Notes to the Consolidated Balance Sheet

Notes to the Consolidated Balance Sheet

Consolidated Balance Sheet

Last Year / Refer to / This Year
£'000 / £'000 / £'000
Fixed Assets
Operational Assets
324,153 / Council Dwellings / 310,855
167,056 / Other Land and Buildings / 250,339
1,874 / Vehicles, Plant And Equipment / 1,376
101,313 / Infrastructure assets / 97,283
598 / Community assets / 582
594,994 / Total Operational Assets / 660,435
Non-Operational assets
25,824 / Investment Properties / 26,490
2,756 / Assets under construction / 770
884 / Surplus Assets, held for disposal / 4,151
29,463 / Total Non-Operational Assets / 31,411
624,457 / Total Fixed Assets / Note 2 / 691,846
1,646 / Long Term Investments / Note 4 / 6,646
Long Term Debtors / Note 5
243 / Mortgages / 199
241 / Other - car loans over 1 yr / 220
0 / PFI Interest / 758 / 1,177
626,587 / Total Long Term Assets / 699,669
Current Assets
339 / Stock and work in progress / Note 6 / 359
35,295 / Debtors / Note 7 / 33,498
81,387 / Short Term Investments / Note 8 / 84,695
120 / Bank and Imprests / 123
0 / Landfill Usage Allowances / Note 9 / 198 / 118,873
Current Liabilities
(12,278) / Temporary Borrowing / Note 10 / (7,717)
(47,055) / Creditors / Note 11 / (48,869)
0 / Landfill Liability / Note 9 / (188)
(4,689) / Bank Overdraft / (6,542) / (63,316)
679,706 / Total Assets less Current Liabilities / 755,226
Long Term Liabilities
(244,344) / Long Term Borrowing / Note 12 / (256,627)
(217) / Deferred Capital Receipts / Note 13 / (182)
(735) / Provisions / Note 14 / (737)
(140,760) / Liability related to defined benefit pension scheme / Note 27 / (128,597)
(386,056) / (386,143)
293,650 / Total Assets less Liabilities / Note 15 / 369,083
Financed by:
(187,681) / Fixed Asset Restatement Reserve / Note 16 / (208,903)
(64,842) / Capital Financing Account / Note 17 / (83,615)
(121,151) / Government Grants Deferred / Note 18 / (141,449)
2,740 / Deferred Premiums / Note 19 / 2,453
(4,040) / Capital Grants Unapplied / Note 20 / (4,692)
(1,862) / Capital Contributions Unapplied / Note 21 / (96)
(350) / Capital Receipts Unapplied / Note 22 / (5,451)
140,760 / Pension Reserve / Note 27 / 128,597
(16,857) / Major Repairs Reserve / Note 23 / (7,303)
(157) / Trading Account Surpluses / Note 24 / (121)
(26,241) / Earmarked Reserves / Note 25 / (32,481)
(13,969) / Revenue Account Surpluses / Note 26 / (16,022)
(293,650) / Total Equity / (369,083)

Notes To The Consolidated Balance Sheet

Note 1: Intangible Assets

The Council does not hold any Intangible Assets, as detailed in Note 2 of our Accounting Policies on Page 14.

Note 2 a): Fixed Assets

Movements in fixed assets during the year were as follows:


  1. The value of Council Dwellings has been discounted to reflect the potential effects of the Right to Buy scheme.
  2. There are 21 voluntary aided and controlled primary and secondary schools, owned by the 4 Dioceses that service the local area, that are used by the authority. The value of these properties, not included in the above valuations, amounts to some £59.3m(the Education revenue account does not incur any capital charge for these properties, which would amount to £2.1m).

Note 2 b): Depreciation Policy

Depreciation is provided for on a straight-line method according to the following policy:


Depreciated over their useful life (generally 40 years), taking account of the estimated residual value of the property at the end of that life;


Traffic signals, street lighting equipment and bus shelters are depreciated over 10 years;

Other infrastructure assets are depreciated over 40 years;

Vehicles, Plant and Equipment

Furniture and equipment is depreciated over 5 years;

Plant and machinery is depreciated over 20 years.

Note 2 c): Valuation Information

The following statement shows the progress of the Council’s rolling programme for the revaluation of

fixed assets. The valuations are undertaken by an officer internal to the authority, the Land and Property Manager (Fellow of the Royal Institute of Chartered Surveyors), on a four year rolling programme; during the year Education and Library properties were re-valued. Next year, Social Care and Leisure and Community assets will be re-valued. Asset valuations are adjusted outside of the 4 year programme where there are impairments or other material changes.

Note 2 d): Capital Expenditure

Expenditure in the year was financed as follows:

Note 2 e): Analysis of Fixed Assets

The numbers and types of Fixed Assets held by the authority are shown below:

Note 2 f): Details of major Capital Schemes

The main items of capital expenditure were:

At the Balance Sheet date, the Council had not entered into any significant capital contracts for which there was no expenditure shown in the accounts. All individually significant schemes are included in the table above.

Note 2 g): Leases

The outstanding undischarged obligations relating to operating leases are as follows:

Note 4 in the Notes to the Consolidated Revenue Account (page 25) details that the Council acts as a lessor negotiating the lease of Council land and property. The gross value of assets held for this purpose amounts to £18.2 million (last year £15.9m), with corresponding asset rental charges against these assets of £35,000 (last year £36,000) and depreciation of £31,000 (last year £31,000). The Council has not acquired any assets specifically for this purpose during the year.

Note 3: Derivatives and Other Financial Instruments

The Council has not issued any capital instruments as a means of raising finance, including shares, debentures, loans or debt instruments, options and warrants that would give the holder the right to subscribe for or obtain capital instruments (in accordance with FRS 13 “Derivatives and Other Financial Instruments”). The Council has not listed or publicly traded on the stock exchange or market.

Note 4: Long Term Investments

The Council has invested £5 million with the Hongkong & Shanghai Banking Corporation (HSBC) for 3 years. The Council has a number of short term investments (recoverable within 1 year) and further information is available in Note 8 on page 42 in the Notes to the Consolidated Balance Sheet.

The Council also holds investments in Durham and Tees Valley Airport Limited and SITA Tees Valley Limited. Information concerning these companies is available with our Group Accounts on page 73.

Note 5: Long Term Debtors

The Council has one long-term contract relating to the building of the secondary school at Ingleby Barwick. The Council has properly accounted for the residual interest in this property paid to operator as part of the unitary charge. A long-term debtor has been created for £758,000. This debtor will be reversed when the asset transfers to the authority (see Note 10 on page 17 in our Accounting Policies and Note 5 on page 25 in the Notes to the Consolidated Revenue Account for further information.

Note 6: Stocks and Work In Progress

Note 7: Debtors

Note 8:Short Term Investments

Note 9: Landfill Allowance Trading Scheme

The Waste and Emissions Trading Act 2003 placed a duty on waste disposal authorities to reduce the amount of biodegradable municipal waste disposed to landfill. The Department of Environment, Food and Rural Affairs (DEFRA) have allocated allowances to individual authorities to use landfill in 2005/06. These allowances are accounted (under UK Generally Accepted Accounting Practice) as a current asset (£198,000), offset by a liability (£188,000) that details those that have been utilised. A specific reserve has been created that corresponds to unutilised allowances that will be redeemed in future years.

The Council has a requirement to maintain sufficient allowances to cover its landfill requirements in each year. Failure to do so would result in government penalties that equate to £150 per tonne.

Note 10: Temporary Borrowing

Note 11: Creditors

Note 12: Long Term Borrowing

Note 13: Deferred Capital Receipts

Deferred Capital Receipts are amounts derived from sales of assets that will be received in instalments over agreed periods of time. They arise from mortgages on sales of council houses that form the main part of mortgages under long term debtors.

Note 14: Provisions

Notes to Provisions:

Domestic Rates Reassessments

There are a considerable number of assessments relating to the former Rating system, which are in the hands of the District Valuer. This provision is subject to continual review.

Rent Bonds

The bonds relate to four weeks advance rent for each unit occupied within the Enterprise Centre.

Surplus Properties

A provision to cover rental obligations on former Cleveland County properties. This provision was reviewed and identified as an other local authority creditor at the end of the financial year.

Interest Equalisation on Borrowing

The SORP requires that, for certain types of borrowing such as LOBO’s (Lenders Option, Borrowers Option) where stepped interest rates apply, that average interest rates are applied to the debt to spread any benefits over the term of the loan. A provision has been formed to apply this benefit to fund interest rate increases.

Harold Wilson Feasibility

A provision to cover the cost of a study into the development of the Harold Wilson

Recreation Centre.

Private Developers

Bonds are provided by developers as insurance against contractual obligation defaults.

Council Tax Rateable Value Reductions

The provision will offset lost income following appeals and retrospective valuations on Council properties.


Minor provisions have been made to offset expenditure resulting from industrial accidents. This provision has been fully utilised during the year.

Note 15: Net Assets Employed

Note 16: Fixed Asset Restatement Account

This is the balance of surpluses and deficits arising from the revaluation of assets.

Note 17: Capital Financing Account

This is the amount set aside from revenue resources and capital receipts to finance capital expenditure or to repay external loans. The account now also includes the write down of Local Government Reorganisation debt that (formerly classified as Deferred Charges).The movement in the account is shown below:

Note 18: Government Grants Deferred Account

This balance represents the values of capital grants and contributions that have been applied to finance the acquisition or enhancement of fixed assets held within the asset register.

Note 19: Deferred Premiums

This is the balance of deferred premiums and discounts arising from loan restructuring.

Note 20: Capital Grants Unapplied

This is the balance of capital grants that have not been used to finance capital expenditure:

Note 21: Capital Contributions Unapplied

This is the balance of capital contributions that have not been used to finance capital expenditure.

Note 22: Capital Receipts Unapplied

This is the balance of capital receipts, which have not been used to finance capital expenditure or to repay debt:

Note 23: Major Repairs Reserve

The unapplied portion of Capital Grants, carried forward to fund expenditure on housing repairs in future years (see Note 8 in the Notes to the Housing Revenue Account).

Note 24: Trading Account Surpluses

The surpluses on the trading accounts will be carried forward and used to reduce charges in future years.

Note 25: Earmarked Reserves

Notes to Earmarked Reserves:

Collection Fund

The balance collected from Council Tax payers in excess of the assumed collection rate and tax base and will be taken into account when calculating the Council Tax for 2007/2008.

Insurance Fund

The fund covers the insurance policy ‘excess’ on liability and property claims. The ‘excess’ on liability of £100,000, covers any public, employers, officials and professional indemnity and libel and slander liability claims. A property ‘excess’ of £100,000 covers claims relating to schools and a further ‘excess’ of £5,000 has been introduced for housing properties. The Council had the following major claims in 2005/06:

  • £63,000 claim for settling an Employers Liability claim;
  • 2 claims amounting to £169,000 on Property relating to damage to Council buildings;
  • £1,397,000 in premiums were payable to external insurers including the costs of handling claims;

The Council received £571,000 from insurers to cover settlements. However, the Council required a reserve amounting to £9 million at the 31st March, 2006 and contributions were made from services, Tristar Homes limited and Middlesbrough Borough Council (unallocated provision from Cleveland County Council).

£1,360,000 has been appropriated from the Consolidated Revenue Account to cover the net movement in the reserve.

City Challenge Fund

Used for the benefit of the local community.


Covers the value of investments held by the authority in Teesside International Airport and SITA Tees Valley Limited (see the Notes to the Group Account Statements for further details, page 73).

Public Service Agreements

Reward grant received for achieving the objectives covered in the targets set across services as identified in Note 14 of the Explanatory Foreword. It is anticipated that this will be utilised during 2006/07.

Neighbourhood Renewal Fund

This incorporates the balance of funds provided to regenerate the area within core services, including education, employment, crime, health and housing. See Note 13

of the Explanatory Foreword.

Revenue Contributions

To be used to assist the funding of capital expenditure in future years.

Managed Surpluses

Budget savings that are earmarked specifically for their use and form an important part of the service planning process.

Commuted Lump Sums

These lump sums have been received to help cover the maintenance costs of bridges, play areas and open spaces, for which the authority has become responsible.

Pension Backfunding

This will cover any increase in the back-funding element of the employer’s pension rate as determined by the actuary. The rate is due to be reviewed by the actuary in 2007.

Private Finance Initiative

A sinking fund formed to support the payments to the contractor in connection with the School PFI scheme at Ingleby Barwick. See Note 9 in the Explanatory Forward for further information.

Stockton On Line

A renewal fund to cover the replacement of Information Technology equipment within centres.

European Regional Development Fund (ERDF)

A reserve arising from retrospective funding received in 2003/04 based on scheme expenditure incurred in previous years. It is anticipated that the reserve will be utilised in 2006/07 on a range of schemes, which will have to meet specific ERDF grant funding criteria.

Schools in Difficulty

In accordance with the Education Development Plan, a reserve is held to help schools with serious weaknesses or in special measures.

Safeguarding Children

A fund created to support pressures arising in 2006/07 within the Children’s budget.

Asylum Seekers

To cover asylum seeker costs that may arise in future years.

Fleet Renewals Fund

A reserve formed to cover the replacement of the Council’s vehicle fleet.

Billingham District Heating

A fund to cover the deficit that arose on the trading account during the closure of the system.

Single Status

Reserve to cover the costs of implementing single status.

Prudential Financing

This reserve has been formed from service contributions to cover the costs and repayment of prudential borrowing.

Surplus Properties

To cover potential dilapidation claims arising from the disposal of a former Cleveland County Council property.

Planning For The Future

A fund formed to cover expenditure arsing from the management restructure in 2004/05 including ongoing pension liabilities and the costs of consultancy.

Energy Efficiency Fund

To assist in the financing of capital expenditure on energy efficiency related schemes.

Grant Exit Strategies

A reserve formed to cover service pressures arising from reductions in government specific grant.

Billingham Regeneration

To cover costs arising from the regeneration of the Billingham Town Centre.

Stockton/Darlington Partnership

A reserve to cover the feasibility costs of developing the partnership business case.

Joint Strategy Unit

The surplus on the Income and Expenditure Account for the Unit, carried forward to fund pressures within the Unit in future years.


To fund outstanding commitments concerning the Municipal Savings Banks and surplus Landfill Allowances.

Note 26: Revenue Account Surpluses

The General Fund is the Council’s main revenue account, covering income and expenditure on all services other than council housing.

The Housing Revenue Account reflects the annual surplus or deficit on council housing activity.

School Reserves represent the unspent balances on delegated budgets, which are earmarked for use by individual schools.

Note 27: Retirement Benefits

Under FRS 17 covering Retirement Benefits, local authorities are required to follow UK GAAP in accounting for pension costs. The requirements of the FRS have been introduced on a staged basis since 2001/02, and have now been fully integrated. The Actuary has provided the information for the Council.

Full compliance includes the identification of the major financial assumptions used, as follows:

The fair value of the attributable assets held by the pension scheme at the end of the period analysed:

The present value of the scheme liabilities based on the actuarial assumptions and the resulting surplus or deficit:

The liability shows the underlying commitments that the authority has in the long-run to pay retirement benefits. The total liability of £129 million has a substantial impact on the net worth of the authority as recorded in the balance sheet. However, statutory arrangements for funding the deficit mean that the financial position of the authority remains healthy. The deficit on the scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary.

Analysis of amount recognised in Statement of Total Recognised Gains and Losses (STRGL).

Movement in Surplus/Deficit during the year:

History of Experience Gains and Losses.