Summary of Accounts 2004-2005

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This is a quick guide to our financial position for the 12 months ended 31 March 2005 and of our income and spending for the year. This summary is based on the information in the full version of the accounts. The figures in the full accounts are shown in the detail and format that meets UK accounting standards. The full accounts have been independently assessed by Audit Scotland, the professional auditors representing the Scottish Executive, and certified as reliable.

Download a full copy of the Annual Accounts 2004-2005 from the related content area on the right hand side of this page.

1. Financial Review by the Director of Finance and Information Technology
2. Account of our service for 2004-2005
3. Capital Investment
4. Housing Account for 2004-2005
5. How has the finance service performed?
6. Council Tax Performance
7. Financial Management Performance

Financial Review by the Director of Finance and Information Technology

The annual accounts show how we manage the public funds we control.

Financial performance
For the 12 months to 31 March 2005, we budgeted to use £4.9 million from our general reserves during the year to support the costs of running our activities. By the end of the financial year, £3.7 million was left over without us needing to use these reserves. This underspending is mainly due to managing our borrowing effectively, with our average interest rate on our debt falling to its lowest since we were formed in 1996.

The general reserves at the end of the year were £16.1 million, of which £9.4 million is set aside for particular purposes such as schools, service reviews and keeping Council Tax increases as low as we can. This leaves £6.7 million (approximately one week’s spending) to protect us against future unexpected risks and costs.

Our housing
We own 14,920 houses which we charge rent for. By law, all spending on these houses must be funded from rent. Any surplus or shortfall at the end of the year is either transferred into or out of housing reserves.

We budgeted to use £2.1 million from housing reserves in 2004-2005 to add to the income produced from rents to fund the budgeted operating costs. During the year, income (not including the £2.1 million) was actually higher than spending by £0.2 million, which allowed this balance to be transferred to the housing reserves. The reduction on the planned shortfall was mainly due to the effective management of borrowing. At the end of the year, the housing reserve totalled £7.6 million, of which £4.8 million was set aside for particular purposes, leaving £2.8 million to protect rent increases in the short term against the effects of the reducing number of occupied houses.

Capital investment
Capital investment is money we spend on buying, building and improving assets such as land, buildings, roads, machinery and vehicles. We can manage our own capital investment limits within a long-term framework that is affordable and efficient. During 2004-2005, we spent £33.6 million on our programme of capital investment. This was within our overall approved limit. The table on the back page shows the major projects we invested in during the year.

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Account of our services for 2004-2005

The accounts below show the cost of running our services for the 12 months between April 2004 and March 2005, where the money came from to finance these costs, and the surplus at the year-end.

Account of our services for 2004-2005	£ million
Education services	139.1
Housing services	0.9
Cultural and related services	19.0
Environmental services	15.5
Roads and transportation services	26.0
Planning and development services	4.0
Social work	62.9
Contribution to police, fire and valuation joint boards	25.8
Corporate and democratic core	4.4
Central overheads (mainly unfunded pensions)	-1.0
Central services to the public	9.9
Cost of services	306.5
Less: internal charge for using our assets	39.6
Add: repayment of loans and interest on loans	266.9
Less: transfers to reserves and other internal accounting	35.4
Amount to be met from government grants and local taxation	297.9
Financed by:
Scottish Executive Support Grant	171.2
Business Rates	64.5
Council Tax	65.9
Total Income	301.6
Surplus for the year	3.7
General fund at the end of March 2004	12.4
General fund at the end of March 2005	16.1

We had a total income in 2004-2005 of £302 million. As the diagram shows, most of it (57%) came from the Scottish Executive. About one fifth of our income comes from rates charged on business premises, the levels of which are controlled directly by the Scottish Executive. Council Tax contributes about one-fifth to total income and the only part that we directly control. We had a surplus income of £3.7 million for the year.

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Capital Investment

Capital investment is the money we spend on buying, building and improving assets such as schools and housing. The public receives the benefit from capital investment over a longer period of time than spending on our day-to-day running costs. We spent £33.6 million during the year 2004-2005, and the following table summarises the capital investment made.

Department	Breakdown of Investment (£ million)	Total Investment for Department (£ million)
Education Services		5.0
Improving schools	3.4
Computers and other equipment, school intruder alarms and access adaptations	1.6
Housing Services		14.3
Replacing kitchens	2.0
Replace windows	2.6
Improving wiring	0.9
Removing dry rot, woodworm and asbestos	0.8
Replacing and renewing heating systems	0.8
Other improvements to housing	7.2
Cultural Services		2.0
Sports halls, pavilions and improvements to public buildings	2.0
Environmental Services		3.1
Various, including decontaminating land and extending cemeteries	3.1
Planning and Transport		4.9
Replacing vehicles	1.4
improving roads, lighting and footpaths	1.6
safer streets - traffic, cycling and walking	0.9
Other improvements, including preventing floods	1.0
Social Work		0.9
Care homes for elderly people. Other upgrades	0.9
Corporate		3.4
Set aside for refurbishing our headquarters	2.0
Set aside for our share of the cost of extending the M74	1.4
Total		33.6

Balance Sheet	31 March 2005 £ million
What we own, what we owe and what we are owed
Land, buildings, roads, machinery and vehicles we own	616.9
Stock of materials	1.0
Money we are owed	95.2
Cash due to the bank	-14.2
Money we owe	-177.4
Total	521.5
Financed by:
Borrowing	261.1
Non-distribute reserves (see note 1 below)	213.1
Distributable reserves (see note 2 below)	47.3
Total	521.5
The figure for distribute reserves above is made up of:
General reserves	16.1
Housing reserves	7.6
Capital receipts to be used for capital investments in future years	14.4
Fund for main classes of insurance	2.3
Fund for refurbishing our headquarters building	3.4
Fund for computers and so on in schools	1.1
Fund for our share of the building costs of the M74	2.4
Total	47.3

The general reserves at the end of the year were £16.1 million, of which £9.4 million is set aside for particular purposes. This has been set aside for best-value service reviews, the schools replaced under the Public-Private Partnership, support to Council Tax levels in 2005-2006 and year-end flexibility. This leaves £6.7 million, 2.3% of our yearly running costs or about one week’s spending. It is good practice to set aside general reserves to protect against unexpected risks and costs. This needs to be about 2% of our yearly budget.

Cash Flow	£ million
Cash due to the bank at 31 March 2004	13.4
Add: Cash out	472.5
Less: Cash in	-471.7
Cash due to the bank at 31 March 2005	14.2

Note 1: Non-distirbutable reserves: under UK accounting rules, we must keep several accounting reserve funds. This is part of our accounting for what we spend on capital investment and the value of our assets plus the new rules for accounting for pensions.

Note 2: Distributable reserves: These funds are available to spend on our services.

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Housing account for 2004-2005

The housing account deals mainly with the transactions involved in providing, improving and managing our housing. By law, all spending on these houses must come from rent.

Housing Account for 2004-2005	£ million
Income
Council house rents Other income	38.0 2.6
Total	40.6
Spending:
Repairs and maintenance Supervision and management Capital financing costs Other costs	16.0 6.4 14.4 3.6
Total	40.4
Surplus for the year Housing reserves at the end of March 2004 Housing reserves at the end of March 2005	0.2 7.4 7.6
We owned the following types and numbers of houses at 31 March 2005.
Houses High-rise flats Tenement flats Other flats Maisonettes	3,147 1,249 5,724 4,161 639
Total	14,920

**The number of houses fell by 732, mostly due to tenants buying their homes. There were 810 empty houses at 31 March 2005.

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How has the finance service performed?

Section	Measure	2002-2003	2003-2004	2004-2005
Treasury	Loans fund interest rate	6.30%	6.25%	5.76%
	Average rate for Scotland	6.61%	6.41%	6.14%
Creditor Payments	Value of invoices	£153.1m	£188.6m	£196.1m
	Number of invoicespaid	233,200	246,600	269,400
	% paid within 32 days	81.0%	88.0%	85.0%
	% paid within 32 days (Scottish Average)	82.0%	82.9%	see note below
Payroll Processing	Value	£165.3m	£168.6m	£176.1m
	No. of pays processed	219,000	218,500	222,000
	% correctly processed	98.9%	99.0%	99.1%
Employee Numbers	Total employees of the Council	7,917	7,897	8,018
	Finance Service Employees	243	293	318

**Note: These figures will not be available until January 2006 when Audit Scotland releases its national survey.

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Council Tax Performance

Council Tax	2002-2003	2003-2004	2004-2005
Population of Renfrewshire	176,970	172,867	171,940
Band-D equivalents	65,414	65,527	65,762
Yearly collection - Renfrewshire	93.3%	93.9%	94.2%
Yearly collection - Scotland	91.4%	91.7%	see note below
Number of direct debits	307,296	319,709	331,412
Value of direct debits	£36.8m	£40.5m	£43.7m

**Note: Our collection rates are better than the Scottish average and have improved each year. 94.2% of Council Tax was collected in 2004-2005, compared to 93.9% in 2003-2004 and 93.3% in 2002-2003.

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Financial Management Performance

Financial Management	2002-2003	2003-2004	2004-2005
Annual accounts presented on time	Yes	Yes	Yes
Free from audit qualifications (figures independently confirmed as reliable)	Yes	Yes	Yes

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