Narrative Report

The Lancashire Combined Fire Authority (CFA) (the Authority) was established as a free-standing body from 1 April 1998. It sets its own budget, holds its own reserves, raises its own council tax, and receives funding direct from the Government and through business rates.

The Authority must prepare and publish a Statement of Accounts annually. Its purpose is to give electors, local taxpayers, Fire Authority Members, employees, and other interested parties clear information about the Fire authority’s finances.

The aim is to provide information on:

· the cost of providing Fire Authority services in the financial year 2023/24;

· how these services were paid for;

· what assets the Fire Authority owned at the end of the financial year; and

· what was owed, to and by, the Fire Authority at the end of the financial year.

This narrative report gives a guide to the most important matters included in the Statement of Accounts.

Contents of this Statement of Accounts

This Statement of Accounts covers the financial year ended on 31 March 2024 (referred to as 2023/24). It has been prepared in accordance with the Accounts and Audit Regulations 2015 as amended by the Accounts and Audit (Amendment) Regulations 2021 and the Code of Practice on Local Authority Accounting in the United Kingdom. The Statement contains:

Statement on Annual Governance Arrangements – Sets out the Authority’s responsibilities regarding the system of internal control and corporate governance.

Independent Auditor’s Report to the Members of Lancashire Combined Fire Authority – The Auditor's report to the CFA on the accounts for 2023/24, which are set out in the sections shown below.

Statement of Responsibilities for the Statement of Accounts – Sets out the responsibilities of the Authority and the Treasurer with regards to the statement of accounts.

Comprehensive Income & Expenditure Statement - This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Fire Authority raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

Movement In Reserves Statement – This statement shows the movement in year on the different reserves held by the Fire Authority analysed between usable and other reserves. The surplus or (deficit) on the Provision of Services line shows the true economic cost of providing the Fire Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement.

Balance Sheet – This shows information on the financial position of the Fire Authority as at the 31 March 2024, including the level of balances and reserves at the Fire Authority’s disposal, its long-term indebtedness and the value of the assets held by the Fire Authority.

Cash Flow Statement – This shows the cash and cash equivalent movements in and out of the Fire Authority due to transactions with third parties for revenue and capital purposes.

Fire Fighters Pension Fund Account and Net Assets Statement – Shows the financial position of the fire fighters pension fund account, showing whether the Authority owes, or is owed, money by the Government to balance the account, together with details of its net assets.

Review of the Year

Supporting our people to deliver the best possible services in Lancashire is a priority in our plans every year. Health and wellbeing and training and development have been the focus of attention in 2023/24, with our staff involved in shaping new and improved initiatives.

The introduction of peer support ambassadors, 32 volunteers within the Service who support people around them through wellbeing conversations, has opened up mental health conversations and is helping to remove the stigma of talking about it.

Our new Lift and Climb mentoring programme is pairing individuals across the Service in different roles and locations, so they can benefit from the guidance and experience of colleagues. The initiative was brought from idea to reality by a member of staff and is supporting people in operational and service support roles.

Adapting to changing risks in communities and finding new ways to make Lancashire safer is a continuous endeavour, and one which we are motivated and driven to succeed in doing. We have improved core services this year in addition to the new assets that signal advancements in how the whole sector operates.

The home fire safety check service is our long-established, main method of prevention designed to provide tailored interventions to people in their homes that reduce the risk of fires. In 2023/24 we delivered well over the target number of interventions and saw a reduction in the number of fires in the home and fewer casualties.

Our business fire safety check service is a newer initiative and part a wider programme to support employers and landlords to keep people safe in their buildings. We exceeded our target in this area too, with crews assuring compliance with fire safety laws in businesses like shops and offices, leaving specialist business safety advisors and inspectors to focus on more complex, high-risk premises.

Alongside these community focussed prevention and protection services, we continue to strengthen our emergency response capabilities through innovation and investment. We became the first service in the UK to introduce an underwater drone and sonar scanner for search and rescue operations. These not only improve how we respond to water-related incidents but also increases firefighter safety.

Dynamic cover software is changing the way we deploy resources across the county. Providing visual data on community risks and emergency cover in real-time, it enables us to position fire engines with more precision, improving emergency cover and reducing response times.

Our brand new incident command units were the result of extensive research and development to ensure that when they joined our fleet, they brought the best possible technology and systems for effective management of complex and large-scale emergencies. Software on board connects the command units to firefighters on the incident ground and the command support room at Service headquarters, sharing one operating picture to all.

At the heart of all that we achieve are people dedicated to making a difference in Lancashire’s communities. In our staff survey, 94% of respondents said they felt that their work contributes to making Lancashire safer, testament to the collective approach we uphold. Together we will continue to learn, improve, and innovate so that we provide the best possible public services now and in the future.

The 2023/24 Financial Overview

The Authority’s spending is planned and controlled by an annual budget process, which leads to the setting of its budget requirement. Expenditure on the day-to-day running costs of the service is determined through the Revenue Budget and is recorded in the Comprehensive Income and Expenditure Statement.

In setting its budget the Authority aims to balance the public’s requirement for and expectations of our services with the cost of providing this. As such the revenue budget focuses on the need to:-

deliver services as outlined in the Risk Management Plan and other plans;
maintain future council tax increases at reasonable levels;
continue to deliver efficiencies in line with targets;
continue to invest in improvements in service delivery and facilities;
set a robust budget that takes account of known and anticipated pressures; and
maintain an adequate level of reserves.

The Authority agreed a net revenue budget of £68.2m and a council tax of £82.27. This represented a £5 increase in council tax, in line with the Council Tax referendum limit. Based on this the budget was considered affordable, prudent, and sustainable, whilst ensuring that the Authority was able to deliver against its corporate priorities.

The net revenue position shows a small overspend of £0.2m.

The following charts show a breakdown of where the monies we received come from and how we spent this:

Pie chart showing the Authority's expenditure analysis for 2023/24. Employee pay costs 70%, supplies and services 13%, capital financing and other items 7%, premises 5%, transport 3% and other employee related costs 2%.

Pie chart showing the Authority's income analysis for 2023/24. Council tax 50%, business rates 27%, government grant 12% and other income 11%.

A summarised comparison of the Fire Authority’s expenditure for the year compared with budget is set out below:

Comparison (£000)	Budget	Spend	(Under) / Overspend
Employees: pay costs	53,167	53,526	359
Other employee related costs	1,536	1,395	(141)
Premises	5,014	4,132	(882)
Transport	2,505	2,380	(125)
Supplies & services	9,507	9,959	452
Capital financing costs & other items	4,560	5,523	963
Total Expenditure	76,289	76,915	626
Other Income	(8,106)	(8,349)	(243)
Budget requirement	68,183	68,566	383

Funded by:
Council tax	(37,951)	(37,951)	-
Business rates	(20,505)	(20,913)	(408)
Government grant	(9,727)	(9,482)	245
Sub-total	(68,183)	(68,346)	(163)
Net Overspend	-	220	220

The following reconciliation shows the comparison between the revenue budget position, as set out above, and the Total Comprehensive Income and Expenditure figure reported in the accounts.

Reconciliation	£000
Revenue Outturn	220
Remove Capital Contributions and transfers to / from reserves	(4,459)
Adjustments for Capital Purposes	4,301
Net change for Pensions Adjustments	4,570
Other Differences	1,206
Deficit on provision of services	5,838
(Surplus)/Deficit on revaluation of fixed assets	(1,206)
Actuarial (gains)/losses on pension fund assets	(4,170)
Total Comprehensive Income and Expenditure	(461)

The Authority’s general fund balance, that includes our share of North West FireControl, was £4.89m at the start of the year. Following a review of reserves during the year and the transfer of the overspend of £0.22m the reserve balance at the end of the year is £5.66m. The Authority’s year-end balance excluding our share of North West FireControl is £4.99m (this is above the minimum level of reserves approved by the Authority at its budget meeting in 2024).

The Authority also holds an additional £8.44m of earmarked revenue reserves and £20.45m of capital reserves and receipts. The Capital reserves and receipts are fully utilised within the medium-term financial strategy. It is also worth noting that over half of the earmarked reserve relates to the Authority’s two PFI schemes, whereby monies are set aside in the early years of the schemes to meet future costs, thus smoothing out the impact of inflationary pressures.

The Authority has continued to invest in its asset base, with capital expenditure incurred in the year totalling £6m, with the main contributors to this being set out below:-

Capital Expenditure	£m
Vehicles Fire Appliances, Command Units, Aerial Appliance and various Support Vehicles including vans and cars.	4.5
Operational Equipment RTC Rescue Equipment, Drone, Thermal Imagining Cameras, Appliance CCTV	0.7
ICT Equipment Command Support software, Firewall, Website, Station uninterruptable power supply	0.5
Buildings Dormitory facilities, Drill tower replacements & work at the fleet workshop	0.3
Total	6.0

Capital Expenditure

£m

Vehicles

Fire Appliances, Command Units, Aerial Appliance and various Support Vehicles including vans and cars.

4.5

Operational Equipment

RTC Rescue Equipment, Drone, Thermal Imagining Cameras, Appliance CCTV

0.7

ICT Equipment

Command Support software, Firewall, Website, Station uninterruptable power supply

0.5

Buildings

Dormitory facilities, Drill tower replacements & work at the fleet workshop

0.3

Total

6.0

The Balance Sheet shows that the Authority’s Total Net Liabilities remained broadly unchanged at (£503.0m) compared to (£502.5m) in the previous year. The net liability reflects the Authority’s compliance with International Accounting Standards and in particular the requirement to show the full pensions liability in the accounts. Whilst the liability on the Local Government Pension Scheme is funded the Fire-fighters Pension Scheme is unfunded, there are no assets from which future liabilities will be paid, and hence the Authority’s overall Fire-fighters pension liability of (£651.8m) is extremely large. If this liability was excluded the Authority’s Total Net Assets would be £148.8m. The fire-fighters Pension Scheme liability remained largely unchanged with a small increase of £0.290m. The pension liability includes estimated costs in relation to the McCloud judgement.

Long-term assets have increased slightly in value to £127.8m from £126.6m, reflecting the investment in our asset base and the impact of revaluations.

Future Financial Plans

Due to economic uncertainty and nearing the end of the Government’s terms in office the Spending Review was again reduced to a single year review, covering 2024/25, with a multi-year settlement anticipated for next year. Again, the outcome of the Fair Funding review, which looked to re-assess the methodology under which funding was allocated to individual authorities, and changes to the Business Rates Retention Scheme, have been put on hold. The 2024/25 Local Government Finance Settlement showed an increase in the Governments Settlement Funding Assessment of 7.5%.

The Government allowed Fire Authorities to increase council tax levels by just 2.99%, compared to £5 the previous year (which is over 6% for LFRS), resulting in a council tax of £84.73 per band D property.

The Authority agreed a net revenue budget of £75.2m, allowing for inflationary pressures. Based on this the budget, as presented, is considered affordable, prudent, and sustainable, whilst ensuring that the Authority can deliver against its corporate priorities.

Given economic uncertainty, the potential impact of the Fair Funding Review and potential changes to local retention of Business rates, it is extremely difficult to anticipate what funding will look like beyond the existing settlement, hence for the purpose of medium-term financial strategy we had assumed that the funding will increases broadly in line with inflation. Based on this we have been able to set a balanced budget in future years, after allowing for council tax increases in line with forecast inflation.

The capital budget continues to invest in our asset base, in particular new buildings/stations, vehicle replacement, new operational equipment, and new IT requirements. This gives rise to a capital program of £73m over the next five years.

We will continue to invest to ensure that our staff have the best equipment available, our vehicle programme sees us investing in enhanced aerial capability, whilst our operational equipment investment includes the replacement of our Breathing Apparatus sets and telemetry, and our cutting/extrication equipment.

When the national Emergency Services Mobile Communications Programme (ESMCP) progresses to a stage where we can purchase replacement radio and mobilising equipment, we will upgrade our current provision. This project has incurred delays and is outside of our control. It is assumed that any costs to the Authority will be funded by specific capital grant.

Most of the capital programme relates to planned enhancements to our building stock, including the potential replacement of Service HQ and Preston Fire Station, together with enhancements to our training props at our Service Training Centre.

The capital programme shows the Authority utilising all its capital reserves and receipts by the end of 2025/26, meaning that the remainder of the capital programme will need to be met from £31m of new borrowing. New borrowing will impact the revenue budget as capital financing (interest payable and Minimum Revenue Provision - MRP) charges and therefore efficiency savings of £2.5m will need to be delivered in the medium term, and this is reflected in our Medium-Term Financial Strategy.

The following significant financial risks have all been assessed and the Treasurer feels that these are adequately covered within the budget estimates or within the level of reserves currently held:-

Reductions in levels of funding over and above those forecasted.
Changes to the Business Rates Retention Scheme.
Adverse changes because of the implementation of the Fair Funding Review.
Reduction in Council Tax funding.
Higher than anticipated inflation.
Larger increases in pension costs.
Significant changes to retirement profiles.
Increase in demand led pressures.
Higher insurance claims.

Accounting Changes

The accounts have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 (the Code).

Statement on Annual Governance Arrangements by the Chairman of the Combined Fire Authority, the Treasurer to the Combined Fire Authority and the Chief Fire Officer

Scope of Responsibility

Lancashire Combined Fire Authority (the Authority) is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently, and effectively. The Authority also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

In discharging this overall responsibility, the Authority is responsible for putting in place proper arrangements for the governance of its affairs facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.

The Authority approved and adopted an updated Local Code of Corporate Governance in 2018 and this was reviewed by the Audit Committee in July 2024. It aligns with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government Framework 2016. Included within the Code are the following core principles:-

1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.

2. Ensuring openness and comprehensive stakeholder engagement.

3. Defining outcomes in terms of sustainable economic, social, and environmental benefits.

4. Determining the interventions necessary to optimise the achievement of the intended outcomes.

5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it.

6. Managing risks and performance through robust internal control and strong public financial management.

7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability.

(A copy of the code, setting out the core and supporting principles, what the Authority commits itself to do and how it will do this can be found on our website at Publications | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk).

This statement explains how the Authority has complied with the code and also meets the requirements of regulation 6(2) of the Accounts and Audit Regulations 2015 in relation to the publication of a statement on internal control.

The Purpose of the Governance Framework

The governance framework comprises the systems and processes, and culture and values, by which the Authority is directed and controlled and its activities through which it accounts to, engages with, and leads the community. It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of the Authority’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively, and economically.

The governance framework has been in place at the Authority for the year ended 31 March 2024 and up to the date of approval of the 2023/24 Statement of Accounts.

The Governance Framework

The Authority’s Local Code of Corporate Governance set out its framework for corporate governance. The key elements of the systems and processes that comprise the Authority’s governance arrangements in accordance with the seven principles of the Local Code of Corporate Governance include:-

· The Community Risk Management Plan (CRMP) sets out the direction of the Service and how we will make Lancashire safer. It is informed by the greatest risks to the people and communities of Lancashire which are identified in our strategic assessment of risk (opens in a new tab). The plan describes our aim, priorities, equality objectives and values, alongside how we will prevent, protect, and respond to the risks in Lancashire. The current plan covering 2022-2027 can be found on our website at Community Risk Management Plan 2022-2027 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk).

· Lancashire Fire and Rescue Service has six core strategies: our People, Prevention, Protection, Response, Financial and Digital Strategies. Our prevention, protection and response activities address the fire and rescue related risks that are identified in those strategies and outline the measures in place and actions we take to make Lancashire safer. Each strategy is periodically reviewed and evaluated to ensure we are delivering against our outlined objectives and are doing so in the most efficient and effective way. Wherever necessary, changes will be made within each strategy to ensure we operate in line with our aim, priorities and values.

· The Strategic Assessment of Risk’ (SAoR) seeks to underpin our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. This document can be found on our website at Strategic Assessment of Risk 2023-2024 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk);

· The Annual Service Plan details the activities we will undertake to deliver the strategy set out in our CRMP. The current plan was approved this year and can be found on our website at Annual Service Plan 2024-2025 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk);

· A Communication Strategy and the Consultation Strategy;

· A comprehensive performance management framework, with the Performance Committee and Service Management Team receiving regular reports on performance against targets and any corrective action taken to address any variances. On an annual basis the Authority publishes an Annual Service Report;

· A Corporate Programme Board provides oversight across 5 areas:-

o Business Process Improvement Programme

o Service Delivery Change Programme

o Capital Projects Programme.

o People Strategy

o Risk Management

All major projects and reviews follow similar format and report to the Corporate Programme Board;

· The Authority operates a Committee Structure aligned to strategic objectives, within agreed Terms of Reference, as follows:-

o The Audit Committee - To advise on the adequacy and effectiveness of the Authority's Internal and External Audit Service and risk management arrangements, which operates in line with the core functions identified in CIPFAs Audit Committees – Practical Guidance for Local Authorities.

o The Resources Committee - To consider reports and make decisions relating to financial, human resources and property related issues.

o The Planning Committee - To consider reports and make decisions relating to all aspect of planning arrangements, including consultation and communication arrangements.

o The Performance Committee - To consider reports and make recommendations on all aspects of performance management.

o The Appeals Committee -To hear relevant appeals, grievances and complaints.

· Clear management structure within the Service. The Executive Board, comprising the Chief Fire Officer (head of paid service), and 4 Executive Directors, is responsible for determining policy, monitoring performance and developing service plans in line with the Authority’s overall strategic objectives and is assisted in this process by the Service Management Team;

· The Combination Scheme Order, Standing Orders, Terms of Reference of individual Committees, Scheme of Delegation and Financial Regulations establish overall arrangements for policy setting and decision making and the delegation of powers to members and officers;

· Comprehensive suite of strategies and policies in place and regularly reviewed;

· Codes of Conduct for members and officers, and member/officer protocol, which set out clear expectations for standards of behaviour;

· Both the Monitoring Officer and Treasurer are involved in the Authority’s decision-making process, and ensure compliance with established policies, procedures, laws and regulations; All Authority reports are considered for human resource, financial, business risk, environmental and equality and diversity implications in order to identify key issues;

· The Treasurer’s role and financial management arrangements align with requirements set out in CIPFAs Statement on the Role of the Chief Financial Officer in Local Government and CIPFAs Financial Management Code;

· Well publicised arrangements for dealing with complaints and whistleblowing, and for combating fraud and corruption;

· A Risk Management Strategy and framework which ensures that risks to the Service’s objectives are identified and appropriately managed;

· Comprehensive Business Continuity arrangements in place, and tested on a regular basis;

· A framework to review potential partnership arrangements utilising set criteria prior to entering into such arrangements;

· Compliance with data transparency requirements, including publication of all key documents, committee agenda and minutes, pay policy and publication scheme on the internet;

· Regular assessment of training & development needs of both members and officers, including appropriate appraisal system. Sufficient budget to meet relevant training requirements; and

· Comprehensive service review process in place, comprising external views in the form of HMICFRS Inspection review, External Audit reviews, Internal Audit reviews and internal reviews undertaken by our own staff. Ultimately these culminate in the production, and publication, of an Annual Assurance Statement.

Review of effectiveness

The Authority has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the work of the executive managers within the Authority who have responsibility for the development and maintenance of the governance environment, the Internal Auditors annual report, and also by comments made by the external auditors and other review agencies and inspectorates.

A statement of assurance was approved by the Authority in April 2024, it sets out the effectiveness of the governance arrangements for which it is responsible, including the system of internal control. The statement of assurance covers all the principles set out in the Authority’s Code of Corporate Governance. The statement of assurance reveals no areas of weakness in the Authority’s corporate governance arrangements; the arrangements are in all cases at least adequate and in the majority of areas good.

In maintaining and reviewing the effectiveness of the Authority’s governance arrangements the following have been considered:-

· A review of minutes of the Executive Board, Audit Committee and Authority to ensure that periodic monitoring and reviews are being reported appropriately and governance issues are addressed.

· We updated our Strategic Assessment of Risk that underpins our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. We undertook an emergency cover review (ECR) in 2022 to ensure that its emergency response remains effective and efficient, and that the Service is well equipped to respond to future challenges.

· Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) reported the outcome of their second full inspection in July 2022; the focus was on the service they provide to the public, and the way they use the resources available. The HMICFRS reported that the Service is performing exceptionally well and has been recognised as ‘outstanding’ for promoting values and culture. As well as being rated ‘outstanding’ for culture and values, the service was rated as ‘good’ in the other 10 categories and there were no areas that ‘require improvement.’ The results mirror those of the service’s first full inspection in 2018, with the new report highlighting that the service has improved in almost all areas since then. The next inspection is due in 2025.

· A new Annual Service Plan has been published, providing clarity, both internally and externally, on our priorities set out in the CRMP and describes what our ambitions are for each priority, as well as setting out the projects and actions that will be delivered, developed, or reviewed during the coming year against each of our priorities. This is supported by Local Delivery Plans.

· Statement of Intent: Enhanced Collaboration agreed between LFRS, Lancashire Constabulary and Northwest Ambulance Services. Collaboration group established with regular reports to Members.

· An Organisational Assurance Team. The newly formed Organisational Assurance team under Planning, Performance and Assurance, will now have a broader reference than just a focus on operational assurance. The team has the responsibility for HMICFRS liaison, operational preparedness and will undertake internal audits/ assurance across the whole organisation based on trends, themes, and emerging needs. The team will identify and share good practice as well as areas for improvement, items will be tracked through to completion. The Organisational Assurance team will work closely with the Operational Assurance team (under Training and Operational Review) who have the responsibility for operational learning and response. The Operational Assurance team will continue to create the operational assurance performance summary which is published quarterly. A programme of preparedness visits will be managed by the Organisational Assurance team which has expanded on the operational audits undertaken previously.

· Performance appraisal incorporating values is undertaken throughout the Service.

· Internal Audit services were provided by Lancashire County Council, who comply with CIPFA’s Code of Internal Audit Practice. The Head of Internal Audit is required by professional standards to provide an opinion addressing governance, risk management and control and thereby to provide assurance that the risks to the objectives of Lancashire Combined Fire Authority are being adequately and effectively controlled. As part of the 2023/24 internal audit plan the auditors undertook various reviews and gave the overall opinion that they can “provide substantial assurance regarding the adequacy of design and effectiveness in operation of the organisation's frameworks of governance, risk management and control.”

· The Authority’s external auditors are Grant Thornton, they are required to consider whether the service has put in place proper arrangements to secure economy, efficiency, and effectiveness in is use of resources. Their conclusions are set out below:

o Financial Sustainability – “Significant weakness in arrangements identified in relation to the Authority’s level and use of reserves to manage its financial position”. Note that this has now been addressed as part of setting the 2024/25 MTFS; the general reserve remains at c£1m above the minimum level of reserves for the duration of the five-year period of the MTFS.

o Governance – “No significant weaknesses in arrangements identified”.

o Improving economy, efficiency, and effectiveness - “No significant weaknesses in arrangements identified”.

· On 3 April 2024 Grant Thornton gave an unqualified opinion on the Authority’s finance statements ended 31 March 2023.

Last year’s Annual Governance Statement identified a number of areas for improvement, and progress against these are set out below:

Area for Improvement	Action to date	Complete/ On-going	Owner
A project to replace the existing Performance Management System will commence	Work has progressed on developing the KPI suite for Service level performance reporting and user acceptance testing is well underway. Two service level KPIs remain in development, and relevant communications and training delivery plans are being drafted ahead of rollout. Regarding the development of internal (front-end) PowerBi dashboards, the first dashboard for Finance Dept. is due to be released by the end of quarter one. Two further dashboards, one for service delivery and one for on call performance, are also in development.	Ongoing	Head of Service Improvement
An upgraded Finance system will be implemented in April 2022, as part of that we will review and implement improvements to the monthly budget monitoring process, making greater use of additional functionality provided.	Improvements to the monthly budget monitoring process have been developed and tested and are being rolled out over the summer of 2024.	Ongoing	Head of Finance
Identify a mechanism to report to Members of the CFA our response to national recommendations made by the HMICFRS during the year.	Regular HMICFRS updates are provided to CFA members via a specific HMICFRS update paper to every planning committee. Members are also provided with a HMICFRS update on Strategy Day via a presentation, this includes an overview of the annual ‘State of fire’ report and any recommendations. Regarding the HMICFRS values and culture recommendations, progress is reported alongside LFRS equality action plan which is provided to CFA members.	Completed	Head of Service Improvement

Significant governance issues

On the basis of the review of the sources of assurance set out in this statement, we are satisfied that Lancashire Combined Fire Authority and Lancashire Fire and Rescue Service has in place a satisfactory system of internal control which facilitates the effective exercise of its functions, and which includes arrangements for the management of risk.

A number of improvement recommendations and one significant governance issue was identified as part of the external audit. The significant government issue relating to the Authority’s level and use of reserves to manage its financial position was addressed in February 2024 as part of setting the Budget and Medium-Term Financial Strategy for 2024/25; the general reserve remains at c£1m above the minimum level of reserves for the duration of the five-year period of the MTFS. The detail of this issue, improvement recommendations and management comments are included in the ‘Auditors Annual Report template - Fire and rescue - 22-23 (lancsfirerescue.org.uk). We are satisfied that the steps set out in the management comments will address the improvements identified in our governance arrangements.

Approved:

Nikki Hennessy

Justin Johnston

Steven Brown

County Councillor N Hennessy, Chairman,

Lancashire Combined Fire Authority

[DATE]

J Johnston,

Chief Fire Officer, Lancashire Fire and Rescue Service

[DATE]

S Brown,

Treasurer,

Lancashire Combined Fire Authority

05^th July 2024

Independent Auditor’s Report to the Members of Lancashire Combined Fire Authority

To add on final audit

Statement of Responsibilities for the Statement of Accounts

The Authority’s Responsibilities

The Authority is required:

· To make arrangements for the proper administration of the financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Treasurer to the Fire Authority.

· To manage its affairs to secure economic, efficient, and effective use of resources and safeguard its assets.

· To approve the Statement of Accounts.

The Treasurer’s Responsibilities

The Treasurer is responsible for the preparation of the Authority’s Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting (‘the Code’), is required to present a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year ended 31 March 2024.

In preparing this Statement of Accounts, the Treasurer has:

· Selected suitable accounting policies and then applied them consistently;

· Made judgements and estimates that were reasonable and prudent;

· Complied with the Code.

The Treasurer has also:

· Kept proper accounting records which were up-to-date;

· Taken reasonable steps for the prevention and detection of fraud and other irregularities.

Steven Brown

Mark Clifford

Steven Brown CGMA

Treasurer to the Combined Fire Authority

05^th July 2024

Mark Clifford

Chair of Audit Committee

[Date]

Explanation of Financial Statements

Comprehensive Income and Expenditure Statement

This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in both the Expenditure and Funding Analysis and the Movement in Reserves Statement.

Movement in Reserves Statement

This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘Usable Reserves’ ( those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the provision of services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Comprehensive Income and Expenditure Statement for council tax setting purposes. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Authority.

Balance Sheet

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories, usable reserves are those that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example capital receipts may only be used to fund capital expenditure). The second category is unusable reserves and includes reserves that hold unrealised gains and losses (for example the revaluation reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

	2023/24	2023/24	2023/24	2022/23	2022/23	2022/23
Continuing operations:
Service Delivery	1	23,174	(2,181)	20,993	33,911	(2,110)	31,801
Strategy and Planning	1	12,802	(736)	12,066	12,389	(847)	11,542
People and Development	1	2,081	-	2,081	2,334	-	2,334
Corporate Services	1	6,253	(66)	6,187	6,285	(65)	6,220
Fire-fighters Pensions	1	1,271	-	1,271	1,141	-	1,141
Overheads	1	8,814	(5,366)	3,448	6,757	(4,863)	1,894
Net Cost of Services	1	54,395	(8,349)	46,046	62,817	(7,885)	54,932
(Gain)/Loss on disposal of non-current assets				32			(9)

Movement in Reserves Statement 2023/24

	General fund £000	Earmarked reserves £000	Total General Fund Balance £000	Capital funding reserve £000	Capital grant unapplied reserve £000	Capital receipts reserve £000	Total usable reserves £000	Unusable reserves £000	Total Authority reserves £000
Balance at 31 March 2023 carried forwards	4,887	9,258	14,145	20,344	27	1,692	36,208	(538,699)	(502,491)

General fund

£000

Earmarked reserves

£000

Total General Fund Balance

£000

Capital funding reserve

£000

Capital grant unapplied reserve

£000

Capital receipts reserve

£000

Total usable reserves

£000

Unusable reserves

£000

Total Authority reserves

£000

Balance at 31 March 2023 carried forwards

4,887

9,258

14,145

20,344

1,692

36,208

(538,699)

(502,491)

Movement in reserves during 2023/24
Surplus/(Deficit) on provision of services	(5,838)	-	(5,838)	-	-	-	(5,838)	-	(5,838)
Other comprehensive income and expenditure	-	-	-	-	-	-	-	5,377	5,377
Total comprehensive income and expenditure	(5,838)	-	(5,838)	-	-	-	(5,838)	5,377	(461)

Adjustments between accounting basis and funding basis under regulations
Charges for depreciation and impairment of non-current assets	5,865	-	5,865	-	-	-	5,865	(5,865)	-
Amortisation of intangible assets	188	-	188	-	-	-	188	(188)	-
Disposal of assets	32	-	32	-	-	16	48	(48)	-
Capital grants unapplied	27	-	27	-	(27)	-	-	-	-
Provision for the repayment of debt	(517)	-	(517)	-	-	-	(517)	517	-
Capital expenditure charged against General Fund Balance	(4,171)	(266)	(4,437)	(751)	-	(1,637)	(6,825)	6,825	-
Amount by which the Code and the statutory pension costs differ	4,554	-	4,554	-	-	-	4,554	(4,554)	-

	General fund £000	Earmarked reserves £000	Total General Fund Balance £000	Capital funding reserve £000	Capital grant unapplied reserve £000	Capital receipts reserve £000	Total usable reserves £000	Unusable reserves £000	Total Authority reserves £000
Amount by which the Code and the statutory collection fund income differ	87	-	87	-	-	-	87	(87)	-
Adjustments total	6,066	(266)	5,800	(751)	(27)	(1,621)	3,401	(3,401)	-
Net increase/decrease before transfers to earmarked reserves	228	(266)	(38)	(751)	(27)	(1,621)	(1,686)	1,225	(461)
Transfers (to)/from earmarked reserves	550	(550)	-	-	-	-	-	-	-
Transfers (to)/from capital funding reserve	-	-	-	-	-	-	-	-	-
Transfers (to)/from accumulated absences adjustment account	(3)	-	(3)	-	-	-	(3)	3	-
Net tfr (to)/from earmarked reserves	547	(550)	(3)	-	-	-	(3)	3	-
Increase/(Decrease) in the year	775	(816)	(41)	-	(27)	(1,621)	(1,689)	1,228	(461)
Balance at 31 March 2024 carried forwards	5,662	8,442	14,104	19,593	-	71	33,768	(536,720)	(502,953)

Movement in Reserves Statement 2022/23

	General fund £000	Earmarked reserves £000	Total General Fund Balance £000	Capital funding reserve £000	Capital grant unapplied reserve £000	Capital receipts reserve £000	Total usable reserves £000	Unusable reserves £000	Total Authority reserves £000
Balance at 31 March 2022 carried forwards	6,536	9,742	16,278	17,672	40	1,683	35,673	(789,359)	(753,686)

General fund

£000

Earmarked reserves

£000

Total General Fund Balance

£000

Capital funding reserve

£000

Capital grant unapplied reserve

£000

Capital receipts reserve

£000

Total usable reserves

£000

Unusable reserves

£000

Total Authority reserves

£000

Balance at 31 March 2022 carried forwards

6,536

9,742

16,278

17,672

1,683

35,673

(789,359)

(753,686)

Movement in reserves during 2022/23
Surplus/(Deficit) on provision of services	(15,347)	-	(15,347)	-	-	-	(15,347)	-	(15,347)
Other comprehensive income and expenditure	-	-	-	-	-	-	-	266,512	266,512
Total comprehensive income and expenditure	(15,347)	-	(15,347)	-	-	-	(15,347)	266,512	251,165

Adjustments between accounting basis and funding basis under regulations
Charges for depreciation and impairment of non-current assets	5,859	-	5,859	-	-	-	5,859	(5,859)	-
Amortisation of intangible assets	94	-	94	-	-	-	94	(94)	-
Disposal of assets	(9)	-	(9)	-	-	9	-	-	-
Capital grants unapplied	42	-	42	-	(42)	-	-	-	-
Provision for the repayment of debt	(487)	-	(487)	-	-	-	(487)	487	-
Capital expenditure charged against General Fund Balance	(4,300)	-	(4,300)	-	-	-	(4,300)	4,300	-
Amount by which the Code and the statutory pension costs differ	12,879	-	12,879	-	-	-	12,879	(12,879)	-
Amount by which the Code and the statutory collection fund income differ	(983)	-	(983)	-	-	-	(983)	983	-
Adjustments total	13,095	-	13,095	-	(42)	9	13,062	(13,062)	-
	General fund £000	Earmarked reserves £000	Total General Fund Balance £000	Capital funding reserve £000	Capital grant unapplied reserve £000	Capital receipts reserve £000	Total usable reserves £000	Unusable reserves £000	Total Authority reserves £000
Net increase/decrease before transfers to earmarked reserves	(2,252)	-	(2,252)	-	(42)	9	(2,285)	253,450	251,165
Transfers (to)/from earmarked reserves	484	(484)	-		-	-	-	-	-
Transfers (to)/from capital funding reserve	-	-	-	2,672	-	-	2,672	(2,672)	-
Transfers (to)/from accumulated absences adjustment account	118	-	118	-	-	-	118	(118)	-
Adjustments to NWFC 21/22 balances following audit	-	-	-	-	29	-	29	-	29
Net tfr (to)/from earmarked reserves	602	(484)	118	2,672	29	-	2,819	(2,790)	29
Increase/(Decrease) in the year	(1,650)	(484)	(2,134)	2,672	(13)	9	534	250,660	251,194
Balance at 31 March 2023 carried forwards	4,887	9,258	14,145	20,344	27	1,692	36,208	(538,699)	(502,491)

	Notes	At 31 March 2024 £000	At 31 March 2023 £000
Long-Term Assets
Property, Plant & Equipment	6	127,349	125,717
Intangible Assets	7	453	906
Long-Term Assets total		127,802	126,623

	Notes	2023/24 £000	2022/23£000
Net deficit on the provision of services		(5,838)	(15,347)
Adjustments to net deficit on the provision of services for non-cash movements	23	8,914	15,940
Adjustments for items included in the net (deficit) on the provision of services that are investing and financing activities		578	699
Net cash flows from Operating Activities		3,654	1,292

Notes to the Core Financial Statements

1 Expenditure and Funding Analysis

The objective of the Expenditure and Funding Analysis is to demonstrate to council taxpayers how the funding available to the Authority (Government grants, council tax and business rates) for the year has been used in providing services in comparison with those resources consumed or earned by the Authority in accordance with generally accepted accounting practices. The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the Authority’s directorates. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.

2023/24	As reported for resource management £000	Adjustment to arrive at the amount chargeable to the General Fund (Note 1a) £000	Net chargeable to the General Fund £000	Adjustments between the Funding and Accounting basis (Note 1a) £000	Net Expenditure in the Comprehensive Income and Expenditure Statement £000
Service Delivery	43,207	-	43,207	(22,214)	20,993
Strategy and Planning	13,810	-	13,810	(1,744)	12,066
People and Development	1,939	-	1,939	142	2,081
Corporate Services	6,678	-	6,678	(491)	6,187
Firefighters Pensions	1,271	-	1,271	-	1,271
Overheads	1,661	-	1,661	1,787	3,448
Net cost of Services	68,566	-	68,566	(22,520)	46,046
Other income and expenditure		-	(68,346)	28,137	(40,209)
(Surplus)/Deficit on provision of services		-	220	5,618	5,838

Opening General Fund balance	(4,887)
Surplus on provision of services	220
NWFC recognise 25% surplus on provision of services	(160)
Transfer from earmarked reserves	(835)
Closing General Fund balance	(5,662)

2022/23	As reported for resource management £000	Adjustment to arrive at the amount chargeable to the General Fund (Note 1a) £000	Net chargeable to the General Fund £000	Adjustments between the Funding and Accounting basis (Note 1a) £000	Net Expenditure in the Comprehensive Income and Expenditure Statement £000
Service Delivery	41,946	-	41,946	(10,145)	31,801
Strategy and Planning	12,211	-	12,211	(669)	11,542
People and Development	1,934	-	1,934	400	2,334
Corporate Services	6,240	-	6,240	(20)	6,220
Firefighters Pensions	1,141	-	1,141	-	1,141
Overheads	1,440	-	1,440	454	1,894
Net cost of Services	64,912	-	64,912	(9,980)	54,932
Other income and expenditure	(63,239)	-	(63,239)	23,654	(39,585)
(Surplus)/Deficit on provision of services	1,673	-	1,673	13,674	15,347

Opening General Fund balance	(6,536)
Surplus on provision of services	1,673
NWFC recognise 25% surplus on provision of services	(24)
Closing General Fund balance	(4,887)

1a Note to the Expenditure and Funding Analysis

2023/24 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts	Transfer to/(from) Earmarked Reserves £000	Transfer to/(from) Capital Reserves £000	Total to arrive at amount charged to the General Fund £000	Adjustments for Capital Purposes (1) £000	Net change for Pensions Adjustments (2) £000	Other Differences (3) £000	Total adjustment between funding and accounting basis £000
Service Delivery	-	-	-	-	(22,351)	137	(22,214)
Strategy and Planning	-	-	-	-	(1,798)	55	(1,744)
People and Development	-	-	-	-	168	(26)	142
Corporate Services	-	-	-	-	(223)	(268)	(491)
Firefighters Pensions	-	-	-	-	-	-	-
Overheads	-	-	-	4,301	24	(2,538)	1,787
Net cost of Services	-	-	-	4,301	(24,180)	(2,640)	(22,520)
Other income and expenditure	-	-	-	-	28,750	(613)	28,137
Total	-	-	-	4,301	4,570	(3,253)	5,618

2022/23 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts	Transfer to/(from) Earmarked Reserves £000	Transfer to/(from) Capital Reserves £000	Total to arrive at amount charged to the General Fund £000	Adjustments for Capital Purposes (1) £000	Net change for Pensions Adjustments (2) £000	Other Differences (3) £000	Total adjustment between funding and accounting basis £000
Service Delivery	-	-	-	-	(10,923)	778	(10,145)
Strategy and Planning	-	-	-	-	(436)	(233)	(669)
People and Development	-	-	-	-	400	-	400
Corporate Services	-	-	-	-	252	(272)	(20)
Firefighters Pensions	-	-	-	-	-	-	-
Overheads	-	-	-	4,214	329	(4,089)	454
Net cost of Services	-	-	-	4,214	(10,378)	(3,816)	(9,980)
Other income and expenditure	-	-	-	-	23,246	408	23,654
Total	-	-	-	4,214	12,868	(3,408)	13,674

Note 1 – Adjustments for capital purposes – this column adds in depreciation, impairments and revaluation gains and losses. It also adjusts for capital disposals with a transfer of the income on the disposal and the amounts written off. MRP is deducted because it is not chargeable under generally accepted accounting practices. Adjustments are also made to recognise capital grant income.

Note 2 – Pensions Adjustments - This shows which lines have been affected by the removal of pension contributions and replaced with IAS19 debits and credits.

Note 3 – Other Differences - This column adjusts for timing differences on the amounts chargeable for Business Rates and Council Tax under Statute and the Code and transfers to reserves.

	2023/24 £000	2022/23 £000
Members allowances/expenses	152	140
Statutory officers	118	123
Others	106	69
Total	376	332

	2023/24 No.	2022/23 No.
£75,000 - £79,999	3	2
£70,000 - £74,999	11	1
£65,000 - £69,999	13	8
£60,000 - £64,999	39	20
£55,000 - £59,999	40	51
£50,000 - £54,999	73	65
Total	179	147

2023/24 Post holder information (post title and name)	Salary £000	Allowances £000	Total Remuneration excluding pension contributions £000	Pension contributions accrued at the standard employer rate for all senior officers £000	Total Remuneration including pension contributions £000
Chief Fire Officer – Justin Johnston	178,022	-	178,022	51,270	229,292
Director of Service Delivery – John Charters	137,699	-	137,699	39,657	177,356
Director of Strategy & Planning – Steve Healey	165,708	-	165,708	47,724	213,432
Director of People & Development – Robert Warren	126,351	-	126,351	21,606	147,957
Director of Corporate Services – Steven Brown	94,361	-	94,361	16,136	110,497
Total	702,141	-	702,141	176,393	878,534

2022/23 Post holder information (post title and name)	Salary £000	Allowances £000	Total Remuneration excluding pension contributions £000	Pension contributions accrued at the standard employer rate for all senior officers £000	Total Remuneration including pension contributions £000
Chief Fire Officer – Justin Johnston	153,121	-	153,121	44,099	197,220
Director of Service Delivery – John Charters	120,377	-	120,377	34,669	155,046
Director of Strategy & Planning – Steve Healey	141,769	-	141,769	40,829	182,598
Director of People & Development – Robert Warren	108,678	-	108,678	18,584	127,262
Director of Corporate Services – Keith Mattinson	94,344	-	94,344	16,133	110,477
Total	618,289	-	618,289	154,314	772,603

Exit Packages

There was one compulsory redundancy during 2023/24 which was in the banding of £40,001-£60,000. There were no exit packages in 2022/23.

4 External Auditors Fees

In 2023/24, the Fire Authority paid a total of £0.106m to its external auditors, Grant Thornton (2022/23: £0.044m), as follows:

	2023/24 £000	2022/23 £000
Audit fees – Grant Thornton	106	44

2023/24

£000

2022/23

£000

Audit fees – Grant Thornton

106

The 2023/24 audit fee charge includes additional charges of £8,300 relating to 2022/23.

5 Related Parties Transactions

The Authority is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by the Authority. Disclosure of these transactions allows readers to assess the extent to which the Authority might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the authority. Consideration must be given to materiality from both the viewpoint of the Authority and the related party.

Central Government

Central government has effective control over the general operations of the Authority – it is responsible for providing the statutory framework within which the Authority operates, provides most of its funding in the form of grants and prescribes the terms of many of the transactions that the Authority has with other parties (for example council tax bills).

Members

Members of the Authority have direct control over the Authority’s financial and operating policies. The total of members’ allowances paid in 2023/24 is shown in Note 2. As required under Section 81 of the Local Government Act 2000, members’ outside interests are recorded in a formal register and the Code of Conduct operated by the Authority requires members to declare any related interests they have, and to take no part in meetings or decisions on issues concerning those related interests.

In addition, a survey of the related party interests of members and their immediate family members was carried out in preparing the Statement of Accounts. This survey showed that members have outside interests in bodies that have transactions with the Authority, such as:

- roles as members of Lancashire County Council, the district and unitary authorities;

- roles with voluntary organisations;

There is no evidence in these cases of control of one party by the other, however material transactions of £1.030m spend with Lancashire County Council requires disclosure in this note. Most of this sum relates to maintenance of the Authority’s vehicle fleet, in addition to services provided under Service Level Agreements.

Officers

Officers of the Authority are required to declare interests in related parties on an annual basis in respect of the financial statements. There were no reported material related party transactions regarding 2023/24. In 2022/23 one Senior Officer declared a family relationship with a Senior Officer who worked across two of our major billing authorities. Although there are significant transactions between the parties in relation to business rates (£0.461m received from the billing authorities), and council tax (£5.772m received from the billing authorities), the administration of these is strictly defined by a statutory framework.

6 Property, Plant & Equipment

Details on policies can be seen in Note 29, Accounting Policies.

Movements during the Year

The table below summarises the movements in Property, Plant and Equipment during the year. Land and buildings, vehicles, plant, furniture, and equipment are all disclosed at their net current value. All additions (new expenditure) are shown at cost.

Movements in Property, Plant and Equipment analysed into their different categories for 2023/24 are:

	Other Land & Buildings £000	PFI Assets – land & buildings £000	Vehicles, Plant & Equipment £000	Total Property, Plant & Equipment £000
Cost or valuation
At 1 April 2023	81,875	36,432	24,708	143,015
Adjustment to opening balance	-	-	714	714
Additions	228	27	5,626	5,881
Disposals/De-recognitions	-	-	(1,833)	(1,833)
Downward revaluation recognised in the Revaluation Reserve	(3,870)	(365)	-	(4,235)
Impairment losses recognised in the CIES Provision of Services	(133)	-	-	(133)
Revaluations	1,142	175	-	1,318
As at 31 March 2024	79,242	36,270	29,215	144,727

Depreciation and impairments
At 1 April 2023	20	-	(17,318)	(17,298)
Adjustment to opening balance	-	-	(257)	(257)
Depreciation charge for 2023/24	(3,104)	(1,040)	(1,589)	(5,732)
Disposals/De-recognitions	-	-	1,785	1,785
Revaluations	3,084	1,040	-	4,123
As at 31 March 2024	-	-	(17,378)	(17,378)
Balance sheet at 31 March 2024	79,242	36,270	11,837	127,349
Balance sheet at 31 March 2023	81,895	36,432	7,390	125,717

	Other Land & Buildings £000	PFI Assets – land & buildings £000	Vehicles, Plant & Equipment £000	Total Property, Plant & Equipment £000
Nature of asset holding
Owned	79,242	-	11,837	91,079
Finance lease	-	-	-	-
PFI	-	36,270	-	36,270
Total	79,242	36,270	11,837	127,349

Historical cost
Carried at historical cost	-	-	11,837	11,837

Valued at current value as at:
31 March 2024	79,242	36,270	-	115,512
31 March 2010	-	-	-	-
Total cost or valuation	79,242	36,270	11,837	127,349

The vehicle, plant & equipment disposal/de-recognition figures in the above table, include 2022/23 disposals and de-recognitions not previously recognised.

On 31 March 2024 the Authority undertook a full revaluation review on approximately one fifth of its land and buildings, and in addition carried out a desktop revaluation exercise on the remainder, which resulted in a net revaluation gain of £5.441m (2022/23: net gain of £22.283m).

Revenue Leases are included in the quinquennial asset valuation programme to meet IFRS 16 requirements however are considered on a desktop basis only this year. All will be valued as full asset valuations from commencement of the 2024-25 financial year, in line with CIPFA Code of Practice.

The comparative figures detailing the movement during 2022/23:

	Other Land & Buildings £000	PFI Assets – land & buildings £000	Vehicles, Plant & Equipment £000	Total Property, Plant & Equipment £000
Cost or valuation
At 1 April 2022	69,114	31,175	24,160	124,449
Additions	473	151	580	1,204
Disposals/De-recognitions	-	-	(32)	(32)
Downward revaluation recognised in the Revaluation Reserve	(279)	(269)	-	(548)
Impairment losses recognised in the CIES Provision of Services	(271)	-	-	(271)
Revaluations	12,838	5,375	-	18,213
As at 31 March 2023	81,875	36,432	24,708	143,015

	Other Land & Buildings £000	PFI Assets – land & buildings £000	Vehicles, Plant & Equipment £000	Total Property, Plant & Equipment £000
Depreciation and impairments
At 1 April 2022	-	-	(15,812)	(15,812)
Depreciation charge for 2022/23	(3,034)	(1,016)	(1,538)	(5,588)
Disposals/De-recognitions	-	-	32	32
Revaluations	3,054	1,016	-	4,070
As at 31 March 2023	20	-	(17,318)	(17,298)
Balance sheet at 31 March 2023	81,895	36,432	7,390	125,717
Balance sheet at 31 March 2022	69,114	31,175	8,348	108,637

Nature of asset holding
Owned	81,895	-	7,387	89,282
Finance lease	-	-	3	3
PFI	-	36,432	-	36,432
Total	81,895	36,432	7,390	125,717

Historical cost
Carried at historical cost	-	-	7,390	7,390

Valued at current value as at:
31 March 2022	81,895	36,432	-	118,327
31 March 2010	-	-	-	-
Total cost or valuation	81,895	36,432	7,390	125,717

Heritage Assets

The Authority holds several heritage assets, in the form of both fire memorabilia such as antique fire extinguishers, and two vintage fire appliances. Due to the nature of these assets, it is not possible to market test the value of these, therefore they are not included in the Property, Plant and Equipment note.

Capital Expenditure

The total capital expenditure in 2023/24 is shown in the table below, together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Authority that has yet to be financed. The CFR is analysed in the second part of this note.

2023/24

£000

2022/23

£000

Opening Capital Financing Requirement

12,283

12,770

Adjustment for prior year NWFC Capital Financing Requirement

751

	2023/24 £000	2022/23 £000
Capital investment:
Property, Plant & Equipment*	5,881	1,204
Intangible assets*	193	477

Sources of Finance:
Capital Reserves	-	-
Revenue contributions to capital*	(4,171)	(1,680)
Funding from earmarked reserves	(266)	-
Capital receipts	(1,637)	-
MRP	(517)	(487)
Closing Capital Financing Requirement	12,517	12,283

Explanation of movements in year
(Decrease)/Increase in underlying need to borrow (supported by Government financial assistance)	(517)	(487)
Assets acquired under finance lease	-	-
Total	(517)	(487)

* Includes NWFC balances.

Details of Assets Held

The number of main assets held by the Authority are shown below:

	2023/24 No.	2022/23 No.
Headquarters	1	1
Fire Stations (including Area Headquarters)	39	39
Training School	1	1
Fire houses	1	1

Capital Commitments

Capital projects often take several years to complete, which means that the Authority is committed to capital expenditure in following years arising from contracts entered into at the Balance Sheet date, but on which all or part of the capital work has yet to be undertaken. The estimated capital expenditure committed at 31 March 2024 is £1.554m (2022/23: £4.704m).

7 Intangible Assets

The Authority accounts for its software as intangible assets. All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Authority.

	2023/24 £000	2022/23 £000
Cost or valuation
At 1 April	2,899	2,422
Adjustment to opening balance	(714)	-
Additions	193	477
Disposals/De-recognitions	(469)
As at 31 March	1,909	2,899

Amortisation & impairment
At 1 April	(1,993)	(1,899)
Adjustment to opening balance	257	-
Amortisation charge for the year	(188)	(94)
Disposals/De-recognitions	469
As at 31 March	(1,456)	(1,993)
Balance sheet at 31 March 2024	453	906
Balance sheet at 31 March 2023	906	523

The disposal/de-recognition figures in the above table, include 2022/23 de-recognitions not previously recognised.

8 Financial Instruments

A financial instrument is a contract which gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. No-exchange transactions such as those relating to taxes and government grants do not give rise to financial instruments.

Financial assets – balances

A financial asset is a right to future economic benefits controlled by the Authority that is represented by cash, equity instruments or a contractual right to receive cash or other financial assets or a right to exchange financial assets and liabilities with another entity that is potentially favourable to the Authority. The financial assets held by the Authority during the year are all accounted for under the amortised cost, comprising:

o Investments, which are loans to other local authorities.

o Cash in hand and bank current and deposit accounts.

o Trade receivables for goods and services provided.

The financial assets disclosed in the Balance Sheet are analysed across the following categories:

	Long-Term		Current
	31 March 2024 £000	31 March 2023 £000	31 March 2024 £000	31 March 2023 £000
Investments	-	-	23,500	15,000
Cash & cash equivalents	-	-	4,297	16,317
Other trade receivables	-	-	1,286	1,555
Assets not defined as financial instruments	-	-	17,651	15,518

Financial liabilities – balances

A financial liability is an obligation to transfer economic benefits controlled by the Authority and can be represented by a contractual obligation to deliver cash or financial assets or an obligation to exchange financial assets and liabilities with another entity that is potentially unfavourable to the Authority.

All the Authority’s financial liabilities held during the year are measured at amortised cost, and comprise:

o Long-term loans from the Public Work Loans Board.

o Private Finance Initiative (PFI) contracts, detailed in Note 14.

o Lease payables.

o Trade payables for goods and services received.

	Long-Term		Current
	31 March 2024 £000	31 March 2023 £000	31 March 2024 £000	31 March 2023 £000
Borrowings	2,000	2,000	22	22
PFI and finance lease arrangements	11,379	11,913	533	522
Trade payables	-	-	3,778	3,891
Liabilities not defined as financial instruments	653,150	652,775	6,626	6,381

Financial Instruments - Gains and Losses

The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments consist of the following:

	2023/24 £000	2022/23 £000
Financial Liabilities at amortised cost
Interest payable relating to PFI	1,269	1,294
Interest payable relating to Borrowing	95	90
Interest payable relating to finance leases	2	4
Total expense in Deficit on the Provision of Services	1,366	1,388

Financial Assets at amortised cost
Interest income	(1,574)	(837)
Total income in Deficit on the Provision of Services	(1,574)	(837)
Net (gain)/loss for the year	(208)	551

Fair Values of Financial Instruments

In accordance with IFRS 9, financial liabilities, financial assets represented by investments and long-term creditors, are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions:

· Estimated ranges of interest rates at 31 March 2024 of 4.48% to 4.49% for loans from the PWLB.

· The fair values of PWLB loans have been discounted at the market rates for similar instruments with similar remaining terms to maturity.

· Where an instrument will mature in the next 12 months, carrying amount is assumed to approximate to fair value.

· The fair value of trade and other receivables is taken to be the invoiced amount.

· The fair value of the PFI liabilities has been calculated by discounting the contractual cash flows (excluding service charge elements) at the appropriate AA-rated bond yield rates.

The fair values calculated are as follows:

	31 March 2024		31 March 2023
	Amortised Cost £000	Fair Value £000	Amortised Cost £000	Fair Value £000
Loans from the Public Works Loan Board	2,000	1,930	2,000	1,915
PFI Liabilities	11,339	14,123	12,351	13,509

Without the addition of accrued interest, the actual Public Works Loan Board debt outstanding at 31 March 2024 is £2.000m (2022/23: £2.000m) and it is due for repayment as shown in the following table:

2023/24

£000

2022/23

£000

Over 10 years

2,000

Total

2,000

9 Debtors

	2023/24 £000	2022/23 £000
Trade debtors	2,123	2,005
VAT	3,862	791
Local taxation debtors	4,303	4,325
Other debtors	8,316	9,642
Total	18,604	16,763

10 Cash & Cash Equivalents

The balance of cash & cash equivalents is made up of the following elements:

	2023/24 £000	2022/23 £000
Cash held by the Authority	53	67
Cash held by North West FireControl (25% share)	59	89
Call account balance	4,185	16,161
Total	4,297	16,317

The call account balance is placed with Lancashire Country Council. Interest on these balances is paid to the Authority. The investments have an amortised cost at 31 March 2024 equal to their nominal value.

11 Creditors

	2023/24 £000	2022/23 £000
Goods and services creditors	3,052	2,676
PAYE/NI	1,219	1,499
VAT	572	27
Local taxation creditors	3,613	3,457
Other creditors	1,942	2,599
Total	10,398	10,258

12 Provisions

The Authority has the power to establish provisions for any liabilities of uncertain timing or amount that have been incurred.

The Authority has established an Insurance Liabilities Provision to meet liabilities, the precise cost of which is uncertain, but which are not reimbursable from insurers as they fall below individual excess clauses and the annual self-insured limits.

The Authority has also recognised a provision in relation to its share of the Business Rates Collection Fund outstanding appeals, which is calculated and provided by billing authorities based on their assumptions of outstanding appeal success rates.

The balances set aside, together with the movement on the provisions, is shown below:

	Insurance Liabilities		Business rates appeals		Total
	2023/24 £000	2022/23 £000	2023/24 £000	2022/23 £000	2023/24 £000	2022/23 £000
Balance at 1 April	579	593	660	854	1,239	1,447
Amounts utilised	(116)	(89)	-	-	(116)	(89)
Unused amounts reversed	(135)	(130)	(145)	(229)	(280)	(359)
Additional provision	330	205	56	35	386	240
Balance at 31 March	658	579	571	660	1,229	1,239

13 Other Long-Term Liabilities

Other long-term liabilities comprise the following:

	2023/24 £000	2022/23 £000
Finance Lease Liability	-	-
PFI Liability (see Note 14)	11,339	11,868
PFI Contractor Loan (see Note 14)	40	45
Pension Liability (see Note 15)	651,920	651,536
Total	663,299	663,449

14 PFI Schemes

The Authority operates two PFI schemes with separate Private Sector Partners (PSP), details of which are as follows:

PFF Lancashire Limited

The Authority signed a contract in May 2002 with a Private Sector Partner (PSP), a consortium known as PFF Lancashire Limited, under the Government's Private Finance Initiative, for two fire stations at Morecambe and Hyndburn.

Under the contract the Authority pays an annual unitary charge to PFF Lancashire Limited for serviced accommodation over the life of the 30-year contract, commencing in 2003/04. The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration. The estimated capital value of the scheme at the point of financial close was £3.500m.

Under the contract PFF Lancashire Limited contributed £0.150m towards the development costs, which is repaid through the annual unitary charge on the life of the 30-year contract commencing in 2005/06. In accordance with recommended accounting practice, the reimbursement has been classed as a loan and the liability reflected as such in the Authority’s accounts. At 31 March 2024 the total outstanding loan was £0.045m (2022/23: £0.050m).

Fire and Rescue NW Limited

The Authority is also involved in a second PFI project, with Merseyside Fire and Rescue Authority and Cumbria County Council to deliver 16 new fire stations, 4 of which will be in Lancashire. Contracts were signed with Balfour Beatty Fire and Rescue NW Limited in February 2011, with phased construction beginning in 2011/12 and completing in 2013/14.

Balfour Beatty sold its’ interest in the PFI scheme in July 2021 to BBGI, a company who already operates several PFI schemes in the UK including within the emergency services sector. BBGI undertook a refinancing deal in December 2021, resulting in a one-off saving of £0.9m for the three authorities, of which Lancashire’s share was £0.2m.

Under the contract the Authority pays an annual unitary charge to Fire and Rescue NW Limited for serviced accommodation over the life of the contract, which runs for 25 years from initial handover of each station commencing in March 2011/12 for the Authority. The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration. The estimated capital value of the total scheme at the point of financial close was £47.886m, and for the Authority was £12.161m.

All PFI Schemes

All PFI stations are recognised on the Authority’s Balance Sheet from the date of initial handover. Movements in their value over the year are detailed in the analysis of the movement on Property, Plant & Equipment balance in Note 6.

Payments made under the contracts are performance related, so deductions are made if parts of the building are not available or if service performance (including maintenance) falls below an agreed standard. The Authority makes an agreed payment each year which is increased by inflation and can be reduced if the contractor fails to meet availability and performance standards in any year but is otherwise fixed. In addition, the Authority receives Government Grant to offset some of these costs.

Payments remaining to be made under both PFI contracts and Government Subsidies to be received at 31 March 2024 are as follows:

	Payment for Services £000	Reimbursement of Capital Expenditure £000	Interest £000	Total £000	Government Subsidy £000
Payable in 1 year	969	528	1,234	2,732	1,734
Payable within 2-5 years	4,149	2,722	4,397	11,268	6,935
Payable within 6-10 years	5,312	4,553	3,828	13,692	8,186
Payable within 11-15 years	3,237	4,065	1,500	8,802	5,371
Payable within 16-20 years	-	-	-	-	-
Total	13,667	11,868	10,959	36,494	22,225

Although the payments made to the contractor are described as unitary payments, they have been calculated to compensate the contractor for the fair value of the services they provide, the capital expenditure incurred and interest payable over the life of the contract. The liability outstanding to pay the contractor for capital expenditure incurred is as follows:

	2023/24 £000	2022/23 £000
Balance outstanding at the start of the year	12,351	12,795
Payments during the year	(483)	(444)
Balance outstanding at year end	11,868	12,351

15 Net Liability Related to Local Government and Firefighters’ Pensions Schemes

During the year the Authority made contributions to the cost of pensions for all employees (except for those who chose not to be members of the scheme) as required by statute.

The Authority participates in two pension schemes:

i) Uniformed Firefighters are covered by an unfunded, defined benefit scheme, meaning that there are no investment assets built up to meet the pensions liabilities and that cash must be generated by the Authority to meet actual pensions payments as they fall due.

ii) Other staff pensions are provided from the Lancashire County Pension Fund. This is a funded scheme, meaning that the Authority and employees pay contributions into a fund calculated at a level intended to balance the pensions liabilities with the investment assets.

Transactions Relating to Post-employment Benefits

We recognise the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against council tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement.

The following transactions have been made in the Comprehensive Income & Expenditure Statement and the General Fund Balance Fund via the Movement in Reserves Statement during the year:

	Local Government Pension Scheme		Uniformed Firefighters’ Pension Scheme
	2023/24 £000	2022/23 £000	2023/24 £000		2022/23 £000
Comprehensive Income & Expenditure Statement
Cost of Services:
· Current service cost	1,414	2,900	3,670	13,640
· Administrative expenses	46	41	-	-
· Past service cost	-	-	-	-
Cost of Services total	1,460	2,941	3,670	13,640

Financing and Investment Income and Expenditure:
· Interest cost	2,785	2,343	29,710	23,040
· Interest on scheme assets	(3,745)	(2,137)	-	-
Financing total	(960)	206	29,710	23,040
Total post-employment benefit charged to the deficit on provision of services	500	3,147	33,380	36,680

Other post-employment benefit charged to the Comprehensive Income and Expenditure Statement
· Actuarial (gains) and losses	(50)	(10,297)	(4,120)	(234,480)
Total post-employment benefit charged to the Comprehensive Income and Expenditure Statement	450	(7,150)	29,260	(197,800)
	Local Government Pension Scheme		Uniformed Firefighters’ Pension Scheme
	2023/24 £000	2022/23 £000	2023/24 £000		2022/23 £000
Movement in reserves statement
· Reversal of net charges made to the deficit on provision of services in accordance with the code	(144)	(2,799)	(4,410)	(10,080)

Actual amount charged against the General Fund Balance for pensions in the year:
Employers’ contributions payable to the scheme	(356)	(348)	-	-
Net retirement benefits payable to pensioners	-	-	(28,970)	(26,600)

The change in the net pension liability is analysed into seven components:

Current service cost – the increase in liabilities because of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked.

Past service cost/(gain) – the increase/(decrease) in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited/(credited) to the deficit on the provision of services in the Comprehensive Income and Expenditure Statement.

Interest on liabilities – the expected increase in the present value of liabilities during the year as they move one year closer to being paid.

Interest on assets – the average rate of return expected on the investment assets held by the pension scheme.

Actuarial (gains) and losses – changes in the net pension liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – (credited)/debited to the pensions reserve.

Employers’ contributions – the payments made into the pension scheme by the Authority during the year in respect of current employees.

Retirement benefits payable to pensioners – the net payments made in respect of the Firefighter pension scheme. Note, the fund also received a top up grant of £19.508m (2022/23: £17.794m) in addition to these, which can be seen in the Firefighters Pension Fund Account on page 70.

A full set of audited accounts for the Lancashire County Pension Fund, together with information relating to membership, actuarial and investment policy, and investment performance, are published in the ‘Lancashire County Pension Fund Annual Report’, available from the administering authority, Lancashire County Council, on request.

Assets and Liabilities in Relation to Post-employment Benefits

Reconciliation of present value of the scheme liabilities (defined benefit obligation):

	Funded Liabilities: Local Government Pension Scheme		Unfunded Liabilities: Uniformed Firefighters’ Pension Scheme
	31 March 2024 £000	31 March 2023 £000	31 March 2024 £000	31 March 2023 £000
Opening balance at 1 April	(58,483)	(84,201)	(651,536)	(875,936)
Current service cost	(1,414)	(2,900)	(3,490)	(13,470)
Interest on liabilities	(2,785)	(2,343)	(29,710)	(23,040)
Contributions by scheme participants	(549)	(492)	(3,830)	(3,560)

	Funded Liabilities: Local Government Pension Scheme		Unfunded Liabilities: Uniformed Firefighters’ Pension Scheme
	31 March 2024 £000	31 March 2023 £000	31 March 2024 £000	31 March 2023 £000
Remeasurements (liabilities):
Experience (gain)/loss	(536)	(6,669)	(8,420)	(49,400)
Gain/(Loss) on financial assumptions	1,186	34,604	12,540	259,250
Gain/(Loss) on demographic assumptions	750	1,885	-	24,630
Benefits/transfers paid	1,516	1,633	32,620	29,990
Past service cost	-	-	-	-
Closing balance at 31 March	(60,315)	(58,483)	(651,826)	(651,536)

Reconciliation of the fair value of the scheme assets:

	Funded Liabilities: Local Government Pension Scheme		Unfunded Liabilities: Uniformed Firefighters’ Pension Scheme
	31 March 2024 £000	31 March 2023 £000	31 March 2024 £000	31 March 2023 £000
Opening balance at 1 April	78,360	76,703	-	-
Interest on scheme assets	3,745	2,137	-	-
Remeasurements (assets)	2,665	354	-	-
Administrative expenses	(46)	(41)	-	-
Employer contributions	356	348	28,790	26,430
Contributions by scheme participants	549	492	3,830	3,560
Benefits paid	(1,516)	(1,633)	(32,620)	(29,990)
Closing balance at 31 March	84,113	78,360	-	-

The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields at the Balance Sheet date. Expected returns on equity investments reflect long-term rates of return experienced in the respective markets. The actual return on scheme assets in the year was a gain of £6.203m (2022/23: gain of £2.305m).

Pension Asset Ceiling

An asset ceiling test limits the amount of the net pension asset that can be recognised to the lower of the amount of the net pension asset or the present value of any economic benefits available in the form of refunds or reductions in future contributions to the plan.

The Authority’s LGPS asset ceiling has been calculated using the present value of accounting service cost in perpetuity less the total of present value of primary contributions in perpetuity and present value of secondary contributions over the recovery period.

	2023/24 £000	2022/23 £000
Gross defined benefit asset/(liability)	23,798	19,877
Authority’s asset ceiling		-
Adjustment for asset ceiling	(23,892)	(19,877)
Net defined benefit asset/(liability)	(94)	-

Scheme history

	2023/24 £000	2022/23 £000	2021/22 £000	2020/21 £000	2019/20 £000
Present value of liabilities:
Local Government Pension Scheme (LGPS)	(60,315)	(58,483)	(84,201)	(83,631)	(69,102)
Firefighters Pension Scheme	(651,826)	(651,536)	(875,936)	(872,386)	(805,506)
Fair value of assets in LGPS	84,113	78,360	76,703	68,314	61,932

Surplus/(Deficit) in the scheme:
Local Government Pension Scheme (LGPS)	23,798	19,877	(7,498)	(15,318)	(7,170)
Firefighters Pension Scheme	(651,826)	(651,536)	(875,936)	(872,386)	(805,506)

Pension Asset Ceiling Adjustment:
Local Government Pension Scheme (LGPS)	(23,892)	(19,877)	-	-	-
Firefighters Pension Scheme	-	-	-	-	-
Total	(651,920)	(651,536)	(883,434)	(887,704)	(812,676)

The liabilities show the underlying commitments that the Authority has in the long‑term to pay post-employment benefits. The total liability of both schemes, £651,920m, has a substantial impact on the net worth of the Authority, as recorded in the Balance Sheet. However, statutory arrangements for funding the liability mean that the financial position of the Authority remains healthy:

· Whilst there is a surplus on the LGPS scheme any future deficits that may arise will sought to be recovered by annual repayments from/to the fund, as assessed by the scheme actuary, throughout the agreed surplus recovery period.

· Finance is only required to be raised to cover fire fighter pensions when the pensions are actually paid.

Estimated contributions expected to be paid by the Authority into each scheme during the next financial year:

Local Government Pension Scheme*

£000

Firefighters’ Pension Scheme**

£000

Total

£000

Estimated contributions

1,231

10,577

11,808

*LGPS contributions shown are gross of surplus recovery referred above.

** Firefighter contributions are part funded from government top up grant.

Basis for Estimating Assets and Liabilities

Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels etc.

The Firefighters’ Scheme has been assessed by GAD (the Government Actuarial Department), an independent firm of actuaries. Estimates for the Firefighters pension scheme are based on a ‘roll forward approach’ which updates the last full valuation on 31 March 2023, taking account of any significant changes since this. The Local Government Fund liabilities have been assessed by Mercer Resource Consulting Limited, an independent firm of actuaries. The last full valuation was as at 31 March 2022.

The principal assumptions used by the actuary have been:

	NWFC Local Government Pension Scheme		LCFA Local Government Pension Scheme		Uniformed Firefighters’ Pension Scheme
	31 March 2024	31 March 2023	31 March 2024	31 March 2023	31 March 2024	31 March 2023
Mortality assumptions:
Longevity at 65 for current pensioners:
Men	19.8	21.2	21.1	21.5	21.3	21.2
Women	23.7	23.8	23.5	23.8	21.3	21.2

Longevity at 65 for future pensioners:
Men	21.4	21.2	22.4	22.8	22.9	21.2
Women	25.3	25.5	25.3	25.6	22.9	21.2
Rate of CPI inflation	2.75%	3.15%	2.70%	2.70%	2.60%	2.60%
Rate of increase in salaries	3.45%	3.65%	4.20%	4.20%	3.85%	3.85%
Rate of increase in pensions	2.75%	2.95%	2.80%	2.80%	2.60%	2.60%
Rate for discounting scheme liabilities	4.85%	4.75%	4.80%	4.80%	4.75%	4.65%
Take up of option to convert annual pension into retirement lump sum	50%	50%	50%	50%	50%	50%

The Firefighters’ Pension Scheme has no assets to cover its liabilities. The Local Government Pension Fund’s assets consist of the following categories, by proportion of the total assets held by the Fund:

		Assets at 31 March 2024		Assets at 31 March 2023
	Quoted in active market	Fair Value £000	%	Fair Value £000	%
Equities	Y	1,873	2.2	1,645	2.1
Bonds	Y	1,349	1.6	1,325	1.7
Property	N	1,463	1.7	1,553	2.0
Cash/Liquidity	N	1,560	1.9	695	0.9
Other	N	77,867	92.6	73,142	93.3
Total		84,113	100.0	78,360	100.0

16 Usable Reserves

Movements in the Authority’s usable reserves are detailed in the Movement in Reserves Statements, on pages 20 and 21.

		2023/24 £000	2023/24 £000	2022/23 £000	2022/23 £000
Revenue Reserves:
General Fund			(5,662)		(4,887)
Earmarked Reserves	(3,285)			(4,101)
PFI Equalisation Reserve	(5,157)			(5,157)
Total Earmarked Reserves			(8,442)		(9,258)
Total Revenue Reserves			(14,104)		(14,145)

Capital Reserves:
Capital Funding Reserve	(19,593)	(20,344)
Capital Grants Unapplied	-	(27)
Usable Capital Receipts	(71)	(1,692)
Total Usable Reserves	(33,768)	(36,208)

18 Unusable Reserves

The total Unusable Reserves are shown in the Movement in Reserves Statement, and details of each reserve and the movements are shown in the following tables:

	2023/24 £000	2022/23 £000
Revaluation Reserve	(73,418)	(75,306)
Capital Adjustment Account	(42,616)	(38,281)
Pensions Reserve	651,920	651,536
Collection Fund Adjustment Account	(120)	(207)
Accumulated Absences Adjustment Account	954	957
Total Unusable Reserves	536,720	538,699

Revaluation Reserve

	2023/24 £000	2022/23 £000
Balance at 1 April	(75,306)	(56,221)
Upward revaluation of assets	(5,441)	(22,283)
Downward revaluation of assets and impairment losses not charged to Net cost of Services	4,235	548
Difference between fair value depreciation and historical cost depreciation	3,095	2,649
Amount written off to the Capital Adjustment Account	-	-
Total Revaluation Reserve	(73,418)	(75,306)

The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are:

· Revalued downwards or impaired and the gains are lost.

· Used in the provision of services and the gains are consumed through depreciation, or

· Disposed of and the gains are realised.

The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

Capital Adjustment Account

The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition under statutory provisions. The account is debited with the cost of acquisition as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement. The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition.

In addition, the account contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains.

2023/24

£000

2023/24

£000

2022/23

£000

2022/23

£000

Balance at 1 April

(38,281)

(39,469)

Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement:
Charges for depreciation and impairment of non-current assets	2,637		2,938
Revaluation losses on Property, Plant & Equipment	133		271
Amortisation of intangible assets	188		94
Sub-total		2,958		3,303
Disposal of assets via the Comprehensive Income & Expenditure Statement		48		-
Adjusting amounts written out of the Revaluation Reserve		-		-
Net amount written out of the cost of non-current assets consumed in the year		3,006		3,303

Capital financing applied in the year:
Prior year financing of NWFC capital assets	(751)		-
Statutory provision for financing of capital investment charged against General Fund	(517)		(487)
Use of capital reserves to fund expenditure	(1,637)		-
Capital expenditure charged to General Fund Balance	(4,437)		(1,628)
Sub-total		(6,591)		(2,115)
Balance as at 31 March		(41,866)		(38,281)

Pensions Reserve

The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions. The reserve relates to both the LGPS and Firefighters pension schemes, and the large negative value of the reserve reflects the unfunded nature of the Firefighters pension scheme.

	2023/24 £000	2022/23 £000
Balance at 1 April	651,536	883,434
Actuarial (gains) or losses on pensions assets and liabilities	(4,170)	(244,777)
Reversal of items relating to retirement benefits debited or credited to Net Cost of Services in the Comprehensive Income & Expenditure Statement	33,880	39,827
Net payments to pensioners payable in the year	(28,970)	(26,600)
Employers pension contributions	(356)	(348)
Total	651,920	651,536

Collection Fund Adjustment Account

The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and business rates income in the Comprehensive Income and Expenditure Statement as it falls due from council tax and business rates payers compared with the statutory arrangements for paying across amounts to the General Fund.

	Council Tax		Business Rates		Total
	2023/24 £000	2022/23 £000	2023/24 £000	2022/23 £000	2023/24 £000	2022/23 £000
Balance at 1 April	5	(139)	(212)	915	(207)	776
Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different from council tax income calculated for the year in accordance with statutory requirements	126	144	-	-	126	144
Amount by which business rates income credited to the Comprehensive Income and Expenditure Statement is different from business rates income calculated for the year in accordance with statutory requirements	-	-	(38)	(1,127)	(38)	(1,127)
Balance at 31 March	130	5	(249)	(212)	(120)	(207)

Accumulated Absences Adjustment Account

The Accumulated Absences Adjustment Account manages the differences arising from the recognition of accrued employee costs in the Comprehensive Income and Expenditure Statement compared with the statutory arrangements for paying across amounts to the General Fund.

	2023/24 £000	2022/23 £000
Balance at 1 April	957	839
Amount by which remuneration charged on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements	-3	118
Balance at 31 March	954	957

19 Contingent Liability

There are no contingent liabilities.

20 Post Balance Sheet Events

As at the date of signing of the draft accounts, 05^th July 2024, there have been no events either adjusting on non-adjusting.

21 Nature and Extent of Risks Arising from Financial Instruments

The Authority’s activities expose it to a variety of financial risks:

· Credit risk – the possibility that other parties might fail to pay amounts due to the Authority.

· Liquidity risk – the possibility that the Authority might not have funds available to meet its commitments to make payments.

· Market risk – the possibility that financial loss might arise for the Authority because of changes in such measures as interest rates and stock market movements.

Risk management is carried out by Lancashire County Council’s Treasury Management Team, under policies approved by the Authority in the annual Treasury Management Strategy. The strategy provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk and the investment of surplus cash.

Credit Risk

Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Authority’s customers.

This risk is minimised through the Annual Investment Strategy, which states that any investment counterparty must have a minimum actual or implied credit rating of AA- to be eligible. The Authority will also have regard to recent banking reform legislation which provides for creditor 'bail-in' rather than state 'bail-out' of banks should the bank fail. The effect of this legislation is that a local authority is likely to lose a higher proportion of any assets caught up in a credit event than almost any other type of institution. Credit risk control therefore means that unsecured bank deposits are, unless for very short duration, not suitable as an investment instrument in the future.

In the context of credit risk, trade debtors are treated as financial instruments.

Trade Debtor Credit Risk

The Authority does not generally allow credit for customers, such that £0.174m of the £0.375m balance is past due date for payment. On a prudent basis the Authority has created a provision for expected credit losses to cover any potential loss arising from this, which currently stands at £0.033m which is considered sufficient for this purpose.

The past due amount can be analysed by age as follows:

	2023/24 £000	2022/23 £000
0 to 30 days	201	298
31 to 60 days	170	23
61 to 90 days	1	154
91 to 180 days	0	1
Over 180 days	3	231
Total	375	707

Liquidity Risk

The Authority has a comprehensive cash flow management system (administered by Lancashire County Council’s Treasury Management Team) that seeks to ensure that cash is available as needed. If unexpected movements happen, the Authority has ready access to borrowings from Lancashire County Council at current market rates. There is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments.

The maturity profile of our remaining debt is shown in the table below.

Value of PWLB loans maturing in future years as at 31 March 2024:

Year	Loan Value (£000)
2035	650
2036	650
2037	700
Total	2,000

Market risk

The Authority is exposed to risk in terms of its exposure to interest rate movements on its borrowings and investments. Movements in interest rates have a complex impact on the Authority. For instance, a rise in interest rate movements would have the following effects:

· Borrowings at fixed rates – the fair value of the liabilities borrowings will fall.

· Investments at variable rates – the interest income credited to the deficit on the provision of services will rise.

We hold fixed rate financial liabilities (borrowings) and variable rate financial assets (investments).

Borrowings are not carried at fair value, so nominal gains and losses on fixed rate loans would not impact on the Deficit on the Provision of Services or Other Comprehensive Income and Expenditure. Instead, the effect of changes in market interest rates is to change the fair value of the liabilities reported in the notes to the balance sheet. Fair values represent the amount due if debt is repaid before its maturity date. When the loans finally mature, they will be repayable at their nominal values.

Our financial assets are the cash deposits placed in a call account with Lancashire County Council. Interest received on them is linked to the base rate. Each working day the balance on the Authority's Call Account is invested to ensure that the interest received on surplus balances is maximised. The average balance within this account throughout the year was £17.7 million and, with no change in that level of balances, a 1% increase in the market rate of interest, if sustained over the whole year would give rise to additional interest earned of £177,000 and a 1% fall would give a reduction of the same amount.

22 Local Authority Controlled Company – NW FireControl Limited

NW FireControl Limited is a company limited by guarantee with the responsibility for Fire and Rescue Service mobilisation for the North West region. The Company has four members which are Cheshire, Cumbria, Greater Manchester, and Lancashire Fire & Rescue Authorities (FRAs). The liability of each member in the event of the company being wound up is limited and shall not exceed £1. Each member of the company has the right to appoint 2 directors, who are Councillors appointed to their respective FRAs. All directors have equal voting rights.

During May 2014 all four services transferred their Control Room functions into the regionalised service provided by NW FireControl Limited. The cost of the service is charged out to the four FRAs on an agreed pro rata basis agreed by a Service Level Agreement. The implementation phase continued to be funded by a section 31 grant from the Department for Communities and Local Government plus an ongoing grant to fund 66% of the lease costs for the building. The grant is paid to Greater Manchester Fire & Rescue Authority as lead authority for the North West region and released to the company as required. From 8th May 2017 Greater Manchester Fire and Rescue Service transferred into the Greater Manchester Combined Authority and the ownership of NW FireControl Limited therefore also transfers.

An assessment for Group Accounting requirements has taken place during 2023/24 in respect of NW FireControl Limited. This is in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom Based on International Financial Reporting Standards (IFRS 10, 11 & 12).

It has been determined that the company is governed by Joint Control since unanimous consent exists for key decisions and each Authority has equal voting rights. This joint arrangement has been deemed to be a Joint Operation as the parties have rights to the assets, and obligations for the liabilities relating to the arrangement, and on this basis, the Authority’s 25% share of the transactions and balances of NW FireControl Limited have been recognised within the accounts. See note 28 Critical judgements.

Below shows the key Information from the Draft Financial Statements of NW FireControl Limited:

Key Information	Year ended 31 March 2024 £000	Year ended 31 March 2023 £000
Total assets less Current Liabilities	356	351
Net assets*	356	638
Surplus/(deficit) Before Taxation	85	(627)
Surplus/(deficit) After Taxation	84	(634)
Debtor Balance (LFRS)	-	10
Creditor Balance (LFRS)	-	-
Invoices raised by NW FireControl to LFRS	1,649	1,424
Invoices raised by LFRS to NW FireControl	-	-

*Net assets includes the future pension liabilities under IAS19 reported by the Cheshire Pension Fund actuaries.

All figures are shown net of VAT.

Transactions between LFRS and NW FireControl Limited include Invoices Raised by NW FireControl to LFRS for the Control Room service and use of facilities in the building.

The Company’s Financial Statements can be obtained from Companies House with the deadline for submission as 31/12/2024 for the final audited 2023/24 accounts.

23 Adjust net surplus/(deficit) on the provision of services for non-cash movements

	2023/24 £000	2022/23 £000
Depreciation	5,732	5,588
Impairment & downwards valuations	133	271
Amortisation	188	94
Increase/(decrease) in provisions	(10)	(207)
Increase/(decrease) in creditors	131	906
(Increase)/decrease in debtors	(1,840)	(3,783)
(Increase)/decrease in stock	(23)	(53)
(Increase)/decrease in LGPS pension liability	-	216
Movement in pension liability	4,554	12,879
NWFC Capital Grants Unapplied Adj	-	29
NBV of fixed assets sold	48	-
Total	8,914	15,940

24 Adjust for items included in the net surplus/(deficit) on the provision of services that are investing and financing activities

2023/24

£000

2022/23

£000

Interest received

(763)

(667)

Interest paid

1,341

1,366

Interest paid includes interest payments in respect of both finance leases and PFI schemes (see accounting policy Note 29, section j)

25 Reconciliation of liabilities arising from financing activities

Long-Term borrowings

£000

Short-Term borrowings

£000

Lease liabilities

£000

Total

£000

1 April 2023

13,867

484

14,383

Cash flows:
Repayment	(528)	45	(33)	(517)
Proceeds	-	-	-	-

Non-cash:
Acquisition	-	-	-	-
31 March 2024	13,339	528	-	13,868

26 Assumptions made about the future and other major sources of estimation and uncertainty

The Statement of Accounts contains estimated figures that are based on assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made considering historical experience, current trends, and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.

The items in the Authority’s Balance Sheet at 31 March 2024 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:

Item	Uncertainties	Effect if actual results differ from assumptions
Property, Plant & Equipment Carrying value £127m (2022/23: £126m)	The uncertainty in terms of the market evidence used to form opinions of value, continues. Shortly after the global pandemic, the war in Ukraine and resultant energy crisis has impacted on materials cost coupled with the void in the market for tradesmen because of Brexit, that has led to slippages in most construction targets.	Most of the Authorities Property assets are valued under the Depreciated Replacement Cost (DRC) method, as specialised assets. There is the possibility that DRC valuations will increase due to shortages of raw materials and labour. It is estimated that a 1% increase in DRC valuations would increase the assets values by £1.3m.
Pension Liability Carrying value £628m (2022/23: £632m)	Estimation of the gross liability to pay pensions depends on several complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. Consulting actuaries are engaged to provide the Authority with expert advice about the assumptions to be applied to each scheme.	It is estimated that, for both pension schemes combined, a 0.5% increase in the discount rate would decrease the liability by £48m (2022/23: £47m), a 1% increase in pay growth would increase the liability by £13m (2022/23: £13m). In addition, a 1-year expectancy would increase the liability by £17m (2022/23: £17m). increase in the assumed life
LGPS Asset Ceiling Gross defined benefit asset £23.8m (2022/23: £19.9m) Net defined benefit asset £- (2022/23: £-)	The assumptions used are like those used to calculate the pension liability and actuaries are consulted to provide expert advice on the assumptions to be used.	The Authority has reduced the scheme’s net asset to nil based on this assessment. It is estimated that a 1% increase in the future accounting service cost would not lead to the Authority having a pension asset ceiling above £0.

This list does not include assets and liabilities that are carried at fair value based on a recently observed market price.

27 Expenditure and Income Analysed by Nature

The Authority’s expenditure and income is analysed as follows:

	2023/24 £000	2022/23 £000
Expenditure
Employee benefits expenses	31,622	42,073
Other services expenses	16,720	13,980
Support service recharges	-	-
Depreciation, amortisation, and impairment	6,053	5,953
Interest payments	30,115	24,634
(Gain)/loss on disposal of fixed assets	32	(9)
Total expenditure	84,542	86,631

Income
Fees, charges, and other service income	(3,832)	(2,542)
Interest and investment income	-	-
Income from council tax, business rates and revenue support grant	(63,910)	(59,611)
Government grants and contributions	(10,963)	(9,131)
Total Income	(78,705)	(71,284)

Surplus on the provision of services

5,838

15,347

28 Significant Judgements

Joint Operation – North West FireControl

It has been determined that the company is governed by Joint Control since unanimous consent exists for key decisions and that each Authority has equal voting rights. This joint arrangement has been deemed to be a Joint Operation as the parties have rights to the assets, and obligations for the liabilities relating to the arrangement, and on this basis, the Authority’s 25% share of the transactions and balances of NW FireControl Limited have been recognised within the accounts.

29 Accounting Policies

a General Principles

The Statement of Accounts summarises the Authority’s transactions for the 2023/24 financial year and its position at the year end of 31 March 2024. The Authority is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2015, as amended by the Accounts and Audit (Coronavirus)(Amendment) Regulations 2021, which those regulations require to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom – 2023/24, supported by International Financial Reporting Standards (IFRS).

The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

b Accruals of income and expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:

· Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.

· Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made.

· Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure based on the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.

· Where income and expenditure have been recognised but cash has not been received or paid, a debtor or a creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.

c Cash & cash equivalents

Cash is represented by cash in hand and deposits repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Authority’s cash management.

d Charges to Revenue for Non-Current Assets

Services, support services and trading accounts are debited with the following amounts to record the cost of holding fixed assets during the year:

· Depreciation attributable to the assets used by the relevant service.

· Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off

· Amortisation of intangible fixed assets attributable to the service.

The Authority is not required to raise council tax to cover these charges. However, it is required to make an annual contribution from revenue (Minimum Revenue Provision (MRP)) towards the reduction in its overall borrowing requirement equal to either an amount calculated on a prudent basis determined by the Authority in accordance with statutory guidance, or a minimum of 4% of the previous years’ Capital Financing Requirement balance. In addition to the statutory MRP calculated, the Authority may also make voluntary MRP contributions in line with approved budgets and to reduce the ongoing borrowing requirement. Depreciation, impairment and impairment losses and amortisations are therefore replaced by the contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

e Employee Benefits

Benefits Payable During Employment

Short-term employee benefits are those due to be settled within 12 months of the year end. They include such benefits as wages and salaries, paid annual leave and paid sick leave and non-monetary benefits (for example cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Authority. An accrual is made for the cost of holiday entitlements (or any form of leave, for example time off in lieu) earned by employees but not taken before the year end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the current financial year (the best estimate of future rates at the time of the accounts). The accrual is charged to the surplus or deficit on provision of services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Post Employment Benefits

Employees of the Authority are members of two separate pension schemes:

· The Firefighters Pension Scheme, administered by Lancashire County Council.

· The Local Government Pension Scheme, administered by Lancashire County Council.

Both schemes provided defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Authority.

The Firefighters’ Scheme

Under IAS19 the future costs of retirement benefits must be recognised in the accounts at the point at which the Authority becomes committed to paying them (the point when the benefits have been earned by the employee), even if the actual payment of benefits will be many years in the future.

This obligation to pay pensions benefits in the future is recognised as a liability in the Authority’s Balance Sheet. In the service costs part of the Comprehensive Income and Expenditure Statement, transactions are recorded that indicate the change over the year in the pension liability. These are principally the future costs of pensions earned by Firefighters in service during the year. The transactions are not cash-based but, are actuarially-calculated amounts that reflect more closely the true changes in the scheme’s long-term liabilities.

In calculating the liability for 2023/24, the actuary based the valuation on a roll forwards approach.

Top up grant received during the year from the Home Office to cover the pension costs of the above scheme are recognized in the Comprehensive Income and Expenditure Statement via adjustments in respect of the actuarial valuation.

The Local Government Pension Scheme

The same basic principles apply to the local government scheme with the difference being that, because this is a funded scheme (it is backed by a portfolio of investments in equities, property etc), there are transactions recorded in the revenue account to reflect changes in the expected return on these assets. Like the transactions referred to above, these too, are actuarially-calculated figures.

On the Balance Sheet, the liability to pay future pensions is balanced by the fund’s investment assets.

In calculating the liability for 2023/24, the actuary based the valuation on a roll forwards approach.

In valuing the pension scheme assets for 2023/24, the actuaries used fair value basis for both derivatives and investments.

f Financial Liabilities

Financial liabilities are initially measured at fair value and carried at their amortised cost. For all the borrowings the Authority has, this means that the amount presented in the Balance Sheet is the outstanding principle repayable plus accrued interest and the interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.

g Financial Assets measured at amortised cost

The Authority holds only one type of financial asset, loans, and receivables. These are its cash investments and debtors - assets that have fixed or determinable payments but are not quoted in an active market.

Investments are initially measured at fair value and carried at their amortised cost. For all the investments that the Authority has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable. The interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year under the terms of the deposit agreement.

h Government Grants & Contributions

Government grants and donations are recognised as due to the Authority when there is reasonable assurance that:

· The Authority will comply with the conditions attached to the payments, and

· The grants or contributions will be received.

Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached have been satisfied. When conditions have been satisfied, the grant is credited to the non-specific grant income line in the Comprehensive Income and Expenditure Statement.

Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement.

i Non-Current Assets

Non-current assets are included in the Balance Sheet at the estimated current value of the asset. They comprise:

· Property, plant & equipment - These are assets that have a physical substance which are used continuously to provide services or for administrative purposes.

· Intangible assets – Assets that do not have a physical substance but can be separately identified and controlled by the Authority (for example, software licenses). Spending on these assets is capitalised if the asset will bring benefit to the Authority for more than one financial year.

i) Recognition

All capital expenditure over the value of £10,000 on the acquisition or enhancement of non-current assets is capitalised in the accounts on an accruals basis, in accordance with the relevant statute, with the exception of fleet vehicles, which are capitalised providing the cost is over £5,000 and the asset life is over 5 years.

ii) Measurement

Land and buildings are revalued on a rolling five-year basis by a suitably qualified surveyor. As at 31 March 2024, Amcat Limited, an external organisation, using surveyors qualified by the Royal Institution of Chartered Surveyors, carried out revaluations on the identified properties. All valuations are based on depreciated replacement cost, except for one property used as offices, valued at Existing Use Value.

All other non-current assets are valued at historic cost.

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007, the date of its formal implementation. The Revaluation Reserve was created with effect from 31 March 2007 with a zero-opening balance. Gains arising before 1 April 2007 have been consolidated into the Capital Adjustment Account.

iii) Impairment

The Combined Fire Authority's non-current assets are considered for impairment at the end of each year by appropriately qualified Property Consultants.

iv) Disposals

When an asset is disposed of the value of asset in the balance sheet is written off to the Comprehensive Income and Expenditure Statement (CIES) as part of the gain or loss on disposal. Receipts from disposals are credited to capital receipts, with the sale proceeds being recognised in the CIES. This treatment results in the netting off receipts against the carrying value of the asset.

v) Depreciation

Depreciation is charged on all assets with a finite useful life by the systematic allocation of the depreciable amounts over the period for which the asset is available for use by the authority.

· Intangible assets are assessed over their estimated useful life, 5 years.

· Land is assessed as having an infinite life, and therefore is not depreciated.

· Building assets are assessed for an appropriate property life by property professionals, in 10-year bands up to a maximum of 50 years.

· Equipment is depreciated over their estimated useful life, ranging from 5 to 20 years.

· Vehicles are depreciated over their estimated useful life, ranging from 5 to 15 years.

vi) Componentisation

From 1 April 2010, the Authority is required to separately recognise, depreciate and de-recognise significant components of assets, where the significant component has a different useful life to the remainder of the asset. Assets with a carrying value of less than £1.0m will not be subject to componentisation rules, and a significant component is one of over 25% of the asset carrying value. Components will only be recognised on assets valued after 1 April 2010.

vii) Derecognition

Assets will be derecognised when no further economic benefits are expected from the asset’s use or disposal – when the economic benefits inherent in the asset have been used up.

j Private Finance Initiative (PFI) and similar contracts

Current Status

The Authority has two existing PFI arrangements:

· With PFF Lancashire for Hyndburn and Morecambe fire stations, which is a continuing commitment for 30 years from May 2003; and

· With Fire and Rescue NW Limited to replace four fire stations in Lancashire as part of a wider scheme to replace 16 in total in conjunction with Merseyside Fire and Rescue Authority and Cumbria County Council. The contract will run for 25 years from the date of the final station being handed over during 2013/14.

Revenue transactions relating to the above schemes are explained in Note 14.

Accounting for PFI

PFI contracts are agreements to receive services, where responsibility for making available the non-current assets to provide services passes to the PFI contractor. The PFI scheme is accounted for on a consistent basis to IFRIC 12.

Recognition of assets and liabilities

Fire stations provided under PFI contracts are recognised as non-current assets of the Authority. A related liability is also recognised. The asset and liability are recognised when the asset is made available for use. The related liability is initially measured at the value of the related asset and subsequently calculated using the same actuarial method used for finance leases.

Once on the balance sheet the PFI assets will be treated in the same way as all other non-current assets of the same type including depreciation, impairment, and revaluation.

Minimum Revenue Provision (MRP)

Assets acquired under a PFI that are recognised on the balance sheet are subject to MRP in the same way as assets acquired using other forms of borrowing. The amounts of MRP are calculated in accordance with the appropriate regulations and statutory guidance. MRP is equal to that element of the unitary charge which is applied to repay the outstanding liability.

Unitary Payment

The unitary payment is a monthly charge payable to the PFI contractor in return for the services provided. This payment is analysed into elements for the fair value of services, capital and revenue lifecycle (planned maintenance), contingent lease rentals, the repayment of the outstanding liability and interest payable on the outstanding liability. The fair value of the services and the revenue lifecycle element are charged to the revenue account. The capital lifecycle element is charged to the non-current assets and funded by a revenue contribution. The contingent lease rentals and interest payable are recorded in the “interest payable and similar charges” account outside the net cost of services but within net operating expenditure in the income and expenditure account.

Deductions from the Unitary Payment

The PFI contracts provide for deductions from the unitary payment in the case of substandard performance or when the facilities are unavailable. Deductions for substandard performance are accounted for as a reduction in the amount paid for the affected services. Deductions arising from the unavailability of the property are apportioned pro rata to the proportions of the service and property elements of the unitary payment:

· A reduction for part or all the property being unavailable for use – this will first be accounted for as an abatement of the contingent lease rentals, then finance costs if contingent rents are insufficient; and

· A reduction in the price paid for services whilst services are not being provided accounted for as a reduction in the amount paid for the affected services.

Deductions of either type are accounted for when the Authority’s entitlement has been established and it is probable that the Authority will be able to make the deduction.

k PFI Equalisation Reserve

The Authority holds two PFI equalisation reserves for the purpose of smoothing out, within the revenue account, the annual net cost to the Authority of payments under PFI contracts:

· In 2003/04 the Authority established a PFI equalisation reserve for the PFI contract with PFF Lancashire Limited. The contract relates to the provision and maintenance by PFF Lancashire Limited of two fire stations at Morecambe and Hyndburn; and

· In 2011/12 the Authority created a new PFI equalisation reserve in relation to the Authority’s share of the PFI contract with Fire and Rescue NW Limited. The contract relates to the provision and maintenance of Blackburn, Burnley, Chorley, and Fleetwood fire stations.

An annual revenue contribution in lieu of interest will be made to the reserve. The reserve balance will be reviewed each year at which time the amount of any revenue contribution to or from the reserve will be determined.

l Provisions

Provisions are made where an event has taken place that gives the Authority a legal or constructive obligation that probably requires settlement by a transfer of economic benefits, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement when the Authority has an obligation and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, considering relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the balance sheet. Estimated settlements are reviewed at the end of each financial year, and where it becomes less probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service line.

Details of the Authority’s provisions are given in Note 12 to the Balance Sheet, and currently comprise insurance liabilities and business rates appeals.

m Reserves

The Authority sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged against the net cost of services in that year in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure.

Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments, retirements and employee benefits and do not represent usable resources for the Authority.

n Contingent liabilities

A contingent liability arises where an event has taken place that gives the Authority a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Authority. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.

o Going Concern

These accounts are prepared on a going concern basis, on the assumption that the Authority’s functions will continue in operational existence for the foreseeable future. Our current Medium Term Financial Strategy (MTFS) shows a healthy reserves position, and a balanced budget in the short and medium term. We await the outcome of the multi-year settlement to clarify our estimates within our MTFS.

p Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors

Prior period adjustments may arise due to a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, in the current and future years affected by the change and do not give rise to a prior period adjustment.

Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Authority’s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

q Accounting Standards issued but not yet adopted

The Authority is required to disclose the impact of an accounting change required by a new accounting standard that has been issued on or before 1 January but not yet adopted by the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). There have been no amendments to the code since 2021/22.

Accounting of Leases (IFRS 16) implementation has been deferred to 1^st April 2024 as agreed by CIPFA/LASAAC in spring 2022. However, both the 2022-23 and the 2023-24 codes allow for early adoption should an authority consider early implementation. Under the new standard, a right of use asset and lease liability will be recognised on the balance sheet. The depreciation of leased assets and interest on lease liabilities will go through the CIES. There are deemed to be no assets affected by the standard.

r Joint Operations

Joint operations are arrangements where the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. The activities undertaken by the Authority in conjunction with other joint operators involve the use of the assets and resources of those joint operators. The Authority has one joint operation, North West FireControl Ltd (see note 22 for details), and recognises:

· its assets, including its share of any assets held jointly.

· its liabilities, including its share of any liabilities held jointly.

· its revenue from the sale of its share of the output arising from the joint operation.

· its share of the revenue from the sale of the output by the joint operation.

· its expenses, including its share of any expenses incurred jointly.

Fire Fighters Pension Fund Account and Net Assets Statement

Fund Account	2023/24 £000	2022/23 £000
Income to the fund
Contributions receivable:
- From employer
- contributions in relation to pensionable pay	(8,012)	(7,631)
- other contributions	(216)	(166)
- Members contributions	(3,723)	(3,448)

Transfers in:
- Individual transfers from other schemes	(254)	(182)
Total Income to the Fund	(12,205)	(11,427)

Spending by the fund
Benefits payable:
- Pension payments	25,508	23,170
- Commutations of pensions and lump-sum retirement benefits	5,923	6,041

Transfers out:
- Individual transfers out to other schemes	282	-
- Refunds of contributions	-	-
Total Spending by the fund	31,713	29,211
Net amount receivable for the year before top up grant receivable from central government	19,508	17,784
Top up grant receivable from central government	(19,508)	(17,784)
Net amount receivable for the year	-	-

Net Assets Statement	2023/24 £000	2022/23 £000
Net current assets and liabilities:
- pensions top up grant receivable from central government	(5,541)	(5,996)
- other current assets and liabilities (other than liabilities and other than benefits in the future)	5,541	5,996
Net current assets at the end of the year	-	-

Firefighters Pension Fund Notes

The four firefighters pension schemes (1992 scheme, 2006 scheme, special members of the 2006 scheme and 2015 scheme) are unfunded defined benefits schemes, meaning that there are no investment assets built up to meet the pensions liabilities, and cash must be generated to meet the actual pension payments as they fall due. The Authority makes employers contributions into the schemes and the balance of funding required after pension payments are made is received from central government.

The above statement shows the financial position of the total fire fighters pension fund account, showing that as at 31 March 2024 the Authority is owed £5.541m (2022/23: £5.996m) by the Home Office in order to balance the account. The fund statements do not take account of liabilities after the period end, the Authority’s long-term pension obligations can be found in the Authority’s main statements and Note 15 to the accounts. The fund was established under the Firefighters’ Pension Scheme (Amendment) (England) Order 2006. The statement was prepared according to International Financial Reporting Standards (IFRS).

The note has been prepared in line with general accounting policies set in Note 29 – accounting policies, in particular section e.

Contribution Rates

To remove future discrimination and ensure equal treatment, all remaining protected members in the 1992 and 2006 scheme were transferred to the 2015 scheme on the 1^st April 2022. For the 2015 Firefighter pension scheme employer contributions are 28.8% and employees contribute between 11.0% and 14.5% dependent on salary.

These contribution levels are set nationally by the Government and are subject to triennial revaluations by the Government Actuary’s Department. Two ill health retirement was recognised during 2023/24, and one in 2022/23.

Benefits Paid

Pensions are paid to retired officers, their survivors and others who are eligible for benefits under new and existing pension schemes.

Home Office Grant

There are no investment assets, and the fund is balanced to zero each year by receipt of a top up grant from the Home Office, if contributions are insufficient to meet the cost of pension payments, or by paying over any surplus grant.

Future Liabilities

The firefighters pension fund financial statements do not take account of liabilities to pay pensions and other benefits after the period end, however details of the firefighter’s pension fund long-term pension obligations are recognised in the Authorities financial statements, details can be found in Note 15.

Glossary of Terms

Accrual

A sum included in the accounts to cover income or expenditure attributable to the accounting period covered by the accounts but for which payment had not been received/made at the Balance Sheet date.

Amortised cost

Amortised cost is a valuation basis for financial instruments that, in the case of this Authority’s assets and liabilities, is equal to their nominal value plus any interest accrued to the balance sheet date.

Budget

A statement which reflects the Authority’s policies in financial terms, and which quantifies its plans for spending over a specified period. The Revenue Budget (spending other than capital expenditure) is normally finalised and approved in February prior to the commencement of the financial year.

Capital Expenditure

Payments made for the acquisition or provision of assets which will be of relatively long-term value to the Authority for example land, buildings and equipment. Also referred to as capital spending, capital outlay, or capital payments. The resulting capital assets are referred to as “fixed assets”.

Capital Receipts

Proceeds from the sale of capital assets. Such income may only be used for capital purposes, to repay existing loan debt, or to finance new capital expenditure in proportions determined by the Government. Any receipts which have not yet been utilised as described are referred to as “capital receipts unapplied”.

Comprehensive Income & Expenditure Statement

An account which records an authority’s day to day expenditure and income on items such as salaries and wages, running costs of services and the financing charges in respect of capital expenditure.

Creditors

Amounts owed by the Authority for work done, goods received, or services rendered but for which payment had not been made at the date of the Balance Sheet.

Debtors

Sums of money due to the Authority in the relevant financial year but not received at the Balance Sheet date.

Fair Value

Fair value is a valuation basis for financial instruments that represents the amount at which the instruments could be exchanged in an open market transaction. If no market for a specific instrument exists, fair value can be estimated by a technique that is based on a comparison of the interest rate on the instrument with interest rates on similar instruments that are available in financial markets.

Financial Instrument

A financial liability or asset such as a borrowing or an investment.

Financial Year

The period of twelve months for which the accounts are comprised. For Fire Authorities the financial year (or accounting period as it is also known) commences on 1 April and finishes on the 31 March of the following year.

Financing Charges

Annual charges to the Authority’s Comprehensive Income and Expenditure Statement to cover the interest on and the repayment of loans raised for capital expenditure. Annual lease rental payments are also included.

Premiums and Discounts

Premiums are payable and discounts receivable when loans are repaid to the Public Works Loan Board (PWLB) in advance of their contracted maturity date. The premium or discount is calculated with reference to the interest rate on the loan being repaid and the interest rate for similar new loans on the repayment date.

Public Works Loan Board (PWLB)

A government agency which provides longer-term loans to local authorities at interest rates only slightly higher than those at which the government itself can borrow.

Revenue Contribution to Capital Outlay

The financing of capital expenditure by a direct contribution from revenue account, rather than by means of loan or other forms of finance.

Revenue Expenditure

The day-to-day expenditure of the Authority, which is charged to the Comprehensive Income & Expenditure Statement, comprising mainly salaries and wages, running costs, and financing charges.

Taxation and non-specific grant income
Council tax	(37,826)	(34,968)
Revenue Support Grant	(9,727)	(9,642)
Non-domestic rates redistribution	(16,080)	(15,559)
Business rates S31 grant	(4,872)	(2,951)
Capital grant income	(277)	(253)
Deficit on the provision of services	5,838	15,347

Current Liabilities
Other Short-Term Liabilities	8	(561)	(558)
Short-Term Creditors	11	(10,398)	(10,258)
Current Liabilities total		(10,959)	(10,816)

Long-Term Liabilities
Provisions	12	(1,229)	(1,239)
Long-Term Borrowing	8	(2,000)	(2,000)
Other Long-Term Liabilities	13	(663,299)	(663,449)
Long-Term Liabilities total		(666,529)	(666,688)

Investing activities
Purchase of property plant and equipment & other capital spend	6/7	(6,074)		(1,680)
(Increase)/Decrease in long-term deposits		-		5,000
(Increase)/Decrease in short-term deposits		(8,500)		(5,000)
Receipts from investing activities	24	763		667
Net cash flows from investing activities			(13,810)		(1,013)

Financing activities
Cash payments for the reduction of the outstanding liabilities relating to finance leases and on-balance sheet PFI contracts		(522)		(492)
Repayment of long-term borrowing		-		-
Payments for financing activities	24	(1,341)		(1,366)
Net cash flows from financing activities			(1,863)		(1,858)
Net increase/(decrease) in cash and cash equivalents			(12,020)		(1,579)
Cash and cash equivalents at the beginning of the reporting period	10		16,317		17,896
Cash and cash equivalents at the end of the reporting period	10		4,297		16,317

Financing & investment income & expenditure
Interest payable and similar charges	8	1,366	1,388
Pensions interest cost and expected return on pensions assets	15	28,750	23,246
Interest receivable and similar Income	8	(1,574)	(837)

Current Assets
Inventories		333	310
Short-Term Investments	8	23,500	15,000
Short-Term Debtors	9	18,604	16,763
Cash & Cash Equivalents	10	4,297	16,317
Current Assets total		46,734	48,390

Usable Reserves
Revenue Reserves	16	(14,104)	(14,145)
Capital Funding Reserve	16	(19,593)	(20,344)
Capital Grants Unapplied Account	16	-	(27)
Usable Capital Receipts Reserve	16	(71)	(1,692)
Usable Reserves total	16	(33,768)	(36,208)

	Balance at 31 March 2022 £000	Transfers in 2022/23 £000	Transfers out 2022/23 £000	Balance at 31 March 2023 £000	Transfers in 2023/24 £000	Transfers out 2023/24 £000	Balance at 31 March 2024 £000
General fund	(6,536)	(24)	1673	(4,887)	(995)	220	(5,662)
Earmarked Reserves	(4,675)	(1,207)	1,781	(4,101)	(1,023)	1,839	(3,285)
PFI Equalisation Reserves	(5,067)	(90)	-	(5,157)	-	-	(5,157)
Total Earmarked Reserves	(9,742)	(1,297)	1,781	(9,258)	(1,023)	1,839	(8,442)
Capital funding reserve	(17,672)	(4,300)	1,628	(20,344)	(4,171)	4,922	(19,593)
Capital grants unapplied	(40)	-	13	(27)	-	27	-
Usable capital receipts	(1,683)	(9)	-	(1,692)	(16)	1,637	(71)
Total Usable Reserves	(35,673)	(5,630)	5,095	(36,208)	(6,205)	7,894	(33,768)

Statement on Annual Governance Arrangements by the Chairman of the Combined Fire Authority, the Treasurer to the Combined Fire Authority and the Chief Fire Officer

Explanation of Financial Statements

Comprehensive Income and Expenditure Statement

Movement in Reserves Statement 2023/24

1 Expenditure and Funding Analysis

2 Fire Authority Costs

6 Property, Plant & Equipment

7 Intangible Assets

8 Financial Instruments

9 Debtors

10 Cash & Cash Equivalents

11 Creditors

12 Provisions

13 Other Long-Term Liabilities

14 PFI Schemes

15 Net Liability Related to Local Government and Firefighters’ Pensions Schemes

18 Unusable Reserves

19 Contingent Liability

22 Local Authority Controlled Company – NW FireControl Limited

23 Adjust net surplus/(deficit) on the provision of services for non-cash movements

24 Adjust for items included in the net surplus/(deficit) on the provision of services that are investing and financing activities

28 Significant Judgements

29 Accounting Policies

Glossary of Terms