The Authority has incurred the following costs in relation to the audit of the Statement of Accounts, certification of grant claims and statutory inspections and to non-audit services, provided by the Authority's External Auditors Ernst and Young LLP.

¹ The additional fees determined by the PSAA for the 2020/21 audit were £112k (2019/20 £103k). £67k of this 2020/21 amount (and £75k of the 2019/20 amount) have been accrued in prior years, leaving £45k for 2020/21 (and £28k for 2019/20) in the 2021/22 column.

2 Ernst & Young previously planned to request additional fees of £73k in respect of professional and regulatory requirements (risk) for the 2021/22 audit. However, this is now expected to be higher and so an estimate has been made of £100k. Any amount they request in respect of this will be subject to approval by the PSAA.

Note 32.1 Officers' Remuneration

Senior officers with a salary of more than £150,000 are required to be disclosed by name and title; those with a salary of less than £150,000 are disclosed by title only. For Bexley, the senior officers disclosed below are the Corporate Leadership Team, the Director of Public Health and the statutory Monitoring Officer - in Bexley, this is the Deputy Director of Corporate Services.

* 2020/21 figures above have been restated to exclude Employer’s National Insurance contributions that were previously included in error in the 2020/21 Statement of Accounts.

Note 32.2 Remuneration Bands

The number of Council employees (including teachers) whose remuneration was £50,000 or more in bands of £5,000 is shown below, split between schools and other staff. Remuneration includes all taxable sums paid to or received by an employee. Payments include salary (including performance-related pay), redundancy, expenses and other benefits received other than in cash (e.g. leased car benefit), excluding pension contributions. The figures also exclude voluntary aided schools whose staff are not employed by the London Borough of Bexley. The Chief Executive, Directors and the Monitoring Officer have been excluded from the table below since they are shown separately in the next table in this note.

* Figures for 2020/21 have been restated to be based on Gross Pay rather than Taxable Pay. The 2020/21 Statement of Accounts had figures based on classifying remuneration into bands based on taxable pay (for most employees this would be gross pay less employee pension contribution). There has also been an adjustment in the banding where amount paid for consultancy fees to a person who then became an employee before the end of the financial year is now included in the determination of the proper band.

Some people whose remuneration would have otherwise been below £50,000 are included in the above bands because of redundancy payments (2 in 2021/22, 5 in 2020/21).

Note 32.3 Exit Packages

The numbers of exit packages with a total cost per band and total cost of the compulsory and other redundancies are set out in the table below:

The Authority's expenditure on Schools is funded primarily by the Dedicated Schools Grant (DSG). The DSG allocation is calculated on a pupils based formulae. An element of DSG is recouped by the department to fund academy schools in the area. The Central element of the Schools Budget covers local authority expenditure on high needs, early years, pupil-related revenue costs arising from schools expansion and certain specified central services. DSG is ring-fenced and can only be applied to meet expenditure properly included in the Schools Budget. Details outlining the deployment of DSG received for 2020/21 and 2021/22 are as follows:

* The 2020/21 figures above have been restated to include a £161k adjustment relating to the Early Years Block of DSG for 2020/21 announced in July 2021.

Other long term liabilities are made up of the following items.

The Council is required to disclose material transactions with related parties, bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party's ability to bargain freely with the Council.

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

The Council has prepared this disclosure in accordance with its interpretation and understanding of IAS 24 and its applicability to the public sector utilising current advice and guidance.

Related party transactions that need to be disclosed are those where a Council Member or senior officer has control over one party to the transaction and significant influence over the other. For Bexley, the only Council Members that would have control over one party to a transaction would be the Members of the Cabinet. This also applies to senior officers. The transactions in the table below have been identified for 2021/22. In addition, there are separate disclosures elsewhere within the accounts for senior officer remuneration and members’ allowances.

Some of the appointments listed below continue throughout 2021/22. The declaration of a related party transaction does not imply any personal involvement of the Councillors and officers shown below. Transactions between the London Borough of Bexley and other organisations that total less than £10k in the year are not included in this note.

Members

The following Members held positions of control or significant influence in related parties to the Council during 2021/22:

• Councillor Teresa O’Neill OBE is the Vice-Chair of the London Government Association and a board member of Homes England
• Councillor David Leaf is the Vic-Chair of the London Council Grants Committee, an LGA Resources Board member and the Chairman of the Eltham Crematorium Committee
• Councillor Louie French is a Director of the Bexleyheath Business Partnership Limited
• Councillor Val Clark is a Director of the Engine House
• Councillor Daniel Francis is a Director of the Belvedere Community Forum
• Councillor Sally Hinkley is a Director of the Belvedere Community Centre and Trustee & Treasurer of St Augustines pre-school
• Councillor Peter Reader is a Director of the Engine House
• Councillor Brian Bishop is a Director of the Engine House
• Councillor John Davey is Chairman of the Bexley Arts Trust, Chair of Governors of Bedonwell School, and a Governor of Barrington School
• Councillor James Hunt is a Non-executive Director of Bird College and Vice-Chair of Bexley Scouts

Council Officers

No Council Officer held positions of control or significant influence in related parties to the Council during 2021/22.
 

Creditors relating to BexleyCo Ltd were £338k at 31 March 2022. The BexleyCo Ltd Debtors of £5,929k shown above includes £205k of shareholder loan which is held in Long Term Investments in the Balance Sheet.

Engine House Bexley Limited (Formerly Thames Innovation Centre -TIC)

The Engine House is a not-for-profit local Council controlled company that commenced trading at the end of 2006. The London Borough of Bexley has made a loan to TIC of £450k as of 31 March 2018 under a loan agreement dated 14 March 2007. No interest will be charged within the initial ten year period from the date of the agreement.

Under a service level agreement dated 29 March 2007, the Council is entitled to reasonable free use of TIC’s facilities.

Furniture and equipment valued at £432k were transferred from the Council to TIC on 29 March 2007. These assets will revert back to the Council at the end of the service level agreement on 31 March 2027. There is a further loan agreement dated 10 February 2010 between the London Borough of Bexley and TIC, providing up to £60k for TIC to undertake internal works to convert two existing offices into six smaller offices. Interest will be charged at 0.5% above the Public Works Loan Board 10 year annuity rate.

As of 31 March 2022, the amount outstanding on the loan facilities was £450k plus accrued interest of £53k.

BexleyCo Limited

BexleyCo Limited is a development and regeneration company that was incorporated by the Council in June 2017. It is a company limited by shares with the Council as the sole shareholder. Its primary activity will contribute to the Councils regeneration and commercialism agenda by purchasing and developing real estate.

The Company’s Business Plan sets out the aims and objectives of the Company, its structure and key activities. This second Business Plan introduces diversification to both maximise the return and deliver it within a reduced timescale to the Council. The central aim of securing a strong delivery vehicle for housing and other development activity remains.

As of the 31 of March 2022, the council had made loans to Bexley Co of £2,533k for development at Sargasso House, £7,513k for development at Old Farm Place and £410k for development at Sedgemere Road. £5,000k of the loan for Old Farm Place has been repaid in 2021/22. The outstanding balance of loans and interest is £6k. In addition to this, the sum of £7k was included in trade debtors as amounts due from BexleyCo.

The latest draft accounts for BexleyCo as of 31 March 2022, showed a net profit of £1,300k (£218k loss in 2020/21) and a net assets balance of £8,866k (£6,281k net liability balance in 2020/21).

Central Government

The Council received a number of grants - both revenue and capital - from the Central Government. Further details of these are given in Note 13.

London Borough of Bexley Pension Fund

The Council recharged £377k to the Pension Fund in 2021/22 (£363k in 2020/21) for administration costs. The Director of Finance & Corporate Services for London Borough of Bexley allocates 5% of their time to the Pension Fund. During the year, no Council Members or designated officers have undertaken any declarable transactions with the Pension Fund.

The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under finance leases and PFI contracts), together with the resources that have been used to finance it. Where the capital expenditure is to be financed in future years by charges to revenue as assets are used by the Council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Council that has yet to be financed. The CFR is analysed in the second part of this note.

Council as Lessor
Finance Leases

The Council has leased out four properties, Welling United Football Club ground, Erith Shopping Centre, Bexleyheath Bowling Centre and Whitehall Lane.

The Council has a gross investment in the lease, made up of minimum lease payments expected to be received over the remaining term. The minimum lease payments comprise settlement of the long-term receivable for the interest in the property acquired by the lessee and finance income earned by the Council.

Operating Leases

The future minimum lease payments due under non-cancellable leases in future years are set out below:

Council as Lessee
Finance Leases

The Council leases 49 vehicles for waste collection and recycling from Countrystyle, the contract is due to last until March 2031. The following information presents the minimum lease payments due and the balance of outstanding liabilities as of the year-end.

The future minimum lease payments due under non-cancellable leases in future years are:

The Council has contracted with Investors in the Community (IIC) for the redevelopment and facilities management of Welling and Bexleyheath academies to provide education services for Bexley pupils. Annual payments commenced during 2005/06 for 25 years and are currently £6,403k, of which 55% will increase annually in line with RPIX and 45% is fixed. They can also vary as a result of performance and availability deductions, benchmarking, certain changes in law and contract variations initiated by the Council. Renewal and termination options and other rights and obligations are available to the Council under the terms of the agreement. The costs are being met from the annual PFI grant provided by the government of £3,056k together with academy contributions and other school budgets approved by the Council.

The Council has also contracted with Parkwood Leisure for the redevelopment and operation of its sports and swimming centres, including both routine and lifecycle building maintenance. The annual payments (the unitary charge) are currently £2,673k, which are inflated by 3% each year. These payments commenced during 2005/06 and are payable over 30 years. They can vary as a result of performance and availability deductions, certain changes in law and contract variations initiated by the Council. In addition, the operational services are benchmarked every five years and at a future benchmarking date (2020 or later) may be market-tested. At July 2010 benchmarking, it was agreed no change would be made to the unitary charge and in July 2015 a unitary charge reduction of £300k per annum was agreed. The costs are being met from budgets approved by the Council. At the end of the contract term, which is fixed, all the facilities return to the Council for nil consideration.

The associated unitary charges are now separated into three elements: service charge, repayment of the liability and interest, which are met from the Council’s revenue account. The PFI payments are due to be made for the next 10 years until 2031. The PPP payments will be made for the next 15 years until 2036. An analysis of the payments in 2020/21 and 2021/22 is shown in the table below:

The Council 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 which is otherwise fixed. Payments remaining to be made under the PFI contracts at 31 March (excluding any estimation of inflation and availability performance) and PPP contracts, which have been uplifted annually by 3% as per the contract are shown below:

Teachers employed by the Council are members of the Teachers’ Pension Scheme, administered by Capita Teachers’ Pension on behalf of the Department for Education. The Scheme provides teachers with specified benefits upon their retirement, and the Council contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries.

The scheme is a multi-employer defined benefit scheme. The scheme is unfunded and the Department for Education uses a notional fund as the basis for calculating the employers’ contribution rate paid by local authorities. Valuations of the notional fund are undertaken every four years.

The scheme has in excess of 7,700 participating employers and consequently, the Council is not able to identify its share of the underlying financial position and performance of the scheme with sufficient reliability for accounting purposes. For the purposes of this Statement of Accounts, it is therefore accounted for on the same basis as a defined contribution scheme.

In 2021/22 the Council paid £4,774k (2020/21 £3,374k) to Teachers’ Pensions in respect of teachers’ retirement benefits, representing 33.1% of contributory Salary of £14,407k. There were no contributions remaining payable at the year-end.

The Council is responsible for the costs of any additional benefits awarded upon early retirement outside of the terms of the teachers’ scheme. These costs are accounted for on a defined benefit basis and detailed in Note 41. The Council is not liable to the scheme for any other entities’ obligations under the plan.

There are also some staff who are members of the National Health Service Superannuation Scheme administered by the Department of Health. This scheme is also an unfunded multi-employer defined benefit scheme. In the NHS, the scheme is accounted for as if it were a defined contribution scheme.

Participation in Pension Schemes

As part of the terms and conditions of employment of its officers, the Council makes contributions towards the cost of post-employment benefits. Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments (for those benefits) and to disclose them at the time that employees earn their future entitlement.

The Council participates in two post-employment schemes - The Local Government Pension Scheme and the London Borough of Bexley Scheme.

• The Local Government Pension Scheme (LGPS), administered locally by the Council - this is a funded defined benefit final salary scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets.
  The London Borough of Bexley pension scheme is operated under the regulatory framework for the Local Government Pension Scheme and the governance of the scheme is the responsibility of the Pensions Committee of the London Borough of Bexley. The policy is determined in accordance with the Pension Fund Regulations.
  The principal risks to the Council of the scheme are the longevity assumptions, statutory changes to the scheme, structural changes to the scheme (i.e. large-scale withdrawals from the scheme), changes to inflation, bond yields and the performance of the equity investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge to the General Fund the amounts required by statute as described in the accounting policies note.
• Arrangements for the award of discretionary post-retirement benefits upon early retirement - this is an unfunded defined benefit arrangement, under which liabilities are recognised when awards are made. However, there are no investment assets built up to meet these pensions liabilities, and cash has to be generated to meet actual pensions payments as they eventually fall due.

Discretionary Post-retirement Benefits

Discretionary post-retirement benefits on early retirement are an unfunded defined benefit arrangement, under which liabilities are recognised when awards are made. There are no plan assets built up to meet these pension liabilities.

Transactions Relating to Post-employment Benefits

The Council recognises 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 the Council is 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 transactions in the table below have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year.

Eltham Crematorium

When Eltham Crematorium was devolved, the sum of £834k was incorporated in Bexley balance sheet to recognise a historic liability obligation in respect of Eltham Crematorium pension fund.

London Pension Fund Association

When the Greater London Council was disbanded, Bexley was allocated 1.23% of the fund which currently represents a liability of £324k. There are now 2 members remaining on this scheme.

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

40.1 Balance Sheet Pension Fund Schemes

40.2 Comprehensive Income & Expenditure Statement

* 2020/21 figures for Actuarial Gains & Losses Arising on Changes in Financial Assumptions and Experience (Gain)/Loss on defined benefit obligation have been restated. They were previously amalgamated into the first of these two lines and are now separated out.

40.3 LGPS Pension Assets and Liabilities Recognised in the Balance Sheet

40.4 Reconciliation of the movements in the current value of scheme (plan) assets & liabilities

40.5 Local Government Pension Scheme assets comprised:

40.6 Assumptions and Sensitivity

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. Under the projected unit method the current service cost will increase as members of the scheme approach retirement (where there is an increase in the age profile of the active membership). Both the Local Government Pension Scheme and Discretionary Benefits liabilities have been assessed by Mercer Ltd, an independent firm of actuaries, estimates for the Council Fund being based on the latest full valuation of the scheme as of 31 March 2022.

The principal assumptions used by the actuary have been:

The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the table above. The sensitivity analysis below has been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and assumes for each change that the assumption analysed changes while all the other assumptions remain constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the scheme, i.e. on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period.

Impact on the Council’s Cash Flows

The objectives of the scheme are to keep employers’ contributions at as constant a rate as possible, subject to the administering Council not taking undue risk. The most recent valuation of the Fund took place as of 31 March 2022. This showed that the Fund is 114% funded. The next triennial valuation is due to be as of 31 March 2025. This will be completed in 2025/26.

There were national changes to the scheme under the Public Pensions Services Act 2013. The Act provides for scheme regulations to be made within a common framework, to establish new career average revalued earnings schemes to pay pensions and other benefits to certain public servants. The new scheme for local government was set out in the LGPS Regulations 2013.

The total contributions expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2022 is £10,076k (£8,053k in 2020/21). This includes expected contributions for the Discretionary Benefits scheme in the year to 31 March 2022 of £571k (£580k in 2020/21).

The weighted average duration of the defined benefit obligation for scheme members is 16 years at 31 March 2022 (15 years at 31 March 2019).

There are no material contingent Liabilities to report.

There are no material contingent assets to report.