Vice Convener 5,479 15 687 6,181 22,280 Education, Children and Families until 30.06.11 N. Work, Vice Convener Health, 21,917 33 851 22,801 23,709 Social Care and Housing R. Cairns, Vice Convener Culture 21,917 0 100 22,017 22,172 and Leisure R. Aldridge, Vice Convener 21,917 0 779 22,696 22,690 Transport, Infrastructure and Environment S. McIvor, Vice Convener 21,141 174 46 21,361 20,471 Planning, Vice Convener Education, Children and Families from 13.09.11 and Convener of Lothian Valuation Joint Board until 24.8.11 (Note 3.) L. Lang, Vice Convener 19,482 0 0 19,482 19,718 Regulatory J. Balfour, Opposition Group 24,352 97 336 24,785 24,273 Leader (Conservative) A. Burns, Opposition Group 24,352 0 0 24,352 24,352 Leader (Labour) S. Burgess, Opposition Group 19,482 0 666 20,148 20,022 Leader (Green) Councillors I. Whyte, Convener Lothian and 36,528 904 531 37,963 37,965 Borders Police Board (Note 1.) M Bridgman, Convener Lothian 36,528 0 599 37,127 38,373 and Borders Fire and Rescue Board (Note 2.) 729,257 1,673 16,732 747,662 784,463 Notes: 1. The amount recharged to Lothian and Borders Police Board in 2011/12 was £16,220 (2010/11 £17,136). 2. The amount recharged to Lothian and Borders Fire and Rescue Board in 2011/12 was £27,033 (2010/11 £28,561). 3. The amount recharged to Lothian Valuation Joint Board in 2011/12 was £5,408 (2010/11 £5,714).

139 REMUNERATION REPORT

Remuneration Paid - continued Remuneration paid to Councillors - continued Members' Salaries and Expenses The Council paid the following amounts to members of the Council during the year (these sums include the totals shown on the previous page): 2011/12 2010/11 £ £ Salaries 1,226,356 1,263,315 Expenses Claimed by councillors 2,773 3,787 Paid directly by the Council 28,706 29,519 Total 1,257,835 1,296,621

Remuneration paid to Senior Officers Non-Cash Salary, Expenses Total Total Fees and Taxable / Benefits- Remun. Remun. Allowances Expenses -in-kind 2011/12 2010/11 £ £ £ £ £ Council's Senior Officers S. Bruce, Chief Executive 158,553 0 0 158,553 39,638 (from 1 January 2011) (full year equivalent) 158,553 T. Aitchison, Chief Executive n/a n/a n/a n/a 127,888 (until 31 December 2010) G. Tee, Director Children and 140,676 0 0 140,676 140,676 Families D. Anderson, Director City 123,525 576 0 124,101 123,525 Development A. Maclean, Director Corporate 67,887 0 0 67,887 n/a Governance (from 26 September 2011) (full year equivalent) 132,105 J. Inch, Director Corporate 17,500 0 0 17,500 123,525 Services (until 30 April 2011) (full year equivalent) 123,525 D. McGougan, Director Finance 35,685 0 0 35,685 123,525 (until 30 June 2011) (full year equivalent) 123,525 P. Gabbitas, Director Health and 61,036 0 1,308 62,344 62,278 Social Care M. Turley, Director Services for 123,525 0 0 123,525 123,525 Communities M. Miller, Chief Social Work 97,782 0 0 97,782 97,133 Officer

140 REMUNERATION REPORT

Remuneration Paid - continued Remuneration paid to Senior Officers - continued Non-Cash Salary, Expenses Total Total Fees and Taxable / Benefits- Remun. Remun. Allowances Expenses -in-kind 2011/12 2010/11 £ £ £ £ £ K. Kelly, Acting Director Finance 37,172 0 0 37,172 n/a (from 1 July to 31 October 2011) (full year equivalent) 111,516 K. Kelly, Chief Financial Officer 41,461 0 0 41,461 n/a (from 1 November 2011) (full year equivalent) 99,507 Total 904,802 576 1,308 906,686 961,713

S. Bruce joined the Council as Chief Executive in January 2011. T. Aitchison retired from the Council in December 2010. Remuneration shown above excludes any fees payable in respect of returning officer or other election duties. S. Bruce received an additional sum of £17,288 in 2011/12 for returning officer duties - this was lower than the authorised amount of £35,288. T. Aitchison received an additional sum of £15,300 in 2010/11 for returning officer duties. J. Inch and D. McGougan retired from the Council in April and June 2011 respectively. A. Maclean was appointed Director of Corporate Governance in September 2011, replacing the former posts of Director of Corporate Services and Director of Finance. K. Kelly was appointed Acting Director of Finance in July 2011 and subsequently Chief Financial Officer in November 2011. Salaries shown for A. Maclean and K. Kelly relate to the responsibilities as shown. P. Gabbitas is employed by NHS Lothian and 50% of his salary costs are recharged to the Council. The above figures therefore show the Council's share. Council Subsidiary Companies EDI Group and EICC are subsidiary companies of CEC Holdings Limited. Figures shown for these companies and Lothian Buses are for the year ended 31 December 2011 and 2010 respectively. Salary, Compensation Total Total Fees and Other for Loss of Remun. Remun. Allowances Bonus Benefits Office 2011/12 2010/11 Council's Subsidiary £ £ £ £ £ £ Companies E. Adair, Operations and 101,577 0 1,324 0 102,901 103,260 Finance Director, EDI Group H. Rissmann, Chief 129,861 18,373 0 0 148,234 145,685 Executive, EICC Lothian Buses I Craig, Managing 159,675 47,200 1,262 0 208,137 203,203 Director W. Campbell, 145,159 42,900 1,166 0 189,225 Exempt Operations Director W. Devlin, Engineering 145,043 42,900 2,431 0 190,374 Exempt Director N. Strachan, Finance 144,464 42,900 1,246 0 188,610 Exempt Director I Coupar, Marketing n/a n/a n/a n/a n/a 233,015 Director, (until 31 December 2010) 141 REMUNERATION REPORT

Council Subsidiary Companies - continued Salary, Compensation Total Total Council's Subsidiary Fees and Other for Loss of Remun. Remun. Companies Allowances Bonus Benefits Office 2011/12 2010/11 £ £ £ £ £ £ tie Limited S. Bell, Tram Project 180,567 15,113 1,000 87,211 283,891 158,875 Director R. Jeffrey, Chief Executive 105,577 0 5,000 82,825 193,402 150,000

A Richards, Managing 186,706 0 0 49,130 235,836 n/a Director (ETL) F McFadden, Infraco 147,320 5,124 1,000 49,857 203,301 n/a Director S Clark, Programme 79,638 9,182 1,000 66,864 156,684 n/a Director D Murray, Commercial 107,625 5,600 1,000 39,893 154,118 n/a Director G Roberts, Finance 81,846 0 1,000 30,855 113,701 n/a Director Total 1,715,058 229,292 17,429 406,635 2,368,414 994,038

Other benefits paid relate to healthcare and telephone provision.

Number of Employees by Pay Band The total number of Council employees receiving more than £50,000 remuneration for the year (including retirement costs) are shown below. 2011/12 2010/11 £50,000 - £54,999 185 156 £55,000 - £59,999 79 105 £60,000 - £64,999 37 37 £65,000 - £69,999 27 35 £70,000 - £74,999 27 26 £75,000 - £79,999 9 13 £80,000 - £84,999 2 7 £85,000 - £89,999 2 3 £90,000 - £94,999 7 5 £95,000 - £99,999 9 15 £100,000 - £104,999 1 2 £105,000 - £109,999 0 1 £110,000 - £114,999 0 2 £115,000 - £119,999 1 0 £120,000 - £124,999 2 4 £125,000 - £129,999 0 1 £130,000 - £134,999 0 0 £135,000 - £139,999 0 1 £140,000 - £144,999 1 1 £150,000 - £154,999 0 0 £155,000 - £159,999 1 0 Total Number of Employees 390 414

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Exit Packages The number of exit packages provided for by the Council during the year, together with the total cost of those packages is shown in the table below. The total cost shown includes pension strain costs and the capitalised value of compensatory added years payments. Number of Number of Other Total Number of Total Cost of Exit Exit package cost Compulsory Departures Exit Packages by Packages in Each band Redundancies Agreed Cost Band Band 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 £000 £000 £0 - £20,000 2 9 49 77 51 86 600 894 £20,001 - £40,000 4 4 82 75 86 79 2,479 2,271 £40,001 - £60,000 1 6 14 32 15 38 707 1,778 £60,001 - £80,000 0 0 8 13 8 13 592 918 £80,000 - £100,000 106979611807 £100,001 - £150,000 114354620469 £150,001 - £200,000 0020203280 £200,001 - £250,000 000101 0234 9 20 165 210 174 230 5,937 7,371

Pension Rights Pension benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS).

Councillors’ pension benefits are based on career average pay. The councillor’s pay for each year or part year ending 31 March (other than the pay in the final year commencing 1 April) is increased by the increase in the cost of living, as measured by the appropriate index (or indices) between the end of that year and the last day of the month in which their membership of the scheme ends. The total revalued pay is then divided by the period of membership to calculate the career average pay. This is the value used to calculate the pension benefits.

For local government employees a final salary pension scheme is operated. This means that pension benefits are based on the final year’s pay and the number of years that person has been a member of the scheme.

The scheme’s normal retirement age for both councillors and employees is 65.

From 1 April 2009 a five tier contribution system was introduced with contributions from scheme members being based on how much pay falls into each tier. This is designed to give more equality between the cost and benefits of scheme membership. Prior to 2009 contributions rates were set at 6% for all non-manual employees.

The tiers and members’ contribution rates for 2011-12 were as follows: Contribution Whole Time Pay rate On earnings up to and including £18,500 (2011 £18,000) 5.50% On earnings above £18,500 and up to £22,600 (2011 £18,000 to £22,000) 7.25% On earnings above £22,600 and up to £30,900 (2011 £22,000 to £30,000) 8.50% On earnings above £30,900 and up to £41,200 (2011 £30,000 to £40,000) 9.50% On earnings above £41,200 (2011 £40,000) 12.00% If a person works part-time their contribution rate is worked out on the whole-time pay rate for the job, with actual contributions paid on actual pay earned.

143 REMUNERATION REPORT

Pension Benefits - continued Pension Rights - continued There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. The accrual rate guarantees a pension based on 1/60th of final pensionable salary and years of pensionable service. (Prior to 2009 the accrual rate guaranteed a pension based on 1/80th and a lump sum based on 3/80th of final pensionable salary and years of pensionable service). The value of the accrued benefits has been calculated on the basis of the age at which the person will first become entitled to receive a pension on retirement without reduction on account of its payment at that age; without exercising any option to commute pension entitlement into a lump sum; and without any adjustment for the effects of future inflation. The pension figures shown relate to the benefits that the person has accrued as consequence of their total local government service, and not just their current appointment. Council's Leader, Civic Head and Senior Councillors The pension entitlements of senior councillors for the year to 31 March 2012 are shown in the table below, together with the contribution made by the Council to each senior councillors' pension during the year. In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 J. Dawe, Leader of the Council 10,374 10,033 Pension 4 1 Lump Sum 4 0 R. Munn, Depute Convener and 6,414 5,016 Pension 2 1 Convenor of Regulatory Committee Lump Sum 2 0 from 17.06.11 T. Buchanan, Convener Economic 6,743 6,522 Pension 2 1 Development Lump Sum 2 0 M. MacLaren, Convener Education, 6,743 6,522 Pension 2 1 Children and Families Lump Sum 2 0 G. Mackenzie, Convener Transport, 6,743 6,522 Pension 2 1 Infrastructure and Environment Lump Sum 2 0 P. Edie, Convener Health, Social Care 6,743 6,522 Pension 2 1 and Housing Lump Sum 2 0 J. Lowrie, Convener Planning 6,743 6,522 Pension 2 0 Lump Sum 2 0 C. Keir, Convener Regulatory until 1,124 6,522 Pension 2 0 17.06.11 (withdrew from pension Lump Sum 2 0 scheme 31 May 2011) P. Wheeler, Convener Finance and 6,743 6,522 Pension 2 0 Resources and Convener of FETA Lump Sum 2 0 Board N. Elliott-Cannon, Vice Convener 4,668 4,515 Pension 2 0 Finance and Resources Lump Sum 2 0 T. McKay, Vice Convener Economic 4,668 4,515 Pension 2 0 Development Lump Sum 2 0 D. Beckett, Vice Convener Education, 1,167 4,515 Pension 1 0 Children and Families until 30.06.11 Lump Sum 2 0 (withdrew from pension scheme 30 June 2011) 144 REMUNERATION REPORT

Pension Benefits - continued Council's Leader, Civic Head and Senior Councillors - continued

In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 N. Work, Vice Convener Health, 4,668 4,515 Pension 2 0 Social Care and Housing Lump Sum 2 0 R. Cairns, Vice Convener Culture and 4,668 4,367 Pension 2 0 Leisure Lump Sum 2 0 R. Aldridge, Vice Convener Transport, 4,668 4,367 Pension 2 0 Infrastructure and Env. Lump Sum 2 0 S. McIvor, Vice Convener Planning, 4,503 4,181 Pension 2 0 Vice Convenor Education, Children Lump Sum 2 0 and Families from 13.09.11 and Convener of Lothian Valuation Joint Board until 24.8.11 L. Lang, Vice Convener Regulatory 4,226 4,013 Pension 1 0 Lump Sum 1 0 A. Burns, Opposition Group Leader 5,187 5,016 Pension 2 0 (Labour) Lump Sum 2 0 I. Whyte, Convener Lothian and 7,780 7,525 Pension 3 1 Borders Police Board Lump Sum 3 0 M. Bridgman, Convener Lothian and 7,780 7,525 Pension 3 1 Borders Fire and Rescue Board Lump Sum 2 0 Pension 42 8

Total 112,353 115,757 Lump Sum 42 0

All senior councillors shown in the above table are members of the Local Government Pension Scheme. Not all senior councillors are members of the Local Government Pension Scheme. The pension figures shown relate to the benefits that the person has accrued as consequence of their total local government service, including any service with a Council subsidiary body, and not just their current position.

Senior Employees The pension entitlements of senior employees for the year to 31 March 2012 are shown in the table below, together with the contribution made by the Council to each senior employees' pension during the year.

In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 S. Bruce, Chief Executive (from 1 37,454 8,045 Pension 71 4 January 2011) Lump Sum 188 1 T. Aitchison, Chief Executive n/a 36,829 Pension n/a n/a (including returning officer role) (until Lump Sum n/a n/a 31 December 2010) G. Tee, Director Children and 29,964 28,979 Pension 66 2 Families Lump Sum 178 0

145 REMUNERATION REPORT

Pension Benefits - continued Senior Employees - continued In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 D. Anderson, Director City 26,311 25,446 Pension 8 2 Development Lump Sum 5 0 A. Maclean, Director Corporate 24,585 n/a Pension 4 2 Governance Lump Sum 0 0 J. Inch, Director Corporate Services 2,193 25,446 Pension 59 0 (until 30 April 2011) Lump Sum 164 0 D. McGougan, Director Finance (until 6,578 25,446 Pension 63 1 30 June 2011) Lump Sum 175 0 P. Gabbitas, Director Health and 8,240 8,240 Pension 21 1 Social Care (Council proportion) Lump Sum 63 3 M. Turley, Director Services for 26,311 25,446 Pension 49 2 Communities Lump Sum 128 0 M. Miller, Chief Social Work Officer 20,814 20,009 Pension 31 2 Lump Sum 79 0 K. Kelly, Acting Director Finance / 22,048 n/a Pension 41 3 Chief Financial Officer Lump Sum 108 4 Pension 413 19 Total 204,498 203,886 Lump Sum 1,088 8

All senior employees shown in the previous table, with the exception of P. Gabbitas are members of the Local Government Pension Scheme. P. Gabbitas is a member of the National Health Service Superannuation Scheme (Scotland). Pension figures for A. Maclean and K. Kelly are for the full year. The pension figures shown relate to the benefits that the person has accrued as consequence of their total local government / public service and not just their current appointment. Accrued pension benefits relate to the position as at 31 March 2012, or the date of leaving, if that is earlier. Employees contribute towards their pensions in accordance with the rates set out on page 143. The contribution rate for P. Gabbitas is 8.5%.

Council's Subsidiary Companies The pension entitlements of senior employees within the Council's subsidiary bodies for the year to 31 March 2012 are shown below, together with the contribution made to each senior employees' pension during the year. In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 E. Adair, Operations and Finance 19,558 18,903 Pension 18 2 Director, EDI Group Lump Sum 40 0 H. Rissmann, Chief Executive, EICC 17,047 16,199 Pension n/a n/a Lump Sum n/a n/a Lothian Buses I. Craig, Managing Director 30,817 29,634 Pension 13 3 Lump Sum 16 0 W. Campbell, Operations Director 28,015 Exempt Pension 24 Exempt Lump Sum 52 Exempt

146 REMUNERATION REPORT

Pension Benefits - continued Council's Subsidiary Companies - continued In-year pension contribs. Accrued Pension Benefits Difference For year to For year to As at from 31.03.12 31.03.11 31.03.12 31.03.11 £ £ £000 £000 Lothian Buses - continued W. Devlin, Engineering Director 27,993 Exempt Pension 29 Exempt Lump Sum 73 Exempt N. Strachan, Finance Director 27,881 Exempt Pension 28 Exempt Lump Sum 66 Exempt I Coupar, Marketing Director, until 31 n/a 18,270 Pension n/a n/a December 2010 Lump Sum n/a n/a tie Limited S. Bell, Tram Project Director, until 22,869 29,869 Pension 12 2 October 2011 Lump Sum 15 0 R. Jeffrey, Chief Executive, until June 7,061 28,200 Pension 7 0 2011 Lump Sum 0 0 F McFadden, Infraco Director, until 18,000 n/a Pension 6 1 October 2011 Lump Sum 3 0 S Clark, Programme Director, until 13,548 n/a Pension 21 1 October 2011 Lump Sum 51 0 D Murray, Commercial Director, until 54,791 n/a Pension 6 1 December 2011 Lump Sum 5 0 G Roberts, Finance Director, until 9,987 n/a Pension 7 1 September 2011 Lump Sum 11 0 Pension 171 11 Total 277,567 141,075 Lump Sum 332 0

EDI Group and EICC are subsidiary companies of CEC Holdings Limited. Figures shown for these companies and Lothian Buses are for the year ended 31 December 2011 and 31 December 2010 respectively. The individuals shown in the above table, except H. Rissmann, are members of the Local Government Pension Scheme. The pension figures shown relate to the benefits that the person has accrued as consequence of their total relevant service and not just their current appointment.

SUE BRUCE ALASTAIR MACLEAN Chief Executive Director of Corporate Governance 14 June 2012 14 June 2012

147 INDEPENDENT AUDITOR'S REPORT

The Statement of Accounts is subject to audit in accordance with the requirements of Part VII of the Local Government (Scotland) Act 1973.

The Auditor appointed for this purpose by the Accounts Commission for Scotland is:

Audit Scotland Osborne House 1/5 Osborne Terrace EDINBURGH EH12 5HG

148 Appendix 2

RECONCILIATION OF THE COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT (as shown on page 19 of the Unaudited Financial Statements) 2010-11 2011-12 £000 £000 £000 £000 £000 £000 Total Comprehensive (Income) and Expenditure -448,504 -62,316

Deduct (gains) or losses credited to the CIES Surplus on revaluation of non-current assets -50,023 -110,880 Actuarial (gains) / losses on pension liabilities -161,242 66,159 Other unrealised losses 947 1,283 -210,318 -43,438 Surplus on provision of services, per CIES -238,186 -18,878

Amounts included in the CIES but required by statute to be excluded when determining the General Fund surplus for the year. Depreciation and impairment of fixed assets -170,677 -175,578 Net profit on sale of fixed assets 867 2,033 Movement in donated assets 171 0 Revenue expenditure funded from capital under statute 44,820 33,811 Finance costs - statutory adjustments 1,074 1,453 Net charges made for retirement benefits in accordance with IAS 19 123,966 -40,774 221 -179,055 Amounts not included in the CIES but required to be included by statute when determining the General Fund surplus for the year. Statutory provision for repayment of debt (includes element relating to PPP) 62,139 65,546 Voluntary provision for repayment of debt 4,000 4,000 Lease repayments (including element relating to PPP contracts) 10,787 10,784 Capital expenditure charged to the General Fund balance -44,820 -33,811 Changes in fair value of investment properties 61 -168 Capital grants and contributions credited to the CIES 135,476 64,977 Net transfer for holiday pay accrual -411 7,136 Employer's contributions payable to Lothian Pension Fund and retirement benefits payable direct to pensioners 58,498 61,620 225,730 180,084 Transfers to / or from the General Fund Balance that are required to be taken into account when determining the General Fund surplus for the year. Statutory transfer of HRA surplus to Renewal and Repairs Fund 1,614 3,514 Net Transfer from earmarked reserves -5,900 151 -4,286 3,665 221,665 4,694 General Fund Surplus reported in Financial Statements -16,521 -14,184 Appendix 2

2010-11 2011-12 £000 £000 £000 £000 £000 £000

Consolidation Adjustments Interest credited to earmarked balances 138 145 Funds (drawn down from) / contributed to earmarked balances: - BT efficiencies fund 255 1,281 - Budget flexibility -2,402 n/a - Change fund (Health and Social Care) 0 2,589 - Change management 0 -366 - Change management (Children and Families) 1,300 0 - Contingency funding 2,900 0 - Contingency funding - loan charges 0 4,000 - Corporate fund - redundancies, etc. 0 -1,020 - Devolved school management 900 1,019 - Dilapidation fund 3,732 712 - Energy efficiency 12 164 - Equal pay -5,159 2,127 - Insurance fund 1,653 229 - Licensing Income 76 402 - Other minor funds 26 -13 - Pre-paid PPP monies 0 137 - Priority outcomes 0 5,201 - Recycling monies 5,001 -4,700 - Requisitions returned to Council 0 1,818 - RSLs - Council Tax 2,922 2,900 - Spend to save -1,655 -1,490 - Unallocated general reserve 4,000 0 - Unspent grants 92 -1,312 13,791 13,823 General Fund Surplus -2,730 -361 Less: Proposed set aside in contingency funding - priority outcomes 2,443 361 Less: Proposed set aside in spend to save fund 287 0 To be returned to Unallocated General Fund 0 0 Appendix 3

REVENUE BALANCES Balance at Movement Balance at Transfers Movement Balance at 31-Mar-10 2010-11 31-Mar-11 2011-12 2011-12 31-Mar-12 £000 £000 £000 £000 £000 £000 Balances Set Aside to Manage Financial Risks Budget flexibility (including set aside) 5,597 -2,402 3,195 -2,332 0 863 Change mgmt - Children and Families 0 1,300 1,300 0 0 1,300 Contingency funding 0 2,900 2,900 -2,900 0 0 Contingency funding - loan charges 0 0 0 0 4,000 4,000 Dilapidations fund 734 3,732 4,466 0 713 5,179 Equal pay 13,800 -5,099 8,701 0 2,169 10,870 Insurance fund 8,462 1,689 10,151 0 276 10,427 Priority outcomes 0 2,443 2,443 5,232 5,562 13,237 28,593 4,563 33,156 0 12,720 45,876 Balances Set Aside from Income Received in Advance Change fund 0 0 0 0 2,589 2,589 Change management 365 2 367 0 -367 0 Corporate fund - redundancies, etc 0 0 0 10,098 -1,020 9,078 Licensing Income 908 76 984 0 406 1,390 Lothian Buses 2,000 0 2,000 0 0 2,000 Other minor funds 252 28 280 0 -12 268 Pre-paid PPP monies 1,027 0 1,027 0 137 1,164 Recycling monies 4,847 5,001 9,848 0 -4,700 5,148 Requisitions returned to Council 0 0 0 0 1,818 1,818 RSLs - Council Tax 5,177 2,944 8,121 0 2,939 11,060 Unspent grants 15,353 92 15,445 -10,098 -1,311 4,036 29,929 8,143 38,072 0 479 38,551 Balances Set Aside for Investment in Specific Projects which will Generate Future Savings BT efficiency fund 1,050 255 1,305 0 1,281 2,586 Energy efficiency 679 14 693 0 168 861 Spend to save 2,837 -1,354 1,483 0 -1,483 0 4,566 -1,085 3,481 0 -34 3,447 Balances Set Aside under Devolved School Management Scheme Devolved School Management 1,000 900 1,900 0 1,019 2,919 1,000 900 1,900 0 1,019 2,919

Unallocated General Reserve 9,025 4,000 13,025 0 0 13,025

Total General Reserve 73,113 16,521 89,634 0 14,184 103,818 Item no Report no

Lothian Pension Funds Annual Report 2011/12 - Unaudited

City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 The purpose of this report is to note the unaudited Lothian Pension Funds Annual Report for the year ended 31 March 2012.

2 Main report

2.1 The Scottish Government has issued statutory accounting guidance which requires that Local Government Pension Scheme (LGPS) financial statements be published within an LGPS Annual Report. The statutory guidance provides that for 2010/11 onwards the LGPS Annual Report should be published separately from the Authority's own financial statements and that LGPS Annual Report contents should comply with the requirements of Scottish Statutory Instrument 2010/234 and there should be a separate audit report.

2.2 The Local Government (Scotland) Act 1973 stipulates that unaudited financial statements must be presented to the Council and the Controller of Audit within three months of the financial year end, that is 30 June.

2.3 It is within the Pensions & Trusts Committee’s governance remit to approve the unaudited Lothian Pension Funds Annual Report. Accordingly, the Pensions & Trusts Committee will be asked to considered and approve the unaudited Lothian Pension Funds Annual Report 2011/12 at its meeting on 27 June 2012.

2.4 These accounts are also being submitted to the Council for the purposes of noting and in compliance with Audit Scotland guidance.

Unaudited Lothian Pension Funds Annual Report 2011/12

2.5 A copy of the unaudited Lothian Pension Funds Annual Report for the year to 31 March 2012 is attached as Appendix 1. The Accounts show that the Lothian Pension Fund valuation increased from £3,477.5m to £3,584.2m and Lothian Buses Pension Fund increased from £257.0m to £271.4m. The Scottish Homes Fund increased from £124.3m to £131.4m.

2.6 In considering the unaudited Pension Funds Annual Report, Committee should note the following: 1

2.6.1 Section 95 of the Local Government (Scotland) Act 1973 states that “every local authority shall make arrangements for the proper administration of their financial affairs and shall secure that the proper officer of the authority has responsibility for the administration of those affairs”. Policy & Strategy Committee of 28 February 2012 approved the recommendation of the Director of Corporate Governance that the proper officer for Lothian Pension Funds should be the Pensions & Accounting Manager.

2.6.2 The Annual Report includes an Annual Governance Statement which sets out details of how the Funds are governed and the internal controls that are in place to manage risk. This mirrors the requirement to have a similar statement within the Financial Statements of the Council. Note that the Statement is signed by the Convener of the Pensions & Trusts Committee, the Chief Executive and the Pensions & Accounting Manager.

2.6.3 The report also includes a Governance Compliance Statement; this is a requirement of the LGPS Regulations. The purpose of this Statement is to record the extent to which the constitutional governance arrangements complies with best practice guidance issued by the Scottish Public Pensions Agency.

2.6.4 Related to the Annual Governance Statement is the Statement of Responsibilities for the Statement of Accounts. This sets out the respective responsibilities of the Administering Authority and the Pensions & Accounting Manager.

2.6.5 The unaudited report includes a section into which the Independent Auditor’s Report will be slotted when the audit is completed.

2.6.6 Each of the three funds has a separate Actuarial Statement provided by the Actuary which provides information on the last triennial valuation and the movement in the funding level since that date, in compliance with International Financial Reporting Standards (IFRS).

2.6.7 Under IAS26 (Retirement Benefit Plans), there is a requirement to disclose the actuarial present value of promised retirement benefits. The basis of the valuation is the same as that used for FRS17 / International Accounting Standard (IAS)19 valuation reports required in the accounts of some individual employers, but covers the liabilities of all employers. The valuation basis is not used for funding purposes and setting contribution levels. The Actuary has provided a value for the liabilities of each of the three Funds and a suitable note has been added to the accounts of each fund (Lothian Pension Fund £4,185m, Lothian Buses Pension Fund £269m and Scottish Homes £131m).

2.7 Following the approval of the unaudited Annual Report by Pensions & Trusts Committee and noting by the Council, the next steps will be:

2.7.1 Pensions and Trusts Committee will consider the International Standard on Auditing (ISA) 260 audit report to those charged with governance (covering all significant issues arising from the audit of the accounts) and the audited accounts at the meeting to be scheduled for a date prior to the end of September 2012 in order to meet the statutory timetable. (At the time of writing Committee dates have yet not been determined.)

2.7.2 Pending any change to the governance and remit of the Council’s Committee structures, the external auditor also intends to submit the 2011/12 Lothian Pension Funds ISA 260 to the Audit Committee to be scheduled for late September 2012.

2.7.3 Finally, the external auditor will issue her annual report to elected members, which summarises all significant matters arising from the audit and overall conclusions about the management of key risks. This report will be considered by the Audit Committee and by the Pensions & Trusts Committee at meetings to be scheduled by the end of 2012.

3 Financial implications

3.1 There are no direct implications beyond those described above.

4 Equalities impact

4.1 There is no equalities impact arising from this report.

5 Environmental impact

5.1 There is no direct environmental impact arising from this report.

6 Recommendations

6.1 The City of Edinburgh Council is asked to note the Pension Funds Annual Report (Unaudited) for the year ended 31 March 2012.

Alastair Maclean Director of Corporate Governance

Appendices 1 Unaudited Pension Funds Annual Report for the year to 31 March 2012

Contact/tel/Email Esmond Hamilton, Financial Controller Tel: 0131 469 3521 E-mail: [email protected]

Wards affected All

Single Outcome National Outcome 15 - Our public services are high quality, Agreement continually improving, efficient and responsive to local people's needs

Background None Papers

UNAUDITED ANNUAL REPORT 2011/2012

FOR

LOTHIAN PENSION FUND

LOTHIAN BUSES PENSION FUND

SCOTTISH HOMES PENSION FUND CONTENTS

Page Foreword by the Director of Corporate Governance 3

Statement of Responsibilities for the Statement of Accounts 4

Annual Governance Statement 5

Annual Governance Compliance Statement 10

Achievements 13

Performance 16

Statement of Accounting Policies and General Notes 19

Lothian Pension Fund Membership Numbers 25 Investment Strategy 25 Investment Performance 25 Fund Account 27 Net Assets Statement 28 Notes to the Accounts 29 Actuarial Statement 51 List of Employers 53

Lothian Buses Pension Fund Membership Numbers 54 Investment Strategy 54 Investment Performance 54 Fund Account 56 Net Assets Statement 57 Notes to the Accounts 58 Actuarial Statement 72

Scottish Homes Pension Fund Membership Numbers 74 Investment Strategy 74 Investment Performance 74 Fund Account 75 Net Assets Statement 76 Notes to the Accounts 77 Actuarial Statement 90

Independent Auditor's Report 92

Additional Information Key Documents Online 93 Fund Advisers 93 Comments and Suggestions 93 Accessibility 93 Contact Details 93

2 FOREWORD BY THE DIRECTOR OF CORPORATE GOVERNANCE

Welcome to the Annual Report and Accounts for 2011/12 for the Lothian Pension Fund, Lothian Buses Pension Fund and Scottish Homes Pension Fund. The report is produced to keep members, employers and other interested stakeholders informed about the activities and performance of the pension funds, as well as their investments and financial accounts. This is the second year in which we are publishingthe pension funds’ annual report separately from the City of Edinburgh Council's own financial statements.

This year has seen a number of key personnel changes at the Pension Funds.

After the retirement of the Director of Finance, Donald McGougan, and a reorganisation of the Council’s senior management team, I am delighted to have been appointed as the Director of Corporate Governance. I will endeavour to replicate the high standards of stewardship which Donald successfully delivered for the pension funds for many years. I am also pleased to see that Donald’s services to local government have been subsequently recognised by the award of an OBE.

After 10 successful years as the Head of Investment & Pensions, Geik Drever left in February 2012 to join the West Midlands Pension Fund and we wish her well in her new role. Clare Scott, previouslythe Fund’s Investment Manager, now leads the Lothian Pension Fund. I am confident that we continue to have a highly professional organisation with the skills to meet the challenges of the future.

Achievements this year include:

The triennial actuarial valuation was completed over the year for all three pension funds, incorporating full consultationwith stakeholders. All three funds, Lothian Pension Fund, Scottish Homes Pension Fund and Lothian Buses Pension Fund showed improved funding levels in 2011 from those in 2008. Despite investment markets remaining nervous about the outcome of the sovereign debt crisis, we were able to maintain unchanged contribution rates for most employers.

The decision in 2010 to expand the internal investment team is bearing fruits. The new team has been putting new portfolios and processes in place and is bringing new ideas forward to improve performance in the future.

After the decision not to merge pension funds in Scotland, new ways of working such as joint procurement initiatives with other pension funds are being taken forward. This year we led the procurement of voting and engagement services on behalf of a number of pension funds and we have agreed to provide investment monitoring support for Falkirk Pension Fund.

The next financial year promises to be another busy year for Lothian Pension Fund.

As a result of the recent local elections there have been changes in the Council’s administration. In addition, a review of the governance arrangements of the City of Edinburgh Council is expected to take place over the summer of 2012. This review will also cover the governance of the pension funds to ensure they are best placed for the future.

We anticipate news about the future of the Local Government Pension Scheme in Scotland following the 2011 Independent Public Service Pensions Commission lead by Lord Hutton. The Fund will be actively involved in the development of any new scheme which we hope will improve fairness, affordability and sustainability.

The Fund intends to continue to improve its performance by making use of information technology solutions to improve the quality of data and developing the investment strategies of the pension funds.

If you have any comments on this report, please let us know using the reply slip at the end of the report, or email [email protected]

ALASTAIR MACLEAN Director of Corporate Governance 19 June 2012

3 STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS

The Administering Authority's responsibilities The Authority is required to:

● make arrangements for the proper administration of the financial affairs of the pension funds in its charge and to secure that one of its officers has the responsibility for the administration of those affairs. Following a re-structure of the Council's senior management in 2011, merging Finance and Corporate Services into a single department of Corporate Governance, the Fund's section 95 officer is the Pensions & Accounting Manager.

● manage its affairs to secure economic, efficient and effective use of its resources and safeguard its assets.

The Pensions & Accounting Manager is responsible for the preparation of the Pension Funds’ statement of accounts which, in terms of the CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2011/12 ('the Code of Practice'), is required to present a true and fair view of the financial position of the Pension Funds at the accounting date and their income and expenditure for the year (ended 31 March 2012).

In preparing this statement of accounts, the Pensions & Accounting Manager has:

● selected suitable accounting policies and then applied them consistently ● made judgements and estimates that were reasonable and prudent ● complied with the Code of Practice, except where stated in the Statement of Accounting Policies and Notes to the Accounts.

The Pensions & Accounting Manager has also:

● kept proper accounting records which were up to date

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

Statement of Accounts The Statement of Accounts presents a true and fair view of the financial position of the Pension Funds as at 31 March 2012, and their income and expenditure for the year ended 31 March 2012.

JOHN BURNS, FCMA CGMA Pensions & Accounting Manager 19 June 2012

4 ANNUAL GOVERNANCE STATEMENT

This Governance Statement explains how the Funds deliver good governance and reviews the effectiveness of those arrangements. The Governance Statement is supported by detailed evidence of compliance which is regularly reviewed. The key documents supporting the governance arrangements are available on the Lothian Pension Fund website.

The Governance Framework of the Funds The governance framework comprises the systems, processes, cultures and values by which the Funds are directed and controlled. It also describes the way they engage with, and account to, their stakeholders. It enables the Funds to monitor the achievement of their objectives and consider whether those objectives have led to the delivery of appropriate, cost-effective services.

Scope of responsibility The City of Edinburgh Council is the administering authority of the Lothian Pension Fund, the Lothian Buses Pension Fund and the Scottish Homes Pension Fund.

The Funds are part of the Local Government Pension Scheme (LGPS) Scotland, a national statutory scheme which sets benefits and regulations for scheme members and employers within local government and associated bodies. It is contracted out of the State Second Pension.

Pension benefits under the LGPS are based on final pensionable pay and length of pensionable service, summarised below:

Service to 31/3/09 Service from 1/4/09

Each year worked is worth 1/80 x Each year worked is worth 1/60 x Pension final pensionable salary final pensionable salary

Automatic lump sum of 3 x pension No automatic lump sum

In addition, part of the annual pension Part of the annual pension can be Lump sum can be exchanged for a one-off tax- exchanged for a one-off tax-free free cash payment. A lump sum of cash payment. A lump sum of £12 £12 is paid for each £1 of pension is paid for each £1 of pension given up. given up.

There are a range of other benefits provided under the scheme including early retirement, ill health pensions and death benefits. For more details, please refer to our website www.lpf.org.uk/benefits

Benefits are index-linked in order to keep pace with inflation. In June 2010, the Government announced that the method of indexation would change from the retail prices index to the consumer prices index. This change took effect from 1 April 2011.

The City of Edinburgh Council is responsible for ensuring the Funds conduct their business legally and meet appropriate standards. It also ensures that the Funds are safeguarded, properly accounted for, and used efficiently, effectively and responsibly.

In discharging these responsibilities, elected members and senior officers are responsible for implementing effective arrangements for governing the affairs of the Funds, and ensuring the effective exercise of their functions, including arrangements for the management of risk. The Council delegates all pension scheme matters to its Pensions and Trusts Committee.

5 ANNUAL GOVERNANCE STATEMENT

Pensions and Trusts Committee The Pensions and Trusts Committee have approved a Governance Policy. The City of Edinburgh Council’s Local Code of Governance relating to non pension matters and internal financial controls applies to the members of the Committee.

The Pensions and Trusts Committee met four times in 2011/12. Its membership over the period up to the Local Government Elections on 3 May 2012 is shown below.

Committee membership until 2 May 2012 Councillor Tim McKay (Convener) Councillor David Beckett (resigned 30 June 2011) Councillor Maggie Chapman Councillor Maureen Child Councillor Nick Elliott-Cannon (appointed 1 July 2011) Councillor Cameron Rose

All Pensions and Trusts Committee members were members of the Lothian Pension Fund with the exception of Councillor Chapman.

The Local Government elections held in May 2012 resulted in changes to the membership of the Pensions and Trusts Committee.

Committee membership post May 2012 election Councillor Maureen Child Councillor Bill Cook Councillor Jim Orr Councillor Cameron Rose Councillor Alasdair Rankin

Consultative Panel membership As part of the governance arrangements, the Lothian Pension Fund's Consultative Panel attends the Pensions and Trusts Committee meetings in a non-voting capacity. The Panel membership for 2011/12 is shown below.

Panel membership 2011/12 Employer Employer Representing representatives Other Eric Adair EDI employers Other Darren May Scottish Water employers Norman Strachan Lothian Buses Lothian Buses Scottish Michael Sullivan Scottish Government Retired 28/3/2012 Homes Colleges Alan Williamson Jewel and Esk College /universities Admitted Rebecca Wilson Barony Housing Association bodies Sharon Saunders East Lothian Council Councils Resigned 27/3/2012 Membership continued overleaf

6 ANNUAL GOVERNANCE STATEMENT

Panel membership 2011/12 cont'd Member Representative Employer Representing

Archie Arnot Lothian Buses Unite Charlie Boyd The City of Edinburgh Council Active Member Allison Cosgrove East Lothian Council Unison Colette Cromar visitScotland Active Member Eric MacLennan The City of Edinburgh Council Unison Appointed 7/2/2012 Andrew Mitchell Lothian Buses Unite Owen Murdoch Retired member Unison/retired

Panel and Committee training Committee and Panel members attend training events and adhere to the Fund's training policy framework. The training policy includes a framework based on the CIPFA Knowledge and Skills Framework which is used to assess knowledge and identify future training needs to ensure effective decision making. The level of knowledge for Committee and Panel members is also set out in the framework which covers the key areas of pension legislation, investment, accounting and auditing standards and actuarial practices.

During the year, two in-house training events took place including investments, risk and the actuarial valuation sessions. Induction training for new members was also held covering pension regulations and legislation, investments and scheme rules. The five Committee members collectively attended 124 hours of in-house and external training. The fourteen Panel members collectively attended 57 training hours.

Investment Strategy Panel The Committee delegates day to day investment responsibility to the Director of Corporate Governance. The Funds' in-house investment team and Investment Strategy Panel carry out this task. The Panel meets quarterly and includes the Director of Corporate Governance, Investment and Pensions Service Manager, Section 95 officer and Investment Manager along with independent advisers.

During the year, the Fund retendered for advisors and applicants were assessed on breadth of investment experience, consultancy experience as well as knowledge and suitability to provide the service. Existing independent advisor Gordon Bagot was reappointed along with Scott Jamieson and KPMG represented by David O’Hara.

Statement of Investment Principles We maintain a Statement of Investment Principles in line with Scheme regulations and review it when there any material changes in investment policy.

The Statement of Investment Principles describes the decision-making process and types of investment, as well as the balance between risk and expected return. It also covers the realisation of investments, responsible investment and ownership along with the exercising of voting rights attached to investments.

Internal financial controls Within the overall control arrangements, the system of internal financial control is intended to ensure that assets are safeguarded, transactions are authorised and properly recorded, and material errors or irregularities are either prevented or detected within a timely period. It is based on a framework of regular management information, financial regulations, administrative procedures and management supervision. The Funds also place reliance upon the internal financial controls within the City of Edinburgh Council's financial systems and the monitoring in place to ensure the effectiveness of these controls.

7 ANNUAL GOVERNANCE STATEMENT

These controls include:

● a structured programme to ensure that Committee members have the required standard of knowledge and understanding of LGPS matters

● a formal Governance Policy statement

● identifying the objectives of the Funds in Funding Strategy Statements, Statement of Investment Principles and Service Plan

● a systematic approach to monitoring and reporting service performance by Committee, senior officers and stakeholders

● a risk management policy, including a regularly reviewed risk register, serves to minimises risk to the Funds

● a detailed compliance framework covers key activities

● establishing the role of the Pensions and Trusts Committee in Council Standing Orders, which also sets out the decision-making powers delegated to officers

● the Fund's Monitoring Officer who ensures compliance with laws and regulations

● the Council's Audit Committee whose core functions comply with CIPFA standards

● the Council's approval and adoption of a Local Code of Corporate Governance that is consistent with the principles of the CIPFA / SOLACE framework "Delivering Good Governance in Local Government". This statement explains how the City of Edinburgh Council delivers good governance and reviews the effectiveness of those arrangements. It also includes a statement on internal financial control

● comprehensive budget and expenditure monitoring systems

● targets against which financial and operational performance can be assessed

● operating within clearly established investment guidelines defined by the LGPS Investment Regulations and the Funds' Statements of Investment Principles

● compliance with the CIPFA Principles for Investment Decision Making in the Local Government Pension Scheme and the Myners Principles on investment

● with the exception of managed funds, unlisted investments and property, all investments are held under custody by a global custodian. The Funds benefit from the custodian's extensive internal control framework

● codes of conduct for both elected members and officers

● benchmarking of services in terms of quality and cost against other LGPS funds.

Each Director of the Council has reviewed internal control arrangements in his / her directorate and reported their assessment, together with any potential areas requiring improvement, to the Chief Executive of the Council. Where improvement actions are identified, an action plan will be developed and made subject to regular monitoring. In reviewing the overall governance framework, the Council has also considered any relevant third party reviews and recommendations.

8 ANNUAL GOVERNANCE STATEMENT

A significant part of the governance framework is the system of internal control, which is based on an ongoing process to identify and prioritise risks to achieve the objectives of the Funds. While the system is designed to enable the Funds to manage risk effectively, it cannot eliminate all risks of failure to implement policies and achieve objectives. Therefore, it provides a reasonable, but not absolute, assurance of effectiveness.

Review of effectiveness The Chief Internal Auditor of the City of Edinburgh Council has also reviewed the effectiveness of the governance arrangements and has indicated that he is satisfied with these arrangements.

The Internal Audit Section operates in accordance with CIPFA’s Code of Practice for Internal Audit and complies with the ISO 9001/2008 quality standard. The Audit Section undertakes an annual work programme based on an agreed audit strategy and formal assessments of risk that are reviewed regularly during the year. During the year the Chief Internal Auditor reported directly to the Head of Financial Services but had free access to the Chief Executive, all directors and elected members, and reported to the Audit Committee and Pensions and Trusts Committee in his own name.

The Chief Internal Auditor has provided an assurance statement on the effectiveness of the system of internal control, which was informed by:

● the Service Manager of Investment and Pensions certified assurances

● senior officers’ management activities

● Internal Audit’s review work

● Audit Scotland’s review work leading to its Annual Audit Report

● risk management procedures.

In compliance with standard accounting practice, the Pension & Accounting Manager as section 95 officer has provided the Chief Executive with a statement of the effectiveness of the internal financial control system of the Funds for the year ended 31 March 2012. It is the Pension & Accounting Manager’s opinion that reasonable assurance can be placed upon its effectiveness.

Post year end governance developments Since 31 March 2012, a review of the City of Edinburgh Council’s governance, and that of the pension funds, has commenced with a view to further improve effectiveness.

Certification It is our opinion that, in light of the foregoing, reasonable assurance can be placed upon the adequacy and effectiveness of the systems of governance of the Funds.

SUE BRUCE ALASTAIR MACLEAN JOHN BURNS Chief Executive Director of Corporate Governance Pensions and Accounting Manager 19 June 2012 19 June 2012 19 June 2012

9 ANNUAL GOVERNANCE COMPLIANCE STATEMENT

Provided below is the Governance Compliance Statement required by regulation which sets out the extent to which governance arrangements comply with best practice.

Full Principle Comments compliance Structure The management of the Yes The City of Edinburgh Council acts as administration of benefits and administering authority and delegates strategic management of fund all pension scheme matters to 5 assets clearly rests with the main appointed Councillors (Pensions and committee established by the Trusts Committee) appointing Council.

That representatives of Yes Fund members and employers are participating LGPS employers, represented by a Lothian Pension admitted bodies and scheme Fund Consultative Panel. members (including pensioner Membership of the Consultative and deferred members) are Panel consists of the Convener of the members of either the main or Pensions and Trusts Committee and secondary committee fifteen representatives. established to underpin the work of the main committee.

That where a secondary Yes The Lothian Pension Fund committee or panel has been Consultative Panel attends the established, the structure Pensions and Trusts Committee ensures effective communication meetings in an advisory, non-voting across both levels. capacity and takes part in training events.

That where a secondary Yes Membership of the Consultative committee or panel has been Panel consists of the Convener of the established, at least one seat of Pensions and Trusts Committee and the main committee is allocated fifteen representatives. Panel for a member from the members attend Pensions and Trusts secondary committee or panel. Committee.

Representation a) That all key stakeholders are Yes Consultative Panel consists of 7 afforded the opportunity to be employer representatives from represented within the main or Councils, universities, colleges and secondary committee structure. other bodies plus 5 active and 1 These include: retired member appointed by trade • Employing authorities unions. A further 2 active members (including non-scheme are selected through self employers, e.g. admitted bodies) nominations. • Scheme members (including deferred and pensioner scheme members) • Where appropriate, independent professional Yes Independent investment advisers sit observers on the Investment Strategy Panel. • Expert advisors (on an ad-hoc basis).

10 ANNUAL GOVERNANCE COMPLIANCE STATEMENT

Full Principle Comments compliance Representation b) That where lay members sit Yes The Consultative Panel attends the on a main or secondary Pensions and Trusts Committee committee, they are treated meetings. Panel members are given equally in terms of access to full opportunity to contribute to papers and meetings, training discussions at the Committee and are given full opportunity to meetings and take part in Committee contribute to the decision making training events. Panel members are process, with or without voting also consulted on key issues to rights formulate fund strategies.

Selection and a) That committee or panel Yes The Consultative Panel's constitution role of lay members are made fully aware sets out the roles and responsibilities members of the status, role and function of its members. Comprehensive that they are required to perform training, including induction, is in on either a main or secondary place with Committee members committee. expected to attend three days training and Panel members one day's training each year. The CIPFA framework is used to ensure Panel members have the knowledge and understanding to perform their role.

b) That at the start of any Yes The declaration of member’s interests meeting, committee members is a standard item on the agenda of are invited to declare any the Pensions and Trust Committee. financial or pecuniary interest related to specific matters on the agenda.

Voting The policy of individual Yes Full voting rights are given to all administering authorities on members of the Pensions and Trusts voting rights is clear and Committee. transparent, including the justification for not extending voting rights to each body or group represented on main LGPS committees.

Training / a) That in relation to the way in Yes A training policy has been adopted. facility time / which statutory and related The Lothian Pension Fund budget expenses decisions are taken by the includes an allowance for training. administering authority, there is a clear policy on training, facility time and reimbursement of expenses in respect of members involved in the decision making process.

b) That where such a policy Yes The training policy ensures all exists, it applies equally to all members are treated equally. members of committees, sub- Consultative Panel members are committees, advisory panels or encouraged to attend in-house any other form of secondary training events. Advisers have their forum. own continuing professional development.

11 ANNUAL GOVERNANCE COMPLIANCE STATEMENT

Principle Full Comments Compliance Training / c) That the administering Yes Each Committee member receives at facility time / authority considers the adoption least three days of training each year. expenses of annual training plans for Attendance at meetings and training committee members and is monitored and reported. maintains a log of all such training.

Meetings a) That an administering Yes The Pensions and Trusts Committee frequency authority’s main committee or meets at least four times a year. committees meet at least quarterly.

b) That an administering Yes The Consultative Panel attends all authority’s secondary committee the Pensions and Trusts Committee or panel meet at least twice a meetings in an advisory, non-voting year and is synchronised with capacity. the dates when the main committees sits.

c) That an administering Not relevant authority who does not include lay members in their formal governance arrangements must provide a forum outside of those arrangements by which the interests of key stakeholders can be represented.

Access That subject to any rules in the Yes Committee papers and minutes are council’s constitution, all publicly available on the Council’s members of main and secondary website. All Committee and committees or panels have Consultative Panel members are equal access to committee provided with hard copies in advance papers, documents and advice of the meetings. that falls to be considered at meetings of the main committee.

Scope That administering authorities Yes The Pensions and Trusts Committee have taken steps to bring wider deals with all matters relating to both scheme issues within the scope the administration and investment of of their governance the Funds. arrangements.

Publicity That administering authorities Yes Lothian Pension Fund publishes have published details of their governance documents and governance arrangements in communicates regularly with such a way that stakeholders employers and scheme members on with an interest in the way in the Fund's website. Two active which the scheme is governed, members of the Consultative Panel can express an interest in are recruited by self nomination. wanting to be part of those arrangements.

12 ACHIEVEMENTS 2011/12

Actuarial Valuation 2011 The Funds carry out an actuarial valuation every three years and the latest was at 31 March 2011. Below are summaries of the valuation reports which are available in full on our website: www.lpf.org.uk/publications

Lothian Pension Fund The financial position of the Fund at 31 March 2011 saw the value of assets as £3,477M while the liabilities (estimate of pension benefits to be paid in the future) was £3,619M. The deficit fell from £524M to £142M which resulted in the funding level rising from 85% at 2008 to 96% in 2011. This improvement was because of favourable investment market conditions since the previous valuation and changes to the rate used to increase pensions from the Retail Price Index (RPI) to Consumer Price Index (CPI).

Although the funding level improved at the 2011 valuation, equity markets and bond yields have since fallen sharply. Most employer contribution rates will therefore remain at 2011/12 levels for the next three years.

Lothian Buses Pension Fund Lothian Buses Pension Fund saw an improved funding level, rising from 95.5% in 2008 to a surplus position of 112.4% at 31 March 2011. However, this surplus was eroded by the subsequent falls in financial markets. Lothian Buses plc recognised the importance of a prudent long term funding strategy in determining the contribution payments to be made to the Fund and will continue phased increases in contribution rates over the next 3 years.

Scottish Homes Pension Fund The funding strategy for the Scottish Homes Pension Fund is determined in the guarantee agreement between the Scottish Government and Fund. The funding level stood at 86.3% at 31 March 2011 (85.9% at 2008) which is below the target funding level. As guarantor, the Scottish Government will pay a contribution of £871,000 and administration each year for the next three years.

Funding Strategy Statement We maintain a Funding Strategy Statement which is an important element of the actuarial valuation. The Funding Strategy Statement sets out how the administering authority balances the potentially conflicting aims of affordability of contributions, transparency of process, stability of employers’ pension contributions and prudence in the funding basis. Overall, the funding strategy remains broadly in-line with that used at the 2008 actuarial valuation, with some changes in employers’ contributions and the Fund's charging policy.

Customers The Funds again successfully retained Customer Service Excellence, the customer service standard designed to improve satisfaction within public services. The Funds were first awarded the Standard in 2008 and have retained it since then. We achieved re-accreditation in 2011 with no partial compliances.

In 2011, we introduced a secure on-line pension information service which enables members to check and update their personal information that we hold and also provides a modelling tool for retirement benefits.

During the year, we continued our drive to enhance data quality. We ensured our pension administration system matches the information held on our pension payroll system. We assessed and met best practice guidelines as defined by the Pension Regulator and we continue to work to ensure the information we hold is as up to date as possible.

Investment markets Investment values fluctuated significantly over recent years, with economic confidence at its lowest point in early 2009. Coordinated government intervention since has resulted in rising equity markets and growing economies. Global equity markets have risen almost 70% since 2009.

13 ACHIEVEMENTS 2011/12

Investment markets cont'd However, since March 2011, confidence has again dropped as interest rates increased in many countries causing another loss of confidence in the financial markets. Global equity markets fell slightly over the year. Stresses in the euro zone and the loss of the US Government’s AAA credit rating meant equity markets fell sharply in June and July 2011, but bonds benefited as they were seen as a safer haven.

While UK property faired better with a 6.6% return over the year, commodity prices were generally weak as growth fell. Europe had a difficult beginning to 2012/13 with the UK's first quarter growth falling -0.2%, and large parts of southern Europe in recession with high unemployment rates.

2012/13 promises to be another “interesting” year with potential changes in the political landscape and the European banking crisis still to be resolved. Consistent and sustained government policies will be required to generate economic growth in the long term and increased investment values.

Investment strategies Changes to the investment strategies of Lothian Pension Fund and Lothian Buses Pension Fund were agreed in 2008/2009. Both Funds are gradually increasing their allocation to alternative investments to improve diversification. Investments in the alternatives category include property, infrastructure, timber, private equity and corporate debt.

The new strategies are being implemented gradually and the first steps were made in 2009/10. By the end of the financial year 2011/12, both funds had made significant progress towards the target allocations. This was aided by a strengthened internal investment management team managing a greater proportion of both equities and alternatives .

We also undertook competitive procurements in accordance with EU regulations for services of: - investment advisors to sit on the Funds' Investment Strategy Panel - investment management services for Pan Asia Pacific equities - investment management services for global equities - integrated voting and engagement services.

There were no changes to the investment strategy of Scottish Homes Pension Fund over the year. More detail on the Funds’ investment strategies is provided later in the report.

Responsible investment We continue to promote responsible corporate behaviour relating to environmental, social and governance issues and undertake voting and engagement activities on a wide range of topics.

We are a signatory to the United Nations Principles for Responsible Investment (UN PRI) and publish how we are meeting the Financial Reporting Council (FRC) UK Stewardship Code requirements. The code promotes public disclosure of stewardship activities and we also encourage our appointed asset managers to publish their own compliance with the code.

During the year, we reappointed Hermes Equity Ownership Service to provide voting and engagement services for the Lothian Pension Fund. Baillie Gifford, Aberdeen Asset, State Street and Legal and General take direct responsibility for stewardship issues in the funds which they manage on our behalf.

Over the year we voted on over 11,000 resolutions at over 1,000 company meetings and opposed one or more resolutions at a third of company meetings. We engaged with over 270 companies across the world on topics such as board structure, executive compensation and climate change. We also participate in class action lawsuits and are acting as co-lead plaintiff in a number of court actions.

Councillor Cameron Rose, a member of the Pensions and Trust Committee, is Vice Chair of the Local Authority Pension Fund Forum (LAPFF) which promotes local authority investment pension fund interests and seeks to maximise their influence as shareholders.

14 ACHIEVEMENTS 2011/12

Staff changes A number of senior staff moves have occurred in 2012 with Geik Drever, Head of Investments and Pensions, leaving to take up a position with West Midlands Pension Fund. Clare Scott, who has been with the Fund since 2005, the last five years as Investment Manager, took over as Service Manager from 1 March 2012. Bruce Miller was appointed as Investment Manager from 1 April 2012.

Wider public sector pension changes 2011 saw the UK Government accept in full the recommendations of the Independent Public Service Pensions Commission. These recommendations included proposals to introduce a career average earnings pension scheme to replace the current final salary arrangement.

In England and Wales, detailed proposals for a new Local Government Pension Scheme with an introduction date of April 2014 have been announced following discussions between the Government, employers and the trades unions. In Scotland, however, no announcement has been made yet on any future proposals.

The annual pension increase for pensions in payment for a year or more increased by 5.2% from 9 April 2012 in line with Consumer Price Index figure for September 2011. The UK Government was challenged on its decision to link the annual pension increases to the Consumer Price Index rather than Retail Price Index. However, the Court of Appeal held that the Government had acted lawfully in instructing the switch.

Award winning funds The Fund won two prestigious awards at the LGC Investment Awards in 2011. We won Fund of the Year (over £2 billion) for the Lothian Pension Fund and Fund of the Year (under £750 million) for the Lothian Buses Pension Fund.

15 PERFORMANCE

The Fund aims to work together to put the customer first. This means making our services simple, right first time, effective and efficient. The Fund is committed to continuously develop our services by aiming for the following goals:

• to provide excellent customer care • to support and develop staff • to continue to be a top performing pension fund.

We therefore measure and report our performance on a regular basis and the table below shows some of our key performance indicators. In 2011/12, we met most of our targets and are working to ensure we meet them all in the future.

Our service plan and performance indicators are available on our website: www.lpf.org.uk/publications

Performance indicator 2010/11 2011/12 Customer focus - improve satisfaction with Target 80% 80% communication as measured in surveys Actual 87% 91%

Customer focus – improve service to members Target > 95% > 95% Active members sent benefit statement by 30 Actual 95% 97% September

Staff focus - to improve attendance Target 3.0% 3.0% Level of sickness absence Actual 3.6% 5.2%

Staff focus - to improve staff development Target > 2 days > 2 days Annual divisional training : average per staff Actual 2.4 days 2.7 days

Performance focus – improve efficiency Pension Target £26.00 £25.82 administration cost per member Actual £24.38 £22.30

Performance focus – improve efficiency of Target > 90% > 90% pension administration % of critical work completed within standards Actual 90% 94%

Customer feedback We ask for our customers’ views in many ways to ensure we are listening to our members and improve our services. We survey active and new members when they contact us and we carry out annual surveys for both retired members and employers.

We include the same overall satisfaction question “overall I feel the service provided by the Fund is excellent” for comparison across all survey groups. The average response over all our surveys shows 84% agreed or strongly agreed, exceeding our 80% target as shown in the chart below. However, results from the new members' survey continue to be below target and we are looking into ways of improving these results.

The chart overleaf shows the responses across all surveys and the cumulative total for overall satisfaction.

16 PERFORMANCE

Responses to overall service provided is excellent for years 2010/11 and 2011/12

100 90 80 70 60 50 40 30 % who agreed who% 20 10 0 Active New Reception Retired Employers Overall 2010/11 83 69 100 88 87 86 2011/12 87 66 100 83 84 84

We also record both informal and formal complaints which help us address any customer care issues that have arisen. We encourage feedback and seek to learn from this to improve and highlight ways to improve our services. Compliments are also recorded.

The graph below shows the total number of formal complaints about our service and also those made through the Internal Disputes Resolution Process (IDRP) for complaints about the way we apply pension rules. We deal promptly with any complaints received. We received 42 complaints in 2011/12 which is a very low percentage of the 26,000 procedures we carry out every year.

Number of complaints

45 40 35 30 Number of complaints 25 20 15 10 5 0 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Service 21 34 30 38 10 42 IDRP 6 1318188 11

17 PERFORMANCE

Pension Administration Strategy (PAS) In 2012, we introduced a Pension Administration Strategy between us and all our employers, setting service levels which are monitored. The table below shows the Funds' performance on the six key tasks and we exceeded our target of 90% for all but one of these categories.

Customer care Number of tasks % within target standards completed 2010/11 2011/12 2010/11 2011/12 New member pack sent 20 days 2,001 1,998 86% 97% Pay lump sum on death 5 days 1,077 1,140 92% 89% Pay dependent's pension 5 days 305 310 98% 94% Pay retirement lump sum 5 days 1,202 1,137 96% 97% Send retirement estimates 10 days 3,685 2,453 90% 91% Early leaver payment of refund 30 days 650 797 90% 93% All key tasks 90.0% 8,920 7,835 92.0% 94.0%

Prompt provision of information by employers is vital for the Fund to be able to provide timely and accurate services for members. We therefore monitor employer performance regularly and also send this information to our employers each year.

Target 2010/11 2011/12 Performance of employers (working % on % on days) target target New member paper forms 20 42% 64% New members - electronic 20 100% 90% Leavers 20 74% 69% Retirements 20 48% 39% Deaths 10 41% 30%

By monitoring these targets we can work with employers to improve performance by:

● raising and resolving any issues as soon as possible ● making it easier for employers to send information electronically ● making use of a specific email address for employers ● providing guidance and training on procedures and completing pensions forms ● providing up to date news and guidance via monthly employer bulletins and our website ● using tools such as surveys and business process reviews to gain insight to employers needs and act on feedback.

18 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES

1 Basis of preparation The Statement of Accounts summarises the transactions of the Funds for the 2011/12 financial year and their position at year-end as at 31 March 2012. The accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12 which is based upon International Financial Reporting Standards (IFRS), as amended for the UK public sector.

The accounts summarise the transactions of the Funds and report on the net assets available to pay pension benefits. The accounts do not take account of obligations to pay pensions and benefits which fall due after the end of the financial year. The actuarial present values of promised retirement benefits, valued on an International Accounting Standard (IAS) 19 basis, are disclosed in the Notes to the Accounts.

2 Summary of significant accounting policies Fund account - revenue recognition

a) Contribution income Normal contributions, both from the members and from employers, are accounted for on an accruals basis at the percentage rate recommended by the Scheme Actuary in the payroll period to which they relate.

Employers’ augmentation contributions and pensions strain contributions are accounted for in the period in which the liability arises. Any amount due in year but unpaid will be classed as a current financial asset. Amounts not due until future years are classed as long-term financial assets.

b) Transfers to and from other schemes Transfer values represent the amounts received and paid during the year for members who have either joined or left the fund during the financial year and are calculated in accordance with the Local Government Pension Scheme Regulations.

Individual transfers in/out are accounted for when received/paid, which is normally when the member liability is accepted or discharged.

Transfers in from members wishing to use the proceeds of their additional voluntary contributions to purchase scheme benefits are accounted for on a receipts basis and are included in Transfers In.

Bulk (group) transfers are accounted for on an accruals basis in accordance with the terms of the transfer agreement.

c) Investment income

i) Interest income Interest income is recognised in the fund account as it accrues, using the effective interest rate of the financial instrument as at the date of acquisition or origination. Income includes the amortisation of any discount or premium, transaction costs or other differences between the initial carrying amount of the instrument and its amount at maturity calculated on an effective interest rate basis.

ii) Dividend income Dividend income is recognised on the date the shares are quoted ex-dividend. Any amount not received by the end of the reporting period is disclosed in the net assets statement as a current financial asset.

19 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES iii) Distributions from pooled funds Distributions from pooled funds are recognised at the date of issue. Any amount not received by the end of the reporting period is disclosed in the net assets statement as a current financial asset. iv) Property related income Property-related income consists primarily of rental income. Rental income from operating leases on properties owned by the fund is recognised on a straight-line basis over the term of the lease. Any lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

Contingent rents based on the future amount of a factor that changes other than with the passage of time, such as turnover rents, are only recognised when contractually due. v) Movement in the net market value of investments Changes in the net market value of investments (including investment properties) are recognised as income and comprise all realised and unrealised profits/losses during the year.

Fund account - expense items d) Benefits payable Pensions and lump sum benefits payable include all amounts known to be due as at the end of the financial year. Any amounts due but unpaid are disclosed in the net assets statement as current liabilities. e) Taxation The fund is a registered public service scheme under section 1(1) of Schedule 36 of the Finance Act 2004 and as such is exempt from UK income tax on interest received and from capital gains tax on the proceeds of investments sold. Income from overseas investments suffers withholding tax in the country of origin, unless exemption is permitted. Irrecoverable tax is accounted for as a fund expense as it arises. f) Administrative expenses All administrative expenses are accounted for on an accruals basis. The Investment and Pensions Division of the Council is responsible for administering the three Pension Funds. The Division receives an allocation of the overheads of the Council, this is based on the amount of central services consumed. In turn, the Division allocates its costs to the three Pension Funds. Costs directly attributable to a specific Fund are charged to the relevant Fund, costs that are common to all three Funds are allocated in proportion to the value of the Funds as at the end of the year. g) Investment management expenses All investment management expenses are accounted for an accruals basis.

Fees of the external investment managers and custodian are agreed in the respective mandates governing their appointments. Broadly, these are based on the market value of the investments under their management and therefore increase or reduce as the value of these investments change. For some investment managers, an element of their fee is performance related.

The cost of obtaining investment advice from external consultants is included in investment management charges.

The costs of the in-house fund management team are charged to the Funds. The basis of allocation is as described above.

20 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES

Net assets statement h) Financial assets Financial assets are included in the net assets statement on a fair value basis as at the reporting date. A financial asset is recognised in the net assets statement on the date the fund becomes party to the contractual acquisition of the asset. From this date any gains or losses arising from changes in the fair value of asset are recognised by the fund.

The values of investments as shown in the net assets statement have been determined as follows: i) Market quoted investments The value of an investment for which there is a readily available market price is determined by the bid market price ruling on the final day of the accounting period. ii) Fixed interest securities Fixed interest securities are recorded at net market value based on their current yields. iii) Unquoted investments The fair value of investments for which market quotations are not readily available is determined as follows:

- valuations of delisted securities are based on the last sale price prior to delisting, or where subject to liquidation, the amount the council expects to receive on wind-up, less estimated realisation costs

- securities subject to takeover offer – the value of the consideration offered under the offer, less estimated realisation costs

- directly held investments include investments in limited partnerships, shares in unlisted companies, trusts and bonds. Other unquoted securities typically include pooled investments in property, infrastructure, debt securities and private equity. The valuation of these pools or directly held securities is undertaken by the investment manager or responsible entity and advised as a unit or security price. The valuation standards followed in these valuations adhere to industry guidelines or to standards set by the constituent documents of the pool or the management agreement

- investments in unquoted property and infrastructure pooled funds are valued at the net asset value or a single price advised by the fund manager

- the values of the investments in unlisted private equity infrastructure, timber and European real estate are based on valuations provided by the general partners to the funds in which the Fund has invested. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines or similar guidelines provided by the British Venture Capital Association, which follow the valuation principles of IFRS. The valuations are usually undertaken annually at the end of December. Cash flow adjustments are used to roll forward the valuations to 31 March as appropriate. iv) Pooled investment vehicles Pooled investment vehicles are valued at closing bid price if both bid and offer prices are published; or if single priced, at the closing single price. In the case of pooled investment vehicles that are accumulation funds, change in market value also includes income which is reinvested in the fund, net of applicable withholding tax.

21 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES v) Freehold and leasehold properties The properties were valued at open market value at 31 March 2012 by John Symes-Thompson FRICS and Genine Terry MRICS of independent external valuers CB Richard Ellis Ltd in accordance with the Royal Institute of Chartered Surveyors’ Valuation Standards (6th Edition). The valuer’s opinion of market value and existing use value was primarily derived using comparable recent market transactions on arm’s-length terms. i) Foreign currency transactions and balances Dividends, interest and purchases and sales of investments in foreign currencies have been accounted for at the spot market rates at the date of transaction. End-of-year spot market exchange rates are used to value cash balances held in foreign currency bank accounts, market values of overseas investments and purchases and sales outstanding at the end of the reporting period. j) Derivatives Derivative contract assets are fair valued at bid prices and liabilities are fair valued at offer prices. Changes in the fair value of derivative contracts are included in change in market value.

The value of futures contracts is determined using exchange prices at the reporting date. Amounts due from or owed to the broker are the amounts outstanding in respect of the initial margin and variation margin.

The future value of forward currency contracts is based on market forward exchange rates at the year-end date and determined as the gain or loss that would arise if the outstanding contract were matched at the year-end with an equal and opposite contract. k) Cash and cash equivalents Cash comprises cash in hand and demand deposits.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to minimal risk of changes in value. l) Financial liabilities The Funds recognise financial liabilities at fair value as at the reporting date. A financial liability is recognised in the net assets statement on the date the fund becomes party to the liability. From this date any gains or losses arising from changes in the fair value of the liability are recognised. m) Actuarial present value of promised retirement benefits The actuarial present value of promised retirement benefits of each of the Funds is assessed on a annual basis by the Scheme Actuary in accordance with the requirements of IAS 19 and relevant actuarial standards.

As permitted under IAS 26, the Funds have opted to disclose the actuarial present value of promised retirement benefits by way of a note to the net assets statements. n) Additional voluntary contributions The Lothian Pension Fund and Lothian Buses Pension Fund provide an additional voluntary contributions (AVC) scheme for their members, the assets of which are invested separately from those of the Funds. The Funds have appointed Standard life and Prudential as their AVC providers. AVCs are paid to the AVC providers by employers and are specifically for providing additional benefits for individual contributors. Each AVC contributor receives an annual statement showing the amount held in their account and the movements in the year.

22 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES

In accordance with regulation 5(2)(b) of the Local Government Pension Scheme (Management and Investment of Funds) (Scotland) Regulations 1998, AVCs are not included in the pension fund financial statements. Details of contributions paid and the total value of funds invested are disclosed by way of note.

3 Critical judgements in applying accounting policies Unquoted private equity and infrastructure investments It is important to recognise the highly subjective nature of determining the fair value of private equity and infrastructure investments. They are inherently based on forward-looking estimates and judgements involving many factors. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines or similar guidelines provided by the British Venture Capital Association, which follow the valuation principles of IFRS.

For the Lothian Pension Fund, the value of unquoted private equity and infrastructure investments at 31 March 2012 was £443.7m (2011 £285.3m).

For the Lothian Buses Pension Fund, the value of unquoted private equity and infrastructure investments at 31 March 2012 was £7.5m (2011 nil).

Actuarial present value of promised retirement benefits Each Fund is required to disclose the estimated actuarial present value of promised retirement benefits as at the end of the financial year. These estimates are prepared by the Fund's Actuary. These values are calculated in line with International Accounting Standard 19 (IAS19) assumptions and comply with the requirements of IAS26. However, the results are subject to significant variances based on changes to the underlying assumptions.

The figures are only prepared for the purposes of IAS26 and has no validity in other circumstances. In particular, it is not relevant for calculations undertaken for funding purposes and setting contributions payable to the Fund.

4 Assumptions made about the future and other major sources of estimation uncertainty The Statement of Accounts contain estimated figures that are based on assumptions made by the Council; private equity and infrastructure managers; other providers of valuation information; and the Scheme Actuary about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the net assets statement at 31 March 2012 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:

a) Actuarial present value of promised retirement benefits Uncertainties Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. The Fund Actuary advises on the assumptions to be applied and prepares the estimates.

23 STATEMENT OF ACCOUNTING POLICIES AND GENERAL NOTES

Effect if actual results differ from assumptions - Lothian Pension Fund The effects on the net pension liability of changes in individual assumptions can be illustrated as follows:

Approx % Approx monetary Change in assumptions - increase in amount year ended 31 March 2012 liabilities % £m 0.5% decrease in discount rate 10 424 1 year increase in member life expectancy 3 126 0.5% increase in salary increase rate 3 130 0.5% increase in pensions increase rate 7 294

Effect if actual results differ from assumptions - Lothian Buses Pension Fund The effects on the net pension liability of changes in individual assumptions can be illustrated as follows:

Approx % Approx monetary Change in assumptions - increase in amount year ended 31 March 2012 liabilities % £m 0.5% decrease in discount rate 10 28 1 year increase in member life expectancy 3 8 0.5% increase in salary increase rate 3 8 0.5% increase in pensions increase rate 7 20

Effect if actual results differ from assumptions - Scottish Homes Pension Fund The effects on the net pension liability of changes in individual assumptions can be illustrated as follows:

Approx % Approx monetary Change in assumptions - increase in amount year ended 31 March 2012 liabilities % £m 0.5% decrease in discount rate 6 28 1 year increase in member life expectancy 3 8 0.5% increase in pensions increase rate 6 20 b) Unquoted private equity and infrastructure investments Uncertainties These investments are not publicly listed and as such there is a degree of estimation involved in the valuation.

Effect if actual results differ from assumptions There is a risk that these investments may be under or overstated in the accounts at any point in time. The actual financial return of this type of investment is only known with certainty when they reach the end of their lifecycles and the final distributions are made to investors.

24 LOTHIAN PENSION FUND

Membership numbers Membership Membership Membership at at at Status 31/03/2010 31/03/2011 31/03/2012 Active 30,313 28,919 28,337 Deferred 14,172 15,218 15,392 Pensioners 17,366 17,894 18,905 Dependants 3,685 3,682 3,720 Total 65,536 65,713 66,354

Investment Strategy In 2009 the Pensions and Trusts Committee approved a revised investment strategy for Lothian Pension Fund. The new strategy includes an increased allocation to alternative investments in order to improve diversification without significantly affecting the Fund’s return expectations.

Implementation of the new strategy started in 2009/10 and has continued through 2011/12. The Fund’s interim investment strategy at 31 March 2012 is as follows:

Previous Long term Interim benchmark strategy strategy at benchmark 31/3/2012 % % % Listed equities UK 18.0 15.0 15.0 US 5.0 5.0 Europe (ex UK) 6.0 7.1 Pacific 10.9 45.0 10.9 Emerging markets 5.1 5.0 Global equities 21.0 21.0 66.0 60.0 64.0 Bonds UK fixed interest 7.8 - - UK index linked gilts 2.2 5.0 5.0 10.0 5.0 5.0 Alternatives Property 12.0 12.0 Cash (for currency management) 2.0 35.0 1.0 Other 10.0 18.0 24.0 35.0 31.0 Cash - - - Total 100.0 100.0 100.0

The changes to the investment strategy, involving the switch from equities to alternatives, will continue to be implemented gradually as opportunities arise.

Investment performance Short term (1 year) The Fund delivered a return of 2.3% over the year, slightly behind its benchmark return of 2.7%. The main contributor to the underperformance was the property asset category.

Medium term (3 years) The returns are strong at 14.3%, supported by equity strength since the start of 2009. The Fund underperformed its benchmark over the period by 1.0% per year. The underperformance was due to returns from the alternatives and property portfolios.

25 LOTHIAN PENSION FUND

Long term (10 years) The Fund’s long term performance is well above the growth in the retail price index and the national average earnings growth. The Fund’s return is ahead of its benchmark by 0.9% per year over the 10 year period to 31 March 2012.

Annualised returns to 31 March 2012 (% per year) 1 Year 3 Years 10 Years Lothian Pension Fund 2.3 14.3 6.2 Benchmark 2.7 15.3 5.3 Retail Price Index 3.6 4.5 3.3 National Average Earnings 0.2 2.6 3.2

Annualised 3 yearly returns ending 31 March (% per year) Target of 1% pa over 3 years

25.0 5.0 Year to March LPF BENCHMRELATIVE (RHS) 20.0 2003 -11.5 -11.5 0.0 4.0 15.0 2004 -0.4 -0.8 0.4 3.0 2005 3.4 3.5 -0.1 10.0 2.0 2006 22.2 22.3 -0.1 5.0 2007 15.1 15.4 -0.2 1.0 2008 10.1 9.4 0.7 0.0 0.0 2009 -4.8 -8.1 3.3 -5.0 2010 2.5 0.0 2.5 -1.0 -10.0 2011 6.6 4.1 2.4 -2.0 2012 14.3 15.3 -1.1 -15.0 -3.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LPF -11. -0.4 3.4 22.2 15.1 10.1 -4.8 2.5 6.6 14.3 BENCHMARK -11. -0.8 3.5 22.3 15.4 9.4 -8.1 0.0 4.1 15.3 RELATIVE (RHS) 0.0 0.4 -0.1 -0.1 -0.2 0.7 3.3 2.5 2.4 -1.1

26 LOTHIAN PENSION FUND

Fund Account for the year ended 31 March 2012

2010/11 2011/12 £000 Note £000 Income 142,684 Contributions from employers 2 144,484 42,455 Contributions from members 3 40,579 6,382 Transfers from other schemes 4 3,171 191,521 188,234

Less: Expenditure 94,742 Pension payments including increases 5 104,279 44,975 Lump sum retirement payments 6 34,523 3,339 Lump sum death benefits 7 4,306 323 Refunds to members leaving service 342 243 Premiums to State Scheme 384 7,889 Transfers to other schemes 8 5,564 1,725 Administrative expenses 9 1,802 153,236 151,200

38,285 Net additions from dealing with members 37,034

Returns on investments 63,355 Investment income 10 69,888 201,482 Change in market value of investments 12a 8,343 (8,818) Investment management expenses 11 (8,525) 256,019 Net returns on investments 69,706

294,304 Net increase in the Fund during the year 106,740

3,183,179 Net assets of the Fund at 1 April 2011 3,477,483

3,477,483 Net assets of the Fund at 31 March 2012 3,584,223

27 LOTHIAN PENSION FUND

Net Assets Statement as at 31 March 2012

2010/11 2011/12 £000 Note £000 3,451,881 Net investment assets 12 3,549,511 Fixed assets 93 Computer systems 95 Current assets 5,432 The City of Edinburgh Council 20 11,192 18,311 Cash balances 20 26,350 13,070 Debtors 17 10,078 36,813 47,620

Current liabilities (11,304) Creditors 18 (13,003)

25,509 Net current assets 34,617

3,477,483 Net assets 3,584,223

JOHN BURNS, FCMA, CGMA Pensions & Accounting Manager 19 June 2012 The financial statements summarise the transactions of the Fund during the year and its net assets at the year end. They do not take account of the obligations to pay pensions and benefits which fall due after the end of the year. The actuarial position of the Fund, which does take account of such obligations, is discussed in the Actuarial Valuation section of this report and these financial statements should be read in conjunction with that information. In addition, as required by IAS26, the Actuarial Present Value of Promised Retirement Benefits is disclosed in the notes to these financial statements.

28 LOTHIAN PENSION FUND

Notes to the Accounts

1 Events after the balance sheet date Since 31 March 2012, there has been a marked decline in the global stock markets which would impact upon the market value of the fund’s investments were they to be valued as at the date these accounts were authorised. This change is deemed to be a non-adjusting post-balance-sheet event.

There have been no events since 31 March 2012, and up to the date when these accounts were authorised, that require any adjustments to these accounts.

2 Contributions from employers The total contributions receivable analysed between the administering authority, other scheduled bodies and admitted bodies were as follows:- 2011 2012 £000 £000 By category Normal (ongoing contributions) 108,084 106,566 Deficit funding 21,423 30,037 129,507 136,603

Pension strain costs 13,177 7,881 142,684 144,484

By employer type Administering Authority 55,445 54,549 Other Scheduled Bodies 71,070 67,626 Community Admission Bodies 15,883 22,030 Transferee Admission Bodies 286 279 142,684 144,484

As Lothian Pension Fund had a deficit at the last actuarial valuation (2008) the employers were required to make a contribution towards restoring the funding position in excess of the amount required to fund the ongoing accrual of benefits. The table above shows an estimation of the split between normal contributions (required to fund the accrual of benefits for current service) and the amount attributable to "deficit funding". This estimate is calculated based on a future service contribution rate of 17.1% (as stated in the actuarial valuation of 31 March 2008). The deficit recovery period varies depending on the individual circumstances of each employer ranging up to 20 years.

Where an employer makes certain decisions which result in additional benefits being paid out to a member, or benefits being paid early, this results in a "strain" on the Fund. The resulting pension strain costs are calculated and recharged in full to that employer.

3 Contributions from members 2011 2012 By employer type £000 £000 Administering Authority 16,350 15,682 Other Scheduled Bodies 20,273 19,255 Community Admission Bodies 5,757 5,569 Transferee Admission Bodies 75 73 42,455 40,579

29 LOTHIAN PENSION FUND

Notes to the Accounts

4 Transfers in from other pension schemes 2011 2012 £000 £000 Group transfers 714 97 Individual transfers 5,668 3,074 6,382 3,171

5 Pensions payable 2011 2012 By employer type £000 £000 Administering Authority 51,354 54,793 Other Scheduled Bodies 35,853 41,217 Community Admission Bodies 7,472 8,209 Transferee Admission Bodies 63 60 94,742 104,279

The basis of 'illustrating' pensions paid to the type of employer has been changed for the year ended 31 March 2012, the equivalent basis has been applied to the previous year's total and the allocation restated.

6 Lump sum retirement benefits payable 2011 2012 By employer type £000 £000 Administering Authority 16,239 14,497 Other Scheduled Bodies 26,038 16,822 Community Admission Bodies 2,673 3,119 Transferee Admission Bodies 25 85 44,975 34,523

7 Lump sum death benefits payable 2011 2012 By employer type £000 £000 Administering Authority 1,184 1,535 Other Scheduled Bodies 1,764 2,052 Community Admission Bodies 391 719 Transferee Admission Bodies - - 3,339 4,306

8 Transfers to other schemes 2011 2012 £000 £000 Group transfers 1,400 - Individual transfers 6,489 5,564 7,889 5,564

30 LOTHIAN PENSION FUND

Notes to the Accounts

9 Administrative expenses 2011 2012 £000 £000 Employee costs 766 928 The City of Edinburgh Council - pension payroll costs 248 221 The City of Edinburgh Council - other support costs 360 312 System costs 145 105 Actuarial fees 53 84 External audit fees 52 40 Legal fees 16 45 Printing & postage 40 42 Depreciation 28 35 Sundry costs less sundry income 17 (10) 1,725 1,802

10 Investment income 2011 2012 £000 £000 Income from fixed interest securities 12,882 10,925 Dividends from equities 35,215 36,776 Income from pooled investment vehicles 541 5,031 Net rents from properties 14,565 16,583 Interest on cash deposits 1,250 915 Stock lending and sundries 687 1,244 65,140 71,474 Irrecoverable withholding tax (1,785) (1,586) 63,355 69,888

11 Investment management expenses 2011 2012 £000 £000 External management fees 7,400 7,221 Employee costs 752 656 Custody fees 238 64 Engagement & voting fees 63 65 Performance measurement fees 37 54 Investment consultancy fees 20 26 System costs 95 146 Legal fees 174 215 Sundry costs 39 78 8,818 8,525

31 LOTHIAN PENSION FUND

Notes to the Accounts

12 Net investment assets 2011 2012 £000 £000 Investment assets Fixed interest securities 271,947 300,883 Equities 1,504,350 1,647,371 Pooled investment vehicles 1,285,558 1,221,474 Properties 233,470 246,915 Derivatives Futures 335 606 Forward foreign exchange 180,986 64,833 181,321 65,439 Cash deposits Margin balances 2,022 1,687 Deposits 163,818 105,153 165,840 106,840 Other investment assets Due from broker 11,316 412 Dividends & other income due 7,939 9,201 19,255 9,613

Total investment assets 3,661,741 3,598,535

Investment liabilities Derivatives Futures (171) (88) Forward foreign exchange (194,230) (45,702) (194,401) (45,790)

Other financial liabilities - due to broker (15,459) (3,234)

Total investment liabilities (209,860) (49,024)

Net investment assets 3,451,881 3,549,511

32 LOTHIAN PENSION FUND

Notes to the Accounts 12a Reconciliation of movement in investments and derivatives Market Purchases Sales Change Market value at cost and proceeds in value at derivative and market at 1 April payments derivative value 31 March 2011 receipts 2012 £000 £000 £000 £000 £000 Fixed interest 271,947 92,906 (88,128) 24,158 300,883 Equities 1,504,350 570,819 (383,254) (44,544) 1,647,371 Pooled investments 1,285,558 102,057 (211,145) 45,004 1,221,474 Property 233,470 11,930 (2,059) 3,574 246,915 Derivatives - futures 164 5,851 (4,451) (1,046) 518 Derivatives - fwd foreign exchange (13,244) 277,238 (231,967) (12,896) 19,131 3,282,245 1,060,801 (921,004) 14,250 3,436,292 Other financial assets / liabilities Margin balances 2,022 (28) 1,687 Cash deposits 163,818 (2,864) 105,153 Broker balances (4,143) (2,902) (2,822) Dividends due etc 7,939 (113) 9,201 169,636 (5,907) 113,219

Net financial assets 3,451,881 8,343 3,549,511

Value Purchases Sales Change Value at at cost and proceeds in at 1 April derivative and market 31 March 2010 payments derivative value 2011 receipts £000 £000 £000 £000 £000 Fixed interest 245,094 225,218 (201,081) 2,716 271,947 Equities 1,317,971 517,774 (406,987) 75,592 1,504,350 Pooled investments 1,203,009 117,398 (158,005) 123,156 1,285,558 Property 202,530 30,970 (7,744) 7,714 233,470 Derivatives - futures 466 6,004 (6,418) 112 164 Derivatives - fwd foreign exchange (26,974) 38,856 (18,570) (6,556) (13,244) 2,942,096 936,220 (798,805) 202,734 3,282,245 Other financial assets / liabilities Margin balances 1,155 (15) 2,022 Cash deposits 196,920 (1,696) 163,818 Broker balances (788) 369 (4,143) Dividends due etc 8,942 90 7,939 206,229 (1,252) 169,636

Net financial assets 3,148,325 201,482 3,451,881

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.

Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include costs charged directly to the Fund such as fees, commissions, stamp duty and other fees. Transaction costs incurred during the year amounted to £1,034k (2011 £1,014k). In addition to the transaction costs disclosed above, indirect costs may be incurred through the bid-offer spread on some pooled investment vehicles, the amount of any such costs is not separately provided to the Fund.

33 LOTHIAN PENSION FUND

Notes to the Accounts

12b Analysis of investments Market Market value value at at 31 March 31 March 2011 2012 Fixed interest securities £000 £000 UK Public sector fixed interest quoted 4,046 2,441 Public sector index linked gilts quoted 123,914 134,331 Corporate quoted 54,145 63,232 Overseas Public sector quoted 4,501 6,308 Commercial quoted 85,341 94,571 271,947 300,883

Equities UK Quoted 94,924 137,513 Overseas Quoted 1,409,426 1,509,858 1,504,350 1,647,371

Pooled investment vehicles UK In-house equities 521,086 527,807 Managed funds - other 389,352 190,220 Managed funds - property 89,823 59,728 Private equity funds 63,197 63,790 Overseas Private equity funds 222,100 379,929 1,285,558 1,221,474

Properties UK direct property 233,470 246,915

Derivatives - futures

Type Expires Economic Market Economic Market exposure value exposure value at at 31 March 31 March 2011 2012 £000 £000 £000 £000 Assets UK Fixed Income < 1 year 201,000 241 - - Overseas Fixed Income < 1 year (57,479) 94 (75,349) 606 335 606

Liabilities UK fixed income < 1 year - - 28,169 (57) Overseas fixed income < 1 year (542,723) (171) 6,199 (31) (171) (88)

164 518

34 LOTHIAN PENSION FUND

Notes to the Accounts

Derivatives - futures cont'd The economic exposure represents the notional value of securities purchased under the futures contract and therefore the value subject to market movements. All futures contracts are exchange traded. The Fund uses futures for the purposes of efficient portfolio management and/or risk reduction. During the year, the Fund’s bond manager transacted futures to manage interest rate exposure.

Derivatives - forward foreign exchange Summary of contracts held at 31 March 2012 Settlement Currency Currency Local Local Asset Liability bought sold currency currency value value bought sold 000 000 £000 £000 Up to one month AUD GBP 81,059 (52,866) 113 (472) Up to one month AUD USD 185 (192) - (1) Up to one month CAD GBP 397 (252) - (3) Up to one month CAD USD 188 (189) - - Up to one month CHF GBP 44,997 (31,427) - (264) Up to one month CHF JPY 41 (3,410) 3 - Up to one month DKK USD 139 (25) - - Up to one month EUR CHF 34 (41) - - Up to one month EUR GBP 400,837 (339,113) 97 (5,086) Up to one month EUR JPY 480,010 (49,747,953) 21,717 - Up to one month EUR USD 504,530 (678,607) 2,584 (6,776) Up to one month GBP AUD 50,516 (80,702) 97 (1,856) Up to one month GBP CAD 227 (355) 4 - Up to one month GBP CHF 31,995 (44,997) 863 (32) Up to one month GBP EUR 343,958 (400,871) 10,036 (230) Up to one month GBP JPY 173,074 (21,044,757) 12,998 - Up to one month GBP USD 384,072 (606,022) 4,775 (22) Up to one month JPY EUR 50,805,057 (480,010) 844 (14,520) Up to one month JPY GBP 20,001,268 (158,475) 32 (6,369) Up to one month JPY USD 5,379 (65) - - Up to one month MXN USD 107,055 (8,404) - (34) Up to one month NOK USD 51 (9) - - Up to one month SEK USD 1,133 (170) - - Up to one month USD AUD 575 (542) 9 - Up to one month USD CAD 230 (230) - - Up to one month USD DKK 25 (139) - - Up to one month USD EUR 674,785 (504,530) 5,423 (3,624) Up to one month USD GBP 609,423 (384,717) 7 (3,276) Up to one month USD JPY 205 (15,584) 10 - Up to one month USD MXN 8,262 (107,055) - (55) Up to one month USD NOK 9 (51) - - Up to one month USD SEK 168 (1,133) - (2) One to six months AUD CAD 2,602 (2,694) - (7) One to six months AUD CHF 2,562 (2,508) - (84) One to six months AUD EUR 5,200 (4,141) - (97) One to six months AUD GBP 10,441 (6,811) - (73) One to six months AUD NZD 5,354 (6,846) - (46) One to six months CAD AUD 8,301 (8,008) 30 (3) One to six months CAD GBP 9,765 (6,196) - (85) One to six months CAD NZD 5,491 (6,591) 65 - One to six months CAD USD 8,403 (8,449) 2 (32) One to six months CHF AUD 2,481 (2,586) 51 - One to six months CHF EUR 41 (34) - -

35 LOTHIAN PENSION FUND

Notes to the Accounts

Settlement Currency Currency Local Local Asset Liability bought sold currency currency value value bought sold 000 000 £000 £000 One to six months CHF GBP 51,977 (36,057) - (35) One to six months CHF JPY 2,531 (223,026) 57 - One to six months CHF NOK 600 (3,733) 7 - One to six months CHF USD 2,263 (2,443) 39 - One to six months CZK GBP 21,078 (712) - (5) One to six months EUR GBP 50,882 (42,506) - (75) One to six months EUR NOK 1,797 (13,396) 31 - One to six months EUR SEK 1,881 (16,672) - (2) One to six months GBP AUD 18,791 (29,227) 172 - One to six months GBP CAD 9,804 (15,514) 94 - One to six months GBP CHF 49,395 (71,489) 12 (207) One to six months GBP CZK 692 (21,078) - (15) One to six months GBP EUR 110,891 (132,463) 360 (73) One to six months GBP HUF 1,626 (576,757) 6 - One to six months GBP ILS 1,006 (5,961) 2 - One to six months GBP JPY 69,013 (8,858,460) 1,456 - One to six months GBP MXN 10,337 (210,586) 89 - One to six months GBP NOK 11,875 (108,718) 6 (43) One to six months GBP NZD 29,409 (57,483) 103 (94) One to six months GBP PLN 1,719 (8,637) - (6) One to six months GBP SEK 20,958 (224,525) - (189) One to six months GBP SGD 2,380 (4,763) 8 - One to six months GBP TRY 6,153 (17,823) - (42) One to six months GBP USD 231,515 (367,455) 1,288 - One to six months GBP ZAR 3,497 (43,402) 3 (23) One to six months HUF GBP 576,757 (1,615) 6 - One to six months ILS GBP 5,961 (1,004) - - One to six months JPY CAD 223,417 (2,741) - (15) One to six months JPY EUR 207,447 (1,946) - (44) One to six months JPY GBP 2,366,261 (18,291) - (282) One to six months JPY NOK 218,146 (15,087) 7 - One to six months JPY USD 2,163,173 (26,812) 29 (352) One to six months MXN GBP 141,681 (6,924) - (29) One to six months MXN USD 68,905 (5,335) 13 - One to six months NOK EUR 14,998 (1,959) 10 - One to six months NOK GBP 295,296 (32,372) 27 (43) One to six months NOK JPY 31,132 (425,578) 172 - One to six months NOK NZD 15,862 (3,330) 35 - One to six months NOK SEK 47,226 (54,988) 2 (7) One to six months NOK USD 51 (9) - - One to six months NZD AUD 6,611 (5,147) 60 - One to six months NZD CAD 10,020 (8,155) 25 (4) One to six months NZD CHF 6,637 (5,066) - (116) One to six months NZD EUR 7,715 (4,775) 5 (42) One to six months NZD GBP 10,789 (5,600) - (82) One to six months NZD JPY 3,753 (246,732) 41 - One to six months NZD NOK 15,034 (70,459) - (31) One to six months NZD SEK 3,315 (18,334) - (32) One to six months NZD USD 10,376 (8,596) - (74) One to six months PLN EUR 2,957 (701) 6 - One to six months PLN GBP 5,680 (1,104) 31 - One to six months SEK EUR 17,231 (1,945) 1 -

36 LOTHIAN PENSION FUND

Notes to the Accounts

Settlement Currency Currency Local Local Asset Liability bought sold currency currency value value bought sold 000 000 £000 £000 One to six months SEK GBP 110,578 (10,416) 23 (23) One to six months SEK NOK 185,958 (156,861) 328 - One to six months SEK USD 20,172 (2,997) 24 - One to six months SGD GBP 4,763 (2,395) - (23) One to six months THB GBP 170,219 (3,505) - (61) One to six months THB USD 166,192 (5,479) - (67) One to six months TRY GBP 17,823 (6,290) - (95) One to six months USD AUD 8,468 (8,041) 113 - One to six months USD CAD 3,046 (3,044) 2 - One to six months USD CHF 2,528 (2,274) 7 - One to six months USD DKK 25 (139) - - One to six months USD EUR 11,047 (8,381) - (73) One to six months USD GBP 29,323 (18,617) - (259) One to six months USD JPY 24,870 (2,011,093) 294 (30) One to six months USD MXN 8,404 (107,727) 34 - One to six months USD NOK 6,318 (36,260) 11 (29) One to six months USD SEK 3,077 (20,555) - (10) One to six months USD THB 10,885 (336,411) 8 - One to six months USD ZAR 5,354 (41,611) - (21) One to six months ZAR USD 85,013 (10,965) 26 - 64,833 (45,702)

Net forward currency contracts at 31 March 2012 19,131 Prior year comparative Open forward currency contracts at 31 March 2011 180,986 (194,230) Net forward currency contracts at 31 March 2011 (13,244)

The above table summarises the contracts held by maturity date, all contracts are traded on an over the counter basis.

In order to maintain appropriate diversification of investments in the portfolio and take advantage of wider opportunities, the Lothian Pension Fund invests around half of the fund in overseas markets. A currency hedging programme, using forward foreign exchange contracts, has been put in place to reduce the extent to which the Fund is exposed to currency movements. In addition, the Fund’s currency and bond managers use forward foreign exchange contracts to add value to the Fund.

37 LOTHIAN PENSION FUND

Notes to the Accounts

Investment managers and mandates 31 March 2011 31 March 2012 Market % of Market % of value total funds value total funds

Manager Mandate £000 % £000 % In-house UK equities 521,164 15.1 527,807 14.9 Legal & General UK equities 69,286 2.0 - - Total UK equities 590,450 17.1 527,807 14.9

In-house Euro equities 252,653 7.3 222,936 6.3 In-house US equities 190,667 5.5 247,927 7.0 Baillie Gifford Pacific equities 406,719 11.8 285,089 8.0 Invesco Pacific equities - - 118,279 3.3 Aberdeen Emerging mkts 208,048 6.0 195,088 5.5 Total regional overseas equities 1,058,087 30.6 1,069,319 30.1

Franklin Templeton Global equities 180,841 5.2 - - Cantillon Global equities - - 177,076 5.0 Lazard Global equities 219,913 6.4 223,242 6.3 Harris Global equities - - 128,274 3.6 Legal & General Global equities 302,087 8.9 173,556 4.9 Total global equities 702,841 20.5 702,148 19.8

Total listed equities 2,351,378 68.2 2,299,274 64.8

In-house Index linked 124,659 3.6 134,863 3.8 Total gilts 124,659 3.6 134,863 3.8

AG Bisset Active / passive (14,200) (0.4) 18,599 0.5 JP Morgan Active 530 - 276 - Record Active 471 - - - Total currency overlay (13,199) (0.4) 18,875 0.5

In-house Private equity LP 185,608 5.4 197,582 5.6 In-house Private equity quoted 38,406 1.1 34,365 1.0 In-house Infrastructure LP 69,115 2.0 143,666 4.0 In-house Infrastructure quoted 21,749 0.6 30,354 0.9 In-house Timber 795 - 46,207 1.3 In-house Gold 9,692 0.3 20,928 0.6 In-house Secured loans 21,717 0.6 22,905 0.6 In-house Euro real estate 29,780 0.9 56,264 1.6 In-house Alternatives cash 7,717 0.2 6,028 0.2 Rogge Bonds 156,388 4.5 171,079 4.8 Standard Life Property 332,268 9.6 324,575 9.1 Total alternative investments 873,235 25.2 1,053,953 29.7

In-house Cash 115,806 3.4 42,546 1.2 In-house Transition 2 - - - Net financial assets 3,451,881 100.0 3,549,511 100.0

38 LOTHIAN PENSION FUND

Notes to the Accounts

Investments representing more than 5% of the net assets of the Fund or 5% of any investment class 31 March 2011 31 March 2012 Investment Class Market % of Market % of value total class value total class £000 % £000 % MFC Vanguard S&P 500 ETF Equities 75,765 5.0 92,692 5.6 L&G UK equity index Pooled funds 94,463 7.3 13,972 1.1 L&G N America equity index Pooled funds 139,311 10.8 84,940 7.0 In-House UK equities Pooled funds 521,086 40.5 527,807 43.2 Folkestone, Shearway Business Pk Property 12,350 5.3 12,450 5.0 Portsmouth, Broad Oak Works Property 13,230 5.7 12,456 5.0 Exeter, David Lloyd Leisure Property 13,300 5.7 13,625 5.5 London, 100 St John Street Property 12,200 5.2 13,725 5.6 Sheffield, Bochum Parkway Property 14,750 6.3 14,750 6.0 Exeter, Bishops Court Property 15,000 6.4 15,000 6.1 London, 119-125 Wardour St Property 15,950 6.8 16,325 6.6

Over the last two years no single investment represented more than 5% of the net assets of the Fund.

12c Securities lending The Lothian Pension Fund participates in two securities lending arrangements. The arrangement with the Northern Trust Company covers the main investments of the Fund. As at 31 March 2012, £112.1m (2011 £47.3m) of securities were released to third parties. Collateral valued at 107.1% (2011 106.7%) of the market value of the securities on loan was held at that date. The arrangement with Blackrock relates to the Fund's holding of FTSE 250 iShares. As at 31 March 2012, £7.9m (2011 £5.2m) of securities were released to third parties. Collateral valued at 108.6% (2011 111.0%) of the market value of the securities on loan was held at that date.

39 LOTHIAN PENSION FUND

Notes to the Accounts

13 Financial instruments 13a Classification of financial instruments

Accounting policies describe how different asset classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the fair value amounts of financial assets and liabilities by category and net assets statement heading. No financial assets were reclassified during the accounting period.

All financial instruments are marked to market (at fair value) in the Fund's accounting records hence there is no difference between the carrying value and fair value.

31 March 2011 31 March 2012 Designated Loans and Financial Designated Loans and Financial as fair value receivables liabilities at as fair value receivables liabilities at through net amortised through net amortised asset cost asset cost statement statement £000 £000 £000 £000 £000 £000 Financial assets Investment assets Fixed interest 271,947 300,883 Equities 1,504,350 1,647,371 Pooled investments 1,285,558 1,221,474 Property 13,230 12,456 Derivative contracts 181,321 65,439 Margin balances 2,022 1,687 Cash 163,818 105,153 Other investment balances 19,255 9,613 3,256,406 185,095 - 3,247,623 116,453 - Other assets The City of Edinburgh Council 5,432 11,192 Cash 18,311 26,350 Debtors 13,070 10,078 - 36,813 - - 47,620 -

Assets total 3,256,406 221,908 - 3,247,623 164,073 -

Financial liabilities Investment liabilities Derivative contracts (194,401) (45,790) Other investment balances (15,459) (3,234) (209,860) - - (49,024) - - Other liabilities Creditors (11,304) (13,003) - - (11,304) - - (13,003)

Liabilities total (209,860) - (11,304) (49,024) - (13,003)

3,046,546 221,908 (11,304) 3,198,599 164,073 (13,003)

Total net financial instruments 3,257,150 3,349,669 Amounts not classified as financial instruments 220,333 234,554 Total net assets 3,477,483 3,584,223

40 LOTHIAN PENSION FUND

Notes to the Accounts 13b Net gains and losses on financial instruments 2011 2012 £000 £000 Designated as fair value through net asset statement 196,071 10,598 Loans and receivables (1,252) (5,907) Financial liabilities at amortised cost - - Net gains and losses on financial instruments 194,819 4,691

Gains and losses on directly held freehold property 6,663 3,652 Change in market value of investments per fund account 201,482 8,343

13c Valuation of financial instruments carried at fair value

The valuation of financial instruments has been classified into three levels, according to the quality and reliability of information used to determine fair values.

Level 1 Financial instruments at Level 1 are those where the fair values are derived from unadjusted quoted prices in active markets for identical assets or liabilities. Products classified as level 1 comprise quoted equities and unit trusts.

Listed investments are shown at bid prices. The bid value of the investment is based on the bid market quotation of the relevant stock exchange.

Level 2 Financial instruments at Level 2 are those where quoted market prices are not available; for example, where an instrument is traded in a market that is not considered to be active, or where valuation techniques are used to determine fair value and where these techniques use inputs that are based significantly on observable market data.

Level 3 Financial instruments at Level 3 are those where at least one input that could have a significant effect on the instrument’s valuation is not based on observable market data. Such instruments would include unquoted equity investments, which are valued using various valuation techniques that require significant judgement in determining appropriate assumptions.

The values of the investments in unlisted private equity, infrastructure, timber and European real estate are based on valuations provided by the general partners to the funds in which the Fund has invested. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines or similar guidelines provided by the British Venture Capital Association, which follow the valuation principles of IFRS. The valuations are usually undertaken annually at the end of December. Cash flow adjustments are used to roll forward the valuations to 31 March as appropriate.

41 LOTHIAN PENSION FUND

Notes to the Accounts

The following table provides an analysis of the financial assets and liabilities of the Fund grouped into Levels 1 to 3, based on the level at which the fair value is observable.

Total at Level 1 Level 2 Level 3 31 March 2012 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 2,490,565 300,883 456,175 3,247,623 Loans and receivables 164,073 164,073 Total financial assets 2,654,638 300,883 456,175 3,411,696 Financial liabilities Designated as fair value through net asset statement (49,024) (49,024) Financial liabilities at amortised cost (13,003) (13,003) Total financial liabilities (62,027) - - (62,027)

Net financial assets 2,592,611 300,883 456,175 3,349,669

Total at Level 1 Level 2 Level 3 31 March 2011 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 2,654,870 271,947 329,589 3,256,406 Loans and Receivables 221,908 221,908 Total financial assets 2,876,778 271,947 329,589 3,478,314 Financial liabilities Designated as fair value through net asset statement (209,860) (209,860) Financial Liabilities at amortised cost (11,304) (11,304) Total financial liabilities (221,164) - - (221,164)

Net financial assets 2,655,614 271,947 329,589 3,257,150

14 Nature and extent of risk arising from financial instruments

Risk and risk management The Fund’s primary aim is to ensure that all members and their dependents receive their benefits when they become payable. The investment strategy aims to maximise the returns from investments within reasonable risk parameters and hence minimise the long-term cost to employers. The Fund achieves this by investing in a diverse range of assets to reduce risk to an acceptable level. In addition, the Fund ensures that sufficient cash is available to meet all liabilities when they are due to be paid.

Responsibility for the Fund’s overall investment strategy rests with the Pensions and Trusts Committee. The Investment Strategy Panel and the internal investment team monitor investment risks on a regular basis. Investment risk management tools are used to identify and analyse risks faced by the Fund’s investments.

Consideration of the Fund’s investment risk is part of the overall risk management of the pensions operations. Risks are reviewed regularly to reflect changes in activity and market conditions.

42 LOTHIAN PENSION FUND

Notes to the Accounts

Types of investment risks There are various ways of considering investment risks for pension funds. For the purposes of this note, market risk is the potential for an investor to experience losses from falls in the prices of investments. All financial instruments, including cash deposits, present a risk of loss of capital and risks vary depending on different asset classes.

Market risk also changes over time as economic conditions and investor sentiment change. The Fund considers overall fluctuations in prices arising from a variety of sources: market risk, foreign exchange risk, interest rate risk, credit risk, etc. The different risks may, to some extent, offset each other.

The overall market risk of the Fund depends on the actual mix of assets and encompasses all the different elements of risk.

The Fund manages these risks in a number of ways:

z assessing and establishing acceptable levels of market risk when setting overall investment strategy. Importantly, risk is considered relative to the liabilities of the Fund

z diversification of investments in terms of type of asset, investment managers, geographical and industry sectors as well as individual securities

z taking stewardship responsibilities serious and pursuing constructive engagement with the companies in which we invest

z monitoring market risk and market conditions to ensure risk remains within tolerable levels

The Fund may use equity futures contracts from time to time to manage market risk. Exchange traded options are not used by the Fund.

Sensitivity analysis Analysis of historical asset prices can give an indication of the volatility in the future. Market risk does change over time and hence it is important to analyse assets price over a sufficiently long term. In consultation with Goldman Sachs, the Fund has determined that, based on analysis of 10 years of data, the following annual movements in prices are possible:

Potential price Asset type movement (+ or -) World listed equity 17.2% Emerging market equity 30.5% UK index linked gilts 4.6% Property 13.6% Private equity 32.9% Commodities 22.4% Corporate credit 7.2% Infrastructure 16.1%

Such price movements are broadly consistent with a one standard deviation (a statistical measure of variation from the expected outcome) and considered to be reasonably possible in any year. In broad terms, in 2 years out of 3 the price movement would be expected to be lower than the percentage change and in 1 year in 3, it would be expected to be higher.

43 LOTHIAN PENSION FUND

Notes to the Accounts

Sensitivity analysis cont'd It is also important to recognise the extent to which asset class moves are correlated. Correlation of 100% between two asset classes would indicate that they move in the same manner. With 0% correlation they would move independently. With negative correlation, they would move in opposite directions. To the extent that correlation between two asset classes is less than 100%, the overall fund benefits from diversification across asset classes and as a result should experience lower volatility.

The following tables shows how the prices of the Fund's investments would increase and decrease in line with the assumptions above.

Value % at Value on Value on % of fund Change Asset type 31 March increase decrease + / - 2012 £000 % % £000 £000 World listed equity 2,122,785 59.9 17.2 2,487,904 1,757,666 Emerging markets equity 195,088 5.5 30.5 254,590 135,586 UK index linked gilts 134,863 3.8 4.6 141,067 128,659 Property 380,839 10.7 13.6 432,633 329,045 Private equity 231,947 6.5 32.9 308,258 155,636 Commodities 67,135 1.9 22.4 82,173 52,097 Corporate credit 242,833 6.8 7.2 260,317 225,349 Infrastructure 174,021 4.9 16.1 202,038 146,004 Total [1] 3,549,511 100.0 17.4 4,168,980 2,930,042 Total [2] 15.4 4,096,136 3,002,886

[1] No allowance for correlations between assets [2] Including allowance for correlations between assets

The analysis shows the benefit of asset diversification, reducing the volatility and hence reducing the potential net movement of the overall Fund.

This risk analysis incorporates volatility from market, interest rate, foreign exchange, credit, and all other sources of risk, and, importantly, makes allowance for how these risks may offset each other.

Credit risk Credit risk represents the risk that the counterparty to a transaction or a financial instrument will fail to discharge an obligation and cause the Fund to incur a financial loss. The market values of investments generally reflect an assessment of credit in their pricing and consequently the risk of loss is implicitly provided for in the value of the fund's assets and liabilities (as outlined in Market Risk above).

In essence, the Fund’s entire investment portfolio is exposed to some sort of credit risk. However, through the selection of counterparties, brokers and financial institutions the Fund reduces the credit risk that may occur through the failure to settle a transaction in a timely manner.

Cash deposits, derivatives and stock lending are the major areas of credit exposure where credit risk is not reflected in market prices.

44 LOTHIAN PENSION FUND

Notes to the Accounts

Cash deposits At 31 March 2012, cash deposits represented £131.5m, 3.7% of total net assets. This was held with the following institutions:

Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £000 £000 Held for investment purposes Northern Trust Global Investment Limited - liquidity funds Aaa 28,555 36,153 Northern Trust Company - cash deposits Aa3 1,467 1,858 Royal Bank of Scotland - various accounts A2 7,197 4,318 The City of Edinburgh Council - treasury management See below 126,599 62,824

Total investment cash 163,818 105,153

Held for other purposes The City of Edinburgh Council - treasury management See below 18,311 26,350

Total cash 182,129 131,503

The majority of Sterling cash deposits of the Fund are managed along with those of the administering authority (the City of Edinburgh Council) and other related organisations which are pooled for investment purposes as a treasury cash fund. Management of the cash fund is on a low risk, low return basis, with security of the investments the key consideration. The Council has in place counterparty criteria.

The Fund's cash holding at the year end under its treasury management arrangements was held with the following institutions: Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £'000 £'000 Money market funds Deutsche Bank AG, London Aaa - 11,792 Standard Life Aaa 10,206 - Bank call accounts Bank of Scotland A1 12,102 7,571 Royal Bank of Scotland A2 12,128 8,212 Santander UK A1 16,128 7,020 Barclays Bank Aa3 15,247 6,956 Svenska Handelsbanken Aa2 - 11,188 Bank near-call accounts Clydesdale Bank (15 Day Notice) A2 10,118 1 Bank certificates of deposit Rabobank Aaa 206 - Building society fixed term deposits - Nationwide Building Society A2 - 2,599 UK Pseudo-Sovereign risk instruments Other Local Authorities [1] n/a 64,380 23,817 UK Government guaranteed FRNs n/a - 10,018 UK Government guaranteed bonds n/a 4,395 -

144,910 89,174

45 LOTHIAN PENSION FUND

Notes to the Accounts

[1] Very few Local Authorities have their own credit rating but they are generally assumed to have a pseudo- sovereign credit rating (which in the UK at 31 March 2012 would have been 'AAA'). Of the £23.8m on deposit with local authorities, £8.8m is with a local authority which has a 'Aa1' credit rating from Moody's.

Securities lending The Fund participates in two securities lending programmes as described above. The Fund is potentially exposed to credit risk in the event of the borrower of securities defaults. This risk is mitigated by the contractual commitment that borrowers provide collateral in excess of 100% of the value of the securities borrowed. In addition, Northern Trust has signed an agreement requiring it to make good any losses arising from the lending programme.

Derivatives The Fund transacts foreign currency derivatives over-the-counter and hence is exposed to credit risk in the event of a counterparty defaulting on the net payment or receipt that remains outstanding. This risk is minimised by the use of counterparties that are recognised financial intermediaries with acceptable credit ratings and by netting agreements. At 31 March 2012, the Fund was due £64.8m (£19.1m net of liabilities) from over-the-counter foreign currency derivatives.

The Fund also transacts in futures which are traded on exchanges. The risk of default is minimal due the collateralisation of the contracts and the exchange having in place controls to cover defaulting counterparties. At 31 March 2012, the Fund was due £606k (£518k net of liabilities) from futures.

Liquidity risk Liquidity risk reflects the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund therefore ensures that there is adequate cash and liquid resources to meet its commitments. Cash flow projections are prepared on a regular basis to understand and manage the timing of the Fund’s cash flow.

The majority (estimated to be over 75%) of the Fund’s investments could be converted to cash within three months in a normal trading environment.

Refinancing risk Refinancing risk is the risk that the Fund will be bound to replenish a significant proportion of its pension fund financial instruments at a time of unfavourable interest rates. The Fund is not bound by any obligation to replenish its investments and hence is not exposed to refinancing risk.

15 Actuarial statement The Scheme Actuary has provide a statement describing the funding arrangements of the Fund, this can be found in a separate section below.

16 Actuarial present value of promised retirement benefits The actuarial value of promised retirement benefits at the accounting date, calculated in line with International Accounting Standard 19 (IAS19) assumptions, is estimated to be £4,185m (2011 £4,046m). This figure is used for statutory accounting purposes by Lothian Pension Fund and complies with the requirements of IAS26. The assumptions underlying the figure match those adopted for the Administering Authority's FRS17/IAS19 reports at each year end.

The figure is only prepared for the purposes of IAS26 and has no validity in other circumstances. In particular, it is not relevant for calculations undertaken for funding purposes and setting contributions payable to the Fund.

46 LOTHIAN PENSION FUND

Notes to the Accounts

Financial assumptions 31 March 31 March 2011 2012 % p.a. % p.a. Inflation / pensions increase rate 2.8 2.5 Salary increase rate 5.1 4.8 Discount rate 5.5 4.8

For the year ended 31 March 2011, salary increases were estimated at 1% p.a. nominal for the three years to 31 March 2015 reverting to the long term rate thereafter.

For the year ended 31 March 2012, salary increases are estimated at 1% p.a. nominal for the period to 31 March 2012, reverting to the long term rate thereafter.

Longevity assumptions The life expectancy assumption is based on Fund specific statistical analysis with improvements from 2008 in line with Medium Cohort and a 1% p.a. underpin. Based on these assumptions, the average future life expectancies, in years, at age 65 are summarised below: Males Females Current pensioners 20.4 22.8 Future pensioners (assumed to be currently 45) 22.6 25.4

This assumption has been updated from that adopted as at 31 March 2011.

Commutation assumption An allowance is included for future retirements to elect to take 50% of the maximum additional tax-free cash up to HMRC limits for pre-April 2009 service and 75% of the maximum tax-free cash for post-April 2009 service.

17 Debtors 2011 2012 £000 £000 Contributions due - employers 10,415 7,252 Contributions due - members 2,038 1,922 Benefits paid in advance or recoverable 53 138 Pensions paid on behalf of employers 478 320 Sundry debtors 56 321 Prepayments 30 125 13,070 10,078 Analysis of debtors Administering Authority 18 270 Other Scheduled Bodies 11,105 7,650 Community Admission Bodies 1,808 1,831 Transferee Admission Bodies 27 24 Other entities and individuals 112 303 13,070 10,078

47 LOTHIAN PENSION FUND

Notes to the Accounts

18 Creditors 2011 2012 £000 £000 Benefits payable 5,962 1,882 VAT and State Scheme premiums 713 500 Contributions in advance - 6,591 Miscellaneous creditors and accrued expenses 4,629 4,030 11,304 13,003 Analysis of creditors Other Scheduled Bodies - 6,478 Community Admission Bodies - 113 Central Government Bodies 713 500 Other entities and individuals 10,591 5,912 11,304 13,003

19 Additional Voluntary Contributions Active members of the Lothian Pension Fund and the Lothian Buses Pension Fund have the option to pay additional voluntary contributions (AVCs). These AVCs are invested separately from the main funds, securing additional benefits on a money purchase basis for those members that have elected to contribute. The investment of the AVCs is managed by Standard Life and Prudential.

Contributions during year 2011 2012 £000 £000 Standard Life 994 506 Prudential 253 705 1,247 1,211

Value at year end 2011 2012 £000 £000 Standard Life 6,509 5,491 Prudential 277 745 6,786 6,236

20 Related party transactions The City of Edinburgh Council The Lothian Pension Fund, the Lothian Buses Pension Fund and the Scottish Homes Pension Fund are administered by the City of Edinburgh Council. Consequently there is a strong relationship between the Council and the Pension Funds.

The Investment and Pensions Division of the Council is responsible for administering the three Pension Funds. The Division receives an allocation of the overheads of the Council, this is based on the amount of central services consumed. This includes the pension payroll service provided by the Council. In turn, the Division allocates its costs to the three Pension Funds. Costs directly attributable to a specific Fund are charged to the relevant Fund, costs that are common to all three Funds are allocated in proportion to the value of the Funds as at the end of the year. The costs allocated to Lothian Pension Fund were: 2011 2012 £000 £000 Administrative expenses 1,725 1,802 Investment management expenses 8,818 8,525 10,543 10,327

48 LOTHIAN PENSION FUND

Notes to the Accounts

The Council is also the single largest employer of members of the pension fund and contributed £54.5m to the Fund during the year (2011 £55.4m).

Transactions between the Council and the Fund are managed via a holding account, each month the Fund is paid a cash sum leaving a working balance in the account to cover the month's pension payroll costs and other expected costs. The year end balance on the account was: 2011 2012 £000 £000 5,432 11,192

Part of the Fund's cash holdings are invested on the money markets by the treasury management operations of the Council, through a service level agreement. During the year to 31 March 2012, the fund had an average investment balance of £95.3m (2011 £174.2m), interest earned was £737.8k (2011 £1.1m). The year end balances are:

2011 2012 £000 £000 Held for investment purposes 126,599 62,824 Held for other purposes 18,311 26,350 144,910 89,174 Governance As at 31 March 2012, all members of the Pensions and Trusts Committee, with the exception of Councillor Maggie Chapman, were active members of the Lothian Pension Fund.

Each member of the Pensions and Trusts Committee is required to declare any financial and non-financial interests they have in the items of business for consideration at each meeting, identifying the relevant agenda item and the nature of their interest.

Key management personnel During the period from 1 April 2011 to the date of issuing of these accounts, several employees of the City of Edinburgh Council held key positions in the financial management of the Lothian Pension Fund. These employees and their financial relationship with the Fund (expressed as cash-equivalent transfer values or CETV) are set out below:

Accrued Accrued CETV as at CETV as at 31 March 31 March 2011 2012 £000 £000 Alastair Maclean Director of Corporate Governance 15 44 Head of Investment and Pensions - resigned 526 581 Geik Drever February 2012 Investment and Pensions Service Manager - 45 67 Clare Scott appointed February 2012 John Burns Pensions & Accounting Manager 262 318 Esmond Hamilton Financial Controller 67 86 Bruce Miller Investment Manager - appointed April 2012 44 65

21 Contingent liabilities and contractual commitments The Fund has commitments relating to outstanding call payments due on unquoted limited partnership funds held in the private equity and infrastructure parts of the portfolio. The amounts ‘called’ by these funds are irregular in both size and timing, taking place over a period of years from the date of each original commitment. The outstanding commitments at the year end are as follows: 2011 2012 £000 £000 197,138 175,058

49 LOTHIAN PENSION FUND

Notes to the Accounts

22 Contingent assets There were no contingent assets at the year end.

23 Impairment losses During the year, in anticipation of best practice standards as defined by the Pensions Regulator, a considerable amount of work was undertaken to improve data quality. This included a detailed reconciliation of the pension payroll system with the pension administration system. Variances which indicated a potential overpayment were prioritised (i.e. where the payroll record is higher than the pension record). 1,189 potential overpayments were identified from which 139 actual overpayments were identified. Overpayments total £329k were identified.

An analysis of overpayment cases has shown that some pensioners had been in receipt of the wrong pension entitlement since 1982. In considering these cases of historic overpayment of pensions, the recipients of which are by definition either elderly or dependants, and in light of established precedent, Finance & Resources Committee agreed not to pursue recovery. The £329k has effectively been recognised in the accounts when the overpayment occurred, so the impact on the accounts has been spread over many years. In all instances, however, the monthly pension payment going forward was corrected.

1,145 potential underpayments were identified of which 124 actual underpayments resulted, totalling £139k. All underpayments have been rectified and the members paid in full. The £139k has been recognised in the accounts for the year ended 31 March 2012.

During the year the Fund has recognised an impairment loss of £45k in respect of specific benefit over payments for which reimbursement has been requested.

A review has been carried out of cessation values for employers that have ceased to have active members, the Fund is satisfied that all material liabilities are covered by a suitable guarantee.

50 LOTHIAN PENSION FUND

Actuarial Statement for 2011/12

This statement has been prepared in accordance with Regulation 31A(1)(d) of the Local Government Pension Scheme (Scotland) (Administration) Regulations 2008, and Chapter 6 of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the UK 2011/12.

Description of Funding Policy The funding policy is set out in the administering authority’s Funding Strategy Statement (FSS), dated March 2012. In summary, the key funding principles are as follows:

● to ensure the long-term solvency of the overall Fund

● to minimise the degree of short-term change in employer contribution rates

● maximise the returns from investments within reasonable and considered risk parameters, and hence minimise the cost to the employer

● to ensure that sufficient cash is available to meet all liabilities as they fall due for payment

● to help employers manage their pension liabilities

● where practical and cost effective, to make allowance for the different characteristics of different employers and groups of employers

The FSS sets out how the administering authority seeks to balance the conflicting aims of securing the solvency of the Fund and keeping employer contributions stable.

Funding position as at the last formal funding valuation The most recent actuarial valuation carried out under Regulation 32 of the Local Government Pension Scheme (Scotland) (Administration) Regulations 2008 was as at 31 March 2011. This valuation revealed that the Fund’s assets, which at 31 March 2011 were valued at £3,477 million, were sufficient to meet 96% of the liabilities (i.e. the present value of promised retirement benefits) accrued up to that date. The resulting deficit at the 2011 valuation was £142 million.

Individual employers’ contributions for the period 1 April 2012 to 31 March 2015 were set in accordance with the Fund’s funding policy as set out in its FSS.

Principal actuarial assumptions and method used to value the liabilities Full details of the methods and assumptions used are described in my valuation report dated 15 February 2012.

Method The liabilities were assessed using an accrued benefits method which takes into account pensionable membership up to the valuation date, and makes an allowance for expected future salary growth to retirement or expected earlier date of leaving pensionable membership.

51 LOTHIAN PENSION FUND

Actuarial Statement for 2011/12

Assumptions A market-related approach was taken to valuing the liabilities, for consistency with the valuation of the Fund assets at their market value.

The key financial assumptions adopted for the 2011 valuation were as follows:

31 March 2011 Financial assumptions % p.a. % p.a. Nominal Real Discount rate 5.8% 2.9% Pay increases * 5.1% 2.2% Price inflation/Pension increases 2.8% ‐

* plus an allowancefor promotionalpay increases. Short term pay growth was assumed to be 1% p.a. for 2011/12 and 2012/13, reverting to 5.1% p.a. thereafter.

The key demographic assumption was the allowance made for longevity. As a member of Club Vita, the baseline longevity assumptions adopted at this valuation were a bespoke set of VitaCurves that were specifically tailored to fit the membership profile of the Fund. Longevity improvements were in line with standard year of birth mortality tables; with medium cohort projections and a 1% p.a. underpin effective from 2008. Based on these assumptions, the average future life expectancies at age 65 are as follows:

Males Females Current pensioners 20.4 years 22.8 years Future pensioners 22.6 years 25.4 years

Copies of the 2011 valuation report and Funding Strategy Statement are available on request from the Fund.

Experience over the period since April 2011 The administering authority monitors the funding position on a regular basis as part of its risk management programme with the next funding update to be produced at September 2012. Experience has been poorer than expected since the last valuation (excluding the effect of any membership movements). The funding level (excluding the effect of any membership movements) has worsened since the 2011 valuation due to falling real bond yields and lower asset returns than expected.

The next actuarial valuation will be carried out as at 31 March 2014. The Funding Strategy Statement will also be reviewed at that time.

Hymans Robertson LLP 20 Waterloo Street Glasgow G2 6DB 18 May 2012

52 LOTHIAN PENSION FUND

List of active employers at 31 March 2012

Community Admitted Bodies CAB / Scheduled Bodies SB / Transferee Admitted Bodies TAB

Almond Housing Association Ltd CAB Lothian & Borders Fire and Rescue Service SB Audit Scotland CAB Lothian and Borders Police Force SB BAM Construction Ltd TAB Lothian Centre for Inclusive Living CAB Barony Housing Association Ltd CAB Lothian Valuation Joint Board SB Broomhouse Centre Representative Council CAB Melville Housing Association CAB Broxburn Family Centre CAB Mental Welfare Commission for Scotland CAB Canongate Youth Project CAB Midlothian Council SB Canongate Youth Project YTS Ltd CAB Mitie PFI (CEC) TAB Capital City Partnership CAB Mitie PFI (WLC) Ltd TAB Centre for Moving Image (The) CAB Morrison Facilities Services Ltd TAB Children First CAB Museums Galleries Scotland CAB Children’s Hospice Association Scotland CAB Newbattle Abbey College CAB Citadel Youth Centre CAB North Edinburgh Dementia Care CAB City of Edinburgh Council (The) SB NSL Ltd TAB Compass Chartwell TAB Oatridge Agricultural College SB Convention of Scottish Local Authorities CAB Open Door Accommodation Project CAB Dawn Group Ltd TAB Penumbra CAB Dean Orphanage and Cauvin’s Trust CAB Pilton Community Health Project CAB Donaldson’s Trust CAB Pilton Equalities Project CAB East Lothian Council SB Pilton Youth and Children’s Project CAB EDI Group Ltd CAB Queen Margaret University CAB Edinburgh Business School CAB Queensferry Churches Care in the Com Project CAB Edinburgh Convention Bureau CAB Royal Edinburgh Military Tattoo CAB Edinburgh Cyrenians Trust CAB Royal Society of Edinburgh CAB Edinburgh Development Group CAB Scotland's Learning Partnership CAB Edinburgh International Festival Society CAB Scottish Adoption Agency CAB Edinburgh Leisure CAB Scottish Council for Single Homeless CAB Edinburgh Napier University CAB Scottish Futures Trust CAB Edinburgh Woman’s Rape and Sexual Abuse Centre CAB Scottish Legal Complaints Commission CAB Edinburgh World Heritage Trust CAB Scottish Mining Museums CAB Edinburgh’s Telford College SB Scottish Police Services Authority SB ELCAP CAB Scottish Water SB Enjoy East Lothian CAB SESTRAN SB Family Advice and Information Resource CAB Skanska UK TAB Festival City Theatres Trust CAB SSERC CAB First Step CAB St Andrew’s Children’s Society Limited CAB Forth and Oban Ltd TAB St Columba’s Hospice CAB Forth Estuary Transport Authority SB Stepping Out Project CAB Four Square (Scotland) CAB Stevenson College SB Freespace Housing Association CAB Streetwork UK Ltd CAB Granton Information Centre CAB University of Edinburgh ( Edin College of Art) SB Handicabs (Lothian) Ltd CAB Victim Support Scotland CAB Hanover (Scotland) Housing Association CAB Visit Scotland SB Health in Mind CAB Waverley Care CAB Heriot-Watt University SB Weslo Housing Management CAB Homes for Life Housing Partnership CAB West Granton Community Trust CAB HWU Students Association CAB West Lothian College SB Improvement Service CAB West Lothian Council SB Into Work CAB West Lothian Leisure CAB ISS UK Ltd TAB Wester Hailes Land and Property CAB Jewel and Esk College SB Young Scot Enterprise CAB Keymoves CAB Youthlink Scotland CAB Link In CAB

53 LOTHIAN BUSES PENSION FUND

Membership numbers

Membership Membership Membership at at at Status 31/03/2010 31/03/2011 31/03/2012 Active 1,558 1,479 1,407 Deferred 1,188 1,182 1,179 Pensioners 1,056 1,092 1,122 Dependants 282 292 303 Total 4,084 4,045 4,011

Investment strategy In 2008, the Pensions & Trusts Committee approved a change to the investment strategy for Lothian Buses Pension Fund. The new strategy reduces the allocation to equities and increases the allocation to non-property alternative investments. It is designed to reduce investment risk as the Fund is now closed to new members and the liabilities will mature over time. Alternative investments are expected to provide returns in excess of bonds while having a low correlation with equities, providing greater diversification for the Fund.

Gradual implementation of the new strategy started in 2009/10 and continued through 2011/2012. These included moving to a 7.5% non-property alternatives benchmark. Non-property alternative investments include private equity, infrastructure and secured loans.

The Fund’s interim investment strategy at 31 March 2012 is as follows:

Previous Long term Interim benchmark strategy strategy at benchmark 31/3/2012 % % % Listed equities UK 35.0 7.5 55.0 Global 35.0 55.0 70.0 55.0 62.5

Bonds 20.0 20.0 20.0

Alternatives Property 10.0 10.0 10.0 Other - 15.0 7.5 10.0 25.0 17.5 Cash - - - Total 100.0 100.0 100.0

The next phase of the transition to the new investment strategy involving the reduction in the Fund’s equity allocation, will be implemented gradually depending on how the funding level develops and on identifying further appropriate alternative investments.

Investment performance

Short term (1 year) The Fund delivered a return of +5.0% over the year. The Fund outperformed its benchmark over the year. The equity funds were broadly in line with benchmark whilst property performed strongly.

Medium term (3 years) Over the 3 years to 31 March 2012, the Fund posted a return of +18.1% per year. The Fund outperformed its benchmark over the period by 1.6% per year. The outperformance was mainly due to strong results from Baillie Gifford who manage the Fund's equities and bonds.

54 LOTHIAN BUSES PENSION FUND

Long term (10 years) The Fund’s long term performance exceeds the growth in the retail price index and national average earnings growth. The Fund’s return is ahead of the benchmark by 0.9% per year over the 10 year period to 31 March 2012. This is attributable to strong performance of the equity portfolio.

Annualised returns to 31 March 2012 (% per year) 1 Year 3 Years 10 Years Lothian Buses Pension Fund 5.0 18.1 7.4 Benchmark 4.5 16.5 6.5 Retail Price Index 3.6 4.5 3.3 National Average Earnings 0.2 2.6 3.2

Annualised 3 yearly returns ending 31 March (% per year) Target is 1.5% pa over 3 years (target prior to October 2009 was 1%)

25.0 5.0 Year to March LBPF BENCHMRELATIVE (RHS) 20.02003 -8.5 -9.4 1.0 4.0 2004 1.0 -0.6 1.7 15.0 3.0 2005 3.7 3.4 0.3 10.02006 21.1 20.0 1.0 2.0 2007 14.6 14.5 0.1 5.02008 10.9 9.8 1.1 1.0 2009 -5.1 -5.6 0.5 0.0 0.0 2010 5.1 3.6 1.6 -5.02011 8.4 6.9 1.4 -1.0 2012 18.1 16.5 1.6 -10.0 -2.0

-15.0 -3.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LBPF -8.5 1.0 3.7 21.1 14.6 10.9 -5.1 5.1 8.4 18.1 BENCHMARK -9.4 -0.6 3.4 20.0 14.5 9.8 -5.6 3.6 6.9 16.5 RELATIVE (RHS) 1.0 1.7 0.3 1.0 0.1 1.1 0.5 1.6 1.4 1.6

55 LOTHIAN BUSES PENSION FUND

Fund Account for the year ended 31 March 2012

2010/11 2011/12 £000 Note £000 Income 7,963 Contributions from employer 2 8,128 2,386 Contributions from members 3 2,358 - Transfers from other schemes 4 - 10,349 10,486

Less: Expenditure 6,228 Pension payments including increases 5 6,580 2,135 Lump sum retirement payments 6 1,712 204 Lump sum death benefits 7 144 330 Transfers to other schemes 8 67 133 Administrative expenses 9 145 9,030 8,648

1,319 Net additions from dealing with members 1,838

Returns on investments 4,661 Investment income 10 5,455 19,883 Change in market value of investments 12a 7,784 (965) Investment management expenses 11 (641) 23,579 Net returns on investments 12,598

24,898 Net increase in the Fund during the year 14,436

232,114 Net assets of the Fund at 1 April 2011 257,012

257,012 Net assets of the Fund at 31 March 2012 271,448

56 LOTHIAN BUSES PENSION FUND

Net Assets Statement as at 31 March 2012

2010/11 2011/12 £000 Note £000

254,111 Net investment assets 12 267,170 Current assets 45 The City of Edinburgh Council 20 629 2,005 Cash balances 20 2,759 870 Debtors 17 951 2,920 4,339

Current liabilities (19) Creditors 18 (61)

2,901 Net current assets 4,278

257,012 Net assets 271,448

57 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

There have been no events since 31 March 2012, and up to the date when these accounts were authorised, that require any adjustments to these accounts.

2 Contributions from employers 2011 2012 Employers £000 £000 Normal (ongoing contributions) 7,258 7,300 Deficit funding 556 556 7,814 7,856

Pension strain 149 272 Total 7,963 8,128

All contributions recorded in the fund account of the Lothian Buses Pension Fund relate to Lothian Buses Plc which is a Scheduled Body. The employer pays an agreed contribution rate on pensionable salaries, this rate includes an element in respect of deficit funding. The part of the contribution attributable to deficit funding as shown above, is calculated based on a future service contribution rate of 21.1% (as stated in the actuarial valuation of 31 March 2008). The deficit recovery period is the estimated future working lifetime of current active members.

3 Contributions from members 2011 2012 £000 £000 Scheduled Body 2,386 2,358

4 Transfers from other schemes 2011 2012 £'000 £'000 Transfers in - -

There have been no transfers in the last two years

5 Pensions payable 2011 2012 £000 £000 Scheduled Body 6,228 6,580

6 Lump sum retirement benefits payable 2011 2012 £000 £000 Scheduled Body 2,135 1,712

58 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

7 Lump sum death benefits payable 2011 2012 £000 £000 Scheduled Body 204 144

8 Transfers out to other schemes 2011 2012 £000 £000 Group transfers - - Individual transfers 330 67 330 67

9 Administrative expenses 2011 2012 £000 £000 Employee costs 58 65 The City of Edinburgh Council - pension payroll costs 17 15 The City of Edinburgh Council - other support costs 25 22 System costs 10 7 Actuarial fees 11 24 External Audit fees 4 2 Legal fees 1 3 Printing & postage 3 3 Depreciation 2 2 Sundry costs less sundry income 2 2 133 145

10 Investment income 2011 2012 £000 £000 Dividends from equities 3,420 3,572 Income from index-linked securities 328 - Income from pooled investment vehicles 941 1,789 Interest on cash deposits 31 45 Securities lending & sundries 107 131 4,827 5,537 Irrecoverable withholding tax (166) (83) 4,661 5,454

11 Investment management expenses 2011 2012 £000 £000 External management fees 875 545 Employee costs 51 43 Custody fees 21 3 Engagement & voting fees 5 5 Performance measurement fees 3 4 Investment consultancy fees 1 2 System costs 7 11 Legal fees - 1 Sundry costs 2 27 965 641

59 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

12 Net investment assets 2011 2012 £000 £000 Investment assets Equities 159,766 169,629 Pooled investment vehicles 91,446 93,708 Deposits 2,387 3,388

Other investment assets Due from broker 27 - Dividends & other income due 485 690 512 690

Total investment assets 254,111 267,415 Investment liabilities Other financial liabilities - due to broker - (245)

Total investment liabilities - (245)

Net investment assets 254,111 267,170

12a Reconciliation of movement in investments Value Purchases Sales Change Value at at cost proceeds in at 1 April market 31 March 2011 value 2012 £000 £000 £000 £000 £000 Equities 159,766 31,632 (22,181) 412 169,629 Pooled investment vehicles 91,446 8,293 (13,388) 7,357 93,708 251,212 39,925 (35,569) 7,769 263,337 Other financial assets / (liabilities) Cash deposits 2,387 (17) 3,388 Broker balances 27 - (245) Dividends due 485 32 690 2,899 15 3,833

Net financial assets 254,111 7,784 267,170

Value Purchases Sales Change Value at at cost proceeds in at 1 April market 31 March 2010 value 2011 £000 £000 £000 £000 £000 Equities 134,438 48,820 (38,155) 14,663 159,766 Index-linked securities 18,102 1,906 (20,557) 549 - Pooled investment vehicles 68,895 23,945 (6,143) 4,749 91,446 221,435 74,671 (64,855) 19,961 251,212 Other financial assets / (liabilities) Cash deposits 7,981 5 2,387 Broker balances (1,519) (87) 27 Dividends due 395 4 485 6,857 (78) 2,899

Net financial assets 228,292 19,883 254,111

60 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include costs charged directly to the Fund such as fees, commissions, stamp duty and other fees. Transaction costs incurred during the year amounted to £81k (2011 £90k). In addition to the transaction costs disclosed above, indirect costs may be incurred through the bid-offer spread on some pooled investment vehicles, the amount of any such costs is not separately provided to the Fund.

12b Analysis of investments Market Market value at value at 31 March 31 March 2011 2012 Equities £000 £000 UK quoted 25,043 29,229 Overseas quoted 134,723 140,400 159,766 169,629

Pooled investment vehicles UK Managed funds - property 22,204 24,381 In-house equities 31,030 21,604 Managed funds - other 38,212 40,164 Overseas Infrastructure and timber - 7,559 91,446 93,708

Investment managers and mandates 2011 2012 Market % of Market % of value at 31 total funds value at 31 total funds March 2011 March 2012

Manager Mandate £000 % £000 % Baillie Gifford Multi asset 191,736 75.5 201,125 75.3 In-house UK equities 31,030 12.2 21,603 8.1 Standard Life Property managed fund 22,204 8.7 24,381 9.1

In-house Private equity quoted 5,275 2.1 4,956 1.9 In-house Infrastructure LP - - 4,810 1.8 In-house Infrastructure quoted 1,857 0.7 4,893 1.8 In-house Timber - - 2,749 1.0 In-house Secured loans 1,910 0.8 1,780 0.7 In-house Alternatives cash 20 - 115 - Total alternative investment 9,062 3.6 19,303 7.2

In-house - cash 79 - 758 0.3 Net financial assets 254,111 100.0 267,170 100.0

61 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

Investments representing more than 5% of the net assets of the Fund or 5% of any investment class 2011 2012 Investment Market % of Market % of value at net assets value at net assets 2011 2012 £000 % £000 % In-house UK equities pooled fund 31,030 12.1 21,603 8.0 Standard Life property fund 22,204 8.6 24,381 9.0 Baillie Gifford inv grade bond fund 18,949 7.4 19,684 7.3 Baillie Gifford index linked gilt fund 19,263 7.5 20,480 7.5

2011 2012 Investment Class Market % of Market % of value total class value total class £000 % £000 % In-house UK equities pooled fund Pooled funds 31,030 33.9 21,603 23.1 Standard Life property fund Pooled funds 22,204 24.3 24,381 26.0 Baillie Gifford inv grade bond fund Pooled funds 18,949 20.7 19,684 21.0 Baillie Gifford index linked gilt fund Pooled funds 19,263 21.1 20,480 21.9

12c Securities lending The Lothian Buses Pension Fund participates in two securities lending arrangements. The arrangement with the Northern Trust Company covers the main investments of the Fund. As at 31 March 2012, £12.5m (2011 £4.5m) of securities were released to third parties. Collateral valued at 107.1% (2011 108.1%) of the market value of the securities on loan was held at that date. The arrangement with Blackrock relates to the Fund's holding of FTSE 250 iShares in the in-house UK equity pooled fund. As at 31 March 2012, £0.3m (2011 £0.3m) of securities were released to third parties. Collateral valued at 108.6% (2011 111.0%) of the market value of the securities on loan was held at that date.

13 Financial instruments 13a Classification of financial instruments

62 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

All financial instruments are marked to market (at fair value) in the Fund's accounting records hence there is no difference between the carrying value and fair value.

31 March 2011 31 March 2012 Designated Loans and Financial Designated Loans and Financial as fair value receivables liabilities at as fair value receivables liabilities at through net amortised through net amortised asset cost asset cost statement statement £000 £000 £000 £000 £000 £000 Financial assets Investment assets Equities 159,766 169,629 Pooled investments 91,446 93,708 Cash 2,387 3,388 Other investment balances 512 690 251,212 2,899 - 263,337 4,078 - Other assets The City of Edinburgh Council 45 629 Cash 2,005 2,759 Debtors 870 951 - 2,920 - - 4,339 -

Assets total 251,212 5,819 - 263,337 8,417 -

Financial liabilities Investment liabilities Other investment balances - (245) - - - (245) - - Other liabilities Creditors (19) (61) - - (19) - - (61)

Liabilities total - - (19) (245) - (61)

251,212 5,819 (19) 263,092 8,417 (61)

Total net financial instruments 257,012 271,448 Amounts not classified as financial instruments - - Total Net Assets 257,012 271,448

13b Net gains and losses on financial instruments 31 March 31 March 2011 2012 £000 £000 Designated as fair value through net asset statement 19,961 7,769 Loans and receivables (78) 15 Financial liabilities at amortised cost - - Total 19,883 7,784

63 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

13c Valuation of financial instruments carried at fair value

The valuation of financial instruments has been classified into three levels, according to the quality and reliability of information used to determine fair values.

Listed investments are shown at bid prices. The bid value of the investment is based on the bid market quotation of the relevant stock exchange.

The values of the investments in unlisted private equity, infrastructure and timber are based on valuations provided by the general partners to the funds in which the Fund has invested. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines or similar guidelines provided by the British Venture Capital Association, which follow the valuation principles of IFRS. The valuations are usually undertaken annually at the end of December. Cash flow adjustments are used to roll forward the valuations to 31 March as appropriate.

The following table provides an analysis of the financial assets and liabilities of the Fund grouped into Levels 1 to 3, based on the level at which the fair value is observable.

Total at Level 1 Level 2 Level 3 31 March 2012 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 255,778 7,559 263,337 Loans and receivables 8,417 8,417 Total financial assets 264,195 - 7,559 271,754 Financial liabilities Designated as fair value through net asset statement (245) (245) Financial liabilities at amortised cost (61) (61) Total financial liabilities (306) - - (306)

Net financial assets 263,889 - 7,559 271,448

64 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

Total at Level 1 Level 2 Level 3 31 March 2011 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 251,212 251,212 Loans and receivables 5,819 5,819 Total financial assets 257,031 - - 257,031 Financial liabilities Designated as fair value through net asset statement - Financial liabilities at amortised cost (19) (19) Total financial liabilities (19) - - (19)

Net financial assets 257,012 - - 257,012

14 Nature and extent of risk arising from financial instruments

Risk and risk management The Fund’s primary aim is to ensure that all members and their dependents receive their benefits when they become payable. The investment strategy aims to maximise the returns from investments within reasonable risk parameters and hence minimise the long-term cost to employers. The Fund achieves this by investing in a diverse range of assets to reduce risk to an acceptable level. In addition, the fund ensures that sufficient cash is available to meet all liabilities when they are due to be paid.

Consideration of the Fund’s investment risk is part of the overall risk management of the pensions operations. Risks are reviewed regularly to reflect changes in activity and market conditions.

The overall market risk of the Fund depends on the actual mix of assets and encompasses all the different elements of risk.

The Fund manages these risks in a number of ways:

z assessing and establishing acceptable levels of market risk when setting overall investment strategy. Importantly, risk is considered relative to the liabilities of the Fund

z diversification of investments in terms of type of asset, geographical and industry sectors as well as individual securities

65 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

z taking stewardship responsibilities serious and pursuing constructive engagement with the companies in which we invest

z monitoring market risk and market conditions to ensure risk remains within tolerable levels.

The Fund may use equity futures contracts from time to time to manage market risk. Exchange traded options are not used by the Fund.

Potential price Asset type movement (+ or -) World listed equity 17.2% Property 13.6% Private equity 32.9% Commodities 22.4% Credit 7.2% Infrastructure 16.1%

It is also important to recognise the extent to which asset class moves are correlated. Correlation of 100% between two asset classes would indicate that they move in the same manner. With 0% correlation they would move independently. With negative correlation, they would move in opposite directions. To the extent that correlation between two asset classes is less than 100%, the overall fund benefits from diversification across asset classes and as a result should experience lower volatility.

The following tables shows how the prices of the Fund’s investments would increase and decrease in line with the assumptions above.

Value % at Value on Value on % of fund Change Asset type 31 March increase decrease + / - 2012 £000 % % £000 £000 World listed equity 222,728 83.4 17.2 261,037 184,419 Property 24,381 9.1 13.6 27,697 21,065 Private equity 4,956 1.9 32.9 6,587 3,325 Commodities 2,749 1.0 22.4 3,365 2,133 Credit 2,652 1.0 7.2 2,843 2,461 Infrastructure 9,704 3.6 16.1 11,266 8,142 Total [1] 267,170 100.0 17.1 312,795 221,545 Total [2] 16.2 310,452 223,888

[1] No allowance for correlations between assets [2] Including allowance for correlations between assets

66 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

The analysis shows the benefit of asset diversification, reducing the volatility and hence reducing the potential net movement of the overall Fund.

Credit risk Credit risk represents the risk that the counterparty to a transaction or a financial instrument will fail to discharge an obligation and cause the Fund to incur a financial loss. The market values of investments generally reflect an assessment of credit in their pricing and consequently the risk of loss is implicitly provided for in the value of the Fund's assets and liabilities (as outlined in Market Risk above).

In essence, the Fund’s entire investment portfolio is exposed to some sort of credit risk. However through the selection of counterparties, brokers and financial institutions the Fund reduces the credit risk that may occur through the failure to settle a transaction in a timely manner.

Cash deposits, derivatives and stock lending are the major areas of credit exposure where credit risk is not reflected in market prices.

Cash Deposits At 31 March 2012, cash deposits represented £6.1m, 2.3% of total net assets. This was held with the following institutions:

Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £000 £000 Held for investment purposes Northern Trust Global Investment Limited - liquidity funds Aaa 2,152 2,144 Northern Trust Company - cash deposits Aa3 156 485 Royal Bank of Scotland - various accounts A2 - - City of Edinburgh Council - treasury management See Below 79 757

Total investment cash 2,387 3,386

Held for other purposes The City of Edinburgh Council - treasury management See Below 2,005 2,759

Total cash 4,392 6,145

67 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

The Fund's cash holding at the year end under its treasury management arrangements was held with the following institutions: Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £000 £000 Money market funds Deutsche Bank AG, London Aaa - 465 Standard Life Aaa 147 - Bank call accounts Bank of Scotland A1 174 299 Royal Bank of Scotland A2 175 324 Santander UK A1 232 277 Barclays Bank Aa3 219 274 Svenska Handelsbanken Aa2 - 442 Bank near-call accounts Clydesdale Bank (15 Day Notice) A2 146 - Bank certificates of deposit Rabobank Aaa 3 - Building Society fixed term deposits - Nationwide Building Society A2 - 103 UK pseudo-sovereign risk instruments Other Local Authorities [1] n/a 925 938 UK Government guaranteed FRNs n/a - 394 UK Government guaranteed bonds n/a 63 -

2,084 3,516

[1] Very few Local Authorities have their own credit rating but they are generally assumed to have a pseudo- sovereign credit rating (which in the UK at 31 March 2012 would have been 'AAA'). Of the £938k on deposit with local authorities at 31 March 2012, £348k is with a local authority which has a 'Aa1' credit rating from Moody's.

Securities lending The Fund participates in two securities lending programmes as described above. The Fund is potentially exposed to credit risk in the event of the borrower of stock defaults. This risk is mitigated by the contractual commitment that borrowers provide collateral in excess of 100% of the value of the securities borrowed. In addition, Northern Trust has signed an agreement requiring it to make good any losses arising from the lending programme.

Liquidity risk Liquidity risk reflects the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund therefore ensures that there is adequate cash and liquid resources to meet its commitments. Cashflow projections are prepared on a regular basis to understand and manage the timing of the Fund’s cashflow.

The majority (estimated to be over 80%) of the Fund’s investments could be converted to cash within three months in a normal trading environment.

68 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

15 Actuarial statement The Fund Actuary has provide a statement describing the funding arrangements of the Fund, this can be found in a separate section below.

16 Actuarial present value of promised retirement benefits The actuarial value of promised retirement benefits at the accounting date, calculated in line with International Accounting Standard 19 (IAS19) assumptions, is estimated to be £269m (2011 £238m). This figure is used for statutory accounting purposes by Lothian Buses Pension Fund and complies with the requirements of IAS26. The assumptions underlying the figure match those adopted for the Administering Authority's FRS17/IAS19 reports at each year end.

Financial assumptions 31 March 31 March 2011 2012 % p.a. % p.a. Inflation / pensions increase rate 2.8 2.5 Salary increase rate 5.1 4.8 Discount rate 5.5 4.8

For the year ended 31 March 2011, salary increases were estimated at 1% p.a. nominal for the three years to 31 March 2015 reverting to the long term rate thereafter.

For the year ended 31 March 2012, salary increases are estimated at 1% p.a. nominal for the period to 31 March 2012, reverting to the long term rate thereafter.

Longevity assumptions The life expectancy assumption is based on Fund specific statistical analysis with improvements from 2008 in line with Medium Cohort and a 1% p.a. underpin. Based on these assumptions, the average future life expectancies, in years, at age 65 are summarised below: Males Females Current pensioners 18.4 21.6 Future pensioners (assumed to be currently 45) 21.7 24.8

This assumption has been updated from that adopted as at 31 March 2011.

17 Debtors 2011 2012 £000 £000 Contributions due - employers 665 700 Contributions due - employees 178 209 Pensions paid on behalf of employers 24 27 Sundry debtors 3 15 870 951 Analysis of debtors Administering Authority 1 3 Scheduled Body 867 936 Other entities and individuals 2 12 870 951

69 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

18 Creditors 2011 2012 £000 £000 Benefits payable 19 61 19 61 Analysis of creditors Other entities and Individuals 19 61 19 61

Contributions during year 2011 2012 £000 £000 Standard Life 994 506 Prudential 253 705 1,247 1,211

Value at year end 2011 2012 £000 £000 Standard Life 6,509 5,491 Prudential 277 745 6,786 6,236

20 Related party transactions The City of Edinburgh Council Lothian Pension Fund, the Lothian Buses Pension Fund and the Scottish Homes Pension Fund are administered by the City of Edinburgh Council. Consequently there is a strong relationship between the Council and the Pension Funds.

The Investment and Pensions Division of the Council is responsible for administering the three Pension Funds. The Division receives an allocation of the overheads of the Council, this is based on the amount of central services consumed. This includes the pension payroll service provided by the Council. In turn, the Division allocates its costs to the three Pension Funds. Costs directly attributable to a specific Fund are charged to the relevant Fund, costs that are common to all three Funds are allocated in proportion to the value of the Funds as at the end of the year. The costs allocated to Lothian Buses Pension Fund were: 2011 2012 £000 £000 Administrative expenses 133 145 Investment management expenses 965 641 1,098 786

Transactions between the Council and the Fund are managed via a holding account, each month the Fund is paid a cash sum leaving a working balance in the account to cover the month's pension payroll costs and other expected costs. The balance on the account was: 2011 2012 £000 £000 45 629

70 LOTHIAN BUSES PENSION FUND

Notes to the Accounts

Part of the Fund's cash holdings are invested on the money markets by the treasury management operations of the Council, through a service level agreement. During the year to 31 March 2012, the Fund had an average investment balance of £4.6m (2011 £3.5m), interest earned was £35.6k (2011 £22.0k). The year end balances are:

2011 2012 £000 £000 Held for investment purposes 79 757 Held for other purposes 2,005 2,759 2,084 3,516

The Council owns 91.01% of the shares of Lothian Buses plc, the Fund being operated solely for the employees of Lothian Buses Plc.

Key management personnel During the period from 1 April 2011 to the date of issuing of these accounts, several employees of the City of Edinburgh Council held key positions in the financial management of the Lothian Buses Pension Fund. These employees and their financial relationship with the Fund (expressed as cash-equivalent transfer values or CETV) are set out below:

Accrued Accrued CETV as at CETV as at 31 March 31 March 2011 2012 £000 £000 Alastair Maclean Director of Corporate Governance 15 44 Geik Drever Head of Investment and Pensions - resigned 526 581 February 2012 Clare Scott Investment and Pensions Service Manager - 45 67 appointed February 2012 John Burns Pensions & Accounting Manager 262 318 Esmond Hamilton Financial Controller 67 86 Bruce Miller Investment Manager - appointed April 2012 44 65

22 Contingent assets There were no contingent assets at the year end.

23 Impairment losses No impairment losses have been identified during the year.

71 LOTHIAN BUSES PENSION FUND

Actuarial Statement for 2011/12

Description of funding policy The funding policy is set out in the administering authority’s Funding Strategy Statement (FSS), dated March 2012. In summary, the key funding principles are as follows:

● to ensure the long-term solvency of the overall Fund

● to minimise the degree of short-term change in employer contribution rates

● maximise the returns from investments within reasonable and considered risk parameters, and hence minimise the cost to the employer

● to ensure that sufficient cash is available to meet all liabilities as they fall due for payment

● to help employers manage their pension liabilities.

The FSS sets out how the administering authority seeks to balance the conflicting aims of securing the solvency of the Fund and keeping employer contributions stable.

Funding position as at the last formal funding valuation The most recent actuarial valuation carried out under Regulation 32 of the Local Government Pension Scheme (Scotland) (Administration) Regulations 2008 was as at 31 March 2011. This valuation revealed that the Fund’s assets, which at 31 March 2011 were valued at £257 million, were sufficient to meet 112% of the liabilities (i.e. the present value of promised retirement benefits) accrued up to that date. The resulting surplus at the 2011 valuation was £28 million.

Employers contributions for the period 1 April 2012 to 31 March 2015 were set in accordance with the Fund’s funding policy as set out in its FSS.

Principal actuarial assumptions and method used to value the liabilities Full details of the methods and assumptions used are described in my valuation report dated 16 December 2011.

Assumptions A market-related approach was taken to valuing the liabilities, for consistency with the valuation of the Fund assets at their market value.

The key financial assumptions adopted for the 2011 valuation were as follows:

31 March 2011 Financial assumptions % p.a. % p.a. Nominal Real Discount rate 5.8% 2.9% Pay increases * 5.1% 2.2% Price inflation/Pension increases 2.8% ‐ * plus an allowancefor promotionalpay increases. Short term pay growth was assumed to be 2.4% p.a. for 2011/12, 3.1% for 2012/13, reverting to 5.1% p.a. thereafter.

72 LOTHIAN BUSES PENSION FUND

Actuarial Statement for 2011/12

Males Females Current pensioners 18.4 years 21.6 years Future pensioners 21.7 years 24.8 years

Copies of the 2011 valuation report and Funding Strategy Statement are available on request from the City of Edinburgh Council, administering authority to the Fund.

The next actuarial valuation will be carried out as at 31 March 2014. The Funding Strategy Statement will also be reviewed at that time.

Hymans Robertson LLP 20 Waterloo Street Glasgow G2 6DB 18 May 2012

73 SCOTTISH HOMES PENSION FUND

Membership Membership Membership Membership at at at Status 31/03/2010 31/03/2011 31/03/2012 Active - - - Deferred 721 684 650 Pensioners 998 996 999 Dependants 305 308 303 Total 2,024 1,988 1,952

Investment strategy The Fund’s investment strategy is shown below. There have been no changes to the strategy over the year. % Equities 40.0 Bonds 50.0 Property 10.0 Total 100.0

Investment performance Short term (1 year) The Fund delivered a return of +12.7% over the year, marginally underperforming its benchmark. The slight underperformance was mainly due to the Schroder Property fund lagging its benchmark.

Medium term (3 years) Over the three years to 31 March 2012, the Fund posted a return of +14.9% per year which was equal to its benchmark return, but did not achieve its target of 0.5% per year above the benchmark.

Long term (since inception - July 2005) The Fund has delivered a positive return since inception, but slightly lags its benchmark. The Fund’s return is well in excess of the retail price index and national average earnings.

Annualised returns to 31 March 2012 (% per year) Since 1 Year 3 Years inception (July 2005) Scottish Homes Pension Fund 12.7 14.9 8.2 Benchmark 13.0 14.9 8.3 Retail Price Index 3.6 4.5 3.4 National Average Earnings 0.2 2.6 2.6

Annualised 3 yearly returns ending 31 March (% per year) Target is 0.5% pa over 3 years

Year to March16.0 SHPF BENCHMRELATIVE (RHS) 1.6 14.02009 -0.2 -0.1 -0.1 1.4 12.0 1.2 10.02010 5.6 5.8 -0.2 1.0 8.02011 6.2 6.2 0.0 0.8 6.02012 14.9 14.9 0.0 0.6 4.0 0.4 2.0 0.2 0.0 0.0 -2.0 -0.2 2009 2010 2011 2012 SHPF -0.2 5.6 6.2 14.9 BENCHMARK -0.1 5.8 6.2 14.9 RELATIVE (RHS) -0.1 -0.2 0.0 0.0

74 SCOTTISH HOMES PENSION FUND

Fund Account for the year ended 31 March 2012

2010/11 2011/12 £000 Note £000 Income 100 Contributions from employer 2 100 - Transfers from other schemes 3 - 100 100

Less: Expenditure 6,781 Pension payments including increases 4 6,913 584 Lump sum retirement payments 5 683 2 Lump sum death benefits 6 9 158 Transfers to other schemes 7 209 88 Administrative expenses 8 98 7,613 7,912

(7,513) Net withdrawals from dealing with members (7,812)

Returns on investments 402 Investment income 9 357 9,224 Change in market value of investments 11a 14,691 (173) Investment management expenses 10 (126) 9,453 Net returns on investments 14,922

1,940 Net increase in the Fund during the year 7,110

122,368 Net assets of the Fund at 1 April 2011 124,308

124,308 Net assets of the Fund at 31 March 2012 131,418

75 SCOTTISH HOMES PENSION FUND

Net Assets Statement as at 31 March 2012

2010/11 2011/12 £000 Note £000

122,595 Net investment assets 11 129,886 Current assets (4) The City of Edinburgh Council 19 268 1,615 Cash balances 19 1,200 103 Debtors 16 98 1,714 1,566

Current liabilities (1) Creditors 17 (34)

1,713 Net current assets 1,532

124,308 Net assets 131,418

76 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

There have been no events since 31 March 2012, and up to the date when these accounts were authorised, that require any adjustments to these accounts.

2 Contributions 2011 2012 £000 £000 Scottish Government 100 100

The Scottish Government has agreed to pay the administration costs of the Fund subject to a minimum of £100k per annum. This is shown as employer contributions for 2010/11 and 2009/10. The Fund consists of only deferred and pensioner members, hence no employee contributions were paid during the year.

3 Transfers in from other schemes 2011 2012 £000 £000 Transfers in - -

There have been no transfers in the last two years

4 Pensions payable 2011 2012 £000 £000 Scheduled Body 6,781 6,913

5 Lump sum retirement benefits payable 2011 2012 £000 £000 Scheduled Body 584 683

6 Lump sum death benefits payable 2011 2012 £000 £000 Scheduled Body 2 9

7 Transfers out to other schemes 2011 2012 £000 £000 Group transfers - - Individual transfers 158 209 158 209

77 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

8 Administrative expenses 2011 2012 £000 £000 Employee costs 38 42 The City of Edinburgh Council - pension payroll costs 11 10 The City of Edinburgh Council - other support costs 16 14 System costs 7 5 Actuarial fees 9 20 External audit fees 2 2 Legal fees 1 2 Printing & postage 2 2 Depreciation 1 1 Sundry costs less sundry income 1 - 88 98

9 Investment income 2011 2012 £000 £000 Schroder exempt property unit trust 384 343 Interest on cash deposits 11 13 Sundries 7 1 402 357 Irrecoverable withholding tax - - 402 357

10 Investment management expenses 2011 2012 £000 £000 External management fees 110 66 Employee costs 25 21 Engagement & voting fees 2 2 Performance measurement fees 1 2 Investment consultancy fees 1 1 System costs 3 5 Legal fees - - Sundry costs 31 29 173 126

11 Net investment assets 2011 2012 £000 £000 Investment assets Pooled investment vehicles 122,595 129,886 Net investment assets 122,595 129,886

78 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

11a Reconciliation of movement in investments Value Purchases Sales Change Value at at cost proceeds in at 1 April market 31 March 2011 value 2012 £000 £000 £000 £000 £000 Pooled investment vehicles 122,595 16,932 (24,332) 14,691 129,886

Value Purchases Sales Change Value at at cost proceeds in at 1 April market 31 March 2010 value 2011 £000 £000 £000 £000 £000 Pooled investment vehicles 120,571 60,395 (67,595) 9,224 122,595 Broker balances 8 - - 120,579 9,224 122,595

No direct transaction costs were incurred during the year. Indirect transaction costs may be incurred through the bid- offer spread on some pooled investment vehicles, the amount of any such costs is not separately provided to the Fund.

11b Analysis of Investments 31 March 31 March 2011 2012 Pooled investment vehicles £000 £000 UK managed funds - property 12,193 12,808 UK managed funds - other 110,402 117,078 122,595 129,886

79 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

Investment managers and mandates 2011 2012 Market % of Market % of value total value total funds funds Manager Mandate £000 % £000 % State Street - managed funds UK equity 10,774 8.8 11,404 8.8 Overseas equities State Street - managed funds N American equities 15,347 12.4 16,348 12.5 State Street - managed funds European equities 10,127 8.3 10,409 8.0 State Street - managed funds Pacific (ex Jpn) equities 4,267 3.5 4,198 3.2 State Street - managed funds Japanese equities 5,020 4.1 5,664 4.4 State Street - managed funds Emerging mkts equities 3,909 3.2 3,994 3.1 38,670 31.5 40,613 31.2

State Street - managed funds UK fixed interest 11,909 9.7 12,766 9.8 State Street - managed funds UK index-linked 49,049 40.1 52,295 40.3

State Street - managed funds Total 110,402 90.1 117,078 90.1

Schroders Property 7,516 6.1 7,674 5.9 Standard Life Property 4,677 3.8 5,134 4.0 12,193 9.9 12,808 9.9

122,595 100.0 129,886 100.0

Investments representing more than 5% of the net assets of the Fund or 5% of any investment class The Fund currently invests all its money in a range of pooled funds. Investments representing more than 5% of the net assets of the Fund or 5% of any investment class are described above.

11c Securities lending The Fund has not participated in any securities lending arrangements in the last two years.

80 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

12 Financial instruments 12a Classification of financial instruments Accounting policies describe how different asset classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the fair value amounts of financial assets and liabilities by category and net assets statement heading. No financial assets were reclassified during the accounting period.

All financial instruments are marked to market (at fair Value) in the Fund's accounting records hence there is no difference between the carrying value and fair value.

£000 £000 £000 £000 £000 £000 Financial assets Investment assets Pooled investments 122,595 129,886 122,595 - - 129,886 - - Other assets The City of Edinburgh Council (4) 268 Cash 1,615 1,200 Debtors 103 98 - 1,714 - - 1,566 -

Assets total 122,595 1,714 - 129,886 1,566 -

Financial liabilities Investment liabilities ------Other liabilities Creditors (1) (34) - - (1) - - (34)

Liabilities total - - (1) - - (34)

122,595 1,714 (1) 129,886 1,566 (34)

Total net financial instruments 124,308 131,418 Amounts not classified as financial instruments - - Total net assets 124,308 131,418

12b Net gains and losses on financial instruments 2011 2012 £000 £000 Designated as fair value through net asset statement 9,224 14,691 Loans and receivables - - Financial liabilities at amortised cost - - Total 9,224 14,691

81 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

12c Valuation of financial instruments carried at fair value

The valuation of financial instruments has been classified into three levels, according to the quality and reliability of information used to determine fair values.

Listed investments are shown at bid prices. The bid value of the investment is based on the bid market quotation of the relevant stock exchange.

The values of the investments in private equity are based on valuations provided by the general partners to the private equity funds in which the Fund has invested. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines or similar guidelines provided by the British Venture Capital Association, which follow the valuation principles of IFRS. Valuations are usually undertaken annually at the end of December. Cash flow adjustments are used to roll forward the valuations to 31 March as appropriate.

The following table provides an analysis of the financial assets and liabilities of the pension fund grouped into Levels 1 to 3, based on the level at which the fair value is observable.

Level 1 Level 2 Level 3 Total at 31 March 2012 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 129,886 129,886 Loans and receivables 1,566 1,566 Total financial assets 131,452 - - 131,452 Financial liabilities Designated as fair value through net asset statement - Financial liabilities at amortised cost (34) (34) Total financial liabilities (34) - - (34)

Net financial assets 131,418 - - 131,418

82 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

Level 1 Level 2 Level 3 Total at 31 March 2011 £000 £000 £000 £000 Financial assets Designated as fair value through net asset statement 122,595 122,595 Loans and receivables 1,714 1,714 Total financial assets 124,309 - - 124,309 Financial liabilities Designated as fair value through net asset statement - Financial liabilities at amortised cost (1) (1) Total financial liabilities (1) - - (1)

Net financial assets 124,308 - - 124,308

13 Nature and extent of risk arising from financial instruments

Risk and risk management The Fund’s primary aim is to ensure that all members and their dependents receive their benefits when they become payable. The investment strategy aims to maximise the returns from investments within reasonable risk parameters and hence minimise the long-term cost to employers. The Fund achieves this by investing in a diverse range of assets to reduce risk to an acceptable level. In addition, the fund ensures that sufficient cash is available to meet all liabilities when they are due to be paid.

Consideration of the Fund’s investment risk is part of the overall risk management of the pensions operations. Risks are reviewed regularly to reflect changes in activity and market conditions.

The overall market risk of the Fund depends on the actual mix of assets and encompasses all the different elements of risk.

The Fund manages these risks in a number of ways:

z assessing and establishing acceptable levels of market risk when setting overall investment strategy. Importantly, risk is considered relative to the liabilities of the Fund

z diversification of investments in terms of type of asset, geographical and industry sectors as well as individual securities z taking stewardship responsibilities serious and pursuing constructive engagement with the companies in which we invest 83 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

z monitoring market risk and market conditions to ensure risk remains within tolerable levels.

The Fund may use equity futures contracts from time to time to manage market risk. Exchange traded options are not used by the Fund.

Asset type Potential price movement (+ or -) World listed equity 17.2% Emerging market equity 30.5% UK gilts 4.6% Property 13.6%

It is also important to recognise the extent to which asset class moves are correlated. Correlation of 100% between two asset classes would indicate that they move in the same manner. With 0% correlation they would move independently. With negative correlation, they would move in opposite directions. To the extent that correlation between two asset classes is less than 100%, the overall Fund benefits from diversification across asset classes and as a result should experience lower volatility.

The following tables shows how the prices of the Fund's investments would increase and decrease in line with the assumptions above.

Value % at Change Value on Value on % of fund Asset type 31 March + / - increase decrease 2012 £000 % % £000 £000 World listed equity 48,023 36.9 17.2 56,283 39,763 Emerging market equity 3,994 3.1 30.5 5,212 2,776 UK gilts 65,061 50.1 4.6 68,054 62,068 Property 12,808 9.9 13.6 14,550 11,066 Total [1] 129,886 100.0 10.9 144,099 115,673 Total [2] 7.7 139,887 119,885

[1] No allowance for correlations between assets [2] Including allowance for correlations between assets

The analysis shows the benefit of asset diversification, reducing the volatility and hence reducing the potential net movement of the overall Fund.

84 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

Credit risk Credit risk represents the risk that the counterparty to a transaction or a financial instrument will fail to discharge an obligation and cause the Fund to incur a financial loss. The market values of investments generally reflect an assessment of credit in their pricing and consequently the risk of loss is implicitly provided for in the value of the funds assets and liabilities (as outlined in Market Risk above).

Cash deposits are a major area of credit exposure where credit risk is not reflected in market prices.

Cash Deposits At 31 March 2012 cash deposits represented £1.2m, 0.9% of total net assets. This was held as follows:

Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £'000 £'000 Held for investment purposes The City of Edinburgh Council - treasury management See below - -

Total investment cash - -

Held for other purposes The City of Edinburgh Council - treasury management See below 1,615 1,200

Total cash 1,615 1,200

All the cash deposits of the Fund are managed along with those of the administering authority (The City of Edinburgh Council) and other related organisations which are pooled for investment purposes as a treasury cash fund. Management of the cash fund is on a low risk, low return basis, with security of the investments the key consideration. The Council has in place counterparty criteria.

85 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

The Fund's cash holding under its treasury management arrangements at 31 March 2012 was held with the following institutions:

Moody's Balances Balances Credit at at Rating 31 March 31 March 2011 2012 £'000 £'000 Money market funds Deutsche Bank AG, London Aaa - 159 Standard Life Aaa 114 - Bank call accounts Bank of Scotland A1 135 102 Royal Bank of Scotland A2 135 111 Santander UK A1 180 94 Barclays Bank Aa3 170 94 Svenska Handelsbanken Aa2 - 151 Bank near-call accounts Clydesdale Bank (15 Day Notice) A2 113 - Bank certificates of deposit Rabobank Aaa 2 - Building society fixed term deposits Nationwide Building Society A2 - 35 UK pseudo-sovereign risk instruments Other Local Authorities [1] n/a 717 320 UK Government Guaranteed FRNs n/a - 134 UK Government Guaranteed Bonds n/a 49 -

1,615 1,200

[1] Very few Local Authorities have their own credit rating but they are generally assumed to have a pseudo- sovereign credit rating (which in the UK at 31 March 2012 would have been 'AAA'). Of the £320k above, £119k is with a local authority which has a 'Aa1' credit rating from Moody's.

Liquidity risk Liquidity risk reflects the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund therefore ensures that there is adequate cash and liquid resources to meet its commitments. Cashflow projections are prepared on a regular basis to understand and manage the timing of the Fund’s cashflow.

The majority (estimated to be over 85%) of the Fund’s investments could be converted to cash within three months in a normal trading environment.

14 Actuarial statement The Fund Actuary has provide a statement describing the funding arrangements of the Fund, this can be found in a separate section below. 86 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

15 Actuarial present value of promised retirement benefits The actuarial value of promised retirement benefits at the accounting date, calculated in line with International Accounting Standard 19 (IAS19) assumptions, is estimated to be £131m (2011 £117m). This figure is used for statutory accounting purposes by Scottish Homes Pension Fund and complies with the requirements of IAS26. The assumptions underlying the figure match those adopted for the Administering Authority's FRS17/IAS19 reports at each year end.

Financial assumptions 31 March 31 March 2011 2012 % p.a. % p.a. Inflation / pensions increase rate 2.8 2.5 Discount rate 5.5 4.8

Longevity assumptions The life expectancy assumption is based on Fund specific statistical analysis with improvements from 2008 in line with Medium Cohort and a 1% p.a. underpin. Based on these assumptions, the average future life expectancies, in years, at age 65 are summarised below: Males Females Current pensioners 21.1 23.9 Future Pensioners (assumed to be currently 45) 23.0 25.7

This assumption has been updated from that adopted as at 31 March 2011.

16 Debtors 2011 2012 £000 £000 Sundry debtors 103 98 103 98 Analysis of debtors Administering Authority 1 1 Central Government Bodies 69 70 Other entities and individuals 33 27 103 98

17 Creditors 2011 2012 £'000 £'000 Benefits payable 1 34 1 34 Analysis of creditors Other entities and individuals 1 34 1 34

87 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

18 Additional Voluntary Contributions As the Fund has no active members no AVC arrangements are provided.

19 Related party transactions The City of Edinburgh Council Lothian Pension Fund, the Lothian Buses Pension Fund and the Scottish Homes Pension Fund are administered by the City of Edinburgh Council. Consequently there is a strong relationship between the Council and the Pension Funds.

The Investment and Pensions Division of the Council is responsible for administering the three Pension Funds. The Division receives an allocation of the overheads of the Council, this is based on the amount of central services consumed. This includes the pension payroll service provided by the Council. In turn, the Division allocates its costs to the three Pension Funds. Costs directly attributable to a specific Fund are charged to the relevant Fund, costs that are common to all three Funds are allocated in proportion to the value of the Funds as at the end of the year. The costs allocated to Scottish Homes Pension Fund were: 2011 2012 £000 £000 Administrative expenses 88 98 Investment management expenses 173 126 261 224

Transactions between the Council and the Fund are managed via a holding account, each month the Fund is paid a cash sum leaving a working balance in the account to cover the month's pension payroll costs and other expected costs. The balance on the account was: 2011 2012 £000 £000 (4) 268

Part of the Fund's cash holdings are invested on the money markets by the treasury management operations of the Council, through a service level agreement. During the year to 31 March 2012, the Fund had an average investment balance of £1.6m (2011 £2.2m), interest earned was £12.7k (2011 £14.2k). The year end balances are:

2011 2012 £000 £000 Held for investment purposes - - Held for other purposes 1,615 1,200 1,615 1,200

88 SCOTTISH HOMES PENSION FUND

Notes to the Accounts

Key management personnel During the period from 1 April 2011 to the date of issuing of these accounts, several employees of the City of Edinburgh Council held key positions in the financial management of the Fund. These employees and their financial relationship with the fund (expressed as cash-equivalent transfer values or CETV) are set out below:

Accrued Accrued CETV as at CETV as at 31 March 31 March 2011 2012 £000 £000 Alastair Maclean Director of Corporate Governance 15 44 Head of Investment and Pensions - resigned Geik Drever February 2012 526 581 Investment and Pensions Service Manager - Clare Scott appointed February 2012 45 67 John Burns Pensions & Accounting Manager 262 318 Esmond Hamilton Financial Controller 67 86 Bruce Miller Investment Manager - appointed April 2012 44 65

20 Contingent liabilities and contractual commitments There were no contingent liabilities or contractual commitments at the year end.

21 Contingent assets There were no contingent assets at the year end.

22 Impairment losses No impairment losses have been identified during the year.

89 SCOTTISH HOMES PENSION FUND

Actuarial Statement for 2011/12

This statement has been prepared in accordance with Regulation 31A of the Local Government Pension Scheme (Scotland) (Administration) Regulations 2008, and Chapter 6 of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the UK 2011/12.

Description of funding policy The funding policy is set out in the Administering Authority’s Funding Strategy Statement (FSS), dated March 2012. In summary, the key funding principles are as follows:

● to ensure the long-term solvency of the Fund

● to minimise the degree of short-term change in the Guarantor’s contribution rate

● to maximise the returns from investments within reasonable and considered risk parameters, and hence minimise the cost to the Guarantor

● to ensure that sufficient cash is available to meet all liabilities as they fall due for payment

● to help the Guarantor manage its pension liabilities

The FSS sets out how the Administering Authority seeks to balance the conflicting aims of securing the solvency of the Fund and keeping the Guarantor contributions stable.

Funding position as at the last formal funding valuation The most recent actuarial valuation carried out under Regulation 32 of the Local Government Pension Scheme (Scotland) (Administration) Regulations 2008 was as at 31 March 2011. This valuation revealed that the Fund’s assets, which at 31 March 2011 were valued at £124 million, were sufficient to meet 86% of the liabilities (i.e. the present value of promised retirement benefits) accrued up to that date. The resulting deficit at the 2011 valuation was £20 million.

The Guarantor’s contributions for the period 1 April 2012 to 31 March 2015 were set in accordance with the Fund’s funding policy as set out in its FSS.

Principal actuarial assumptions and method used to value the liabilities Full details of the methods and assumptions used are described in the valuation report dated 16 December 2011.

Method The liabilities were assessed using an accrued benefits method which takes into account pensionable membership up to the valuation date.

Assumptions A market-related approach was taken to valuing the liabilities, for consistency with the valuation of the Fund assets at their market value.

The key financial assumptions adopted for the 2011 valuation were as follows:

% p.a. % p.a. Nominal Real Discount rate (pensioners) 3.9% 1.3% Discount rate (deferreds) 4.3% 1.5% GMP increases before SPA 5.1% 2.3% Price inflation/pension increases (pensioners) 2.6% ‐ Price inflation/pension increases (deferreds) 2.8% ‐

90 SCOTTISH HOMES PENSION FUND

Actuarial Statement for 2011/12

The key demographic assumption was the allowance made for longevity. The baseline longevity assumptions adopted at this valuation were in line with standard SAPS mortality tables, and included improvements based on medium cohort projections and a 1% p.a. underpin effective from 2008. Based on these assumptions, the average future life expectancies at age 65 are as follows:

Males Females Current Pensioners 21.1 years 23.9 years Future Pensioners 23.0 years 25.7 years

Copies of the 2011 valuation report and Funding Strategy Statement are available on request from the City of Edinburgh Council, administering authority to the Fund.

Experience over the period since April 2011 The administering authority monitors the funding position on a regular basis as part of its risk management programme. The most recent funding update was produced at 31 March 2012. It showed that the funding level (excluding the effect of any membership movements) had fallen from 86% to 82% due to falling real bond yields.

The next actuarial valuation will be carried out as at 31 March 2014. The Funding Strategy Statement will also be reviewed at that time.

Hymans Robertson LLP 20 Waterloo Street Glasgow G2 6DB 18 May 2012

91 INDEPENDENT AUDITOR'S REPORT

The Statement of Accounts is subject to audit in accordance with the requirements of Part VII of the Local Government (Scotland) Act 1973.

The Auditor appointed for this purpose by the Accounts Commission for Scotland is:

Audit Scotland Osborne House 1/5 Osborne Terrace EDINBURGH

92 ADDITIONAL INFORMATION

Key documents online You can find further information on what we do and how we do it, on our website www.lpf.org.uk. The following documents are on the website’s publications section: ● Actuarial Valuation reports ● Communications strategy ● Consultative Panel constitution and operation guidance ● Freedom of Information policy ● Funding Strategy Statement ● Annual Report and Accounts ● Governance Policy Statement ● Service Plans ● Statement of Investment Principles ● Trustee training policy

Fund advisers

Actuaries: Hymans Robertson LLP

Auditor: David McConnell, Assistant Director of Audit, Audit Scotland

Bankers: Royal Bank of Scotland

Investment consultancy: KPMG LLP Gordon Bagot Scott Jamieson

Investment custodians: The Northern Trust Company

Investment managers: Details can be found in the notes to the accounts of the three Funds

Additional Voluntary Standard Life Contributions (AVC) Prudential managers:

Property valuations: CB Richard Ellis Ltd

Solicitors: The City of Edinburgh Council – Legal Services

Comments and suggestions We appreciate your comments and suggestions on this report. Please let us know which sections you found useful and if you have any suggestions for items to be included in the future. Please email your comments to [email protected]

Accessibility You can get this document on tape, in Braille, large print and various computer formats if you ask us. Please contact the Interpretation and Translation Service (ITS) on 0131 242 8181 and quote reference number 00819. The ITS can also give information on community language translations.

Contact details If you would like further information about Lothian Pension Fund, please contact us.

Address: Lothian Pension Fund, 3/3 Waverley Court, 4 East Market Street, Edinburgh, Telephone: 0131 529 4638 Fax: 0131 529 6229 Email: [email protected] Web: www.lpf.org.uk

93 Item no Report no

Contract for Community Connecting Service

The City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 The purpose of this report is to seek Council approval for the award of Block Contracts for the provision of a Community Connecting Service for a period of 2 years from 1 October 2012 – 1 October 2014 (with the option to extend for up to a further period of 2 years).

2 Main report

2.1 The Health, Social Care and Housing Committee on 11th October 2011 approved up to £400,000 per annum to be allocated from the Change Fund to deliver the Community Connecting Service through a process of competitive tendering.

2.2 The Community Connecting Service will support older people, through the use of volunteers, to connect with local community activities and opportunities, regain skills, confidence and prevent social isolation.

2.3 A Community Connecting service has been successfully piloted within Western and South Central Neighbourhood Partnership areas, and a small pilot has also been developed in Leith. The evaluation of these pilots has informed the plans to develop a service that is available to isolated older people from all areas of the city.

2.4 The timescales for the procurement of the Community Connecting Service were approved in a report to the Finance and Resources Committee on 17th January 2012.

2.5 A project team comprising of representatives from Health and Social Care, Corporate Governance and NHS Lothian was established with the following procurement objectives for delivering the Community Connecting Service project:

• To meet the strategic objectives outlined in Re-shaping Care for Older People – A Programme for Change;

• To deliver the service requirements outlined in the Community Connecting Service specification; 1

• To promote the use of community benefits within the specification and evaluation criteria;

• To achieve value for money;

• To increase service capacity for individuals;

• To encourage use of Small and Medium Enterprises (SME) within the local community;

• To meet agreed project timescales and key project milestones; and

• To ensure the procurement process complies with procurement regulations and the Council’s standing orders.

2.6 To meet the above objectives a procurement plan was developed which focussed on small, localised, networks and split the service requirement into four geographic lots across Edinburgh. The four geographic areas (lots) were identified as:

• Lot 1 North East Edinburgh

• Lot 2 South West Edinburgh

• Lot 3 South East Edinburgh

• Lot 4 North West Edinburgh

2.7 Governance and oversight of the work for the project team has been provided by the Community Connecting Project Board, chaired by Tricia Campbell, Senior Manager, Older People and with representation from senior Council, NHS Lothian and Edinburgh Voluntary Organisations Council (EVOC) managers.

2.8 A project communications plan was developed which allowed for briefing existing providers, councillors and other interested parties about the procurement process and timetable.

2.9 The service is categorised as a Part B service under the Public Contracts (Scotland) Regulations 2006. The project team adopted the requirements of the legislation using a one stage process which allowed any interested provider to access the tender documents and submit a bid.

2.10 The contract was advertised on the Public Contracts Scotland website from 6 February 2012 for a 6 week period. 35 expressions of interest were received.

2.11 Nine tenders were subsequently received and evaluated by the evaluation team on a weighting of 70% for quality and 30% for price in order to rank providers in terms of best value.

2.12 Upon award of the Block Contracts there will be a 3 month implementation period during which successful providers will prepare to deliver the new service.

Where sub contracting arrangements are made, the lead provider will remain responsible for ensuring that the conditions of the service specification are met.

Lot Number Contract Description Recommended Provider

1 North East Edinburgh Health in Mind (sub- contracting to Pilmeny Development Project)

2 South West Edinburgh Health in Mind

3 South East Edinburgh Places for People (partial sub-contracting of volunteer recruitment and management to Volunteer Centre Edinburgh).

4 North West Edinburgh Places for People (partial sub-contracting of volunteer recruitment and management to Volunteer Centre Edinburgh).

3 Financial implications

3.1 Providers were asked to submit a price which was fixed for the 2 year duration of the contract.

3.2 The total cost of all 4 contracts recommended for award over the 2 year period is £760,742.16, against a provisional Change Fund allocation of up to £800,000.

3.3 In addition to demonstrating best value, the contracts will also deliver:

• Increased self help and the promotion of independence in the community;

• Reduced social isolation by increasing preventative intervention;

• Reduce the length of stay in care homes;

• Reduced direct admissions to long stay care homes from hospital;

• Community benefits by bringing new volunteers to deliver the service; development of additional services and additional funding from each of the proposed providers to support the new service; and

• Increased staffing and service capacity at a reduced spend compared to the current Community Connecting Service contracts within Edinburgh.

4 Equalities impact

4.1 The Community Connecting service aims to have a positive impact for socially isolated older people. Relevant screening was undertaken for the service and resulted in a score of 3, which is low and no further Equalities Impact Assessment (EQIA) was required.

4.2 The screening highlighted a number of areas which positively contribute to equalities legislation and these will be progressed. Equalities considerations have been built into the contract documentation to ensure the needs of people with protected characteristics are appropriately recognised and addressed.

5 Environmental impact

5.1 This service is currently being piloted on a smaller scale within Edinburgh by Health in Mind and Pilmeny Development Project (PDP). Both providers have been successful in winning lots (PDP through a sub-contracting arrangement with Health in Mind). This should reduce the impact of change in service delivery and make it unlikely that there will be any staff transfer requirements under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

6 Recommendations

6.1 The Council is requested to approve the award of four block contracts for the provision of a Community Connecting Service to the two providers detailed in paragraph 2.12, for a period of two years, with the option to extend for up to a further two years.

Alastair D Maclean Director of Corporate Governance

Appendices 1

Contact/tel/Email Tricia Campbell, Senior Manager - Older People, 0131 553 8304 [email protected] Leanne Wilson, Corporate Procurement – Procurement Transformation Manager, 0131 469 3810 [email protected] Elizabeth Lebost, Corporate Procurement, Procurement Specialist, 0131 469 3537 [email protected]

Wards affected All Wards

Single Outcome (6) We live longer, healthier lives; Agreement (7) We have tackled the significant inequalities in Scottish society; (11) We have strong, resilient and supportive communities where people take responsibility for their own actions and how they affect others; and (15) Our public services are high quality, continually improving, efficient and responsive to local people’s needs. This contract will contribute towards the following local outcomes – Edinburgh carers are supported; Older people have improved health and wellbeing; Edinburgh has strong, engaged, and supported voluntary and community sectors that enable people to participate in their communities.

Background Community Connecting Service, Finance and Resources Committee, Papers 17th January 2012 Commissioning of Community Connecting Services Engagement and Communications Plan, December 2011

Appendix 1

Summary of tendering and tender evaluation processes

Contract Block Contract for Community Connecting Service

Estimated contract value (over 2 years) £760,742.16 Standing Orders Observed 76 (2) Selective competitive tendering. 76 (3) more than 4 tenders invited.

Governing UK Directives The Public Contract (Scotland) Regulations 2006 EC Procedure Chosen Part B Services Expressions of Interest received 35 Tenders returned 9 Tenders fully compliant 9 No of recommended suppliers 2 Primary Criteria The tenders were assessed on the basis of 70% quality and 30% financial and their ability to deliver the Council’s strategic outcomes and objectives. Quality criteria were set out in the tender documents and tested throughout the evaluation process. Evaluation Team Corporate Procurement, Health and Social Care, NHS Lothian.

Item no Report no

Police and Fire Reform – Pathfinder Committee Proposal

City of Edinburgh Council

28 June 2012

1 Purpose of report 1.1 To consider how to progress the proposed Pathfinder scrutiny/overview Committee for policing and fire in the light of the Scottish Government’s indication that no additional resources will be made available for this function.

2 Main report 2.1 A report to Policy & Strategy Committee on 24 January 2012 advised of the opportunity for the Council to participate in running a ‘Pathfinder’ for scrutiny and overview of policing and fire and rescue services in the period leading up to the establishment of the new single police and fire services in the spring of 2013. The Committee agreed: -

2.1.1 To advise the Scottish Government of the Council’s intention to establish Pathfinder local scrutiny and engagement arrangements for Police and Fire and Rescue.

2.1.2 To advise the Scottish Government that there was currently no budget provision for these costs.

2.1.3 To agree that Councillor Bridgman, together with the Director of Corporate Governance, be nominated as the Council’s representatives on the Local Scrutiny and Engagement Network.

2.2 A further report to Committee on 27 March 2012 set out more detailed proposals for the operation of the Pathfinder as a full Committee of the Council including the powers, structure, role and membership of the Committee and advised that a commitment was being sought from the Scottish Government on financial support for the pathfinder costs. Committee agreed that a further report should be submitted, prior to implementation of the final Pathfinder arrangements in June 2012, including details of the Scottish Government’s response on resources.

2.3 The Scottish Government’s response is attached at appendix 1. The Scottish Government is resourcing a network to share best practice on scrutiny and 1

engagement but has indicated that the costs of the new local scrutiny and engagement arrangements themselves, including any shadow arrangements introduced prior to 1 April 2013, will fall to local partners.

2.4 In these circumstances it is open to Council not to proceed with a Pathfinder. The Joint Boards for Police and Fire and Rescue will continue to meet over the coming year and will provide governance and accountability for these services until the implementation of the new bodies. The national network for scrutiny and engagement will provide a source of good practice information to assist with the development of new scrutiny and overview arrangements in 2013.

2.5 However, there will still be a need for Council to establish such arrangements when the new national police and fire services become operational. Moreover, partners in police and fire and rescue are keen to progress the pathfinder approach.

2.6 Governance and accountability arrangements for police and fire have always carried a cost and this has been met to date from the Joint Board budgets. It is proposed therefore that Council should continue to lobby through Cosla for resources to be made available to meet the cost of local governance and accountability functions for these vital services.

2.7 If Council decides to proceed with a pathfinder, the Pathfinder Committee could be formally established at this meeting based on the principles agreed at Committee on 27 March 2012. These included a membership of nine, with two Vice-Conveners to support the Convener in building effective relationships with both local commanders. The following considerations should also be taken into account:

2.8 For a Committee of nine members, a proportional allocation of places would be 2 Conservatives, 1 Green, 3 Labour and 3 Scottish National Party members;

2.9 A draft remit has been prepared and consulted on with partners and is presented at Appendix 2;

2.10 In order to maintain continuity, it is proposed that members of the Pathfinder Committee should be drawn from Edinburgh Council membership of the Police and the Fire and Rescue Boards; and

2.11 Appointment of Convener and Vice-Conveners should be from members who are existing senior councillors.

2.12 This would enable the Pathfinder to start operation immediately after the summer recess.

3 Financial implications 3.1 If the Pathfinder were to go ahead within existing resources, on the above basis, there would be opportunity costs in the following areas:

• costs of committee support for four meetings (£1,200);

• policy advice and support to the Convener and members especially to assist with the scrutiny of policing activities (equivalent to 0.4 FTE or £20,000); and • member training and expenses (£15,000). 3.2 There would therefore be an impact of around £36,200 on other service developments or savings which would not be progressed. However it should be noted that the full costs of running these scrutiny and oversight arrangements in future years would be considerably greater as the Council receives income of £478,000 to resource the Joint Boards and this income will cease as from April 2013. The Pathfinder pilot will run in parallel with the existing Joint Board arrangements in 2012/13.

4 Equalities impact 4.1 None, though the proposed Pathfinder Committee will be able to consider equalities and diversity issues in relation to policing and fire and rescue services.

5 Environmental impact 5.1 There are no environmental impacts arising from this report.

6 Recommendations 6.1 It is recommended that members approve the Pathfinder project on the basis described in paragraph 2.7 and to appoint members on the basis of the political balance outlined in paragraph 2.8.

Alastair D Maclean Director of Corporate Governance

Appendices 1. Letter from Scottish Government 2. Draft remit

Contact/tel/Email A Kassyk 469 3553 [email protected]

Wards affected

Single Outcome Agreement

Background Papers

Safer Communities Directorate Police and Fire Reform Division

T: 0131‐244 3251 F: 0131‐244 5393 E: [email protected] αβχδεφγηιϕ

Tom Little Head of Policy & Public Affairs Corporate Governance The City of Edinburgh Council αβχδεφγη Waverly Court 4 East Market Street Edinburgh ___ Your ref: TL/Pathfinder

10 May 2012

Dear Tom,

POLICE AND FIRE REFORM – PATHFINDER PROJECT

Thank you for your letter of 22 March 2012 regarding the Local Scrutiny and Engagement (Pathfinder) Project. I am delighted that Edinburgh City Council is participating in the Local Scrutiny and Engagement Project as a Pathfinder and I note with interest your proposal for a single Committee to take an overview of both police and fire and rescue matters.

In your letter you noted the estimated costs of your proposal for new local scrutiny and engagement arrangements and sought additional financial support from the Scottish Government to cover them. As set out in the guidance we circulated to prospective participants when seeking expressions of interest in December, the Scottish Government will resource the delivery of the Project in order to support and facilitate the work of Pathfinders. This includes staffing the project, running the Learning Network, hosting Network events, providing self-evaluation support and producing any national guidance and tools required. The costs of the new local scrutiny and engagement arrangements themselves, including any shadow arrangements introduced prior to 1 April 2013, will fall to local partners and will depend on what approaches councils, together with the services, choose to adopt.

The Police and Fire Reform (Scotland) Bill sets out a high level framework for the delivery of local scrutiny and engagement, but is not prescriptive in how this is delivered. The open nature of the legislation has been welcomed by participants in the Project and allows local partners the flexibility to design local arrangements that are appropriate for local circumstances, structures and budgets. The Project provides a good opportunity to test and monitor cost implications across a range of different

Pathfinder approaches. This learning will then help to inform the development of local approaches that are efficient, effective and sustainable.

The Project Team has been mindful of the need not to impose significant additional burdens on local partners during the transition period given the important ongoing role of Police and Fire Boards/Authorities. We continue to welcome feedback from Pathfinders on Project delivery and the Project support on offer.

We believe that being part of the Project is providing participants with a range of benefits and will help them to avoid many of risks associated with implementing the new arrangements in isolation. Most notably, as evidenced by the first Learning Network event held on 19 April, it is providing a valuable opportunity for participants to learn from one another and share good practice as they develop their new arrangements.

Kind regards,

Mark Patterson Project Executive Police and Fire Reform Division

Appendix 2 Pathfinder Committee Draft Remit

(1) To trial the arrangements to be operated from 1 April 2013 for local scrutiny and engagement for police and fire and rescue services in Edinburgh.

(2) To develop and operate processes and protocols for –

• commenting on the strategic police plan and the strategic fire plan when consulted by the relevant national authority • commenting on the local police plan and the local fire plan and the process for their approval by or on behalf of the Council • considering progress reports on the implementation of the local policing and fire plans • seeking reports on major incidents affecting the police and fire and rescue services • consideration of statistical information on the performance of the services in Edinburgh and on comparisons of performance with other appropriate Council areas • making recommendations to the local commander (police) and Local Senior Officer (fire) on matters affecting delivery of services and on steps taken or necessary to meet National Outcome Agreement 9 - “We live our lives safe from crime, disorder and danger.”

Item no Report no

Corporate Governance Structure – Chief Financial Officer

The City of Edinburgh Council

28 June 2012

1 Purpose of report

1.1 The purpose of this report is to outline interim arrangements in the Corporate Governance Directorate for the post of Head of Finance and designation of the role of Chief Financial Officer.

2 Main report

2.1 The Policy and Strategy Committee approved the new senior management structure for the Corporate Governance Directorate on 28 February 2012. As a result of the implementation of the agreed structure, the post of Head of Finance has become vacant and recruitment is commencing. In the interim it is proposed to appoint Hugh Dunn as acting Head of Finance.

2.2 The role of Chief Financial Officer is a statutory responsibility in terms of Section 95 of the Local Government (Scotland) Act 1973 for the proper conduct of all financial matters on behalf of the Council. 2.3 Hugh Dunn, Acting Head of Finance, will fulfil the role of Chief Financial Officer during this interim period, for up to six months.

3 Financial implications

3.1 Appropriate acting up allowances will be payable.

4 Equalities impact

4.1 None.

5 Environmental Impact

5.1 None.

6 Recommendations

6.1 The Council is asked to endorse the designation of Hugh Dunn as Chief Financial Officer, for up to six months, pending a further report on the appointment of the Head of Finance.

Alastair D Maclean Director of Corporate Governance

Appendices None

Contact/tel/Email Kirsty-Louise Campbell Corporate Governance Tel: 529 3654 [email protected]

Wards affected All

Single Outcome No direct implications arising out of this report Agreement

Background None Papers

Item no Report no

Report from the Pentlands Neighbourhood Partnership

City of Edinburgh Council

28 June 2012

Purpose of Report

1 To refer a motion of the Pentlands Neighbourhood Partnership to the Council for information.

Main Report

2 On 30 May 2012, the Pentlands Neighbourhood Partnership approved the following motion by Councillor Heslop submitted in terms of Standing Order 27 of the Neighbourhood Partnership:

“This Neighbourhood Partnership:

(a) notes that a decision was taken at the full meeting of City of Edinburgh Council on 24 May 2012 to nominate two Councillors to Pentland Hills Regional Park Forum;

(b) further notes that the Forum is an apolitical body which exists to promote the beauty and benefits of the Park;

(c) regrets that the selection of an Administration Councillor representing Portobello/Craigmillar thereby excluded a second local elected member for Pentland Hills Ward to serve on the Forum;

(d) requests the Convener of Pentlands Neighbourhood Partnership write to the Chief Executive and Leader of the Council expressing the Partnership’s regret and for further clarification of this decision, to appoint an East Edinburgh Councillor;

(e) agrees to refer this motion to the next meeting of the City of Edinburgh Council on 28 June 2012 for information as to the local communities dissatisfaction with the Council decision in the Partnership area.”

1 Recommendation

3 That the Council considers the motion from the Pentlands Neighbourhood Partnership.

Mark Turley Director of Services for Communities

Appendix None

Contact/tel Mike Avery South West Neighbourhood Manager Tel 529 3801 e-mail [email protected]

Wards affected 2 – Pentland Hills; 8 – Colinton/Fairmilehead

Background Papers Minute of Pentlands Neighbourhood Partnership 30 May 2012 *