Agenda Document Pack - Moray Council - 25/10/2023
Moray Council · 25 October 2023
Back to Moray Council — 25 October 2023 and its agenda
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Moray Council Wednesday, 25 October 2023 NOTICE IS HEREBY GIVEN that a Special Meeting of the Moray Council is to be held at Council Chambers, Council Office, High Street, Elgin, IV30 1BX on Wednesday, 25 October 2023 at 09:30. BUSINESS 1. Sederunt 2. Declaration of Group Decisions and Members Interests * 3. External Audit - Annual Report to Members on 2022-23 Audit Report by Depute Chief Executive (Economy, Environment and Finance) 5 - 94 4. Audited Annual Accounts 1 April 2022 to 31 March 2023 Report by Depute Chief Executive (Economy, Environment and Finance) 95 - 98 5. Audited Connected Charities Audited Annual Accounts 1 April 2022 to 31 March 2023 Report by Depute Chief Executive (Economy, Environment and Finance) 99 - 124 6. Best Value Thematic Review 2022 - 2023 Report by Chief Executive 125 - 166 7. UK Government Our Long Term Plan for Towns Report by Depute Chief Executive (Economy, Environment and Finance) 167 - 174 Page 1
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8. Moray Council Permission for Hospitality Businesses to Place Furniture and Non Furniture on Public Footways Report by Depute Chief Executive (Economy, Environment and Finance) 175 - 190 Watching the Meeting You can watch the webcast live by going to: http://www.moray.gov.uk/moray_standard/page_43661.html Webcasts are available to view for 1 year following the meeting. You can also attend the meeting in person, if you wish to do so, please come to the High Street entrance door and a member of staff will be let into the building. Page 2
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GUIDANCE NOTES * Declaration of Group Decisions and Members Interests - The Chair of the meeting shall seek declarations from any individual or political group at the beginning of a meeting whether any prior decision has been reached on how the individual or members of the group will vote on any item(s) of business on the Agenda, and if so on which item(s). A prior decision shall be one that the individual or the group deems to be mandatory on the individual or the group members such that the individual or the group members will be subject to sanctions should they not vote in accordance with the prior decision. Any such prior decisions will be recorded in the Minute of the meeting. Page 3
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MORAY COUNCIL Moray Council SEDERUNT Councillor Kathleen Robertson (Chair) Councillor Donald Gatt (Depute Chair) Councillor James Allan (Member) Councillor Peter Bloomfield (Member) Councillor Neil Cameron (Member) Councillor Tracy Colyer (Member) Councillor Theresa Coull (Member) Councillor John Cowe (Member) Councillor John Divers (Member) Councillor Amber Dunbar (Member) Councillor Jérémie Fernandes (Member) Councillor David Gordon (Member) Councillor Juli Harris (Member) Councillor Sandy Keith (Member) Councillor Scott Lawrence (Member) Councillor Graham Leadbitter (Member) Councillor Marc Macrae (Member) Councillor Paul McBain (Member) Councillor Neil McLennan (Member) Councillor Shona Morrison (Member) Councillor Bridget Mustard (Member) Councillor Derek Ross (Member) Councillor John Stuart (Member) Councillor Draeyk Van Der Horn (Member) Councillor Sonya Warren (Member) Councillor Ben Williams (Member) Clerk Name: Tracey Sutherland Clerk Telephone: 07971 879268 Clerk Email: committee.services@moray.gov.uk Page 4
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: EXTERNAL AUDIT – ANNUAL REPORT TO MEMBERS ON 2022/23 AUDIT BY: DEPUTE CHIEF EXECUTIVE (ECONOMY, ENVIRONMENT AND FINANCE) 1. REASON FOR REPORT 1.1 To provide the Council with a copy of the External Auditor’s Annual Audit Report to Council on the 2022/23 accounts. 1.2 This report is submitted to the Council for consideration as part of a suite of reports on the Annual Audit and Accounts for 2022/23. 2. RECOMMENDATION 2.1 It is recommended that the Council consider and note the contents of the Annual Audit Report 2022/23. 3. BACKGROUND 3.1 The Council’s External Auditor, Grant Thornton, provides an Annual Report to those in charge of governance who are the Council and the Controller of Audit. This report is a significant document and covers: The audit of the 2022/23 annual accounts Financial management Financial sustainability Vision, Leadership and Governance Use of Resources Other Wider Scope areas (Climate Change and Cyber Security) Best Value Action Plan recommendations from the External Auditor and management’s response 3.2 A copy of the External Auditor’s Annual Audit is attached as APPENDIX 1. A representative of the Council’s External Auditor will present the report at the meeting. 3.3 The report coincides with the completion of the Annual Audit of the Council’s Annual Accounts, also an item on this agenda. The Council has received an Item 3. Page 5
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unqualified Audit Opinion for 2022/23 on the Council’s annual accounts and on the Connected Charities accounts, also an item on this agenda. 4. ANNUAL AUDIT REPORT 4.1 Audit of the Accounts The report identifies 4 new areas of work which added to the complexity of the audit. The draft accounts included a Prior Period Adjustment (PPA) as the basis of valuation of assets approved in previous audits by Audit Scotland was not considered appropriate by Grant Thornton as it did not fully adjust all assets which had not been revalued in 2021/22 for indexation. This entailed significant additional work for the Accountancy section and for the Auditor. The Council implemented a new Fixed Asset Register (FAR) during 2022/23 and implementation of the FAR required additional verification by the auditor. Grant Thornton carry out a detailed technical review as part of their audit process. As a result of this review a number of presentational amendments were required to the layout agreed with Audit Scotland in 2021/22. The final area of work was in recognising a pension asset instead of a liability as had previously been the case. This required an additional assessment by the Pension Fund actuaries and is recognised in the Audit Report as having been a significant issue for all bodies with pension assets in 2022/23 and their auditors, with Grant Thornton’s technical team developing audit guidance during the course of the audit. The main amendments to the final accounts from the draft accounts are explained in the covering report to the audited Annual Accounts, which is another item on the agenda for this meeting. 4.2 Audit planning identified that the Council has no formal authorisation of journals within the General Ledger. Additional audit work was carried out but no issues identified. The report includes three recommendations from the audit, including a review of authorisation of General Ledger journals. Other recommendations related to fixed assets: reconciliation of the disclosure notes to the FAR and review of fully depreciated assets. Only 2 recommendations from previous audit report recommendations remain open, with the completion date for the second (relating to business continuity) still to come. Financial Management 4.3 The report concludes that the Auditor is satisfied that the Council has appropriate financial management arrangements in place. The Auditor notes significant variances against forecast for both capital and revenue at the year end. No Action Plan recommendation is made. Financial Sustainability 4.4 The report notes the considerable challenge facing the Council to achieve a balanced budget in 2024/25. The following recommendations are made: that the Council monitors its level of general reserves; that the Council upscales the pace and delivery of transformation; that the Council reviews the affordability of its capital plan. The Council already monitors the level of general reserves as part of budget monitoring and financial planning, work continues on transformation as set out more fully in the Medium to Long Term Financial Strategy (as per 25 October Special Full Council agenda) and a review of the capital plan for affordability was planned for the late summer and autumn and has commenced. Page 6
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Vision, Leadership and Governance 4.5 The report concludes that the Council will need to ensure that members work effectively together to act on key decisions in an effective and efficient manner, in a challenging financial environment. The following recommendations are made: that the Council provides further clarification and guidance as to the role of the Audit and Scrutiny Committee; that the Council implements an annual selfevaluation to identify areas of strength and weakness. Work is in progress to identify any knowledge gaps regarding Audit and Scrutiny and a training session has been arranged for December 2023. Work on Collaborative Leadership is planned and will be incorporated into the Best Value Action Plan and the regular selfevaluation reported pre covid is under consideration to be reinstated. Use of Resources 4.6 The report notes that the Council faces the challenge of an increasing older population with a decline in working age population and staff recruitment challenges. It notes good practice in relation to community stakeholder engagement regarding the Corporate Plan. The following recommendations are made: that the Council use Participatory Budgeting (PB) exercises to reallocate financial resource to priority areas. The Council has an agreed communication and engagement strategy for its financial planning process. This does not involve PB but PB activity is ongoing and nationally what is viewed as PB activity appears to be broadening Climate Change and Cyber Security 4.8 The report notes that no specific risks were identified for these areas. Best Value 4.9 The report considers follow up to the Best Value Assurance Report. Best Value is reported in the Thematic Review and the Best Value Thematic report is the subject of another report to this meeting of Council. Best value progress as informed by the annual audit will be reported to Corporate Committee on 7 November. 4.10 Four recommendations relating to the Council’s accounts preparation and financial controls are made in the Action Plan. These relate to authorisation of general ledger journals, reconciliation of the accounts to the Council’s Fixed Asset Register, assets with nil book value and disclosure of Group reserves. All areas will be reviewed in preparation for the 2023/24 accounts. 5. SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) This is referred to in Appendix 1 to the report. (b) Policy and Legal The audit is conducted in terms of statutory powers afforded to Grant Thornton, the appointed External Auditor for the Council. (c) Financial Implications Page 7
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There are no issues arising directly from this report. The report notes that the current level of service provision is not financially sustainable. (d) Risk Implications The work undertaken by External Audit provides assurance to Members on the Council’s performance management, financial statements and the actions taken by the Council to address significant matters arising out of the audit process. (e) Staffing Implications Preparation of the Council’s annual financial statements requires significant resource input as part of the scheduled work of the accountancy team within Financial Services and from other services across the Council. (f) Property There are no property issues arising directly from this report. (g) Equalities/Socio Economic Impact There are no equalities issues arising directly from this report. (h) Climate Change and Biodiversity Impacts There are no climate change and biodiversity issues arising directly from this report. (h) Consultations The content of the APPENDIX 1 to this report has been discussed with CMT and relevant officers of the Council. 6. CONCLUSION 6.1 The annual audit by External Audit gives members assurance that the Council’s Financial Statements give a true and fair view of its financial position at 31 March 2023 and that appropriate internal control systems are in place. The Report to those in charge of governance details the External Auditor’s findings and conclusions arising from the audit and the planned management actions to address matters which have been highlighted. Author of Report: Lorraine Paisey, Chief Financial Officer – Ext 3213 Background Papers: Attached Ref: LP/LJC/SPMAN1293228629950 Page 8
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Commercial in confidence 15 ↔ ✓ ↔ ✓ ↔ ✓ ↔ Not considered likely to result in material adjustment or change to disclosures within the financial statements Potential to result in material adjustment or significant change to disclosures within the financial statements Likely to result in material adjustment or significant change to disclosures within the financial statements Assessed risk consistent with Audit Plan Assessed risk decrease since Audit Plan Assessed risk increase since Audit Plan ↔ Page 23
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© 2023 Grant Thornton UK LLP | The Audit Findings Commercial in confidence 24 • • • • • Page 32
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© 2023 Grant Thornton UK LLP | The Audit Findings Commercial in confidence 32 • • • • Page 40
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© 2023 Grant Thornton UK LLP | The Audit Findings Commercial in confidence 33 Assessment Significant deficiencies identified in IT controls relevant to the audit of financial statements Non-significant deficiencies identified in IT controls relevant to the audit of financial statements/significant deficiencies identified but with sufficient mitigation of relevant risk IT controls relevant to the audit of financial statements judged to be effective at the level of testing in scope Not in scope for testing Page 41
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Commercial in confidence 84 International Standard on Auditing ISA (UK) 260, as well as other ISAs, prescribe matters which we are required to communicate with those charged with governance. These are set out in the table below. Our communication plan Audit Plan Annual Report (our ISA 260 Report) Page 92
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: MORAY COUNCIL’S AUDITED ANNUAL ACCOUNTS FOR THE PERIOD 1 APRIL 2022 TO 31 MARCH 2023 BY: DEPUTE CHIEF EXECUTIVE (ECONOMY, ENVIRONMENT AND FINANCE) 1. REASON FOR REPORT 1.1 To submit to the Council the Audited Annual Accounts for the Moray Council for the year ended 31 March 2023. 1.2 This report is submitted to the Council for consideration as a suite of reports on the Annual Audit and Accounts for 2022/23. 2. RECOMMENDATION 2.1 It is recommended that the Council: i) consider and note the Audited Annual Accounts for the financial year 2022/23; and ii) approve that the Annual Accounts are signed, having regard to the Annual Report from the external auditor considered earlier at this meeting. 3. BACKGROUND 3.1 The unaudited Annual Accounts were submitted to a meeting of Moray Council on 28 June 2023 (paragraph 9 of the minute refers). A copy of the Audited Annual Accounts for 2022/23 is available as another meeting document on this agenda. Subject to approval, the signed accounts will be posted to the Council’s website following this meeting. 3.2 As a result of the audit process a number of changes have been made to the Core Statements and these are described below. 3.3 The Council carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured at current or fair value is revalued at least every five years. The Council undertook a desktop indexation exercise for assets not subject to a formal valuation during 2022/23 and corrections were required as a result of the audit. This included the Item 4. Page 95
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Council’s Housing Stock. Due to the timings for preparing the annual accounts the indexation percentage applied was based on information available at the end of February 2023. When this reviewed during the audit information to the end of March 2023 was available and this amended the percentage used from 6.88% to 2.57%. Corrections were also identified in regards of asset values included in the unaudited accounts and these were also amended in the accounts. The effect of these amendments was to decrease net assets and unusable reserves by £14.784 million. There was no impact on the Council’s useable reserves. 3.4 The unaudited accounts contained a Pension Asset of £161.095 million. This unusual situation was caused by increased interest rates and also due to an increase in the expectations of the future level of return on investments held by the North East Scotland Pension Fund. However, under International Financial Reporting Standards (IFRS), the Council is limited as to how much of a surplus can be recognised as an asset. The Council engaged with its actuaries to apply the asset ceiling test to determine the level of asset to be recognised. The revised figures are incorporated in the audited accounts. This has resulted in a decrease in the Pension Asset of £153.611 million and an increase in the Pension Liability of £10.257 million. This impacted on the Comprehensive Income and Expenditure Statement (CIES) by increasing the remeasurement of the net defined liability. This also affected the Movement in Reserves Statement (MIRS) to increase the unusable reserves value; the Balance Sheet for the pension assets and long term pension liability and pension reserve, along with the associated notes and group accounts. There was no impact on the Council’s useable reserves. 3.5 The overall impact of the amendments is to decrease net assets by £178.652 million and unusable reserves by £178.652 million. There was no impact on the Council’s useable reserves. 3.6 The External Auditors have given the Council an unqualified opinion in the Independent Auditors’ Report, which can be found on pages 117119 of the Accounts. 4. SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) There are no implications for the Corporate Plan or LOIP. (b) Policy and Legal According to Paragraph (1) of the Local Authority Accounts (Scotland) Regulations 2014, a Local Authority is required to submit its Audited Accounts to the Council each year and state that a local authority must meet to consider the Audited Accounts and aim to approve them no later than 30 September immediately following the financial year to which they relate. The audit was not completed within time for the amended accounts to be prepared, checked by the auditors and reported to Council by 30 September 2023. Page 96
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The review by the External Auditors of the Council’s Accounts is in accordance with the Council’s Code of Corporate Governance and ensures that the Council complies with established policies, procedures, laws and regulations. (c) Financial implications Amendments to the accounts were identified as part of the audit process. The impact of these was to decrease net assets by £178.652 million and unusable reserves by £178.652 million. There was no impact on the Council’s useable reserves. (d) Risk Implications There are no risk issues arising directly from this report. The work undertaken by the External Auditor provides assurance to the Council that the Accounts for 2022/23 give a true and fair view of the financial position and expenditure and income of the Council and its group for the year. (e) Staffing Implications Many staff throughout the Council provide information for the inclusion in the Annual Accounts. (f) Property There are no property issues arising directly from this report. (g) Equalities/Socio Economic Impact There are no equalities issues arising directly from this report. (h) Climate Change and Biodiversity Impacts There are no climate change and biodiversity issues arising directly from this report. (i) Consultations None. 5. CONCLUSION 5.1 The Council’s External Auditor has issued an opinion with no qualifications for the 2022/23 Annual Accounts which means that the audited financial statements give a true and fair view of the financial position and expenditure and income of the Council and its group for the year. Author of Report: Laurie Milne, Senior Accountant Background Papers: Held in Financial Services Ref: SPMAN1293228629948 Page 97
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: MORAY COUNCIL’S CONNECTED CHARITIES’ AUDITED ANNUAL ACCOUNTS FOR THE PERIOD 1 APRIL 2022 TO 31 MARCH 2023 BY: DEPUTE CHIEF EXECUTIVE (ECONOMY, ENVIRONMENT AND FINANCE) 1. REASON FOR REPORT 1.1 To submit to the Council the audited Annual Accounts for Moray Council’s Connected Charities for the year ended 31 March 2023. 1.2 This report is submitted to the Council for consideration as part of a suite of reports on the annual audit and accounts for 2022/23. 2. RECOMMENDATION 2.1 It is recommended that the Council considers and approves the audited Annual Accounts for the Connected Charities for the financial year 2022/23. 3. BACKGROUND 3.1 Moray Council (all 26 councillors) acts as sole trustee for the administration of 30 small charitable trusts, which are all registered with the Office of the Scottish Charities Regulator (OSCR). 3.2 Section 106 of the Local Government (Scotland) Act 1973 applies the accounting and auditing requirement of the Act to any trust fund where an authority or some members of the authority are the sole trustees. As section 106 requires an audit, the appointments of local authority auditors include the provision of an auditor’s report for charitable funds covered by that section. 3.3 Regulation 7 of the Charities Accounts (Scotland) Regulations permits charities that have a common purpose or shared management to prepare a single set of “connected charities” accounts. Moray Council acts as sole trustee to 30 individual small charitable trusts. On the basis of this shared management arrangement, it has been agreed with the Council’s auditors that the financial result of the 30 individual small charitable trusts can be consolidated into a single set of accounts for audit purpose. Item 5. Page 99
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3.4 A copy of the Connected Charities Audited Annual Accounts for 2022/23 is attached as APPENDIX 1 to this report. 3.5 The audit process highlighted identified no changes to the Annual Accounts and therefore there has been no change in the balances held. 3.6 The External Auditors have given the Council an unqualified opinion in the Independent Auditors’ Report, which can be found on pages 1518 of the Accounts. 3.7 The report to trustees states that the Council should continue with its planned reorganisation of the trusts in order to maximise the use of the funds available. 4. SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) There are no implications for the Corporate Plan or the LOIP. (b) Policy and Legal According to Paragraph 6 (1) of the Local Authority Accounts (Scotland) Regulations 1985, a Local Authority is required to submit its Audited Accounts to the Council by 30 September each year. Work was not completed on the audit in time for this deadlie to be met. The review by the External Auditors of the council’s Accounts is in accordance with the council’s Code of Corporate Governance and ensures that the council complies with established policies, procedures, laws and regulations. (c) Financial implications The audit process highlighted identified no changes to the Annual Accounts and therefore there has been no change in the balances held. (d) Risk Implications There are no risk issues arising directly from this report. The work undertaken by the External Auditor provides assurance to the council that the Connected Charity Accounts for 2022/23 give a true and fair view of the financial position and expenditure and income of the council for the year. (e) Staffing Implications Staff throughout the Council provide information for the inclusion in the annual Statement of Accounts. (f) Property There are no property issues arising directly from this report. Page 100
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(g) Equalities/Socio Economic Impact There are no equalities issues arising directly from this report. (h) Climate Change and Biodiversity Impacts There are no climate change and biodiversity issues arising from this report. (i) Consultations None. 5. CONCLUSION 5.1 The Council’s External Auditor has issued an opinion with no qualifications for the 2022/23 Connected Charities’ Annual Accounts which means that the audited financial statements give a true and fair view of the financial position and expenditure and income of the council’s Connected Charities for the year. Author of Report: Laurie Milne, Senior Accountant Background Papers: Held in Financial Services Ref: SPMAN1293228629949 Page 101
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AUDITED The Moray Council - Connected Charity Trust Funds Trustees' Report and Financial Statements For the year ended 31 March 2023 Item 5. Page 103
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Contents Pages Trustees' Annual Report 1 - 4 Statement of Financial Activities 5 Balance Sheet 6 Notes to the Financial Statements: Note 1 Statement of Financial Activities 7-8 Note 2 Balance Sheet 9-10 Note 3 Investment Income 11 Note 4 Awarding of Grants 11 Note 5 Investments 12 Note 6 Other Income 12 Note 7 Debtors 12 Note 8 Creditors: amounts falling due within one year 13 Note 9 Financial Instruments 13 Note 10 Related Parties 13 Note 11 Trustee Remuneration, Benefits and Expenses 13 Note 12 Staff Costs and Emoluments 13 Note 13 External Audit Costs 14 Note 14 Accounting Policies 14-15 Independent Auditor’s Opinion 16 Page 104
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1 Trustees' Annual Report Objectives and Activities Moray Council acts as sole trustee for 8 Connected Charity Trust Funds listed below which have charitable status and are registered with the Office of the Scottish Charity Regulator (OSCR). The policy relating to the reinvestment of income in, and disbursement from, Trust Funds was amended on 8 October 2013. The policy was amended to allow disbursement of capital from Trust Funds in accordance with the trust deed, provided there is unanimity amongst the trustees. For all other trusts the whole annual income of the trust will be available for disbursement in accordance with the trust deed, provided sufficient funds are maintained to meet commitments. The following table gives the OSCR charity registration number, the charity name and an indication of the purpose of each Trust. The only activity carried out by each of the Trusts in relation to those purposes is the making of grants. Charity Number Charity Name Purpose SC019017 Moray and Nairn Educational Trust To provide assistance to persons who have been resident in Moray and Nairn for the last five years and to organisations belonging to the former counties of Moray and Nairn for: •bursaries for attendance at a Scottish University or central institution • grants for adult education •provision and maintenance of sports facilities for the benefit of young people •travel grants for educational purposes SC019033 Keith Poor Householders Fund (Keith Nursing Trust Fund) The relief of poverty for residents of the burgh of Keith and provision of financial assistance for funerals. Such individuals may apply to the trust fund for a grant. Only residents of Keith are eligible. SC019065 Castlehill Trust To support in the upkeep, maintenance and management of Castlehill, Forres. SC019066 Grant Park Trust To support in the upkeep, maintenance and management of Grant Park, Forres. SC019068 George Boyd Anderson Bequest To support improvements to the community of Lossiemouth. Individuals and groups may apply to the trust fund for a grant. Only people resident in Lossiemouth are eligible. SC019069 Mr & Mrs William J Watt Dufftown Food Fund The relief of poverty amongst residents of Dufftown by providing groceries. Such individuals may apply to the trust fund for a grant. Only residents of Dufftown are eligible. SC019071 Robert Young Trust The relief of poverty for men in Forres aged over 65. Such individuals may apply to the trust fund for a grant. Only residents of Forres are eligible. SC046791 The Moray Council Charitable Trust Single Trust created for the reorganisation of existing funds that are restricted or have been fulfilled as far as possible. The trust purposes must follow those of the reorganised trusts. There are nine sub categories within the trust, by location and purpose. The Council agreed to a trust reorganisation process at a meeting on 14 November 2012; to create a single charitable Trust which would enable the reorganisation and transfer of assets of existing small charities held by the Council whose purposes could no longer be met. Page 105
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2 Trustees' Annual Report (continued) The Moray Council Charitable Trust was created in August 2016 with the objective of reorganising existing trust funds that are frustrated, perhaps due to limited funds or out of date purposes, into one large trust, split into geographical areas then split again into charitable purposes. The Trusts being transferred into the single charitable trust will be utilised, as far as possible, in a manner consistent with the original Trust purposes. This will create many ring fenced funds within the single Trust, but will enable the resources of these trusts to be applied to better effect for charitable purposes rather than remaining in a frustrated trust that cannot be used. Achievements and Performance During the year 31 grants totalling £14,752 were made to individuals from the Moray and Nairn Educational trust, which includes means tested grants for education within Moray and Nairn, and bursaries for attendance at further education institutions in Scotland. The Council plans to support the Mr and Mrs William J Watt Dufftown Food Fund, and the Castlehill Trust by funding any deficit and any future deficits until the charities can be reorganised or wound up. Financial Review The Moray and Nairn Educational Trust is an endowment fund, with income from investments allocated to an unrestricted fund of the trust. All other funds are unrestricted. This differentiation of funds is an essential feature in the presentation of a charity's statement of financial activities (SoFA) and balance sheet. The trust funds use the Moray Council's bank account for financial transactions and the balance is invested in the Council's Loans Fund for which it earns interest on the balance. It was agreed at the Moray Council meeting on 10 August 2022 that interest on balances held in the Council’s bank for the next two years would be calculated using the two year fixed Public Works Loans Board rate as at 1 April 2022 of 2.35%. Income received during the year was £27,384 (2021/22 £24,169). This was made up of £9,772 interest received from the Council's Loans Fund and £17,612 of dividend income (2021/22 £8,787 and £15,382 respectively). Grants totalling £14,752 were paid out during the year (2021/22 £10,976). Governance costs for the year were £7,493 (2021/22 £6,863). The Trust Funds have no specific reserves policy other than noted above regarding disbursement of capital and annual income. For many of the trust funds, the terms of the trust deed are very restrictive and this has resulted in a gradual accumulation of reserves over time. In the event that an individual trust fund falls into deficit, the trustees will consider whether it is likely that the deficit is temporary and can be recovered. If deficit recovery is considered unlikely, the Trust is effectively wound up and an application will be made to OSCR to remove them from the Scottish Charity Register. The revenue reserves held at 31 March 2023 were £1,016,370 (31 March 2022 £1,026,777). Structure, Governance and Management The trustees of the funds are the councillors listed on page 4. The trustees of the funds are the local Councillors who are appointed at local government elections and by-elections The trust funds are governed using the same governance framework that is applicable to the Council. This framework includes the principles: • taking informed and transparent decisions which are subject to effective scrutiny and managing risk • engaging with local people and other stakeholders to ensure robust public accountability Page 106
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3 Trustees' Annual Report (continued) Statement of trustees' responsibilities The trustees are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and regulations. The law applicable to charities in Scotland requires the trustees to prepare financial statements for each financial year. Under that law the trustees have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under that law the trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources of the charity for that period. In preparing these financial statements, the trustees are required to: • select suitable accounting policies and then apply them consistently; • observe the methods and principles in the Charities SORP; • make judgements and estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. The trustees are responsible for keeping accounting records that are sufficient to show and explain the charity's transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and the provisions of the trust deed. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The trustees are responsible for the maintenance and integrity of the charity and financial information included on the Moray Council's website in so far as it relates to the charity. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Auditor The Connected Charity Trusts Auditor is: Grant Thornton UK LLP Level 8 110 Queen Street Glasgow G1 3BX Reference and Administrative details The financial statements of the charities listed on page 1 are included in this report. Trustees In terms of the "Trustees" of the Connected Charity Trust Funds, the guidance provided by OSCR is that those who have “general control and management" of the charity are the charity trustees. Decisions regarding the general control and management of the Connected Charity Trust Funds are made by the Corporate Committee of the Council, which has delegated authority from the Council in this regard; but ultimately control rests with the full Council of elected members. We have therefore interpreted the above guidance as meaning all elected members are charity trustees. Page 107
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4 Trustees' Annual Report (continued) All of the trustees for the financial statements are normally elected or re-elected at local government elections. By-elections are held to elect new members, on the occasions of elected members vacating their positions, who automatically become trustees. There was a local government election on 5 May 2022 and a by-election in the Buckie Ward on 4 November 2022. Names of Trustees in financial year 2022/23 until local government election on 5 May 2022: Names of Trustees on date of Approval of Trustees Annual Report: Councillor George Alexander Councillor James Allan Councillor James Allan Councillor Peter Bloomfield Councillor David Bremner Councillor Neil Cameron Councillor Frank Brown Councillor Tracy Colyer Councillor Theresa Coull Councillor Theresa Coull Councillor John Cowe Councillor John Cowe Councillor Gordon Cowie Councillor John Divers Councillor Paula Coy Councillor Amber Dunbar Councillor Lorna Creswell Councillor Jeremie Fernandes Councillor John Divers Councillor Donald Gatt Councillor Tim Eagle Councillor David Gordon Councillor Ryan Edwards Councillor Juli Harris Councillor Claire Feaver Councillor Sandy Keith Councillor Donald Gatt Councillor Scott Lawrence Councillor Graham Leadbitter Councillor Graham Leadbitter Councillor Marc Macrae Councillor Marc Macrae Councillor Aaron McLean Councillor Paul McBain Councillor Maria McLean Councillor Neil McLennan Councillor Ray McLean Councillor Shona Morrison Councillor Shona Morrison Councillor Bridget Mustard Councillor Louise Nicol Councillor Kathleen Robertson Councillor Laura Powell Councillor Derek Ross Councillor Derek Ross Councillor John Stuart (elected 4 November 2022) Councillor Amy Taylor Councillor Sonya Warren Councillor Sonya Warren Councillor Ben Williams Councillor Walter Wilson Councillor Draeyk Van Der Horn Other Trustees during the year: Councillor Christopher Price (resigned 17 August 2022) Principal Address of the Trust Funds is: The Moray Council Council Offices High Street Elgin IV30 1BX Signed by one trustee on behalf of all the trustees: Councillor Kathleen Robertson Leader of Moray Council Page 108
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5 Statement of Financial Activities for the year ended 31 March 2023 2022/23 2022/23 2022/23 2021/22 Notes Unrestricted Endowment Total Funds Total Funds £ £ £ £ Income and endowments from: Investments 3 27,384 - 27,384 24,169 Voluntary Income 6 268 - 268 144 Total 27,652 - 27,652 24,313 Expenditure on: Awarding of Grants 4 22,245 - 22,245 17,839 Other - - - - Total 22,245 - 22,245 17,839 Net gains/(losses) on investments 5 - (15,815) (15,815) 42,150 Net Income/(Expenditure) 5,407 (15,815) (10,408) 48,624 Transfers between funds - - - - Net movement in funds 5,407 (15,815) (10,408) 48,624 Reconciliation of Funds: Total funds brought forward at 1 April 319,247 707,530 1,026,777 978,153 Total funds carried forward at 31 March 324,654 691,715 1,016,369 1,026,777 All results derive from continuing operations. There is no material difference between the funds carried forward for the financial year stated above and their historical cost equivalents, with the exception of the Fixed Asset Investments which are carried at fair value. All gains and losses recognised in the year are included in the statement of financial activities. Page 109
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6 Balance Sheet as at 31 March 2023 2022/23 2021/22 Notes £ £ Fixed Assets: Investments 5 583,714 599,529 Current assets: Loan Fund Balance 437,500 432,917 Debtors 7 1,655 1,266 439,155 434,183 Liabilities: Creditors: amounts falling due within one year 8 (6,500) (6,935) Net current assets 432,655 427,248 Total net assets or liabilities 1,016,369 1,026,777 The funds of the charity: Endowment Funds 691,715 707,530 Unrestricted Funds 324,654 319,247 Total charity funds 1,016,369 1,026,777 The notes on pages 8 to 16 form part of these financial statements. The unaudited Financial Statements were issued by the Trustees on 28 June 2023. The audited Financial Statements were authorised for issue on 25 October 2023. Councillor Kathleen Robertson Leader of Moray Council Page 110
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7 Notes to the Financial Statements Note 1 Statement of Financial Activities for the year ended 31 March 2023 Moray and Nairn Educat ional Trust Moray and Nairn Educat iona l Trust Keit h Poor Householders Fund ( Keit h Nursing Trust Fund) Cast lehill Trust Grant Park Trust George Boyd Anderson Bequest Mr and Mrs William J Wat t Duf f t own Food Fund Robert Young Trust The Moray Council Charit able Trust Tot al Unrest rict ed f unds Tot al Endowment f unds SC019017 SC019017 SC019033 SC019065 SC019066 SC019068 SC019069 SC019071 SC046791 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 2022/ 23 Notes Unrestricted Endowment Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted £ £ £ £ £ £ £ £ £ £ £ Income and endowment s f rom: Investment Income 3 20,414 - 62 3 74 786 - 334 5,711 27,384 - Voluntary Income 6 - - - 133 - - 135 - - 268 - Tot al 20,414 - 62 136 74 786 135 334 5,711 27,652 - Expendit ure on: Awarding of Grants 4 20,028 - 136 136 136 144 135 138 1,392 22,245 - Tot al 20,028 - 136 136 136 144 135 138 1,392 22,245 - Net gains/(losses) on investments 5 - (15,815) - - - - - - - (15,815) Net Income/ ( Expendit ure) 386 ( 15,815) ( 74) 0 ( 62) 642 0 196 4,319 5,407 ( 15,815) Transf ers bet ween f unds - - - - - - - - - - Net movement in f unds 386 ( 15,815) ( 74) 0 ( 62) 642 0 196 4,319 5,407 ( 15,815) Reconciliat ion of f unds: Total funds brought forward at 1 April 2022 12,228 707,530 2,635 - 3,165 34,629 0 14,666 251,924 319,247 707,530 Tot al f unds carried f orward at 31 March 2023 12,614 691,715 2,561 - 3,103 35,271 - 14,862 256,243 324,654 691,715 Page 111
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8 Notes to the Financial Statements (continued) Note 1 Statement of Financial Activities for the year ended 31 March 2022 Moray and Nairn Educat ional Trust Moray and Nairn Educat iona l Trust Keit h Poor Householders Fund ( Keit h Nursing Trust Fund) Cast lehill Trust Grant Park Trust George Boyd Anderson Bequest Mr and Mrs William J Wat t Duf f t own Food Fund Robert Young Trust The Moray Council Charit able Trust Tot al Unrest rict ed f unds Tot al Endowmen t f unds SC019017 SC019017 SC019033 SC019065 SC019066 SC019068 SC019069 SC019071 SC046791 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 2021/ 22 Notes Unrestricted Endowment Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted Unrestricted £ £ £ £ £ £ £ £ £ £ £ Income and endowment s f rom: Investment Income 3 17,849 - 57 3 68 729 - 301 5,162 24,169 - Voluntary Income 6 - - - 25 - - 119 - - 144 - Tot al 17,849 - 57 28 68 729 119 301 5,162 24,313 - Expendit ure on: Awarding of Grants 4 14,238 - 122 121 122 1,355 - 124 1,757 17,839 - Tot al 14,238 - 122 121 122 1,355 - 124 1,757 17,839 - Net gains/(losses) on investments 5 - 42,150 - - - - - - - 42,150 Net Income/ ( Expendit ure) 3,611 42,150 ( 65) ( 93) ( 54) ( 626) 119 177 3,405 6,474 42,150 Transf ers bet ween f unds - - - - - - - - - - Net movement in f unds 3,611 42,150 ( 65) ( 93) ( 54) ( 626) 119 177 3,405 6,474 42,150 Reconciliat ion of f unds: Total funds brought forward at 1 April 2021 8,617 665,380 2,700 93 3,219 35,255 (119) 14,489 248,519 312,773 665,380 Tot al f unds carried f orward at 31 March 2022 12,228 707,530 2,635 - 3,165 34,629 - 14,666 251,924 319,247 707,530 Page 112
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9 Notes to the Financial Statements (continued) Note 2 Balance Sheet as at 31 March 2023 Moray and Nairn Educational Trust Keith Poor Household ers Fund (Keith Nursing Trust Fund) Castlehill Trust Grant Park Trust George Boyd Anderson Bequest Mr and Mrs William J Watt Dufftown Food Fund Robert Young Trust The Moray Council Charitable Trust TOTAL SC019017 SC019033 SC019065 SC019066 SC019068 SC019069 SC019071 SC046791 2022/23 2022/23 2022/23 2022/23 2022/23 2022/23 2022/23 2022/23 2022/23 Notes £ £ £ £ £ £ £ £ £ Fixed Assets Investments 5 583,714 - - - - - - - 583,714 Current Assets Loans Fund Balance 123,429 2,696 135 3,238 35,407 136 14,996 257,463 437,500 Debtors 7 1,655 - - - - - - - 1,655 125,084 2,696 135 3,238 35,407 136 14,996 257,463 439,155 Liabilities: Creditors: amounts falling due within one year 8 (4,469) (136) (135) (135) (135) (136) (135) (1,219) (6,500) (4,469) (136) (135) (135) (135) (136) (135) (1,219) (6,500) Net Current Assets 120,615 2,560 - 3,103 35,272 - 14,861 256,244 432,655 Total net assets or liabilities 704,329 2,560 - 3,103 35,272 - 14,861 256,244 1,016,369 The funds of the charity: Endowment Funds 691,715 - - - - - - - 691,715 Unrestricted Funds 12,614 2,560 - 3,103 35,272 - 14,861 256,244 324,654 Total charity funds 704,329 2,560 - 3,103 35,272 - 14,861 256,244 1,016,369 Page 113
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10 Notes to the Financial Statements (continued) Note 2 Balance Sheet as at 31 March 2022 Moray and Nairn Educational Trust Keith Poor Household ers Fund (Keith Nursing Trust Fund) Castlehill Trust Grant Park Trust George Boyd Anderson Bequest Mr and Mrs William J Watt Dufftown Food Fund Robert Young Trust The Moray Council Charitable Trust TOTAL SC019017 SC019033 SC019065 SC019066 SC019068 SC019069 SC019071 SC046791 2021/22 2021/22 2021/22 2021/22 2021/22 2021/22 2021/22 2021/22 2021/22 Notes £ £ £ £ £ £ £ £ £ Fixed Assets Investments 5 599,529 - - - - - - - 599,529 Current Assets Loans Fund Balance 124,126 2,756 121 3,286 34,830 - 14,786 253,012 432,917 Debtors 7 1,266 - - - - - - - 1,266 125,392 2,756 121 3,286 34,830 - 14,786 253,012 434,183 Liabilities: Creditors: amounts falling due within one year 8 (5,162) (121) (121) (121) (201) - (121) (1,088) (6,935) (5,162) (121) (121) (121) (201) - (121) (1,088) (6,935) Net Current Assets 120,230 2,635 - 3,165 34,629 - 14,665 251,924 427,248 Total net assets or liabilities 719,759 2,635 - 3,165 34,629 - 14,665 251,924 1,026,777 The funds of the charity: Endowment Funds 707,530 - - - - - - - 707,530 Unrestricted Funds 12,229 2,635 - 3,165 34,629 - 14,665 251,924 319,247 Total charity funds 719,759 2,635 - 3,165 34,629 - 14,665 251,924 1,026,777 Page 114
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11 Notes to the Financial Statements (continued) 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 £ £ £ £ £ £ £ £ £ £ £ £ Note 3 Investment Income Interest earned on loans pool balances 2,802 2,467 - - 62 57 3 3 74 68 786 729 Dividend income 17,612 15,382 - - - - - - - - - 20,414 17,849 - - 62 57 3 10 74 68 786 729 Note 4 Awarding of Grants Grants Paid 14,752 9,976 - - - - - - - - - 1,000 Governance Costs: Accountancy and Legal costs 807 595 - - 1 1 - - 1 1 8 154 Audit of Financial Statements 4,469 3,667 - - 135 121 136 121 135 121 136 201 20,028 14,238 - - 136 122 136 332 136 122 144 1,355 Total Unrestricted funds Total Endowment funds 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 2022/ 23 2021/ 22 £ £ £ £ £ £ £ £ £ Note 3 Investment Income Interest earned on loans pool balances - - 334 301 5,711 5,162 9,772 - 9,772 8,787 Dividend income - - - - - - 17,612 - 17,612 15,382 - - 334 301 5,711 5,162 27,384 - 27,384 24,169 Note 4 Awarding of Grants Grants Paid - - - - - - 14,752 - 14,752 10,976 Governance Costs: Accountancy and Legal costs - - 3 3 173 669 993 - 993 1,423 Audit of Financial Statements 135 - 135 121 1,219 1,088 6,500 - 6,500 5,440 135 - 138 124 1,392 1,757 22,245 - 22,245 17,839 Unrestricted Unrestricted Unrestricted M r and M rs William J Watt Dufftown Food Fund Robert Y oung Trust The M oray Council Charitable Trust TOTAL SC019069 SC019071 SC046791 Unrestricted Endowment Unrestricted Unrestricted Unrestricted Unrestricted SC019017 SC019017 SC019033 SC019065 SC019066 SC019068 George Boyd Anderson Bequest M oray and Nairn Educational Trust M oray and Nairn Educational Trust Keith Poor Householders Fund (Keith Nursing Trust Fund) Castlehill Trust Grant Park Trust Page 115
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12 Notes to the Financial Statements (continued) Note 5 Investments There is only one trust with investments; Moray and Nairn Educational Trust (SC019017). The investments are all unit trusts managed in line with the investment policy of the trust. Investments are included at fair value as at the balance sheet date. The return on investment is made up of the income derived from the investment (e.g. interest and dividends) and any gain or loss in the market value of the investment. If a charity sells an investment, a gain or loss on the carrying amount of the asset is realised upon its disposal. Where a charity retains an investment, an unrealised gain or loss on the carrying amount of the investment may arise at the balance sheet date. Trust law applies different rules to endowment funds. In an endowment, trustees cannot add the income from investments to the endowment capital; the income from the investment is allocated to the unrestricted fund. However, any gain or loss on investment is attributed to the endowment capital. The gain/(loss) on Revaluation figure includes the movement in the market value of all investments held by the trust. 2022/23 2021/22 £ £ Add: Net (loss)/gain on revaluation (15,815) 42,150 Net gains/(losses) on investments (15,815) 42,150 Balance Sheet 2022/23 2021/22 £ £ Opening Balance 599,529 557,379 Add: Net (loss)/gain on revaluation (15,815) 42,150 Balance sheet value of Investments 583,714 599,529 SoFA - Movement in the Available for Sale Reserve Note 6 Voluntary Income Voluntary income includes incoming resources which provide core funding or are of a general nature. Having due regard to the Council's plans to support any trust funds likely to fall into deficit, including funding any future deficits until the charity can be reorganised or wound up, there was a contribution of £268 in the year to support two Trusts: 2022/23 2021/22 £ £ Castlehill Trust 133 25 Mr and Mrs William J Watt Dufftown Food Fund 135 119 Total Contribution from Moray Council 268 144 Note 7 Debtors 2022/23 2021/22 £ £ Investment income - Moray and Nairn Educational Trust 1,655 1,266 Total 1,655 1,266 Page 116
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13 Notes to the Financial Statements (continued) Note 8 Creditors: amounts falling due within one year 2022/23 2021/22 £ £ Audit fee 6,500 5,440 Grant award due - Moray & Nairn - 1,495 6,500 6,935 Note 9 Financial Instruments The trust funds only have financial assets and financial liabilities of a kind that qualify as basic financial instruments per FRS 102. Basic financial instruments are recognised at transaction value. The financial instruments disclosed in the Balance Sheet are made up of the following categories: 2022/23 2021/22 £ £ Debtors Financial Assets carried at contract amounts 1,655 1,266 Loans Fund Balances 437,500 432,917 Total Debtors 439,155 434,183 Creditors Financial Liabilities carried at contract amounts 6,500 5,440 Total Creditors 6,500 5,440 Note 10 Related Parties The Trustees and Moray Council are the only related parties of the Connected Charities. There were no transactions during the year between any of the Trustees and the Connected Charity Trust Funds. The trust funds use Moray Council's bank account for all transactions and the balance is invested in the Council's loans fund, for which it earns interest. There are no other outstanding balances due to or from Moray Council at 31 March 2023. The trustees are required by the Charities SORP to disclose material transactions with related parties; bodies or individuals that have the potential to control or influence the Trusts Funds, or to be controlled or influenced by the Trust Funds. The amounts paid by the Connected Charities to Moray Council for support services, including legal and finance costs, in 2022/23 was £993 (2021/22 £1,423). Note 11 Trustee Remuneration, Benefits and Expenses None of the trustees of the Trust Funds and no associated person connected with any of them have received any remuneration or any other benefit for their services. Further, no directly incurred expenses were reimbursed to the trustees during the year. Note 12 Staff Costs and Emoluments The Trust Funds have no employees and have not incurred any staff costs or emoluments. Page 117
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14 Notes to the Financial Statements (continued) Note 13 External Audit Costs The Connected Charities incurred £6,500 of statutory audit fees for the audit of the Connected Charities Trustees Report and Financial Statements for the year ended 31 March 2023. This cost has been accrued in 2022/23 and allocated to each trust (£5,440 2021/22). Note 14 Accounting Policies Basis of Preparation The financial statements for the charitable trusts have been prepared in accordance with the Charities: Statement of Recommended Practice 2015, commonly referred to as the SORP, in accordance with the Financial Reporting Standard 102 (FRS 102), which is effective for accounting periods beginning after 1 January 2015. The financial statements have been prepared under the historical cost convention as modified by the inclusion of investments at fair value, in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The financial statements are prepared on a going concern basis, and in accordance with applicable United Kingdom accounting standards. The principal accounting policies have been applied consistently throughout the year. The Mr and Mrs William J Watt Dufftown Food Fund has been exhausted and is in deficit at 31 March 2023 by £135. The Castlehill Trust is in deficit by £133. Having due regard to the Council's plans to support the charity, including funding that deficit and any future deficits until the charity can be reorganised or wound up, the Trustees are confident that this will be sufficient to enable the Charity to continue to meet its obligations as they fall due for the period of at least 12 months from the date of signing these financial statements and as such have prepared the financial statements on the going concern basis. In line with Regulation 7 of the 2006 Regulations, these financial statements have been prepared on the basis that the Trust funds for which it acts as sole Trustee are connected charities. As such the financial statements for the individual charities have been prepared on a collective basis for the Council. An amendment to the Charities SORP (FRS 102) issued by the Financial Reporting Council and published in February 2016 states the requirement for larger charities to prepare a statement of cash flow. The charitable trusts are not classed as a large charity and so a cash flow statement has not been prepared this year. Fund Accounting Unrestricted funds are spent or applied at the discretion of the trustees to further any of the charity's purposes. Endowment funds represent those assets which must be held permanently by the charity. Income generated from endowment funds held for investment must be spent on furthering its charitable purposes. Incoming Resources Investment income and other income is accounted for in the period in which the charity is entitled to the receipt and the amount can be measured with reasonable certainty. Resources expended Expenditure is included in the financial statements on an accruals basis and recognised when the activity takes place and not simply when the cash payment is made. Governance costs include the costs of the preparation and examination of statutory financial statements; legal advice to trustees on governance or constitutional matters and costs of administering grants. Investments Investments are included at fair value at the balance sheet date in accordance with the principles of the SORP. Investment gains and losses include any gain or loss on the sale of investments and any gain or loss resulting from revaluing investments to fair value at the end of the period. Page 118
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15 Notes to the Financial Statements (continued) Note 14 Accounting Policies (continued) Other Matters The Connected Charities is an arrangement that enables the trust funds for which Moray Council are sole trustees, and which are individually registered with OSCR, to be brought together and included in the Connected Charities Trustees' Report and Financial Statements. As registered charities, they are entitled to certain tax exemptions on income and profits from investments, and surpluses on any trading activities carried on in furtherance of the charities primary objectives, if these profits and surpluses are applied solely for charitable purposes. The connected charities are a Public benefit entity as defined by FRS 102 in that their primary objective is to make grants to the individuals or community groups rather than with a view to providing a financial return to trustees. The Charitable Activities of the trusts are making grants in accordance with the trust deeds and in agreement of the Trustees. There are no judgements, apart from those involving estimations, that the trustees have made in the process of applying the entity's accounting policies that have a significant effect on the amounts recognised in the accounts. There are no key assumptions concerning the future, or other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period. Page 119
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16 Independent auditor’s report to the trustees of The Moray Council – Connected Charity Trust Funds and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements We certify that we have audited the financial statements in the statement of accounts of The Moray Council – Connected Charity Trust Funds for the year ended 31 March 2023 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Financial Activities, the Balance Sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the accompanying financial statements: give a true and fair view of the state of affairs of the charities as at 31 March 2023 and of their incoming resources and application of resources for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulation 8 of The Charities Accounts (Scotland) Regulations 2006. Basis for opinion We conducted our audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charities in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern basis of accounting We have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charities' ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. Responsibilities of the trustees for the financial statements As explained more fully in the Statement of trustees’, the trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charities' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees intend to discontinue the charities' operations, or have no realistic alternative but to do so. Page 120
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17 Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: using our understanding of the local government sector and charity sector to identify that the Local Government (Scotland) Act 1973, the Charities and Trustee Investment (Scotland) Act 2005, and The Charities Accounts (Scotland) Regulations 2006 are significant in the context of the charities; inquiring of the Trustees as to other laws or regulations that may be expected to have a fundamental effect on the operations of the charities; inquiring of the Trustees concerning the charities’ policies and procedures regarding compliance with the applicable legal and regulatory framework; discussions among our audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the charities’ controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Reporting on other requirements Other information The trustees are responsible for the other information in the statement of accounts. The other information comprises the Trustees’ Annual Report. Our responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except on the Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Page 121
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18 Opinions prescribed by the Accounts Commission on the Trustees’ Annual Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Charities SORP (FRS 102). Matters on which we are required to report by exception We are required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in our opinion: proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records; or we have not received all the information and explanations we require for our audit. We have nothing to report in respect of these matters. Use of our report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, we do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. Angela Pieri, (for and on behalf of Grant Thornton UK LLP), 110 Queen Street Glasgow G13BX , Date: ………………………………………………. Grant Thornton UK LLP is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 122
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: BEST VALUE PROGRESS REPORT ON MORAY COUNCIL BY: CHIEF EXECUTIVE 1. REASON FOR REPORT 1.1 To ask the Council to consider the Best Value Thematic Review Report on Moray Council by Grant Thornton (“the auditors”) and the associated Improvement Action Plan. 1.2 This report is submitted to Council in terms of Section 103E of the Local Government (Scotland) Act 1973, as amended by the Local Government (Scotland) Act 2003. 2. RECOMMENDATIONS 2.1 The Council is invited to: i) welcome the areas of strength recognised in the Best Value Thematic Review report on “Leadership and Development of New Strategic Priorities” in Appendix 1 including the work undertaken in relation to community engagement in forming the new Corporate Plan; ii) consider and note the findings, seeking clarification on points as required; and iii) agree the Improvement Action Plan in Appendix 1 of the report. 3. BACKGROUND AND INTRODUCTION 3.1 Changes have been made to the Best Value audit process in line with the revised Code of Audit Practice 2020. These changes are summarised below: Integrating Best Value 3.2 The Best Value audit is now integrated into the annual audit process. Auditors will report yearly in their Annual Audit Reports on progress made in implementing recommendations from previous Best Value reports, alongside issues arising from current audit work. Item 6. Page 125
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Thematic reporting 3.3 A new annual thematic focus to Best Value reporting has been introduced. Auditors will report annually on specific themes identified by the Commission. That is the subject matter of this report. This will also be summarised in the Annual Audit Report. 3.4 The Commission will then produce an annual overview report, summarising key findings and judgements from this thematic reporting. The theme for this year is leadership in the development of the council’s strategic priorities. And the year two theme is workforce innovation. Reporting on individual Councils 3.5 As before, each Council will have a report focussed on Best Value once in the audit cycle, starting from October 2023 and concluding by the end of the audit appointments in August 2027. Moray Council is one of the council’s being reviewed in the first year of the cycle. The Controller of Audit then reports on this cycle to the Accounts Commission which will then decide how it wishes to respond. The Thematic Review 3.6 The Thematic Review considers 5 specific areas: How clear is the new Council vision and priorities. How effectively have the views of citizens and communities been reflected in the priorities and decisions taken by the Council. How effectively do the Council priorities reflect the need to reduce inequalities and climate change. How good are the delivery plans and is there alignment of financial, workforce, asset and digital plans with the Council priorities. Overall, how effective has the leadership been (political and officer) in setting clear priorities and a sustainable approach to delivering them. 3.7 There are four areas of improvement recommended by the auditors. A representative of the Council’s External Auditor will present the report at the meeting. 3.8 The four areas of improvement are set out below: 3.8.1 To undertake more work around participatory budgeting – engagement with the community is a major aspect of the work ongoing to bridge the budget gap. Stage 1 of the Public Communication and Engagement Strategy has been undertaken and will be reported to the meeting of the Council on 25 October 2023 following which it is anticipated that stage 2 will commence. Participatory budgeting will continue to be utilised as far as practicable. Page 126
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3.8.2 To review the Capital Plan in line with council priorities and affordability thresholds – this work is ongoing as part of the Short to Medium Term Financial Strategy. 3.8.3 That an annual selfevaluation is undertaken of effective and efficient cross party working to support continuous improvement – Further work has been planned and will be captured in the revised Best value Action Plan due to be reported on 7 November 2023 to the Corporate Committee. 3.8.4 That further training is provided to members of Audit and Scrutiny Committee – This is in progress. 3.9 In conclusion, work is already underway to address the actions identified in the Thematic Review and progress will be reported together with wider Best Value activity according to the established reporting cycle for this work. 4. SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) The Council is committed to delivering better public services year on year through Best Value and its key principle of continuous improvement. (b) Policy and Legal The Council has a legal duty to deliver Best Value and to address any findings containing recommendations arising from any Best Value Assurance Reports. (c) Financial Implications There are no direct financial implications arising from this report. (d) Risk Implications As the Council operates with small teams/specialists there is an ongoing risk associated with workforce issues and capacity. Accordingly it will be important that continuous improvement in delivery of Best Value including the thematic actions is resourced properly and/or other work reprioritised given the tight resourcing across current services. Improved results from less resources will require even more rigorous prioritisation than previously seen. Failure to do this is likely to introduce other risks such as the capacity for IMP and other improvement activity which is at the core of financial sustainability. There is a risk that delayed progress in some of the actions has a substantial impact on the Council’s future financial position. There remains a risk that lack of progress towards making the significant changes in the Council to produce the required improvements in performance and outcomes may result in further audit scrutiny and intervention. Page 128
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The issues relative to leadership do not have simple tangible remedies and will need ongoing attention. There is a need to focus on these as both significant and challenging if the Council wants to improve. (e) Staffing Implications There are no implications arising directly from this report and actions have been/will be incorporated into existing resources and work plans. (f) Property None. (g) Equalities/Social Economic Impact This is covered in terms of the inspection regime itself and the Council’s duty to deliver Best Value. (h) Climate Change and Biodiversity Impact This is covered in terms of the inspection regime itself and the Council’s duty to deliver Best Value. (i) Consultations CMT and the Chief Financial Officer have been consulted in terms of development of the action plan. 5. CONCLUSION 5.1 The Council has already begun work on the majority of the areas identified for action in the Thematic Review and progress will be the subject of further reports. Author of Report: Rhona Gunn, Depute Chief Exec (EEF) Background Papers: Letter dated 2 February 2022 from Secretary to Accounts Commission enclosing the Controller of Audits Best Value Assurance Report on Moray Council. Letter dated 18 February 2022 from Secretary to Accounts Commission enclosing a copy of the finding of the Accounts Commission on the Control of Audits Best Value Assurance Report on Moray Council. Best Value Assurance Report Detailed Plan Strategic Summary (SPMAN1108985784334) Best Value Assurance Report Strategic Action Plan (Appendix 1) – Moray Council on 28 October 2020 BVAR Action Plan Report 001 (20.01.2021) BVAR Action Plan Report 002 (10.03.2021) Covid Related Pressures and Service Prioritisation Report and Appendix (10.3.21) BVAR Action Plan Report 003 (12.05.2021) BVAR Action Plan Report 004 (30.06.2021) BVAR Action Plan Report 005 (15.09.2021) Scottish Government published advice and guidance on Coronavirus (COVID19) protection levels and decision making framework BVAR Action Plan Report 006 (19.01.2022) Report to Council 15 March 2022 (Item 03) Page 129
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Best Value Progress Report 29 June 2022 (Item 17c) Best Value Progress Update 4 October 2023 (Item 6) Ref: SPMAN1108985784906 / SPMAN1108985784911 Page 130
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: UK GOVERNMENT “OUR LONGTERM PLAN FOR TOWNS” BY: DEPUTE CHIEF EXECUTIVE (ECONOMY, ENVIRONMENT AND FINANCE) 1. REASON FOR REPORT 1.1 To inform the Council of the announcement on 1 October 2023 that Elgin is one of 55 towns in the UK to receive £20 million funding towards town centre regeneration projects from the UK Government and to agree that the Head of Economic Growth and Development liaises with the UK and Scottish Governments to progress governance arrangements to establish a Town Board. 1.2 This report is submitted to Committee in terms of Section III(A)(2) of the Council’s Scheme of Administration relating to longterm financial plans. 2. RECOMMENDATION 2.1 The Council is asked to: (i) note the award of £20 million funding for Elgin from the UK Government LongTerm Plan for Towns; (ii) agree that the Head of Economic Growth and Development liaises with the other 6 Scottish towns local authorities which have been awarded funding to share best practice; (iii) agree that the Head of Economic Growth and Development establishes an initial informal group as per para 4.8 and suitable interim governance structures; (iv) agree that the Head of Economic Growth and Development proposes to the initial group that the Elgin City Centre Masterplan and Delivery Programme are updated to inform the Long Term Plan, and if this is supported, delegated authority is granted to progress that work ahead of formal constitution of the Town Board; and (v) agree a further report be prepared for Council when further details on the staffing and financial implications surrounding the Item 7. Page 167
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funding are available. 3. BACKGROUND 3.1 The Long –Term Plan for Towns was published on 1 October 2023 and seeks to invest £1.1billion into 55 towns across the UK, of which 7 are within Scotland, including Elgin. 3.2 The Plan recognises that through the Government’s existing programmes and lessons learned from other countries, the need for longer term funding certainty, building local partnerships, having a clear plan for delivery, joint working between central and local Government and involving people and communities from the outset are key to success and have been embedded in the Plan. 3.3 The funding will be focused on the issues that matter most to local people, including high streets, heritage and regeneration. The funding complements several projects within the Moray Growth Deal which will invest in Elgin and town centre regeneration funding secured from a number of external sources as reported to Economic Development and Infrastructure Services Committee on 5 September 2023 (paragraph 10 of the minute refers). 4. PROPOSALS 4.1 The Long Term Plan requires that each of the 55 towns will have a long term plan drawn up by a new Towns Board, made up of local community leaders and employers. Each town will have a £20 million endowment style fund to invest over the next decade. 4.2 To support this work, the UK Government will also be establishing a new Towns Taskforce reporting directly to the Prime Minister, which will support towns on their LongTerm Plans also making it easier to repurpose empty high street shops by reforming licensing rules and supporting more housing in town centres. 4.3 Each town will be required to; Develop a Long Term Plan to invest in and regenerate their town, based on the priorities of local people and put to local people for consultation Receive £20 million in endowment style funding and support over ten years to support the Town Plan, to be spent on issues that matter to local people, including regenerating high streets and securing public safety. This plan will be put to local people for comment. Establish a Town Board to bring together community leaders, employers, local authorities and the local MP to oversee and deliver the Longterm Plan. 4.4 Once structures are in place, capacity funding will be made available from Spring 2024 to develop Town Plans which should be produced no later than Summer 2024. From summer 2024 the UK Government will provide the first year of funding to support the interventions set out in the Long Term Plan Page 168
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which will be subject to assessment by the Department for Levelling Up, Housing and Communities 4.5 Details of the endowment style fund need to be clarified, with the Plan stating that Towns will receive funding and support of £20M (25% resource, £75% capital) to provide a range of interventions across the investment themes and will have ten years to deliver these, providing longer term certainty to deliver significant improvements in their towns. The 25% “resource” needs is presumed to be revenue but clarification is required on spending criteria. 4.6 The Plan states that the UK Government will provide further guidance and discuss next steps with each of the local authorities. The UK Government will work with devolved administrations in Scotland and Wales to consider how best this approach is applied in Scotland and Wales. 4.7 The Town Boards are expected to comprise a group of local organisations, including; Community partners, such as community groups, faith groups and local charities, the neighbourhood forum, the local Council for Voluntary Services Local businesses and social enterprises, such as the chair or board members for the Business Improvement District, key local employers or investors in the town Key cultural, arts, heritage and sporting organisations Public sector agencies such as representatives from schools or police subject to local priorities The local MP/MSP (to be clarified) in Scottish towns, relevant local authorities representatives such as local Councillors. 4.8 The Plan encourages local authorities to start bringing partners together which will form part of their Town Boards in advance of this, and to begin to set out a vision, formulate investment priorities and engage with local communities. 4.9 The significant work and engagement already undertaken associated with the Elgin City Centre Masterplan (ECCMP), Levelling Up Fund (LUF) round 2 bid and Moray Growth Deal mean that many projects are well positioned to progress to further engagement and delivery with advanced design work completed. The current work to complete addressing formal and informal feedback received on the unsuccessful LUF round 2 bid is transferable and includes; Establishing governance structures, including partnership agreements Baseline information requirements and monitoring and evaluation framework Risk registers Revised project costs to reflect inflation Phasing plan Ensuring a strong, linked package of projects is retained Revised economic modelling Page 169
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4.10 However, given that the funding is secured, there is an opportunity to revisit long list projects which weren’t included within the LUF round 2 bid and consider for inclusion. 4.11 Updating the ECCMP and preparing a complementary Delivery Plan is a resource efficient way to progress, aligning with the work associated with developing a place based approach in the next local development plan. This will then provide the opportunity to consult on priority projects which support the objectives of the Fund. 5 NEXT STEPS 5.1 The proposed next steps are; Continue liaison with UK and Scottish Governments to inform governance and understand funding implications. Liaise with the other 6 Scottish towns to share best practice. Establish an initial informal group. Report to Moray Economic Partnership and the Community Planning Board on the proposed governance structures and representation on the Town Board. It is suggested that council representatives for informal discussions be those appointed to Moray Economic Partnership and the Council Leader. Report to Council by March 2024 with proposed governance structures and further details on financial and staffing implications. Establish Town Board and associated governance structures by April 2024. The Town Board to include representation from business and community. If supported, update the ECCMP and develop a Delivery Plan by end July 2024. Recruitment of project management staff to support the Delivery Plan by September 2024. 6 SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) Town Centre regeneration is a key element of economic development which is a priority in the Corporate Plan. The funding will support employment, training and skills opportunities with regeneration of the town centre supporting and enhancing the regional role of Elgin as a place to live, work and invest. A Community Wealth Building Plan will be developed to support the programme of projects seeking to maximise economic benefit. (b) Policy and Legal The funding will support delivery of the statutory Moray Local Development Plan 2020 and the ECCMP. Subsidy control advice has been taken through development of the LUF bid and further advice will be required as the programme progresses. Page 170
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(c) Financial implications The details of how the endowment fund will operate are not known at this time with details awaited from the UK Government. Project Management costs will be paid from the 25% revenue within the £20 million allocation. Capacity funding will be released in April to help progress the Town Centre Plan, the amount is not yet known. Projects are likely to result in increased maintenance costs as previously reported and it is important that projects are designed from the outset to minimise ongoing costs to the Council. Update of the ECCMP and Delivery Plan if supported will be progressed within existing resources. (d) Risk Implications There are a number of risks and opportunities including; A risk that the benefits of the £20M are not fully realised or evaluated officers have held workshops to establish Monitoring and Evaluation and benefits realisation plans associated with the LUF projects and these can be updated and adapted to support the Delivery Plan. A risk that projects are not shovel ready, however, as noted above, strong partnerships and design work has been progressed for a number of projects. A risk regarding inflation and construction costs, which has been and will continue to be reflected in updated cost for projects including high optimism bias levels. A risk that the public are not engaged in the project this will be managed through a strong and active Communications and Engagement Plan. The local press have been very supportive and active on town centre regeneration projects and a partnership approach to communications and engagement will be key to keeping everyone informed and engaged as projects progress. (e) Staffing Implications Most of the work carried out to address LUF feedback has been carried out in house by officers within Strategic Planning and Development, Transportation and Consultancy with external expert economic consultancy support. Officers within Strategic Planning and Development, Transportation and Consultancy will continue to progress and deliver projects as part of their duties in delivering the Moray Local Development Plan 2020, the ECCMP, Active Travel Strategy, Elgin Transport Strategy, Surface Water Management Plan. Page 171
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It is proposed that in discussion with the initial advisory group, the ECCMP is updated and a Delivery Plan prepared for engagement. This will be done within existing staff resources as it aligns with the place based approach required for the new local development plan which is being prepared. Any aspirational plans outwith those previously articulated through levelling up, growth deal and ECCMP may require additional staffing resource and would need to be funded through the capacity funding within the grant. However, it is likely that there will be a requirement for the following additional staffing resource for the delivery phase of the project, as well as external legal support; A dedicated programme/ project manager to coordinate the project to be employed in house and a part time project officer, reporting to the Strategic Planning and Development Manager A Project Manager (engineer) to lead on transportation projects, reporting to the Senior Engineer (Transportation) Potentially additional part time staff in communications, finance, procurement and audit which will need further clarification. (f) Property Council property and the public realm within the town centre may be eligible for support through this funding although clearly the focus of the funding is much wider. (g) Equalities/Socio Economic Impact The funding aims to support town centre regeneration and address economic disadvantage and in doing so, provide safer, more inclusive and accessible places. An Equalities/ Socio Economic Impact Assessment will be undertaken on the updated Elgin City Centre Masterplan and Delivery Plan. (h) Climate Change and Biodiversity Impacts The proposals support delivery of the ECCMP which include objectives intended to reduce carbon, by reusing vacant and derelict premises, promoting active travel, greening town centres and through new initiatives including investigating a potential heat network. There is an opportunity to link funding from the Nature Restoration Fund with delivery of town centre project in future years. (i) Consultations The Depute Chief Executive (Economy, Environment and Finance), the the Head of Economic Growth and Development, the Legal Services Manager, the Head of Financial Services, the Democratic Services Manager, the Principal Climate Change Officer, the Consultancy Manager, the Senior Engineer (Transportation), the Senior Communications Officer and the Equalities Officer have been consulted and comments received have been incorporated into the report. Page 172
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5. CONCLUSION 5.1 The UK Government has published “Our Long Term Plan for Towns” which includes Elgin as one of 55 towns in the UK to receive £20M funding towards issues that matter most to local people, including high streets, heritage and regeneration and public safety and security. 5.2 The Plan requires the Council to set up a Town Board and prepare a Town Plan to deliver the £20M. The ECCMP and work to develop the LUF round 2 bid and address subsequent feedback would provide a strong platform for progressing the governance arrangements required. 5.3 This report proposes that officers liaise with the UK and Scottish Governments over arrangements and begin to establish an initial advisory group and governance arrangements, then update the ECCMP and Delivery Programme. Author of Report: Gary Templeton, Strategic Planning and Development Manager Background Papers: Ref: SPMAN813460984438 Page 173
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REPORT TO: SPECIAL MORAY COUNCIL ON 25 OCTOBER 2023 SUBJECT: PERMISSION FOR HOSPITALITY BUSINESSES TO PLACE FURNITURE AND NONFURNTIURE ITEMS ON PUBLIC FOOTWAYS BY: DEPUTE CHIEF EXECUTIVE (ECONOMY, ENVIRONMENT AND FINANCE) 1. REASON FOR REPORT 1.1 To seek approval for the application process, charges and guidance for the placement of furniture (tables and chairs) and nonfurniture items on the public footway for restaurants, cafes and public houses. 1.2 This report is submitted to Council in terms of Section III (F) (17) of the Council's Scheme of Administration relating to traffic management, and is submitted to Council for efficiency as the policy and charging elements of the report cross two separate Committee function (Economic Development and Infrastructure Services and Corporate committees). 2. RECOMMENDATION 2.1 It is recommended that Council approves the applications process, charges and guidance for the placement of furniture and nonfurniture items on the public footway to enable outside dining for restaurants, cafes and public houses. 3. BACKGROUND 3.1 The appropriate use of the public realm for outdoor eating and drinking has been highlighted as a way of supporting hospitality businesses and encouraging visitors to Moray’s town centres and coastal villages. Until this year the placement of furniture and other items to enable outdoor dining on public footways outside premises has required planning permission. However, changes to Permitted Development Rights in Scotland brought in on 31 March 2023 remove the requirement for planning permission so permission is now conditional on meeting Roads Authority requirements associated with Section 59 of the Roads (Scotland) Act 1984. Item 8. Page 175
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3.2 Section 59 relates to the control of obstructions in roads and states that: “ … nothing shall be placed or deposited in a road so as to cause an obstruction except with the roads authority’s consent in writing and in accordance with any reasonable conditions which they think fit to attach to the consent …” 3.3 As the placement of furniture within the public footway previously required planning permission, the Council has no standalone process for hospitality businesses to seek the necessary permission from the Roads Authority. As part of the planning process, Transportation were a consultee and provided comments on the suitability of the proposal. If Transportation had no objections then consent was gained implicitly through the planning process. 3.4 There have also been occasions when hospitality businesses have placed furniture and other items within the footway without seeking planning permission. The procedure followed when such a situation was noted during routine inspections or brought to the Council’s attention through a complaint, included a site visit to determine if there was sufficient space for pedestrians to safely pass. 3.5 In instances where there was sufficient space, the business would be asked to seek retrospective planning permission. However, if there was not sufficient space, Officers would seek the removal of the furniture and nonfurniture items by talking to the proprietor of the business and issuing a follow up letter. Should the business continue to place the obstructions on the footway, then the Council would use it powers under Section 59 of the Roads (Scotland) Act 1984 to remove them and recover the costs for their removal. 3.6 Transport Scotland’s good practice guidance ‘Roads for All’ highlights the importance of ensuring that footways are free from clutter and remain a safe environment for vulnerable road users and states that: “A well designed pavement café, the right location, can add value to the pedestrian environment and should present no barriers or hazard to disabled people. However, a badly designed café or a café on a too narrow a footway can restrict the pedestrian route and create a hostile environment for disabled people.’ 3.7 The presence of furniture within a footway also present hazards to people with impaired vision, in particular those who use a long cane as an assistance tool. Many hospitality businesses are not aware of the impact that tables and chairs can have on this group of road user and the need to make sure that areas of seating are behind a defined barrier. 3.8 It is therefore important that clear guidance is provided to local businesses to ensure that any outside dining on the public footways does not represent an obstruction to other road users. In the absence of the need for planning permission, an application process supported by clear guidance on what is and what is not acceptable is required. 3.9 A review of how other local authorities across Scotland treat outdoor hospitality on the public footway has been undertaken. During this review it Page 176
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was noted that most Local Authorities issue an annual permit, which is subject to a charge. The proposed application form and guidance have been discussed with Moray Chamber of Commerce and Elgin BID during a meeting at the end of August and their comments have been taken on board (see para 5.6). 3.10 Following that meeting Elgin BID surveyed their members for feedback on the proposed guidance and application process. Of the 16 responses received from members of BID, 9 related to the level of the fee and that it would be non refundable if an application was unsuccessful The information provided within the guidance, along with additional information for businesses (see para 5.6) will seek to minimise the risk of an unsuccessful application. 3.11 The following sections set out proposed guidance, the application process and levels of charges for the placement of tables and chairs on the footway. 4. PROPOSED GUIDANCE 4.1 A review of other Local Authority guidance was undertaken which found that the level of detail in the guidance varies widely. Large cities such as Edinburgh and Aberdeen have very detailed, prescriptive guidance whereas other more rural authorities areas have simpler guidance. However there are common elements across the various guidance documents which are: a) Ensuring that there is a minimum area of footway kept clear to enable the safe passage of pedestrians, particularly those with impaired mobility or vision. b) Having movable barriers around the area to be used for outdoor hospitality, which include low level ‘kickboards’ to highlight the presence of the barriers to visually impaired persons using a long cane as an aid. c) The business monitoring and keeping the area clean and tidy, and removing the tables, chairs and barriers at the end of the day. d) Removing the tables, chairs and barriers upon request to allow for roadworks, access to utilities, events etc. e) For licensed premises, the operator’s alcohol licence must also cover the area applied for. 4.2 Guidance for applicants has been prepared and is Proposed attached as APPENDIX 1. In summary this guidance seeks: Location a) Applications will only be considered for footways and pedestrianised areas where there is public access and the area is part of the Public Road. b) An unobstructed space between the carriageway and the front of the outdoor hospitality must ideally be 2.0 metres and no less than 1.5 metres at any constraint. Page 177
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c) For locations near junctions and accesses, visibility splays (sightlines) must be kept clear. d) The hospitality area must be defined by a removable barrier, and has a low level kick board which can be detected by the visually impaired. e) All tables, chairs, barriers and other items must be removed offstreet out with the agreed operational hours or when the hospitality area is not in use, to reduce the risk of antisocial behaviour and/or damage to the furniture or other property. Furniture f) The furniture should be of a sufficient quality and form of construction to ensure it will not be blown away by the wind or be easily moved to another area where it can cause a hazardous obstruction, and as a general principle plastic garden furniture is unlikely to be sufficiently robust. g) Nonfurniture items such as gas heaters must comply with the relevant safety standards. Environmental Requirements h) The operator must keep the area clean and free from litter during the permitted hours of operation. i) The preparation of food must be carried out within registered premises and not in the outdoor hospitality area, unless permission has been granted by the Council’s Environmental Health section j) The operator must provide suitable and adequate lighting if it is intended that the outdoor area is used during the hours of darkness. Lighting proposals will be reviewed by Building Standards section. Requirements for Approval k) Applicants must agree to the removal, at short notice, of all tables, chairs and associated items at any time they are requested to do so by the Council, Statutory Undertakers or by the Emergency Services in order to respond to an emergency situation (e.g. a burst water pipe). l) Permission may be temporarily withdrawn by the Council at any time to allow for roadworks, large events or for any other reasonable similar scenario. Notice of the start and finish of the withdrawal period will be provided in advance (minimum 5 working days notice). 5. PROPOSED APPLICATION PROCESS 5.1 During the Covid19 restrictions, a temporary application process for furniture on the footway was developed in response to restrictions on the number of Page 178
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covers that cafes/restaurants/public houses could have inside and to support recovery of businesses. The following proposed application process takes cognisance of the approach taken at that time and the approaches taken by other local authorities. 5.2 Applications are to be made to the Traffic Team and follow the same process that exists for road opening permits, permissions to place skips and scaffolding on the public road etc. Applications will also be shared with Licensing, and the Environmental Protection and Environmental Health sections so they are aware of any relevant implications arising from the application. 5.3 The proposed application process requires the following information to be supplied: a) Evidence of public liabilities insurance of £5m; b) Plan showing extent of area (Scale 1:100minimum); c) Details of the proposed furniture and barriers, and other items to be used; d) Evidence that area is within sight of premises and there are staff available who can leave the premises to visit the area to ensure it that the furniture and barriers remain within the agreed area and do not cause an obstruction; e) Details of how the area will be managed during operational hours to ensure that the furniture and barriers remain within the agreed area and do not cause an obstruction; and f) Details of where the furniture, barriers and other items will be stored when they are not in use. 5.4 The proposed form is similar to the existing road opening permit form and other permissions to place items on the public road e.g. skips, scaffolding and is attached as Appendix 2. 5.5 Applicants will need to agree with the conditions as set out in guidance document (Appendix 1) and if there is a deviation from permission/guidance, then the permission can be revoked. 5.6 Moray Chamber of Commerce has recommended that details of the application process, with some examples of good practice, are added to the Moray Business Advice portal. This would assist applicants in determining whether or not their application would be successful before submitting, and minimise the risk of an unsuccessful application. Information will be uploaded, including photographs of good/bad practice from locations outwith Moray. Elgin BID have requested that an officer attends a future BID meeting to talk hospitality businesses through the application process and offer initial advice, Officer attendance at the Elgin BID meeting will be in the new year. Officers would attend a Moray Chamber of Commerce meeting should this be requested. Page 179
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6. PROPOSED CHARGES 6.1 A review of charges and fees applied by other local authorities found that some charge an annual flat rate fee whilst others charge per square metre occupied, and have differing rates for different locations. The authorities which have differing rates tend to be those that include cities with areas that are subject to very high levels of footfall. 6.2 The fees charged are used to cover administration and inspection costs which would be incurred by the Roads Authority in checking applications and ensuring that the tables, chairs and barriers remain in the agreed location. The propsed level of fee is lower than the fees for a planning application for the placement of tables and chairs on the public road, which was the previous means of gaining permission. 6.3 Moray is a rural authority with smaller settlements. A flat rate charge of £175.00 per annum is proposed. This charge is similar to other authorities and is the current charge for a Road Opening Permit. The charge will be reviewed as part of the annual review of all Council charges at the start of next year. A separate charge would be applied should there be a requirement to remove furniture and other items as part of any enforcement action undertaken by the Council. 6.4 The annual permit may be renewed by an existing applicant upon confirmation that preexisting arrangements are still accurate. 7. SUMMARY OF IMPLICATIONS (a) Corporate Plan and 10 Year Plan (Local Outcomes Improvement Plan (LOIP)) The use of the public realm for outdoor hospitality can support businesses and encourage visitors to town centres and coastal villages, leading to increased economic activity. (b) Policy and Legal Changes to permitted development rights have removed the requirement for planning permission for outdoor hospitality areas on the public footway and in the public realm, subject to the granting of a licence under Section 59 of Roads (Scotland) Act 1984. Premises licenced for the sale/consumption of alcohol must extend their alcohol licence to cover proposed outdoor area. Any implications relating to data protection or processing fair notice about how applicants data will be stored / used will be addressed prior to implementation. (c) Financial implications Costs of processing applications and site inspections are to be covered by annual application fee. This fee will increase on an annual basis in keeping with other Council charges. (d) Risk Implications The indiscriminate placement of tables and chairs on footways and in the public realm can result in obstructions and hazards for pedestrians. An application process and associated guidance will reduce the risk of Page 180
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injury. Operators will be required to demonstrate that they have public liability insurance which will be checked as part of the application process. (e) Staffing Implications The consideration of applications and checking of compliance will be undertaken as part of existing staff duties. (f) Property The new permitted development rights cover public footways and the public realm only. Outside seating for hospitality on private or other Council ground will still require planning permission. (g) Equalities/Socio Economic Impact In practical terms there are no changes to the impacts of the council’s position on those with protected characteristics. The guidance regarding disabled access and safety will continue as per the current arrangements. (h) Climate Change and Biodiversity Impacts There are no climate change or biodiversity impacts associated with this report. (i) Consultations The Depute Chief Executive (Economy, Environment and Finance), Head of Environmental and Commercial Services, Legal Services Manager, Sean Hoath, Senior Solicitor (Licensing and Regulatory) Chief Finance Officer, Development Management and Building Standards Manager, Environmental Health and Trading Services Manager, Environmental Protection Manager, Roads Maintenance Manager, Equalities Officer and the Democratic Services Manager have been consulted and any comments taken into consideration. 8. CONCLUSIONS 8.1 There are now Permitted Development Rights for hospitality businesses to place tables and chairs on the public footway to enable outside dining. However the rights are conditional on meeting the requirements of Section 59 of the Roads Scotland Act. 8.2 To safeguard operation of the public footway, guidance and an application process has been developed. Other Local Authorities in Scotland have similar guidance and application processes in place already. 8.3 It is proposed that a charge of £175.00 is made for the application, which is to be renewed on an annual basis. Author of Report: Diane Anderson, Senior Engineer Transportation Background Papers: Ref: SPMAN524642768967 Page 181
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APPENDIX 1 Guidance and Conditions for the Use of the Public Road for Outdoor Hospitality Permission to use any part of the adopted road, including the footway, for outdoor hospitality (or any use involving the placing of tables, chairs and other furniture within the public road) is granted by the issue of a permit by Moray Council as the Roads Authority, under Section 59 of the Roads (Scotland) Act 1984. Tables and chairs placed on any part of the adopted road without such permission constitutes an obstruction and the Council will take enforcement action in such cases. The granting of such permission Under Section 59 of the Act only relates to the occupation of the road and applicants will need to ensure that they obtain all of the necessary permits and permissions e.g. alcohol licensing. The granting of other relevant permits/consents should not be taken as an indication that occupation of the road will be permitted. Location Outdoor hospitality will be considered on footways and other pedestrianised areas where there is public access. Junction visibility splays must be maintained at all times. This may mean increasing the unobstructed footway width to accommodate this requirement. This will have an impact on proposed sites at or near junctions. Outdoor hospitality should generally be situated adjacent to the premises from where they are intended to be serviced from the premises to the outdoor hospitality area. If the area is directly in front of the applicant’s premises then a 1.5 metre wide unobstructed access corridor to the premise’s entrance must be maintained at all times. The outdoor hospitality area must be physically delineated by a removable barrier to define the operational area. No fixing or marking of any kind will be permitted on the public road. The barrier must be distinguishable and not create a hazard to other road users, particularly those with visual impairments. The design of the barrier must solid bar elements between 100mm and 1000mm above ground level, with a low level kick board or similar which can be detected by the visually impaired using a long cane. Materials should be lightweight and portable but strong enough to prevent collapse if accidently walked or stumbled into. Rope barriers will not be permitted. It is the responsibility of the permit holder to ensure that all barriers, tables, chairs etc. are removed offstreet outwith the agreed operational hours, or when the hospitality area is not in use. Furniture The furniture should be of a sufficient quality and form of construction to ensure it will not be blown away by the wind or be easily moved to another area where it can cause a hazardous obstruction, and as a general principle plastic garden furniture is Item 8. Page 183
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APPENDIX 1 unlikely to be sufficiently robust Where umbrellas are provided these must be fabric type (i.e. nonreflective). They must be positioned to avoid causing an obstruction/hazard by overhanging beyond the barriers or impairing pedestrian/vehicle sight lines. Nonfurniture items, such as menu boards, signs and portable gas heaters must be approved and comply with relevant safety standards, where applicable, and be retained within the limits of the barriers. The Council reserves the right to remove any obstructions resulting from items being placed outwith the approved limit of the hospitality area. All furniture and non furniture items must be removed at the end of each working day. Environmental Requirements It will be the responsibility of the operator to keep the hospitality area clean and free from litter during the permitted hours of operation. In general, the preparation or cooking of any form of food must be carried out from within registered premises and not in the outdoor hospitality area to prevent the risk of food contamination and the uncontrolled dispersal of cooking vapours. If the proprietor wishes to prepare or cook food within the hospitality area then consent may be required from Environmental Health to ensure compliance with Food Premises Regulations. The operator must provide suitable and adequate lighting if it is intended that the outdoor area is used during the hours of darkness. Any lighting must be designed in such a manner as to avoid distracting or confusing drivers and pedestrians. Requirements for Approval It is a condition of consent that applicants remove, at short notice, all tables, chairs and associated items at any time they are requested to do so by the Council, any Statutory Undertaker or by the emergency services, in order to respond to an emergency situation (eg a burst water pipe). Applicants should also note that consent may be suspended by the Council at any time to allow for road works, large events or for any competent reason. There will be no refund of the application fee for periods when the permitted area is not available. Permission to operate an outdoor hospitality area will normally be granted for a 12 month period to allow the Council to monitor the operation of the facility and to ensure that the conditions are being adhered to. Applicants must reapply on an annual basis confirming that the area to be occupied has not changed. Please ensure that you apply for any renewal at least 21 days before the expiry of any current permission. Page 184
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APPENDIX 1 Conditions 1. The minimum width of unobstructed space between the carriageway and the front of the outdoor hospitality area must be no less than 2.0 metres (1.5 metres if previous planning permission exists). 2. Junction visibility splays must be maintained at all times. 3. A 1.5 metre wide unobstructed access corridor to the premise’s entrance must be maintained at all times. 4. Solid barriers must be approved and have solid bar elements between 100mm and 1000mm above ground level with a low level kick board or similar which can be detected by the visually impaired using a long cane. 5. Rope barriers will not be permitted. 6. All emergency routes and exits must be kept clear at all times. 7. All furniture and nonfurniture items must be removed at the end of each working day. Should furniture and nonfurniture items be persistently left on the public road then they may be removed by the council and the cost of removal/storage/destruction will be recovered. 8. The permit requires renewal on an annual basis. 9. Applicants will be required to provide (with the application) proof of Public Liability Insurance as indemnification against all claims, injuries or accidents with cover up to a minimum of £5 million for any one event, which shall remain in force throughout the permission. This proof is also required to be provided with any subsequent applications for renewal. 10.The area occupied must be washed at the end of each working day, prior to reopening the area to the general public. The operator is required to make adequate provision for the storage and disposal of all waste and litter. 11.The preparation or cooking of any form of food is not generally permitted within the outdoor hospitality area. Any area where food will be served will be designated as ‘no smoking’. 12.The hours of operation must be agreed with the Council prior to commencement of operation of an approved outdoor hospitality area. However permission will not be granted before 08.00 nor after 22.00. 13.Applicants must remove, at short notice, of all tables, chairs and associated items at any time they are requested to do so by the Council, any Statutory Undertakers or by the emergency services. 14. Applicants will be liable for any damage to the public road resulting from the placement of furniture and nonfurniture items. The costs of any repairs Page 185
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APPENDIX 1 required as a result of damage associated with the use of the area shall be recovered by the Council. Page 186
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APPENDIX 2 1 August 2023 TC/1914‐ ENVIRONMENTAL AND COMMERCIAL SERVICES TRANSPORTATION APPLICATION FOR A PERMIT TO PLACE TABLE AND CHAIRS ON THE PAVEMENT OR ROAD ROADS (SCOTLAND) ACT 1984, SECTION 59 *required information Are you an agent acting on behalf of the applicant? (Put ‘No’ if you applying on your own behalf or on behalf of a business you own or work for) Yes/ No (delete as appropriate) APPLICANT DETAILS *Name: *E‐mail Main telephone number (include country code if outside UK) Other telephone number How would you like to be contacted? Are you: Applying as a business or organisation, including as a sole trader (A sole trader is a business owned by one person without any special legal structure) Yes / No (delete as appropriate) Applying as an individual (Applying as an individual means you are applying so you can be employed, or for some other personal reason, such as following a hobby) Yes / No (delete as appropriate) TYPE OF APPLICATION Type of application: New Renewal (delete as appropriate) Existing Permission Number (for renewal applications only): PREMISES FOR WHICH PERMISSION IS REQUIRED *Name of premises/trading name *Building number or name *Street Location *Town *Postcode Further Details *Type of business (e.g. pub, restaurant, café) Proposed Start Date (new application): Expiry Date of Current Permission (Renewal):: Item 8. Page 187
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APPENDIX 2 1 August 2023 OCCUPATION OF PAVEMENT/FOOTWAY *Describe the area where you wish to place tables and chairs (a detailed plan must be attached with your application, photographs of the area can also be attached) Give the dimensions of the area you wish to occupy in metres *Length *Width *Give the total width of the pavement or footway at this location OPENING TIMES State the days and times you propose to place tables and chairs on the pavement *Day or Days *From *To *Do you plan to place table and chairs on the pavement all year round? Yes / No (delete as appropriate) DETAILS OF FURNITURE Provide details of all the furniture and other equipment you propose to place on the pavement. Please refer to the local guidance note and conditions which can be found at : XXXinsert weblinkXXX to ensure your proposals are compliant. Supporting information, drawings, photographs, etc. should also be provided. Please specify the number of each item below: *Tables Space Heaters *Chairs Lighting Litter Bins Barrier/Balustrades Parasols/Umbrellas Other furniture or equipment (Description e.g. dimensions, type, material, colour supplier/technical details, as appropriate) Further Details Where will these items be stored when not in use? What are your arrangements for clearing and cleaning the pavement at the end of the day? Page 188
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APPENDIX 2 1 August 2023 PUBLIC LIABILITY INSURANCE You must have a suitable level of public liability insurance to cover this activity – check local requirements *Do you have public liability insurance Yes / No (delete as appropriate) ADDITIONAL DETAILS Provide any additional information which is required or relevant to your application. PAYMENT DETAILS This fee must be paid to the authority. I attach fee of £ Cheque (post only) Credit/Debit Card (Please call 0300 1234565 during office hours for Card Payment) DECLARATION This section should be completed by the applicant. I confirm that I have read and understand the Conditions which will attached to any permission as set out in the Moray Council Guidance and Conditions for the Use of the Public Road for Outdoor Hospitality XXXX insert weblink XXXX *Full Name *Capacity *Date For Office Use Only Approved By: Date: Fee Paid: BACS/Cheque/Card Payment No: Page 189
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APPENDIX 2 1 August 2023 NOTES FOR GUIDANCE OF APPLICANT Fees: Annual Fee £175.00 1. Charges must be paid on application. 2. The completed form should be submitted: By Post to: Moray Council P.O. Box 6760 Elgin IV30 9BX By E Mail to: roadspermits@moray.gov.uk 3. AT LEAST 21 WORKING DAYS NOTICE IS REQUIRED PRIOR TO PERMISSION BEING GIVEN. 4. Guidance and Conditions of Permission are available on the council’s website for inspection at: XXXXXX. 5. Indemnity The applicant shall indemnify Moray Council as Roads Authority for and against all actions, claims, demands, costs, charges, damages, losses and expenses of whatsoever kind or nature which may be brought or made against them or incurred by them in respect of the negligence, omission or default of the holder of this permission or those for whom the holder of this permission is responsible arising in respect of any operations authorised by this permission unless due to the negligence or other breach of legal duty on the part of the Council or of any person for whom the Council are responsible. Page 190