Cheshire West & Chester Council Statement of Accounts 2015-16 Visit: cheshirewestandchester.gov.uk 2015-16 Statement of Accounts Contents Page Narrative Report 3 Statement of Responsibilities for the Statement of Accounts 13 Annual Governance Statement 14 Independent auditor’s report 33 Core financial statements • Movement in Reserves Statement 36 • Comprehensive Income and Expenditure Statement 38 • Balance Sheet 39 • Cash Flow Statement 40 Notes to the core financial statements 1. Significant accounting policies 41 2. Accounting standards 60 3. Critical judgements 61 4. Assumptions made about the future and other major sources of 64 estimation uncertainty 5. Material items of income and expense 65 6. Events after the Balance Sheet date 65 7. Adjustments between accounting basis and funding basis under 66 regulations 8. Transfers to/from Earmarked Reserves 68 9. Other operating income and expenditure 69 10. Financing and investment income and expenditure 69 11. Taxation and non-specific grant income 70 12. Other comprehensive income and expenditure 70 13. Property, plant and equipment 71 14. Heritage assets 76 15. Investment properties 79 16. Asset held for sale 81 17. Financial instruments 82 18. Debtors 89 19. Cash and cash equivalents 91 20. Creditors 92 21. Provisions 94 22. Usable reserves 96 Continued on next page… 1 2015-16 Statement of Accounts …continued from previous page 23. Unusable reserves 98 24. Cash Flow Statement - Operating activities 103 25. Cash Flow Statement - Investing activities 104 26. Cash Flow Statement - Financing activities 104 27. Amounts reported for resource allocation decisions 105 28. Trading operations 109 29. Agency services 110 30. Members' allowances 112 31. Officers remuneration 112 32. Audit costs 117 33. Dedicated Schools Grant 117 34. Grant income 119 35. Related party transactions 121 36. Better Care Fund 124 37. Leases 126 38. Private Financing Initiative (PFI) 129 39. Impairment loss 133 40. Capitalisation of borrowing costs 133 41. Pension schemes (Defined Contribution Scheme) 134 42. Defined schemes (Benefit Pension Scheme) 135 43. Contingent Liabilities 142 44. Contingent Assets 143 45. Risk arising from financial instruments 143 46. Interests in companies 148 47. Trust funds 156 48. Comparative information 157 The Housing Revenue Account 158 Collection Fund 163 Pension Fund accounts 166 Group Accounts 222 Glossary of terms 239 2 2015-16 Statement of Accounts Narrative Report The Statement of Accounts is produced annually to give electors, local taxpayers, Members of the Council, employees and other interested parties clear information about the Council’s finances. The narrative report is designed to provide an explanation of the Council’s financial position and to assist in the interpretation of the financial statements. It also contains additional information about the Council in general and the main influences on the financial statements to provide a link between the Councils activities and challenges and how these impact on its financial resources. The narrative report is structured as follows: 1. About Cheshire West and Chester 2. Strategic Priorities 3. Key achievements 4. Summary of financial performance 5. Main issues from the 2015-16 accounts 6. Explanation of the financial statements 1. About Cheshire West and Chester Cheshire West and Chester is a unitary authority with a population of 332,200 and covers 350 square miles. The borough is located in the North West of England and includes the historic city of Chester and the industrial and market towns of Ellesmere Port, Frodsham, Helsby, Malpas, Neston, Northwich and Winsford. About a third of the population lives in rural areas. The Council is responsible for ensuring a wide range of services are provided to the residents, businesses and visitors to the Borough. These include education, safeguarding vulnerable children and adults, social care, public health, highways, leisure, culture, waste collection, planning, housing benefits, regeneration and community engagement. In addition to providing or commissioning services the Council is also responsible for the collection of local taxation in the form of Council Tax and Non Domestic Rates on behalf of itself and local agencies such as Police and Fire authorities. The Council is a politically-led organisation and has adopted a Leader and Cabinet model. It has 75 elected members representing 50 wards across the Borough. The current political make-up of the Council is shown below. Independent 1 Cllr Conservative Labour 36 Cllrs 38 Cllrs 3 2015-16 Statement of Accounts 2. Strategic Principles and Priorities Cheshire West and Chester Council is an innovative organisation that seeks to pioneer new and improved ways of delivering services. As an ambitious Council we are determined to deliver the best possible services, improve the quality of life for all residents and help to tackle disadvantage. Cheshire West and Chester Council has developed and launched a new plan for 2016-2020 called ‘Helping the Borough Thrive’. The Council Plan sets out the Council's vision, what it wants to achieve, and the way its staff will work. The plan is structured through ten outcomes across the three key focus areas of Residents, Communities and Economy. Thriving Residents • All of our families, children and young people are supported to get the best start in life • Vulnerable adults and children feel safe and are protected • Older people and vulnerable adults are compassionately supported to lead fulfilled and independent lives Thriving Communities • Cleanest, safest and most sustainable neighbourhoods in the country • Good quality and affordable housing that meets the needs of our diverse communities • Vibrant and healthy communities with inclusive leisure, heritage and culture opportunities • Our resources are well managed and reflect the priorities of our residents Thriving Economy • People are well educated, skilled and earn a decent living • A great place to do business • A well connected and accessible borough The Council Plan is fully joined-up with other key plans and strategies across the borough. The plan has been developed alongside the four year budget plan to ensure that resources are in place to deliver the ten outcomes. 4 2015-16 Statement of Accounts Financial Scenario In common with all Local Authorities Cheshire West and Chester needs to manage a situation where the costs and demands of services are growing but the amount of funding available is reducing. Over the last five years Central Government funding to the Council has significantly reduced and it is expected that by 2020 all discretionary spend by the sector will be 100% reliant on locally generated income. Against this backdrop the Council needs to manage growing demand for services, inflationary pressures, a need to invest in the local economy to promote growth and a desire to continually improve services. The gap resulting from reduced government funding and increasing expenditure is expected to be around £57m. A four year plan to bridge the £57m funding gap has been produced but with careful consideration of the impact of any decisions on the ten priorities outlined in the Council Plan. The key areas that have been considered when developing the four year budget package are: • Reviewing future service provision within the context of the impact the service makes to the Council’s stated outcomes and the optimum delivery mechanism to secure savings and continue to have a positive impact on the outcome; • Opportunities for delivering savings by sharing with others and working across partner boundaries; • Identifying the growth opportunities that exist within the Borough; • Identifying the opportunities available to the Council owned Companies; • Opportunity for reducing inequality across the Borough. 3. Key achievements The Council has been named winner of the ‘Best Achieving Council’ category at the 2015 annual Municipal Journal Awards. The esteemed award highlighted the Council’s work to regenerate deprived communities, create new models of delivery, focus on prevention and create cultural change. The following table highlights the key areas of Council performance: 5 2015-16 Statement of Accounts Residents Better outcomes for residents by Work Zones helping people into work with approximately 50 percent of jobs going investing in prevention, to the long term unemployed. supporting economic growth and Disposing of surplus land and buildings and using the proceeds to invest in roads, enabling local communities to leisure services and culture. solve local problems. Challenge what we do to ensure it is efficient and delivers our ambitious objectives around prevention, economic growth and community empowerment. This has seen yearly savings of £133m. Annual investment of almost £49m into priority services to protect vulnerable elderly residents and young people subjected to abuse and neglect. Chester new culture centre and Theatre is going under the brand name of the Storyhouse and is one of the country's largest regional arts project. The theatre is a multi-purpose venue and will provide residents and vistors with a excellent experience. Investing in prevention Our ambitious Integrated Early A genuine ‘Team around the Family’ provides a streamlined approach and reduces Support Services (launched demand on acute and reactive services. October 2013) provides effective • Over 6,000 people supported by IES so far services to support children and • 726 ‘troubled families’ engaged with over 90 percent of those already seeing