The Planning Inspectorate Annual Report and Accounts 2005/06

Section 12 - Financial Statements for year ended 31 March 2006

Operating Cost Statement - For the year ended 31 March 2006

Text only version Operating Cost Statement

Balance Sheet - As at 31 March 2006

Text only version for the Balance Sheet

Katrine Sporle
Chief Executive
29 June 2006

Cash Flow Statement - For the year ended 31 March 2006

Text only version Cash Flow Statement

Notes to the Accounts

1. Statement of accounting policies

The financial statements have been prepared in accordance with the 2005/06 Financial Reporting Manual (FReM) issued by HM Treasury.The accounting policies contained in the FReM follow UK Generally Accepted Accounting Practice for companies (UK GAAP) to the extent that it is meaningful and appropriate to the public sector.Where the FReM permits a choice of accounting policy, the accounting policy which has been judged to be most appropriate to the particular circumstances of the Inspectorate for the purpose of giving a true and fair view has been selected. The Inspectorate’s accounting policies have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of fixed assets at their value to the business by reference to their current costs.

1.2 Tangible fixed assets

Tangible fixed assets are stated at the lower of replacement cost and recoverable amount. On initial recognition they are measured at cost including any costs such as installation directly attributable to bringing them into working condition. All tangible fixed assets are restated at current value each year, using indices published by the Office for National Statistics (ONS) appropriate to the category of asset. In previous years this restatement has included in-house developed software. However, to bring our accounting policies in line with ODPM and to reflect the fact that in-house software is constantly upgraded without additional costs being capitalised, this policy has been reviewed. Consequently the value of in-house software has been revalued at its historic cost. The minimum level for capitalisation of a tangible fixed asset is £3,000, and in the case of minor computer hardware this could be a group of assets. Items falling below this value are charged as an expense and shown in the Operating Cost Statement.

Expenditure on furniture, fixtures and fittings is charged as an expense shown in the Operating Cost Statement.

1.3 Depreciation

Tangible fixed assets are depreciated at rates calculated to write off the assets over their estimated useful lives on a straight-line basis, as follows:

Assets in the course of construction are depreciated from the point at which the asset is brought into use. Software development relates to the in-house development of strategic computer systems, which will assist in the administration of casework and the provision of business information. Costs, including those attributed to individual sub-projects, relating to the early development stages of the project are held on the balance sheet at their historical cost until the project or sub-project becomes operational, after which they are depreciated evenly over five years.

1.4 Operating income

Income is calculated as the value of services provided from the ordinary activities of the Inspectorate completed during a financial year. In the case of Development Plan inquiries, which can span a number of financial years, this includes work completed to an interim stage as well as fully completed inquiries.

1.5 Cost of capital charge

A charge, reflecting the cost of capital utilised by the Inspectorate, is included in operating costs.The charge is calculated at the government’s standard rate of 3.5 per cent in real terms on the average carrying amount of all assets less liabilities.

1.6 Pensions

Past and present employees are covered by the provisions of the Civil Service Pension Scheme (CSPS) the details of which are outlined in note 2.The Inspectorate recognises the expected cost of providing pensions on a systematic and rational basis over the period during which it benefits from employees’ services by payment to the CSPS of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the CSPS.

1.7 Operating leases

Operating lease rentals are charged to the Operating Cost Statement on a straight-line basis over the term of the lease.

1.8 Provisions

The Inspectorate provides for legal or constructive obligations which are of uncertain timing or amount at the balance sheet date on the basis of the best estimate of the expenditure required to settle the obligation.

1.9 Value Added Tax

Most of the activities of the Inspectorate are outside the scope of VAT and in general output tax does not apply and input tax on purchases is not recoverable, other than under the terms of the Treasury Direction under Section 41(3) Value Added Tax Act (VATA) 1994. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets.Where output tax is charged or input VAT is recoverable the amounts are stated net of VAT.
The Inspectorate is not separately registered for VAT but operates under the Office of the Deputy Prime Minister (ODPM) VAT registration.

1.10 Notional costs

In accordance with the Treasury Guide to Fees and Charges, notional costs at the appropriate rate are included for audit fees and for services provided by ODPM.

1.11 Early departure costs

Under arrangements in force up to 31 March 1997, 20% of the cost of early departures was normally borne by the Inspectorate and the remaining 80% was met centrally from the Civil Superannuation Vote. For departure decisions after that date, the full cost is borne by the Inspectorate.

Government policy is to include the full cost of an Agency’s activities in its accounts even where, as in this case, some of these costs are borne elsewhere in Government. Normal accounting practice is to provide for the full cost of early departure of employees in the year in which the early departure decision is made.The element borne by the Inspectorate is charged to the Operating Cost Statement straight away and taken to a provision on the Balance Sheet. For more details please refer to note 9.

1.12 Deemed Planning Applications

The fees paid by appellants for consideration of a deemed planning application are disclosed in the Balance Sheet as a debtor and creditor until the appeal is determined, when the fee is either returned to the appellant or paid over as a Consolidated Fund Extra Receipt (CFER) (see note 19).

2. Staff numbers and costs

Text only version of the table and text above

Pension

Pension benefits are provided through the CSPS arrangements. From 1 October 2002, civil servants may be in one of three statutory based ‘final salary’ defined benefit schemes (classic, premium, and classic plus).The schemes are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, and classic plus are increased annually in line with changes in the Retail Prices Index. New entrants after 1 October 2002 may choose between membership of premium or joining a good quality ‘money purchase’ stakeholder arrangement with a significant employer contribution (partnership pension account).

Employee contributions are set at the rate of 1.5% of pensionable earnings for classic and 3.5% for premium and classic plus. Benefits in classic accrue at the rate of 1/80th of pensionable salary for each year of service. In addition, a lump sum equivalent to three years’ pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum (but members may give up (commute) some of their pension to provide a lump sum), classic plus is essentially a variation of premium, but with benefits in respect of service before 1 October 2002 calculated broadly as per classic.

The partnership pension account is a stakeholder pension arrangement.The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee.The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

Further details about the CSPS arrangements can be found at the website www.civilservice-pensions.gov.uk

The Remuneration Report contains details of the member’s Cash Equivalent Transfer Value (CETV) accrued at the end of the reporting period together with the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors.

A CETV is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time.The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme.The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.The CETV figures, and from 2003/04 the other pension details, include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the CSPS arrangements and for which the CS Vote has received a transfer payment commensurate to the additional pension liabilities being assumed.They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries.

3. Other administration costs

Text only Version Other administration costs

* ODPM charges include accounting services and internal audit services.
** The notional audit fee is in respect of the National Audit Office’s annual certification audit of the Inspectorate’s financial statements.There was no remuneration due for non-audit work.

4. Operating income (see also note 1.4)

Text only version for the Operating Costs

Unit cost is based on the full cost of inspector time plus an apportionment for the business overheads. During the financial year two factors have required the Inspectorate to redefine the apportionment basis and develop a revised costing model; the restructuring of the Inspectorate at the beginning of the financial year and the move to the Local Development Frameworks (LDFs) which have replaced the Local Plans.This revision has demonstrated that full cost recovery has not been achieved and a submission has been made to the Minister to amend the recharging rate set in the Statutory Instrument. Due to the restructuring it has not been possible to restate the unit cost figures for 2004/05 using the 2005/06 costing model basis.

Continued on next page

---

Accessibility | Contact Us | Privacy Statement | Site Feedback | Site Map | Planning Portal | Directgov | Gov news | Crown Copyright © 2004

---