Statement of Accounts 2020/21 Contents Statement of Accounts 2020/21 Newport City Council Page No. Head of Finance’s Narrative Report for the Statement of Accounts 5 Statement of Responsibility 17 Annual Governance Statement 18 Auditor’s Report 43 Expenditure and Funding Analysis 44 Comprehensive Income and Expenditure Statement 45 Movement in Reserves Statement 46 Balance Sheet 47 Cash Flow Statement 48 Notes to the Statement of Accounts 49 Group Accounts 123 Notes to the Group Accounts 128 Glossary of Accounting Related Terminology 140 Glossary of Acronyms 145 Further Information 146 - 2 - Contents Statement of Accounts 2020/21 Newport City Council Notes to the Statement of Accounts Index Note 1 Accounting Policies Note 2 Accounting Standards that have been issued but not yet adopted Note 3 Critical judgements in applying Accounting Policies Note 4 Events after the balance sheet date Note 5 Assumptions made about the future and other major sources of estimation uncertainty Note 6 Material items of income and expense Note 7 Note to the expenditure and funding analysis Note 8 Expenditure and Income Analysed by Nature Note 9 Adjustments between Accounting Basis and funding basis under regulations Note 10 Transfer to / from earmarked reserves Note 11 Other operating expenditure Note 12 Financing and investment income and expenditure Note 13 Taxation and non-specific grant income Note 14 Property, Plant and Equipment Note 15 Impairment losses Note 16 Heritage Assets Note 17 Investment Properties Note 18 Financial Instruments Note 19 Inventories Note 20 Short term debtors Note 21 Cash and cash equivalents Note 22 Assets held for sale Note 23 Short term creditors Note 24 Provisions Note 25 Usable reserves - 3 - Contents Statement of Accounts 2020/21 Newport City Council Note 26 Unusable reserves Note 27 Cash Flow Statement – operating activities Note 28 Cash Flow Statement – investing activities Note 29 Cash Flow Statement – financing activities Note 30 Members’ allowances and expenses Note 31 Officer Remuneration Note 32 Termination benefits Note 33 External audit costs Note 34 Grants income Note 35 Agency Expenditure and Income Note 36 Related parties Note 37 Capital expenditure and capital financing Note 38 Leases Note 39 Private Finance Initiatives and similar contracts Note 40 Capitalisation of borrowing costs Note 41 Pension Schemes accounted for as defined contribution schemes Note 42 Defined Benefit Pensions Schemes Note 43 Nature and extent of risks arising from financial instruments Note 44 Contingent Liabilities Note 45 Contingent Assets - 4 - Head of Finance Narrative Report for the Statement of Accounts Statement of Accounts 2020/21 Newport City Council Introduction / summary The 2020/21 financial year for Newport City Council has been an unconventional one. Traditional considerations to deliver a balanced revenue budget, generally involving significant increased demands on social services and schools in particular, have been replaced with pressures on income budgets, establishments and service outlets that have been closed for significant parts of the year leading to lower running costs, alternate working measures being introduced, and considerable ad-hoc reactive funding that is not guaranteed into the medium term. It is very difficult at this stage to quantify the long term impact of Covid-19, especially in the early stages of recovery and subsequently the “new normal”, when it is unknown what services will look like and how they will be provided in the future, and the level of funding that will be made to deliver these. The Council will monitor and forecast these future costs and loss of income alongside our “usual” monitoring process, and will take the appropriate actions required to maintain the financial sustainability going forward. 1. About Newport and the Council Newport is a coastal city, covering a geographical area of just over 84 square miles. It has an urban hub with an extensive rural hinterland and is home to one of Wales’ most diverse and multi-cultural populations. The city has a population of over 150,000 and has employment in the city of 84,800 across a broad range of industries. Newport's population by Age 26,164 30,946 Aged 0 to 15 Aged 16 to 64 Aged 65 and over 94,375 - 5 - Head of Finance Narrative Report for the Statement of Accounts Statement of Accounts 2020/21 Newport City Council Employment by broad industry Other service activities Public administration, defence, education… Professional, scientific and technical… Real estate activities Finance and insurance activities Information and communication Wholesale, retail, transport, hotels and food Construction Production Agriculture, forestry and fishing - 5,000 10,000 15,000 20,000 25,000 30,000 The City Council’s Corporate Plan for 2017 – 2022 – “Building on Success: Building a Better Newport” sets out the key priorities of the Council. The Council has a clear mission statement – “Improving People’s Lives”, which is aligned to the aspirations set out in the Well Being of Future Generations Act. The plan outlines how we will put this mission into practise, through the well-being objectives, which have been adopted: Improve skills, educational outcomes and employment opportunities Promote economic growth and regeneration whilst protecting the environment Enable people to be healthy, independent and resilient Build cohesive and sustainable communities The Council employs approximately 5,800 members of staff (including teachers and other school based staff), every day the mission is executed through the delivery of around 800 discrete activities in various service delivery methods, ranging from services the council delivers to services delivered in partnerships with a number of other organisations. 2. The Council’s Performance and Achievements in 2020/21 The impact of Covid continues to have a significant impact on Services. Staff have needed to be rapidly redeployed to cover unexpected changes in demand, for example litter bins on countryside walks, cemeteries and a shift from commercial to domestic waste and recycling collections. The need to shield vulnerable staff and for others to self-isolate has also made delivery of services challenging and increased operation costs. Focus has been on frontline services, which we have been able to maintain through the pandemic. Whilst many councils reduced their garden waste and recycling collections, Newport Council maintained its operations and were not impacted during this period. Safety critical highway repairs were carried out and the contact centre was made virtual, with staff working from home still able to answer calls. The last year has presented unprecedented and unique challenges. Whilst most of the UK began shutting down, services ramped up and supported not only our Newport businesses and key workers but also some of our most vulnerable residents. The Flying Start team continued to provide early year’s childcare for key workers as well as for the more vulnerable - 6 - Head of Finance Narrative Report for the Statement of Accounts Statement of Accounts 2020/21 Newport City Council children in our community and hub based youth workers supported the provision of weekend key worker childcare for older children. This support continued throughout the summer holiday period and provided an invaluable service for key workers. The Neighbourhood hubs have remained at the heart of our communities and have supported residents in need of food, advice and support. A free phone helpline was set up and over 800 emergency food parcels were provided for vulnerable residents with no other access to food. Activity packs and baby bundles were also distributed to children and new parents. The hubs team also coordinated the Welsh Government food parcel scheme which saw over 5,000 telephone calls made to shielding residents and over 600 weekly food parcels ordered. Demand for temporary accommodation has increased significantly due to Welsh Government guidance to accommodate anyone at risk of, or sleeping rough. We have strengthened partnerships with other departments, stakeholders, external agencies and the third sector to provide accommodation and support to those most vulnerable. Demand for temporary accommodation is far exceeding supply and we have worked tirelessly to source further accommodation and consider new and innovative ways of supporting service users through joint working, an example being the fifteen modular units which were provided at Mission Court and provide supported temporary accommodation for some of our most vulnerable residents. The Social Services Teams normally deal with challenging conditions and increasing demand but this was significantly heightened this year. The adults social care market - domiciliary and residential services were already under financial pressure but Covid meant that increased support was required, both to maintain safe services as well as ensure the market was financially secure and sustainable. Additional payments were paid to care workers and administered by the services commissioning team. Whilst the impact on the Children’s care market was relatively less severe than Adult’s, the pressure on families during the pandemic meant that Children’s social services were also under severe pressure in supporting vulnerable children/families. The Business Support Team helped over 1,000 Newport businesses access advice and financial support at a time when most businesses were struggling to keep afloat. The Regeneration team have been working hard to maintain momentum