Unaudited Statement of Accounts 2023-24

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• deliver services as outlined in the Risk Management Plan and other plans;

• maintain future council tax increases at reasonable levels;

• continue to deliver efficiencies in line with targets;

• continue to invest in improvements in service delivery and facilities;

• set a robust budget that takes account of known and anticipated pressures; and

• maintain an adequate level of reserves.

The Authority agreed a gross revenue budget of £66.7m and a council tax of £82.27. This represented a £5 increase in council tax, in line with the Council Tax referendum limit. Based on this the budget was considered affordable, prudent, and sustainable, whilst ensuring that the Authority was able to deliver against its corporate priorities.

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

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

Expenditure analysis 2023/24

Income analysis 2023/24

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Reductions in levels of funding over and above those forecasted.

• Changes to the Business Rates Retention Scheme.

• Adverse changes because of the implementation of the Fair Funding Review.

• Reduction in Council Tax funding.

• Higher than anticipated inflation.

• Larger increases in pension costs.

• Significant changes to retirement profiles.

• Increase in demand led pressures.

• Higher insurance claims.

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

Scope of responsibility

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

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

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

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

2. Ensuring openness and comprehensive stakeholder engagement.

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

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

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

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

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

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

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

The purpose of the governance framework

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

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

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

The governance framework

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

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

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

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

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

• A Communication Strategy and the Consultation Strategy;

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

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

  • Business Process Improvement Programme

  • Service Delivery Change Programme

  • Capital Projects Programme.

  • People Strategy

  • Risk Management

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Review of effectiveness

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

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

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

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

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

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

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

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

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

• Performance appraisal incorporating values is undertaken throughout the Service.

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

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

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

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

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

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

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

Significant governance issues

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

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

Approved:

Nikki Hennessy - County Councillor N Hennessy, Chairman, Lancashire Combined Fire Authority

Justin Johnston - Chief Fire Officer, Lancashire Fire and Rescue Service

Steven Brown - Treasurer, Lancashire Combined Fire Authority

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

To add on final audit.

The Authority's Responsibilities

The Authority is required:

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

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

• To approve the Statement of Accounts.

The Treasurer's Responsibilities

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

In preparing this Statement of Accounts, the Treasurer has:

• Selected suitable accounting policies and then applied them consistently;

• Made judgements and estimates that were reasonable and prudent;

• Complied with the Code.

The Treasurer has also:

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

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

Steven Brown CGMA - Treasurer, Lancashire Combined Fire Authority

Mark Clifford - Chair of Audit Committee

Comprehensive Income and Expenditure Statement

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

Movement in Reserves Statement

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

Balance Sheet

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories, usable reserves are those that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example capital receipts may only be used to fund capital expenditure). The second category is unusable reserves and includes reserves that hold unrealised gains and losses (eg 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’.

This Statement of Accounts is that upon which the Auditor should enter his certificate and opinion. It presents a true and fair view of the financial position of the Authority at 31 March 2024 and its income and expenditure for the year then ended.

Steven Brown CGMA - Treasurer, Lancashire Combined Fire Authority

Mark Clifford - Chair of Audit Committee

The cash flow statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flows arising from operating activities is an indicator of the extent to which the operations are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery.

1. Expenditure and Funding Analysis

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

1a. Note to the Expenditure and Funding Analysis

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

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

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

2. Fire Authority Costs

In 2023/24 Fire Authority costs amounted to £0.376m (2023/24: £0.332m), analysed as follows:

3. Employee Emoluments

Details of the Authority’s employees, out of an estimated 1,168 employees, who have received pay and benefits of more than £50,000 are:

The above table excludes Senior Officers, who are disclosed individually in the following tables.

During the year, Senior Officers received remuneration packages as detailed below – these employees are also excluded from the table above.

Exit Packages

4. External Auditors Fees

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

5. Related Parties Transactions

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

Central Government

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

Members

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

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

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

- roles with voluntary organisations;

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

Officers

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

6. Property, Plant and Equipment

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

Movements During the Year

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

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

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

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

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

The comparative figures detailing the movement during 2022/23:

Heritage Assets

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

Capital Expenditure

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

*Includes NWFC balances.

Details of Assets Held

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

Capital Commitments

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

7. Intangible Assets

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

8. Financial Instruments

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

Financial assets - balances

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

• Investments, which are loans to other local authorities.

• Cash in hand and bank current and deposit accounts.

• Trade receivables for goods and services provided.

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

Financial liabilities - balances

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

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

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

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

• Lease payables.

• Trade payables for goods and services received.

Financial Instruments - Gains and Losses

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

Fair Values of Financial Instruments

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

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

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

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

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

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

The fair values calculated are as follows:

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

9. Debtors

10. Cash and Cash Equivalents

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

11. Creditors

12. Provisions

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

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

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

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

13. Other Long-term Liabilities

Other long-term liabilities comprise the following:

14. PFI Schemes

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

PFF Lancashire Limited

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

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

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

Fire and Rescue NW Limited

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

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

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

All PFI Schemes

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

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

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

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

15. Net Liability Related to Local Government and Firefighters' Pension Scheme

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

The Authority participates in two pension schemes:

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

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

Transactions Relating to Post-employment Benefits

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

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

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

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

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

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

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

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

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

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

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

Assets and Liabilities in Relation to Post-employment Benefits

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

Reconciliation of the fair value of the scheme assets:

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

Pension Asset Ceiling

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

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

Scheme History

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

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

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

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

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

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

Basis for Estimating Assets and Liabilities

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

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

The principal assumptions used by the actuary have been:

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

16. Usable Reserves

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

17. Transfers (to)/from Earmarked Reserves

18. Unusable Reserves

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

Revaluation Reserve

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

• Revalued downwards or impaired and the gains are lost.

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

• Disposed of and the gains are realised.

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

Capital Adjustment Account

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

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

Pensions Reserve

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

Collection Fund Adjustment Account

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

Accumulated Absences Adjustment Account

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

19. Contingent Liability

There are no contingent liabilities.

20. Post Balance Sheet Events

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

21. Nature and Extent of Risks Arising from Financial Instruments

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

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

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

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

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

Credit Risk

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

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

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

Trade Debtor Credit Risk

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

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

Liquidity Risk

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

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

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

Market Risk

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

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

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

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

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

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

22. Local Authority Controlled Company – NW FireControl Limited

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

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

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

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

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

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

All figures are shown net of VAT.

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

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

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

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

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

25. Reconciliation of liabilities arising from financing activities

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

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

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

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

27. Expenditure and Income Analysed by Nature

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

28. Significant Judgements

Joint Operation – North West Fire Control

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

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

29. Accounting Policies

a) General Principles

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

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

b) Accruals of income and expenditure

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

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

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

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

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

c) Cash and cash equivalents

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

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

d) Charges to Revenue for Non-Current Assets

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

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

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

• Amortisation of intangible fixed assets attributable to the service.

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

e) Employee Benefits

Benefits Payable During Employment

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

Post Employment Benefits

f) Financial Liabilities

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

g) Financial Assets measured at amortised cost

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

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

h) Government Grants & Contributions

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

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

• The grants or contributions will be received.

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

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

i) Non-Current Assets

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

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

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

i) Recognition

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

ii) Measurement

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

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

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

iii) Impairment

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

iv) Disposals

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

v) Depreciation

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

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

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

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

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

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

vi) Componentisation

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

vii) Derecognition

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

j) Private Finance Initiative (PFI) and similar contracts

Current Status

The Authority has two existing PFI arrangements:

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

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

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

Accounting for PFI

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

Recognition of assets and liabilities

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

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

Minimum Revenue Provision (MRP)

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

Unitary Payment

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

Deductions from the Unitary Payment

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

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

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

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

k) PFI Equalisation Reserve

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

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

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

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

l) Provisions

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

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

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

m) Reserves

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

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

n) Contingent liabilities

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

o) Going Concern

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

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

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

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

q) Accounting Standards issued but not yet adopted

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

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

r) Joint Operations

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

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

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

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

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

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

Fire Fighters Pension Fund Account and Net Assets Statement