Supplementary Pack 1
Argyll and Bute Council · 23 June 2022
Back to Audit and Scrutiny Committee — 23 June 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Argyll and Bute Council Comhairle Earra-Ghàidheal Agus Bhòid Executive Director: Douglas Hendry Kilmory, Lochgilphead, PA31 8RT Tel: 01546 602127 Fax: 01546 604435 DX 599700 LOCHGILPHEAD 21 June 2022 SUPPLEMENTARY PACK 1 AUDIT AND SCRUTINY COMMITTEE - COUNCIL CHAMBERS, KILMORY, LOCHGILPHEAD on THURSDAY, 23 JUNE 2022 at 12:30 PM I enclose herewith an update appendix 1 in respect of item 17 (LOCAL GOVERNMENT BENCHMARKING FRAMEWORK 2020/21 – ANALYSIS AND COMMENTARY) and an updated appendix 4 in respect of item 19 (REVIEW OF CODE OF CORPORTE GOVERNANCE). Please disregard the ones previously issued. Also enclosed is item 20 (UNAUDITED FINANCIAL ACCOUNTS) which was marked to follow on the Agenda for the above meeting. Douglas Hendry Executive Director ADDITIONAL ITEM(S) OR ITEM(S) TO FOLLOW 17. LOCAL GOVERNMENT BENCHMARKING FRAMEWORK 2020/21 - ANALYSIS AND COMMENTARY (Pages 3 - 56) Report by Executive Director with responsibility for Customer Support Services 19. REVIEW OF CODE OF CORPORATE GOVERNANCE (Pages 57 - 72) Report by Executive Director with responsibility for Legal and Regulatory Support 20. UNAUDITED FINANCIAL ACCOUNTS (Pages 73 - 226) Report by Interim Head of Financial Services Public Document Pack
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Audit and Scrutiny Committee Martin Caldwell (Chair) Councillor Daniel Hampsey Councillor Graham Hardie Councillor Mark Irvine Councillor Reeni Kennedy-Boyle Councillor Jim Lynch (Vice-Chair) Councillor Andrew Vennard Shona Barton, Committee Manager Contact: Lynsey Innis, Senior Committee Assistant; Tel: 01546 604338
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Appendix 1 1 Corporate Outcome - People Live Active, Healthier And Independent Lives Adult Care Percentage of people aged 65 and over with long-term care needs who receive personal care at home (SW3a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 67.37 68.13 66.53 67.53 FG median 65.70 61.92 60.56 60.47 Scotland 61.75 61.02 60.68 61.71 How We Performed Argyll & Bute continue to out‐perform our Family Group and Scotland wide. There has been a 1% increase of people in this category who are receiving care at home. There could be several factors for this such as the number of people over 65 that require long term care as well as the size of the package delivered which will reflect the agreed eligibility criteria in place to ensure a fair allocation of care. Older adults in Argyll and Bute are choosing to remain within their own communities wherever possible. During 2020‐21 a number of community supports were withdrawn or unable to offer support to people due to Covid 19 restrictions e.g. day services, community groups etc. This has resulted in a number of people requiring additional support at home with things such as meal preparation, personal care etc. where previously family could have been contributing to their care but had to isolate during the pandemic. Expected Future Performance and Impact of Policy Decisions Over the past year, challenges in attracting sufficient staff numbers to accommodate growing demand have been highlighted. Internal and external providers of care at home services have struggled to maintain the current service. Partnership working with providers has identified different ways of working and learning from this will be taken forward through the development of a care at home strategy over the coming year. Currently the services are operating with waiting lists and some people are being delayed in hospital due to lack of staffing to provide care at home services. Additional funding has been made available to the HSCP to enable care at home services to develop and redesign to take account of challenges in recruitment. Mobile teams have been developed in a number of areas, delivering an intake service and also working to a different working model. Work will continue over the coming year to clarify the best ways of working and delivering of services in the community. 2020-21 2019-20 2018-19 2017-18 65 60 55 67.53 66.53 68.13 67.37 75 70 Page 3 Agenda Item 17
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Appendix 1 Adult Care 2 Residential costs per week per resident for people aged 65 or over (SW5) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £478.11 £496.73 £486.67 £463.25 FG median £470.72 £483.10 £468.25 £463.75 Scotland £414.68 £422.67 £448.51 £431.59 How We Performed Our residential care costs have decreased by almost 5%, this is the lowest they have been since 2010‐11 and are lower than our Family Group. The use of a category of enhanced residential care was withdrawn from use and this may have reduced that payments to some care homes where it was expected that current residential care would provide the expected enhanced function as standard. This was following practice across most other areas in Scotland and the National Care Home Contract. It should be noted that a lot of residential care home costs are fixed costs such as staffing, heating, lightning etc. as well as the normally higher costs for an island. Expected Future Performance and Impact of Policy Decisions The number of admissions to care homes has reduced during the pandemic, with a number of people choosing not to receive residential care but remain at home. There has also been a reduction in bed days occupied due to homes being unable to admit if residents or staff test positive for Covid 19. Recently a number of interim beds have been commissioned to enable people to be discharged from hospital but who await a package of care in the community. This has been funded through the additional unscheduled care monies. The need for nursing home placements in future will be identified through the Care Homes and Housing Programme Board. 2020-21 2019-20 2018-19 2017-18 £300 £400 £463.25 £478.11 £500 £486.67 £496.73 £600 Page 4
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Appendix 1 Adult Care 3 Proportion of care services graded ‘good’ (4) or better in Care Inspectorate inspections (SW7) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 77.27 73.60 85.00 87.10 FG median 84.85 83.68 84.03 84.85 Scotland 85.38 82.17 81.80 82.50 How We Performed There has been a large increase of over 2% in the performance of this indicator, this follows on from the previous increase of nearly 12%. Argyll & Bute now exceed both our Family Groups and Scotland wide performance. The data is taken from The Health and Care Experience Survey which provides a more robust sample than the Scottish Household Survey in relation to social care. Service users are surveyed as part of the GP survey and asks about experience of ‘care’. The data cannot be related to a specific element of social care so therefore it may reflect users experience across a mixture of health care, social care, and district nursing for example. There is now a Care Home Assurance Group for Argyll and Bute and much work has progressed in supporting care homes and driving quality. Assurance visits have also provided opportunities to discuss training and support for care homes. Similarly there will be similar focus on care at home. Much work has progressed in supporting care homes and driving quality. Additional staff in terms of quality assurance and care at home management means a continued focus on improvement. Expected Future Performance and Impact of Policy Decisions As part of the development of Covid measures and unscheduled care, a number of key posts have been identified to work with internal and external providers to ensure appropriate support and partnership working is established. This will include clear guidance on procedures and pathways and will ensure agencies support each other to deliver optimum care in each locality. These posts will ensure delivery of KPIs required as part of the additional unscheduled care funding. 2020-21 2019-20 2018-19 2017-18 70 73.60 75 77.27 85 80 87.10 85.00 90 Page 5
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Appendix 1 10 Legal and Regulatory Support & Development and Economic Growth Cost of trading standards and environmental health per 1,000 population (ENV5) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £42,871.47 £41,913.66 £35,179.57 £31,651.64 FG median £35,666.21 £34,391.94 £30,907.06 £25,725.34 Scotland £23,817.89 £22,675.30 £21,043.42 £18,463.04 How We Performed The cost of this service is the lowest since 2010‐11 and has reduced by a further 10% on the previous year. While the cost of providing this service has continued to fall Argyll & Bute remains above our Family Group and Scotland, with the Scotland average falling by 12%. This is a cost per 1,000 population. As a result, a growing population in other areas of Scotland will have an effect when we compare our performance to others, such as our Family Group or Scotland. It should also be noted that the costs of environmental health also include the costs of public conveniences. Through a drive for continual improvement, efficiencies and income generation, comparative costs have decreased over the last 4 years by 24% in Argyll and Bute. It is important to recognise the significant work undertaken by environmental health to protect public safety throughout the Covid pandemic, taking on new enforcement responsibilities with little increase in resources. Prior to Covid considerable demands were placed on environmental health with preparing for the impact of EU Exit and export health certification. From a Trading Standards aspect the overall spend has reduced due to the reduction of the Big Lottery Funded Money Skills project which is predominantly a pass through to external organisations. There has also been a planned reduction in Trading Standards spend due to savings which have been made across Trading Standards with the redesign of Advice Services. Expected Future Performance and Impact of Policy Decisions The Money Skills Argyll Project finished in 2020/21 and will continue to impact on the indicator. From 2021/22, additional monies have been allocated to Welfare Rights to meet ongoing Covid economic impacts. This funding will employ a new Welfare Rights Officer & Welfare Rights Assistant & to improve outreach to the island communities. 2020-21 2019-20 2018-19 2017-18 £15,000 £25,000 £31,651.64 £35,000 £35,179.57 £42,871.47 £41,913.66 £45,000 Page 6
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Appendix 1 11 In addition, the national restructuring of Animal Feed duties and Scottish Government funding for new Fireworks duties are likely to result in increased income for Trading Standards enforcement duties. This is not considered to be an effective measure of the cost of environmental health and the Improvement Service are aware of the need to develop a better and more effective measure to assess environmental health performance, costs and the public health benefit of their work. In the interim, the costs of delivering environmental health across a rural area, despite continued drive for efficiencies and better use of digital technology, will continue to be in the higher quartile of Scottish local authorities. Page 7
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Appendix 1 12 Legal and Regulatory Support Cost of trading standards per 1,000 population (ENV5a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £10,608.83 £12,409.48 £7,105.48 £7,046.70 FG median £10,163.79 £10,127.95 £7,911.47 £8,133.77 Scotland £6,559.95 £6,433.69 £6,348.51 £5,857.30 How We Performed The performance of this indicator has reduced slightly on the previous year by just under 1%. Argyll & Bute is below our Family Group but remains higher than Scotland. The cost is presented per 1,000 population. As a result, a growing population in other areas of Scotland will have an effect when we compare our performance to others, such as our Family Group or Scotland. The overall spend has reduced due to the reduction of the Big Lottery Funded Money Skills project which is predominantly a pass through to external organisations. There has also been a planned reduction in Trading Standards spend due to savings which have been made across Trading Standards with the redesign of Advice Services. Expected Future Performance and Impact of Policy Decisions The Money Skills Argyll Project finishes in 2020/21 so will continue to impact on the indicator. From 2021/22, additional monies have been allocated to Welfare Rights to meet ongoing Covid economic impacts. This funding will employ a new Welfare Rights Officer & Welfare Rights Assistant & to improve outreach to the island communities. In addition, the national restructuring of Animal Feed duties and Scottish Government funding for new Fireworks duties are likely to result in increased income for Trading Standards enforcement duties. 2020-21 2019-20 2018-19 2017-18 £5,000 £7,046.70 £7,500 £7,105.48 £10,000 £12,409.48 £10,608.83 £15,000 £12,500 Page 8
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Appendix 1 13 Corporate Outcome - Children And Young People Have The Best Possible Start Children and Families The gross cost of ‘children looked after’ in residential based services per child per week (CHN8a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £2,452.47 £2,860.95 £2,772.71 £2,809.23 FG median £3,789.13 £4,599.60 £4,057.54 £4,326.37 Scotland £3,899.02 £4,184.28 £4,101.33 £4,379.87 How We Performed Cost in £'s ‐ Lowest is best There has been an increase in cost for Argyll and Bute whilst continuing to return the lowest weekly cost within our Family Group and Scotland for residential based services for our looked after children. Generally overall the cost has remained quite constant. Argyll & Bute continue to spend significantly under the national average on ‘children looked after’ within residential care. We anticipate maintaining current performance levels, this area remains a service priority within the corporate parenting plans and in Keeping The Promise. If there is any increase in the number of children accommodate in ‘out of area’ placements this could potentially significantly increase over all costs with some of these placements costing in excess of £6000 per week. Expected Future Performance and Impact of Policy Decisions As we continue to meet ‘The Promise’ it is likely we will have to invest in services for young people either already ‘looked after’ on the ‘edges of care’ within communities. In the long run the balance of care should move away from residential based care to community supports. This remains a long term aspiration and will ultimately see spending on residential care reduce. 2020-21 2019-20 2018-19 2017-18 £1,000 £2,772.71 £2,452.47 £2,860.95 £2,000 £2,809.23 £5,000 £4,000 £3,000 Page 9
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Appendix 1 Children and Families 14 The gross cost of ‘children looked after’ in a community setting per child per week (CHN8b) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £349.49 £359.95 £286.89 £282.99 FG median £363.90 £354.97 £326.70 £371.79 Scotland £370.14 £374.77 £371.23 £382.18 How We Performed Cost in £'s ‐ Lowest is best There has been a decrease in cost for Argyll and Bute whilst continuing to return the lowest weekly cost within our Family Group and Scotland for community based services for our looked after children. The reduction in spending on young people looked after in community setting should not necessarily be seen as a positive development. There is a need to increase levels of community based supports and to invest significantly in this area. This area remains a service priority within the corporate parenting plans and in Keeping The Promise. Expected Future Performance and Impact of Policy Decisions It is expected as we shift the balance of care from residential based care to community based care there will be a need for significant investment in the latter. This investment will be required to secure the long term benefits to the people of Argyll & Bute and the potential long term financial savings to the public purse. In the short term, and before savings in residential spending, there will be a cost incurred. 2020-21 2019-20 2018-19 2017-18 £200 £282.99 £286.89 £250 £349.49 £300 £359.95 £400 £350 Page 10
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Appendix 1 Children and Families 15 Balance of care for looked after children: percentage of children being looked after in the community (CHN9) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 81.88% 83.33% 85.19% 83.11% FG median 87.13% 86.03% 84.90% 85.26% Scotland 89.61% 89.85% 90.07% 90.30% How We Performed The percentage of our children being looked after in a community setting has decreased by nearly 2 percent. This relatively large decrease may be down to low numbers of children. Our Family Group and Scotland wide have both seen an increase in the percentage of children being looked after in a community setting. The strategic direction is to ensure an increasing emphasis on the community based supports and away from reliance on residential care. It should be noted due to the small numbers involved overall that a few children requiring residential care can skew the statistics significantly. Expected Future Performance and Impact of Policy Decisions In the long run it is expected that there will be a steady reduction of children in residential care and in particular in out of area placements. 2020-21 2019-20 2018-19 2017-18 70% 85.19% 83.33% 81.88% 80% 83.11% 90% 100% Page 11
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Appendix 1 Children and Families 16 Percentage of children meeting development milestones (CHN17) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 85.94% 87.32% 87.10% 85.48% FG median 86.13% 87.65% 87.43% 86.29% Scotland 84.61% 85.48% 85.70% 85.06% How We Performed There has been a decrease in the percentage of children meeting their development milestones. This is mainly from within the Speech and Language developmental areas, most likely due to the limited opportunities during the pandemic. This decrease is mirrored within our Family Group and the Scotland average, although not to the same degree. Whilst our performance has dipped, it compares with pre pandemic performance. We continue to exceed the national performance as a result of our own scrutiny and intervention which is detailed within relevant planning documentation. The introduction of moderation of milestones is ensuring a consistency of understanding and ensure increasingly robust data. 1140hrs has seen an increase in new staff who will require to be trained and supported in evaluating and measuring developmental milestones. This work will see the percentage of children meeting developmental milestones grow over the coming year. Learning and Development meetings/discussions have taken place in 95% of Early Learning Centre (ELC) settings to quality assure and provide support and advice. An updated Learning and Development framework has been created to reflect the new Quality Framework and National Standards legislation. Continuous training is provided to all settings to support the curriculum. The uptake of Eligible 2s has increased within this session. Expected Future Performance and Impact of Policy Decisions As we re‐mobilise following the various ‘lockdowns’ resultant from the pandemic it is expected that Argyll & Bute will continue to operate at or above the national averages. The application of the new Learning and Development resource combined with a return to face to face support for our settings will ensure that there is an increase in the percentage of children achieving their developmental milestones 2020-21 2019-20 2018-19 2017-18 80% 85.48% 85% 87.10% 85.94% 87.32% 90% Page 12
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Appendix 1 Children and Families 17 Percentage of child protection re-registrations within 18 months (CHN22) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 15.79% 3.57% 7.46% 4.17% FG median 4.27% 4.96% 7.39% 3.29% Scotland 5.96% 7.22% 6.92% 6.95% How We Performed Argyll & Bute has seen a significant decrease of 3.29% in the percentage of re‐registrations within 18 months. This mirrors a 4.1% decrease within our family group but contrasts with a maintained percentage of nearly 7% across Scotland. The reasons for this are not clear from the data but low numbers of children on the child protection register and a slight increase in re‐registration will greatly affect this indicator. It is recognised that the various ‘lockdowns’ resultant from the pandemic have affected child protection data including this statistic, the number of re‐registrations within 18 months. Argyll & Bute have less re‐ registrations than the national average, however there is a need to acknowledge that numbers are not high in Argyll & Bute and as such a small number of young people more or less being re‐registered can skew the percentages significantly. The focus on the use of improvement methodology continues. Data is analysed using our multi‐agency minimum data set which has expanded this session to include tabs specifically for Education data. Post Covid the recovery phase includes a focus on health and well‐being and nurture across education establishments. Expected Future Performance and Impact of Policy Decisions It is expected that the long term reduction in such re‐registrations will continue once any pandemic factors become less salient. 2020-21 2019-20 2018-19 2017-18 0% 3.57% 4.17% 5% 7.46% 10% 15.79% 15% 20% Page 13
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Appendix 1 Children and Families 18 Percentage LAC with more than 1 placement in the last year (Aug-July) (CHN23) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 23.49% 18.67% 12.35% 16.22% FG median 24.84% 21.42% 17.81% 17.58% Scotland 20.13% 19.51% 16.68% 16.79% How We Performed Argyll & Bute has seen a large increase of 4% in this indicator but remains lower than our Family Group and Scotland. The preference is for a Looked After Child to only have 1 placement. Again it should be cautioned that small numbers of young people can skew this statistic significantly in one direction or another. Equally it is noted that a young person moving placements can also be a positive move such as from an out of council placement to moving nearer home or from residential care to family based care. Expected Future Performance and Impact of Policy Decisions It is expected that Argyll & Bute will continue to operate at better than or near the national average. It is anticipated there will be a gradual and long term improvement in this area of practice. 2020-21 2019-20 2018-19 2017-18 0% 12.35% 10% 16.22% 18.67% 23.49% 20% 30% Page 14
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Appendix 1 19 Corporate Outcome - Education, skills and training maximise opportunities for all Education Percentage of pupils from gaining 5+ awards at level 5 (CHN4) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 66.00% 68.00% 68.00% 68.00% FG median 62.50% 61.50% 61.50% 65.50% Scotland 62.00% 63.00% 65.00% 67.00% How We Performed There has been no change in Argyll and Bute performance, which continues to exceed both the National and Family Group averages at 68.0%. For 2020, the absence of external assessment information and the Ministerial direction to award estimated grades have led to a different pattern of attainment than we have seen in previous years. The cancellation of examinations in 2021, and the implementation of the Scottish Qualifications Authority’s (SQA) Alternative Certification Model, as well as the period of lockdown from January to April 2021, presented significant challenges for young people and practitioners. The results of Argyll and Bute’s young people were supported by a rigorous framework of moderation within and between schools, the robustness of the process having been acknowledged by the SQA. The consistency of attainment detailed above attests to the effectiveness of provision and processes. Expected Future Performance and Impact of Policy Decisions The return by the SQA to a diet of examinations in 2022, albeit with the increased emphasis on the collation of evidence of demonstrated attainment to inform estimates, may result in a reduction in attainment at level 5, which is anticipated across the country. The disruption to learning caused by the ongoing Covid pandemic may also have a negative effect on attainment. However, alongside the course revisions and supports put in place by the SQA, it is expected that targeted recovery approaches within schools and extensive Supported Study opportunities will mitigate against a significant fall‐off in attainment. 2020-21 2019-20 2018-19 2017-18 55% 65% 68.00% 66.00% 68.00% 68.00% 75% Page 15
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Appendix 1 Education 20 Percentage of pupils from deprived areas gaining 5+ awards at level 5 (SIMD) (CHN6) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 54.00% 52.00% 58.00% 70.00% FG median 37.00% 44.00% 39.00% 42.50% Scotland 42.00% 45.00% 47.00% 49.00% How We Performed Argyll and Bute has seen a large increase of nearly 21% on the previous year – which follows on from a 6% increase the previous year and continues to exceed both the National and Family Group averages at 70%. The National average has increased by 2% whilst the Family Group average has increased by 3.5%. For 2020, the absence of external assessment information and the Ministerial direction to award estimated grades have led to a different pattern of attainment than we have seen in previous years. Post Covid, there has been a prioritisation of targeted recovery across Argyll and Bute, with a strong focus on supporting the health and wellbeing of all young people, and particularly from the most disadvantaged backgrounds and those most negatively affected by Covid. The authority’s understanding of deprivation in a rural context and targeted investment of Pupil Equity Funding, alongside the development of Nurture, Trauma‐Informed Practice and counselling in schools have supported young people from the most deprived backgrounds to achieve to their potential. Expected Future Performance and Impact of Policy Decisions Through the rigorous implementation of the Getting It Right For Every Child (GIRFEC) model and practice, the implementation of the United Nations Convention on the Rights of the Child (UNCRC) in policy and practice and our adherence to The Promise, our schools will maintain a focus on closing the attainment gap and sustaining improvements, supported by Pupil Equity Funding. 2020-21 2019-20 2018-19 2017-18 30% 55% 52.00% 54.00% 58.00% 70.00% 80% Page 16
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Appendix 1 Education 21 Proportion of pupils entering positive destinations (CHN11) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 95.01% 94.63% 92.33% 95.02% FG median 95.12% 95.06% 93.16% 95.47% Scotland 94.56% 95.05% 93.34% 95.48% How We Performed There has been a significant increase in Argyll and Bute performance of nearly 2.7%. This is slightly below both the National and Family Group averages. However, the percentage increase is larger than both the National and Family Group. In 2020‐21, there was a decrease in the number of young people in employment in Argyll and Bute to 21.9% from 22.6% in 2019‐20. However, this figure was exceeded by the number of young people moving into further and higher education, and other positive destinations. The above figure has been achieved despite the negative effect of Covid on employment opportunities in some areas of the Authority, particularly in the key areas of tourism and hospitality, which are key to the Argyll and Bute economy. Expected Future Performance and Impact of Policy Decisions The appointment of four Developing the Young Workforce Co‐ordinators to work with clusters of Secondary schools across the Authority is widening the quality and range of work placements and work‐ based vocational learning for young people. As the number of such placements increases, as we emerge from Covid, the effect on subsequent positive destinations should be a positive one. Equally, the widening of college courses available to senior pupils in schools via virtual learning through video conferencing, and the dedication of a common column in all Secondary school timetables for this purpose, will extend the reach of further education and encourage the uptake of college courses post‐school. The ongoing engagement of Secondary schools with initiatives, such as Top Up and Focus West, is also encouraging pathways for senior pupils into higher education. 2020-21 2019-20 2018-19 2017-18 92% 92.33% 93% 94.63% 94% 96% 95.01% 95% 95.02% Page 17
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Education Percentage of child protection re-registrations within 18 months (CHN22) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 15.79% 3.57% 7.46% 4.17% FG median 4.27% 4.96% 7.39% 3.29% Scotland 5.96% 7.22% 6.92% 6.95% How We Performed Argyll & Bute has seen a significant decrease of 3.29% in the percentage of re‐registrations within 18 months. This mirrors a 4.1% decrease within our family group but contrasts with a maintained percentage of nearly 7% across Scotland. The reasons for this are not clear from the data but low numbers of children on the child protection register and a slight increase in re‐registration will greatly affect this indicator. It is recognised that the various ‘lockdowns’ resultant from the pandemic have affected child protection data including this statistic, the number of re‐registrations within 18 months. Argyll & Bute have less re‐ registrations than the national average, however there is a need to acknowledge that numbers are not high in Argyll & Bute and as such a small number of young people, both more or less being re‐registered, can skew the percentages significantly. The focus on the use of improvement methodology continues. Data is analysed using our multi‐agency minimum data set which has expanded this session to include tabs specifically for Education data. Post Covid the recovery phase includes a focus on health and well‐being and nurture across education establishments. Expected Future Performance and Impact of Policy Decisions It is expected that the long term reduction in such re‐registrations will continue once any pandemic factors become less salient. 2020-21 2019-20 2018-19 2017-18 0% 3.57% 4.17% 5% 7.46% 10% 15.79% 15% 20% Page 18
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Appendix 1 Education 23 School exclusion rate (per 1,000 pupils) (CHN20a) Group 2014-15 2016-17 2018-19 2020-21 Argyll & Bute 20.60 15.79 19.88 14.25 FG median 20.50 22.64 20.30 10.66 Scotland 27.20 26.84 21.65 11.87 How We Performed Data is published every 2 years. Schools aim to keep pupils engaged and attending school. Pupils are only excluded if there is serious disruption for the other pupils. There has been a decrease of 5.6% in exclusions within Argyll & Bute since the previous data set. This brings the performance more in line with pre‐pandemic levels. This is in comparison to a decrease of 9.6% within our family group and 9.7% nationally. The figures represent the number of exclusions per 1,000 openings ‐ not the percentage or number of pupils. An 'opening' refers to either a morning or afternoon school session. This data includes both temporary exclusions and pupils removed from the register (previously called 'permanent' exclusions).This figure is achieved by obtaining the number of exclusion incidents divided by the number of pupils then multiplied by 1,000. Our continued focus on United Nations Convention on the Rights of the Child (UNCRC) and working on the Rights Respecting Schools framework across the Authority should see this indicator remain stable moving forward. Expected Future Performance and Impact of Policy Decisions The exclusion policy is due to be reviewed in the coming session. When this is complete, it will be relaunched and the focus of exclusion as a last resort and continued promotion of Our Children, Their Nurturing Education should have a positive impact on this indicator. 2020-21 2018-19 2016-17 2014-15 10 15.79 14.25 19.88 15 20.60 30 25 20 Page 19
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Appendix 1 Education 24 Percentage of funded early years provision which is graded good/better (CHN18) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 84.00% 92.00% 89.20% 92.65% FG median 88.36% 89.97% 89.80% 90.69% Scotland 91.03% 90.58% 90.20% 90.93% How We Performed This indicator looks at the percentage of funded early years provision which is graded 'good' or better. This year has seen an increase in performance in this indicator by nearly 3.5% which brings our provision in line with 2014‐15 performance. The performance for Argyll and Bute is above that for both our Family Group and Scotland wide, both of which have improved performance in this indicator. The roll‐out of the 1140 hours provision across our settings is likely to have had some impact here due to a change in working environment for staff and resultant training and development needs arising, as well as changes to some of the physical environments in which our staff operate. Note ‐ Data is presented as at 31 December in each year. Not included are cancelled services on 31 December each year. Not included is data for those services that did not submit an annual return. Therefore, the information might not match the 'Early Learning and Childcare Statistics' publication, where estimates and imputations are used to account for non‐submissions Due to Covid restrictions, quality improvement and assurance functions have been minimal and targeted during this period, as have inspection processes by Care Inspectorate. In spite of this, and as result of significant CPD and support online, the percentage of funded early years’ providers achieving grades of ‘good’ or above, and as such, meeting new National Standard requirements, remains strong at 92%. Our aim last year was to bring about the percentage of funded early years providers achieving 'good' returning to over 90% within 2020/21. Expected Future Performance and Impact of Policy Decisions We would anticipate maintaining and improving on this figure with a view to improving on the 2020/21 figure. 84.00% 92.00% 89.20% 92.65% 80% 85% 90% 95% 100% 2017-18 2018-19 2019-20 2020-21 Page 20
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Appendix 1 Education 25 Participation rates for 19 year olds (CHN21) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 94.20 94.76 94.07 93.53 FG median 94.00 92.53 93.83 93.62 Scotland 91.80 91.56 92.13 92.18 How We Performed The participation rate for Argyll and Bute has decreased slightly to below that of our Family Group but higher than Scotland wide. Our participation rate has continued to drop for the last 3 consecutive years. It should be noted that Covid may have had an impact on this measure. Developing the Young Workforce activities have assisted young people with the transition from school into employment, education or training. For 2020‐21, Argyll and Bute Council was 9th among councils in Scotland for Participation of 19 year olds. Expected Future Performance and Impact of Policy Decisions The effects of the Covid pandemic on employment opportunities, particularly in individual local communities, may continue to impact on Participation rates in 2022 and beyond. Key partner agencies, including secondary schools, Community Learning and Development (CLD), local colleges, Skills Development Scotland and the third sector, will continue to work together with Developing the Young Workforce (DYW) to ensure that young people are supported to access and sustain positive destinations. The robust, current information provided by the Data Hub and Annual Participation Measure is being used to identify potential issues and inform interventions for individual young people. It is expected the work of the Scottish Government funded DYW Co‐ordinators will have a positive impact on future destination figures. 2020-21 2019-20 2018-19 2017-18 90 92 93.53 94 94.07 94.20 94.76 96 Page 21
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Appendix 1 Education 26 Percentage of P1, P4 and P7 pupils combined achieving expected CFE level in literacy (CHN13a) Group 2018-19 2019-20 2020-21 Argyll & Bute 71.78% *CHECK* 58.65% FG median 72.27% *CHECK* 64.82% Scotland 72.30% *CHECK* 66.88% How We Performed Although this indicator spans a 3‐year period there is only for 2 years as no data was collected during 2020 due to Covid. This indicator measures the proportion of P1, P4 and P7 children that are achieving the expected level in Literacy. It should be noted that this measure is the teachers’ professional judgements on a child’s progress. Therefore whilst Family Group and Scotland data is helpful to a degree, there is not a ‘true’ like‐for‐like comparison. No data available for previous year due to Covid. Attainment in literacy is calculated on the aggregated data of the number of pupils achieving expected levels in all three organisers in literacy; reading, writing and listening and talking. Achievement of a level results in literacy overall for Argyll and Bute has been impacted by non‐achievement for pupils at in writing. Covid related school closures in March 2020 and January 2021 should be taken into account as it is likely to have had an impact on the CfE levels achieved for some children, we have seen this particularly impact achievement in writing. Expected Future Performance and Impact of Policy Decisions Most recent data extracted in February 2022 from the Education Service’s tracking and monitoring system is illustrating a recovery for this particular cohort which are now P2, P5 and S1. Rigorous tracking of all pupils will continue at school and authority level to support the recovery of attainment. Additionally, the Lead Teacher for Recovery and Renewal ‐ Literacy and Numeracy provides targeted support and interventions to accelerate recovery, this will continue in session 2022‐23. 71.78% 0.00% 58.65% 0% 20% 40% 60% 80% 2018-19 2019-20 2020-21 Page 22
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Appendix 1 Education 27 Percentage of P1, P4 and P7 pupils combined achieving expected CFE level in numeracy (CHN13b) Group 2018-19 2019-20 2020-21 Argyll & Bute 80.24% *CHECK* 68.97% FG median 78.66% *CHECK* 70.88% Scotland 79.07% *CHECK* 74.69% How We Performed Although this indicator spans a 3‐year period there is only for 2 years as no data was collected during 2020 due to Covid. This indicator measures the proportion of P1, P4 and P7 children that are achieving the expected level in Literacy. It should be noted that this measure is the teachers’ professional judgements on a child’s progress. Therefore whilst Family Group and Scotland data is helpful to a degree, there is not a ‘true’ like‐for‐like comparison. No data available for previous year due to Covid. Covid related school closures in March 2020 and January 2021 should be taken into account as it is likely to have had an impact on the Curriculum for Excellence levels achieved for some children. Expected Future Performance and Impact of Policy Decisions The Education Service has a robust system of tracking and monitoring of progress in which we track achievement of all pupils. The data most recently extracted in February 2022 is illustrating a recovery for this particular cohort which are now P2, P5 and S1. Rigorous tracking of all pupils will continue at school and authority level to support the recovery and renewal of attainment. Additionally, the Lead Teacher for Recovery and Renewal ‐ Literacy and Numeracy provides targeted support and interventions to accelerate recovery, this will continue in session 2022‐23. 80.24% 0.00% 68.97% 0% 20% 40% 60% 80% 100% 2018-19 2019-20 2020-21 Page 23
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Appendix 1 Education 28 Literacy attainment gap (P1, P4 and P7 combined) - percentage point gap between the least deprived and most deprived pupils (CHN14a) Group 2018-19 2019-20 2020-21 Argyll & Bute 13.37% *CHECK* 32.51% FG median 25.90% *CHECK* 31.65% Scotland 20.66% *CHECK* 24.70% How We Performed Although this indicator spans a 3‐year period there is only for 2 years as no data was collected during 2020 due to Covid. This indicator measures the gap in literacy and numeracy between children from Scotland’s most and least deprived areas. A pupil is deemed to have achieved the expected level in literacy if they have achieved the expected level in all three literacy organisers: reading, writing, and listening and talking. It should be noted that this measure is the teachers’ professional judgements on a child’s progress. Therefore whilst Family Group and Scotland data is helpful to a degree, there is not a ‘true’ like‐for‐like comparison. No data available for previous year due to Covid. It is important to note that the 2020‐21 data for Literacy attainment gap (P1, P4 and P7 combined) ‐ percentage point gap between the least deprived and most deprived pupils is compared to the data collected in 2018/19 due to non‐collection of data in 2019‐2020 due to Covid. Therefore the above data is being compared to pre‐Covid data. Data is showing that although attainment was impacted for pupils in least deprived areas it was to a lesser extent and pupils’ from the most deprived areas experienced a larger impact on attainment. Expected Future Performance and Impact of Policy Decisions School leaders will continue to be supported and challenged by our central team, Northern Alliance Team and our Attainment Advisor who will share best practice from within the Council, across the Alliance and nationally to define their poverty related attainment gap and to use Pupil Equity funding identify interventions and approaches to accelerate progress. Improved approaches to moderation are being rolled out to ensure improved confidence in professional judgment and enhanced moderation of standards across not only our schools but also those within the Northern Alliance. Targeted work to reduce non‐attendance is underway with multi‐agency partners. Increased attendance for a number of pupils is the first step in improving attainment. The Lead Teacher for Recovery will use the data to identify schools requiring more specific interventions and support and work directly with them to deliver effective interventions based on tried and tested methodology from across Scotland. Education Mangers, Heads of Service and the Attainment Advisor will scrutinise spending plans to ensure that Scottish Attainment Challenge Funding is targeted on children and young people under attaining to 0% 0.00% 2018-19 2019-20 2020-21 13.37% 20% 10% 32.51% 30% 40% Page 24
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Appendix 1 Education 29 ensuring we meet our focused stretch aims for pupils impacted by poverty and to support accelerated recovery in attainment. We predict a narrowing of the poverty related gap and are already seeing progress towards this as a result of focused interventions. Page 25
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Appendix 1 Education 30 Numeracy attainment gap (P1, P4 and P7 combined) - percentage point gap between the least deprived and most deprived pupils (CHN14b) Group 2018-19 2019-20 2020-21 Argyll & Bute 15.27% *CHECK* 28.97% FG median 23.28% *CHECK* 27.68% Scotland 16.81% *CHECK* 21.42% How We Performed Although this indicator spans a 3‐year period there is only for 2 years as no data was collected during 2020 due to Covid. This indicator measures the gap in literacy and numeracy between children from Scotland’s most and least deprived areas. It should be noted that this measure is the teachers’ professional judgements on a child’s progress. Therefore whilst Family Group and Scotland data is helpful to a degree, there is not a ‘true’ like‐for‐like comparison. No data available for previous year due to Covid. It is important to note that the 2020‐21 data for Literacy attainment gap (P1, P4 and P7 combined) ‐ percentage point gap between the least deprived and most deprived pupils is compared to the data collected in 2018/19 due to non‐collection of data in 2019‐2020 due to Covid. Therefore the current data is being compared to pre‐Covid data. Data is showing that although attainment was impacted for pupils in least deprived areas it was to a lesser extent and pupils’ from the most deprived areas experienced a larger impact on attainment. Expected Future Performance and Impact of Policy Decisions School leaders will continue to be supported and challenged by our central team, Northern Alliance Team and our Attainment Advisor who will share best practice from within the Council, across the Alliance and nationally to define their poverty related attainment gap and to use Pupil Equity funding identify interventions and approaches to accelerate progress. Improved approaches to moderation are being rolled out to ensure improved confidence in professional judgment and enhanced moderation of standards across not only our schools but also those within the Northern Alliance. Targeted work to reduce non‐attendance is underway with multi‐agency partners. Increased attendance for a number of pupils is the first step in improving attainment. The Lead Teacher for Recovery will use the data to identify schools requiring more specific interventions and support and work directly with them to deliver effective interventions based on tried and tested methodology from across Scotland. Education Mangers, Heads of Service and the Attainment Advisor will scrutinise spending plans to ensure that Scottish Attainment Challenge Funding is targeted on children and young people under attaining to ensuring we meet our focused stretch aims for pupils impacted by poverty and to support accelerated recovery in attainment. We predict a narrowing of the poverty related gap and are already seeing progress towards this as a result of focused interventions. 0% 0.00% 2018-19 2019-20 2020-21 15.27% 10% 30% 20% 28.97% 40% Page 26
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Appendix 1 34 Corporate Outcome - Our economy is diverse and thriving Development and Economic Growth Average time per business and industry planning application (weeks) (ECON3) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 12.09 9.97 13.86 12.69 FG median 10.55 8.29 10.57 12.06 Scotland 9.34 9.09 10.54 11.08 How We Performed Argyll and Bute performance in this indicator has improved, with the average time taken by Argyll & Bute reducing by over 1 week. The performance for our Family Group and Scotland wide has decreased however, Argyll & Bute performance remains slower than for both comparators. Major applications are not included in the calculation of this indicator. The Performance is measured on the time taken to determine planning applications for employment uses. An efficient and well‐functioning planning service plays an important role in facilitating sustainable economic growth and delivering high quality development in the right places. Covid has continued to impact upon the performance of Development Management with the continued closure of Council offices and increased absence impacting upon efficiency of work processes and output. A number of Planners have also taken the opportunity to retire and securing suitably skilled replacements has been difficult given the national shortage of qualified professionals. That said we have taken steps to increase the validation team this year to deal with pandemic backlogs and an increased focus on dealing with legacy cases. Workforce planning will be key this year as the number of planning applications has returned to pre pandemic levels with a significant number of major applications coming through in renewables, tourism and housing. In an effort to deal with this anticipated workload and also in the knowledge that planning fees have been increased for the next financial year by the Scottish Government the service is aiming to recruit to vacant posts and recruit additional specialist staff to assist with the major applications and the possible introduction of planning control zones as a consequence of new Scottish Government legislation on short terms lets. Expected Future Performance and Impact of Policy Decisions The Development Management Service have also required to operate for extended periods during 2021/22 with vacancies in key positions that have stretched the capacity and resilience of the Service and also adversely affected performance. Notwithstanding these difficulties, the Service continues to prioritise applications that will result in inward investment and employment and it is expected that performance against this marker will remain largely unchanged for the 2021/22 reporting period. 2020-21 2019-20 2018-19 2017-18 9 7 9.97 11 12.69 13.86 12.09 15 13 Page 27
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Appendix 1 Development and Economic Growth 35 Number of Business Gateway start-ups per 10,000 population (ECON5) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 12.44 13.45 16.19 10.89 FG median 19.20 19.37 16.17 16.44 Scotland 16.83 16.70 16.41 11.19 How We Performed Argyll & Bute saw a steep drop in the start‐up rate and is now 5.5% lower than our Family Group and slightly below Scotland. This indicator shows the number of business start‐ups per 1,000 population (not working age population) and Argyll and Bute does have an above average proportion of its population retired. During this period the number of business gateway start‐ups fell coupled with a fall in population. The Performance as measured here is linked to local Business Gateway capacity to follow‐up with clients assisted and identify those that started trading after receiving support. As expected, performance dropped significantly, largely due to Business Gateway being required to administer Scottish Government Covid grants for businesses for significant parts of the year. Whilst the service continued to provide start‐up support by phone or video, the capacity to follow‐up with clients assisted to identify those that started trading was severely limited. Expected Future Performance and Impact of Policy Decisions Performance will improve for 2021‐22. Business Gateway was able to undertake follow‐up activity between April and December 21 and in March 22. This identified a number of start‐ups supported which could have been claimed the previous year if there had been capacity to follow up. This has contributed to a performance well above target, with the number of start‐ups supported in 2021‐22 up 46% on 2020‐21. If the two years are averaged (to smooth the effect of the follow‐up work), a more realistic performance can be seen. 2020-21 2019-20 2018-19 2017-18 5 10.89 13.45 12.44 15 10 16.19 25 20 Page 28
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Appendix 1 Development and Economic Growth 36 Proportion of people earning less than the real Living Wage (ECON7) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 24.20 24.00 19.80 18.70 FG median 23.60 24.00 19.80 19.80 Scotland 18.40 19.40 16.90 15.20 How We Performed Although the percentage of people earning less than the living wage in Argyll and Bute continues to decrease and is now below our Family Group, it remains substantially higher than Scotland. Argyll and Bute Council is a Living Wage employer. Councils play an important role in supporting people to develop the skills and opportunities to progress in the labour market, by attracting new businesses with higher value employment opportunities and by encouraging employers to pay the living wage. In particular, the Local Growth Accelerator Programme (LGAP) Employer grants and the Local Authority COVID Economic Recovery (LACER) grants administered by the council’s Business Gateway, do ask that the supported businesses can provide equivalent of the Scottish Living Wage for the employee/owner, or the business has the potential to do so within 12 months. The same requirement will be made of the Rural Growth Deal projects where there is an aim to be an inclusive as possible. Argyll and Bute continues to have a high dependency on employment in sectors such as tourism, where the payment of the living wage is variable and has been adversely affected by Covid. Businesses do not always have the resources to pay the full amount, especially after lockdowns and significant limitations to income. Recent wage inflation designed to address significant workforce shortages has not shown to have a significant impact as yet but rising energy costs and construction costs will no doubt place a significant strain on the ability of many businesses to expand employment opportunities in the next year at least. Pre‐pandemic inequalities have been exacerbated by Covid‐19 and exposed already vulnerable groups, such as those earning less than the living wage, to adverse shocks. It is estimated that without ongoing appropriate government interventions, inequalities are set to expand in the short, medium to long‐run. Some of the most significant include income, labour market participation, education and life chances, particularly for women, lone parents, young people from ethnic minority backgrounds and disabled people. Expected Future Performance and Impact of Policy Decisions The rural and island nature of Argyll and Bute, the structure of the economy in terms of a reliance on micro businesses, self‐employment and tourism would indicate that this will continue to be an area of challenge for us. Officers contribute significantly to the work of the improvement service, SLAED People Group and other development agencies to assist employers in making the Real living wage a priority. While increasingly enterprise agency grant support moving forward will be restricted to Living Wage employers, Business Gateway recognises that there is still a need to support small businesses to reach this 2020-21 2019-20 2018-19 2017-18 15 10 18.70 20 19.80 25 24.00 24.20 30 Page 29
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Appendix 1 Development and Economic Growth 37 level, which could be addressed in a suggested supporting local business investment programme for potential inclusion in the UKSPF Investment Plan for Argyll and Bute. Page 30
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Appendix 1 Development and Economic Growth 38 Proportion of properties receiving superfast broadband (ECON8) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 77.72 78.30 80.00 81.20 FG median 76.86 77.60 82.75 84.10 Scotland 91.13 92.01 93.29 93.79 How We Performed Access to good digital infrastructure is a key driver of economic competitiveness and productivity. This indicator captures the proportion of all properties within the local authority area receiving superfast broadband greater than 30Mbit/s which is the EU’s definition of superfast broadband the Scottish Government’s ambition for this to be available to all premises by the end of 2021. Although we can facilitate and enable the performance of this indicator is it out with our control. Gaps in provision relate predominately to our remote rural and island communities where we have a dispersed community with multiple premises making commercial delivery of digital infrastructure uneconomic and in need for public subsidy. We continue to work with and lobby both Governments and their contractors (BT for example) to accelerate the roll out of digital investment. The delay in awarding the north lot of R100 (covers much of Argyll and Bute with the exception of most of the Helensburgh and Lomond area) has delayed implementation of the national scheme but work has now commenced with a key aspect of the work underway which is laying fibre cable to a number of our island communities. Other work is also underway in the Oban area. The percentage of properties continues to increase but it is important to see that Argyll & Bute remains lower than our Family Group and significantly lower than Scotland for the above reasons. Across Argyll and Bute there were 8,265 premises in the main R100 contract some of these have already been deployed. In many instances where contract build has progressed a number of other premises have been provided an improved connection whether this has been through ‘Overspill’ (incidental connections due to the nature of an optical network) or through Openreach commercial build. Additionally as the 4G coverage improves across Argyll and Bute a number of premises are utilising this network to provide a Home 4G Broadband service. 4G network from one operator covers around 93% of Argyll premises and 75% geographic coverage. Digital Boost Programme- administered by Business Gateway Summary: • Levering additional funding from Digital Scotland to support SMEs in developing digital skills. • Phase 6 target spend £41,139. Latest update: Phase 6 final spend was £41,909. This included 19 in‐depth advice sessions, 55 1 hour sessions, and 15 coaching sessions/webinars. 2020-21 2019-20 2018-19 2017-18 70 81.20 80.00 80 78.30 77.72 90 100 Page 31
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Appendix 1 Development and Economic Growth 39 Expected Future Performance and Impact of Policy Decisions The Council does not control the levers to improve this measure, but continues to lobby for better provision to support the removal of barriers for providers. Recognising the importance of this to the area’s long term prosperity, the Council is continuing to raise this as an issue. Despite this effort, we continue to face challenges. Full Fibre coverage will increase over the coming years as R100 build continues across the area, additionally 4G coverage will also continue to increase as a result of UK, Scottish Government and commercial investment programmes like the Shared Rural Network (SRN) and Scottish 4G Infill (S4GI). Digital Boost Programme- administered by Business Gateway The Scottish Government has provided a reduced overall programme budget for 2022-23. The budget for Phase 7 is therefore lower than previous years, at £25,488. This will be focused on one‐to‐one support, with a target of 70 one hour expert help sessions and 10 in‐ depth expert help sessions of up to two days. Page 32
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Appendix 1 Development and Economic Growth 40 Cost of environmental health per 1,000 population (ENV5b) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £32,262.64 £29,504.18 £28,074.10 £24,604.94 FG median £23,654.39 £23,030.28 £22,365.77 £20,073.01 Scotland £17,257.94 £16,241.60 £14,698.62 £13,070.44 How We Performed The cost of providing the environment health service continues to decrease, however it remains higher than our Family Group and Scotland. It should also be noted that the costs of environmental health also include the costs of public conveniences. This cost is presented per 1,000 population. As a result growing population in other areas of Scotland coupled with a reduction in the Argyll and Bute population will have an effect when we compare our performance to others such as our Family Group or Scotland. Through a drive for continual improvement, efficiencies and income generation, comparative costs have decreased over the last 4 years by 24% in Argyll and Bute. It is important to recognise the significant work undertaken by environmental health to protect public safety throughout the Covid pandemic, taking on new enforcement responsibilities with little increase in resources. Expected Future Performance and Impact of Policy Decisions This is not an effective measure of the cost of environmental health and the Improvement Service is aware of the need to develop a better and more effective measure to assess environmental health performance, costs and the public health benefit of their work. In the interim, the costs of delivering environmental health across a rural area, despite continued drive for efficiencies and better use of digital technology, will continue to be in the higher quartile of Scottish local authorities. 2020-21 2019-20 2018-19 2017-18 £10,000 £20,000 £28,074.10 £24,604.94 £30,000 £29,504.18 £32,262.64 £40,000 Page 33
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Appendix 1 Development and Economic Growth 41 Claimant count as percentage working age population (ECON12a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 1.80% 2.70% 3.00% 5.70% FG median 1.75% 2.45% 2.65% 5.20% Scotland 2.50% 3.10% 3.30% 6.10% New Measure How We Performed This measure presents the claimant count of the working age population, which is 16‐64. The definition of claimant count is the number of people of working age claiming either jobseeker’s allowance or claim Universal Credit and are required to seek work and be available for work. The percentage of this indicator has increased by 90% and an increase of 1,365 working age claimants on the previous year. The Mid‐Year Estimate (MYE) of working age population has increased by 106 or .21% Under Universal Credit a broader span of claimants is required to look for work than under Jobseeker's Allowance. As Universal Credit Full Service is rolled out in particular areas, the number of people recorded as being on the Claimant Count is likely to rise. The impact that the Covid pandemic has had on the claimant rate is significant in 2020/21. However, by mid‐April 2021 the rate started to fall and continues to fall and as of March 2022 we are slightly above (3.5%) pre pandemic levels (3%). Expected Future Performance and Impact of Policy Decisions Officers monitor claimant data on a monthly basis as they are released by ONS. This information is shared with internal and external colleagues to support co‐ordinated policy interventions and actions to reduce the claimant rate. It is intended to deploy a limited amount of Local Authority Covid Economic Recovery (LACER) funding (£150k) to target hard hit sectors and areas adversely affected by the pandemic. This will add to other LACER funding to assist the growth of small businesses in Argyll and Bute helping to continue previous business support work undertaken by Business Gateway. The focus of our work in collaboration with national partners is on the younger working population and over 50s where there is a larger percentage of people claiming benefits. In addition we continue to focus on our main sectors with a new tourism strategy now launched that includes looking at improving peoples skills, together with a new food and drink strategy that is looking to assist the expansion of this important industry which again employs a wide range of individuals with considerable potential to expand. 2020-21 2019-20 2018-19 2017-18 1% 3% 1.80% 3.00% 2.70% 5% 5.70% 7% Page 34
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Appendix 1 42 Claimant count as percentage of 16-24 population (ECON12b) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 2.21% 2.81% 2.99% 6.10% FG median 2.10% 3.05% 3.06% 6.01% Scotland 3.07% 3.60% 3.88% 7.17% New Measure How We Performed This measure presents the claimant count as a percentage of the 16‐24 population. The definition of claimant count is the number of 16‐24 year olds claiming either jobseeker’s allowance or claim Universal Credit and are required to seek work and be available for work. 16‐24 year olds have been disproportionally affected by the pandemic. Schemes like The Young Persons Guarantee and No One Left Behind are being administered locally to improve opportunities for young people to get into work. The percentage of this indicator has increased by 103.5% and an increase on the previous year of 250 claimants aged 16‐24. The Mid‐Year Estimate (MYE) of 16‐24 age group has increased by 60 or (0.73%) Under Universal Credit a broader span of claimants is required to look for work than under Jobseeker's Allowance. As Universal Credit Full Service is rolled out in particular areas, the number of people recorded as being on the Claimant Count is likely to rise. As with all age groups Covid has had a significant impact on the performance of this indicator. The Scottish Government has brought in additional initiatives to counteract the effect of the pandemic on employment. Expected Future Performance and Impact of Policy Decisions Officers monitor claimant data on a monthly basis as they are released by Office of National Statistics. This information is shared with internal and external colleagues with the aim of identifying potential hotspots and trends. This then allows for preparedness by officers in these areas in the event that trends accelerate. This is also backed up by detailed economic information in the monthly bulletins. Comparing and contrasting performance between age groups and other local authorities allows for identification of best practice and the sharing of this. 2020-21 2019-20 2018-19 2017-18 2% 2.21% 4% 2.99% 2.81% 6% 6.10% 8% Page 35
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Appendix 1 43 Legal and Regulatory Support Percentage procurement spend on local enterprises (ECON4) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 29.40% 28.00% 28.43% 25.41% FG median 35.17% 39.54% 35.49% 32.30% Scotland 27.40% 28.71% 28.51% 29.11% How We Performed The local spend in 2020‐21 was affected due to the nature of the contracts that we were awarding to support the council in its activities during the Covid lockdown. We do not have a local supply base for a large number of the contracts that were awarded in 2020‐21 due to the specialized nature of the requirement, size or the geographical location for delivery of the works and services. In addition, it should be noted that local spend can only be reported where proximity is known via the Scottish Government Information Hub, and if a local supplier has a registered head office out with Argyll and Bute, this may not be allocated to local spend data. Argyll & Bute Council has an ongoing commitment to encourage spend in the local economy and thus create employment. The Council monitors the type of contracts the local suppliers are bidding for and which contracts are subsequently awarded to them. The PCCMT continues to provide accessible training and access to tender opportunities to local suppliers. The PCCMT further support local businesses by carrying out a number of procurements via Invitation to Quote (ITQ), where the regulations allow it. The PCCMT also focus on simplified and streamlined procurement processes, thus ensuring that the documentation is as simplified as possible, and engage with local Economic Development colleagues and other collaborative stakeholders to support emerging priorities that will support the economic recovery within Argyll and Bute. In an effort to support local suppliers however, the PCCMT have developed a supplier page on the Council’s website that provides suppliers with pre‐recorded webinars on how to bid for Council contracts, hints and tips for tendering as well as our contract plan, details of upcoming supplier development events and our category officer’s contact details all of which enable local suppliers to be able to bid for our contracts. Expected Future Performance and Impact of Policy Decisions Argyll & Bute Council has an ongoing commitment to encourage spend in the local economy and thus create employment. However, due to the nature of the local economy, the very small average size of businesses, narrow sectoral reach and the geographical spread of contract demand, the area does not have the capacity of businesses to respond. A lot of larger specialist contracts have to go to companies outside the area. This is a structural economic and demographic challenge, which the council has limited economic levers available to influence. 2020-21 2019-20 2018-19 2017-18 25% 20% 25.41% 28.43% 28.00% 29.40% 40% 35% 30% Page 36
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Appendix 1 44 Corporate Outcome - We Have An Infrastructure That Supports Sustainable Growth Commercial Services Proportion of operational buildings that are suitable for their current use (CORP-ASSET1) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 73.74 75.06 78.48 77.60 FG median 78.30 76.98 78.96 79.77 Scotland 80.81 82.15 82.47 82.31 How We Performed The performance of this indicator has dropped slightly following steady year‐on‐year improvement since 2020‐11. There has been a significant increase in the percentage difference between Argyll & Bute and our Family Group which is now more than 2%. The Scotland wide percentage difference has decreased slightly due to the Scotland average figure reducing. There are several factors that may have contributed to this change such as policy decision and capital investment. Over the 4 year period, the number of buildings that are suitable has increased from 292 to 343. This has primarily been as a result of data cleansing. Over the same period, the total number of operational buildings has altered from 396 to 442. The highest proportion occurred in 2019‐20. Expected Future Performance and Impact of Policy Decisions The Council’s property related capital programme primarily targets asset sustainability issues. The associated projects help to sustain the condition of buildings as opposed to their suitability. It is therefore anticipated that the indicator will remain stagnant in moving forward and will be affected by initiatives to reduce the Council’s office estate, the longer term improvement of the Learning Estate and depot rationalisation. There will be further change associated with a combination of asset transfers and further data cleansing. 2020-21 2019-20 2018-19 73.74 2017-18 70 75.06 77.60 78.48 80 90 Page 37
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Appendix 1 45 Roads and Infrastructure Services Net cost of waste collection per premise (ENV1a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £59.83 £46.40 £45.81 £48.07 FG median £67.92 £65.76 £62.97 £64.87 Scotland £73.47 £73.41 £73.46 £72.35 How We Performed The performance has increased against the previous year which in line with our Family Group. Although the cost of waste collection is lower than our Family Group and Scotland it should be read in conjunction with indicator ENV2a which looks at the cost of waste disposal. Comparing the current period against the previous period there were an additional 1,448 properties for waste collection and an additional total cost of £166,000. The high costs experienced in Argyll and Bute for collections is due to the remote and island communities that make up the area. It should also be borne in mind that Covid would have impacted on this measure. Expected Future Performance and Impact of Policy Decisions The Council are working towards a solution which will be compliant with regulation. Officers are currently working with Scottish Government colleagues with a view to ensuring that whichever solution is progressed takes in to account the requirements of the Energy from Waste review, commissioned by Scottish Government, which commenced early 2022. There is some dubiety as to whether or not there will be a requirement to extend food waste collections across Argyll and Bute. Currently food waste is only collected from the Helensburgh and Lomond area due to the population exceeding the current threshold. Should food waste collections be required across the whole council area there will be a significant cost implication which will incur additional revenue expenditure in excess of £1m. 2020-21 2019-20 2018-19 2017-18 £40 £48.07 £45.81 £50 £46.40 £59.83 £80 £70 £60 Page 38
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Appendix 1 Roads and Infrastructure Services 46 Net cost of waste disposal per premise (ENV2a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £206.33 £206.75 £211.43 £180.69 FG median £121.60 £120.93 £136.97 £131.52 Scotland £112.91 £106.36 £105.37 £105.88 How We Performed The cost of waste disposal is the lowest for 8 years however, the cost remains the highest in Scotland. As our Family Group consists of rural authorities our geography obviously plays an important factor in this indicator, therefore it is not surprising that costs are significantly higher than Scotland wide. Comparing the current period against the previous period there were an additional 1,448 properties with a total cost reduction of £1,323,000. This indicator should be read in conjunction with indicator ENV1a which looks at the cost of waste collection. It should also be borne in mind that Covid would have impacted on this measure. The high costs experienced in Argyll and Bute are partly due to the remote and island communities that make up the area. However the high costs are also attributed to the fact that the Council has in place a PPP contract dating from 2001 which was designed to divert waste material from landfill through processing. This contract runs until September 2026 which creates a nine month period between the 2025 Biodegradable Municipal Waste Ban and the end of the contract. A detailed options appraisal following green book principles is currently underway to look at the best long term solution for Argyll and Bute, this is due to report to the September 2022 Economic Development & Infrastructure Committee. Expected Future Performance and Impact of Policy Decisions The Council are working towards a solution which will be compliant with regulation. Officers are currently working with Scottish Government colleagues with a view to ensuring that whichever solution is progressed takes in to account the requirements of the Energy from Waste review, commissioned by Scottish Government, which commenced early 2022. £250 £200 £180.69 £206.33 £206.75 £211.43 £150 £100 £50 2017-18 2018-19 2019-20 2020-21 Page 39
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Appendix 1 Roads and Infrastructure Services 47 Street cleanliness score (ENV3c) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 93.55 92.30 90.73 84.27 FG median 95.24 95.85 97.05 96.00 Scotland 92.20 92.80 92.25 90.10 How We Performed Argyll & Bute has seen a sharp decrease in this indicator which puts the performance below that of our Family Group and Scotland. The decline in performance is in line with a reduction in investment in the service. Street cleanliness is presented using the Street Cleanliness Score, which is produced by Keep Scotland Beautiful. This measures the percentage of areas assessed as ‘clean’ rather than completely litter free sites (as this is considered impractical in areas of high footfall). This allows authorities to tackle litter problem areas to achieve better results. This indicator is linked to the Cost of Street Cleaning per 1,000 Population. The net cost of street cleaning has reduced by £64,000 however, the population has reduced by 440 (Mid Year Estimate 2020 of 85,430). We will continue to monitor street cleanliness through the Keep Scotland Beautiful framework with a view to bringing forward any future policy changes that may result from the budget process and service prioritisation. Expected Future Performance and Impact of Policy Decisions Future performance will be determined by available budget, as budget reduces, performance in this area will continue to reflect the available resource. 2020-21 2019-20 2018-19 2017-18 85 80 84.27 90.73 92.30 93.55 100 95 90 Page 40
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Appendix 1 Roads and Infrastructure Services 48 Percentage of total household waste arising that is recycled (ENV6) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 38.73% 37.80% 38.59% 31.20% FG median 33.29% 32.60% 34.06% 32.90% Scotland 45.60% 44.70% 44.85% 42.00% How We Performed The performance for all groups decreased in this indicator with Argyll & Bute performing worse than our Family Group and that of Scotland. The recycling performance dropped largely as a result of the pandemic which resulted in Argyll and Bute putting in place a single bin collection service during the peak of the pandemic rather than separately collecting recycling materials and general waste at kerb‐side. It should also be borne in mind that Covid would have impacted on this measure. Expected Future Performance and Impact of Policy Decisions Full impact of regulation and national policy changes have yet to be fully determined, however the Biodegradable Municipal Waste (BMW) ban, deposit return scheme and potential increase collection for food waste are all likely to have an impact on future performance. 2020-21 2019-20 2018-19 2017-18 25% 35% 31.20% 38.59% 37.80% 38.73% 45% 55% Page 41
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Appendix 1 Roads and Infrastructure Services 49 Cost of roads per kilometre (ENV4a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £7,030.53 £8,661.62 £7,604.63 £5,832.62 FG median £6,112.89 £6,503.27 £6,211.75 £4,535.85 Scotland £11,241.06 £10,834.74 £10,412.81 £9,378.69 How We Performed The cost of maintaining our roads has reduced again with Argyll & Bute above our Family Group and below Scotland average. The expenditure for 2020‐21 is 23% lower than the previous year and is in line with 2015‐ 16 expenditure. This indicator is a measure of the cost that has been spent on the road network, this also includes winter maintenance and is normally in line with a capital budget and policy decisions. This indicator should be viewed in conjunction with the percentage of roads that should be considered for maintenance treatment. The length of road for this indicator remains unchanged at 2,286 kilometres. It should be noted that during the Covid‐19 pandemic, we were severely limited in carrying out road improvement works. The higher performance in previous years shows the investment decisions taken by the council to improve the road network. Expected Future Performance and Impact of Policy Decisions At the time of writing, April 2022, budgets that were approved in February this year will now only buy 80% of what they would have done at the time of approval. What this means in reality is that there will be less roads maintenance carried out per pound of available budget than last year. Whilst the way this indicator has been designed will not reflect any changes of the cost per kilometre, in reality what this means is that fewer roads will be repaired than would have been prior to the price increase. 2020-21 2019-20 2018-19 2017-18 £6,000 £4,000 £5,832.62 £7,030.53 £8,000 £7,604.63 £8,661.62 £12,000 £10,000 Page 42
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Appendix 1 Roads and Infrastructure Services 50 Percentage of A class roads that should be considered for maintenance treatment (ENV4b) Group 2016-18 2017-19 2018-20 2019-21 Argyll & Bute 43.49% 41.80% 41.59% 40.30% FG median 31.92% 31.37% 32.23% 31.80% Scotland 30.16% 30.03% 30.57% 29.80% How We Performed This indicator has continued to improve however Argyll & Bute remains significantly above our Family Group (lower is best – we aim for a lower figure) and Scotland. This indicator should be viewed in conjunction with the percentage of ‘B’ class roads that should be considered for maintenance and the cost of maintenance per kilometre of road. It is positive to note that our overall performance is improving with a reduction in the percentage of ‘A’ class roads in need of maintenance treatment. This is largely due to positive capital investment through the roads reconstruction programme and also through levering in additional funding through initiatives such as the Timber Transport Fund. We continue to implement policy decisions to invest in our road network, but this indicator shows that the nature of our network, with remote, rural and island roads means that the costs remain high. Expected Future Performance and Impact of Policy Decisions The ongoing price increases for bitumen and fuel will mean we able to deliver fewer resurfacing schemes for the available budget, this is very likely to see a worsening of the road condition, despite policies of further investment. 2019-21 2018-20 2017-19 2016-18 20% 30% 40% 40.30% 41.59% 41.80% 43.49% 50% Page 43
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Appendix 1 53 Roads and Infrastructure Services Percentage of B class roads that should be considered for maintenance treatment (ENV4c) Group 2016-18 2017-19 2018-20 2019-21 Argyll & Bute 63.86% 62.66% 61.73% 59.70% FG median 35.83% 36.27% 36.64% 35.55% Scotland 35.90% 35.71% 34.96% 34.00% How We Performed This indicator has improved by 2% however Argyll & Bute remains significantly above our Family Group (lower is best – we aim for a lower figure) and Scotland. This indicator should be viewed in conjunction with the percentage of ‘A’ class roads that should be considered for maintenance and the cost of maintenance per kilometre of road. It is positive to note that our overall performance is improving with a reduction in the percentage of ‘B’ class roads in need of maintenance treatment. This is largely due to positive capital investment through the roads reconstruction programme and also through levering in additional funding through initiatives such as the Timber Transport Fund. Expected Future Performance and Impact of Policy Decisions The ongoing price increases for bitumen and fuel will mean we able to deliver fewer resurfacing schemes for the available budget, this is very likely to see a worsening of the road condition. 2019-21 2018-20 2017-19 2016-18 50% 40% 30% 59.70% 61.73% 62.66% 63.86% 70% 60% Page 44
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Appendix 1 54 Getting It Right Customer Support Services Percentage of the highest paid 5% of employees who are women (CORP3b) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 53.06% 52.06% 55.15% 55.96% FG median 47.00% 49.44% 49.59% 53.80% Scotland 54.63% 55.53% 56.74% 58.30% How We Performed The performance of this indicator has improved on last years’ increase. Again this year it is the highest percentage at any point for Argyll & Bute. We have a higher percentage than the Family Group average but again lower than Scotland wide. This measure captures gender equality in senior positions only. While it is important to capture the progress made in relation to gender equality in senior positions, there is a need to capture the progress being made across the wider work force. The Gender Pay helps reflect this position. Expected Future Performance and Impact of Policy Decisions We will continue to look at opportunities to implement guidance and procedures that support the wellbeing and development of all of our employees. Some of these we hope will have a positive impact on women, such as support around menopause and caring responsibilities, which will assist in women being able to continue developing their careers during periods where they have additional personal challenges or responsibilities 2020-21 2019-20 2018-19 2017-18 40% 52.06% 45% 55.15% 50% 53.06% 55.96% 55% 60% Page 45
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Appendix 1 Customer Support Services 55 The gender pay gap (%) (CORP3c) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 7.71% 7.76% 6.83% 6.71% FG median 7.45% 6.29% 5.84% 5.79% Scotland 3.93% 4.18% 3.40% 3.66% How We Performed The Gender Pay Gap for Argyll and Bute has reduced again for the third year running but it still remains higher than that of our Family Groups and over 4% higher than that of Scotland wide. As this value is a 'positive' figure it indicates that men are paid more than women. The figure is the percentage difference of the hourly pay, not a monetary difference. Expected Future Performance and Impact of Policy Decisions This will be an area of continued focus going forward and we will seek to look at best practice and benchmarking to see how we can continue to address the gender pay gap in Argyll & Bute. 2020-21 2019-20 2018-19 2017-18 6% 4% 2% 6.71% 6.83% 8% 7.76% 7.71% 10% Page 46
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Appendix 1 Customer Support Services 56 Sickness absence days per teacher (CORP6a) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 5.89 5.73 7.65 4.40 FG median 7.18 7.18 7.16 4.41 Scotland 5.93 6.21 6.35 4.16 How We Performed Argyll & Bute saw a decrease in teacher absence of more than 42 % on the previous year. It is felt that alternative styles of teaching as a result of managing Covid has impacted on this measure. Absence due to Covid is excluded from this data. Additional Head of Service Commentary covered under 6b 2020-21 2019-20 2018-19 2017-18 3 5.73 4.40 5.89 8 6 5 7.65 9 Page 47
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Appendix 1 Customer Support Services 57 Sickness absence days per employee (non-teacher) (CORP6b) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 12.82 14.01 12.31 9.96 FG median 10.91 11.36 11.35 9.58 Scotland 11.41 11.49 11.90 9.71 How We Performed In line with teacher absence, employee absence has seen a large reduction in levels of absence. This is in also line with our Family Group and Scotland wide. This reduction brings sickness absence levels back to pre‐2012/13 levels. It is felt that working from home of national guidance and managing Covid has impacted on this measure. Absence due to Covid is excluded from this data. Additional Commentary by Head of Service (both Corp 6a & 6b) Overall, there has been a 26% reduction in sickness absence across the Council. All Covid related absence e.g. Covid absence, reaction to vaccine, self‐isolation, shielding, caring responsibilities were not recorded against sickness absence but recorded separately. The Services’ that have seen a bigger % reduction in absence are “support services” who in the main have been working from home. It is not clear why this is ‐ there are a number of assumptions e.g. employees being better able to manage underlying health conditions or a period of ill health at home rather than in the office and elimination of significant travelling time which again which makes it easier to manage ill health as working days are shorter and less contact with other people reducing the transmission of other types of infections. The services to have experienced the lowest % change in their absence are the “operational services” – Commercial Services, Development & Economic Growth, Road & Infrastructure Services, Adult Services and Children & Families. The reasons for absence has changed quite significantly. Stress, Depression and Mental Health remains the number one reason for absence and is a much higher proportion at 39% in 20/21. There has only been a 3% increase in work days lost due to this reason but in the landscape of an overall decrease in work days lost of 26% this is concerning but possibly not surprising as it has been a year like no other. Looking a little deeper at the underlying sickness reasons within this category – Anxiety, Alcoholism, Bereavement and Sleep Problems have increased their proportion. National Records for Scotland confirm that there have been more deaths in 2020 than in other year due to Covid and therefore it is unsurprising the reason of 2020-21 2019-20 2018-19 2017-18 10 8 9.96 12 12.31 12.82 14 14.01 16 Page 48
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Appendix 1 58 bereavement for absence has increased. With the introduction of the new Conditions of Service for LGE staff (July 21) we have increased the number of days of bereavement leave from 3 to 5. Interestingly when we looked at the absence figures in Q1 20/21 stress absence had reduced dramatically – by 25% in that quarter than the previous year. However, all other quarters show an increase. Work days lost due to medical treatment has accounted for almost half the proportion against last year and looking at the sickness reasons underneath this category it can be assumed this is due to the lack of hospital treatments that took place in 20/21. As hospitals return to operations and treatments it may be that we see this account for a bigger proportion of absence in 21/22 as backlogs are cleared. Work days lost due to infections has reduced to a 5% proportion from a 9% last year – it can be assumed that this is due to the lack of social contact and increased protection measures that people have experienced in the last year. As the restrictions relax we may see this rise again but with continuation of most protection measures and working from home we may see this to continue to account for a lower proportion. There has been an 11% increase in the proportion of long term absence (28 days +) against short term absence which is quite significant. Expected Future Performance and Impact of Policy Decisions Overall, as Covid restrictions are removed we would expect the absence figures to rise to be closer to pre pandemic levels and they may exceed pre pandemic levels with national trend data pointing towards a lasting impact especially with mental health related absences. With Covid restrictions easing in 21/22 it is expected that the rate of infections will rise as social distancing and isolation are removed although perhaps they will not rise to pre pandemic levels with increased awareness of infection control. As the NHS get back to business as usual with planned operations we would expect to see a rise in our absences due to medical treatment. Both statistically and anecdotally those services that have offered working from home have seen a bigger decrease in the number of work days lost and we would expect that to continue as working from home has remained the norm however, employees habits have changed with Covid therefore there may be other impacts on wellbeing that have not yet been seen. The Council has introduced new Supporting Attendance Procedures in October 2021 and revised its Stress in the Workplace procedures which is hoped will have a positive impact on reducing absence however, given that these were only introduced in the third quarter a longer lead in time will be required. The Wellbeing team’s focus has continued to be on supporting managers with long term absence particularly within the HSCP therefore it is hoped a reduction in absence in this area will be realised. The Council has also introduced a number of new leave types in July 21 which is also hoped to impact on absence but again given this was only in the second quarter of the performance year a positive impact may not be noticed until the following year. Page 49
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Appendix 1 Financial Services 59 The cost per dwelling of collecting Council Tax (CORP4) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute £9.26 £10.47 £7.00 £6.76 FG median £9.77 £9.83 £9.00 £8.87 Scotland £8.19 £7.56 £7.02 £6.64 How We Performed The cost to the Council of collecting council tax has reduced again this period by 3.6% and is the lowest cost achieved so far which is a positive result. The cost is substantially lower than that of our Family Group and slightly higher than the Scotland wide average. It is expected that these costs will be maintained at the current level in 2021/2022. Expected Future Performance and Impact of Policy Decisions Expect to maintain these costs at the current level in 2022/23 however the Revenue & Benefit Section is undergoing a Business Process Review (BPR) which may impact the figures from 2023/24 onwards. 2020-21 2019-20 2018-19 2017-18 £6 £6.76 £7.00 £8 £9.26 £10 £10.47 £12 Page 50
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Appendix 1 Financial Services 60 Percentage of income due from Council Tax received by the end of the year (CORP7) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 95.80% 96.11% 96.40% 96.12% FG median 96.20% 96.44% 96.37% 95.91% Scotland 96.00% 96.01% 95.76% 94.77% How We Performed Argyll & Bute continues to perform very well in this measure where a high percentage is a good result. To complement the cost of collecting council tax the percentage of council tax collected is again very high performing. As anticipated last year the percentage has dropped slightly on the previous year. The reasons given for this is the impact of the Covid pandemic on financial insecurity and the taxpayers’ ability to pay their Council Tax. The performance in 2021/22 has been good despite the challenges of Covid and the anticipated significant fall in Council Tax income has not been realised The performance achieved is higher than our Family Group and Scotland wide. Expected Future Performance and Impact of Policy Decisions Expect current performance beyond 2021/22 to be maintained. 2020-21 2019-20 2018-19 2017-18 94% 96.11% 95.80% 96.12% 96% 96.40% 98% Page 51
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Appendix 1 Financial Services 61 Percentage of invoices sampled that were paid within 30 days (CORP8) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 96.57% 97.12% 97.65% 96.04% FG median 92.01% 92.25% 93.57% 93.12% Scotland 93.19% 92.68% 91.72% 91.76% How We Performed Although performance in this indicator has dropped in this period it still far exceeds both the Family Group and Scotland wide performance which is a positive position to be in. This has been achieved despite the significant additional workload in relation to the payment of Covid related grants. This is especially important at the current time as small and medium size businesses continue to recover from the impact of Covid. Expected Future Performance and Impact of Policy Decisions Expected future performance is expected to rise again as the impact of Covid passes and the new ledger system becomes familiar. 2020-21 2019-20 2018-19 2017-18 90% 95% 96.04% 96.57% 97.65% 97.12% 100% Page 52
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Appendix 1 Financial Services 62 Total useable reserves as a percentage of Council annual budgeted net revenue (FINSUS1) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 23.84% 23.50% 23.10% 34.71% FG median 19.35% 17.80% 18.61% 26.10% Scotland 17.01% 16.57% 16.95% 23.60% How We Performed Higher is best. During this period the performance of this indicator has increased by 11.6% and is above both our Family Group and Scotland average figures. The level of reserves provides an indication of how a council is placed to meet unforeseen events. A low level of unallocated reserves may be a sign that a council could struggle if an unknown financial event were to occur. The Council follows the guidance outlined in the Chartered Institute of Public Finance and Accountancy (CIPFA) LAAP Bulletin in relation to Local Authority Reserves and Balances which provides guidance to local authorities on the establishment and maintenance of local authority reserves and balances. The level of the Council's reserves, and the extent to which an element of the general fund is not committed is kept under constant review. Should the Council's 2% contingency have to be utilised then the S95 Officer is required to put a recovery plan in place immediately to ensure the Council’s contingency balance is restored. In recent years’ the biggest threat to this was the risk of an Integrated Joint Board (IJB) overspend. If that occurred the partners (the Council and NHS Highland) would be required to make additional payments to the IJB. However, the IJB have repaid all their debt in 2021/22 therefore this threat has been removed. Levels of reserves were also higher in 2020/21 due to additional Covid funding and slippage within the capital programme as a result of works having to be put on hold. Expected Future Performance and Impact of Policy Decisions The level of reserves should reduce back to previous levels during 2022/23 as the Covid recovery period progresses and the funding is spent. The capital programme should also begin to pick up pace. 2020-21 2019-20 2018-19 2017-18 10% 20% 23.10% 23.50% 23.84% 30% 34.71% 40% Page 53
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Appendix 1 63 Financial Services Uncommitted general fund balance as percentage of Council annual budgeted net revenue (FINSUS2) Group 2017-18 2018-19 2019-20 2020-21 Argyll & Bute 2.81% 2.71% 2.53% 2.60% FG median 2.71% 2.69% 2.77% 3.09% Scotland 3.67% 3.51% 3.63% 3.52% How We Performed Lower is best. Although this indicator has risen slightly, it remains lower than the Family Group median and Scotland. This indicator reflects the conscious investment decisions the Council has made by utilising the uncommitted balance and therefore the decline is non‐unknown or unplanned. Additional commentary as per FINUS01. Expected Future Performance and Impact of Policy Decisions As per FINUS01. 2020-21 2019-20 2018-19 2017-18 2% 2.53% 2.60% 2.71% 2.81% 3% 4% Page 54
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Appendix 1 64 Measures for which there is no data yet: Adult Care • Percentage of carers who feel supported to continue in their caring role (SW4E) • Percentage of adults supported at home who agree that their services and support had a positive impact in improving or maintaining their quality of life (SW4b) • Percentage of adults supported at home who agree that they are supported to live as independently as possible (SW4c) • Percentage of adults supported at home who agree that they had a say in how their help, care of support was provided (SW4d) Commercial Services • Percentage of adults satisfied with libraries (C&L5a) • Percentage of adults satisfied with leisure facilities (C&L5d) Education • School attendance rate (looked after children) (CHN19b) • School exclusion rate (per 1,000 ‘looked after pupils’) (CHN20b) • Percentage of adults satisfied with local schools (CHN10) • Percentage of children living in poverty (after housing costs) (CHN24) Development and Economic Growth • Gross value added (GVA) per capital (ECON11) Commercial Services • CO2 emissions area wide per capita (CLIM1) Roads and Infrastructure Services • Percentage of adults satisfied with street cleaning (ENV7b) • Percentage of adults satisfied with refuse collection (ENV7a) Page 55
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Appendix 4 BACKGROUND / SCOPE OF RESPONSIBILITY Argyll and Bute Council’s (the Council) governance framework includes the systems, processes and culture by which the Council is controlled, engages with communities and monitors the achievement of strategic objectives. The Council conducts its business in accordance with the law and proper standards. The Council has a duty to make arrangements to secure continuous improvement in the way which its functions are exercised, having regard to the economic, efficient and effective use of public money. The system of internal control is a key part of the framework and is designed to manage risk to an acceptable level. In discharging these responsibilities, the Council has put in place proper arrangements for the governance of its affairs and the stewardship of the resources at its disposal. The Council has approved and adopted a Local Code of Corporate Governance (the Code), which is consistent with the principles and requirements of the CIPFA/SOLACE revised Framework for ‘Delivering Good Governance in Local Government 2016 and the Guidance Notes for Scottish Authorities 2016’. This Statement explains how the Council has complied with the Code and meets the requirements of current good practice. A copy of the Code may be obtained from the Head of Legal and Regulatory Services, Argyll and Bute Council, Kilmory, Lochgilphead, PA31 8RT and is also available on the Council’s website. THE GOVERNANCE FRAMEWORK The Code details how the Council will demonstrate compliance with the fundamental principles of corporate governance for public sector bodies. The seven key principles of our governance arrangements in 2021/22 are described in the Code, along with our supporting principles and key aspects of our arrangements to ensure compliance. Key features of our arrangements are summarised below. 1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. We have four values, which underpin all that we do and provide a sound basis to achieve transformation to ensure we meet the challenges of the future and deliver quality services. These values are that we have a workforce which is: Caring Committed Collaborative Creative We have developed and communicated an Ethical Framework within the Council's Constitution, which defines standards of behaviour for members and staff. Protocols for Member/Officer relations are also detailed within the Constitution. The Councillors’ Code of Conduct is set out at a national level, applying to all members in Scottish local authorities and is incorporated into the Council’s Constitution as part of the ethical framework which also includes a protocol for the monitoring officer. A register of members’ interests is available on the Council's website. The Constitution has a section on conduct at meetings and meeting agendas require declarations of interest to be made where appropriate. Anti-fraud and whistleblowing policies are in place and the Council has adopted the SPSO’s Model Complaints Handling Procedure. Standing orders for meetings are included within the Council’s constitution and training and Page 57 Agenda Item 19
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Appendix 4 support is provided to members on their role in Council committees. The Council complies with CIPFA’s Statement on the Role of the Chief Financial Officer in Local Government. 2. Ensuring openness and comprehensive stakeholder engagement. We have established clear channels of communication with the community and other stakeholders through our Communication Strategy. Key mechanisms include: Consultation Diary The Council has developed a consultation section on its website which hosts all consultations run by the Council, both current and historic. This includes a section which publicises the results and/or outcome of the consultation and the resultant decisions that have been taken, showing how they were informed by the consultation process. This is part of our commitment to You Said, We Did information sharing for the public. Keep in the Loop Service 2019/20 was the first full year that the pro-active Keep in the Loop Service was deployed. It proved hugely popular as a customer engagement tool and the 7927 customers subscribed to receive notifications across the range of services. In 21/22 the number of subscribers is 10489. For customers it meant that they have been kept up to date with topical council information and opportunities to provide valued input on matters that affect them. MyAccount Myaccount is the simple and secure sign-in service for accessing online public services in Scotland. It provides people living in Scotland with the ability to set up an online account and use it to access a growing range of online public services, Scotland-wide, including Argyll and Bute Council. 13,021 customers have signed up to this service, which is an increase from 11,079 in 2020/21. It allows customers to: Fill in forms automatically with your details Save forms for finishing later Track the progress of your reports and requests Access to council services that require proof of identity Access your council tax account and sign up for e-billing Find our when your bins are collected at a glance Manage your email subscriptions and alerts Avoid having to re-register with local council services when you move to a new part of Scotland Bookmark useful pages to make them easier to find Public Performance Reporting The Council’s website makes all performance information available to the public within the performance section. This includes information on performance scorecards, budgets and other service related information. This ensures the Council is openly accountable to the public for its performance against agreed policies and standards. Public Performance Reporting was reviewed in 2021 and improved as part of the Performance Excellence Project, an action in the BV3 Action Plan. Accessibility Online service provision is only effective if it is easy to access. In order to ensure maximum accessibility for everyone and meet our equalities responsibilities, the Council’s website has Page 58
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Appendix 4 been revised and refreshed to improve its rating for accessibility in the national Silktide accessibility score. In April 2022 the website had a 99% rating (excellent) and was the 13th highest ranking Council in the UK. In 2022 the website will be getting a major upgrade to Drupal 9 Content Management System and has procured expert input from Inspire Ltd to help with this Community Engagement The Council supports good community engagement with the resourcing of community development officers in the Community Planning and Community Development Team, part of the Chief Executives Unit. The team has resources and expertise to support hard to reach groups, community organisations and remote communities to have a voice in decision making. The team also provides best community engagement practice for any other requirement. The Council also oversees the work of Community Learning (Youth Work and Adult Learning) through its collaboration with its Arms-length External Organisation (ALEO) partner Live Argyll. The Council’s Community Development Team can also assist community organisations with developing new projects, funding opportunities, training needs and support with evaluation techniques. Local Community Development Officers also support community groups, organisations and individuals, particularly those who do not traditionally engage in community issues, to participate in local Area Community Planning Groups. Further to this the team has a Gaelic Development Worker to support and engage Gaelic learning and Gaelic speaking communities. The Council’s Governance section supports community engagement by providing the staff resource to support Area Community Planning Groups which act as a forum to enable local groups and organisations to participate in Community Planning and partnership working at a local area level throughout Argyll & Bute. The section has put arrangements in place across the partnership members to ensure these groups have had the ability to continue to meet on a virtual basis during the Covid19 pandemic response period. It also plays a key role in supporting the Community Safety Partnership which is an integral part of the Community Planning Partnership and takes a lead in relation to Outcome 6 of the Argyll and Bute Outcome Improvement Plan: People live in safer and stronger communities. This group has produced its first Community Safety Strategy which sets out strategic priorities and how the partnership will work together to focus resources in support of agreed actions. It also supports community engagement by resourcing community council liaison activities, including training and support activity, which helps to build the capacity of community councils. During the Covid 19 response period the Scheme for the Establishment of Community Councils was amended to facilitate community councils being able to meet on a virtual basis during this period to fulfil their representative role and advice and support was provided to facilitate this development. The Council actively seeks to ensure that young people are engaged in Community Planning and has implemented the following initiatives: The 3 local Members of the Scottish Youth Parliament (MSYP's) attend the Community Planning Partnership Management Committee meetings on a rotational basis. The Area Community Planning Groups invite members of local Youth Forums to attend meetings when they are held in their local areas & information is passed on to young people by Youth Workers who are kept updated on any developments. One ACPG currently has a young person in the Vice Chair role. Page 59
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Appendix 4 The revised Scheme of Establishment for Community Councils outlines the requirement to encourage young people to attend and participate in community council meetings” and the age to become a Community Councilor was lowered to be 16 to encourage more young people to become involved. The Council continues to promote the Community-Led Action Planning Toolkit (developed in partnership with Scottish Community Development Centre). Communities are being supported to consider use of the online toolkit in developing action plans that the community can lead on to address issues and needs in their communities. There are a number of existing community-led action plans and these are recognised as important community contributions to area community planning. The Community Planning Partnership undertook a Place Standard Engagement exercise to help shape the CPP priorities from 2021. This information has also been shared with communities to be used to develop community led action plans. A strong Community Planning Partnership (CPP) is in place with partners leading on each of the outcomes and emerging cross-cutting thematic working groups. This ensures a shared sense of accountability and ownership of working towards realising the CPP priorities. During the Covid pandemic, the council engaged with local community response groups, making sure that groups were supported with good practice and resources where required such as – lone volunteering policies, safe medication delivery process, insurance, confidentiality guidance etc. Regular online drop-in sessions were established and ran for a period of 2 years for the groups to receive updates and to enable them to highlight needs/challenges and ask questions of Council and its partners. Council/Committee Meetings Meetings are always held in public, unless one of the statutory exemptions in the Local Government (Scotland) Act 1973, schedule 7A applies to the content of the report. Agendas for and minutes of meetings are detailed on the Council’s website. When schedule 7A applies papers are adjusted to ensure that the maximum amount of content is in the public domain. The Council’s constitution defines the roles and responsibilities of the administration, committees, scrutiny and officer functions, with clear delegation arrangements and protocols for effective communication. The constitution is updated on an annual basis with the last update carried out in October 2021. The constitution includes collective and individual roles and responsibilities of the Leader, Provost, Policy Lead Councillors, other councillors and officers. It also includes a protocol for the role of the Monitoring Officer (the Executive Director for Customer Services). Best Value (BV) is assessed by the Council’s external auditors over the five year audit appointment, as part of the annual audit work and, additionally, a Best Value Assurance Report (BVAR) for each Council will be considered by the Accounts Commission at least once during this five year period. The Council’s Chief Executive presented an update on the Action Plan to the Council’s Audit and Scrutiny Committee on 16 March 2021 who accepted the progress to date. Audit Scotland followed up with the Council in May 2021 to review evidence against the progress listed in the Action Plan and stated in their Annual Report (December 2021) that the Council has made good progress. A further progress report was submitted to the Audit and Scrutiny Committee 15 March 2022 which illustrates how 22 of the 36 actions are complete and that a further report will come back in 12 months to provide a further update on the 14 actions remaining. The Standards Commission Advice Note for Councillors on Distinguishing between their Strategic Role and any Operational Work has previously been included in an Elected Member Page 60
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Appendix 4 Seminar and is hosted on the Members Resource page on the Hub for ease of reference. 3. Defining outcomes in terms of sustainable economic, social, and environmental benefits. Our Corporate Plan sets out our, and our community planning partner’s, vision for Argyll and Bute’s economic success to be built on a growing population. It also defines our mission “To make Argyll and Bute a place people choose to live, learn, work and do business” and establishes our outcomes, priorities and approach to delivering on our shared ambition with our community partners. All services have plans containing an agreed set of quality standard measures which feed into the overall Corporate Plan. We have a Performance Improvement Framework (PIF) that ensures performance is integral to the work of the Council. The PIF is focused not just on measuring what we do but on measuring the difference we make in terms of our outcomes. Councillors and senior managers review and scrutinise the Council’s performance at all levels to ensure our services are having the desired impact on our communities and customers. At a strategic level, performance is scrutinised through our strategic committees and, more locally, at our area committees. The Audit and Scrutiny Committee, which meets four times a year, has a key role in reviewing and scrutinising how we are meeting our strategic objectives. They also promote good internal control, financial and risk management, governance and performance management, in order to provide reasonable assurance over the effective and efficient operation of the Council, and compliance with laws and regulations, including the Council’s Financial and Security Regulations, Contract Standing Orders and accounting codes of practice. The Council’s Capital programme and capital investment strategy is considered by the Executive Management team and approved by the Council at the budget meeting. 4. Determining the interventions necessary to optimise the achievement of the intended outcomes. The Council’s Executive leadership team meet regularly with the administration to discuss their key priorities and requirements for decision making in addition there is regular survey and feedback on their needs and a regular review of governance arrangements to ensure that decision making is fully supported. The Council’s complaints process ensures that service and operational issues are picked up and improvements are undertaken when required. Services carry out consultations and public surveys on various projects and service improvement areas across the Council which inform reporting and decision making on these. The Council’s performance management framework has KPI’s allowing the monitoring of service outcomes which are reported to the ELT and Members enabling management decision and appropriate interventions to be taken. Business outcomes are mapped to the corporate plan and the budget consultation process ensures that service priorities are affordable within resource constraints. 5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. Elected Member Development The Council has signed up to the Improvement Service’s Continuing Professional Development Framework for Elected Members. All Elected Members are provided with opportunities to progress personal development plans so that individual training needs and aspirations are identified and support provided as appropriate. This is complemented by a comprehensive seminar and workshop programme which addresses a wide range of topics Page 61
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Appendix 4 and strategic issues. Since the introduction of new ways of working and operating in a virtual environment in response to the Covid-19 pandemic this programme has moved on-line and during 2021/22 a regular programme of webinars and workshops have taken place on-line which has facilitated a higher level of attendance. Additional training was undertaken by Elected Members in relation to the technology, knowledge and skills necessary to support the transition to a virtual environment including webcasting of strategic Committee meetings and the operation of meetings on a hybrid basis, enabling a mixed attendance of members being physically or virtually present. Support has been provided to Chairs in terms of process and guidance notes to facilitate the transition to operating on a virtual basis and enhance effectiveness in this regard. During this period a review of Elected Member Induction was undertaken in advance of Local Government Elections in May 2022. The programme was redesigned to focus on the whole geographical area of Argyll and Bute and to enable Members to gain a perspective on both local and strategic issues across the Council area whilst ensuring they have the opportunity to gain the knowledge and skills necessary to facilitate effective decision making, scrutiny and challenge in the early days of the new term. Following the 3 by-elections that took place in 2021-22 there was the opportunity to pilot some of the induction material on a virtual basis. Officer Development The Council supports officer development through a structured approach, driven by the values set out in the Corporate Plan and a behavioural competency framework. The Council has Argyll and Bute Manager and Leadership Programmes, which ensure that all employees who have management responsibilities are knowledgeable and effective in delivering services within the priority management policies and procedures of the Council, including finance, performance and people management. The Leadership Programme ensures that senior and aspiring leaders in the organisation have support to develop their leadership behaviours and to improve their overall impact and performance across the organisation. 6. Managing risks and performance through robust internal control and strong public financial management. Internal Financial Control Our standing orders, financial instructions, scheme of delegation and supporting procedure notes/manuals clearly define how decisions are taken and the processes and controls in place to manage risks. These are reviewed and updated on an annual basis. We ensure compliance with relevant laws and regulations, internal policies and procedures, and that expenditure is lawful. The Council’s Monitoring Officer advises on compliance with our policy framework, ensuring that decision making is lawful and fair. Our financial management arrangements conform to the CIPFA Statement on the Role of the Chief Financial Officer and we ensure that our independent Audit and Scrutiny Committee undertakes the core functions identified in CIPFA’s Audit Committees – Practical Guidance for Local Authorities. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The Council has a designated Data Protection Officer and all services have Information Asset Registers along with appropriate guidance on how data should be managed. The Council has a system of internal financial control designed to manage risk to a reasonable level. It is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Page 62
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Appendix 4 Development and maintenance of the system is undertaken by officers within the Council and the named bodies mentioned below. In particular the system includes: comprehensive budgeting systems regular reviews by the Council and the named bodies (mentioned below) of periodic and annual financial reports which indicate financial performance against forecast setting targets to measure financial and other performance the preparation of regular financial reports which indicate actual expenditure against forecast clearly defined capital expenditure guidelines project management disciplines guidance relating to financial processes, procedures and regulations an effective Internal Audit section. Internal controls cannot eliminate risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. This annual review also covers the other bodies whose activities are incorporated into our Group Accounts and reliance is placed on the formal audit opinion contained in the financial statements of each individual body. Dunbartonshire and Argyll and Bute Valuation Board Strathclyde Partnership for Transport Strathclyde Concessionary Travel Scheme Joint Committee Live Argyll Argyll and Bute Integration Joint Board The Council’s risk management processes are well developed. In particular the: Strategic Risk Register is updated twice a year and approved by the SMT Chief Executive presents the Strategic Risk Register to the Audit and Scrutiny Committee on an annual basis Operational Risk Registers are updated quarterly by departmental management teams. Internal audit has a key role in relation to the Council’s governance to provide assurance over the effective management of risk. In September 2019 the Audit and Scrutiny Committee agreed that the CIA would perform an annual strategic risk assurance mapping exercise with this replacing a previous annual requirement for a risk management report. This was presented to the Audit and Scrutiny Committee in September 2019, September 2020 and September 2021. This exercise has confirmed that for all the risks in the Council’s strategic risk register there are either sufficient assurances in place or internal audit currently have scheduled work to fill identified gaps. This mapping exercise will continue to be performed annually and Internal Audit will perform an audit of compliance with risk management arrangements every three years unless issues are brought to the attention of the Chief Internal Auditor which would suggest a review is required outwith that cycle. Page 63
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Appendix 4 7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability Internal Audit The Council and its Group bodies have internal audit functions, which operate to Public Sector Internal Audit Standards. The work of internal audit is informed by an analysis of the risk to which the Council and its Group bodies are exposed, with annual internal audit plans prepared based on that analysis. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The COVID-19 pandemic meant the 2021/22 audit plan needed to be revised and this revision was approved by the Audit and Scrutiny Committee on 15 March 2022. This was due to a need to redeploy audit resource to priority tasks required to support the Council’s response to the pandemic and support Financial Services. This resulted in three audits being removed from the 2021/22 plan. The Chief Internal Auditor provides the Audit and Scrutiny Committee with an annual report on internal audit activity in the Council and this confirms that reasonable assurance can be taken that the systems of governance and internal control are operating effectively. Internal audit provides members and management of the Council with independent assurance on risk management, internal control and corporate governance processes. External audit has, and continues to, place reliance on the work of internal audit. The Chair of the Audit and Scrutiny Committee is an independent lay member. During 2021/22, one of the seventeen audit reports presented to the Audit and Scrutiny Committee had an overall audit opinion of ‘limited’ assurance. The audit related to Contract Management Roads and Amenity Services. For these and all other audit reports, an action plan has been agreed and progress against their delivery is routinely monitored by Internal Audit. Management have accepted 100% of audit recommendations and a robust follow-up system is in place with progress reports presented to the SMT on a quarterly basis. During 2021/22 the following developments were made within Internal Audit: the counter fraud team worked alongside internal audit to ensure there is cross team learning the CIA engaged with members of the Audit and Scrutiny Committee as part of the planning process for the 2022/23 audit plan the internal audit team delivered internal audit services to the Argyll and Bute Health and Social Care Partnership, undertaking 3 audits which were presented to the Audit and Risk Committee. Clear reports on a common format which are publically available and the Council has developed a hybrid meeting facility enabling physical and virtual attendance at meetings with a public broadcast function so that members of the public can see and hear meetings of the Council’s strategic committees live increasing openness and transparency. The Council prepares an annual report and an annual governance statement. The Audit and Scrutiny Committee receive an annual Strategic Risk Assurance Mapping report which helps inform their consideration of potential scrutiny topics. This is supported by the Council’s Scrutiny Framework and Manual which continues to be refreshed on an annual basis as the Council’s approach to scrutiny evolves and matures. GOVERNANCE ROLES AND RESPONSIBILITIES The Council has appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is adequate and effective in practice. The legislative framework of local government defines a number of posts which are primary to the Council’s governance arrangements. These include the Chief Executive, Pippa Milne fulfilling Page 64
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Appendix 4 the role of Head of Paid Service. As Monitoring Officer, the Executive Director Douglas Hendry: oversees the implementation of the Code and monitoring its operation reports annually to the Council on compliance with the Code and any changes required to maintain it and ensure its effectiveness. Account has been taken of the results of reviews of internal control that have been carried out within each council service. Specific responsibilities are assigned to the Executive Director Kirsty Flanagan as the Council’s Chief Financial Officer (S95 Officer), to ensure that public funds are properly accounted for. In recognition of the significant role that the Chief Financial Officer has in relation to financial performance and the financial control environment, CIPFA has set out key principles that define the core activities and behaviours that belong to the role. These include, being a key member of the Leadership Team, being actively involved in and influencing decision making, and leading the delivery of good financial management across the whole organisation. The Council have appointed a Data Protection Officer in line with the requirements of the UK- General Data Protection Regulations and the Data Protection Act 2018. IMPACT OF COVID-19 ON GOVERNANCE Throughout the period 2021-22 the Council continued to operate Council and Committee meetings on a virtual basis in response to the Covid 19 pandemic. The Council has invested significantly in the technology to enhance the virtual meeting environment with the transition from Skype to the increased functionality offered by MSTeams and by providing the additional option to operate on a hybrid basis, where attendance can be on a virtual or in person basis. The hybrid option was introduced in the first quarter of 2022 and is scheduled to be rolled out to Area Committee Meeting later in 2022. During this period the Council also commenced recording strategic meeting of the Council and hosting these for the public on the Councils website. This has now progressed to webcasting for strategic committees with the first webcast meeting being the Policy and Resources Committee in December 2021. This approach facilitates a greater reach in terms of Public access to meetings and underpins our commitment to transparency and accessibility. The Council Constitution and associated protocols were amended to incorporate these developments in October 2021. COVID-19 also impacted on governance across services during 2021/22 and this has been assessed against four broad categories: 1. Impact on business as usual in the delivery of services While the Council returned to a more business as usual footing during the period, some specific areas where service delivery has been impacted are: restrictions on travel and social distancing requirements continued to impact on the ability of planning officers to visit application sites and enforcement complaints – this required the use of remote verification inspections to be implemented a wide range of services within Roads and Infrastructure Services continued to be impacted to some extent, but not limited to, burials, cremations, refuse collection, civic amenity sites, home to school transport and ferry transport Learning and teaching moved from distance learning and returned to classroom teaching across Argyll and Bute. Page 65
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Appendix 4 2. New areas of activity as part of the national response to COVID-19 and any governance issues arising Some specific examples of new areas of activity are: move to flexible online home working for 1400 employees with access via secure vpn to all files, processes and telephony establishing procedures for estates staff to work safely, carry out remote marketing and arrange premises for COVID related projects additional cleansing of buildings such as schools, public conveniences, crematoria chapel, and a variety of vehicles including ferries and refuse vehicles. providing business support through the administration of COVID specific Scottish Government grants to local businesses and self-employed people a Community Food Programme team to ensure vulnerable people can access food and provision of doorstep delivery of free school meals a Caring for People partnership bringing together the Health and Social Care Partnership, Third Sector Interface and the Council to work together with a focus on helping people affected by COVID-19 to receive essential support where no other support exists redeployment of staff from substantive posts to provide support in critical areas of response activity establishment of HUB schools for children of keyworkers. 3. The funding and logistical consequences of delivering the local government response The Council’s Financial Services team have worked in conjunction with all services to capture and monitor the financial impact of COVID-19 in terms of creating new cost pressures and its impact on the delivery of agreed savings options. 4. Recovery and reinstating services post COVID-19 The Council agreed a ‘Recovery Strategy and Framework’ in 2020 focused on considering the actions and priorities required to return the Council, its services and wider issues including economic and social recovery, to the “new norm”. An Argyll and Bute Overarching Recovery Group was formed to lead this process with specific thematic groups focused on Council recovery, building back stronger communities, economic and social recovery, infrastructure and transportation, financial management and public health. This work recognised the impact of the pandemic on widening inequalities and is considering longer term social and economic impacts. Good progress has been made and the Councils published its Recovery document “Recovery, Renew and Restart” outlining its achievements and current priorities. FINANCIAL SUSTAINABILITY It is anticipated the Scottish public sector will continue to face a very challenging short and medium term financial outlook with significant uncertainty over the scale of likely reductions in funding. The one year financial settlements do not provide any degree of medium term certainty and ring-fencing of monies and additional policy commitments which are not always fully funded limit financial flexibility and create additional financial pressures. The financial outlook is significantly exacerbated by the extent to which COVID-19 will continue to impact on expenditure, loss of income and future years funding levels. The additional funds made available by the UK and Scottish Government to combat the impact of COVID-19, and the agreement on financial flexibilities to date, have been sufficient to combat the financial impact of COVID to the Council in 2021/22 and 2022/23. However there Page 66
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Appendix 4 is likely to be ongoing pressure on the Capital Programme as a result of increasing costs that is difficult to accurately quantify at this stage and while an element of COVID-19 funding has been allocated to the programme relating to current works, increases could continue for some time and result in further overspends across the life of the programme. It may be that we will need to re-prioritise some of our capital spending. The Council continues to provide financial estimates for future years with their medium term financial outlook covering a five year window to provide a longer term view of the Council’s estimated budget gap. Preparing any forward looking financial outlook is challenging due to the levels of uncertainty however the assumptions are reviewed regularly and updated with the outlook prepared to reflect a best case, worst case and mid-range scenario. The Council continues to be committed to developing multi-year savings proposals with a focus on longer term planning. The additional work and pressure on teams as a result of COVID during 2021-22 meant that there had to more of a focus on balancing the 2022-23 budget, however, some of the savings options impact on future years. The Scottish Government Resource Spending Review published on 31 May 2022 is hoped to provide sufficient information to allow Council’s to plan with more certainty as it will set out the spending plans for the remainder of the parliament term 2023-24 to 2026-27. As with previous years, it is the intention to establish a cross party Budget Working Group who would meet early August to commence the budget discussions for 2023-24 and beyond. The Council has a strong track record in financial management as recognised by previous year’s annual external audit reports and the Council’s Best Value report issued in May 2020. The Best Value report also recognises that the Council’s medium to long term financial strategy helps support financial planning arrangements. This strategy was updated in August 2021 as recommended in the Best Value report and now covers the period 2020-21 to 2029- 30. In addition to providing revenue and capital projections the Strategy also sets out the position in relation to the Council’s general fund reserve, the approach to managing the financial impact of COVID-19, approach to Treasury Management and the strategy to address budget gaps. HEALTH AND SOCIAL CARE INTEGRATION The Argyll and Bute IJB has been established as a separate legal entity from Argyll and Bute Council and NHS Highland, with its own separate governance arrangements. The IJB comprises eight voting members with four Elected Members nominated by Argyll and Bute Council and four Board members of NHS Highland. In addition there are a number of non- voting appointees representing other sectors and stakeholder groups, such as the Third Sector, Independent Sector, Patients and Service Users, Carers and Staff. The arrangements for the operation, remit and governance of the IJB are set out in the Argyll and Bute Integration Scheme which has been approved by Argyll and Bute Council and NHS Highland. This was most recently revised and formally signed off by the Scottish Government on 23 March 2021. The IJB, via a process of delegation from the Health Board and Local Authority as outlined in the Scheme of Integration has responsibility for the planning, resourcing and operational delivery of all integrated health and social care services within Argyll and Bute. The Council places reliance on the IJB’s framework of internal controls and similarly the IJB places reliance on the procedures, policies and operational systems of the Council and the Health Board. The IJB operates within an established procedural framework. The roles and responsibilities of board members and officers are defined within Standing Orders, the Integration Scheme, Financial Regulations and Standing Financial Instructions. The IJB has proportionate internal audit arrangements in place to provide independent assurance on risk management, corporate governance and the system of internal control. A Page 67
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Appendix 4 risk based internal audit plan was carried out in 2021-22 and the IJB’s internal auditor has issued a formal annual report providing their independent opinion on the effectiveness of the IJB’s risk management, internal control and governance processes. During 2021-22 the IJB has further progressed a number of initiatives to develop its governance arrangements including embedding board development events within its governance structures, its committee annual reporting and evaluation process, progressing an induction and development program for staff and implemented its revised risk management strategy.It has also established a new Contingency Risk and Resilience Committee to reflect its status as Category 1 responder. The IJB has faced substantial financial challenge since its inception. However, during 2020/21 and 2021/22 it has been able to deliver savings, operate within its budget and generate a small general reserve from its’ underspend for the year. The HSCP delivered an underspend of £1.738m against the resources available to it, these totalled £307m for the year. During 2021/22 the IJB was able to repay the final £2.8m that it owed to Argyll & Bute Council relating to previous overspends. The IJB has welcomed the recent increases in funding from Scottish Government and this has enabled it to set a balanced budget with a realistic savings program. Like all public bodies, the HSCP is required to continually improve its efficiency and the value for money associated with the services it provides. It will do this through its Transformation agenda and its savings plans. It is now also seeking to develop longer term plans for investment in its physical and digital infrastructure in the coming years. The HSCP also anticipates that it faces a period of significant structural change as the National Care Service is introduced. UPDATE ON AREAS FOR DEVELOPMENT IN 2020/21 ANNUAL GOVERNANCE STATEMENT The 2020/21 Annual Governance Statement identified a number of areas for further development. A summary update for each area is provided in the table below. Area 2021/22 Update Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio-degradable Municipal Waste Ban Specialist economic consultants now engaged on an options appraisal exercise to help inform the decision. This is to be reported to September’s ED&I committee. Further develop the Council’s Counter Fraud Team The Counter Fraud Team (CFT) have submitted a report to Strategic Management Team which will be considered at the beginning of July which outlines the actions, rebilling and recovery to date. The pilot is due to end in September and there is a proposal for the team to be made permanent. Progress the project to upgrade the Council’s general ledger system with an anticipated go live This has now been pushed back to 6 June 2022 at the earliest due to issues which have surfaced during the implementation of the automated interface between Concerto and Oracle. Page 68
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Appendix 4 of 1 April 2022 Complete the development of the automated interface between the Property Management System (Concerto) and the Financial System (Oracle) to process contractor payments The capital Oracle/Concerto interface has been completed. The revenue interface has been delayed because of the need for Oracle to be updated as advised above. Review of the scheme of delegation in relation to property matters to ensure decisions are taken at the correct level Further review of property delegations will be included in the next review of the constitution. Enhance reporting of workforce planning to the Strategic Management Team and Elected Members Operational Workforce plans are reviewed on a six monthly basis and each team in the council are assigned a WFP risk rating. Data from these discussions are collated and analysed in a report which is presented to SMT. HROD team highlight any common themes that would benefit from a revised corporate approach. Quarterly health of the organisation reports are presented to DMT and SMT which cover a number of workforce indicators. Further progress the work to digitalise all document and evidence exchanges for Local Development Plan 2 ‘Examination in Public’ Complete and DPEA have complimented D&EG on the provision of information in the required format Respond to the findings of the Scrutiny Review of the Strategic Housing Fund which is to be reported in June 2021 All identified actions have been completed Continue to improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management Contract let and work underway to gather updated asset information for major buildings – new plans being drawn. Estates has continued to improve records with the property measurement contract providing new plans for properties. As part of the asset valuation process Estates also building up property records and will use the details for the insurance valuation updates to be completed in 2022/23. Page 69
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Appendix 4 Further progress the implementation of a self-billing approach using CareFirst for payments to social care providers This action has been suspended pending the implementation of two new key systems which would be integral to the revised process: The Oracle Fusion Financial Management System and the Eclipse Social Work Management System. Once the two systems are up and running and we know what the Eclipse system can do – the vendor is still writing the software - we’ll be able to determine the actions necessary to implement this process. ISSUES FOR FURTHER DEVELOPMENT The review of governance and internal control has identified the following areas for consideration during 2022/23, particularly in the context of continuous improvement within the Council: Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio-degradable Municipal Waste Ban (Head of Roads and Infrastructure Services – March 2023) Further enhance reporting of workforce planning to the Strategic Management Team and Elected Members (Head of Customer Support Services – March 2023) Finalise the project to upgrade the Council’s general ledger system with an anticipated go live of 6 June 2022 (Head of Financial Services – June 2022 Finalise the implementation of a self-billing approach using CareFirst for payments to social care providers (Head of Financial Services – March 2023) Complete the development of an automated interface between Concerto and Oracle (Head of Commercial Services – March 2023) Improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management (Head of Commercial Services – March 2023) Progress roll-out of Microsoft 365 (Head of Customer Support Services – March 2023) Develop data/analytics business intelligence tool (Head of Customer Support Services – March 2023) Undertake review of performance information (Head of Customer Support Services – March 2023) External Quality Assessment Framework (Head of Financial Services – March 2023) ASSURANCE The annual review of the effectiveness of the system of governance and internal financial control is informed by: the work of officers within the Council the work of Internal Audit as described above the work of External Audit the Statements of Governance and/or Internal Control provided by the bodies incorporated into our Group Accounts Page 70
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Appendix 4 statements of assurance provided by the Council’s Chief Executive, Executive Directors and Heads of Service external review and inspection reports; and recommendations from the Audit and Scrutiny Committee. It is the Council’s view that the systems for governance and internal control are operating effectively within Argyll and Bute Council and the aforementioned bodies during 2021/22 and that there are no significant weaknesses. This assurance is framed within the context of the work undertaken during the year and the evidence available at the time of preparing this statement. Page 71
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 23 JUNE 2022 2021-22 UNAUDITED ANNUAL ACCOUNTS 1. EXECUTIVE SUMMARY 1.1 This covering report gives an overview of the unaudited annual accounts for 2021-22 and a summary of the significant movements from 2020-21. It also gives information on the revenue outturn for 2021-22 and Council will be asked to approve the Unaudited Annual Accounts for 2021-22 for issue. 1.2 The Comprehensive Income and Expenditure statement shows a surplus on the provision of services of £1.025m, a surplus on the revaluation of Long Term Assets of £11.143m and an actuarial gain on the pension fund assets/liability of £110.648m giving an accounting surplus of £122.816m. 1.3 The Balance Sheet shows that the net worth of the Council has increased by £122.814m from £345.370m as at 31 March 2021 to £468.184m as at 31 March 2022. The main reason for this increase is a swing in the pension scheme which went from a liability of £82m in 2020-21 to an asset of £5m in 2021-22. Our pension figures are provided by external actuaries and their explanation for this is that investment returns have been greater than expected leading to positive return on assets. 1.4 The balance of unusable reserves has increased by £103.973m from £260.585m as at 31 March 2021 to £364.558m as at 31 March 2022. The main reasons for the increase relates to the increase in the pension fund reserve referenced to above. 1.5 The balance of usable reserves has increased by £18.841m from £78.245m as at 31 March 2021 to £96.530m as at 31 March 2022. This is due to an increase to the General Fund of £18.285m in addition to small increases to the Capital Fund and the Repairs and Renewals Fund. 1.6 In respect of the General Fund Balance movement, there has been an increase of £18.285m from a balance of £78.245m to £96.530m. The main increase is in respect of new earmarking of funds at the end of 2021-22, with the most significant being in respect unspent grant carry forwards in addition to COVID-19 funding and unspent budget carry forward proposals. There are substantial sums earmarked within the general fund amounting to £89.433m. The Council has agreed to hold a contingency balance equivalent to 2% of the Council budget and this amounts to £5.256m. The remaining unallocated balance amounts to £1.841m. 1.7 The performance against budget for financial year 2021-22 was an overall Page 73 Agenda Item 20
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underspend of £1.630m, 0.59% after accounting for new earmarking. There was a net underspend of £0.815m in relation to Council services departmental expenditure, a net overspend of £0.432m in relation to other central costs and a net over recovery of income of £1.247m. Social Work, managed by the Health and Social Care Partnership were underspent by £1.738m and this amount is recognised as a creditor on the balance sheet as money owing to the HSCP by the Council which creates a nil variance on the revenue monitoring position. 1.8 The Committee is asked to consider the Unaudited Annual Accounts for the year ended 31 March 2022. Page 74
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 23 JUNE 2022 2021-22 UNAUDITED ANNUAL ACCOUNTS 2. INTRODUCTION 2.1 This covering report gives an overview of the Unaudited Annual Accounts for 2021-22 and a summary of the significant movements from 2020-21. It also gives information on the revenue outturn for 2021-22 and Council will be asked to approve the Unaudited Annual Accounts for 2021-22 for issue. 3. RECOMMENDATIONS 3.1 The Committee is asked to consider the Unaudited Annual Accounts for the year ended 31 March 2022. 4. DETAIL Introduction 4.1 The annual accounts set out the financial statements of the Council and its group for the year ended 31 March 2022. Its main purpose is to demonstrate the stewardship of public funds entrusted to the Council. The requirements governing the format and content of local authorities’ annual accounts are contained in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The 2021-22 accounts have been prepared in accordance with this Code. 4.2 There is a statutory requirement to prepare a set of accounts and submit them to the Council and the Controller of Audit. The date set by the Scottish Government for the submission of the unaudited annual accounts is 30 June each year. 4.3 It should be noted that the Annual Accounts have still to be audited and therefore figures are subject to change. Once the audit has been completed the Audit and Scrutiny Committee will be advised by the external auditor of any material issues coming to light during the audit and any changes to the Accounts. The timing of this meeting will depend on when the audit is completed. The Audited Accounts, Audit Certificate and Auditors final report will then be submitted to the Council. 4.4 Since 2010-11, Local Authorities have been required to prepare financial statements following International Financial Reporting Standards (IFRS). Under the Local Authority Accounts (Scotland) Regulations 2014 there is a requirement to include a Management Commentary in the Accounts. The contents of the Annual Accounts are noted below: Management Commentary Statement of Responsibilities for Annual Accounts Annual Governance Statement Page 75
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The Remuneration Report Expenditure and Funding Analysis Statement of Comprehensive Income and Expenditure Balance Sheet Statement of Movement in Reserves Cash Flow Statement Notes to the Financial Statements Council Tax and Non-Domestic Rate Income Accounts Group Accounts 4.5 Management Commentary: The Management Commentary outlines the key messages regarding the objectives and strategy of the Council and its financial performance for the year. It also looks forward, outlining the future financial plans for the organisation and the challenges and risks which are faced in making Argyll and Bute a place where people want to live, learn, work and do business. 4.6 Statement of Responsibilities for the annual accounts: this outlines the Council’s responsibilities and also the responsibilities of the Council’s Section 95 Officer. 4.7 Annual Governance Statement: this statement states its view on the adequacy of its governance and internal control system. It is the Council’s view that the systems for governance and internal control are operating effectively within Argyll and Bute Council during 2021-22 and that there are no significant weaknesses. 4.8 Remuneration Report: this report provides details of the remuneration policy, remuneration and pension benefits of senior councillors and senior officers in addition to detail on employee exit packages. 4.9 Expenditure and Funding Analysis: this shows how the Council funding is spent across services. It also compares to the expenditure shown in Comprehensive Income and Expenditure Statement (CIES) and details the differences between the two. The differences are as a result of accounting statutory adjustments that are required within the CIES, for example, depreciation, pension adjustments etc. Comprehensive Income and Expenditure Statement (CIES) 4.10 The statement of comprehensive income and expenditure shows the accounting cost of providing services rather than the amount to be funded from taxation. The Council is required to make various statutory accounting adjustments to the net cost of services as reported in the budgetary outturn in order to comply with the Code. These accounting adjustments include depreciation, loans fund principal repayment and accrued holiday leave not taken by 31 March 2022. 4.11 The Council ended the year with a surplus of £122.816m for 2021-22, this is the accounting surplus based on the IFRS compliant accounts rather than the movement in the General Fund Balance. The total Comprehensive Income and Expenditure comprises of a surplus on the provision of services of £1.025m, increased by a surplus on the revaluation of Long Term Assets of £11.143m and an actuarial gain on the pension fund assets/liability of £110.648m. Page 76
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4.12 The surplus on the provision of services of £1.025m compares to a surplus of £14.257m for 2020-21. The main factors contributing to this change is an increase in the Net Cost of Services of £25.792m, a decrease in other operating income and expenditure of £5.934m, a decrease in financing and investment income and expenditure of £0.336m and an increase in the overall funding of £6.290m. 4.13 The table below, sets out a reconciliation of the surplus on the provision of services of £1.025m as noted in the Statement of Comprehensive Income and Expenditure to the revenue budget outturn of £1.630m underspend. 4.14 Balance Sheet: The Balance Sheet shows that the net worth of the Council has increased by £122.814m from £345.370m as at 31 March 2021 to £468.184m as at 31 March 2022. The major changes are set out in the table below. 31/03/2021 £000 31/03/2022 £000 Change £000 Main Reason Long Term Assets 671,332 687,461 16,129 Revaluation of fixed assets and addition of pension debtor due to an increase in investment returns Current Assets 103,849 123,285 19,436 Investments previously categorised as long term now £000 £000 Surplus/(Deficit) on Provision of Services 1,025 Remove statutory adjustments that don't feature in budget outturn: Depreciation 23,325 Impairment of Assets charged to services 1,252 Capital Funding (21,700) CFCR (735) Pension Adjustment 23,700 Statutory Repayment of Debt (2,514) Repayment of Finance Leases (4,844) Transfers to/from Other Statutory Reserves (553) Other Adjustments (671) 17,260 Movement In General Fund Balance 18,285 £000 £000 Adjust for earmarkings: Released sums earmarked to service budgets 2020-21 18,921 Supplementary estimates agreed during 2020-21 (2,975) Revenue Budget 20-21 - investment in Capital (7,562) Repayment of Social Work Overspend by HSCP (2,759) Contributions to earmarked reserves 2020-21 (22,280) (16,655) Revenue Budget Underspend/(Overspend) 1,630 Page 77
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moved to short term as due to mature in less than 1 year. Current Liabilities (55,667) (66,513) (10,846) Increase in temporary borrowing after a period of little/no borrowing during the height of the pandemic. Long Term Liabilities (374,144) (276,049) 98,095 Pension liability reduced to zero as investment returns have been greater than expected leading to positive return on assets. Total 345,370 468,184 122,814 4.15 Statement of Movement in Reserves - This Statement shows the movement on the different reserves held by the Council, analysed into usable reserves (resource backed reserves which can be used to fund expenditure) and unusable reserves (required purely for accounting purposes and are not backed by resources). 4.16 The total Council reserves have increased from £345.370m at 31 March 2021 to £468.184m at 31 March 2022, an increase of £122.814m. 4.17 The balance of unusable reserves has increased by £103.973m from £260.585m as at 31 March 2021 to £364.558m as at 31 March 2022. The main reason for this increase is a swing in the pension scheme which went from a liability of £82.314m in 2020-21 to an asset of £4.634m in 2021-22 and an increase in the revaluation reserve of £10.511m which arises from revaluations of properties within the Council’s 5 year rolling programme. 4.18 In respect of the General Fund Balance movement, there has been an increase of £18.285m from a balance of £78.245m to £96.530m and the detail on the movement in the balance is summarised within the table below. The main increase is in respect of the new earmarking at the end of 2021-22, with the most significant being unspent grant carry forwards, funding for capital projects, unspent budget carry forward proposals and COVID funding received from the Scottish Government. 4.19 The General Fund balance at 31 March 2022 is £96.530m. The total earmarked balances amount to £89.433m. The Council has agreed to hold a contingency balance equivalent to 2% of the Council budget and this amounts to £5.256m. The remaining General Fund balance (“unallocated balance”) amounts to £1.841m. £000 Balance on General Fund 31 March 2021 78,245 Social Work Repayment of Debt 2,759 Revenue Budget 2021-22 – investment in capital 2,975 Revenue Budget 2021-22 – COVID allocation to reserves 7,562 Released sums earmarked to service budgets 2021-22 (18,923) Contributions to earmarked reserves 2021-22 22,280 Overall budget underspend as noted above 1,630 Page 78
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Rounding 2 Balance on General Fund as at 31 March 2022 96,530 Earmarked balances as at 31 March 2022 (89,433) Contingency Balance 2% of budget (5,256) Unallocated Balances as at 31 March 2022 1,841 4.20 Cash Flow Statement: The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the financial year. This is analysed into Operating, Investing and Financing Activities. The Cash and Cash Equivalents decreased by £15.910m to £19.728m. 4.21 Notes to the Financial Statement: The notes section provides further information and explanation on some of key figures included within the Accounts. The notes conform to the guidance issued by CIPFA/LASAAC within the Code of Practice on Local Authority Accounting. 4.22 Council Tax Income Account: This accounts shows the gross income raised from council tax levied and deductions made under the Local Government Finance Act 1992. The resultant net income is transferred to the CIES. Council Tax rate for Band D was £1,367.73 for 2021-22 which was identical to 2020-21 due to a council tax freeze agreed by Council as part of the budget setting process. The income transferred to the general fund for Council Tax in 2020-21 was £56.242m. This compared to £54.437m in 2020- 21. 4.23 Non Domestic Rate Income Account: This account is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Non- Domestic Rate Account. Non Domestic Rate Income amounted to a share of £25.070m for 2021-22 allocated from the national pool. This compares to £23.284m in 2020-21. Our own net income amounted to £25.706m and we made a contribution to the national pool of £0.636m for 2021-22. These figures compared to income of £24.736m and a contribution to the national pool of £1.452m for 2020-21. 4.24 Group Accounts: Argyll and Bute Council Group comprise the following entities: Argyll and Bute Council Dunbartonshire and Argyll and Bute Valuation Joint Board Strathclyde Partnership for Transport Strathclyde Concessionary Travel Scheme Joint Committee Live Argyll (Leisure Trust). In addition, the council’s Common Good Funds have been fully consolidated into the Group Accounts. 4.25 The effect of inclusion of the Associates, Subsidiary and Common Good Funds on the Group Balance Sheet is to increase both reserves and net worth by £24.186m. This gives an overall net asset position for the Group of £492.370m, an increase of £134.400m from the previous year. As with the single entity Balance Sheet, the increase Page 79
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is mainly due to the swing in the pension scheme which went from a liability of £88m in 2020-21 to an asset of £1m in 2021-22. Performance Against Budget 4.26 The performance against budget for financial year 2021-22, after adjusting for automatic and proposed earmarked reserve proposals, was an overall underspend of £1.630m, 0.59% (2020-21 underspend of £0.188m, 0.07%). 4.27 There was a net underspend of £0.815m in relation to Council services departmental expenditure, a net overspend of £0.432m in relation to other central costs and a net over recovery of income of £1.247m. Social Work, managed by the Health and Social Care Partnership were underspent by £1.738m and this amount is recognised as a creditor on the balance sheet as money owing to the HSCP by the Council which creates a nil variance on the revenue monitoring position. The main reasons for the year-end net overspend are noted below: Chief Executive’s Unit - a small underspend which was largely due to a reduction in travel costs as a result of COVID-19 restrictions and new ways of working. Executive Director Douglas Hendry - the main underspends were due to an over recovery of vacancy savings, reduced catering in schools due to less demand as a result of COVID-19, reduced running costs within Early Learning and Childcare and an underspend in NPDO and Hub Schools arising from insurance savings and the settlement of historic disputed cost reductions. The main overspends related to external residential placements within Education. Executive Director Kirsty Flanagan - the main underspends were due to the over recovery of vacancy savings, additional income within Environmental Health, one-off income in Housing and additional planning fee income. The main overspends were due to the under recovery of building warrant fees and transportation project costs. Central costs - The main reason giving rise to the overspend was due to insurance costs being higher than budget by £0.339m. 4.28 A summary of the final outturn position is noted within the table below: 2021-22 Final Revenue Budget Outturn Actuals Budget Variance Percentage Adjusted for Earmarkings (Overspend) Underspend £000 £000 £000 % Chief Executive's Unit 5,308 5,326 18 0.34% Executive Director (Douglas Hendry) 115,160 115,383 223 0.19% Executive Director (Kirsty Flanagan) 49,123 49,697 574 1.16% Page 80
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Total Departmental Expenditure 169,591 170,406 815 0.48% Joint Boards 1,490 1,496 6 0.40% Loans Charges 9,382 9,382 0 0.00% Pension Costs 1,798 1,745 (53) (2.99%) Other 9,664 9,279 (385) (4.15%) Total Central Expenditure 22,334 21,903 (432) (1.97%) Social Work 62,871 62,871 0 0.0% Total Social Work Expenditure 62,871 62,871 0 0.0% Total Expenditure 254,796 255,098 383 0.12% Total Funding 278,706 277,459 1,247 0.45% UNDERSPEND 1,630 5. CONCLUSION 5.1 The Unaudited Annual Accounts have been prepared in accordance with professional and statutory requirements. The General Fund Balance has increased by £18.285m, after taking into consideration the movement during the year, the end of year outturn position and the new earmarkings. The net worth per the balance sheet has increased by £122.814m to £468.184m. Overall the financial position of the Council remains stable. 6. IMPLICATIONS 6.1 Policy – None. 6.2 Financial - None, summarises the financial position for 2021-22 6.3 Legal - None. 6.4 HR - None. 6.5 Fairer Scotland Duty - None. 6.5.1 Equalities - None 6.5.2 Socio-Economic - None 6.5.3 Islands Duty - None 6.6 6.7 Climate Change - Risk - None. None. 6.8 Customer Service - None. Kirsty Flanagan Executive Director/Section 95 Officer 17 June 2022 Gary Mulvaney - Policy Lead for Finance and Commercial Services Appendix 1 – Unaudited Annual Accounts 2021-22 For further information contact Anne Blue, Interim Head of Financial Services anne.blue@argyll-bute.gov.uk Page 81
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Unaudited Annual Accounts for the year ended 31 March 2022 Page 83
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FRONT COVER PICTURE: PORNAHAVEN, ISLAY Page 84
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LANGUAGE OPTIONS If you would like this document in another language or format, or if you require the services of an interpreter, please contact us. Financial Services Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Tel: 01546 605522 Page 85
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ANNUAL ACCOUNTS CONTENTS www.argyll-bute.gov.uk Page 1 Page Management Commentary 4-22 Statement of Responsibilities for the Annual Accounts 23 Annual Governance Statement 24-37 The Remuneration Report 38-47 Expenditure and Funding Analysis 48-49 Statement of Comprehensive Income and Expenditure 50-51 Balance Sheet 52-53 Statement of Movement in Reserves – Movement in 2021-22 54-55 Statement of Movement in Reserves – Comparative Movement in 2020-21 56-57 Cash Flow Statement 58 Notes to the Financial Statements (See Page 2-3) 59-120 Council Tax Income Account 121 Notes to the Council Tax Income Account 122 Non Domestic Rate Income Account 123 Notes to the Non Domestic Rate Income Account 124 Group Accounts - Introduction 125 Group Statement of Comprehensive Income and Expenditure 126 Group Balance Sheet 127-128 Group Statement of Movement in Reserves – Movement in 2021-22 129 Group Statement of Movement in Reserves – Comparative Movement 2020-21 Group Cash Flow Statement 130 131 Notes to the Group Financial Statements 132-136 Glossary of Terms Appendix A: Trade Union Facility Time Statement 2021-22 137-138 139-140 Page 87
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www.argyll-bute.gov.uk Page 2 NOTES TO THE FINANCIAL STATEMENTS CONTENTS Note No Page 1 Summary of Significant Accounting Policies 59-71 2 Accounting Standards Issued But Not Yet Adopted 72 3 Critical Judgements in Applying Accounting Policies 72-73 4 Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty 73-74 5 General Fund Reserves 75 6 Supplementary Notes to the Statement of Comprehensive Income and Expenditure 76-77 7 Other Operating Income and Expenditure 77 8 Agency Services 77-78 9 Community Care and Health (Scotland) Act 2002 78 10 Fees Payable to Audit Scotland 79 11 Waste Management Public Private Partnership 79 12 Grant Income 80 13 Related Parties 81-82 14 Property, Plant and Equipment 83-87 15 Heritage Assets 87 16 Intangible Assets 88-89 17 Investment Property 89-90 18 Schools Built under Public Private Partnership Contracts (PPP) 90-93 19 Operating Leases 93-94 20 Finance Leases 94-95 21 Long Term Debtors 96 22 Debtors 96 23 Assets Held for Sale 97 24 Cash and Cash Equivalents 97 25 Creditors 98 26 Financial Instruments Disclosures 98-102 27 Other Liabilities 102 Page 88
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www.argyll-bute.gov.uk Page 3 NOTES TO THE FINANCIAL STATEMENTS CONTENTS Note No Page 28 Provisions 103-104 29 Capital Grants Received in Advance 104 30 Defined Benefit Pension Schemes 104-110 31 Note to the Expenditure and Funding Analysis 111-113 32 Unusable Reserves 114-115 33 Usable Reserves 115 34 Contingent Liabilities 116 35 Termination Benefits 116-117 36 Trust Funds and Other Third Party Funds 118 37 Common Good Funds 117-118 38 Tax Incremental Financing (TIF) Projects 118 39 Cash Flow Statement – Operating Activities 119 40 Cash Flow Statement – Investing Activities 119 41 Cash Flow Statement – Financing Activities 120 Page 89
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www.argyll-bute.gov.uk Page 4 Management Commentary 1. INTRODUCTION Welcome to the financial statements for Argyll and Bute Council and its group for the year ended 31 March 2022. The statements have been compiled in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). This commentary outlines the key messages regarding the performance of the Council over the 2021-22 financial year as well as providing an indication of risks and issues which may impact upon the Council in the future. 2. PROFILE OF ARGYLL AND BUTE COUNCIL The report starts with outlining some key facts about Argyll and Bute. Page 90
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www.argyll-bute.gov.uk Page 5 Management Commentary 3. MISSION AND PRIORITIES The Council’s Corporate Plan 2018-2022 was approved in February 2018 and sets out our mission, vision and priorities for the next 5 years. Our mission: To make Argyll and Bute a place people choose to Live, Learn, Work and Do Business. Service Plans are also agreed and detail the measures, targets and timescales to achieve the required results. Service Plans are aligned to the Corporate Plan and the Argyll and Bute Outcome Improvement Plan. Our Corporate Plan 2018-2022 can be found on the Council website. Argyll and Bute is an area of Scotland with outstanding places, people and potential for a prosperous future for everyone. Our Council, along with our Community Planning Partners, is committed to ensuring that: Argyll and Bute’s Economic Success is built on a Growing Population. Page 91
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www.argyll-bute.gov.uk Page 6 Management Commentary Our six outcomes are: People live active, healthier and independent lives People will live in safe and stronger communities. Children and young people have the best possible start Education skills and training maximise opportunities for all Our Economy is diverse and thriving We have an infrastructure that supports sustainable growth The performance of the Council is reported on the Council’s website. Performance is reviewed by the Strategic Committees and then the Council and departmental performance reports and scorecards are presented to the Audit and Scrutiny Committee on a half-yearly basis. In 2021-22 we have tracked our progress on delivering our outcomes through 17 business outcomes and 85 success measures which are recorded on the Council’s scorecard. Progress is identified using a Red or Green status indicator to track performance. Of the 85 success measures in 2021-22 of which 57 were green (67%), 16 were red (19%) and for 12 (14%) no data is currently available. For comparison purposes as at 31 March 2021, there were 178 success measures and 137 were green (77%), 28 were red (16%) and 13 had no data (7%). An analysis by department is shown below. It should be noted that Covid has had an impact not just on our performance but also the ability for collecting and collating data. As a result the status of some measures that are currently displaying red or off-track may change in due course as data becomes available. 2020-21 and 2021-22 Success Measures Performance as at 31 March Some of our achievements, and the challenges we faced, in relation to the Council’s agreed Corporate Outcomes are highlighted below. Page 92
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www.argyll-bute.gov.uk Page 7 Management Commentary People Live Active Healthier and Independent Lives The empty homes services has an empty homes officer (EHO) who has an overall remit to assist and encourage owners to bring empty homes back into use. Wider outcomes, working in partnership include: Over 500 empty homes brought back into use. First Empty Homes Compulsory Purchase Order concluded - renovation works undertaken with no financial support and flat leased as private let. Worked in conjunction with Mull and Iona Community Trust to undertake joint communication exercise with all registered empty home owners on the Island. Hebridean Trust in Tiree supported by the EHO to drive forward plans for the long term use of all their buildings whilst assisting them to bring six listed empty flats back into use. Due to the scale of scheme, the EHO established a working group of relevant partners to maximise support to take this project forward. The EHO is working with Islay Development Initiative to bring two empty flats back into use as affordable housing. This also provides unique opportunity to consider a plug and play model on the grounds of property for additional housing provision. Winner of outstanding team and Scottish Empty Homes Conference 2022. People will live in safer and stronger communities The Trading Standards Team initially maintained a reactive presence, which, as restrictions allowed moved to a proactive planned approach. This despite Covid, impacts allowed the Team to deal with a high proportion of all premises identified as high risk. Developed the Community Safety Partnership Strategy 2021-2023 which underpins the Argyll and Bute Outcome Improvement Plan and sets out strategic priorities in relation to: We live in a safe and positive community We encourage safer road and water use Our natural and built environment is protected Our communities are supported and included. It also identifies how key partners including the Council, Police Scotland, Scottish Fire and Rescue Service, HM Coastguard, Health & Social Care Partnership (HSCP), Third Sector Interface (TSI) and local groups will bring together resources to ensure that Argyll and Bute is a safer place to live, work and visit. Education skills and training maximise opportunities for all Page 93
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www.argyll-bute.gov.uk Page 8 Management Commentary The level of participation in education, training or employment for 16-19 year-olds in Argyll and Bute in the data released in September 2021 was 93.5%. Although constituting a slight fall from the 2020 measure of 94.1%, the Argyll and Bute figure is still 1.3% above the national average and the Authority remains in the top 10 authorities nationally for participation levels. Strong and enhanced partnership working between Education, Developing the Young Workforce, Skills Development Scotland and third sector partners, involving training and sharing of data, is contributing to the Authority’s strong performance in participation. Children and young people have the best possible start MAKI Pups Outdoor Nursery opened in 2021, and is operated by ACT – Argyll and the Isles Coast and Countryside Trust. Their vision provides for 3-5 year old children and their families from the Mid Argyll area, to develop an appreciation and ownership for their natural environment, the ability to understand and enjoy the adventures and challenges that outdoor learning offers. The Nursery are passionate about the positive impact, both physically and emotionally, that being outdoors can have on the youngest children. They want the best for our children, as they start on their journey into lifelong learning and strongly believe that the outdoor environment will provide children with the opportunity to grow, learn and develop into young people and adults who care for, respect and appreciate their world and everything in it. MAKI Pups Outdoor Nursery is set against the backdrop of Kilmory Council headquarters, and uses the Curriculum for Excellence and other national framework and documentation to provide a curriculum based on the seven design principles and promoting inclusion for all. The Nursery offers fully funded early learning childcare and private wraparound care. At the nursery, children have a variety of areas where they have access to – mud kitchens, firepit area where they can enjoy their snack and, tell and hear stories, and the hobbit house. There are plans for the children to grow their own herbs and other foods, all of which helps children learn about a more sustainable future. The site the Nursery is situated on, is owned by the Council, and the Council will maintain and improve existing facilities and provide a new “hobbit house” shelter and waterless toilets for the nursery. Children are heavily involved in how the Nursery will grow – they have access to children’s tools to help with making their own equipment and play areas – children are taught the philosophy in relation to loose materials, for example wood and tyres, that “something can make anything”. Page 94
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www.argyll-bute.gov.uk Page 9 Management Commentary Our economy is diverse and thriving A Rothesay Townscape Heritage (TH) grant of £311,601 supported the comprehensive repair of a prominent listed building in multiple ownership, serving to safeguard the property for future generations whilst helping to lift the appearance of Rothesay’s town centre. Before After Traditional materials and methods of repair were used to ensure best practice, and align with Historic Environment Scotland’s Advisory Standards of Repair. Works encompassed roof works, including leadwork, chimney and skew repairs, as well as substantial masonry works to front, rear and gable elevations, which included stone indents and stone replacements, as well as full re-pointing and structural repairs. Rainwater goods and dormer windows were also restored and the roof inspected for rot and treated accordingly. Timber sash and case windows were restored, and uPVC windows replaced in timber. New close doors were added to front and rear. Rothesay TH is a heritage-led partnership project that is funded by National Lottery Heritage Fund, Historic Environment Scotland, Argyll and Bute Council, Highlands and Islands Enterprise, Smarter Choices Smarter Places and LEADER. The partnership funding totals, £2,746,049. It is anticipated with private owner contributions included, the total value of the project will be in excess of £3.2m. The programme is being delivered over a 5 year period, and will conclude on 31st March 2023. Our economy is diverse and thriving In response to community concerns, as tourism opened up after Covid restrictions, we developed and promoted our ‘Have a great time. Be a great visitor’ message and campaign, bringing together information from different organisations. We have an infrastructure that supports sustainable growth Over the course of 2021/22 we have progressed with a number of ambitious marine engineering schemes designed to guarantee safe and sustainable future transport connectivity for our island communities. These include: Craignure - Developing the concept of this scheme towards a detailed design including significant public engagement where a community group is working with council on elements of the design process. Fionnphort/Iona - At this location we are progressing a £20million scheme to replace/renew key pieces of marine infrastructure to allow for full and unfettered access to and from Iona. Page 95
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www.argyll-bute.gov.uk Page 10 Management Commentary We have an infrastructure that supports sustainable growth Towards the end of the financial year, we were successful in securing a £5.5m grant for bridges and structures improvements/replacement. This will enable a number of bridges to be strengthened and/or replaced over the coming years, providing more resilience to transport infrastructure whilst also reducing some of the routine revenue maintenance work. We have an infrastructure that supports sustainable growth The Council is working towards the 2025 Biodegradable Municipal Waste (BMW) ban and the end of the Waste PPP contract in 2026. While these significant changes are some years in the future the planning is already underway. The BMW ban will pose a significant and ongoing financial risk to the Council. Officers are currently engaged on a number of fronts working with Scottish Government and neighbouring local authorities to plan for/reduce the impact. It is likely that Argyll and Bute will need additional transfer stations particularly in the Helensburgh and Lomond area to help create logistical efficiency. Page 96
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www.argyll-bute.gov.uk Page 11 Management Commentary 4. FINANCIAL PERFORMANCE 2021-22 The Council has a robust financial reporting framework in place and a comprehensive monitoring pack is prepared and presented to every Policy and Resources Committee. This includes reports on the revenue budget, capital plan, financial risks, treasury monitoring, reserves and balances and delivery of any previously agreed savings. The financial framework is shown on the left. Revenue: Outturn against Budget The performance against budget for financial year 2021-22, after adjusting for automatic and proposed earmarked reserve proposals, was an overall underspend of £1.630m, 0.59% as summarised in the table below. (The corresponding position for 2020-21 was an underspend of £0.188m, 0.07%.) 2021-22 Final Revenue Budget Outturn Actuals Budget Variance Percentage Adjusted for Earmarkings (Overspend) Underspend £000 £000 £000 % Chief Executive's Unit 5,308 5,326 18 0.34% Executive Director (Douglas Hendry) 115,160 115,383 223 0.19% Executive Director (Kirsty Flanagan) 49,123 49,697 574 1.16% Total Departmental Expenditure 169,591 170,406 815 0.48% Joint Boards 1,490 1,496 6 0.40% Loans Charges 9,382 9,382 0 0.00% Pension Costs 1,798 1,745 (53) (2.99%) Other 9,664 9,279 (385) (4.15%) Total Central Expenditure 22,334 21,903 (432) (1.97%) Social Work 62,871 62,871 0 0.0% Total Social Work Expenditure 62,871 62,871 0 0.0% Total Expenditure 254,796 255,098 383 0.12% Total Funding 278,706 277,459 1,247 0.45% UNDERSPEND 1,630 Page 97
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www.argyll-bute.gov.uk Page 12 Management Commentary Within the Chief Executive’s Unit (Community Planning and Finance) there was a small underspend which was largely due to a reduction in travel costs as a result of COVID-19 restrictions and new ways of working. Within the remit of Executive Director Douglas Hendry (Education, Legal and Regulatory Support and Commercial Services) the main underspends were due to an over recovery of vacancy savings, reduced catering in schools due to less demand as a result of COVID-19, reduced running costs within Early Learning and Childcare and an underspend in NPDO and Hub Schools arising from insurance savings and the settlement of historic disputed cost reductions. The main overspends related to external residential placements within Education. Within the remit of Executive Director Education Flanagan (Roads and Infrastructure, Development and Economic Growth and Customer Support Services) the main underspends were due to the over recovery of vacancy savings, additional income within Environmental Health, one-off income in Housing and additional planning fee income. The main overspends were due to the under recovery of building warrant fees and transportation project costs. The main reason giving rise to the overspend in central costs was due to insurance costs being higher than budget by £0.339m. Social Work, managed by the Health and Social Care Partnership, were underspent by £1.738m this was after accounting for repayment of outstanding debt to the Council of £2.759m therefore clearing the balance of any debt owed to zero. As per CIPFA/LASAAC Guidance, the remaining underspend on the HSCP has been recognised as a creditor on the Council’s balance sheet making the funds available to Social Work to spend in future years. There was a favourable position in relation to Council Tax funding, where collection rates were greater than anticipated and this was assisted by £0.450m of Low Income Pandemic Payments (LIPP) that were credited directly to Council Tax accounts. The overall favourable position for Departmental and Central Expenditure Budgets has provided the opportunity to earmark unspent budget for specific purposes aligned to the objectives, priorities and targets of the Council. Delivery of 2021-22 Agreed Savings The Council has been required to make significant budget savings for a number of years in order to ensure it responds to continued funding reductions, rising cost pressures and complies with its statutory requirement to set a balanced budget whilst meeting the needs of local residents. Budget savings of £2.699m (64 saving options) were agreed for 2021-22. These, and savings agreed in previous years which had to be delivered in 2021-22 totalling £0.076m (17 saving options), were monitored throughout the year. The chart on the right shows the overall delivery of savings and any shortfall was absorbed within departmental resources as is evidenced from the overall departmental underspends. These saving options are all recurring in nature. Capital: Outturn against Budget The net 2021-22 capital expenditure was £24.831m compared to an annual budget of £31.012m, (adjusted for previously agreed slippages, accelerations and virements) giving rise to a year end Page 98
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www.argyll-bute.gov.uk Page 13 Management Commentary slippage/underspend of £6.181m (19.9%). There are a number of under and (overspends) within the outturn position, the most significant are noted below: Project (Over) / Under Spend (£m) Harbour Investment Programme 2.484 Education (Asset Sustainability) 0.889 Roads and Infrastructure (Asset Sustainability) 0.670 Shared Office Accommodation (Asset Sustainability) 0.547 Clean Energy/Climate Change 0.464 HSCP Projects 0.250 Helensburgh Waterfront Development 0.238 Campbeltown Flood Scheme 0.231 Live Argyll Projects 0.142 Nature Restoration Fund 0.108 After accounting for previously agreed slippages, the total slippage in the capital programme in 2021- 22 was £28.217m. As reported in Audit Scotland’s Financial Overview 2020-21, capital expenditure across Scotland’s councils reduced by more than 20% as a result of COVID, impacting both cost and delivery plans. This is something that has continued in 2021-22. There are 180 projects within the Capital Plan: 94 of the projects are complete or on track which equates to 52%. Health and Social Care Partnership (HSCP) The Argyll and Bute Integration Joint Board (IJB) with responsibility for Social Work and a range of health services was established and came into effect on 1 April 2016. The Council approved the 2021- 22 budget on 25 February 2021 and the amount approved for Social Work services transferring to the Integration Joint Board for 2021-22 was £62.211m. The budget figures quoted in the previous outturn table include in-year adjustments. In terms of the outturn position, the HSCP has reported a breakeven position for 2021-22 and has repaid the £2.759m balance owed to the Council in relation to the debt which had accumulated from overspends in previous years. The early repayment of this debt places the HSCP in an improved financial position which will enable it to accelerate its service transformation programme. The Council has a creditor totalling £2.201m on its balance sheet in relation to earmarked reserves which the Council holds on behalf of the HSCP. The earmarked balance comprises £1.519m of Scottish Government funding for a range of specific Scottish Government Initiatives and £0.682m for service transformation and infrastructure investment. 5. FINANCIAL STATEMENTS Expenditure and Funding Analysis Statement The Expenditure and Funding Analysis Statement shows how the Council funding is spent across services. It also compares to the expenditure shown in the Statement of Comprehensive Income and Expenditure and details the differences between the two. The differences are a result of accounting statutory adjustments that are required within the Statement of Comprehensive Income and Expenditure, for example, depreciation, pension adjustments etc. Comprehensive Income and Expenditure Statement (CIES) The CIES shows the accounting cost of providing services rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure in accordance with regulations; this may be Page 99
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www.argyll-bute.gov.uk Page 14 Management Commentary different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. The Council is required to make various statutory accounting adjustments to the net cost of services as reported in the budgetary outturn in order to comply with the Code of Practice for Local Authority Accounting in the United Kingdom 2021-22. These accounting adjustments include depreciation, loans fund principal repayment and accrued holiday leave not taken by 31 March 2022. Internal income also requires to be removed between segments within the CIES. During 2021-22 the Council managed a range of COVID support funding made available by the Scottish Government. The disclosure of these transactions in the Council’s financial statements depends on whether the Council is acting as an agent (i.e. acting as an intermediary) or a principal (acting on its own behalf). LASAAC Guidance on Accounting for Coronavirus Grants has confirmed that where the Council is acting as an agent it should not recognise the transactions as income or expenditure in the Comprehensive Income and Expenditure Statement although it is necessary to recognise a creditor (where funding from the Scottish Government has been provided in advance) or debtor (where funding is provided in arrears) in the Balance Sheet. This guidance has been applied to the Council’s 2021-22 financial statements. Reconciliation of CIES to Revenue Budget Outturn A reconciliation of the Surplus on the Provision of Services of £1.025m as noted in the CIES to the revenue budget outturn of £1.630m underspend is shown below. Reconciliation of CIES to Revenue Budget Outturn £000 £000 Surplus/(Deficit) on Provision of Services 1,025 Remove statutory adjustments that don't feature in budget outturn: Depreciation 23,325 Impairment of Assets charged to services 1,252 Capital Funding (21,700) CFCR (735) Pension Adjustment 23,700 Statutory Repayment of Debt (2,514) Repayment of Finance Leases (4,844) Transfers to/from Other Statutory Reserves (553) Other Adjustments (671) 17,260 Movement In General Fund Balance 18,285 £000 £000 Adjust for earmarkings: Released sums earmarked to service budgets 2021-22 18,923 Revenue Budget 2021-22 - investment in Capital (2,975) COVID allocation to reserves (7,562) Repayment of Social Work Overspend by HSCP (2,759) Contributions to earmarked reserves 2021-22 (22,280) (16,653) Rounding (2) Revenue Budget Underspend/(Overspend) 1,630 Page 100
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www.argyll-bute.gov.uk Page 15 Management Commentary Balance Sheet The Balance Sheet summarises the Council’s assets and liabilities as at 31 March 2022 and explanatory notes are provided. The net worth of the Council has increased by £122.814m from £345.370m as at 31 March 2021 to £468.184m as at 31 March 2022. The major changes are set out in the table below. Main Balance Sheet Changes 31/03/2021 £000 31/03/2022 £000 Change £000 Main Reason Long Term Assets 671,332 687,461 16,129 Revaluation of fixed assets and addition of pension debtor due to an increase in investment returns Current Assets 103,849 123,285 19,436 Investments previously categorised as long term now moved to short term as due to mature in less than 1 year. Current Liabilities (55,667) (66,513) (10,846) Increase in temporary borrowing after a period of little/no borrowing during the height of the pandemic. Long Term Liabilities (374,144) (276,049) 98,095 Pension liability reduced to zero as investment returns have been greater than expected leading to positive return on assets. Total 345,370 468,184 122,814 Provisions The Council has provisions totalling £4.310m on the Balance Sheet as detailed in Note 28 to the Accounts. The larger provisions, those £0.250m or over, are summarised below. £1.989m for landfill sites. A provision for landfill sites was created in 2014-15 reflecting the Council’s liability for restoration and ongoing maintenance in respect of landfill sites operated by the Council at Glengorm, Gartbreck and Gott Bay. These have been provided for based on the net present value of estimated future costs. £1.483m for NPDO and Hub DBFM Payments. This provision is held in relation to disputed performance deductions and unbilled utility costs. Pension Asset The Council is required to account for its share of the Strathclyde Pension Fund assets and liabilities. The information included in the Accounts is provided by the Pension Fund actuaries following the annual valuation of the Fund. The Council’s share of the assets of the Strathclyde Pension Fund have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on the assumptions about mortality rates, salary levels etc. The asset relates to benefits earned by existing or previous employees up to 31 March 2022. There has been a significant change in the pension valuation from a £82.314m liability in 2020-21 to a £4.634m asset in 2021-22. This is as a result of investment returns being greater than anticipated by our actuaries leading to positive return on assets. The pension liability or asset can fluctuate significantly year on year. The table below shows the pension liability or asset over the last three years. Further detail on the pension estimates are included within Note 30. Page 101
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www.argyll-bute.gov.uk Page 16 Management Commentary Pension Liability at the end of the financial year 2019-20 £000 2020-21 £000 2021-22 £000 Pension (Liability)/Asset (67,346) (82,314) 4,634 Borrowing During 2021-22 the Council’s external borrowing increased by £4.9m from £170.4m as at 31 March 2021 to £179.5m as at 31 March 2022. The increase was due to temporary borrowing taken out at the year end for cash flow purposes. The Council was under borrowed by £14.4m at 31 March 2022. This was due to higher than normal levels of cash balances partly due to slippage in the capital programme meaning there was no requirement to borrow at this stage. The Council’s 2022-23 ‘Treasury Management Strategy and Annual Investment Strategy’ was approved at the full Council meeting on 24 February 2022 and outlines the Council’s capital prudential and treasury indicators. Statement of Movement in Reserves This Statement shows the movement on the different reserves held by the Council, analysed into usable reserves (resource backed reserves which can be used to fund expenditure) and unusable reserves (required purely for accounting purposes and are not backed by resources). The balance of unusable reserves has increased by £103.973m from £260.585m as at 31 March 2021 to £364.558m as at 31 March 2022. The main reason for this movement is the increase in the pensions reserve noted earlier in this commentary plus smaller accounting adjustments required through the Capital adjustment account and revaluation reserve. The balance of usable reserves has increased by £18.841m from £84.785m as at 31 March 2021 to £103.626m as at 31 March 2022. This is due to an increase to the General Fund of £18.285m in addition to small increases to the Capital Fund outlined in Note 33.1 and the Repairs and Renewals Fund outlined in Note 33.2. In respect of the General Fund Balance movement, there has been an increase of £18.285m from a balance of £78.245m to £96.530m and the detail on the movement in the balance is summarised within the table below. The increase largely relates to the timing of Scottish Government funding that was unspent at the end of the year such as COVID funding, unspent grants including LACER, ELC 1140 hours and Crown Estates, and Scottish Government Initiatives such as Employability and the expansion of free school meals. It is expected that other Local Authorities will have a similar increase to their General Fund Balance due to the timing of the funding. Detail on all the earmarking is included within Note 5 to the Accounts. Movement on General Fund Balance £000 Balance on General Fund 31 March 2021 78,245 Social Work Repayment of Debt 2,759 Revenue Budget 2021-22 – investment in capital (held in reserves) 2,975 Revenue Budget 2021-22 – COVID allocation to reserves 7,562 Released sums earmarked to service budgets 2021-22 (18,923) Contributions to earmarked reserves 2021-22 22,280 Overall budget underspend as noted above 1,630 Page 102
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www.argyll-bute.gov.uk Page 17 Management Commentary Rounding 2 Balance on General Fund 31 March 2022 96,530 General Fund Balance The chart below shows what is included within the General Balance as at 31 March 2022 with a comparison to the position as at 31 March 2021. General Fund Balances as at 31 March 2021 and 31 March 2022 An analysis of the earmarked balances are shown in the chart below. Earmarked Balances held in the General Fund as at 31 March 2022 Group Accounts The Group accounts include Dunbartonshire and Argyll & Bute Valuation Joint Board, Strathclyde Partnership for Transport and Strathclyde Concessionary Travel Scheme Joint Committee as Associates as the Council have “significant influence” over their financial and operating policies. Live Argyll is a wholly owned subsidiary of Argyll and Bute Council and is consolidated within the group accounts on a line by line basis. Page 103
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www.argyll-bute.gov.uk Page 18 Management Commentary In addition, the Council’s Common Good Funds have been fully consolidated into the Group Accounts and Note 37 gives further details on the Council’s Common Good Funds. The effect of inclusion of the Associates, Subsidiary and Common Good Funds on the Group Balance Sheet is to increase both reserves and net worth by £24.186m. This gives an overall net asset position for the Group of £492.370m, an increase of £134.400m from the previous year. The most significant increase is the swing in the pension position from a liability in 2020-21 to an asset in 2021-22 and the increase in the General Fund Balance as noted earlier in the commentary. The Argyll and Bute Integration Joint Board has responsibility for all health and social care functions relating to adults and children and will oversee the strategic planning and budgeting of these, together with corresponding service delivery for the residents of Argyll and Bute. Argyll and Bute Council contributed £62.871m towards the Argyll and Bute Integration Joint Board in the 2021-22 financial year. All transactions are accounted for and shown within the single entity statements and the IJB are treated as a Joint Venture within the Group Accounts therefore a share of their overall surplus and net assets have been recognised in the Group Statements. 6. KEY FINANCIAL INDICATORS The financial indicators outlined below have been developed to assist the reader in assessing the performance by the Council over the last financial year and the affordability of its ongoing commitments. Key Financial Indicators Financial Indicator 2020-21 2021-22 Comment Unallocated General Fund Balance as a proportion of next year’s Annual Budgeted Net Expenditure 2.53% 2.70% Reflects the level of funding available to manage financial risk/unplanned expenditure. This includes the 2% contingency. The 2021- 22 position is similar to the 2020-21 one and confirms there are sufficient reserves to meet any unplanned expenditure. Movement in the Unallocated General Fund Balance No Change £0.5m Reflects the extent to which the Council is using its Unallocated General Fund Balance (excluding contingency). A small increase in the 2021-22 balance reflects a degree of stability in the Council’s financial position. In-year Council Tax collection rate 96.12% 96.28% Reflects the Council's effectiveness in collecting Council Tax debt compared to a target of 96%. The target continues to be exceeded. Ratio of Council Tax Income to Overall Level of Funding 18.87% 19.08% Reflects the capacity of the Council to vary expenditure by raising Council Tax income. Actual Outturn compared to budgeted expenditure £0.188m 0.07% £1.630m 0.59% A measure of how the final outturn compares to the budgeted position. The surplus is a reflection of the effectiveness of the Council’s financial management. Capital Financing Requirement (CFR) for the current year £296.662m £309.092m Measurement of requirement to borrow for capital purposes. The increase in 21-22 reflects the gradual recovery of the capital programme after the impact of the COVID-19 pandemic. External Debt Levels for the current year £168.805m £177.934m Actual borrowing for capital investment levels. Increase in 2021-22 due to temporary Page 104
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www.argyll-bute.gov.uk Page 19 Management Commentary Financial Indicator 2020-21 2021-22 Comment borrowing taken at the year end for cash flow purposes. Ratio of financing costs to net revenue stream 4.35% 3.37% Measures the percentage of income that has been committed towards meeting the costs of borrowing. The more income needed to fund financing costs the less that is available to meet other revenue expenditure therefore the 2021-22 ratio reflects an improved position. 7. OUTLOOK A five year financial outlook informing Council of the estimated budget gap covering the period 2022-23 to 2026-27 using best case, worse case and mid-range scenarios was kept up to date during 2021-22 and presented to the Policy and Resources Committee in May, August, October and December 2021. Preparing any forward looking financial outlook is challenging due to the levels of uncertainty however, the assumptions used to inform the outlook are reviewed and updated regularly. The Council has a strong track record in financial management as recognised by previous years annual external audit reports and the Council’s Best Value report issued in May 2020. The chart below shows the cumulative budget gap over the next five years as reported to the Policy and Resources Committee on 16 June 2022. Cumulative Budget Gap 2023-24 to 2027-28 as reported on 16 June 2022 Budget Strategy A report to Council on 24 June 2021 set out the approach to the 2022-23 revenue budget process and identification of savings to balance the 2022-23 budget. It was agreed that a cross party Budget Working Group (BWG) be established comprising six elected members from the administration, three elected members from the opposition and two Trade Union representatives. The BWG’s role was to engage with officers and provide a sounding board to assist in the development and identification of savings options. It does not have any decision making authority but can report to and make recommendations to either the Council or the Policy and Resources Committee. Its primary purpose was to assist in the savings identification process and provide a degree of scrutiny over options as they are being developed. Page 105
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www.argyll-bute.gov.uk Page 20 Management Commentary New savings options were identified by officers and presented to the BWG at meetings held on 21 September 2021 and 2 November 2021, 16 December 2021 and 20 January 2022. The BWG agreed a suite of options which were presented to the Policy and Resources Committee on 9 December 2021 which would deliver £2.522m in savings in 2022-23, some were one-off and some were recurring. The BWG met again on 16 December 2021 and 20 January 2022 which has resulted in the savings options being further refined with the additional of two new savings options totaling £0.280m in 2022-23. The Council continues to be committed to developing multi-year savings proposals with a focus on longer term planning. The additional work and pressure on teams as a result of COVID during 2021-22 meant that there had to more of a focus on balancing the 2022-23 budget, however, some of the savings options impact on future years. The Scottish Government Resource Spending Review published on 31 May 2022 is hoped to provide sufficient information to allow Council’s to plan with more certainty as it will set out the spending plans for the remainder of the parliament term 2023-24 to 2026-27. As with previous years, it is the intention to establish a cross party Budget Working Group who would meet early August to commence the budget discussions for 2023-24 and beyond. COVID Pandemic The COVID pandemic is now showing signs of receding, however, much work relating to recovery and renewal is still being undertaken. The Council still have COVID related funding as we move into financial year 2022-23 including the Recovery and Renewal Fund, Local Authority Covid Economic Recovery Fund monies (as reported to Council on 28 April 2022) as well as a provision for capital contract increases. We are experiencing significant increases in prices for capital works due to issues such as disruptions to the supply chain for both labour and materials and longer lead times in relating to the construction sector and material availability. Cost of Living Crisis The ‘cost of living crisis’ refers to the fall in ‘real’ disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021. It is being caused predominantly by high inflation outstripping wage and benefit increases and has been further exacerbated by recent tax increases. As well as affecting individuals, the cost of living crisis is having a significant impact on Council services. In September the Prime Minister, Boris Johnson, announced that National Insurance rates would be increased by 1.25% from April 2022 as part of the government's plan to fund the NHS and social care, this was for both individuals and businesses. The Council had to account for this increase in their budget proposals which was estimated to amount to £0.850m in 2022-23. Inflation is calculated as the average change in the price of typical goods and services purchased by UK households over 12 months. This is tracked using the Consumer Price Index (CPI), calculated by the Office for National Statistics using a sample of 180,000 prices of 700 common consumer goods and services. The latest data has the current CPI at 9% in the 12 months to April 2022. The Bank of England aims to keep the CPI rate of inflation at 2% plus or minus 1% (i.e. between 1% and 3%). As a result of the rising inflation, the Council is seeing significant increases in all areas of supplies, but specifically in utilities and fuel costs and it will be extremely challenging to contain spending within current resources. The pay award for 2022-23 has still to be agreed and there is increasing pressure from the Trade Unions to have a fair and equitable increase in light of the current cost of living. The Trade Unions have noted the rise in energy prices, transport costs, food prices and the current rate of inflation, in addition to the increase in National Insurance Contributions as the main reasons for their pay claim. The Council have budgeted 2% for pay inflation in line with two thirds of other Councils as this is deemed to be affordable, however, this falls well short of the Trades Unions request. Every 1% over and above what is budgeted would add an additional pressure of circa £1.5m to the Council’s expenditure. Page 106
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www.argyll-bute.gov.uk Page 21 Management Commentary Rural Growth Deal The Council continues to take forward the £70m Rural Growth Deal (RGD) following the signing of the Heads of Terms in February 2021. Both UK and Scottish Governments are contributing £25m each with a further £20m (at least) match funding from the Council and partners. The focus is now on developing outline business cases and linking to new and evolving funding streams that can increase the economic and social benefits of the deal on our communities. A programme office is now established and good progress is being made on the outline business cases. Levelling Up Fund The UK Government’s Levelling Up Fund was announced by the Chancellor at the 2020 Spending Review. It is a fund jointly managed by HM Treasury, the Department for Levelling Up, Housing & Communities and the Department for Transport. It is worth £4.8 billion and is intended to support capital investment projects in town centre and high street regeneration, local transport projects, and cultural and heritage assets which must be bid for via a competition. The fund focuses investment on projects that require up to £20m of funding. There is however no minimum bid level. For higher-value transport schemes, there is also scope in securing investment in larger projects up to £50m by exception, but these will subject to more detailed business case processes and will need to score highly overall across the bidding criteria. The Council is working up two bids (£20m regeneration bid and £50m transport bid) which will be submitted by the deadline of 6 July 2022. The council has chosen to prepare packaged bids to better reflect the economic, population and geographic challenges of Argyll and Bute as a predominately rural region. It is considered that these bids could be potentially transformational for our economy, as a place to live, invest and visit. The bids take account of strict delivery deadlines of the fund spending profile and the need to reach net zero. The fund is highly competitive with no guarantee of success however all of the work to date has helped to develop the different project elements of each bid package to a shovel ready status. It is expected that we will hear around October 2022 as to whether the Council has been successful in the bids. Risks The Council’s Strategic Management Team (SMT) actively manage strategic risks via a six monthly review of the Strategic Risk Register (SRR) which adopts established risk management arrangements including reviewing current mitigating measures and identifying key actions to further mitigate them. These actions are designed to be consistent with the work required to deliver services which are aligned to the Council’s objectives through the Council’s strategic and service plans. Furthermore departmental management teams review their operational risk registers (ORR) on a quarterly basis with all red risks identified in ORRs being reported to the SMT to ensure they are sighted on all emerging high priority risks. The SRR currently has 12 strategic risks which are categorised using a RAG (Red, Amber, Green) Status based on the residual impact and likelihood of crystallisation after accounting for mitigation measures. There are currently three risks classified as red as set out in the diagram below which also summarises the current mitigating actions. These are issues that the Council continues to manage through programmes of work such as the Rural Growth Deal, and the Levelling Up Fund, also the progression of a new Waste Strategy with a particular focus on the 2025 ban on Biodegradable Municipal Waste and reviewing contingency plans and disaster recovery plans in relation to Cyber Security. Page 107
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www.argyll-bute.gov.uk Page 22 Management Commentary 8. CONCLUSION The Council has continued to have good financial planning arrangements in place in 2021-22, and have managed the additional complexities and pressures brought about by COVID to ensure they operated within budget in 2021-22 and are in a strong position to manage the financially challenging times which remain ahead including the uncertainty about future funding levels and the longer term impact COVID will have on the national and local economies. The Council are committed to deliver the best services to the people of Argyll and Bute within the available resources and to supporting local business recover from the impact of COVID. 9. ACKNOWLEDGEMENTS We would take this opportunity to acknowledge the significant effort in producing the Annual Accounts and to record our thanks to both Elected Members and staff for their continued hard work and support. Cllr Robin Currie Pippa Milne Kirsty Flanagan Leader Chief Executive Section 95 Officer •Maximise external funding •Rural Growth Deal •Levelling Up Fund •Promote and market Argyll and Bute Economic and Population Decline •Developing options for new Waste Strategy •Planning for impact of Bio-degradable Municipal Waste Ban 2025 •Planning for impact of Scottish Deposit Return Scheme Waste Management •Contingency Planning •Raising Cyber Security awareness •Disaster Recovery Plan •Work with Scottish Government Cyber Resilience Team Cyber Security Page 108
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www.argyll-bute.gov.uk Page 23 Statement of Responsibilities for the Annual Accounts THE AUTHORITY'S RESPONSIBILITIES The Council is required: to make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs (Section 95 of the Local Government (Scotland) Act 1973). In this Authority, that officer is the Executive Director; to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; to ensure the Annual Accounts are prepared in accordance with legislation (The Local Authority Accounts (Scotland) Regulations 2014), and so far as is compatible with that legislation, in accordance with proper accounting practices (section 12 of the Local Government in Scotland Act 2003); to approve the Annual Accounts for signature. SECTION 95 OFFICER RESPONSIBILITIES The Section 95 Officer is responsible for the preparation of the Council's Annual Accounts in accordance with proper practices as required by legislation and as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (The Code). In preparing the Annual Accounts, the Section 95 Officer has: selected suitable accounting policies and applied them consistently; made judgements and estimates on a reasonable basis; complied with legislation; complied with the Local Authority Accounting Code of Practice 2021-22 (in so far as it is compatible with legislation). The Section 95 Officer has also: kept adequate accounting records which were up to date; taken reasonable steps for the prevention and detection of fraud and other irregularities. I certify that the Annual Accounts give a true and fair view of the financial position of the Council and its group at the reporting date and the transactions of the Council and its group for the year ended 31 March 2022. Kirsty Flanagan Section 95 Officer Page 109
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www.argyll-bute.gov.uk Page 24 Annual Governance Statement BACKGROUND / SCOPE OF RESPONSIBILITY Argyll and Bute Council’s (the Council) governance framework includes the systems, processes and culture by which the Council is controlled, engages with communities and monitors the achievement of strategic objectives. The Council conducts its business in accordance with the law and proper standards. The Council has a duty to make arrangements to secure continuous improvement in the way which its functions are exercised, having regard to the economic, efficient and effective use of public money. The system of internal control is a key part of the framework and is designed to manage risk to an acceptable level. In discharging these responsibilities, the Council has put in place proper arrangements for the governance of its affairs and the stewardship of the resources at its disposal. The Council has approved and adopted a Local Code of Corporate Governance (the Code), which is consistent with the principles and requirements of the CIPFA/SOLACE revised Framework for ‘Delivering Good Governance in Local Government 2016 and the Guidance Notes for Scottish Authorities 2016’. This Statement explains how the Council has complied with the Code and meets the requirements of current good practice. A copy of the Code may be obtained from the Head of Legal and Regulatory Services, Argyll and Bute Council, Kilmory, Lochgilphead, PA31 8RT and is also available on the Council’s website. THE GOVERNANCE FRAMEWORK The Code details how the Council will demonstrate compliance with the fundamental principles of corporate governance for public sector bodies. The seven key principles of our governance arrangements in 2021/22 are described in the Code, along with our supporting principles and key aspects of our arrangements to ensure compliance. Key features of our arrangements are summarised below. 1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. We have four values, which underpin all that we do and provide a sound basis to achieve transformation to ensure we meet the challenges of the future and deliver quality services. These values are that we have a workforce which is: Caring Committed Collaborative Creative We have developed and communicated an Ethical Framework within the Council's Constitution, which defines standards of behaviour for members and staff. Protocols for Member/Officer relations are also detailed within the Constitution. The Councillors’ Code of Conduct is set out at a national level, applying to all members in Scottish local authorities and is incorporated into the Council’s Constitution as part of the ethical framework which also includes a protocol for the monitoring officer. A register of members’ interests is available on the Council's website. The Constitution has a section on conduct at meetings and meeting agendas require declarations of interest to be made where appropriate. Anti-fraud and whistleblowing policies are in place and the Council has adopted the SPSO’s Model Complaints Handling Procedure. Standing orders for meetings are included within the Council’s constitution and training and support is provided to members on their role in Council committees. Page 110
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www.argyll-bute.gov.uk Page 25 Annual Governance Statement The Council complies with CIPFA’s Statement on the Role of the Chief Financial Officer in Local Government. 2. Ensuring openness and comprehensive stakeholder engagement. We have established clear channels of communication with the community and other stakeholders through our Communication Strategy. Key mechanisms include: Consultation Diary The Council has developed a consultation section on its website which hosts all consultations run by the Council, both current and historic. This includes a section which publicises the results and/or outcome of the consultation and the resultant decisions that have been taken, showing how they were informed by the consultation process. This is part of our commitment to You Said, We Did information sharing for the public. Keep in the Loop Service 2019/20 was the first full year that the pro-active Keep in the Loop Service was deployed. It proved hugely popular as a customer engagement tool and the 7927 customers subscribed to receive notifications across the range of services. In 21/22 the number of subscribers is 10489. For customers it meant that they have been kept up to date with topical council information and opportunities to provide valued input on matters that affect them. MyAccount Myaccount is the simple and secure sign-in service for accessing online public services in Scotland. It provides people living in Scotland with the ability to set up an online account and use it to access a growing range of online public services, Scotland-wide, including Argyll and Bute Council. 13,021 customers have signed up to this service, which is an increase from 11,079 in 2020/21. It allows customers to: Fill in forms automatically with your details Save forms for finishing later Track the progress of your reports and requests Access to council services that require proof of identity Access your council tax account and sign up for e-billing Find our when your bins are collected at a glance Manage your email subscriptions and alerts Avoid having to re-register with local council services when you move to a new part of Scotland Bookmark useful pages to make them easier to find Public Performance Reporting The Council’s website makes all performance information available to the public within the performance section. This includes information on performance scorecards, budgets and other service related information. This ensures the Council is openly accountable to the public for its performance against agreed policies and standards. Public Performance Reporting was reviewed in 2021 and improved as part of the Performance Excellence Project, an action in the BV3 Action Plan. Accessibility Online service provision is only effective if it is easy to access. In order to ensure maximum accessibility for everyone and meet our equalities responsibilities, the Council’s website has been revised and refreshed to improve its rating for accessibility in the national Silktide accessibility score. In April 2022 the website had a 99% rating (excellent) and was the 13th highest ranking Council in the UK. Page 111
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www.argyll-bute.gov.uk Page 26 Annual Governance Statement In 2022 the website will be getting a major upgrade to Drupal 9 Content Management System and has procured expert input from Inspire Ltd to help with this Community Engagement The Council supports good community engagement with the resourcing of community development officers in the Community Planning and Community Development Team, part of the Chief Executives Unit. The team has resources and expertise to support hard to reach groups, community organisations and remote communities to have a voice in decision making. The team also provides best community engagement practice for any other requirement. The Council also oversees the work of Community Learning (Youth Work and Adult Learning) through its collaboration with its Arms-length External Organisation (ALEO) partner Live Argyll. The Council’s Community Development Team can also assist community organisations with developing new projects, funding opportunities, training needs and support with evaluation techniques. Local Community Development Officers also support community groups, organisations and individuals, particularly those who do not traditionally engage in community issues, to participate in local Area Community Planning Groups. Further to this the team has a Gaelic Development Worker to support and engage Gaelic learning and Gaelic speaking communities. The Council’s Governance section supports community engagement by providing the staff resource to support Area Community Planning Groups which act as a forum to enable local groups and organisations to participate in Community Planning and partnership working at a local area level throughout Argyll & Bute. The section has put arrangements in place across the partnership members to ensure these groups have had the ability to continue to meet on a virtual basis during the Covid19 pandemic response period. It also plays a key role in supporting the Community Safety Partnership which is an integral part of the Community Planning Partnership and takes a lead in relation to Outcome 6 of the Argyll and Bute Outcome Improvement Plan: People live in safer and stronger communities. This group has produced its first Community Safety Strategy which sets out strategic priorities and how the partnership will work together to focus resources in support of agreed actions. It also supports community engagement by resourcing community council liaison activities, including training and support activity, which helps to build the capacity of community councils. During the Covid 19 response period the Scheme for the Establishment of Community Councils was amended to facilitate community councils being able to meet on a virtual basis during this period to fulfil their representative role and advice and support was provided to facilitate this development. The Council actively seeks to ensure that young people are engaged in Community Planning and has implemented the following initiatives: The 3 local Members of the Scottish Youth Parliament (MSYP's) attend the Community Planning Partnership Management Committee meetings on a rotational basis. The Area Community Planning Groups invite members of local Youth Forums to attend meetings when they are held in their local areas & information is passed on to young people by Youth Workers who are kept updated on any developments. One ACPG currently has a young person in the Vice Chair role. The revised Scheme of Establishment for Community Councils outlines the requirement to encourage young people to attend and participate in community council meetings” and the age to become a Community Councilor was lowered to be 16 to encourage more young people to become involved. The Council continues to promote the Community-Led Action Planning Toolkit (developed in partnership with Scottish Community Development Centre). Communities are being supported to consider use of the online toolkit in developing action plans that the community can lead on to address issues and needs in their communities. There are a number of existing community-led action plans and these are recognised as important community contributions to area community planning. Page 112
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www.argyll-bute.gov.uk Page 27 Annual Governance Statement The Community Planning Partnership undertook a Place Standard Engagement exercise to help shape the CPP priorities from 2021. This information has also been shared with communities to be used to develop community led action plans. A strong Community Planning Partnership (CPP) is in place with partners leading on each of the outcomes and emerging cross-cutting thematic working groups. This ensures a shared sense of accountability and ownership of working towards realising the CPP priorities. During the Covid pandemic, the council engaged with local community response groups, making sure that groups were supported with good practice and resources where required such as – lone volunteering policies, safe medication delivery process, insurance, confidentiality guidance etc. Regular online drop-in sessions were established and ran for a period of 2 years for the groups to receive updates and to enable them to highlight needs/challenges and ask questions of Council and its partners. Council/Committee Meetings Meetings are always held in public, unless one of the statutory exemptions in the Local Government (Scotland) Act 1973, schedule 7A applies to the content of the report. Agendas for and minutes of meetings are detailed on the Council’s website. When schedule 7A applies papers are adjusted to ensure that the maximum amount of content is in the public domain. The Council’s constitution defines the roles and responsibilities of the administration, committees, scrutiny and officer functions, with clear delegation arrangements and protocols for effective communication. The constitution is updated on an annual basis with the last update carried out in October 2021. The constitution includes collective and individual roles and responsibilities of the Leader, Provost, Policy Lead Councillors, other councillors and officers. It also includes a protocol for the role of the Monitoring Officer (the Executive Director for Customer Services). Best Value (BV) is assessed by the Council’s external auditors over the five year audit appointment, as part of the annual audit work and, additionally, a Best Value Assurance Report (BVAR) for each Council will be considered by the Accounts Commission at least once during this five year period. The Council’s Chief Executive presented an update on the Action Plan to the Council’s Audit and Scrutiny Committee on 16 March 2021 who accepted the progress to date. Audit Scotland followed up with the Council in May 2021 to review evidence against the progress listed in the Action Plan and stated in their Annual Report (December 2021) that the Council has made good progress. A further progress report was submitted to the Audit and Scrutiny Committee 15 March 2022 which illustrates how 22 of the 36 actions are complete and that a further report will come back in 12 months to provide a further update on the 14 actions remaining. The Standards Commission Advice Note for Councillors on Distinguishing between their Strategic Role and any Operational Work has previously been included in an Elected Member Seminar and is hosted on the Members Resource page on the Hub for ease of reference. 3. Defining outcomes in terms of sustainable economic, social, and environmental benefits. Our Corporate Plan sets out our, and our community planning partner’s, vision for Argyll and Bute’s economic success to be built on a growing population. It also defines our mission “To make Argyll and Bute a place people choose to live, learn, work and do business” and establishes our outcomes, priorities and approach to delivering on our shared ambition with our community partners. All services have plans containing an agreed set of quality standard measures which feed into the overall Corporate Plan. We have a Performance Improvement Framework (PIF) that ensures performance is integral to the work of the Council. The PIF is focused not just on measuring what we do but on measuring the difference we make in terms of our outcomes. Page 113
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www.argyll-bute.gov.uk Page 28 Annual Governance Statement Councillors and senior managers review and scrutinise the Council’s performance at all levels to ensure our services are having the desired impact on our communities and customers. At a strategic level, performance is scrutinised through our strategic committees and, more locally, at our area committees. The Audit and Scrutiny Committee, which meets four times a year, has a key role in reviewing and scrutinising how we are meeting our strategic objectives. They also promote good internal control, financial and risk management, governance and performance management, in order to provide reasonable assurance over the effective and efficient operation of the Council, and compliance with laws and regulations, including the Council’s Financial and Security Regulations, Contract Standing Orders and accounting codes of practice. The Council’s Capital programme and capital investment strategy is considered by the Executive Management team and approved by the Council at the budget meeting. 4. Determining the interventions necessary to optimise the achievement of the intended outcomes. The Council’s Executive leadership team meet regularly with the administration to discuss their key priorities and requirements for decision making in addition there is regular survey and feedback on their needs and a regular review of governance arrangements to ensure that decision making is fully supported. The Council’s complaints process ensures that service and operational issues are picked up and improvements are undertaken when required. Services carry out consultations and public surveys on various projects and service improvement areas across the Council which inform reporting and decision making on these. The Council’s performance management framework has KPI’s allowing the monitoring of service outcomes which are reported to the ELT and Members enabling management decision and appropriate interventions to be taken. Business outcomes are mapped to the corporate plan and the budget consultation process ensures that service priorities are affordable within resource constraints. 5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. Elected Member Development The Council has signed up to the Improvement Service’s Continuing Professional Development Framework for Elected Members. All Elected Members are provided with opportunities to progress personal development plans so that individual training needs and aspirations are identified and support provided as appropriate. This is complemented by a comprehensive seminar and workshop programme which addresses a wide range of topics and strategic issues. Since the introduction of new ways of working and operating in a virtual environment in response to the Covid-19 pandemic this programme has moved on-line and during 2021/22 a regular programme of webinars and workshops have taken place on-line which has facilitated a higher level of attendance. Additional training was undertaken by Elected Members in relation to the technology, knowledge and skills necessary to support the transition to a virtual environment including webcasting of strategic Committee meetings and the operation of meetings on a hybrid basis, enabling a mixed attendance of members being physically or virtually present. Support has been provided to Chairs in terms of process and guidance notes to facilitate the transition to operating on a virtual basis and enhance effectiveness in this regard. During this period a review of Elected Member Induction was undertaken in advance of Local Government Elections in May 2022. The programme was redesigned to focus on the whole geographical area of Argyll and Bute and to enable Members to gain a perspective on both local and strategic issues across the Council area whilst ensuring they have the opportunity to gain the knowledge and skills necessary to facilitate effective decision making, scrutiny and challenge in the early days of the new term. Following the 3 by-elections that took place in 2021-22 there was the opportunity to pilot some of the induction material on a virtual basis. Page 114
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www.argyll-bute.gov.uk Page 29 Annual Governance Statement Officer Development The Council supports officer development through a structured approach, driven by the values set out in the Corporate Plan and a behavioural competency framework. The Council has Argyll and Bute Manager and Leadership Programmes, which ensure that all employees who have management responsibilities are knowledgeable and effective in delivering services within the priority management policies and procedures of the Council, including finance, performance and people management. The Leadership Programme ensures that senior and aspiring leaders in the organisation have support to develop their leadership behaviours and to improve their overall impact and performance across the organisation. 6. Managing risks and performance through robust internal control and strong public financial management. Internal Financial Control Our standing orders, financial instructions, scheme of delegation and supporting procedure notes/manuals clearly define how decisions are taken and the processes and controls in place to manage risks. These are reviewed and updated on an annual basis. We ensure compliance with relevant laws and regulations, internal policies and procedures, and that expenditure is lawful. The Council’s Monitoring Officer advises on compliance with our policy framework, ensuring that decision making is lawful and fair. Our financial management arrangements conform to the CIPFA Statement on the Role of the Chief Financial Officer and we ensure that our independent Audit and Scrutiny Committee undertakes the core functions identified in CIPFA’s Audit Committees – Practical Guidance for Local Authorities. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The Council has a designated Data Protection Officer and all services have Information Asset Registers along with appropriate guidance on how data should be managed. The Council has a system of internal financial control designed to manage risk to a reasonable level. It is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by officers within the Council and the named bodies mentioned below. In particular the system includes: comprehensive budgeting systems regular reviews by the Council and the named bodies (mentioned below) of periodic and annual financial reports which indicate financial performance against forecast setting targets to measure financial and other performance the preparation of regular financial reports which indicate actual expenditure against forecast clearly defined capital expenditure guidelines project management disciplines guidance relating to financial processes, procedures and regulations an effective Internal Audit section. Internal controls cannot eliminate risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. Page 115
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www.argyll-bute.gov.uk Page 30 Annual Governance Statement This annual review also covers the other bodies whose activities are incorporated into our Group Accounts and reliance is placed on the formal audit opinion contained in the financial statements of each individual body. Dunbartonshire and Argyll and Bute Valuation Board Strathclyde Partnership for Transport Strathclyde Concessionary Travel Scheme Joint Committee Live Argyll Argyll and Bute Integration Joint Board The Council’s risk management processes are well developed. In particular the: Strategic Risk Register is updated twice a year and approved by the SMT Chief Executive presents the Strategic Risk Register to the Audit and Scrutiny Committee on an annual basis Operational Risk Registers are updated quarterly by departmental management teams. Internal audit has a key role in relation to the Council’s governance to provide assurance over the effective management of risk. In September 2019 the Audit and Scrutiny Committee agreed that the CIA would perform an annual strategic risk assurance mapping exercise with this replacing a previous annual requirement for a risk management report. This was presented to the Audit and Scrutiny Committee in September 2019, September 2020 and September 2021. This exercise has confirmed that for all the risks in the Council’s strategic risk register there are either sufficient assurances in place or internal audit currently have scheduled work to fill identified gaps. This mapping exercise will continue to be performed annually and Internal Audit will perform an audit of compliance with risk management arrangements every three years unless issues are brought to the attention of the Chief Internal Auditor which would suggest a review is required outwith that cycle. 7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability Internal Audit The Council and its Group bodies have internal audit functions, which operate to Public Sector Internal Audit Standards. The work of internal audit is informed by an analysis of the risk to which the Council and its Group bodies are exposed, with annual internal audit plans prepared based on that analysis. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The COVID-19 pandemic meant the 2021/22 audit plan needed to be revised and this revision was approved by the Audit and Scrutiny Committee on 15 March 2022. This was due to a need to redeploy audit resource to priority tasks required to support the Council’s response to the pandemic and support Financial Services. This resulted in three audits being removed from the 2021/22 plan. The Chief Internal Auditor provides the Audit and Scrutiny Committee with an annual report on internal audit activity in the Council and this confirms that reasonable assurance can be taken that the systems of governance and internal control are operating effectively. Internal audit provides members and management of the Council with independent assurance on risk management, internal control and corporate governance processes. External audit has, and continues to, place reliance on the work of internal audit. The Chair of the Audit and Scrutiny Committee is an independent lay member. During 2021/22, one of the seventeen audit reports presented to the Audit and Scrutiny Committee had an overall audit opinion of ‘limited’ assurance. The audit related to Contract Management Roads and Amenity Services. For these and all other audit reports, an action plan has been agreed and progress against their delivery is routinely monitored by Internal Audit. Management have accepted 100% of audit recommendations and a robust follow-up system is in place with progress reports presented to the SMT on a quarterly basis. Page 116
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www.argyll-bute.gov.uk Page 31 Annual Governance Statement During 2021/22 the following developments were made within Internal Audit: the counter fraud team worked alongside internal audit to ensure there is cross team learning the CIA engaged with members of the Audit and Scrutiny Committee as part of the planning process for the 2022/23 audit plan the internal audit team delivered internal audit services to the Argyll and Bute Health and Social Care Partnership, undertaking 3 audits which were presented to the Audit and Risk Committee. Clear reports on a common format which are publically available and the Council has developed a hybrid meeting facility enabling physical and virtual attendance at meetings with a public broadcast function so that members of the public can see and hear meetings of the Council’s strategic committees live increasing openness and transparency. The Council prepares an annual report and an annual governance statement. The Audit and Scrutiny Committee receive an annual Strategic Risk Assurance Mapping report which helps inform their consideration of potential scrutiny topics. This is supported by the Council’s Scrutiny Framework and Manual which continues to be refreshed on an annual basis as the Council’s approach to scrutiny evolves and matures. GOVERNANCE ROLES AND RESPONSIBILITIES The Council has appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is adequate and effective in practice. The legislative framework of local government defines a number of posts which are primary to the Council’s governance arrangements. These include the Chief Executive, Pippa Milne fulfilling the role of Head of Paid Service. As Monitoring Officer, the Executive Director Douglas Hendry: oversees the implementation of the Code and monitoring its operation reports annually to the Council on compliance with the Code and any changes required to maintain it and ensure its effectiveness. Account has been taken of the results of reviews of internal control that have been carried out within each council service. Specific responsibilities are assigned to the Executive Director Kirsty Flanagan as the Council’s Chief Financial Officer (S95 Officer), to ensure that public funds are properly accounted for. In recognition of the significant role that the Chief Financial Officer has in relation to financial performance and the financial control environment, CIPFA has set out key principles that define the core activities and behaviours that belong to the role. These include, being a key member of the Leadership Team, being actively involved in and influencing decision making, and leading the delivery of good financial management across the whole organisation. The Council have appointed a Data Protection Officer in line with the requirements of the UK-General Data Protection Regulations and the Data Protection Act 2018. IMPACT OF COVID-19 ON GOVERNANCE Throughout the period 2021-22 the Council continued to operate Council and Committee meetings on a virtual basis in response to the Covid 19 pandemic. The Council has invested significantly in the technology to enhance the virtual meeting environment with the transition from Skype to the increased functionality offered by MSTeams and by providing the additional option to operate on a hybrid basis, where attendance can be on a virtual or in person basis. The hybrid option was introduced in the first quarter of 2022 and is scheduled to be rolled out to Area Committee Meeting later in 2022. During this period the Council also commenced recording strategic meeting of the Council and hosting these for the public on the Councils website. This has now progressed to webcasting for strategic committees with the first webcast meeting being the Policy and Resources Committee in December 2021. This approach facilitates a greater reach in terms of Public access to meetings and underpins our commitment to transparency and accessibility. The Council Constitution and associated protocols were amended to incorporate these developments in October 2021. Page 117
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www.argyll-bute.gov.uk Page 32 Annual Governance Statement COVID-19 also impacted on governance across services during 2021/22 and this has been assessed against four broad categories: 1. Impact on business as usual in the delivery of services While the Council returned to a more business as usual footing during the period, some specific areas where service delivery has been impacted are: restrictions on travel and social distancing requirements continued to impact on the ability of planning officers to visit application sites and enforcement complaints – this required the use of remote verification inspections to be implemented a wide range of services within Roads and Infrastructure Services continued to be impacted to some extent, but not limited to, burials, cremations, refuse collection, civic amenity sites, home to school transport and ferry transport Learning and teaching moved from distance learning and returned to classroom teaching across Argyll and Bute. 2. New areas of activity as part of the national response to COVID-19 and any governance issues arising Some specific examples of new areas of activity are: move to flexible online home working for 1400 employees with access via secure vpn to all files, processes and telephony establishing procedures for estates staff to work safely, carry out remote marketing and arrange premises for COVID related projects additional cleansing of buildings such as schools, public conveniences, crematoria chapel, and a variety of vehicles including ferries and refuse vehicles. providing business support through the administration of COVID specific Scottish Government grants to local businesses and self-employed people a Community Food Programme team to ensure vulnerable people can access food and provision of doorstep delivery of free school meals a Caring for People partnership bringing together the Health and Social Care Partnership, Third Sector Interface and the Council to work together with a focus on helping people affected by COVID-19 to receive essential support where no other support exists redeployment of staff from substantive posts to provide support in critical areas of response activity establishment of HUB schools for children of keyworkers. 3. The funding and logistical consequences of delivering the local government response The Council’s Financial Services team have worked in conjunction with all services to capture and monitor the financial impact of COVID-19 in terms of creating new cost pressures and its impact on the delivery of agreed savings options. 4. Recovery and reinstating services post COVID-19 The Council agreed a ‘Recovery Strategy and Framework’ in 2020 focused on considering the actions and priorities required to return the Council, its services and wider issues including economic and social recovery, to the “new norm”. An Argyll and Bute Overarching Recovery Group was formed to lead this process with specific thematic groups focused on Council recovery, building back stronger communities, economic and social recovery, infrastructure and transportation, financial management and public health. This work recognised the impact of the pandemic on widening inequalities and is considering longer term social and economic impacts. Good progress has been made and the Councils published its Recovery document “Recovery, Renew and Restart” outlining its achievements and current priorities. Page 118
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www.argyll-bute.gov.uk Page 33 Annual Governance Statement FINANCIAL SUSTAINABILITY It is anticipated the Scottish public sector will continue to face a very challenging short and medium term financial outlook with significant uncertainty over the scale of likely reductions in funding. The one year financial settlements do not provide any degree of medium term certainty and ring-fencing of monies and additional policy commitments which are not always fully funded limit financial flexibility and create additional financial pressures. The financial outlook is significantly exacerbated by the extent to which COVID-19 will continue to impact on expenditure, loss of income and future years funding levels. The additional funds made available by the UK and Scottish Government to combat the impact of COVID-19, and the agreement on financial flexibilities to date, have been sufficient to combat the financial impact of COVID to the Council in 2021/22 and 2022/23. However there is likely to be ongoing pressure on the Capital Programme as a result of increasing costs that is difficult to accurately quantify at this stage and while an element of COVID-19 funding has been allocated to the programme relating to current works, increases could continue for some time and result in further overspends across the life of the programme. It may be that we will need to re-prioritise some of our capital spending. The Council continues to provide financial estimates for future years with their medium term financial outlook covering a five year window to provide a longer term view of the Council’s estimated budget gap. Preparing any forward looking financial outlook is challenging due to the levels of uncertainty however the assumptions are reviewed regularly and updated with the outlook prepared to reflect a best case, worst case and mid-range scenario. The Council continues to be committed to developing multi-year savings proposals with a focus on longer term planning. The additional work and pressure on teams as a result of COVID during 2021-22 meant that there had to more of a focus on balancing the 2022-23 budget, however, some of the savings options impact on future years. The Scottish Government Resource Spending Review published on 31 May 2022 is hoped to provide sufficient information to allow Council’s to plan with more certainty as it will set out the spending plans for the remainder of the parliament term 2023-24 to 2026-27. As with previous years, it is the intention to establish a cross party Budget Working Group who would meet early August to commence the budget discussions for 2023-24 and beyond. The Council has a strong track record in financial management as recognised by previous year’s annual external audit reports and the Council’s Best Value report issued in May 2020. The Best Value report also recognises that the Council’s medium to long term financial strategy helps support financial planning arrangements. This strategy was updated in August 2021 as recommended in the Best Value report and now covers the period 2020-21 to 2029-30. In addition to providing revenue and capital projections the Strategy also sets out the position in relation to the Council’s general fund reserve, the approach to managing the financial impact of COVID-19, approach to Treasury Management and the strategy to address budget gaps. HEALTH AND SOCIAL CARE INTEGRATION The Argyll and Bute IJB has been established as a separate legal entity from Argyll and Bute Council and NHS Highland, with its own separate governance arrangements. The IJB comprises eight voting members with four Elected Members nominated by Argyll and Bute Council and four Board members of NHS Highland. In addition there are a number of non-voting appointees representing other sectors and stakeholder groups, such as the Third Sector, Independent Sector, Patients and Service Users, Carers and Staff. The arrangements for the operation, remit and governance of the IJB are set out in the Argyll and Bute Integration Scheme which has been approved by Argyll and Bute Council and NHS Highland. This was most recently revised and formally signed off by the Scottish Government on 23 March 2021. The IJB, via a process of delegation from the Health Board and Local Authority as outlined in the Scheme of Integration has responsibility for the planning, resourcing and operational delivery of all integrated health and social care services within Argyll and Bute. Page 119
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www.argyll-bute.gov.uk Page 34 Annual Governance Statement The Council places reliance on the IJB’s framework of internal controls and similarly the IJB places reliance on the procedures, policies and operational systems of the Council and the Health Board. The IJB operates within an established procedural framework. The roles and responsibilities of board members and officers are defined within Standing Orders, the Integration Scheme, Financial Regulations and Standing Financial Instructions. The IJB has proportionate internal audit arrangements in place to provide independent assurance on risk management, corporate governance and the system of internal control. A risk based internal audit plan was carried out in 2021-22 and the IJB’s internal auditor has issued a formal annual report providing their independent opinion on the effectiveness of the IJB’s risk management, internal control and governance processes. During 2021-22 the IJB has further progressed a number of initiatives to develop its governance arrangements including embedding board development events within its governance structures, its committee annual reporting and evaluation process, progressing an induction and development program for staff and implemented its revised risk management strategy. It has also established a new Contingency Risk and Resilience Committee to reflect its status as Category 1 responder. The IJB has faced substantial financial challenge since its inception. However, during 2020/21 and 2021/22 it has been able to deliver savings, operate within its budget and generate a small general reserve from its underspend for the year. The HSCP delivered an underspend of £1.738m against the resources available to it, these totalled £307m for the year. During 2021/22 the IJB was able to repay the final £2.8m that it owed to Argyll & Bute Council relating to previous overspends. The IJB has welcomed the recent increases in funding from Scottish Government and this has enabled it to set a balanced budget with a realistic savings program. Like all public bodies, the HSCP is required to continually improve its efficiency and the value for money associated with the services it provides. It will do this through its Transformation agenda and its savings plans. It is now also seeking to develop longer term plans for investment in its physical and digital infrastructure in the coming years. The HSCP also anticipates that it faces a period of significant structural change as the National Care Service is introduced. Page 120
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www.argyll-bute.gov.uk Page 35 Annual Governance Statement UPDATE ON AREAS FOR DEVELOPMENT IN 2020/21 ANNUAL GOVERNANCE STATEMENT The 2020/21 Annual Governance Statement identified a number of areas for further development. A summary update for each area is provided in the table below. Area 2021/22 Update Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio- degradable Municipal Waste Ban Specialist economic consultants now engaged on an options appraisal exercise to help inform the decision. This is to be reported to September’s ED&I committee. Further develop the Council’s Counter Fraud Team The Counter Fraud Team (CFT) have submitted a report to Strategic Management Team which will be considered at the beginning of July which outlines the actions, rebilling and recovery to date. The pilot is due to end in September and there is a proposal for the team to be made permanent. Progress the project to upgrade the Council’s general ledger system with an anticipated go live of 1 April 2022 This has now been pushed back to 6 June 2022 at the earliest due to issues which have surfaced during the implementation of the automated interface between Concerto and Oracle. Complete the development of the automated interface between the Property Management System (Concerto) and the Financial System (Oracle) to process contractor payments The capital Oracle/Concerto interface has been completed. The revenue interface has been delayed because of the need for Oracle to be updated as advised above. Review of the scheme of delegation in relation to property matters to ensure decisions are taken at the correct level Further review of property delegations will be included in the next review of the constitution. Enhance reporting of workforce planning to the Strategic Management Team and Elected Members Operational Workforce plans are reviewed on a six monthly basis and each team in the council are assigned a WFP risk rating. Data from these discussions are collated and analysed in a report which is presented to SMT. HROD team highlight any common themes that would benefit from a revised corporate approach. Quarterly health of the organisation reports are presented to DMT and SMT which cover a number of workforce indicators. Page 121
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www.argyll-bute.gov.uk Page 36 Annual Governance Statement Further progress the work to digitalise all document and evidence exchanges for Local Development Plan 2 ‘Examination in Public’ Complete and DPEA have complimented D&EG on the provision of information in the required format Respond to the findings of the Scrutiny Review of the Strategic Housing Fund which is to be reported in June 2021 All identified actions have been completed Continue to improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management Contract let and work underway to gather updated asset information for major buildings – new plans being drawn. Estates has continued to improve records with the property measurement contract providing new plans for properties. As part of the asset valuation process Estates also building up property records and will use the details for the insurance valuation updates to be completed in 2022/23. Further progress the implementation of a self- billing approach using CareFirst for payments to social care providers This action has been suspended pending the implementation of two new key systems which would be integral to the revised process: The Oracle Fusion Financial Management System and the Eclipse Social Work Management System. Once the two systems are up and running and we know what the Eclipse system can do – the vendor is still writing the software - we’ll be able to determine the actions necessary to implement this process. ISSUES FOR FURTHER DEVELOPMENT The review of governance and internal control has identified the following areas for consideration during 2022/23, particularly in the context of continuous improvement within the Council: Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio-degradable Municipal Waste Ban (Head of Roads and Infrastructure Services – March 2023) Further enhance reporting of workforce planning to the Strategic Management Team and Elected Members (Head of Customer Support Services – March 2023) Finalise the project to upgrade the Council’s general ledger system with an anticipated go live of 6 June 2022 (Head of Financial Services – June 2022 Finalise the implementation of a self-billing approach using CareFirst for payments to social care providers (Head of Financial Services – March 2023) Complete the development of an automated interface between Concerto and Oracle (Head of Commercial Services – March 2023) Improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management (Head of Commercial Services – March 2023) Progress roll-out of Microsoft 365 (Head of Customer Support Services – March 2023) Develop data/analytics business intelligence tool (Head of Customer Support Services – March 2023) Page 122
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www.argyll-bute.gov.uk Page 37 Annual Governance Statement Undertake review of performance information (Head of Customer Support Services – March 2023) External Quality Assessment Framework (Head of Financial Services – March 2023) ASSURANCE The annual review of the effectiveness of the system of governance and internal financial control is informed by: the work of officers within the Council the work of Internal Audit as described above the work of External Audit the Statements of Governance and/or Internal Control provided by the bodies incorporated into our Group Accounts statements of assurance provided by the Council’s Chief Executive, Executive Directors and Heads of Service external review and inspection reports; and recommendations from the Audit and Scrutiny Committee. It is the Council’s view that the systems for governance and internal control are operating effectively within Argyll and Bute Council and the aforementioned bodies during 2021/22 and that there are no significant weaknesses. This assurance is framed within the context of the work undertaken during the year and the evidence available at the time of preparing this statement. Cllr Robin Currie Pippa Milne Kirsty Flanagan Leader Chief Executive Section 95 Officer Page 123
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www.argyll-bute.gov.uk Page 38 The Remuneration Report BACKGROUND The Local Authority Accounts (Scotland) Regulations 2014 (SSI No.2014/200) require local authorities in Scotland to prepare a Remuneration Report as part of the annual statutory accounts. All information disclosed in the tables in this Remuneration Report will be audited by Audit Scotland. All other sections within the Remuneration Report will be reviewed by Audit Scotland to ensure it is consistent with the Financial Statements. REMUNERATION POLICY AND ARRANGEMENTS Councillors The remuneration of councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No 2020/26). The Regulations provide for the grading of councillors for the purposes of remuneration arrangements. There are 4 grades of councillor in each local authority for the purposes of payment of remuneration, the Leader of the Council; the Civic Head (Provost); senior councillors; and councillors. The Leader of the Council and the Provost cannot be the same person for the purposes of payment of remuneration. A senior councillor is a councillor who holds a significant position of responsibility in the Council’s political management structure. The Regulations also provide for the banding of local authorities. Argyll and Bute is in Band B and the Council has determined the level of remuneration for councillors within that banding. The salary that is to be paid to the Leader of the Council is set out in the Regulations. For 2021-22 the salary for the Leader of Argyll and Bute Council is £37,213. The Regulations permit the Council to remunerate one civic head. The Regulations set out the maximum salary that may be paid to that civic head. The Council’s civic head is the Provost and their remuneration is set at £27,910 which is the maximum allowed for local authorities in Band B. The Regulations also set out the remuneration that may be paid to senior councillors in addition to the Leader and Civic Head and the total number of senior councillors the Council may have. The maximum yearly amount that may be paid to a senior councillor is 75% of the total yearly amount payable to the Leader of the Council. The total yearly amount payable by the Council for remuneration of all its senior councillors shall not exceed £0.326m. The Council is able to exercise local flexibility in the determination of the precise number of senior councillors up to a maximum of 14 and their salary within these maximum limits. The Council’s policy is to pay a salary of £26,359 to each appointed policy lead. Chairs of Area Committees without a policy lead remit are paid a salary of £21,976. In 2021-22, Argyll and Bute Council had 9 senior councillors in the administration (excluding the Provost and the Leader). The total salary remuneration for senior councillors (excluding the Provost and the Leader) during 2021-22 was £0.199m. The Regulations also permit the Council to pay contributions or other payments as required to the Local Government Pension Scheme in respect of those councillors who elect to become councillor members of the pension scheme. Senior Employees The salary of senior employees is set by reference to national arrangements as well as local decisions on management structures and their associated remuneration levels. The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services (Chief Officials) sets the salary levels for the Chief Executives of Scottish Local Authorities and also sets out the spinal column salary points for Chief Officers which local authorities can utilise in setting the salary levels for posts within their authority. Circular CO/151 sets the amount of salary for the Chief Executive of Argyll and Bute Council for 2021-22. The salaries of Executive Directors are paid at SCP 43 with Heads of Service being paid at SCP 29. Page 124
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www.argyll-bute.gov.uk Page 39 The Remuneration Report COUNCILLORS’ REMUNERATION Councillors’ payments are made in accordance with the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 and The Local Government (Allowances and Expenses) (Scotland) Regulations 2007. The total amount of councillors’ remuneration paid by the Council during the year was: 2020-21 2021-22 Actual Members Allowances Actual £'000 £'000 429 Basic Councillor Salaries 480 62 Leader and Provost's Salary 65 226 Senior Councillor Salaries 199 8 Other Expenses and Allowances paid to Members 4 725 Total Allowances 748 The annual return of councillors’ salaries and expenses for 2021-22 is available for any member of the public to view at all Council libraries and public offices during normal working hours. It is also available on the Council’s website at http://www.argyll-bute.gov.uk/council-and-government/councillors-and- community-councillors. Page 125
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www.argyll-bute.gov.uk Page 40 The Remuneration Report SENIOR COUNCILLORS’ REMUNERATION Additional disclosures are required for senior councillors’ remuneration. Senior councillors’ remuneration is in accordance with the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 which for the purpose of remuneration, grades Councillors as either the Leader of the Council, The Civic Head (Provost), senior Councillors or Councillors. Details of senior councillors’ remuneration are as follows: 2020-21 Total Remuneration Senior Members Responsibility Salary, Fees and Allowances Taxable Expenses Total Remuneration £ £ £ £ 25,274 Councillor Rory Colville Policy Lead - Roads and Infrastructure Services and Chair of Mid Argyll, Kintyre & the Islands Area Committee from 22-10-20, Policy Lead for Support Services from 26-09-19 to 22-10-20 26,313 - 26,313 30,250 Councillor Robin Currie Leader from 24-09-20, Policy Lead for The Economy and Rural Growth from 22-10-20, Policy Lead for Housing, Roads and Infrastucture Services from 26-09-19 to 22-10- 20, Chair of Mid Argyll, Kintyre & the Islands Area Commitee to 22-10-20 37,148 - 37,148 10,420 Councillor Mary-Jean Devon Policy Lead for Support Services from 22-10-20 26,313 26,313 21,071 Councillor Bobby Good Chair of Bute & Cowal Area Committee 21,938 - 21,938 25,274 Councillor Kieron Green Policy Lead for Health and Social Care 26,313 - 26,313 25,728 Councillor David Kinniburgh Provost from 26-11-20, Policy Lead for Planning and Regulatory Services from 22-10-20, Policy Lead for Planning Services from 26-09-19 to 22-10-20 27,862 - 27,862 25,274 Councillor Yvonne McNeilly Policy Lead for Education 26,313 - 26,313 8,736 Councillor Barbara Morgan Chair of Helensburgh & Lomond Area Committee from 22-10-20 to 14-10-21 12,720 12,720 20,163 Councillor Aileen Morton Leader to 24-09-20, Policy Lead for Commercial Services and Strategic Priorities from 26-09-19 to 22-10- 20 with oversight of Economic Growth from 26-11-19 to 20- 05-20, Chair of Helensburgh & Lomond Area Committee from 25-11-21 19,611 - 19,611 25,274 Councillor Gary Mulvaney Depute Leader and Policy Lead for Financial Services and Major Projects from 26-09-19 26,313 - 26,313 20,469 Councillor Alasdair Redman Policy Lead for Business, Regeneration and Commercial Development from 22-10-20 to 20-08-21, Policy Lead for Economic Growth from 25-05-20 to 22-10- 20 21,873 - 21,873 21,071 Councillor Elaine Robertson Chair of Oban, Lorn & the Isles Area Committee 21,938 - 21,938 2021-22 Senior Councillors’ remuneration in the tables above does not include non-taxable expenses. Page 126
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www.argyll-bute.gov.uk Page 41 The Remuneration Report EMPLOYEES’ REMUNERATION The Regulations require that local authorities provide an analysis of the number of employees whose remuneration in the year was £50,000 or more, including those classified as senior employees who are subject to separate disclosure requirements. The definition of remuneration includes all sums paid to or receivable by an employee, expense allowances chargeable to tax and the monetary value of benefits received other than in cash. This definition therefore includes all payments made to the employee in respect of agreed employment terminations or retirements. However, employer pension contributions are excluded from the definition. Readers should be aware when making comparisons between years that, due to contractual incremental pay increases, the number of employees covered by this disclosure will increase each year. In addition, payments made in respect of agreed employment terminations or retirements can also distort the number and/or banding of employees. The number of employees whose remuneration, excluding employer pension contributions and including redundancy/retirement payments, was £50,000 or more in bands of £5,000 was: -1 £65,000 - £69,999 1617 £75,000 - £79,999 19 £70,000 - £74,999 44 £100,000 - £104,999 -- £80,000 - £84,999 £50,000 - £54,999 140124 £60,000 - £64,999 4125 £55,000 - £59,999 8492 Range 2021-222020-21 £ Number of OfficersNumber of Officers 3 £95,000 - £99,999 11 £85,000 - £89,999 -- £90,000 - £94,999 1- 8 £105,000 - £109,999 22 £110,000 - £114,999 -- £115,000 - £119,999 -- £120,000 - £124,999 -- £125,000 - £129,999 £130,000 - £135,000 1 Page 127
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www.argyll-bute.gov.uk Page 42 The Remuneration Report SENIOR EMPLOYEES’ REMUNERATION The table below provides details of the remuneration paid to the Council’s senior employees. This is defined by the regulations as; someone who has responsibility for the management of the organisation, or occupy a position which is politically restricted, or any additional employee whose annual remuneration is £150,000 or more (remuneration includes salary, non-cash benefits and any lump sum payment for loss of employment) The following table sets out the remuneration disclosures for 2021-22 for senior officers: Total Remuneration 2020-21 Post Holder Salary (Including Fees and Allowances) Taxable Expenses Total Remuneration 2021-22 £ £ £ £ 129,066 Chief Executive - Pippa Milne 132,568 717 133,285 106,249 Executive Director - Douglas Hendry 106,908 822 107,730 106,157 Executive Director, Section 95 Financial Officer - Kirsty Flanagan 107,054 698 107,752 68,994 Head of Adult Services (Mental Health, Learning Disability, Addictions and Lifelong Conditions) (Section 3 Social Work Officer) - Julie Lusk (from 19-05-20 to 13-09-21) 40,345 - 40,345 79,441 (Full year equivalent) 80,336 - 80,336 Head of Children and Families and Criminal Justice (Section 3 Social Work Officer) - David Gibson (from 14-09- 21) 40,600 40,600 (Full year equivalent) 80,336 80,336 10,602 Head of Children & Families (Section 3 Social Work Officer) - Alex Taylor (to 18-05-20) - - - 79,441 (Full year equivalent) - - 79,441 Live Argyll General Manager (Subsidiary of Argyll & Bute Council) - Kevin Anderson 80,501 - 80,501 Page 128
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www.argyll-bute.gov.uk Page 43 The Remuneration Report PENSION BENEFITS Pension benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS). Councillors’ pension benefits are based on career average pay. A councillor’s pay for pension purposes for each year or part year ending 31 March (other than the pay in the final year commencing 1 April) is increased by the increase in the cost of living, as measured by the appropriate index (or indices) between the end of that year and the last day of the month in which their membership of the scheme ends. The total of the revalued pay is then divided by the period of membership to calculate the career average pay. This is the value used to calculate the pension benefits. Local government employees had a final salary pension scheme prior to 1 April 2015. This means that pension benefits are based on the final year’s pay and the number of years that person has been a member of the scheme. As of 1 April 2015, local government employees are now part of a defined benefit pension scheme worked out on a career average basis. Benefits accumulated are calculated using pensionable pay each scheme year, rather than final salary. All benefits accumulated prior to 1 April 2015 are protected. A five-tier contribution system is in place with contributions from scheme members based on how much pay falls into each tier. This is designed to give more equality between the costs and benefits of scheme membership. The tiers and members contribution rates for 2021-22 are as follows: Whole time pay Contribution Rate 2021-22 On earnings up to and including £22,300 5.50% On earnings above £22,301 and up to £27,300 7.25% On earnings above £27,301 and up to £37,400 8.50% On earnings above £37,401 and up to £49,900 9.50% On earnings above £49,901 12.00% From 1 April 2015, if a person works part-time their contribution is worked out on their part-time pay rate for the job. Prior to this, if a person worked part-time, their contribution rate was worked out on the whole- time pay rate for the job with actual contributions paid on actual pay earned. There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for a lump sum up to the limit set by the Finance Act 2004. From 1 April 2015, benefits are calculated on the basis of a revalued annual pension built up of 1/49th of pensionable pay each year, plus inflation to keep up with the cost of living. Prior to this date, the accrual rate guaranteed a pension based on 1/60th of final pensionable salary and years of pensionable service. Prior to 2009 the accrual rate guaranteed a pension based on 1/80th and a lump sum based on 3/80th of final pensionable salary and years of pensionable service. The value of the accrued benefits has been calculated on the basis of the age at which the person will first become entitled to receive a full pension on retirement without reduction on account of its payment at that age; without exercising any option to commute pension entitlement into a lump sum; and without any adjustment for the effects of future inflation. Page 129
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www.argyll-bute.gov.uk Page 44 The Remuneration Report SENIOR COUNCILLORS’ PENSION BENEFITS The pension entitlements for senior councillors for the year to 31 March 2022 are shown in the table below, together with the contribution made by the Council to each senior Councillor’s pension during the year. The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their relevant local government service and not just their current appointment. In-year pension contributions Accrued pension benefits Senior Members In-year pension contributions Accrued pension benefits £ £ £ £ 4,878 6,067 Councillor Rory Colville Pension 5,078 6,879 1,716 Lump Sum 1,866 5,838 6,066 Councillor Robin Currie Pension 7,170 7,615 916 Lump Sum 1,007 1,433 4,872 Councillor Mary-Jean Devon Pension - - 1,598 Lump Sum - 4,878 2,436 Councillor Kieron Green Pension 5,078 2,985 - Lump Sum - 4,067 1,661 Councillor Bobby Good Pension 4,234 2,117 - Lump Sum - 4,966 6,031 Councillor David Kinniburgh Pension 5,377 6,878 1,684 Lump Sum 1,837 4,878 1,990 Councillor Yvonne McNeilly Pension 5,078 2,536 - Lump Sum - 3,693 1,434 Councillor Barbara Morgan Pension 2,455 1,701 Lump Sum 5,350 5,077 Councillor Aileen Morton Pension 3,785 5,718 - Lump Sum - 4,878 5,683 Councillor Gary Mulvaney Pension 5,078 6,492 1,596 Lump Sum 1,745 332 6,896 Councillor Elaine Robertson Pension - - 1,471 Lump Sum - 4,605 1,555 Councillor Alasdair Redman Pension 4,221 2,009 - Lump Sum - For the year to 31 March 2021 For the year to 31 March 2022 Page 130
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www.argyll-bute.gov.uk Page 45 The Remuneration Report SENIOR EMPLOYEES’ PENSION BENEFITS The pension entitlements for senior employees for the year to 31 March 2022 are shown in the table below, together with the contribution made by the Council to each senior employee’s pension during the year. The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their relevant local government service and not just their current appointment. In-year pension contributions Accrued pension benefits Senior Officers In-year pension contributions Accrued pension benefits £ £ £ £ 24,751 59,828 Pension 25,586 64,367 105,037 Lump Sum 105,855 20,334 58,601 Pension 20,546 61,269 105,777 Lump Sum 106,780 20,334 30,625 Pension 20,546 33,069 30,459 Lump Sum 30,787 15,332 2,024 Pension 15,537 3,672 - Lump Sum - Head of Children and Families and Criminal Justice (Section 3 Social Work Officer) - David Gibson (from 14-09-21) Pension 8378 913 Lump Sum 7,574 45,496 Pension - - 89,571 Lump Sum - 15,332 28,854 Pension 15,537 30,794 37,747 Lump Sum 38,221 For the year to 31 March 2021 For the year to 31 March 2022 Head of Children and Families (Section 3 Social Work Officer) - Alex Taylor (to 18-05- 20) Live Argyll General Manager (Subsidiary of Argyll & Bute Council) - Kevin Anderson Chief Executive - Pippa Milne (from 06-01- 20) Executive Director of Customer Services - Douglas Hendry Executive Director, Section 95 Financial Officer - Kirsty Flanagan Head of Adult Services (Mental Health, Learning Disability, Addictions and Lifelong Conditions) (Section 3 Social Work Officer) - Julie Lusk (from 19-05-20 to 13-09-21) Page 131
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www.argyll-bute.gov.uk Page 46 The Remuneration Report EMPLOYEE EXIT PACKAGES The numbers of exit packages with cost per band for compulsory and other redundancies are set out in the table below: Exit Package Cost Band No £ No £ No £ No £ No £ No £ 6 42,526 2 27,866 8 70,392 £0 - £20,000 2 11,782 1 11,144 3 22,926 2 44,307 - - 2 44,307 £20,001 - £40,000 - - - - - - 2 94,397 - - 2 94,397 £40,001 - £60,000 - - - - - - 1 64,618 2 144,484 3 209,102 £60,001 - £80,000 - - 1 70,992 1 70,992 - - - - - - £80,001 - £100,000 - - 1 80,629 1 80,629 1 103,669 - - 1 103,669 £100,001 - £150,000 - - 1 133,113 1 133,113 - - - - - - £150,001 - £200,000 - - - - - - 12 349,517 4 172,350 16 521,867 2 11,782 4 295,878 6 307,660 2020-21 2021-22 Compulsory Redundancies Other Departures Total Compulsory Redundancies Other Departures Total For the purposes of this note, Exit Packages include: Redundancy payment; Strain on the fund cost (the amount which the Council is required to pay to the pension fund because the employee has retired before the assumed retirement age); Added Years Lump Sum (the amount which the Council pays to the individual in a one-off lump sum, according to the compensatory added years awarded – maximum three years); and A capitalised value of the recurring Compensatory Added Years payment. This represents the amount which the Council has to pay to the pension fund because the employee has retired with enhanced service (maximum three years). This amount is paid on an annual basis once a person has left employment with the Council and is therefore a notional cost at 31 March 2022. The cash value costs noted in the table represent the actual costs incurred by the Council for the agreed exit packages. The capitalised added years pension element for members of the Teachers’ Pension Scheme is included in the cash value cost as payment is made in advance to the teachers’ pension fund to settle this liability. The total cost of £0.308m in the table includes exit packages that have been agreed and charged to the Council’s Comprehensive Income and Expenditure Statement in the current year. These costs include all exit packages agreed by 31 March in each year, this does not necessarily mean that these payments have been made, for example an employee could have subsequently been re-deployed to an alternative post within the Council. The Council’s Balance Sheet includes a provision at 31 March 2022 of £0.065m, this represents the amount which has yet to be paid out by the Council and this amount is included within the bands above. The supplementary Termination Benefits Note 35 provides more information on the exit packages agreed in the last two financial years. Page 132
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www.argyll-bute.gov.uk Page 47 The Remuneration Report FACILITY TIME STATEMENT Under the Trade Union (Facility Time Publication Requirements) Regulations 2017, the Council is required to collect and publish data in relation to its usage and spend of trade union facility time in respect of employees who are trade union representatives. Full details for the period 1 April 2021 to 31 March 2022 are attached at Appendix A. Page 133
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Expenditure and Funding Analysis www.argyll-bute.gov.uk Page 48 Net Expenditure Chargeable to the General Fund Adjustments between the Funding and Accounting Basis (Note 31) Net Expenditure in the Comprehensive Income and Expenditure Statement Net Expenditure Chargeable to the General Fund Adjustments between the Funding and Accounting Basis (Note 31) Net Expenditure in the Comprehensive Income and Expenditure Statement £'000 £'000 £'000 Service £'000 £'000 £'000 5,329 452 5,781 Chief Executive and Financial Services 5,347 1,087 6,434 Executive Director Douglas Hendry 410 27 437 Executive Director 330 59 389 9,426 6,827 16,253 Commercial Services 9,471 8,053 17,524 81,717 (1,567) 80,150 Education 86,427 2,331 88,758 8,557 3,359 11,916 Legal and Regulatory Support 9,466 1,805 11,271 Executive Director Kirsty Flanagan (2) 6 4 Executive Director 305 32 337 7,892 2,460 10,352 Customer Support 7,553 3,113 10,666 9,649 570 10,219 Development and Economic Growth 9,752 1,786 11,538 32,448 12,024 44,472 Roads and Infrastructure 30,914 17,187 48,098 58,107 3,465 61,572 Social Work 67,080 2,238 69,318 9,019 (1,347) 7,672 Other Non-Departmental Costs 10,974 (687) 10,287 222,552 26,276 248,828 Net Cost of Services 237,619 37,004 274,620 2020-21 2021-22 Page 134
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Expenditure and Funding Analysis www.argyll-bute.gov.uk Page 49 (251,127) (11,958) (263,085) Other Income and Expenditure (255,904) (19,741) (275,645) (28,575) 14,318 (14,257) (Surplus) / Deficit (18,285) 17,263 (1,025) (49,670) Opening General fund Balance (78,245) (28,575) Plus (Surplus) or Deficit on General Fund Balance (18,285) (78,245) Closing General Fund Balance at 31 March 2022 (96,530) The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, council tax and business rates) by local authorities in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated for decision making purposes between the council’s services. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement. Page 135
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Statement of Comprehensive Income and Expenditure www.argyll-bute.gov.uk Page 50 Note Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £'000 £'000 £'000 Service £'000 £'000 £'000 25,784 20,003 5,781 Chief Executive and Financial Services 25,714 19,280 6,434 Executive Director Douglas Hendry 437 437 Executive Director 389 389 19,167 2,914 16,253 Commercial Services 21,022 3,498 17,524 93,170 13,020 80,150 Education 103,006 14,248 88,758 16,173 4,257 11,916 Legal and Regulatory Support 15,499 4,228 11,271 Executive Director Kirsty Flanagan 4 4 Executive Director 337 337 10,945 593 10,352 Customer Support Services 11,374 708 10,666 18,709 8,490 10,219 Development and Economic Growth 23,172 11,634 11,538 60,972 16,500 44,472 Roads and Infrastructure 70,602 22,504 48,098 - - 147,227 85,655 61,572 Social Work 157,712 88,394 69,318 11,263 3,591 7,672 Other Non-Departmental Costs 13,174 2,887 10,287 403,851 155,023 248,828 Net Cost of Services 442,001 167,381 274,620 2020-21 2021-22 Page 136
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Statement of Comprehensive Income and Expenditure www.argyll-bute.gov.uk Page 51 Other Operating Income and Expenditure: 6,286 Net (Gain)/loss on Disposal of Long Term Assets (103) 1,381 Other Operating Income and Expenditure 7 1,836 7,667 Total Other Operating Income and Expenditure 1,733 Financing and Investment Income and Expenditure: 16,805 Interest Payable and Similar charges 16,343 (955) Interest and Investment Income (805) 1,888 Net Pension Interest Expense 1,864 17,738 Total Financing and Investment Income and Expenditure 17,402 Taxation and Non-Specific Grant Income: (197,110) General Government Grants (191,432) (13,495) Government Capital Grants and Other Capital Contributions 12 (21,700) (23,284) Non-domestic Rates Redistribution (25,070) (164) Non-domestic Rates TIF (336) (54,437) Council Tax Income (56,242) (288,490) Total Taxation and Non-Specific Grant Income (294,780) (14,257) (Surplus)/Deficit on Provision of Services 6.1 (1,025) (9,030) (Surplus)/Deficit on revaluation of Long Term Assets (11,143) 3,388 Other Post Employment Benefits (Pensions) 30.2 (110,648) (5,642) Other Comprehensive Income and Expenditure (121,791) (19,899) Total Comprehensive Income and Expenditure (122,816) This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Statement of Movement in Reserves. Page 137
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Balance Sheet www.argyll-bute.gov.uk Page 52 £'000 £'000 Note £'000 £'000 Long Term Assets Property Plant & Equipment 14 376,141 - Other Land and Buildings 384,930 9,945 - Vehicles, Plant, Furniture and Equipment 11,798 222,947 - Infrastructure Assets 230,478 5,950 - Community Assets 7,454 1,637 - Surplus Assets 1,408 25,599 - Assets Under Construction 35,344 642,219 Total Property Plant & Equipment 671,412 2,086 Heritage Assets 15 2,099 572 Intangible Assets 16 604 2,435 Investment Property 17 2,428 17,992 Long Term Investments 26 492 6,028 Long-Term Debtors 21 5,792 Other Long Term Debtors (Pensions) 30 4,634 671,332 Total Long Term Assets 687,461 Current Assets 900 Inventories 842 20,446 Short Term Debtors (Net of Impairment) 22 18,706 1,865 Assets Held for Sale 23 1,509 45,000 Short Term Investments 82,500 35,638 Cash and Cash Equivalents 24 19,728 103,849 Total Current Assets 123,285 Current Liabilities (3,005) Short-term Borrowing 26 (17,882) (45,457) Short-term Creditors 25 (41,283) (7) Capital Grant Receipts in Advance 29 - (2,356) Provisions 28 (2,231) (4,842) Other Short Term Liabilities 27 (5,117) (55,667) Total Current Liabilities (66,513) Long-term Liabilities (167,418) Borrowing Repayable within a Period in Excess of 12 Months 26 (161,657) (117,432) Other Long-term liabilities 27 (112,313) (1,980) Provisions 28 (2,079) (5,000) Capital Grant Receipts in Advance 29 - (82,314) Other Long-term liabilities (Pensions) 30 (374,144) Total Long-term Liabilities (276,049) 345,370 Total Assets less Liabilities 468,184 31 March 202231 March 2021 Page 138
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Balance Sheet www.argyll-bute.gov.uk Page 53 £'000 £'000 Note £'000 £'000 Unusable Reserves 32 135,392 - Revaluation Reserve 145,903 217,237 - Capital Adjustment Account 223,147 (2,524) - Financial Instruments Adjustment Account (2,198) (82,314) - Pensions Reserve 4,634 (7,206) - Accumulated Absences Account (6,928) 260,585 364,558 Usable Reserves 33 4,406 - Capital Funds 4,414 2,134 - Repairs and Renewals Funds 2,682 78,245 - General Fund Balance 96,530 84,785 103,626 345,370 Total Reserves 468,184 31 March 202231 March 2021 The Balance Sheet is a snapshot of the value as at the 31 March 2022 of the assets and liabilities recognised by the Council. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported as follows: • Unusable Reserves: are reserves that the Council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the revaluation reserve), where amounts would only become available to provide services if the assets are sold and reserves that hold timing differences shown in the Movement in Reserves Statement line “Adjustments between accounting basis and funding basis under regulations”. • Usable Reserves: are reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and statutory limitations on their use (for example the capital receipts reserve that may only be used to fund capital expenditure or repay debt). Kirsty Flanagan Section 95 Officer Page 139
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 54 Unusable Reserves (Note 32) Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2021 (78,245) (2,134) (4,406) (84,785) (135,392) (217,237) 82,314 2,524 7,206 (260,585) (345,370) (Surplus)/Deficit on Provision of Services (1,025) (1,025) - (1,025) Other Comprehensive Income and Expenditure (11,143) (110,648) (121,791) (121,791) Total Comprehensive Income and Expenditure (1,025) - - (1,025) (11,143) - (110,648) - - (121,791) (122,816) Adjustments between accounting basis and funding basis under regulations: Adjustment between CAA and Revaluation Reserve for depreciation that is related to the revaluation balance rather than historic cost - 632 (632) - - Amortisation of Intangible Assets (36) (36) 36 36 - Depreciation of Non-current Assets (23,325) (23,325) 23,325 23,325 - Impairment of Non-current Assets (1,252) (1,252) 1,252 1,252 - Capital Grants and Contributions credited to the Comprehensive Income and Expenditure Statement 21,700 21,700 (21,700) (21,700) - Capital Expenditure Charged to the General Fund 735 735 (735) (735) - Net Gain or Loss on Sale of Non-current Assets 103 (815) (712) 712 712 - Amount by which finance costs calculated in accordance with the Code are different from the amount of finance costs calculated in accordance with statutory requirements 326 326 (326) (326) - Employee Benefits 278 278 (278) (278) - Amount by which pension costs calculated in accordance with the Code are different from the contributions due under pension scheme regulations (23,700) (23,700) 23,700 23,700 - Usable Reserves (Note 33) Page 140
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 55 Unusable Reserves (Note 32) Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Statutory Repayment of Debt - Loans Fund Advances 2,514 2,514 (2,514) (2,514) - Statutory Repayment of Debt - Finance Leases 44 44 (44) (44) - Statutory Repayment of Debt - NPDO Finance Lease Liability 4,800 4,800 (4,800) (4,800) - Total Statutory Adjustments (17,813) - (815) (18,628) 632 (5,100) 23,700 (326) (278) 18,628 - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (18,838) - (815) (19,653) (10,511) (5,100) (86,948) (326) (278) (103,163) (122,816) Transfer to/from Other Statutory Reserves 553 (548) 807 812 (810) (810) 2 (Increase)/Decrease in Year (18,285) (548) (8) (18,841) (10,511) (5,910) (86,948) (326) (278) (103,973) (122,814) Balance at 31 March 2022 Carried Forward (96,530) (2,682) (4,414) (103,626) (145,903) (223,147) (4,634) 2,198 6,928 (364,558) (468,184) Other Transfers required by Statute Usable Reserves (Note 33) This Statement shows the movement in the 2021-22 financial year on the different reserves held by the Council, analysed into ‘Usable Reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and “Unusable Reserves”. The ‘(Surplus)/Deficit on the Provision of Services’ line shows the true economic cost of providing the Council’s services, more details of which are shown in Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The ‘Net (Increase)/Decrease before Transfers to Other Statutory Reserves’ line shows the Statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. Page 141
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 56 Unusable Reserves (Note 32) Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2020 (49,670) (1,843) (4,379) (55,892) (126,560) (220,263) 67,346 2,850 7,048 (269,579) (325,471) (Surplus)/Deficit on Provision of Services (14,257) (14,257) - (14,257) Other Comprehensive Expenditure and Income (9,030) 3,388 (5,642) (5,642) Total Comprehensive Expenditure and Income (14,257) - - (14,257) (9,030) - 3,388 - - (5,642) (19,899) Adjustments between accounting basis and funding basis under regulations: Adjustment between CAA and Revaluation Reserve for depreciation that is related to the revaluation balance rather than historic cost. - 198 (198) - - Amortisation of Intangible Assets (89) (89) 89 89 - Depreciation and of Non-current Assets (22,041) (22,041) 22,041 22,041 - Impairment of Non-current Assets 3,142 3,142 (3,142) (3,142) - Capital Grants and Contributions credited to the Comprehensive Income and Expenditure Statement 13,495 13,495 (13,495) (13,495) - Capital Expenditure Charged to the General Fund 744 744 (744) (744) - Net Gain or Loss on Sale of Non-current Assets (6,286) (612) (6,898) 6,898 6,898 - Amount by which finance costs calculated in accordance with the Code are different from the amount of finance costs calculated in accordance with statutory requirements 326 326 (326) (326) - Employee Benefits (158) (158) 158 158 - Amount by which pension costs calculated in accordance with the Code are different from the contributions due under pension scheme regulations (11,580) (11,580) 11,580 11,580 - Usable Reserves (Note 33) Page 142
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 57 Unusable Reserves (Note 32) Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Statutory Repayment of Debt - Loans Fund Advances 5,246 5,246 (5,246) (5,246) - Statutory Repayment of Debt - Finance Leases 43 43 (43) (43) - Statutory Repayment of Debt - NPDO Finance Lease Liability 2,549 2,549 (2,549) (2,549) - Total Statutory Adjustments (14,609) - (612) (15,221) 198 3,611 11,580 (326) 158 15,221 - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (28,866) - (612) (29,478) (8,832) 3,611 14,968 (326) 158 9,579 (19,899) Transfer to/from Other Statutory Reserves 291 (291) 585 585 (585) (585) - (Increase)/Decrease in Year (28,575) (291) (27) (28,893) (8,832) 3,026 14,968 (326) 158 8,994 (19,899) Balance at 31 March 2021 Carried Forward (78,245) (2,134) (4,406) (84,785) (135,392) (217,237) 82,314 2,524 7,206 (260,585) (345,370) Other Transfers required by Statute Usable Reserves (Note 33) This Statement shows the movement in the 2020-21 financial year on the different reserves held by the Council, analysed into ‘Usable Reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and “Unusable Reserves”. The ‘(Surplus)/Deficit on the Provision of Services’ line shows the true economic cost of providing the Council’s services, more details of which are shown in Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The ‘Net (Increase)/Decrease before Transfers to Other Statutory Reserves’ line shows the Statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. Page 143
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Cash Flow Statement www.argyll-bute.gov.uk Page 58 The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flow arising from operating activities is a key indicator of the extent to which the operations of the Council are funded by way of taxation and grant income or from the recipients of services provided by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Council. 2020-21 2021-22 £'000 Note £'000 (14,257) Net (Surplus) on the Provision of Services (1,025) (30,546) Adjustments to net surplus or deficit on the provision of services for non- cash movements (20,643) 2,471 Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities 7,928 (42,332) Net Cash Flows from Operating Activities 39 (13,740) 7,740 Net Cash Flows from Investing Activities 40 32,043 7,739 Net Cash Flows from Financing Activities 41 (2,393) (26,853) Net (Increase)/Decrease in Cash and Cash Equivalents 15,910 (8,785) Cash and Cash Equivalents at the beginning of the Reporting Period (35,638) (35,638) Cash and Cash Equivalents at the end of the Reporting Period 24 (19,728) Page 144
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www.argyll-bute.gov.uk Page 59 Notes to the Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 General Principles The Annual Accounts summarise the Council’s transactions for the 2021-22 financial year and its position at the year-end of 31 March 2022. The Council must ensure that its Annual Accounts are prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014, which section 12 of the Local Government in Scotland Act 2003 require to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2021-22, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 12 of the 2003 Act. The accounts have been prepared under the historic cost convention, other than changes resulting from the revaluation of certain categories of non-current assets and financial instruments, and on a going concern basis. 1.2 Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods or services are transferred to the service recipient in accordance with the performance obligations in the contract. Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption; they are carried as inventories on the Balance Sheet. Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made. Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. 1.3 Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty of notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Balance Sheet and Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management. 1.4 Prior Period Adjustments, Changes in Accounting Policies, Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Page 145
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www.argyll-bute.gov.uk Page 60 Notes to the Financial Statements Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. 1.5 Charges to Revenue for Non-Current Assets Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year: Depreciation attributable to the assets used by the relevant service. Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off. Amortisation of intangible fixed assets attributable to the service. The council is not required to raise Council Tax to fund depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis determined by the Council in accordance with the Statutory Repayment of Loans Fund Advances. Depreciation, revaluation and impairment losses and amortisation are therefore replaced by Loans Fund principal repayments in the General Fund Balance by way of an adjusting transaction within the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. 1.6 Employee Benefits 1.6.1 Benefits Payable during Employment Short-term employee benefits are those due to be settled wholly within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave, paid sick leave, bonuses and non- monetary benefits (e.g. cars) for current employees. These benefits are recognised as an expense for services in the year in which employees render service to the Council. An accrual is made for the cost of holiday entitlements earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday entitlements are charged to revenue in the financial year in which the holiday absence occurs. 1.6.2 Termination Benefits Termination benefits are amounts payable as a result of a decision by the Council to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy. They are charged on an accruals basis to the appropriate service segment in the Comprehensive Income and Expenditure Statement at the earlier of when the Council can no longer withdraw the offer of those benefits or when the Council recognised costs for a restructuring. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Page 146
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www.argyll-bute.gov.uk Page 61 Notes to the Financial Statements 1.6.3 Post-Employment Benefits The Council participates in two separate pension schemes: The Scottish Teachers’ Pension Scheme administered by the Scottish Government The Local Government (Scotland) Pensions Scheme administered by the Strathclyde Pension Fund. Both schemes provide defined benefits to members (retirement lump sums and pensions), earned while employees work for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot ordinarily be identified specifically to the Council. The scheme is therefore accounted for as if it were a defined contribution scheme. No liability for future payments of benefits is recognised in the Balance Sheet and the Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to the Teachers’ Pension Scheme in the year. Local Government Pension Scheme The Local Government Pension Scheme is accounted for as a defined benefits scheme: The liabilities of the Strathclyde Pension Fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates and projected earnings for current employees. Liabilities are discounted to their value at current prices, using a discount rate of 2.7% (based on the indicative rate of return on a “high quality corporate bond of equivalent term and currency to the liability” (as measured by the yield on iBoxx Sterling Corporates Index, AA over 15 years)). The assets of the Strathclyde Pension Fund attributable to the Council are included in the Balance Sheet at their fair value: quoted securities – current bid price unquoted securities – professional estimate unitised securities – current bid price property – market value The change in the net pension’s liability is analysed into the following components: Service cost comprising: Current service cost – the increase in liabilities as a result of years of service earned this year - allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked. Past service cost – the increase in liabilities as a result of a scheme amendment or curtailment whose effect relates to years of service earned in earlier years, debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Council – the change during the period in the net defined benefit liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability (asset) at Page 147
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www.argyll-bute.gov.uk Page 62 Notes to the Financial Statements the beginning of the period, taking into account any changes in the net defined liability (asset) during the period as a result of contribution and benefit payments. Re-measurements comprising: The return on plan assets – excluding amounts included in the net interest on the net defined benefit liability (asset), charged to the Pension Reserve as Other Comprehensive Income and Expenditure. Actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions, charged to the Pensions Reserve. Contributions paid to the Strathclyde Pension Fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. In relation to retirement benefits, statutory provisions require the General Fund Balance to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are transfers to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable to the fund but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits earned by employees. 1.6.4 Post Employment Discretionary Benefits The Council also has restricted powers to make discretionary awards of retirements benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. 1.7 Events after the Reporting Period Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Annual Accounts are authorised for issue. Two types of events can be identified: Those that provide evidence of conditions that existed at the end of the reporting period – the Annual Accounts are adjusted to reflect such events. Those that are indicative of conditions that arose after the reporting period – the Annual Accounts are not adjusted to reflect such events, but where a category of events would have a material impact, disclosure is made in the notes of the nature of the events and their estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Annual Accounts. 1.8 Financial Liabilities Financial liabilities are recognised on the Balance Sheet when the Council becomes party to the contractual provisions of a financial instrument and initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying value of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised. Page 148
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www.argyll-bute.gov.uk Page 63 Notes to the Financial Statements For most of the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement. Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of the restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement. 1.9 Financial Assets Financial assets are classified based on a classification and measurement approach that reflects the business model for holding the financial assets and their cashflow characteristics. There are three main classes of financial assets measured at: Amortised cost Fair value through profit or loss, and Fair value through other comprehensive income The Council’s business model is to hold investments to collect contractual cash flows. Financial assets are therefore classified as amortised cost, except for those whose contractual payments are not solely payment of principal and interest (i.e. where the cash flows do not take the form of a basic debt instrument). Financial Assets Measured at Amortised Cost Financial assets measured at amortised cost are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the financial assets held by the Council, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. Financial Assets Measured at Fair Value through Profit or Loss Financial assets that are measured at fair value through profit or loss are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Fair value gains and losses are recognised as they arrive in the Surplus or Deficit on the Provision of Services. The fair value measurements of the financial assets are based on the following techniques: Instruments with quoted market prices – the market price Page 149
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www.argyll-bute.gov.uk Page 64 Notes to the Financial Statements Other instruments with fixed and determinable payments – discounted cash flow analysis The inputs to the measurement techniques are categorised in accordance with the following three levels: Level 1 inputs – quoted prices (unadjusted) in active markets for the identical assets that the Council can access at the measurement date. Level 2 inputs – inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. Level 3 inputs – unobservable inputs for the asset. Any gains and losses that arise on the derecognition of the asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Expected Credit Loss Model The Council recognises expected credit losses on all of its financial assets held at amortised cost, either on a 12-month or lifetime basis. The expected credit loss model also applies to lease receivables and contract assets. Only lifetime losses are recognised for trade receivables (debtors) held by the Council. 1.10 Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that: The Council will comply with the conditions attached to the payments; and The grants or contributions will be received. Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset in the form of the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor. Monies advanced as grants and contributions for which conditions have been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income and Expenditure (non-ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Account are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure. 1.11 Heritage Assets The main heritage assets held by the Council are two art collections, an archaeology collection and a historic jail and courthouse which is operated as a “living” museum. The “Argyll Collection” is an art collection which was set up to provide the young people of Argyll and Bute with direct access to a wide range of quality art recognising that they had limited access to museums and galleries. In addition, the Council holds other works of art which are held at various libraries and the Campbeltown Museum. Heritage Assets are recognised and measured (including the treatment of revaluation gains and losses) in accordance with the Council’s accounting policies on property, plant and equipment. However, some of the measurement rules are relaxed in relation to heritage assets as detailed below. The Council’s main heritage assets are accounted for as follows: Page 150
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www.argyll-bute.gov.uk Page 65 Notes to the Financial Statements The Art Collections The collections cover a range of media including acrylic, charcoal, embroidery, engraving, etching, gouache, lithography, oil, pastel, pencil, procion dye, screenprint, monoprint, watercolour, woodcut, ceramic, bronze and woodcarving. These items are reported in the Balance Sheet at insurance valuation which is based on market values. These valuations are updated periodically. The assets within the art collections are deemed to have indeterminate lives and a high residual value; hence the Council does not consider it appropriate to charge depreciation. Acquisitions are made by purchase or donation. Acquisitions are initially recognised at cost and donations are recognised at valuation with valuations provided by external valuers and with reference to appropriate commercial markets using the most relevant and recent information from sales at auctions. Inveraray Jail and Courthouse and “Other” Historic Buildings The building is owned by Argyll and Bute Council and leased out to an organisation which runs it as a “living museum”. The building is valued in accordance with the Council’s property, plant and equipment policy. Other buildings included in this category are McCaig’s Folly in Oban, the Argyll Mausoleum and Castle Lodge in Dunoon. Archaeology and “Other” Museum Exhibits The Council has obtained specialist valuations for the archaeology collection held within Campbeltown Museum which covers a range of objects including swords, bones, pottery, stone and leather remains. Similar to the Art Collections, these items are reported in the Balance Sheet at insurance valuation which is based on market values. These valuations will be updated periodically. The assets within the collection are deemed to have indeterminate lives and a high residual value; hence the Council does not consider it appropriate to charge depreciation. Heritage Assets – General The carrying amounts of heritage assets are reviewed where there is evidence of impairment for heritage assets, e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Council’s general policies on impairment (see note 1.19.3 in this summary of significant accounting policies). The proceeds of any disposals are accounted for in accordance with the Council’s general provisions relating to the disposal of property, plant and equipment. Disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and receipts (see note 1.19.4 in this summary of significant accounting policies). 1.12 Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council. Expenditure on the development of websites is not capitalised if the website is solely or primarily intended to promote or advertise the Council’s goods or services. Intangible assets are measured initially at cost. Amounts are not revalued, as the fair value of the assets held by the Council cannot be determined by reference to an active market. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service lines in the Comprehensive Income and Expenditure Statement. An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted to the relevant service lines in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Page 151
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www.argyll-bute.gov.uk Page 66 Notes to the Financial Statements Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account. 1.13 Interests in Companies and Other Entities The Council has material interests in companies and other entities that have the nature of subsidiaries, associates or joint ventures and requires to prepare Group Accounts. In the Council’s own single entity accounts, the interests in companies and other entities are recorded as financial assets at cost, less any provision for losses. 1.14 Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. The cost of inventories is assigned using the weighted average costing formula. 1.15 Investment Properties Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale. Investment properties are measured initially at cost and subsequently at fair value, being the price that would be received to sell such an asset in an orderly transaction between market participants at the measurement date. As a non-financial asset, investment properties are measured at highest and best use. Properties are not depreciated but are revalued annually according to market conditions at the year-end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account. 1.16 Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets. 1.16.1 The Council as Lessee a) Finance Leases Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Council are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Page 152
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www.argyll-bute.gov.uk Page 67 Notes to the Financial Statements Lease payments are apportioned between: A charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and A finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement). Property, plant and equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life. The Council is not required to raise Council Tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. b) Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease). 1.16.2 The Council as Lessor a) Finance Leases Where the Council grants a finance lease over a property or an item of plant and equipment, the relevant asset is written out of the Balance Sheet as a disposal. At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether property, plant and equipment or assets held for sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. A gain, representing the Council’s net investment in the lease, is credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal), matched by a lease (long-term debtor) asset in the Balance Sheet. Lease rentals receivable are apportioned between: A charge for the acquisition of the interest in the property – applied to write down the lease debtor (together with any premiums received); and Finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement). The gain credited to the Comprehensive Income and Expenditure Statement on disposal is not permitted by statute to increase the General Fund Balance and is required to be treated as a capital receipt. Where a premium has been received, this is posted out of the General Fund Balance to the Capital Receipts Reserve in the Movement in Reserves Statement. When the future rentals are received, the element for the capital receipt on disposal of the asset is used to write down the debtor. At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve. The written-off value of disposals is not a charge against Council Tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. Page 153
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www.argyll-bute.gov.uk Page 68 Notes to the Financial Statements b) Operating Leases Where the Council grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the relevant Service lines in the Comprehensive Income and Expenditure Statement, with the exception of rental income from investment property which is credited to Interest and Investment Income. Credits are made on a straight line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income. 1.17 Overheads and Support Services The costs of overheads and support services are not charged to service segments in accordance with the Council’s arrangements for accountability and financial performance. 1.18 Assets Held for Sale Property, plant and equipment are classified as Assets Held for Sale when the following criteria are met: The property is available for immediate sale in its present condition. The sale must be highly probable; and an active programme to locate a buyer and complete the plan must have been initiated. The asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value. The sale should be expected to qualify for recognition as a completed sale within one year (although events or circumstances may extend the period to complete the sale beyond one year). When these criteria are met, assets within the category of Property, Plant and Equipment will be reclassified as Assets Held for Sale. 1.19 Property, Plant and Equipment Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. 1.19.1 Recognition Expenditure on the acquisition, creation, or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (i.e. repairs and maintenance) is charged as an expense when it is incurred. 1.19.2 Measurement Assets are initially measured at cost, comprising: The purchase price. Any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. The Council does not capitalise borrowing costs incurred while assets are under construction. Page 154
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www.argyll-bute.gov.uk Page 69 Notes to the Financial Statements The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition will not increase the cash flows of the Council. In the latter case, the cost of the acquisition is the carrying amount of the asset given up by the Council. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Accounts. Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement. Assets are then carried in the Balance Sheet using the following measurement bases: Infrastructure, community assets and assets under construction – depreciated historical cost. Council offices – current value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV). School buildings – current value, but because of their specialist nature, are measured at depreciated replacement cost which is used as an estimate of current value. Surplus assets – the current value measurement base is fair value, estimated at highest and best use from a market participant’s perspective. All other assets – current value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV). Where there is no market-based evidence of current value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value. Where non-property assets have short useful lives or low values (or both), depreciated historical cost is used as a proxy for current value. Assets included in the Balance Sheet at current value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Surplus or Deficit on the Provision of Services where they arise from the reversal of an impairment loss previously charged to a service. Where decreases in value are identified, they are accounted for by: Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains). Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. 1.19.3 Impairment Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for by: Page 155
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www.argyll-bute.gov.uk Page 70 Notes to the Financial Statements Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains) Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service lines in the Comprehensive Income and Expenditure Statement. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service lines in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. 1.19.4 Disposals and Non-current Assets Held for Sale When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is re-valued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on the Provision of Services. Depreciation is not charged on Assets Held for Sale. Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale. When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account. Disposal receipts are categorised as capital receipts. All capital receipts are credited to the Capital Receipts Reserve, and can then only be used for new capital investment. Receipts are appropriated to the Reserve from the General Fund Balance in the Movement in Reserves Statement. The written-off value of disposals is not a charge against Council Tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. 1.19.5 Depreciation Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. land and certain community assets) and assets that are not yet available for use (i.e. assets under construction). Where an asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. 1.20 Private Finance Initiative (PFI) and Similar Contracts PFI contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor. As the Council is deemed to control the services that are provided under its PFI schemes and as ownership of Page 156
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www.argyll-bute.gov.uk Page 71 Notes to the Financial Statements the property, plant and equipment will pass to the Council at the end of the contracts for no additional charge, the Council carries the assets used under the contracts on the Balance Sheet. The original recognition of these assets at fair value was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as Property, Plant and Equipment owned by the Council. The amounts payable to the PFI operators each year are analysed into five elements: Fair value of the services received during the year - debited to the relevant service in the Comprehensive Income and Expenditure Statement. Finance Cost – this is calculated by applying the implicit interest rate in the lease to the opening lease liability for the period, this is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Payment towards liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease). Lifecycle replacement costs – proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to Property, Plant and Equipment when the relevant works are eventually carried out. 1.21 Provisions and Contingent Liabilities 1.21.1 Provisions Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. For instance, the Council may be involved in a court case that could eventually result in a settlement or the payment of compensation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Council becomes aware of the obligation, and measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision set up in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year and where it becomes more likely than not that a transfer of economic benefits will not now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the obligation is settled. 1.21.2 Contingent Liabilities A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Page 157
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www.argyll-bute.gov.uk Page 72 Notes to the Financial Statements 1.22 Reserves Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus/Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against Council Tax for the expenditure. Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and do not represent usable resources for the Council – these reserves are explained in the relevant policies above and Note 32 to the accounts. 1.23 VAT Income and expenditure excludes any amounts related to VAT, as all VAT collected is payable to HM Revenue and Customs and VAT paid is recoverable. 2. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED The standards introduced by the 2022-23 Code where disclosures are required in the 2021-22 financial statements in accordance with the requirements of paragraph 3.3.4.3 of the code are: Annual Improvements to IFRS Standards 2018-2020. The annual IFRS improvement programme notes 4 changed standards: Foreign operations of acquired subsidiaries transitioning to IFRS: IFRS 1 Onerous Contracts: Amendments to IAS 37 clarifies the intention of the code Leases: IFRS 16 – amendment removes a misleading example that is not referenced in the code Agriculture: IAS 41 The Code requires implementation from 1 April 2022, therefore there is no impact on the 2021/22 accounts. Furthermore there is no material impact anticipated in future years from the implementation of these standards. Property Plant & Equipment: IAS16 amendments - Proceeds before intended Use There will be no material impact in future years from the adoption of this amendment. CIPFA/LASAAC has agreed to defer the implementation of IFRS 16 Leases until 1 April 2024. 3. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. Where a critical judgement has been made this is referred to in the relevant note to the core financial statements; however a summary of those with the most significant effect is detailed below: There is a high degree of uncertainty about future levels of funding for local government. However, the Council has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Council might be impaired as a result of a need to close facilities and reduce levels of service provision. Page 158
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www.argyll-bute.gov.uk Page 73 Notes to the Financial Statements The Council currently operates three Private Finance Initiative (PFI), or similar, contracts which are accounted for as Service Concession arrangements under IFRIC12 – Service Concession Arrangements. The Council has determined that in the case of the Schools NPDO contract and the new Schools DBFM contract, the Council has control over the services provided through use of the schools and that a qualifying asset has been created. The appropriate accounting treatment is to bring the assets “on Balance Sheet” along with a finance lease liability. The Council also operates a Waste Management PPP contract. In this case the Council determined that a “qualifying asset” had not been created and that the Council did not have significant control over the services being provided. The appropriate accounting treatment was therefore determined to be “off Balance Sheet” and that payments to the contractor are charged to the appropriate service line within the Comprehensive Income and Expenditure Account. The Council has considered its exposure to possible losses and made adequate provision where it is probable that an outflow of resources will be required and the amount of the obligation can be measured reliably. Where it has not been possible to measure the obligation, material contingent liabilities have been disclosed in Note 34. Unused holiday entitlement earned at 31 March 2022 but not taken at that date has been quantified on the basis of a 5% sample of all non-term time Council employees. The calculation in respect of unused holidays for term time staff in schools is based on actual leave entitlement as at 31 March and no estimation is required for these staff. The liability shown in the 2021-22 financial statements in respect of the holiday pay accrual is £6.927m. £2.636m has been treated as principal by the Council for costs associated with the provision of Personal Protective Equipment (PPE) and testing kits by NHS National Services Scotland to Argyll and Bute for social care services and has therefore has been included in both the income and expenditure figures for Social Work within the Comprehensive Income and Expenditure Statement. 4. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY The financial statements contain estimated figures that are based on assumptions made by the Council about which there is a degree of uncertainty. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Council’s Balance Sheet at 31 March 2022 for which there is a significant risk of material adjustment in the forthcoming financial year are outlined in the table that follows: Page 159
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 74 Item Uncertainties Effect if Actual Results Differ from Assumptions Property, Plant and Equipment Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Council will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives. If the useful life of assets is reduced, depreciation increases and the carrying amount of the assets falls. It is estimated that the annual depreciation charge for buildings would increase by £1.446m for every year that useful lives had to be reduced. Pensions Liability Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. The effects on the net pension’s liability of changes in individual assumptions can be measured. The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out as follows: Sensitivities at 31 March 2022 Approximate % Increase to Employer Liability Approximate monetary amount £’000 0.1% decrease in real discount rate 2% 16,417 1 Year increase in the member life expectancy 4% 34,850 0.1% increase in salary increase rate 0% 968 0.1% increase in pension increase rate 2% 15,333 Page 160
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Notes to the Financial Statements Page 75 www.argyll-bute.gov.uk 5. GENERAL FUND RESERVES The Council has ring-fenced £89.433m of the balance on the General Fund. Ring-fenced Balances Balance 1 April 2021 Funds Used Contributions to/from Funds New Earmarking agreed 2021-22 New Earmarking at end of 2021- 22 Balance 31 March 2022 £'000 £'000 £'000 £'000 £'000 £'000 Revenue from Additional Council Tax on Second Homes (Strategic Housing Fund) 7,126 (2,672) 2,136 6,590 Investment in Affordable Housing 3,500 - (200) 3,300 Capital Projects 7,452 (6,279) 15,378 4,741 3,430 24,722 Lochgilphead and Tarbert Regeneration 2,272 (1) 2,271 Support for Rural Growth Deal 1,195 (137) 1,058 Asset Management 2,573 - 34 2,607 Piers and Harbours Investment Fund 970 - 673 1,643 Scottish Government Initiatives 1,116 (119) 2,144 3,141 Transformation 73 - (73) - CHORD 262 - 87 349 School Budget Carry Forwards 1,020 (639) 1,601 1,982 Energy Efficiency Fund 218 - 218 Unspent Budget Required for Existing Legal Commitments 588 (113) 475 Unspent Committed Grants 8,393 (1,637) (2) 6,080 12,834 Contributions Carried Forward 144 (25) (2) 49 166 Other Previous Council Decisions 5,664 (828) (3,137) 2,400 244 4,343 Redundancy Reserve 1,899 (167) 1,732 Supporting Organisational Change 499 (111) 1,200 1,588 Spend to Save Route Optimisation Software 100 - 100 Fleet - Timing Delay 107 - 392 499 Hermitage Park 4 4 COVID-19 13,469 (5,003) (9,433) 7,562 2,812 9,407 Unspent Budget Carried Forward 13,248 (1,192) (4,246) 2,594 10,404 Total Ring-fenced 71,888 (18,923) (515) 14,703 22,280 89,433 Contingency 5,032 - 224 - - 5,256 Unallocated 1,325 - 4,682 (4,166) - 1,841 Total General Fund Balance 78,245 (18,923) 4,391 10,537 22,280 96,530 The contingency balance of £5.256m is 2% of the Council’s budgeted net expenditure for 2022-23. Page 161
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Notes to the Financial Statements Page 76 www.argyll-bute.gov.uk 6. SUPPLEMENTARY NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND EXPENDITURE 6.1 Expenditure and Income Analysed by Nature The Council’s expenditure and income is analysed as follows: 2020-21 Expenditure/Income 2021-22 £'000 £'000 Expenditure 163,138 Employee benefits expenses 184,092 163,560 Other services expenses 170,464 58,178 Contribution to Argyll and Bute Integration Joint Board 62,870 18,975 Depreciation, amortisation, impairment 24,575 18,693 Interest payments 18,207 1,400 Precepts and levies 1,419 (19) Other operating expenditure 417 6,286 Net Loss/(Gain) on the disposal of assets (103) 430,211 Total Expenditure 461,941 Income (96,845) Fees, charges and other service income (104,511) (58,178) Income to fund social care services (Argyll and Bute Integration Joint Board) (62,870) (955) Interest and investment income (805) (77,885) Income from council tax and non-domestic rates (81,648) (210,605) Government grants and contributions (213,132) (444,468) Total Income (462,966) (14,257) (Surplus)Deficit on the Provision of Services (1,025) Page 162
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Notes to the Financial Statements Page 77 www.argyll-bute.gov.uk 6.2 Revenue from Contracts with Service Recipients 31 March 2021 31 March 2022 £'000 £'000 23,427 23,449 23,427 23,449 Revenue from contracts with service recipients Total Included in Comprehensive Income and Expenditure Statement 7. OTHER OPERATING INCOME AND EXPENDITURE The expenditure of £1.836m shown in the Other Operating Income and Expenditure line on the Statement of Comprehensive Income and Expenditure can be analysed as follows: 2020-21 2021-22 ActualOther Operating Income and Expenditure Actual £'000 £'000 1,400 Dunbartonshire and Argyll & Bute Valuation Joint Board Requisition 1,419 (19) Equal Pay Settlements and Legal Costs (16) - Other Operating Income and Expenditure not attributable to Services 433 1,381 Total 1,836 8. AGENCY SERVICES The Council bills and collects non-domestic rates on behalf of the Scottish Government from ratepayers situated within Argyll and Bute. The Council also bills and collects, along with its own council tax, domestic water and sewerage charges on behalf of Scottish Water. In addition, the Council received a number of funding streams from the Scottish Government in 2021/22 to support financial hardship experienced by third parties (individuals and businesses) related to the COVID-19 pandemic. The Council had no discretion over the terms of the funding and could not use it for service delivery. This means the Council acted as agent only and the grant funding received and paid out are not included in the Council's reserves, CIES or Balance Sheet. In some cases, an administration grant was awarded to the Council to facilitate these payments. This is accounted for as operational income and expenditure and not disclosed here. Page 163
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Notes to the Financial Statements Page 78 www.argyll-bute.gov.uk 2020-21 2021-22 Actual Actual £'000 £'000 23,284 Scottish Government - Contributions (to)/from the non-domestic rates pool 25,070 13,932 Domestic water and sewarage charges collected (14,317) (13,932) Domestic water and sewarage charges paid over to Scottish Water 14,317 289 Service income from Scottish Water for collection of domestic water and sewerage 289 7 Service income BID levy - Dunoon 7 7 Service income BID levy - Oban 7 (1,003) COVID - Financial Hardship and Self-Isolation grants paid out (1,405) 1,003 COVID - Financial Hardship and Self-Isolation funding received from Scottish Government 1,405 (37,144) COVID - Business Grant Scheme paid out (5,160) 37,144 COVID - Business Grant Scheme funding received from Scottish Government 5,160 (25,176) COVID - Strategic Framework grants paid out (17,543) 25,176 COVID - Strategic Framework funding received from Scottish Government 17,543 (3,623) COVID - Other support for businesses (including furlough support) paid out (7,445) 3,623 COVID - Other support for businesses (inculding furlough support) funding received from 7,445 Scottish Government 23,587 Total 25,373 Agency Income 9. COMMUNITY CARE AND HEALTH (SCOTLAND) ACT 2002 From 1 April 2016 health and social care services were fully integrated as part of the new Health and Social Care Partnership. During 2021-22 the Partnership included provision of services to older people, supporting people with a learning disability and provision of support to adults who have a mental health difficulty. Budgets are currently aligned which means that each Partner organisation holds their own element of the budget and records the income and expenditure that relates to the part of the service for which they are responsible. During 2021-22 income received by the Council from this source amounted to £7.666m and the related expenditure was £10.110m. This can be analysed as follows: Income Expenditure Income Expenditure £'000 £'000 Purpose of Services £'000 £'000 2,795 4,549 Care of the Elderly 3,355 5,203 2,793 3,310 Provision of Services for People with Learning Disabilities 2,857 3,279 1,352 1,551 Provision of Services for People with Mental Health Needs 1,454 1,628 6,940 9,410 7,666 10,110 7,148 5,217 2,362 2,241 14,088 14,627 10,028 12,351 2020-21 2021-22 Additional Covid Response Funding received via NHS for 2021-22 Page 164
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Notes to the Financial Statements Page 79 www.argyll-bute.gov.uk 10. FEES PAYABLE TO AUDIT SCOTLAND In 2021-22 the following fees relating to external audit and inspection were incurred: 2020-21 2021-22 £'000 £'000 266 Fees payable to Audit Scotland with regard to external audit services carried 272 out by the appointed Auditor 266 Total Remuneration 272 Auditor's Remuneration The figure above includes fees for the audit of the Council’s charitable trusts. Audit Scotland did not undertake any non-audit work in 2020-21 or 2021-22. 11. WASTE MANAGEMENT PUBLIC PRIVATE PARTNERSHIP The Council has entered into a Public Private Partnership for the provision of its waste disposal service. This agreement requires the provider to upgrade or replace three waste disposal sites, two transfer stations and five civic amenity sites. In addition, the provider will also provide composting facilities to meet waste diversion targets. When the agreement ends in September 2026, during financial year 2026- 27, the provider will hand back to the Council the waste disposal facilities with a remaining life of 5 years. The Council has paid a service charge of £6.028m which represents the value of the service provided from 1 April 2021 to 31 March 2022 (£4.864m for 2020-21). Under the agreement the Council is committed to paying the following sums: Future Repayment Periods £'000 2022-2023 6,658 2023-2025 13,763 2025-2027 9,444 Total 29,865 The average service charge equates to £5.168m per annum over the life of the contract. Page 165
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Notes to the Financial Statements Page 80 www.argyll-bute.gov.uk 12. GRANT INCOME The Council credited the following grants to the Comprehensive Income and Expenditure Statement in 2021-22: 2020-21 Grant Income 2021-22 £'000 £'000 Credited to Taxation and Non Specific Grant Income 197,110 Revenue Support Grant 191,432 23,284 Non Domestic Rates 25,070 2,137 Specific Capital Grant 474 8,480 General Capital Grant 10,822 48 Heritage Lottery Fund 137 1,339 Scottish Timber Transport Strategy 1,299 1,023 Scottish Government 1,126 102 Strathclyde Partnership for Transport (SPT) 195 11 Revenue Contribution to Capital Projects 27 329 Other Grants 2,620 26 Other Government Capital Grants 5,000 233,889 Total 238,202 Credited to Services 11,429 Scottish Government Specific Grants 12,830 3,703 Scottish Government Specific Grants - Scotland's Schools for the Future - 356 General Capital Grant - Private Sector Housing Improvement Grants 558 18,605 Housing Benefit Subsidy 17,809 3,860 Other Revenue Government Grants 5,751 37,953 Total 36,948 Page 166
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Notes to the Financial Statements Page 81 www.argyll-bute.gov.uk 13. RELATED PARTIES The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Council. The aim of the Financial Reporting Standard dealing with Related Parties is to highlight instances where influence and control has been exercised over an external organisation by the Council, and where an elected member, their close family or someone in their household, has the ability to exercise the influence or control. Elected members and Senior Officers have completed a signed declaration on Related Party Interests and these have been used to compile this disclosure. 13.1 Scottish Government The Scottish Government has effective control over the general operations of the Council – it is responsible for providing the statutory framework, within which the Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other parties (e.g. council tax bills, housing benefits). Grants received from government departments are set out in Note 12 – Grant Income. Members Members of the council have direct control over the Council’s financial and operating policies. The total of members’ allowances paid in 2021-22 is shown in the Remuneration Report. During the year there was one organisation in which members had a significant interest and where the total of transactions exceeded £10,000. Expenditure Transactions in which Members have a significant interest £'000 Southpeak Services 28 Total 28 Page 167
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Notes to the Financial Statements Page 82 www.argyll-bute.gov.uk 13.2 Other Related Bodies This category relates to transactions with entities which are controlled or significantly influenced by the Council. During the year transactions with other related bodies were as follows: Expenditure Related Bodies £'000 Transactions with related bodies during the year totalled 4,630 Of these, transactions with the following exceeded £10,000: ACHA 32 LINK Group Ltd 1,827 West Highland Housing Association Ltd 168 Oban and Lorn Community Enterprise - Atlantis Leisure 514 Argyll and the Isles Tourism Ltd 15 Islay and Jura Community Enterprise 215 Mid Argyll Community Enterprise 139 Scotland Excel 71 Argyll and Bute Citizens Advice Bureau 48 Bute Advice 149 Kintyre Recycling 132 SEEMIS 158 Argyll and the Isles Coast & Countryside Trust 220 Carr Gomm 380 Argyll & Bute Women's Aid 122 Argyll & Bute Care & Repair 178 HELP 149 COSLA 71 Total 4,588 Given the relationships the Council has with other organisations and partners it is possible that some related party transactions may exist. However, the purpose of the requirement to complete the disclosure is to provide additional information to the users of the Annual Accounts and, by declaring possible instances, there is no suggestion that any inappropriate transactions have taken place. Page 168
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 83 14. PROPERTY, PLANT AND EQUIPMENT 14.1 Movement in Property, Plant and Equipment Other Land & Buildings Vehicles Plant & Equipment Infra- structure Assets Community Assets Surplus Assets Assets Under Construction Total 2021-22 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or Valuation At 1 April 2021 402,408 41,727 320,407 5,959 1,634 25,599 797,734 Additions 9,161 4,564 15,434 1,504 22 12,210 42,895 Additions financed under a new leasing arrangement - 6,808 35 6,843 (3,015) (122) - (3,137) Derecognition - Disposals (6) (1,863) - (1,869) Assets reclassified (to)/from Held for Sale (248) 153 (164) (259) Other movements in cost or valuation 2,412 - 53 - (2,465) - At 31 March 2022 417,520 44,428 336,047 7,463 1,405 35,344 842,207 Depreciation and Impairments At 1 April 2021 (26,267) (31,782) (97,460) (9) 3 - (155,515) (12,508) (2,711) (8,106) - (23,325) 4,166 4,166 2,004 2,004 - - - - - 1,863 1,863 15 (3) - 12 At 31 March 2022 (32,590) (32,630) (105,569) (9) 3 - (170,795) Balance Sheet amount at 31 March 2022 384,930 11,798 230,478 7,454 1,408 35,344 671,412 Balance Sheet amount at 31 March 2021 376,141 9,945 222,947 5,950 1,637 25,599 642,219 Other movements in depreciation and impairment Movements in 2021-22 Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation increases/(decreases) recognised in the Surplus/Deficit on the Provision of Services Depreciation Charge for 2021-22 Depreciation written out to the Revaluation Reserve Depreciation written out to the Surplus/Deficit on the Provision of Services Impairment losses/(reversals) recognised in the Revaluation Reserve Impairment losses/(reversals) recognised in the Surplus/Deficit on the Provision of Services Derecognition - Disposals Page 169
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 84 Other Land & Buildings Vehicles Plant & Equipment Infra- structure Assets Community Assets Surplus Assets Assets Under Construction Total 2020-21 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or Valuation At 1 April 2020 400,497 40,704 310,761 5,656 3,250 26,806 787,674 Additions 4,204 2,608 6,824 303 (3) 8,543 22,479 Additions financed under a new leasing agreement - - - - - - - 406 - - - 100 - 506 (1,348) - - - (113) (7,170) (8,631) Derecognition - Disposals (1,086) (1,582) - - - - (2,668) Assets reclassified (to)/from Held for Sale (223) - 200 - (1,600) - (1,623) Other movements in cost or valuation (42) (3) 2,622 - - (2,580) (3) At 31 March 2021 402,408 41,727 320,407 5,959 1,634 25,599 797,734 Depreciation and Impairments At 1 April 2020 (29,881) (31,077) (89,607) (9) 4 - (150,570) (7,914) (2,287) (7,853) (1) (18,055) 9,467 9,467 1,169 67 1,236 823 1,582 2,405 69 (67) 2 At 31 March 2021 (26,267) (31,782) (97,460) (9) 3 - (155,515) Balance Sheet amount at 31 March 2021 376,141 9,945 222,947 5,950 1,637 25,599 642,219 Balance Sheet amount at 31 March 2020 370,616 9,627 221,154 5,647 3,254 26,806 637,104 Other movements in depreciation and impairment Impairment losses/(reversals) recognised in the Surplus/Deficit on the Provision of Services Derecognition - Disposals Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation increases/(decreases) recognised in the Surplus/Deficit on the Provision of Services Depreciation Charge for 2020-21 Depreciation written out to the Revaluation Reserve Comparative Movements in 2020-21 Page 170
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 85 14.2 Valuation of Property, Plant and Equipment IAS 16 – Property, Plant and Equipment has been adapted for the public sector by IPSAS 17 – Property, Plant and Equipment. Under IPSAS 17 each category of Property, Plant and Equipment is valued as follows: • Infrastructure, community assets and assets under construction are valued at historical cost. • Vehicles, plant and equipment are valued at depreciated historical cost as a proxy for fair value. • All other classes of assets are valued at fair value. Where there is no market based evidence of fair value because of the specialist nature of the asset and the asset is rarely sold then an estimate of fair value is made using a depreciated replacement cost approach. The Council carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured is re-valued at least every five years. Assets identified as Corporate Surplus Assets are valued in accordance with IFRS 13 - Fair Value Measurement. The Balance Sheet value of Corporate Surplus assets at 31 March 2022 was £1.408m. Corporate Surplus assets are valued at their fair value on 31 March each year. Level 2 or 3 inputs were used for most Corporate Surplus asset valuations. Revaluations of Council owned land and property were carried out at 31 March 2022 in accordance with the Council’s rolling programme of revaluations. The revaluations have been carried out in house by the Council’s Estates Service. Valuations of land and buildings were carried out in accordance with the methodologies and basis for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. The following table shows the progress of the Council’s rolling programme for the revaluation of Other Land and Buildings: Other Land & Buildings £'000 31 March 2022 44,329 31 March 2021 61,402 31 March 2020 26,317 31 March 2019 101,822 31 March 2018 151,060 Total Cost or Valuation 384,930 Valued at Fair Value as at: Page 171
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Notes to the Financial Statements Page 86 www.argyll-bute.gov.uk 14.3 Depreciation The following useful lives and depreciation rates have been used in the calculation of depreciation: • Buildings – straight-line allocation over the useful life of the property as estimated by the valuer (20 to 60 years) • Infrastructure – straight-line allocation over 40 – 60 years • Vessels – straight line allocation over 25 years • Vehicles, Plant and Equipment - straight-line allocation over the useful life of the asset as determined by a suitably qualified officer (5 to 20 years) 14.4 Summary of Capital Expenditure and Financing Capital expenditure involves the creation of assets, the benefit of which will be available to future rates and Council taxpayers. It is financed from borrowing, capital receipts and capital grants. The cost of the asset is effectively borne over a period of years. In 2021-22 total spending on capital projects was £42.976m. The 2020-21 opening balance for the capital financing requirement has been restated to take account of the revaluation of the Landfill sites which had been incorrectly included in 2019-20. This subsequentlyresults in the removal of £0.583m from Total Funding within 2020-21 as this is not a source of finance. There is also an adjustment in 20-21 to include assets held for sale (£25k). This note is for information only and does not impact the main financial statements. 2020-21 2021-22 £'000 £'000 294,885 Opening Capital Financing Requirement 294,752 Capital Investment: 3,851 Property Plant and Equipment: Other Land and Buildings 9,157 2,608 Vehicles, Plant, Furniture and Equipment 4,564 6,824 Infrastructure Assets 15,434 303 Community Assets 1,504 (3) Surplus Assets 22 8,543 Assets Under Construction 12,210 353 Property Plant and Equipment acquired under Finance Leases: Other Land and Buildings - DBFM Schools 4 - Heritage Assets 13 75 Intangible Assets 68 (25) Assets Held for Sale 22,529 Total Capital Investment 42,976 Sources of Finance: (612) Capital Receipts (838) (13,495) Government Grants (21,700) (744) Capital Financed from Current Revenue (735) (5,246) Net Borrowing (2,514) (2,592) Assets Aquired under Finance Leases/Schools NPDO (4,844) 27 Capital Receipts transferred to/(from) Capital Fund 3 (22,662) Total Funding (30,628) 294,752 Closing Capital Financing Requirement 307,100 Page 172
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Notes to the Financial Statements Page 87 www.argyll-bute.gov.uk 14.5 Commitments under Capital Contracts At 31 March 2022, the Council had commitments on capital contracts of £8.224m. This expenditure will be funded from a combination of Government Grants, borrowing and income from selling assets and contributions from Revenue Accounts. Similar commitments at 31 March 2021 were £18.675m. The major commitments are: £'000 Helensburgh Waterfront Development 2,959 Kilmory Business Park 1,980 Gartbreck/Glengorm Landfill Sites 896 Lochgilphead Front Green 486 St Muns Primary School Upgrade 262 Garelochhead Primary School Upgrade 254 Gibraltar Street, Oban, Public Realm 250 Dunoon Cycle Bothy 212 Oracle Replacement Project 202 Oban North Pier 150 Other small projects each less than £0.150m in value 573 15. HERITAGE ASSETS The main heritage assets held by the Council are two art collections, an archaeology collection and Inveraray Jail and Courthouse. The Council holds other heritage assets which are not valued and shown on the Balance Sheet. Further details on the council’s heritage assets policy can be found in note 1.11. Reconciliation of the carrying value of heritage assets held by the Council: Art Collections Heritage Property Total £'000 £'000 £'000 Cost or Valuation Net Book Value at 1 April 2021 1,600 486 2,086 Additions - 13 13 Disposals - - - Revaluations - - - Impairment Losses/(Reversals) recognised in the Revaluation Reserve - - - - - - At 31 March 2022 1,600 499 2,099 Movements in 2021-22 Transfer from Assets Under Construction Page 173
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Notes to the Financial Statements Page 88 www.argyll-bute.gov.uk 16. INTANGIBLE ASSETS Intangible assets comprise software licences and carbon reduction commitment allowances purchased in advance. Purchased software licences are shown at cost and this cost is charged to the relevant service lines within the Comprehensive Income and Expenditure Statement over the economic life of the licences, assessed as five years. The movement in intangible assets during the year was: £'000 £'000 Cost or Valuation At 1 April 2021 2,207 2,207 Additions 68 68 Disposals - - Revaluations - - Reclassifications - - At 31 March 2022 2,275 2,275 Depreciation and Impairments At 1 April 2021 (1,635) (1,635) Charge for 2021-22 (36) (36) Disposals - - At 31 March 2022 (1,671) (1,671) Balance Sheet amount at 31 March 2022 604 604 Balance Sheet amount at 31 March 2021 572 572 Movements in 2021-22 Purchased Software Licences Total Intangible Assets Page 174
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Notes to the Financial Statements Page 89 www.argyll-bute.gov.uk Total Intangible Assets Comparative Movements in 2020-21 £'000 £'000 Cost or Valuation At 1 April 2020 2,129 2,129 Additions 75 75 Disposals - - Revaluations - - Reclassifications 3 3 At 31 March 2021 2,207 2,207 Depreciation and Impairments At 1 April 2020 (1,546) (1,546) Charge for 2020-21 (89) (89) Disposals - - At 31 March 2021 (1,635) (1,635) Balance Sheet amount at 31 March 2021 572 572 Balance Sheet amount at 31 March 2020 583 583 Purchased Software Licences 17. INVESTMENT PROPERTY Investment property has been accounted for in accordance with IAS 4 - Investment Property, except where interpretations or adaptations to fit the public sector are detailed in the Code. The definition of an investment property in the context of the public sector is one that is used solely to earn rentals or for capital appreciation or both. The value of investment property is initially measured at cost and thereafter measured at fair value. The fair value of investment property reflects market conditions at 31 March 2022. Revaluations of investment properties were carried out at 31 March 2022 in house by the Estates Service. 17.1 Movement in Investment Property The movement in investment property during 2021-22 was: Investment Properties £'000 Cost or Valuation At 1 April 2021 2,435 Acquisitions - Disposals - Net Gains/Losses from fair value adjustments (38) Transfers 31 At 31 March 2022 2,428 Movements in 2021-22 17.2 Investment Property Income and Expenditure The following items of income and expenditure have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement: Page 175
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Notes to the Financial Statements Page 90 www.argyll-bute.gov.uk 2020-21 2021-22 £'000 £'000 113 Rental income from investment property 148 (4) Direct operating expenses arising from investment property (4) 109 144 18. SCHOOLS BUILT UNDER PUBLIC PRIVATE PARTNERSHIP CONTRACTS (PPP) Argyll and Bute Council have two schemes: Schools Non-Profit Distributing Organisation (NPDO) During 2007-08 two secondary schools, two joint campuses and one primary campus, developed as part of the Non-Profit Distributing Organisation (NPDO) variant of a Public Private Partnership (PPP), became operational. When the agreement ends in 2035 the provider will hand the five school complexes back to the Council, it is expected at that point in time each school will have an estimated life of 30 years remaining. Schools Hub Design, Build, Finance and Maintain Contract (DBFM) Campbeltown and Oban High Schools have been built under this type of arrangement which reached Financial Close in March 2016. Campbeltown Grammar School Construction Phase 1 was completed on 19 February 2018 and provided a new secondary school for pupils aged between 12 and 18. The new school has capacity for 500 pupils and replaces the existing Campbeltown Grammar School on the current school site at Hutcheon Road, Campbeltown. Phase 2 which included the demolition of the existing school buildings, provision of a car park, landscaping and 3G artificial turf pitch was completed during 2018-19. Oban High School Construction Phase 1 was completed on 5 April 2018 and provided a new secondary school for pupils between 12 and 18. The new school has capacity for 1300 pupils and replaces the existing Oban High School, on the current school site at Soroba Road, Oban. Phase 2 includes the demolition of the existing school buildings, provision of a car park, landscaping and a pedestrian footway with lighting from the new school facilities to the grass pitches owned by the Council at Glencruitten, Oban was completed during 2018-19. Page 176
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Notes to the Financial Statements Page 91 www.argyll-bute.gov.uk 18.1 Assets Held under Schools NPDO and DBFM Contracts Five schools were constructed under the Schools NPDO Contract; Hermitage Academy, Dunoon Grammar, Lochgilphead Joint Campus, Rothesay Joint Campus and Oban Primary Campus. The construction costs of the buildings, adjusted for revaluations on 31 March 2022 and depreciation to date are included as part of Operational Land and Buildings. As noted above two schools were completed under the Schools DBFM Contract. Oban High School and Campbeltown Grammar have been included within Operational Land & Buildings. Schools DBFM - Other Land & Buildings Schools NPDO - Other Land & Buildings Total Schools Built under PFI Contracts The value of assets held under PFI arrangements at each balance sheet date, and an analysis £'000 £'000 £'000 of the movements in those values. Cost or Valuation At 1 April 2021 53,715 122,046 175,761 Additions at Cost 4 - 4 Transfers - - - Revaluations - - - At 31 March 2022 53,719 122,046 175,765 Depreciation and Impairments At 1 April 2020 - - - Charge for 2021-22 (1,748) (3,089) (4,837) Transfers - - - Revaluations - - - At 31 March 2022 (1,748) (3,089) (4,837) Balance Sheet amount at 31 March 2022 51,971 118,957 170,928 Balance Sheet amount at 31 March 2021 53,715 122,046 175,761 Movements in 2021-22 Schools DBFM - Other Land & Buildings Schools NPDO - Other Land & Buildings Total Schools Built under PFI Contracts £'000 £'000 £'000 Cost or Valuation At 1 April 2020 58,897 130,677 189,574 Additions at Cost 353 - 353 Transfers - - - Revaluations - - - At 31 March 2021 59,250 130,677 189,927 Depreciation and Impairments At 1 April 2020 (3,798) (5,756) (9,554) Charge for 2020-21 (1,737) (2,875) (4,612) Transfers - - - Revaluations - - - At 31 March 2021 (5,535) (8,631) (14,166) Balance Sheet amount at 31 March 2021 53,715 122,046 175,761 Balance Sheet amount at 31 March 2020 55,099 124,921 180,020 Comparative Movements in 2020-21 Page 177
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Notes to the Financial Statements Page 92 www.argyll-bute.gov.uk 18.2 Schools NPDO Finance Lease Liability The finance lease liability arising from the Schools NPDO contract is as follows: Schools DBFM Schools NPDO Total Schools Finance Lease Liability £'000 £'000 £'000 Balance at 1 April 2021 (55,909) (65,175) (121,084) Additions - - - Repayments 2,034 2,766 4,800 Prior year repayment adjustment - - - Schools Finance Lease Liability at 31 March 2022 (53,875) (62,409) (116,284) Split: Obligations payable within 1 year (2,000) (3,071) (5,071) Obligations payable after 1 year (51,876) (59,337) (111,213) Schools Finance Lease Liability at 31 March 2022 (53,876) (62,408) (116,284) Movements in 2021-22 Schools DBFM Schools NPDO Total Schools Finance Lease Liability £'000 £'000 £'000 Balance at 1 April 2020 (55,968) (67,666) (123,634) Additions - - - Repayments 1,994 2,491 4,485 Prior year repayment adjustment (1,935) - (1,935) Schools Finance Lease Liability at 31 March 2021 (55,909) (65,175) (121,084) Split: Obligations payable within 1 year (2,033) (2,766) (4,799) Obligations payable after 1 year (53,876) (62,409) (116,285) Schools Finance Lease Liability at 31 March 2021 (55,909) (65,175) (121,084) Comparative Movements in 2020-21 18.3 Payments due to Operator under Schools NPDO Contract Page 178
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Notes to the Financial Statements Page 93 www.argyll-bute.gov.uk The Council is committed to paying the following sums under the Schools NPDO contract: Future Repayment Periods Payment of Interest Service Charges Total Payments £'000 £'000 £'000 2022 - 2023 6,475 5,602 15,148 2023 - 2027 22,042 24,256 60,214 2027 - 2032 18,381 34,328 79,118 2032 - 2035 4,359 18,291 41,663 Total 51,257 82,477 196,143 Repayment of Liability £'000 13,916 26,409 19,013 62,409 3,071 18.4 Payments due to Operator under Schools DBFM Contract The Council is committed to paying the following sums under the Schools DBFM contract: Future Repayment Periods Service Charges Total Payments £'000 £'000 2022- 2023 786 2,786 2023 - 2027 4,114 12,192 2027 - 2032 7,201 17,711 2032 - 2037 10,365 22,974 2037 - 2042 9,284 25,980 2042 - 2043 763 4,746 Total 32,513 86,389 12,609 16,696 53,876 Repayment of Liability £'000 8,078 10,510 3,983 2,000 19. OPERATING LEASES 19.1 Operating Leases – Amounts Paid to Lessors The Council uses land, buildings, vehicles, plant and equipment financed under the terms of an operating lease. The amounts paid under these arrangements in 2021-22 were as follows: 2020-21 2021-22 £'000 £'000 256 Land and Buildings 226 1,407 Vehicles 1,322 184 Plant and Equipment 176 1,847 Total 1,724 19.2 Assets Held Under Operating Leases Page 179
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Notes to the Financial Statements Page 94 www.argyll-bute.gov.uk The Council was committed at 31 March 2022 to making payments of £2.990m under operating leases comprising the following elements: Other Land and Buildings Vehicles, Plant and Equipment Other Land and Buildings Vehicles, Plant and Equipment £'000 £'000 £'000 £'000 177 311 Due within 1 year 161 286 583 254 Due between 1 and 5 years 574 314 1,625 38 Due after 5 years 1,579 76 2,385 603 Value at 31 March 2,314 676 31st March 2021 31st March 2022 20. FINANCE LEASES 20.1 Finance Leases – Amounts Paid to Lessors During 2017-18 the Council purchased a new cremator for Cardross Crematorium under a finance lease arrangement. The amount paid under this arrangement in 2021-22 was as follows: 2020-21 2021-22 £'000 £'000 63 Plant and Equipment 63 63 Total 63 20.2 Assets Held Under Finance Leases Assets purchased under a finance leases are included within the assets of the Council and depreciated over the life of the asset as follows: 2020-21 2021-22 £'000 Vehicles, Plant and Equipment £'000 478 Value at 1 April 427 - Additions - (51) Depreciation (51) 427 Value at 31 March 376 20.3 Finance Lease Liability The Council was committed at 31 March 2022 to making payments of £0.396m under finance leases comprising the following elements: Page 180
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Notes to the Financial Statements Page 95 www.argyll-bute.gov.uk Movements in 2021-22 £'000 Balance at 1 April 2021 (440) Additions - Repayments 44 Finance Lease Liability at 31 March 2022 (396) Split: Obligations payable within 1 year (63) Obligations payable between 1 and 5 years (251) Obligations payable after 5 years (155) Finance Lease Obligations at 31 March 2022 (469) Less Interest element of lease 73 Finance Lease Liability at 31 March 2022 (396) Comparative Movements in 2020-21 £'000 Balance at 1 April 2020 (483) Additions - Repayments 43 Finance Lease Liability at 31 March 2021 (440) Split: Obligations payable within 1 year (63) Obligations payable between 1 and 5 years (252) Obligations payable after 5 years (217) Finance Lease Obligations at 31 March 2021 (532) Less Interest element of lease 92 Finance Lease Liability at 31 March 2021 (440) Page 181
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Notes to the Financial Statements Page 96 www.argyll-bute.gov.uk 21. LONG TERM DEBTORS 31st March 2021 31st March 2022 £'000 £'000 14 House Loans 13 750 Waste PPP Historic Contamination Fund 750 1,384 Charging Orders - Care Home Fees 1,465 3,297 Strategic Housing Fund Loans to Registered Social Landlords 3,229 583 Other Long Term Debtors 335 6,028 Total Long Term Debtors 5,792 22. DEBTORS £'000 £'000 £'000 £'000 18,350 Arrears of Local Taxation 19,410 (16,170) Less: Provision for Bad Debts (16,910) 2,180 2,500 1,030 Housing Benefits Overpayments 974 (955) Less: Provision for Bad Debts (910) 75 64 6,092 Debtor Accounts 3,351 (1,012) Less: Provision for Bad Debts (1,067) 5,080 2,284 - Net Debtor to Scottish Government for Non Domestic Rates 721 3,080 VAT Recoverable from HMRC 2,436 205 Strategic Housing Fund Loans due within 1 Year 68 6,037 Accrued Income 4,891 3,789 Other Debtors 5,742 20,446 Total Debtors 18,706 31 March 202231 March 2021 Page 182
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Notes to the Financial Statements Page 97 www.argyll-bute.gov.uk 23. ASSETS HELD FOR SALE The movement in assets held for sale during 2021-22 was: 2020-21 2021-22 £'000 £'000 674 1,865 1,624 228 (25) Additions - (43) Revaluation losses (12) - Revaluation gains 134 - Impairment losses - - Assets declassified as "Held for Sale" (Property, Plant and Equipment) - (365) Assets Sold (706) 1,865 Balance outstanding at 31st March 2022 1,509 Balance outstanding at 1st April 2021 Assets newly classified as "Held for Sale" (Property, Plant and Equipment) Movements 24. CASH AND CASH EQUIVALENTS The balance of Cash and Cash Equivalents is made up of the following elements: 31 March 2021 31 March 2022 £'000 £'000 4 1 (30) Cash in transit 74 25,518 Short term deposits with banks 5,117 17,290 Short term deposits in Money Market Funds 19,600 (7,144) Bank Current Accounts (5,064) 35,638 Total Cash and Cash Equivalents 19,728 Cash held by the Authority Page 183
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Notes to the Financial Statements Page 98 www.argyll-bute.gov.uk 25. CREDITORS 31 March 2021 31 March 2022 £'000 £'000 7,134 Accrued Payrolls and Superannuation 7,544 2,761 Accrued Employer's National Insurance Contributions and PAYE 2,880 7,206 Accrual for Short Term Accumulating Absences 6,927 983 Creditors System Liability 11 14,925 Accrued Expenditure 12,117 2,389 Health and Social Care Partnership Creditor 2,148 400 RCGF Grant Income 387 180 Housing Benefit Subsidy - 829 Trust Funds 856 1,171 Net Creditor to Scottish Government for Non Domestic Rates - 7,479 Other Creditors 8,412 45,457 Total Creditors 41,283 26. FINANCIAL INSTRUMENTS DISCLOSURES 26.1 Types of Financial Instruments Accounting regulations require the “Financial Instruments” (investment, lending and borrowing of the Council) shown on the balance sheet to be further analysed into various defined categories. The investments, lending and borrowing disclosed in the Balance Sheet are made up of the following categories of “Financial Instruments”: Long Term Current Long Term Current £'000 £'000 £'000 £'000 Investments and Lending 6,388 118,396 Loans and Receivables 6,284 38,434 Borrowing 284,848 50,920 273,969 64,282 31 March 202231 March 2021 Financial Liabilities at amortised cost 26.2 Fair Value of Assets and Liabilities Carried at Amortised Cost Financial assets (represented by lending and receivables) and financial liabilities (represented by borrowings) are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining period of the instrument, using the following assumptions: • Estimated interest rates at 31 March 2022 for loans from the PWLB were taken from the appropriate interest rate notice and for other loans receivable and payable from market rates obtained by our treasury advisors. • No early repayment or impairment is recognised. • Where an instrument will mature in the next 12 months, the carrying amount is assumed to approximate to fair value. Page 184
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Notes to the Financial Statements Page 99 www.argyll-bute.gov.uk • The fair value of trade and other receivables is taken to be the invoiced or billed amount. The fair values are calculated as follows: Carrying Amount Fair Value Carrying Amount Fair Value £'000 £'000 £'000 £'000 Lending 124,784 125,076 Loans and Receivables 44,718 44,954 Borrowing 335,768 422,798 Financial Liabilities 338,251 401,463 31 March 2021 31 March 2022 The fair value is greater than the carrying amount because the Council’s lending figure includes a number of loans where the interest rate receivable is higher than the rates available for similar loans at the Balance Sheet date. The commitment to receive interest above the current market rates increases the amount the Council would receive if it agreed the early repayment of loans. 26.3 Gains and Losses on Financial Instruments There are no gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to Financial Instruments. 26.4 Nature and Extent of Risks arising from Financial Instruments The Council’s management of treasury risks actively works to minimise the Council’s exposure to the unpredictability of financial markets and to protect the financial resources available to fund services. The Council has fully adopted CIPFA’s Code of Treasury Management Practices and has written principles for overall risk management as well as written policies and procedures covering specific areas such as credit risk, liquidity risk and market risk. 26.5 Credit Risk Credit risk arises from the short-term lending of surplus funds to banks, money market funds, building societies and other local authorities as well as credit exposures to the Council’s customers. It is the policy of the Council to place deposits only with a limited number of high quality banks and money market funds whose credit rating is independently assessed as sufficiently secure by the Council’s treasury advisers and to restrict lending to a prudent maximum amount for each institution. The following analysis summarises the Council’s potential maximum exposure to credit risk, based on past experience and current market conditions. No credit limits were exceeded during the financial year and the Council expects full repayment on the due date of deposits placed with its counterparties. Amount at 31 March 2022 Historical Experience of Non-payment adjusted for Market Conditions at 31 March 2022 Estimated Maximum Exposure to Default and Uncollectability £'000 % £'000 24,717 - - Deposits with Banks and Money Market Funds The information in respect of the Council’s debtors can be found in note 21 and 22. The Debtor Accounts Page 185
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Notes to the Financial Statements Page 100 www.argyll-bute.gov.uk represents the amounts owed by the Council’s customers; Other Debtors include prepaid expenditure, accrued income and money owed to the Council in respect of projects being carried out under partnerships where the Council is the lead partner. The bad debt provision shown in note 22 represents the Council’s assessment of the likely recoverability of the debt outstanding. The credit risk around unprovided for debt is considered to be low. Debtors relate to the normal business of the Council and credit is issued on the Council’s standard credit terms. There are no significant amounts past due but not impaired where recoverability is considered to be an issue. 26.6 Liquidity Risk The Council’s main source of borrowing is the Treasury’s Public Works Loans Board (PWLB). There is no significant risk that the Council will be unable to raise finance to meet its commitments under Financial Instruments. The Council has safeguards in place to ensure that a significant proportion of its borrowings does not mature for repayment at any one time in the future to reduce the financial impact of re- borrowing at a time of unfavourable interest rates. The Council’s policy is to ensure that not more than 30% of the loans are due to mature within any financial year through a combination of prudent planning of new loans taken out and, where it is economic to do so, making early repayments. The maturity analysis of financial liabilities is as follows: 31 March 2021 31 March 2022 £'000 £'000 50,920 Less than one year 64,281 10,893 Between one and two years 5,284 16,915 Between two and five years 17,690 257,040 More than five years 250,996 335,768 338,251 Maturity analysis of financial liabilities All other amounts due to the Council for council tax, non-domestic rates and other income are due to be paid in less than one year. 26.7 Market Risk Changes in market interest rates influence the interest payable on borrowings and on interest receivable on surplus funds invested. For example, a rise in interest rates would mean an increase in the interest charged on borrowing at variable rates and an increased cost to the taxpayer. An increase in interest rates would also mean an increase in the income received on lending at variable rates and a reduction in cost for the taxpayer. Changes in market rates also affect the notional “fair value” of lending and borrowing. For example, a rise in interest rates would reduce the “fair value” of both lending and borrowing at fixed rates. Changes in “fair value” of lending and borrowing do not impact upon the taxpayer and are confined to prescribed presentational aspects in the Accounts. The Council has a variety of strategies for managing the uncertainty of future interest rates and the financial impact on the Council. It is the policy of the Council to limit its exposure to variable rate borrowing to a maximum of 30% of what it borrows. During periods of falling rates and where it is economically advantageous to do so, the Council will consider the repayment and restructuring of fixed interest rate debt. The Council takes the daily advice from its specialist treasury advisers and actively monitors changes in interest rates to inform decisions on the lending of surplus funds, new borrowings and restructuring Page 186
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Notes to the Financial Statements Page 101 www.argyll-bute.gov.uk of existing borrowings. Any potential for a financial impact on the Council is also significantly limited by the Scottish Government’s grant distribution mechanism that automatically adjusts for changes in interest rates in the Government Grant support the Council receives for “loan charges”. To illustrate the impact of changes in interest rates upon the Council, the following table shows the financial effect if rates had been 1% higher at 31 March 2022, with all other variables held constant: 31 March 2022 Impact on tax-payer £'000 Increase on interest payable on variable rate borrowings 105 Increase in interest receivable on variable rate lending - Increases in government grant receivable for “loan charges” - Net effect on Statement of Comprehensive Income & Expenditure 105 31 March 2022 Other accounting presentational changes £'000 A decrease in the “fair value” of fixed rate borrowing (disclosure confined to the notes to the financial statements) 43,465 The impact of a 1% fall in the interest rates would be as above but with the changes being reversed. 26.8 Price Risk The Council has no investment classified as “available-for-sale”. 26.9 Foreign Exchange Risk The Council does not lend or borrow in foreign currencies and has no exposure to gains or losses arising from movements in exchange rates. 26.10 Short-Term Deposits The short-term deposits arise as a result of the timing of expenditure and associated income and movements in fund and revenue balances. The Council adopts a proactive but prudent approach to its Treasury Management operations, which are governed by the fully revised edition of CIPFA’s Code of Practice on Treasury Management. 31 March 2021 31 March 2022 £'000 £'000 32,808 Banks and Money Market Funds 24,717 Page 187
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Notes to the Financial Statements Page 102 www.argyll-bute.gov.uk 26.11 Soft Loans The Council has no material soft loans at 31 March 2022, on which no interest was being charged. 26.12 Short-Term Borrowing The Common Good and the various Trust Funds administered by the Council had monies temporarily invested with the Council’s loans fund during the year. The amounts at 31 March 2022 are shown in the table below. Further details of the nature and amounts of the funds of the Common Good and Trust Funds are shown in notes 36 and 37. 31 March 2021 31 March 2022 £'000 £'000 133 Common Good 133 829 Trust Funds 829 27. OTHER LIABILITIES Other liabilities consist of liabilities which by arrangement are payable at some point in the future or paid off by an annual sum over a period of time. Other liabilities total £117.430m as at 31 March 2022 and comprise the following: Opening Balance 1 April 2021 Movement in Year Closing Balance 31 March 2022 £'000 £'000 £'000 (440) 44 (396) (121,084) 4,800 (116,284) (750) - (750) Total Other Liabilities (122,274) 4,844 (117,430) Split: Short Term Liabilities (due within 1 year) (5,117) Long Term Liabilities (due after 1 year) (112,313) Total Other Liabilities (117,430) Movements in 2021-22 Finance Lease Liability (See note 20.3) Schools Finance Lease Liability (See note 18.2) Land Contamination Page 188
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Notes to the Financial Statements Page 103 www.argyll-bute.gov.uk 28. PROVISIONS Opening Balance 1 April 2021 Additional Provision Amounts Used Unused Amounts Reversed Closing Balance at 31 March 2022 £'000 £'000 £'000 £'000 £'000 (59) - - 16 (43) (71) (19) - - (90) (154) (20) - - (174) Service Choices Redundancy Costs (150) (65) 138 - (77) (1,909) (80) - - (1,989) (256) - - 33 (223) Litigation Claims (250) (50) 79 - (221) Insurance Excess Provision (10) - - - (10) (1,477) (379) 158 215 (1,483) Total Provisions (4,336) (613) 375 264 (4,310) Split: Short Term Provisions (due within 1 year) (2,231) Long Term Provisions (due after 1 year) (2,079) Total Other Liabilities (4,310) Income due to Registered Social Landlords Landfill Sites - Restoration and Aftercare Costs Utilities Provision NPDO and Hub DBFM Payments Equal Pay Claims Commercial Rent Balances A provision was created at the end of 2005-06 in relation to employees in catering, cleaning and home care services who had not accepted the Council’s equal pay settlement. There may be further outstanding claims where the settlement amount cannot be estimated reliably enough to provide for the costs. The Council reduced the discount on Council Tax from second homes to 10% during 2005-06. The additional Council Tax income invoiced during 2021-22 amounted to £2.106m; this amount is to be paid to registered social landlords to invest in social housing. A provision for cash not yet collected has been created amounting to £0.090m. There is a provision for Commercial Rents where arrangements have been put in place for repayment over a number of years. The provision reflects the uncertainty of collection of the debt. Liabilities have arisen in respect of employees who will be made redundant as a result of savings options agreed. The cost for any employee, whose contract has been terminated on or before 31 March 2022 has been incurred in year. For the employees who have confirmed acceptance of redundancy but have left or are leaving after 31 March 2022, a provision of £0.077m has been created. A provision for landfill sites was created in 2014-15 reflecting the Council’s liability for restoration and ongoing maintenance in respect of landfill sites operated by the Council, at Glengorm, Gartbreck and Gott Bay. The landfills sites were revalued at 31 March 2022 and the provision for restoration and aftercare increased to £1.989m. These have been provided for based on the net present value of estimated future costs. The utilities provision was created during 2011-12 to cover a potential liability in relation to discrepancies in charges for utility costs, £0.033m has been reversed during 2021-22 resulting in a total provision of £0.223m. A legal litigation provision was created in 2020-21 as the Council is currently involved in several ongoing Page 189
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Notes to the Financial Statements Page 104 www.argyll-bute.gov.uk cases that will incur costs into future years. The provision is based on sums invoiced and anticipated future costs. A provision was created in 2020-21 for insurance excess costs in relation to an ongoing HR process and this has been carried forward into 2021-22. The NPDO provision for withheld sums from the Unitary Charge paid to ABC Schools which relate to disputed performance deductions and unbilled utility costs. The HUB DBFM provision for withheld sums from the Monthly Service Payment paid to Hub North Scotland (O&C) Ltd which relate to disputed performance deductions. 29. CAPITAL GRANTS RECEIVED IN ADVANCE Opening Balance 1 April 2021 Capital Grants Received Amounts Used Closing Balance 31 March 2022 £'000 £'000 £'000 £'000 (5,000) - 5,000 - (7) - 7 - Total Other Liabilities (5,007) - 5,007 - Split: Capital Grant Receipts in Advance (due within 1 year) - Capital Grant Receipts in Advance (due after 1 year) - Total Other Liabilities - Ministry of Defence LIBOR Funding - Helensburgh & Lomond Grant in Aid - Gaelic School Capital Fund The Chancellor of the Exchequer, in his Spring 2016 Budget, awarded Argyll and Bute Council LIBOR funding of £5m. The Ministry of Defence (MOD) are acting on behalf of Her Majesty’s Treasury (HMT) with regard to all matters relating to this funding. The purpose of the grant is to provide a contribution to the costs of the provision of the new Helensburgh Leisure Centre on condition that serving personnel and their families are offered favourable admission terms. This is because the LIBOR funds are to be used to recognise the contribution made by the Armed Forces Community to the nation. These funds have been drawn down in 2021-22. 30. DEFINED BENEFIT PENSION SCHEMES Participation in Pension Schemes As part of the terms and conditions of employment of its officers, the Council makes contributions towards the cost of post-employment benefits. Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments (for those benefits) and to disclose them at the time that employees earn their future entitlement. The Council participates in two separate pension schemes which meet the needs of employees in particular services. Both schemes provide members with defined benefits related to pay and service. The schemes are as follows: Teachers Page 190
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Notes to the Financial Statements Page 105 www.argyll-bute.gov.uk The Scottish Teachers’ Superannuation Scheme is an unfunded scheme administered by the Scottish Government. This means that liabilities for the benefits provided cannot be identified by the Council. The scheme is therefore accounted for as if it were a defined contribution scheme where no liability for future payments of benefits is recognised in the balance sheet and revenue accounts are charged with the employer’s contributions payable to the Scottish Government in the year. Local Government Pension Scheme This is administered by Strathclyde Pension Fund – this is a funded defined benefit final salary scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level intended to balance the pension’s liabilities with investment assets. The contributions are based on rates determined by the Fund’s professionally qualified actuary and based on triennial valuations of the Fund. The principal risks to the Council of the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the equity investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge to the General Fund the amounts due by statute as described in the accounting policies note. 30.1 Accrued Pensions Contribution Due to the timing of salary processing, not all employee and employer contributions have been paid to the pension schemes by the 31 March 2022. These payments have been accrued and are included within the creditors figure on the Balance Sheet. These have been paid during April 2022. The amounts are as follows: • Local Government Pension Scheme – £1.671m • Teachers’ Scheme – £1.082m 30.2 Transactions in Respect of the Local Government Pensions Scheme The latest formal valuation of the Strathclyde Pension Fund for funding purposes was at 31 March 2020. The independent actuaries appointed by the Council are Hymans Robertson and they have assumed that employees have continued to earn new benefits on the same basis as the latest formal valuation and that the employer’s pensionable payroll over the year to 31 March 2022 remains substantially stable with new entrants replacing any leavers. We recognise the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against Council Tax is based on the cash payable in the year, so the real cost of retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. Page 191
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Notes to the Financial Statements Page 106 www.argyll-bute.gov.uk The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund via the Movement in Reserves Statement during the year: 2020-21 2021-22 £'000 £'000 24,830 Current Service Cost 37,756 73 Past Service Cost (Including Curtailments) 197 24,903 Net Cost of Services 37,953 1,888 Net Interest Expense 1,864 26,791 39,817 (153,529) Return on Assets (excluding amounts included in net interest) (46,314) (16,702) Other Experience (see note (i) below) 1,795 173,619 Change in Financial and Demographic Assumptions (66,129) 30,179 (70,831) Statement of Movement in Reserves: (11,580) (23,700) 15,211 Employer's Contributions Payable to the Scheme 16,117 Comprehensive Income and Expenditure Statement: Cost of Services: Total Post Employment Benefit Charged to the Surplus or Deficit on the Provision of Services Other Post Employment Benefit Charged to the Comprehensive Income and Expenditure Statement Total Post Employment Benefits Charged to the Comprehensive Income and Expenditure Statement Reversal of net charges made to the Surplus or Deficit for the Provision of Services for post employment benefits in accordance with the Code Actual Amount charged against the General Fund Balance for pensions in the year: Service cost comprising: (i) A measure of the difference between actual experience and that expected based upon a set of actuarial assumptions, during the period between two actuarial valuation dates, as determined in accordance with a particular cost method. (ASOP No. 4) Page 192
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Notes to the Financial Statements Page 107 www.argyll-bute.gov.uk 30.3 Assets and Liabilities in Relation to Post-Employment Benefits Reconciliation of present value of the scheme liabilities (defined benefit obligation): 2020-21 2021-22 £'000 £'000 743,420 897,836 24,830 Current Service Cost 37,756 73 Past Service Costs including Curtailments 197 17,390 Interest Cost 18,152 4,182 Contributions by Scheme Participants 4,457 131,520 Re-measurement Gains and (Losses) (64,334) (23,579) Estimated Benefits Paid (22,822) 897,836 Defined Benefit Obligation at 31 March 22 871,242 Defined Benefit Obligation at 1 April 21 Reconciliation of fair value of the scheme (plan) assets: 2020-21 2021-22 £'000 £'000 676,074 815,522 Re-measurement Gains and (Losses): 153,529 Expected Rate of Return on Pension Fund Assets 46,314 (25,397) Actuarial Gains and Losses - 15,502 Interest Income on Plan Assets 16,288 15,211 Employers Contributions 16,117 4,182 Contributions by Scheme Participants 4,457 (23,579) Estimated Benefits Paid (22,822) 815,522 Fair Value of Employer Assets at 31 March 22 875,876 Fair Value of Employer Assets at 1 April 21 The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets. 30.4 Pensions Assets and Liabilities Recognised in the Balance Sheet 2020-21 2021-22 £'000 Local Government Pension Scheme £'000 (870,979) Present Value of Funded Liabilities (846,995) (26,857) Present Value of Unfunded Liabilities (24,247) 815,522 Fair Value of Employer Assets 875,876 (82,314) Surplus/(Deficit) in the Scheme 4,634 The liabilities show the underlying commitments that the Council has in the long run to pay post- employment (retirement) benefits. Page 193
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Notes to the Financial Statements Page 108 www.argyll-bute.gov.uk 30.5 Analysis of Pension Fund’s Assets Argyll and Bute Council’s share of the Pension Fund’s assets at 31 March 2022 comprised: 2020-21 2021-22 £'000 £'000 13,691 Cash and Cash Equivalents 22,287 Equity Instruments (by industry type) 46,957 Consumer 41,032 46,519 Manufacturing 38,595 8,518 Energy and Utilities 9,115 28,867 Financial Institutions 24,122 22,751 Health and Care 29,269 37,735 Information Technology 50,860 - Other - 191,347 Sub-total Equity Instruments 192,993 Bonds (by sector) - Corporate - - Government - - Sub-total Bonds - Real Estate 66,075 UK Property 73,866 - Overseas Property - 66,075 Sub-total Real Estate 73,866 145,865 Private Equity (All) 171,465 Investment Funds and Unit Trusts 285,233 Equities 324,322 110,297 Bonds 88,462 345 Commodities 301 824 Infrastructure 769 1,698 Other 1,411 398,397 Sub-total Investment Funds and Unit Trusts 415,265 Derivatives - Forward Foreign Exchange Contracts - 147 Other - 147 Sub-total Derivatives - 815,522 Total Assets 875,876 2020-21 2021-22 £'000 Fair Value of Pension Fund Assets £'000 Equity Securities 190,471 Quoted in an Active Market 192,575 876 Not Quoted in an Active Market 418 191,347 Sub-total Equity Securities 192,993 Page 194
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Notes to the Financial Statements Page 109 www.argyll-bute.gov.uk 30.6 Basis for Estimating Assets and Liabilities The Council’s share of the liabilities of Strathclyde Pension Fund have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on the assumptions about mortality rates, salary levels, etc. The principal assumptions used by the actuary have been: 2020-21 2021-22 Years Mortality assumptions Years 19.8 Longevity at 65 for current pensioners: Men 19.6 22.6 Women 22.4 21.2 Longevity at 65 for future pensioners: Men 21.0 24.7 Women 24.5 2020-21 2021-22 % Financial Assumptions % 2.9% Rate of Inflation (CPI) 3.2% 3.6% Rate of Increase in Salaries 3.9% 2.9% Rate of Increase in Pensions (CPI) 3.2% 2.0% Rate for discounting scheme liabilities 2.7% 2020-21 2021-22 % Long-term Expected Rate of Return on Assets in the Fund % 2.0% Equity Investments 2.7% 2.0% Bonds 2.7% 2.0% Property 2.7% 2.0% Cash 2.7% An allowance is included for future retirements to elect to take 50% of the maximum additional tax-free cash up to HMRC limits for pre-April 2009 service and 75% of the maximum tax-free cash for post-April 2009 service. 30.7 Asset and Liability Matching (ALM) Strategy The main fund (Fund 1) of Strathclyde Pension fund does not have an asset and liability matching strategy (ALM) as this is used mainly by mature funds. The Fund does match, to the extent possible, the types of assets invested to the liabilities in the defined benefit obligation. As is required by the pensions and investment regulations, the suitability of various types of investment has been considered, as has the need to diversify investments to reduce the risk of being invested into too narrow a range. Page 195
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Notes to the Financial Statements Page 110 www.argyll-bute.gov.uk 30.8 Impact on the Council’s Cash Flow The objectives of the Fund are to keep employers’ contributions at as constant a rate as possible. The Fund has agreed a strategy to achieve a funding rate of 100% in the longer term. The Scheme is a multi- employer defined benefit plan and employers’ contributions have been determined so that employee and employer rates are standard across all participating Local Authorities. Employer’s contributions have been set at 19.3% for 2022-2023. The total contributions expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2023 is £14.344m. This is based on an assumed pensionable payroll of £74.322m. The assumed weighted average duration of the defined benefit obligation for the Council falls into the “Medium” duration category which is between 17 and 23 years (this is different from the mortality assumptions quoted in the table above in “Basis for Estimating Assets and Liabilities”). 30.9 Teachers Pensions – Administered By Scottish Public Pensions Agency Teachers employed by the Council are members of the Scottish Teachers’ Superannuation Scheme, administered by the Scottish Public Pensions Agency. The Scheme is an unfunded statutory public service pension scheme with benefits underwritten by the UK Government. The Scheme is financed by payments from employers and from those current employees who are members of the Scheme and paying contributions at progressively higher marginal rates based on pensionable pay, as specified by the regulations. Employers currently pay a contribution rate of 23% - about two thirds of the cost of an individual's pension. This took effect from 1 September 2019. The Council has no liability for other employers’ obligations to the multi-employer scheme. As the scheme is unfunded there can be no deficit or surplus to distribute on the wind-up of the Scheme or withdrawal from the Scheme. The scheme is an unfunded multi-employer defined benefit scheme. It is accepted that the scheme can be treated for accounting purposes as a defined contribution scheme in circumstances where the Authority is unable to identify its share of the underlying assets and liabilities of the scheme. At the last valuation a shortfall of £1.3 billion was identified in the notional fund which will be repaid by a supplementary rate of 4.5% of employers’ pension contributions for fifteen years from 1 April 2015. This contribution is included in the 23% employers’ contribution rate. As a proportion of the total contributions into the Teachers’ Pension Scheme during the year ended 31 March 2022, the council’s own contributions equate to 1.45%. 9,229 Amount Paid Over (£'000) 9,497 23.00% Rate of Contribution (%) 23.00% 520 Amount of Added Years Awarded by the Council (£'000) 514 2021-222020-21 The contributions due to be paid to the Teacher’s Scheme by the Council in the next financial year are estimated to be £9.798m. Page 196
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Notes to the Financial Statements Page 111 www.argyll-bute.gov.uk 31. NOTE TO THE EXPENDITURE AND FUNDING ANALYSIS This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund to arrive at the amounts in the Comprehensive Income and Expenditure Statement. Adjustments for Capital Purposes Note (i) Net change for Pension Adjustments Note (ii) Capital element of Schools NPDO payment Note (iii) Other Adjustments Note (iv) Total Adjustments £'000 £'000 £'000 £'000 £'000 Chief Executive and Strategic Finance - 1,108 - (21) 1,087 Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) - 65 - (6) 59 Commercial Services 2,159 1,744 - 4,150 8,053 Education 5,303 4,944 - (7,916) 2,331 Legal and Regulatory Support 3,125 926 (4,800) 2,554 1,805 Executive Director (Kirsty Flanagan) - Executive Director (Kirsty Flanagan) - 49 - (17) 32 Head of Customer Support 1,173 1,544 - 396 3,113 Head of Development and Economic Growth 341 1,754 (309) 1,786 Roads and Infrastructure 11,852 4,139 - 1,196 17,187 Social Work 170 2,381 - (313) 2,238 Other Non-Departmental Costs 4 (700) - 9 (687) - - 24,127 17,954 (4,800) (277) 37,004 Other Income and Expenditure (24,564) 5,746 - (923) (19,741) (437) 23,700 (4,800) (1,200) 17,263 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments between Funding and Accounting Basis 2021-22 Net Cost of Services Difference between General Fund Surplus and Comprehensive Income and Expenditure Statement (Surplus)/Deficit Page 197
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Notes to the Financial Statements Page 112 www.argyll-bute.gov.uk (i) Adjustments for Capital Purposes This column adds in depreciation and impairment and revaluation gains and losses in the services line, and for: Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. Taxation and non-specific grant income and expenditure – capital grants are adjusted for income not chargeable under generally accepted accounting practices. Revenue grants are adjusted from those receivable in the year to those receivable without conditions or for which conditions were satisfied throughout the year. The Taxation and Non Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions or for which conditions were satisfied in the year. Financing and investment income and expenditure – the statutory charges for capital financing (loans fund advances) and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. (ii) Net change for the Pensions Adjustments Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension related expenditure and income: For services this represents the removal of the employer pension contributions made by the Council as allowed by statute and the replacement with current service costs and past service costs. For Financing and investment income and expenditure – the net interest on the defined benefit liability is charged to the Comprehensive Income and Expenditure Statement. (iii) Capital element of schools NPDO payment This is the capital cost of the annual payment to the schools NPDO operator and represents repayment of the Balance Sheet liability rather than a charge to Comprehensive Income and Expenditure Statement. (iv) Other Adjustments For Financing and investment income and expenditure the other differences column recognises adjustments to the General Fund for the timing differences for premiums and discounts. For services an adjustment is made for the accrual of holiday pay and other similar entitlements, this is required under generally accepted accounting principles but the impact on the General Fund is mitigated by statute which allows the impact to be reversed out through the Movement in Reserves Statement. Page 198
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Notes to the Financial Statements Page 113 www.argyll-bute.gov.uk Adjustments for Capital Purposes Note (i) Net change for Pension Adjustments Note (ii) Capital element of Schools NPDO payment Note (iii) Other Adjustments Note (iv) Total Adjustments £'000 £'000 £'000 £'000 £'000 Chief Executive and Strategic Finance (66) 535 - (17) 452 Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) - 34 - (7) 27 Commercial Services 1,834 844 - 4,149 6,827 Education 3,509 2,399 - (7,475) (1,567) Legal and Regulatory Services 2,911 443 (2,549) 2,554 3,359 Executive Director (Kirsty Flanagan) - Executive Director (Kirsty Flanagan) - 24 - (18) 6 Head of Customer Support Services 1,276 789 - 395 2,460 Head of Development and Economic Growth (9) 885 (306) 570 Roads and Amenity Services 8,839 1,996 - 1,189 12,024 Social Work 677 3,096 - (308) 3,465 Other Non-Departmental Costs 4 (1,351) - - (1,347) - - 18,975 9,694 (2,549) 156 26,276 Other Income and Expenditure from the Expenditure and Funding Analysis (13,184) 1,886 - (660) (11,958) 5,791 11,580 (2,549) (504) 14,318 Adjustments between Funding and Accounting Basis 2020-21 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts (Comparative Year) Difference between General Fund Surplus and Comprehensive Income and Expenditure Statement (Surplus)/Deficit Net Cost of Services Page 199
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 114 32. UNUSABLE RESERVES Movements in the Council’s unusable reserves are detailed in the Statement of Movement in Reserves. 32.1 Revaluation Reserve The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are: Revalued downwards or impaired and the gains are lost Used in the provision of services and the gains are consumed through depreciation, or Disposed of and the gains are realised. The reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account. 32.2 Capital Adjustment Account The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or additions to those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or subsequent costs as depreciation, impairment losses and amortisations which are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert current and fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and subsequent costs. The Account contains accumulated gains and losses on Investment Properties. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains. 32.3 Financial Instruments Adjustment Account The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains per statutory provisions. The Council uses the Account to manage premiums paid on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure Statement when they are incurred, but reversed out of the General Fund Balance to the Account in the Movement in Reserves Statement. Over time, the expense is posted back to the General Fund Balance in accordance with statutory arrangements for spreading the burden on Council Tax. 32.4 Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. The Council accounts for post-employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Council makes employer’s contributions to pension funds. The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Council has set aside to meet them. The statutory arrangements will ensure funding will have been set aside by the time the benefits come to be paid. Page 200
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 115 32.5 Accumulated Absences Account The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account. 33. USABLE RESERVES Movements in the Council’s usable reserves are detailed in the Statement of Movement in Reserves. 33.1 Capital Funds The Council holds two funds which make up the Capital Funds total in the Statement of Movement in Reserves, these are: Usable Capital Receipts Reserve During the 2006-07 financial year, and prior to the transfer of the Council’s housing stock during November 2006, the receipts from the sale of council houses were transferred to the Usable Capital Receipts Reserve. The amounts held in this reserve can only be used for social housing capital expenditure. Capital Fund During the 2007-08 financial year the Council established a Capital Fund under Section 22 of Schedule 3 of the Local Government (Scotland) Act 1975. All receipts from capital disposals are to be paid into this fund with effect from 14 February 2008. The movement in the Usable Capital Receipts Reserve and Capital Fund are as follows: Usable Capital Receipts Reserve Capital Fund Total Capital Funds £'000 £'000 £'000 Balance at 1 April 2021 2,872 1,534 4,406 Proceeds of Disposals 3 835 838 Transfer to Capital Adjustment Account - (835) (835) Contribution to Capital Fund From Revenue - - - Interest Earned 2 3 5 Balance at 31 March 2022 2,877 1,537 4,414 Movements in 2021-22 33.2 Repairs and Renewals Fund The movement in the Education Repairs and Renewals Fund is as follows: Balance at 1 April 2021 Contribution from Revenue Interest Earned Contribution to Revenue Balance at 31 March 2022 £'000 £'000 £'000 £'000 £'000 Education 2,134 (349) 2 895 2,682 Total 2,134 (349) 2 895 2,682 Movements in 2021-22 Page 201
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 116 34. CONTINGENT LIABILITIES 34.1 Equal Pay Claims The Council settled a number of equal pay claims during 2017-18, however there are a small number remaining where the outcome of the applications are unknown and there is insufficient information to allow the potential cost of these claims to be provided for. There is also the potential for other equal pay claims whose costs may be met by the Council. 34.2 Limitation (Childhood Abuse) (Scotland) Act 2017 The Limitation (Childhood Abuse) (Scotland) Act 2017 Section 1 removes the limitation period for actions of damages in respect of personal injuries resulting from childhood abuse. At this stage the extent of any potential liability is unknown. 34.3 Goodwin Judgement The Social Security Act 1986 introduced changes to survivor pensions which resulted in most public service pension schemes providing survivor benefits to widowers (male survivors in opposite-sex marriages) based on the female spouse’s service from 6 April 1988 onwards. Since the introduction of civil partnerships and same sex marriages, public service pension schemes have provided survivor benefits in respect of both which have been in line with those paid to widowers. An employment tribunal (the Goodwin case) concluded on 30 June 2020 that a female member in an opposite sex marriage is treated less favorably than a female in a same sex marriage or civil partnership, and that treatment amounts to direct discrimination on grounds of sexual orientation. Where schemes contain provisions deemed discriminatory, those provisions must be dis-applied as being contrary to the non-discrimination rule set out in section 61 of the Equality Act 2010. In light of this ruling the Chief Secretary to the Treasury has confirmed that amendments would be made to the Teachers’ Pension Scheme and other public service pension schemes so that “surviving male same-sex and female same-sex spouses and civil partners will, in certain cases, receive benefits equivalent to those received by widows of opposite sex marriages” There is still uncertainty surrounding the potential remedy to the Goodwin judgement however the Council’s actuaries have estimated the potential impact of implementing a solution to correct the past underpayment of spouses’ benefits to be circa 0.1% - 0.2% of gross obligations. This would amount to £0.871m at 0.1% for the Council or £1.742m at 0.2%. As there is still uncertainty over the remedy and the potential impact no provision has been made in the accounts at the current time. 34.4 Other Legal Challenges There are other legal challenges which are on-going and may result in future liabilities. 35. TERMINATION BENEFITS A number of savings options have been agreed at Council budget meetings to balance the Council budget. A number of these savings options were reliant on a reduction in the Councils staffing levels. The Council had forewarning of the level of savings required to balance the budget and had previously asked all Council employees to express an interest in voluntary redundancy. As a result of the budget savings options approved by the Council a number of employees have had their redundancy application accepted. Redundancy costs have been incurred by the Council since the 2010-11 financial year in relation to the budget savings agreed. In each year, provision was made within the financial year for the costs of all employees who had accepted redundancy as at 31 March ending that year, including accounting for costs for employees who confirmed redundancy by 31 March but left or were leaving after this date. The total cost accounted for in 2021-22 is £0.308m for 6 employees and in 2020-21 was £0.522m for 16 employees. These costs are detailed further in the Remuneration Report. Page 202
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 117 Termination costs for all Council employees who have accepted redundancy by 31 March 2022 have been accounted for in 2021-22, or in previous financial years. The reduction in the staffing establishment includes posts from all services across the Council and reductions were in line with the savings agreed by the Council. There will be further redundancy costs incurred as the Council is required to make further savings to balance the budget in future years and the council have earmarked monies from the loans fund one-off re-profiling gain. 36. TRUST FUNDS AND OTHER THIRD PARTY FUNDS The Council acts as sole or custodian trustee for 57 trust funds. The funds do not represent assets of the Council, and as such have not been included in the Balance Sheet. Funds for which the Council act as sole trustee: Income Expenditure Net Assets Reserves £'000 £'000 £'000 £'000 14 3 676 676 - 2 69 69 26 - 1,124 1,124 1 9 466 466 Total Trust Funds 41 14 2,335 2,335 GM Duncan Trust MacDougall Trust Various Other Trust Funds Argyll Education Trust Argyll Education Trust: this is made up of a number of small trusts to award prizes, bursaries, etc. to pupils and ex-pupils of schools within the former Argyll County Council area. GM Duncan Trust: for the provision of fuel, clothing and foodstuffs for the needy of Campbeltown. MacDougall Trust: for the provision of sheltered housing on the Ross of Mull. Further information on the Trust Funds, administered by the Council, can be obtained from Financial Services within the Chief Executive’s Unit. A number of the trust funds administered by the Council are charitable trusts and as such are required to comply with current Office of the Scottish Charities Regulator (OSCR) financial reporting requirements. Arrangements have been put in place to ensure that all charities administered by the Council comply and will continue to comply with these requirements. 37. COMMON GOOD FUNDS The Council administers the Common Good Accounts for the former Burghs of Oban, Campbeltown, Rothesay, Dunoon, Lochgilphead, Inveraray, Cove and Kilcreggan. The figures below summarise the aggregate income and expenditure for the year as well as providing a snapshot picture of the assets and liabilities at 31 March 2022. The Common Good Funds are for the benefit of the geographical areas of the former burghs. Further information on the Common Good Funds can be obtained from Financial Services within the Chief Executive’s Unit. 37.1 Common Good Income and Expenditure Account for the year ended 31 March 2022 2020-21 2021-22 Actual Actual £'000 £'000 170 Expenditure 199 (594) Income (351) (424) (Surplus)/Deficit for the Year (152) Page 203
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 118 37.2 Common Good Balance Sheet at 31 March 2022 2020-21 2021-22 Actual Actual £'000 £'000 4,898 Tangible Fixed Assets 4,813 2,954 Investments 3,207 289 Current Assets 322 (11) Current Liabilities (42) 8,130 Total Assets less Liabilities 8,300 4,902 Revaluation Reserve 4,817 3,228 Common Good Fund 3,483 8,130 Total Net Worth 8,300 38. Tax Incremental Financing (TIF) Projects The Council entered into an agreement with the Scottish Government in May 2014 in respect of the Lorn Arc Tax Incremental Finance (TIF) scheme. This agreement essentially allows for the repayment of debt arising from infrastructure investment from incremental Non-Domestic Rates (NDR) revenue. The assets to be funded by the TIF project largely comprise public realm and infrastructure improvements within the Lorn Arc area of Oban. The project is for 25 years, with the first material capital investment incurred during the financial year ended 31 March 2015. During the TIF project period, the Council is entitled to retain the TIF revenue from its NDR revenue, a pro-rata amount of NDR equal to the amount (if any) by which the collected amount exceeds the collectable amount. The Council is required to apply 100% of the TIF revenue towards repayment of the TIF debt. If all projects are delivered and debt is fully paid, the Council can retain 50% of the TIF revenue for further infrastructure investment until the end of the TIF period. Net capital expenditure incurred in the year to 31 March 2022, to be funded from borrowing, in respect of TIF assets totalled £0.049m (2020-21 £0.037m). This is reflected in the “Summary of Capital Expenditure and Financing” outlined within note 14.4. The total TIF debt to be repaid over the project period, in respect of investment to 31 March 2022, has been calculated in accordance with finance circular No. 4/2014 at £0.987m (2020-21 £0.939). There is a retention of £0.336m of TIF income during 2021-22 (2020-21 £0.164m) to repay the notional borrowing for TIF. Principal sums accumulated by 2021-22 amount to £0.137m (2020-21 £0.132m) and cumulative interest £0.116m (2020-21 £0.115m) resulting in a net cumulative surplus of £1.103m (2020- 21 £0.773m) which will be used to pay down TIF debt per the TIF agreement and the balance of £0.252m will be placed in earmarked reserves to be used in future years to repay debt costs. Page 204
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 119 39. CASH FLOW STATEMENT – OPERATING ACTIVITIES The Net Cash Flows for Operating Activities can be reconciled to the Net (Surplus)/Deficit on the Provision of Services as follows: 2020-21 2021-22 £'000 £'000 (14,257) Net (Surplus)/Deficit on Provision of Services (1,025) (14,609) Statutory Adjustments through Statement of Movement in Reserves (17,813) 291 Transfer to/from Other Statutory Reserves 553 151 Increase/(Decrease) in Inventories (58) 2,311 Increase/(Decrease) in Debtors (2,044) (13,181) (Increase)/Decrease in Creditors and Provisions 3,312 (5,509) Other Revenue Adjustments (4,593) (30,546) (20,643) 5,063 Non Cash Capital 12,772 (2,592) Capital Element of Finance Lease Payments (4,844) 2,471 7,928 (42,332) Net Cash Flows from Operating Activities (13,740) 7,269 Interest Paid on Borrowings 7,074 2,592 Interest Paid on Finance Leases 4,844 (292) Interest Received on Bank Deposits (241) 9,569 Net Cash Outflow from Servicing of Finance 11,677 Adjustments to Net (Surplus)/Deficit on the Provision of Service for Non Cash Movements: Adjustments for items included in the Net (Surplus)/Deficit on the Provision of Services that are Investing and Financing Activities: The cash flows for Operating Activities include the following items: 40. CASH FLOW STATEMENT – INVESTING ACTIVITIES The cash flows for Investing Activities include the following items: 2020-21 2021-22 £'000 £'000 17,491 30,203 3,000 20,000 (612) (815) (12,139) (17,345) 7,740 Net Cash Outflow from Investing Activities 32,043 Purchase of Property, Plant and Equipment, Investment Property and Intangible and Heritage Assets Proceeds from the Sale of Property, Plant and Equipment and Investment Property Other Receipts from Investing Activities Investments made/(disposed of) during year Page 205
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 120 41. CASH FLOW STATEMENT – FINANCING ACTIVITIES The cash flows for Financing Activities include the following items: 2020-21 2021-22 £'000 £'000 (332) (10,184) 313 1,892 2,592 4,844 5,166 1,055 7,739 Net Cash (Inflow)/Outflow from Financing Activities (2,393) Cash Payments for the Reduction of the Outstanding Liabilities relating to Finance Leases and on Balance Sheet PFI Contracts Other Receipts from Financing Activities Repayments of Short and Long Term Borrowing Cash Receipts of Short and Long Term Borrowing Page 206
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www.argyll-bute.gov.uk Page 121 Council Tax Income Account The Council Tax Income Account shows the gross income raised from council tax levied and deductions made under the Local Government Finance Act 1992. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the Council. 2020-21 2021-22 Actual Actual £'000 £'000 70,624 Gross Council Tax Levied and Contributions in Lieu excluding RSL Second Home Additional Income 71,280 Less: (15,067) Other Discounts and Reductions (14,516) (1,484) Write-off of Uncollectable Debts and Allowance for Impairment (1,358) 54,073 Total 55,406 364 Adjustment to Previous Years' Community Charge and Council Tax 836 54,437 Transfers to General Fund 56,242 Page 207
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www.argyll-bute.gov.uk Page 122 Notes to the Council Tax Income Account 1. CALCULATION OF THE COUNCIL TAX Dwellings are valued by the Assessor and placed within a valuation band ranging from the lowest “A” to the highest “H”. The Council Tax charge is calculated using the Council Tax Base, Band D equivalent as below. This value is then decreased or increased dependent upon the band of the dwelling. The charge for each band for 2021-22 was as follows: Band Valuation Band £ per year A Up to £27,000 911.82 B £27,001 - £35,000 1,063.79 C £35,001 - £45,000 1,215.76 D £45,001 - £58,000 1,367.73 E £58,001 - £80,000 1,797.05 F £80,001 - £106,000 2,222.56 G £106,001 - £212,000 2,678.47 H Over £212,000 3,350.94 6/9 7/9 8/9 9/9 473/360 585/360 705/360 882/360 Ratio Band D 2. CALCULATION OF THE COUNCIL TAX BASE 2021-22 Council Tax Base A B C D E F G H Total Total Number of Properties 7,447 10,038 9,447 6,242 7,659 4,382 2,942 254 48,411 Less - 956 757 895 472 567 232 148 50 4,077 - 894 1,106 799 467 443 218 110 6 4,043 Effective Number of Properties 5,597 8,175 7,753 5,303 6,649 3,932 2,684 198 40,291 Band D Equivalent Factor (ratio) 67% 78% 89% 100% 131% 163% 196% 245% 3,731 6,358 6,891 5,303 8,736 6,390 5,256 485 43,150 Add Contribution in lieu in respect of Class 18 dwellings (Band D Equivalent) 499 Nominal Tax Yield 43,649 Less Provision for Non-Collection - 9.400% 4,103 Council Tax Base 2021-22 - Number of Band D equivalents 39,546 Exemptions / Deductions Adjustment for Single Chargepayers Band D Equivalent Number of Properties Page 208
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www.argyll-bute.gov.uk Page 123 Non Domestic Rate Income Account The Non-Domestic Rate Income Account is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Non-Domestic Rate Account. The statement shows the gross income from the rates and deductions made under the Local Government (Scotland) Act 1975 as amended by the Local Government Finance Act 1992 on non-domestic property. The net income is paid to the Scottish Government as a contribution to the national non-domestic rate pool. 2020-21 2021-22 Actual Actual £'000 £'000 56,335 Gross rates levied and Contributions in Lieu 55,736 Less: (28,240) Reliefs and other deductions (25,366) - Payment of Interest - (281) Write-off of Uncollectable Debts and Allowance for Impairment (304) 27,814 Total Net Non-Domestic Rate Income 30,066 (2,914) Adjustments for prior years (4,024) - Business Rate Incentivisation Scheme (BRIS) NDR Income Retained - (164) Tax Incremental Finance (TIF) Scheme NDR Income Retained (336) 24,736 Contribution to National Non-Domestic Rate Pool 25,706 (1,452) Difference between Distributable and Contributable NDR Income amounts (636) 23,284 Distribution from Non-Domestic Rate Pool credited to Comprehensive Income and Expenditure Statement 25,070 Page 209
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www.argyll-bute.gov.uk Page 124 Notes to the Non Domestic Rate Income Account 1. ANALYSIS OF RATEABLE VALUES 2020-21 2021-22 £ £ 9,370,855 Industrial and freight transport subjects 9,355,020 73,835,770 Miscellaneous including Telecomms, Rail, Gas and Electricity Companies 75,263,110 Commercial subjects: 13,864,845 Shops 13,964,305 5,869,970 Offices 5,871,270 9,596,600 Hotels, Boarding Houses etc. 9,503,760 1,921,620 Others 1,921,820 114,459,660 Total Rateable Value 115,879,285 2. NON-DOMESTIC RATE CHARGE 2020-21 2021-22 Pence Pence 49.8p Rate Per Pound 49.8p 1.3p Supplementary Rate Per Pound for Properties between £51,000 and £95,000 1.3p 2.6p Supplementary Rate Per Pound for Properties over £95,000 2.6p 3. CALCULATION OF RATE CHARGE FOR EACH PROPERTY The rates charge for each subject is determined by the rateable value placed upon it by the Assessor multiplied by the Rate per £ announced each year by the Government. Page 210
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www.argyll-bute.gov.uk Page 125 Group Accounts - Introduction INTRODUCTION The Code of Practice on Local Authority Accounting in the United Kingdom 2021-22: Based on International Financial Reporting Standards, places a requirement on Councils to consider all their interests in external organisations including limited companies and other statutory bodies. Where the interest is considered to be material, the Council is required to prepare a full set of group accounts in addition to those prepared for Argyll and Bute Council. The Group Accounts are designed to show “a true and fair view” of the financial performance and position of the Council’s Group. THE GROUP ACCOUNTS The Group Accounts comprise the following financial statements: Group Statement of Comprehensive Income and Expenditure: this statement shows the accounting cost in the year of providing the Council’s services and its share of the results of its associates in accordance with International Financial Reporting Standards, rather than the amount to be funded from taxation. Local authorities raise taxation to cover expenditure in accordance with regulations, and this is different from the accounting cost. The taxation position is shown in the Statement of Movement in Reserves. Group Balance Sheet: The Balance Sheet is a snapshot of the value at the 31 March 2022 of the assets and liabilities recognised by the Council and its share of the net assets or liabilities of its associates and Common Good funds. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. The net investment or liability in its associates is matched by its share of the reserves of the associates (i.e. its group reserves). Group Statement of Movement in Reserves: this statement shows the movement in the year on the reserves held by the Council plus its share of the reserves of its associates. The Common Good reserves are also fully consolidated into the Group Accounts. The Council’s reserves are analysed into those which are “Usable Reserves” (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Council’s share of the reserves of Associates is an unusable reserve (i.e. it cannot be used to fund expenditure or reduce taxation). The Council’s Statement of Movement in Reserves gives a more detailed analysis of the movement in the Council’s usable and unusable reserves during 2021-22. Group Cash Flow Statement: The Cash Flow Statement shows the changes in cash and cash equivalents of the Council and its associates Common Good Funds. The statement shows how the Group generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flow arising from operating activities is a key indicator of the extent to which the operations of the Group are funded by way of taxation and grant income or from the recipients of services provided by the Group. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Group’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Group. Page 211
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Group Statement of Comprehensive Income and Expenditure www.argyll-bute.gov.uk Page 126 Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £'000 £'000 £'000 Service £'000 £'000 £'000 25,784 20,003 5,781 Chief Executive and Financial Services 25,714 19,280 6,434 130,969 22,977 107,992 Executive Director - Douglas Hendry 144,439 25,338 119,101 90,630 25,583 65,047 Executive Director - Kirsty Flanagan 105,485 34,846 70,639 147,227 85,655 61,572 Health and Social Care Integration 157,712 88,394 69,318 11,433 3,591 7,842 Other Non-Departmental Costs 13,354 2,887 10,467 1,981 5,010 (3,029) Associates and Joint Ventures Accounted for on an Equity Basis 2,124 9,390 (7,266) 408,024 162,819 245,205 Net Cost of Services 448,828 180,135 268,693 Other Operating Income and Expenditure: 6,286 Net (Gain)/loss on Disposal of Fixed Assets (103) 1,381 Other Operating Income and Expenditure 1,836 7,667 Total Other Operating Income and Expenditure 1,733 Financing and Investment Income and Expenditure: 16,211 Interest Payable and Similar charges 15,993 (955) Interest and Investment Income (805) 1,888 Net Pension Interest Expense 1,864 17,144 Total Financing and Investment Income and Expenditure 17,052 Taxation and Non-Specific Grant Income: (197,110) General Government Grants (191,432) (13,495) Government Capital Grants and Other Capital Contributions (21,700) (23,448) Non-domestic Rates Redistribution and Retained Non-domestic Rates (TIF & BRIS) (25,406) (54,437) Council Tax Income (56,242) (288,490) Total Taxation and Non-Specific Grant Income (294,780) (18,474) (Surplus)/Deficit on Provision of Services (7,302) (9,030) (Surplus)/Deficit on revaluation of Fixed Assets (11,143) 7,009 Other Post Employment Benefits (Pensions) (113,865) (591) Share of Other Comprehensive Income and Expenditure of Associates and Common Good Funds (2,092) (2,612) Other Comprehensive Income and Expenditure (127,100) (21,086) Total Comprehensive Income and Expenditure (134,402) 2020-21 2021-22 Page 212
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Group Balance Sheet www.argyll-bute.gov.uk Page 127 £'000 £'000 £'000 £'000 Long Term Assets Property Plant & Equipment 376,141 - Other Land and Buildings 384,930 9,945 - Vehicles, Plant, Furniture and Equipment 11,798 222,947 - Infrastructure Assets 230,478 10,848 - Community Assets 12,267 1,637 - Surplus Assets 1,408 25,599 - Assets Under Construction 35,344 647,117 Total Property Plant & Equipment 676,225 2,086 Heritage Assets 2,099 572 Intangible Assets 604 2,435 Investment Property 2,428 6,028 Long-Term Debtors 5,792 20,946 Long-Term Investments 3,699 - Other Long-Term Debtors (Pensions) 1,084 3,751 Investment in Associates and Joint Ventures 4,502 682,935 Total Long Term Assets 696,433 Current Assets 908 Inventories 863 20,541 Short Term Debtors (Net of Impairment) 18,825 1,865 Assets Held for Sale 1,509 45,000 Short Term Investments 82,500 38,011 Cash and Cash Equivalents 22,535 5,808 Investment in Associates and Joint Ventures 13,162 112,133 Total Current Assets 139,394 Current Liabilities (2,874) Short-term Borrowing (17,745) (45,952) Short-term Creditors (42,034) (7) Capital Grant Receipts in Advance - (2,356) Provisions (2,231) (4,842) Other Short Term Liabilities (5,117) (367) Investment in Associates and Joint Ventures (281) (56,398) Total Current Liabilities (67,408) Long-term Liabilities (167,418) Borrowing Repayable within a Period in Excess of 12 Months (161,657) (117,432) Other Long-term liabilities (112,313) (1,980) Provisions (2,079) (5,000) Capital Grant Receipts in Advance - (87,703) Other Long-term liabilities (Pensions) - (1,167) Liabilities in Associates and Joint Ventures - (380,700) Total Long-term Liabilities (276,049) 357,970 Total Assets less Liabilities 492,370 31 March 202231 March 2021 Page 213
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Group Balance Sheet www.argyll-bute.gov.uk Page 128 £'000 £'000 £'000 £'000 Unusable Reserves 135,392 - Revaluation Reserve 145,903 217,237 - Capital Adjustment Account 223,147 (2,524) - Financial Instruments Adjustment Account (2,198) (87,703) - Pensions Reserve 1,084 (7,206) - Accumulated Absences Account (6,928) 255,196 361,008 Usable Reserves 4,406 - Capital Funds 4,414 2,134 - Repairs and Renewals Funds 2,682 78,245 - General Fund Balance 96,530 84,785 103,626 9,861 Group Reserves 19,438 8,128 Common Good Reserves 8,298 357,970 Total Reserves 492,370 31 March 202231 March 2021 The Unaudited Annual Accounts were issued on 30 June 2022. Kirsty Flanagan Section 95 Officer Page 214
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Group Statement of Movement in Reserves Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Total Unusable Reserves Total Reserves of the Council Total Live Argyll Reserves Usable Total Live Argyll Reserves Unusable £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2021 (78,245) (2,134) (4,406) (84,785) (260,585) (345,370) (8,024) (1,836) 5,389 (8,129) (357,970) (Surplus)/Deficit on Provision of Services (1,025) - - (1,025) - (1,025) (7,266) 1,159 - (170) (7,302) Other Comprehensive Income and Expenditure - - - - (121,791) (121,791) (2,092) (3,217) - (127,100) Total Comprehensive Income and Expenditure (1,025) - - (1,025) (121,791) (122,816) (9,358) (2,058) - (170) (134,402) Total Statutory Adjustments (See Page 53 to 54) (17,813) - (815) (18,628) 18,628 - 1,839 (1,839) - - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (18,838) - (815) (19,653) (103,163) (122,816) (9,358) (219) (1,839) (170) (134,402) Transfer to/from Other Statutory Reserves 553 (548) 807 812 (810) 2 - - - - 2 (Increase)/Decrease in Year (18,285) (548) (8) (18,841) (103,973) (122,814) (9,358) (219) (1,839) (170) (134,400) Balance at 31 March 2022 Carried Forward (96,530) (2,682) (4,414) (103,626) (364,558) (468,184) (17,382) (2,055) 3,550 (8,299) (492,370) Council's Share of Reserves of Associates Total Common Good Reserves Total Reserves Other Transfers required by Statute Argyll and Bute Council Usable Reserves www.argyll-bute.gov.uk Page 129 Page 215
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Group Statement of Movement in Reserves Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Total Unusable Reserves Total Reserves of the Council £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2020 (49,670) (1,843) (4,379) (55,892) (269,579) (325,471) (4,405) (520) 1,216 (7,705) (336,885) Surplus/(Deficit) on Provision of Services (14,257) - - (14,257) - (14,257) (3,029) (764) - (424) (18,474) Other Comprehensive Expenditure and Income - - - - (5,642) (5,642) (591) 3,621 - - (2,612) Total Comprehensive Expenditure and Income (14,257) - - (14,257) (5,642) (19,899) (3,619) 2,857 - (424) (21,085) Total Statutory Adjustments (See Page 55 to 56) (14,609) - (612) (15,221) 15,221 - - (4,173) 4,173 - - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (28,866) - (612) (29,478) 9,579 (19,899) (3,619) (1,316) 4,173 (424) (21,085) Transfer to/from Other Statutory Reserves 291 (291) 585 585 (585) - - - - - - (Increase)/Decrease in Year (28,575) (291) (27) (28,893) 8,994 (19,899) (3,619) (1,316) 4,173 (424) (21,085) Balance at 31 March 2021 Carried Forward (78,245) (2,134) (4,406) (84,785) (260,585) (345,370) (8,024) (1,836) 5,389 (8,129) (357,970) Total Common Good Reserves Total Reserves Other Transfers required by Statute Argyll and Bute Council Usable Reserves Council's Share of Reserves of Associates Total Live Argyll Reserves Usable Total Live Argyll Reserves Unusable www.argyll-bute.gov.uk Page 130 Page 216
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Group Cash Flow Statement www.argyll-bute.gov.uk Page 131 2020-21 2021-22 £'000 Group Note £'000 (18,474) Net Deficit on the Provision of Services (7,302) (28,254) Adjustments to net surplus or deficit on the provision of services for non- cash movements (24,428) 2,471 Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities 8,155 (44,257) Net Cash OutFlow from Operating Activities 9 (23,575) 8,286 Investing Activities 10 41,442 7,741 Financing Activities 11 (2,391) (28,230) Net (Increase)/Decrease in Cash and Cash Equivalents 15,476 (9,781) Cash and Cash Equivalents at the beginning of the Reporting Period (38,011) (38,011) Cash and Cash Equivalents at the end of the Reporting Period (22,535) Page 217
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Notes to the Group Financial Statements www.argyll-bute.gov.uk Page 132 1. GROUP ACCOUNTING POLICIES The group accounts are prepared in accordance with the policies set out in Note 1 to the Financial Statements. • The Strathclyde Partnership for Transport and Strathclyde Concessionary Travel Scheme Joint Committee financial statements have been prepared under the historic cost convention. 2. COMBINING ENTITIES The Council has an interest in a number of Associate Entities. For the purposes of consolidation and incorporation within the Group Accounts recognition has been made of the Council’s significant influence over Joint Boards and other entities. The Associates which have been incorporated are: • Dunbartonshire and Argyll & Bute Valuation Joint Board • Strathclyde Partnership for Transport • Strathclyde Concessionary Travel Scheme Joint Committee Under accounting standards, the Council is required to include the results of the above organisations as “associates” because it has “significant influence” over their financial and operating policies. The Council has no shares in or ownership of any of these organisations which are entirely independent of the Council under law and for taxation. Two of the three Joint Boards (SPT and Concessionary Travel) are included within the Group Accounts under the wider definition of an “associate” although the Council holds less than 20% of voting rights that is normally presumed to confer significant influence. This is in view of the funding arrangements between the constituent Councils and the Joint Boards. Live Argyll is a wholly owned subsidiary of Argyll and Bute Council and is consolidated within the group accounts on a line by line basis. The accounting period for all entities is 31 March 2022. 3. NON MATERIAL INTEREST IN OTHER ENTITIES The Council has an interest in Scotland Excel. Scotland Excel took up the activities of the Authorities Buying Consortium and similar bodies across the Scottish Local Authority sector on 1 April 2008. Renfrewshire Council prepare the financial statements for Scotland Excel in its role as lead authority. Scotland Excel is a not-for-profit organisation funded mainly by the 32 participating Scottish Local Authorities. The Council contributed £0.071m towards Scotland Excel in the 2021-22 financial year. The Council also has an interest in the Highlands and Islands Transport Partnership (HITRANS). The Partnership was established as one of the seven Scottish Regional Transport Partnerships. The Transport (Scotland) Act 2005 requires these Partnerships to prepare Transport Strategies for their regions which will enhance economic well-being; promote safety; social inclusion and equal opportunity; plan for a sustainable transport system; and integrate across boundaries with other partnerships. These entities are part of the Council’s group for the purposes of Group Accounts. As such it is recognised that the nature of the relationship with these bodies should be included within these notes. However, it has been decided that the Council’s share of the net worth of these entities is not material to a fair understanding of the financial position of the Council, and so they have not been consolidated into the Group Accounts. The Council inherited its interest in these entities following the reorganisation of local government in 1996. Page 218
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Notes to the Group Financial Statements www.argyll-bute.gov.uk Page 133 4. ARGYLL AND BUTE INTEGRATION JOINT BOARD The Argyll and Bute Integration Joint Board was established as a body corporate by order of Scottish Ministers on 27 June 2015. The partnership between the Council and NHS Highland has been established in accordance with the provisions of the Public Bodies (Joint Working)(Scotland) Act 2014 and associated Regulations. The Integration Joint Board has responsibility for all health and social care functions relating to adults and children and will oversee the Strategic Planning and budgeting of these, together with corresponding service delivery for the residents of Argyll and Bute. The Council contributed £62.870 towards the Argyll and Bute Integration Joint Board in the 2021-22 financial year. The Council and NHS Highland are required to treat the IJB as a Joint Venture in their annual accounts and recognise a share of the overall surplus or deficit of the IJB for the year. 5. FINANCIAL IMPACT OF CONSOLIDATION The effect of inclusion of the Associates, Joint Ventures, Subsidiaries and Common Good Funds on the Group Balance Sheet is to increase both reserves and net worth by £24.186m. This gives an overall net asset position for the Group of £492.370m. All associates and subsidiaries have prepared their accounts on a ‘going concern’ basis. For Strathclyde Partnership for Transport and the Joint Valuation Board funding arrangements between the Scottish Government and constituent authorities remains assured. In common with these public bodies, the Council’s Group Accounts have been prepared on a ‘going concern’ basis as there is no reason to suggest that future funding will not continue. 6. FURTHER DETAILS ON CONSOLIDATION Strathclyde Partnership for Transport Strathclyde Partnership for Transport was formed on 1 April 2006 as the successor to the Strathclyde Passenger Transport Authority. It is a Joint Committee of all Councils in the West of Scotland plus Dumfries and Galloway Council. In association with the related Structure Planning Committees, the Partnership’s remit included the promotion of joint working to set out the policy framework for achieving the most effective management, development and integration of the transport network across boundaries in the medium to longer term through the Joint Transport Strategy. The Council contributed £0.409m or 1.14% of the Board’s estimated net running costs during 2021-22 and accounted for £5.523m of the Balance Sheet Assets within the Group Balance Sheet. The accounts of the Board are subject to independent audit and are available from the Treasurer to Strathclyde Partnership for Transport, Consort House, 12 West George Street, Glasgow G2 1HN. Strathclyde Concessionary Travel Scheme Joint Board This body comprises the 12 local authorities within the West of Scotland which oversees the operations of the concessionary fares scheme for public transport within its area. The costs of the scheme are met by a combination of funding from the 12 constituent councils and direct grant funding from the Scottish Government. During 2021-22 the Council contributed £0.206m or 5.04% of the net annual running costs and accounted for £0.232m of the Balance Sheet Assets within the Group Balance Sheet. The accounts of the Board are subject to independent audit and are available from the Treasurer to Strathclyde Concessionary Travel Scheme, Consort House, 12 West George Street, Glasgow G2 1HN. Live Argyll Live Argyll was established by Argyll and Bute Council and is limited by guarantee and was fully incorporated and commenced trading on 2 October 2017. The Trust is a charitable company registered in Scotland and provides a wide range of services within the Argyll and Bute area including libraries, leisure facilities, halls, sports development and community centres the assets of which are owned by the Council. During 2021-22 Argyll and Bute Council paid £3.938m in the form of a Management Fee to Live Argyll and reduced the overall net worth of the Group Balance Sheet by £1.495m. The board is made up of 3 independent board members, 3 Councillors and a Trade Union representative. Page 219
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Notes to the Group Financial Statements www.argyll-bute.gov.uk Page 134 Dunbartonshire and Argyll and Bute Valuation Joint Board This body was formed in October 1995 at Local Government reorganisation by a Statutory Instrument and is responsible for the maintenance of the electoral, council tax and non-domestic rates registers for Argyll and Bute, West Dunbartonshire and East Dunbartonshire Councils. The Board’s running costs are met by the three Councils. During 2021-22 Argyll and Bute Council contributed £1.47m towards estimated running costs and accounted for £0.032m of Balance Sheet Liabilities within the Group Balance Sheet. The accounts of the Board are subject to independent audit and will be available from the Valuation Joint Board’s website www.saa.gov.uk /dab-vjb/ and West Dunbartonshire Council’s website https://www.west-dunbarton.gov.uk/council/performance-and-spending/service- performance/financial-performance/ from 1 July 2022. The following disclosures are also required for Dunbartonshire and Argyll and Bute Valuation Joint Board because the Council’s interest exceeds the 25% threshold for accounting purposes:- 2020-21 2021-22 £'m £'m Argyll and Bute Council has a 48.1% share of: 2.898 Gross Income 2.958 0.213 Net (Surplus)/Deficit 0.244 0.640 Long Term Assets 0.636 0.897 Current Assets 0.994 (0.206) Liabilities due within one year (0.065) - Liabilities due over one year - (2.426) Pension Liability (0.507) (1.095) Capital and Revenue Reserves (2.072) 7. REPORTING AUTHORITY ADJUSTMENTS A number of adjustments are required to the Council’s Statement of Comprehensive Income and Expenditure (pages 49 to 50) for group accounting purposes. These can be summarised as follows: • All intra-group transactions have been removed from the Group Accounts as part of the subsidiary consolidation process. • The Common Good Funds described in note 37 of the Notes to the Financial Statements on pages 116 to 117 have been fully consolidated into the Group Accounts. This adjustment increases the net assets and reserves of Argyll and Bute Council’s Group by £8.298m. Page 220
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Notes to the Group Financial Statements www.argyll-bute.gov.uk Page 135 8. GROUP CASH FLOW STATEMENT – OPERATING ACTIVITIES 2020-21 2021-22 £'000 £'000 (18,474) Net (Surplus)/Deficit on Provision of Services (7,302) (14,609) Statutory Adjustments through Statement of Movement in Reserves (15,974) 291 Transfer to/from Other Statutory Reserves 553 1,849 Transfer Group Other Comprehensive Income and Expenditure (5,309) 143 Increase/(Decrease) in Inventories (45) 2,260 Increase/(Decrease) in Debtors (2,020) (13,143) (Increase)/Decrease in Creditors and Provisions 3,056 (5,045) Other Revenue Adjustments (4,689) (28,254) (24,428) 5,063 Non Cash Capital 12,999 (2,592) Capital Element of Finance Lease Payments (4,844) 2,471 8,155 (44,257) Net Cash Flows from Operating Activities (23,575) 7,269 Interest Paid on Borrowings 7,074 2,592 Interest Paid on Finance Leases 4,844 (292) Interest Received on Bank Deposits (241) 9,569 Net Cash Outflow from Servicing of Finance 11,677 Adjustments to Net (Surplus)/Deficit on the Provision of Service for Non Cash Movements: Adjustments for items included in the Net (Surplus)/Deficit on the Provision of Services that are Investing and Financing Activities: The cash flows for Operating Activities include the following items: 9. GROUP CASH FLOW STATEMENT – INVESTING ACTIVITIES 2020-21 2021-22 £'000 £'000 17,491 30,244 3,000 20,000 (612) (815) 546 9,358 (12,139) (17,345) 8,286 Net Cash Outflow from Investing Activities 41,442 Net Receipts from Investment in Associates and Joint Ventures Proceeds from the Sale of Property, Plant and Equipment and Investment Property Other Receipts from Investing Activities Investments made/(disposed of) during year Purchase of Property, Plant and Equipment, Investment Property and Intangible and Heritage Assets Page 221
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Notes to the Group Financial Statements www.argyll-bute.gov.uk Page 136 10. GROUP CASH FLOW STATEMENT – FINANCING ACTIVITIES 2020-21 2021-22 £'000 £'000 (332) (10,184) 313 1,892 2,592 4,844 5,168 1,057 - - 7,741 Net Cash (Inflow)/Outflow from Financing Activities (2,391) Other Payments from Financing Activities Cash Receipts of Short and Long Term Borrowing Other Receipts from Financing Activities Cash Payments for the Reduction of the Outstanding Liabilities relating to Finance Leases and on Balance Sheet PFI Contracts Repayments of Short and Long Term Borrowing Page 222
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Glossary of Terms www.argyll-bute.gov.uk Page 137 Existing Use Value. The market value of a particular Council property, less the difference between the average rental income between public and private sector properties. Expected Rate of Return on Pension Assets. The average rate of return, including both income and changes in fair value but net of scheme expenses, expected over the remaining life of the related obligation on the actual assets held by the Scheme. Fair Value. This is the price at which an asset could be exchanged in an arm’s length transaction less any grants receivable towards the purchase or use of the asset. Financial Asset. A right to future economic benefits controlled by the Council that is represented by cash, an equity instrument of another entity, a contractual right to receive cash from another entity or a financial right to exchange financial instruments under conditions that are potentially favourable to the Council. Financial Instrument. Any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another. Financial Instruments Adjustment Account. This holds the accumulated difference between the financing costs included in the Income and Expenditure Account and the accumulated financing costs required in accordance with regulations to be charged to the General Fund Balance. Financial Liability. An obligation to transfer economic benefits controlled by the Council that is represented by a contractual obligation to deliver cash or another financial asset to another entity or a contractual obligation to exchange financial instruments under conditions which are potentially unfavourable to the Council. Financial Reporting Standard (FRS). Financial Reporting Standards are issued by the Accounting Standard Board and define proper accounting practice for a given transaction or event. Fixed Assets. Tangible assets that yield benefits to the Council and the services it provides for a period of more than one year. Gains/losses on settlements and curtailments. The result of actions to relieve the Council of liabilities or events that reduce the expected future service or accrual of benefits of employees. This is charged or credited to Non Distributed costs in the Comprehensive Income and Expenditure Statement. General Fund Balance. This contains the net surplus on the provision of Council services combined with any balances from previous years and any contributions to other funds or reserves made during the year. Group Accounts. The purpose of group accounts is to show the Council’s interest in organisations and companies within the Financial Statements. The Council’s shares of the assets and liabilities of these other entities are shown in the Group Movement in Reserves Statement, Comprehensive Income and Expenditure Statement and Group Balance Sheet. Government Grants. Assistance by government and inter- government agencies and similar bodies, whether local, national or international, in the form of cash or transfers of assets to an authority in return for past, or future, compliance with certain conditions relating to the activities of the Council. Heritage Assets. Assets which are intended to be preserved in trust for future generations because of their cultural, environmental and historical associations and are held by the Council of the maintenance of heritage. International Accounting Standards (IAS). International Accounting Standards are issued by the International Accounting Standards Board and define proper accounting practice for a given transaction or event. IAS’s take precedence over other accounting standards in the hierarchy of technical accounting standards. International Public Sector Accounting Standards (IPSAS), a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. Impairment. A reduction in the value of fixed or financial asset below the valuation held on the balance sheet. Infrastructure Assets. Fixed assets that are inalienable, expenditure on which is recoverable only by continued use of the asset created. Examples of infrastructure assets are highways and footpaths. Intangible Assets. Non-financial assets which do not have physical substance but are identifiable and are controlled by the Council. Interest Cost (Pensions). The expected increase during the period in the present value of the scheme liabilities because the benefits are one period closer to settlement. Inventories. Inventories may comprise the following: goods or other assets purchased for re-sale; consumable stores; raw materials and components purchased for incorporation into products for sale; products and services in intermediate stages of completion; long term contract balances; and finished goods. Liquid Resources. Current asset investments that are readily disposable by the Council without disrupting its business and are either readily convertible to known amounts of cash at or close to the carrying amount, or traded on the active market. Page 223
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Glossary of Terms www.argyll-bute.gov.uk Page 138 Materiality. Information is included where the information is of such significance as to justify its inclusion, and omission or misstatement could, individually or collectively, influence the decisions or assessments of users made on the basis of the financial statements. National Non-Domestic Rates Pool. All non-domestic rates collected by Council’s are remitted to the national pool and, thereafter, distributed to Councils by the Scottish Government. Net Book Value. The amount at which fixed assets are included in the Balance Sheet, i.e. their historical cost or current value less cumulative amounts provided for depreciation. Net Realisable Value. The open market value of the asset in its existing use, or open market value in the case of non- operational assets, less the expenses to be incurred in realising the asset. Non-Current Assets. Non-current assets are not expected to be realised within 12 months and are held to provide future economic benefits to the Council. Non-operational assets. Are assets held by the Council but not directly occupied, used or consumed in the delivery of services. Examples of non-operational assets are investment properties and assets that are surplus to requirements, pending sale or redevelopment. Officers’ Remuneration. All sums paid to or receivable by an employee and sums due by way of expenses allowances (as far as those sums are subject to UK Income Tax). Operating Leases. A lease other than a finance lease, i.e. a lease which does not transfer the risks and rewards of ownership to the lessee. Operating Assets. All items which derive from events or transactions that fall within the ordinary activities of the Council and which need to be disclosed separately by virtue of their size or incidence to give fair presentation of the accounts. Past Service Costs (Pensions). The increase in the present value of the scheme liabilities related to employee service in prior periods arising in the current period as a result of the introduction of, or improvement to, retirement benefits. Pensions Reserve. The Pensions Reserve absorbs the timing differences arising from different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. Prior Period Adjustments. Those material adjustments applicable to prior years arising from changes in accounting policies or from the correction of fundamental errors. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years. Public Private Partnerships (PPP). Those partnerships enable the Council to purchase services from the private sector and pay a fee based on pre-defined output criteria. The private sector uses this fee to repay loans taken out to finance the building or refurbishment of the assets. Residual Value. The net realisable value of an asset at the end of its useful life. Related Party Transactions. A related party transaction is the transfer of assets or liabilities, or the performance of services by, to or for a related party irrespective of whether a charge is made. Renewal and Repairs fund. This contains funds credited at the Council’s discretion from the General Fund and is available for use on capital or revenue expenditure on Council assets. Revaluation Reserve. Records unrealised gains arising since 1 April 2007 from holding fixed assets not yet realised through sales. Service Expenditure Analysis (SEA). An analysis which groups together expenditure on services within headings or divisions as defined in the Service Reporting Code of Practice (SeRCOP). Specific Government Grants. These are grants received from Central Government in respect of a specific purpose or service. Unusable Reserves. Those reserves which hold unrealised gains and losses where amounts would only become available to provide services if the assets are sold and reserves that hold timing differences. Usable Reserve. Those reserves which the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use. Useful Life. The period over which the Council will derive benefits from the use of a fixed asset. Page 224
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Appendix A www.argyll-bute.gov.uk Page 139 Trade Union Facility Time Statement 2021-22 This information is published under the Trade Union (Facility Time Publication Requirements) Regulations 2017 Schedule 2 (Regulation 8) Table 1: Relevant Union Officials Total number of employees who were relevant union officials during the relevant period. Number of employees who were relevant union officials during the relevant period Full time equivalent employee number Central Function 18 17.4 Education Function 8 7.8 Note: The headcount figure for relevant union officials includes all stewards and school based reps who are elected by their peers to provide first line support for members. Table 2: Percentage of Time Spent on Facility Time Number of employees who were relevant union officials employed during the relevant period who spent a) 0%, b) 1%-50%, c) 51%-99% or d) 100% of their working hours on facility time. Percentage of time Number of employees Central Function Education Function 0% 0 5 1% - 50% 17 2 51% - 99% 1 0 100% 0 1 Page 225
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www.argyll-bute.gov.uk Page 140 Table 3: Percentage of Pay Bill Spent on Facility Time The percentage of the total pay bill spent on paying employees who were relevant union officials for facility time during the relevant period. Central Function Education Function The total cost of facility time £119,964 £64,715 The total pay bill £106,970,507 £52,279,467 The percentage of the total pay bill spent on facility time 0.11% 0.12% Table 4: Paid Trade Union Activities Percentage of total paid facility time hours spent by employees who were relevant union officials during the relevant period on paid trade union activities. Central Function Education Function Time spent on paid trade union activities as percentage of total paid facility time hours calculated as: (total hours spent on paid trade union activities by relevant union officials during the relevant period ÷ total paid facility time hours) x 100 0% 0% Page 226