The table below breaks down the non-operational assets

The following statement shows the progress of the Council’s rolling programme for the revaluation of fixed assets.  The basis for valuation is set out in the statement of accounting policies in note 4.  These values differ from note 1 above as these represent the gross values of the Fixed Assets as at the last revaluation whereas note 1 includes depreciation.

Foundation schools remain vested in the Governing Bodies of the individual Foundation School, therefore these assets have not been included in the consolidated balance sheet.  In this authority, there are four Foundation Schools with a fixed asset valuation of £15.140m as at 31st March 2006 (2004/5 £14.220m).
Church and other schools, which are not owned by the authority have not been included in the balance sheet, and therefore no capital charges will have been applied to the accounts.

*  includes capital expenditure of £7.97m on the replacement of a foundation school.

The format of this report has been changed.  Thus the comparative figures for 2004/05 have been amended.

Although the balance sheet shows an overdrawn position this is not reflected at the bank due to un-presented cheques and intra account transfers.

The County Council allocates and controls its available resources for capital expenditure via a rolling three year capital programme. The extent to which expenditure will be incurred in future years for schemes in the various annual programmes is as follows:

Major contracts entered into during 2005/06 and earlier, where significant payments remain to be made to contractors, include:

This represents the premiums payable upon the premature repayment of debt. This sum is charged to the revenue account in line with the policy described in Note 16 of the Statement of Accounting Policies and Estimation Techniques.

a)  The County Council is a member of the Eastern Shires Purchasing Organisation (ESPO) involved in the negotiation of contracts for supplies to its members and the provision of a central warehouse for the supply of items in common use.  During 2005/06 a net surplus of £0.4m (2004/05 £0.7m) was reported on income, net of cost of sales, of £13.2m (2004/05 £11.1m).  Turnover between LCC and ESPO totalled £60.5m (2004/5 £49.1m) in respect of stores issues, direct orders and period contracts.  
The County Council has entered into a borrowing arrangement on behalf of the constituent members of the consortium to finance the provision of a new warehouse and integrated offices costing £12.5m in 2005/6.  The County Council in effect owns approximately one seventh of ESPO assets and liabilities, however these are not included the County Council’s balance sheet.
b)  The County Council is a constituent member of Leicester, Leicestershire and Rutland Combined Fire Authority.  During 2005/06 the estimated turnover is £30.3m (2004/5 actual turnover £28.9m).

Surplus cash balances are invested in short term deposits with a range of banks and other financial institutions. Included within this amount is £3.884m (2004/05 £2.714m) which is invested on behalf of ESPO and £1.605m (2004/05 £1.37m) on behalf of residents in care homes.

The council has a liability to make payments during 2006/07:

As at 31 March 2006, the County Council has a total commitment to meet finance lease payments of £0.387m (2004/05 £0.439m), and operating lease rental payments of £4.179m (2004/05 £4.471m).

In December 2004 an Employment Tribunal held that the County Council had failed to consult Unison under the Trade Union and Labour Relations (Consolidation) Act 1992.  The Employment Tribunal made a protective award against the County Council in respect of those groups of staff who were either downgraded or were previously in receipt of bonus or enhancements.
The Authority has very recently accepted the Court of Appeal decision that upheld the original decision of the Employment tribunal.
A provision of £4.5m has been made to meet the estimated costs of this case.  There is, however, uncertainty around the basis of calculating the protective award.  The provision is based on a ‘worst case’ interpretation of the legislation.  The award would be considerably less under the alternative interpretation.

The insurance policies held by the County Council require a significant level of self insurance, the level of this being recommended by independent advisers.  The monies set aside for self insurance are split between a provision representing outstanding, unsettled claims at 31 March 2006 and a reserve to meet future claims.  The provision is expected to be used within the next seven years.

See accounting policies note 19 for details of the Landfill Allowance Trading Scheme (LATS).

The government has indicated that a reduction will be made to the council’s 2004/05 and 2005/06 R.S.G, in 2006/07 arising from amendments to the population of some major cities and other data corrections.

Sum to match costs to the benefits that departments receive from the leasing arrangement as actual payments are geared towards the last year of the agreement.

Provides for the costs of departmental restructuring scheduled for 2006/07.

Provides for refunds to people with mental health difficulties, who have been charged for residential and nursing care, for which a legal judgement has been made to repay the levy charged.

The balance of the fund as at 31 March 2006, £34.355m (2004/05 £33.762m), contains the following earmarked sums:

Thus, the uncommitted balance is restricted to £7.425m (2004/05 £6.273m).

The net movement on revenue reserves does not equal the amount shown as ‘transfers to / from revenue reserves’ in the consolidated revenue account due to the method of accounting for self-insurance and the financing of capital expenditure.

Resources for the funding of replacement vehicles and equipment.

Finance to achieve targets within the local area agreement. £1.4m relates to the achievement of ‘stretched targets’ and this will be repaid to the County Council from anticipated reward grant from meeting these targets. £250,000 is the contribution to the achievement of ‘non reward’ targets.

Surpluses arising on the provision of Industrial Properties are credited to this reserve which will be used to finance future capital and revenue expenditure, including development of the Industrial Estate.

Provides for landlord repairs to the majority of the Council’s establishments.  A rolling programme of works can thus be undertaken which spans financial years.  The balance represents uncompleted orders.

Grants awarded to statutory and voluntary organisations that remain to be claimed by the recipients.

Finance to fund potential restructuring costs if the authority withdraws certain lower priority discretionary services as a result of projected budgetary pressures.

To support the introduction of county-wide free concessionary travel subject to financial contributions from district councils.

A programme consisting initially of 4 strands to improve services by delivering efficiency savings, improve public access to information and services, implement the creation of new departments for Children’s and Adult Services whilst supporting the development of the workforces to deliver quality services.

See accounting policies note 19.
A notional surplus within the revenue account of £746,000 derived from unused allowances has been transferred to this non cash backed reserve.

a)  Municipal Mutual Insurance Limited, the County Council’s former insurers, ceased writing insurance business in September 1992.  They have made a scheme of arrangements with creditors in the event of the company becoming insolvent. Claims are currently being paid in full and it is hoped that the Company’s assets will enable all liabilities to be met.  It should be noted that there is a contingent liability if the County Council is: a) unable to recover all of the outstanding claims in ensuing years, b) if a clawback arrangement has to be implemented.
b)  Independent Insurance Company Limited, the County Council’s liability insurers for the period 1 November 1993 to 31 October 1998, went into provisional liquidation in June 2001.  Claims to date, for this period have been financed from the Councils insurance reserve, however, further claims may arise in the future.
c)  Projects that have been awarded lottery funds; if the assets provided are withdrawn from public use before the end of the agreed term, repayment of grant may be necessary.

Provisions and reserves are operated to meet the self-insured deductibles for the following policies, however, stop loss insurance applies to fire and public/employers’ liability policies.

Apart from Museums, the Authority has no general insurance cover for the theft of contents from buildings.  Similarly the Authority has no insurance cover against storm damage, floods, burst pipes, malicious damage, impact, earthquake and accidental damage.  Schools, however, have the option to join a group self insurance scheme to cover the above risks.

The County Council acts as trustee and/or administrator for approximately 20 prize funds, endowments, scholarships and bequests.  The original bequests are invested in either the Council’s trust fund pooling scheme or in a range of other direct external investments.
Trustees are nominated by Leicestershire County Council, Leicester City Council and the National Trust to the Bradgate Park and Swithland Wood charity.  This is the largest Trust the County Council is involved with, and due to the timing of the production of Leicestershire County Council’s Statement of Accounts, the figures shown below are compiled on an estimated basis. Therefore the opening balance has been revised from £512,000 to £526,600 to reflect the actual balance as at 31st March 2005.
To the extent that income from these investments has not been utilised for prizes etc., the surplus funds are invested in short term deposits with various financial institutions.
Under regulations issued under the Charities Act 1993, trust fund accounts where annual income exceeds £10,000, require an independent examination.

The main trust funds are as follows:

* Not sole trustee.  The authority administers the funds and is represented on the board of trustees.

** Management and custodianship of a new trust to be created will transfer to Loughborough College in the future.

The underlying assets and liabilities of the County Council at 31^st March are as follows:

The liability shows the underlying commitment that the authority has in the long run to pay retirement benefits.  This liability of £209.7m has a substantial impact on the net worth of the authority as recorded in the balance sheet.  Statutory arrangements, for funding the deficit will result in the deficit being made good by increased contributions by the employer over the remaining working life of employees as assessed by the actuary.
The net liability as at 31 March 2005 included £4.76m in respect of employees of the Magistrates Courts Service. These liabilities have now been excluded from the net liability as at 31 March 2006.
The FRS17 figures above incorporate staff of the Eastern Shires Purchasing Organisation (ESPO) whose staff are employed by Leicestershire County Council but whose costs are excluded from these accounts.
Assets in the County Council Pension Fund are valued at fair value, principally market value for investments, and consist of the following categories:

Liabilities of the fund have been based on the following assumptions:

The movement in the pension deficit for the year to 31 March 2006 is as follows:

Changes to the Local Government Pension Scheme permit employees retiring on or after 6th April 2006 to take an increase in their lump sum payment in exchange for a reduction in their future annual pension.  The actuaries have taken the view that there is insufficient reliable evidence to assume a level of take-up of the change in the pension scheme.  Consequently the valuation of the Council’s retirement benefit liabilities as at 31st March 2006 does not include any allowance for this change to the pension scheme.

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.