Explanatory Foreword

Introduction

This document sets out the published statement of accounts of the Authority for 2002/03. The accounts have been produced in line with the various regulations that govern local authority accounting.

This foreword gives a brief summary of the overall financial position of the County Council, sets out how the County Council’s budget is spent and financed and explains the purpose of the financial statements that are contained within the accounts.

Sources of Revenue Funding and Services Provided

The chart below details the main sources of funds received by the County Council.

This income is used to finance the various services provided by the County Council. As the chart below shows, the most significant in terms of expenditure are Education and Social Services.

Review of the Year - Revenue

In overall terms the County Council underspent against the original budget (updated for carry forwards) of £447.6m by £3.4m. Variations between the budget and outturn occurred on the majority of service areas. The significant variations were:

Underspends

Education (£496,000). An underspend mainly occurred on the authorities contribution to the standards fund and the phased programme of a Common Admission Policy for 4+ pupils, which was partly offset by overspends on Special Educational Needs and Drug Awareness. Highways and Transport (£1,278,000). This was principally a result of savings on the concessionary travel scheme and a higher than expected surplus generated by the Highways DLO.
Waste Disposal (£576,000). This was mainly due to additional trade waste income and savings on disposal of waste.
Regulatory Services (£179,000). This was due to difficulties recruiting trading standards officers, additional fee income and delayed departmental reorganisation costs.
Museums and Arts (£109,000). This was principally due to a higher than expected staff vacancy rate, and income at Snibston Discovery Park being higher than budgeted.

Approximately 50% of these underspends have been carried forward to the 2003/04 financial year.

Review of the Year - Capital

In 2002/03 the County Council spent £39.3m. on capital projects. The table below shows the main areas of expenditure, and how the expenditure was financed.

	Outturn £000
Education	13,474
Transportation	16,859
Social Services	924
Capitalisation of Maintenance	2,105
Industrial Properties	1,567
Other	4,321
Total	39,250
Financed by:
Credit Approvals	20,216
Capital Receipts	3,279
Government Grants & Contributions from external bodies	12,233
Revenue Funding	2,292
Reserves	1,230
Total	39,250

The Council’s long term borrowings, used to finance the purchase of assets were £244m at 31st March 2003. The book value of assets was £611m.

The major projects undertaken and expenditure incurred in the year were:

Schools	£000
Ashby Grammar – Science Accommodation & Replacement of Temporary Classrooms	842
Bottesford Belvoir - Replacement of Temporary Accommodation	712
Loughborough Burleigh - Replacement of Temporary Accommodation	567
Birstall Riverside – Replacement of Temporary Accommodation	505
Roads
Loughborough Epinal Way – Developer Funded Extension to Existing Road	915
Ashby Bypass	652

Future Prospects

In 2003/04 expenditure is budgeted to increase by 8% on a like for like basis. The vast majority of these extra resources are required to meet unavoidable increased costs and demands on services. Limited resources have been allocated to improve the quality of services in particular to expand the provision of nursery education, improvements to facilities for young people and easier access to services.

The County Council continues to maintain balances to meet unforeseen eventualities. At 31st March 2003 these stood at £5.7m. They are budgeted to fall to £4.9m at the end of 2003/04.

In 2003/04 and beyond the major influences will be the Comprehensive Spending Review (CSR), spending pressures and the County Councils Medium Term Corporate Strategy.

On the capital side the key influence in the medium term will be the introduction of the new self-regulatory approach to the control of capital expenditure, based on prudential guidelines to be issued by CIPFA and backed by a Code of Professional Conduct. The Government plan to put forward proposals on how capital investment will be supported under this system later this year.

Other Accounting Issues

In accordance with the transitional arrangements under Financial Reporting Standard 17 – Retirement Benefits, only a disclosure note is required, and this is included under balance sheet note 24. The net pension liability shown for retirement benefit obligations is not required to be included within the Authority’s balance sheet at this stage.

Contents of the Statement of Accounts

Consolidated Revenue Account

Covers expenditure and income for all services (other than the Pension Fund) which is funded from a combination of Revenue Support Grant, National Non-Domestic Rate income and precepts upon collection funds maintained by District Councils.

Consolidated Balance Sheet

Sets out the financial position of the County Council on 31st March 2003. It incorporates all the funds of the Authority, both capital and revenue, with the exception of the Pension Fund and Trust Funds.

Statement of Total Movements in Reserves

Brings together all the recognised gains and losses of the Authority during the period and identifies those which have and have not been recorded in the consolidated revenue account. The statement separates the movements in revenue reserves and capital reserves.

Cash Flow Statement

Gives a summary of the inflows and outflows of cash arising from transactions with third parties during the financial year. Internal transfers are thus, excluded from expenditure and income.

Trading Accounts

Shows the turnover, total expenditure and resulting surplus or deficit for major trading services, i.e. the Highways, Transportation and Waste Management Department’s Highways DLO, and the Leicestershire County Catering Service.

Pension Fund

Shows the annual results of the Leicestershire County Council administered Local Government Pension Fund for Leicestershire covering both County Council employees and those of District Councils and other admitted bodies.

Euro Costs

Following the introduction of the Euro on 1 January 1999, it is unlikely that any significant costs will be incurred prior to a decision being made regarding United Kingdom membership of the Euro.

Statement of Accounts Contents