Skip to content Quick exit
REPORT CRIME ONLINEEMERGENCY CALL 999
REPORT CRIME ONLINEEMERGENCY CALL 999

Back to part one of the statement of accounts - Chief Constable - 2020-2021

Notes to the statements of accounts 2020/21

Note 1 - General accounting policies 

Where possible accounting policies have been shown alongside relevant notes to the accounts.  There are, however, a number of overarching accounting policies that apply more broadly which are set-out here: 

General principles 

The Chief Constable, PCC and Group have adopted a common set of accounting principles. Only those principles directly applicable to the Chief Constable’s Accounts are shown below.  A full set of Group Principles is disclosed within the Group / PCC Accounts. 

The Statement of Accounts summarises the Chief Constable’s transactions for the 2020/21 financial year and its position at the year-end of 31 March 2021.  The Chief Constable is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011, which these regulations require to be prepared in accordance with proper accounting practices.  These practices primarily comprise of the Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 published by CIPFA, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 21(2) of the Local Government Act 2003. 

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. 

Accruals 

Estimation techniques are the methods adopted by the Chief Constable to arrive at the estimated monetary amounts, corresponding to the measurement bases selected for assets, liabilities, gains, losses and changes in reserves.  The policies are therefore set to specify the basis on which an item will be measured: where there is uncertainty over how to measure this, the amount has been arrived at using an estimation or accrual technique.

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received.  The Chief Constable’s Balance Sheet holds debtors and creditors relating to the provision of policing services.  In particular: 

  • Revenue from the provision of goods or services is recognised in line with IFRS15.
  • Supplies and services (including services provided by employees) are recorded as expenditure when they are consumed or the services are received.
  • Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet.  Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.
  • The actual cost of employees and police officers is recorded in the accounts.  Accruals are made for the payment of police overtime, pension and tax liabilities based on the actual March payments and included as creditors on the Balance Sheet. 

Cash and cash equivalents 

Whilst the Chief Constable does not hold a bank account, cash is expended at his request as resources are consumed and a share of working capital and provisions are included within his Balance Sheet.  A Cash Flow statement has therefore been prepared to reconcile the Net Surplus or Deficit on the Provision of Services to Cash and Cash Equivalents held at the end of the reporting period. 

Items not included in the Chief Constable’s accounts 

As outlined in Note 4, all capital balances and transactions are disclosed in the PCC’s accounts. As such, the following items are not included in the Chief Constable’s accounts; 

  • Capital Expenditure & Receipts
  • Charges to Revenue for Non-Current Assets
  • Disposals and Non-current Assets Held for Sale
  • Intangible Assets
  • Investments
  • Property, Plant and Equipment
  • Usable Reserves 

Revenue recognition 

The Chief Constable accounts for revenue recognition in accordance with IFRS 15.  This applies to the accounting for revenue arising from the sale of goods and services. 

Any income received under contract is recognised in accordance with the performance obligations in the contract. 

Revenue is recognised and measured at fair value of the consideration received or receivable except for financial assets otherwise measured as financial instruments.  Revenue is recognised when performance obligations have been met.  Where there are doubts as to the collectability of an amount already included in revenue an impairment expense is recognised rather than an adjustment made to the revenue already recognised in the Comprehensive Income and Expenditure Statement. 

Unusable reserves 

The Chief Constable’s Accounts contain only unusable reserves required to manage the accounting processes for retirement and employee benefits.  These reserves do not represent usable resources for the Chief Constable and are explained in the relevant policies. 

VAT 

VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty's Revenue and Customs. VAT receivable is excluded from income.

Note 2 - Changes in accounting policies 

There have been no significant changes in accounting policies since 2019/20.  

Note 3 - Accounting standards that have been issued but not yet adopted 

The following sets out amendments to accounting standards or new accounting standards that have been issued but will not be adopted by the Code until 2021/22. 

  • Definition of a Business: Amendments to IFRS 3 Business Combinations
  • Interest Rate Benchmark Reform: Amendments to IFRS 9, IAS 39 and IFRS 7
  • Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.

These amendments to International Financial Reporting Standards are not expected to have any material impact on the accounts.

Note 4 - Critical judgements in applying accounting policies 

In applying the accounting policies, the Chief Constable has had to make certain judgements about complex transactions or those involving uncertainty about future events.  Critical judgements made in the Statement of Accounts for 2020/21 are: 

a)    Allocation of transactions, benefits and liabilities between the Accounts of the Chief Constable and PCC 

A key critical judgement is the allocation of transactions and balances between the accounts of the PCC and those of the Chief Constable.  The adopted allocation of expense, income and balances is set-out in the following table:

Critical judgements in applying accounting policies

Group CI&E

Chief Constable’s CI&E

 

PCC's CI&E

Cost of Service

 

Cost of Service

-  Employee Cost of Officers & Staff under the direction & control of the Chief Constable

 

- OPCC Domestic Budget

- Commissioning Spend

- Support from Chief Constable Staff

- Policing Service Non-Pay Expenditure

 

- IAS19 Current Cost Pension Charges

- IAS19 Current Cost Pension Charges

- Accumulated Absences Accruals

 

- Capital Charges Depreciation & Impairment

- Pension Fund Top-Up Payment

 

- Specific Grants relating to the PCC

- Income from Fees and Charges

   

- Specific Grants relating policing services

 

 

Other Operating Expenditure

 

Other Operating Expenditure

   

- Surplus/Deficit on disposal of non-current assets

- Pension Top-Up Grant Income

Financing & Investment

 

Financing & Investment

- IAS19 Pension Net Interest

 

- IAS19 Pension Net Interest

- Capital Financing and Interest on Balances

Critical judgements in applying accounting policies

Taxation and Non-Specific Grants

 

Taxation and Non-Specific Grants

   

- Settlement Funding

 

 

- Accounting for Council tax

Intra Entity Transfer

 

Intra Entity Transfer

- Transfer of funding from the PCC

 

- Transfer of funding to the CC

 

Critical judgements in applying accounting policies

Movement in Reserves Statement

 

Movement in Reserves Statement

 

 

- Revenue Contributions to Capital

 

 

- Minimum Revenue Provision

 

Group balance sheet

Group Balance Sheet

 

 

 

Chief Constable’s Balance Sheet

 

PCC's Balance Sheet

Net Assets

 

Net Assets

- Working Capital (CC Share)

 

- Non-Current Assets

- Provisions

 

- Working Capital (PCC Share)

- Accumulated Absences Liability

 

- Investments

- IAS19 Pensions Liability

 

- Cash & Cash Equivalents

 

 

- IAS19 Pensions Liability

 

 

- Provisions

 

 

- Long Term Borrowing

Reserves

 

Reserves

- Accumulated Absences Reserve

 

- Revaluation Reserve

- IAS19 Pensions Reserve

 

- IAS19 Pensions Reserve

 

 

- Capital Adjustments Reserve

 

 

- Useable Capital Receipts Reserve

 

 

- Specific Reserves

 

 

- Police Fund

The Scheme of Governance set-outs that strategic control; ultimately the overarching responsibility for setting the Police and Crime Plan, holding the Chief Constable accountable for the delivery of an efficient and effective police force and the responsibility for the appointment and dismissal of the Chief Constable, is exercised by the PCC.  As such, the Accounts of the PCC contain not only the direct costs of his office but also the cost of funding the activities of the Chief Constable and the capital accounting transactions and balances associated with his control over the strategic non-current assets such as Land and Buildings as well as all cash backed reserves. 

The Chief Constable has daily direction and control over all police officers and a great majority of police staff, therefore his Accounts contain the direct cost of employment as well as associated IAS19 transactions and balances associated with his staff. 

Stage 2 of the transfer of Staff and Assets required under the Police Reform and Social Responsibility Act 2011 was made on the 1 April 2014.  From that date, employment of staff under the direction and control of the Chief Constable transferred to him from the PCC.  In addition, a new scheme of governance was introduced to reflect the revised arrangements which set out the consents under which the Chief Constable will operate in the future.  The impact of these changes has been limited to the exclusion of IAS19 transactions relating to police staff employed by the PCC from the Chief Constable’s Accounts. 

a) Collaborative Activities - The Chief Constable participates in a wide range of joint activities with other forces. During 2020/21, these were primarily with Bedfordshire Police and Cambridgeshire Constabulary, to a lesser extent with Thames Valley Police as well as Eastern Region forces.  Details of these arrangements as set out in note 19.  The Chief Constable deems these arrangements to be jointly co-controlled operations in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom and consequently the Statement of Accounts and the accounting statements only reflect Hertfordshire’s share of the associated financial transactions and balances. 

b) IAS19 Estimation of Pension Liabilities – In response to the outcome of the McCloud case and the subsequent statement by government regarding its intention to respond, an estimate of additional pension liabilities has been reflected in the IAS19 calculation. IAS19 requires an entity to measure its defined benefit obligations on a basis that reflects: the benefits set out in the terms of the plan (or resulting from any constructive obligation that goes beyond those terms) at the end of the reporting period. This approach has been applied to ensure that the accounts show a true and fair view of the pension liability as at 31 March 2021. Further details can be found in note 21. 

c) In allocating balances between the PCC and Chief Constable accounts, the Home Office debtor for pension top-up grant due of £5.072m has been included in full in the PCC’s accounts. 

d) GMP equalisation and indexation. A past service cost was recognised in 2017/18 reflecting a previous extension of the interim solution regarding guaranteed minimum pension (“GMP”) indexation, which was announced by HMT in January 2018. Members of public service pension schemes with GMP entitlements who reach State Pension age on or after 6 December 2018 and before 6 April 2021 are covered by this previous extension of the interim solution. 

The High Court published its judgment in the Lloyds Banking Group case on the equalisation of GMP that pensions must be equalised for the effects of unequal GMP and the Government has committed to addressing GMP equalisation. Following discussions through the Finance Working Group covering most public service pension schemes, there was general consensus that a past service cost was required during 2019/20 in respect of the additional liabilities in respect of members reaching State Pension age after 6 April 2021, which were included in the 2019/20 accounts.

Note 5 - Assumptions made about the future and other major sources of estimation uncertainty 

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for the revenues and expenses during the year.  However, the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year areas follows:

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

Item

Uncertainties

Effect if Actual Results Differ from Assumptions

Pensions Liability

Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. Actuaries are engaged to provide the Chief Constable with expert advice about the assumptions to be applied

Note 38 sets out the sensitivity of the defined pension benefit obligation to significant actuarial assumptions including the impact of adjusting results for the McCloud and Sargeant pension challenges.

 

Note 6 - Events after the balance sheet date 

Accounting policy 

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified: 

  • Those that provide evidence of conditions that existed at the end of the reporting period.  The Statement of Accounts is adjusted to reflect such events.
  • Those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect. 

There are no such events for 2020/21. 

Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. This is the date at which the CFO signs the audited statement of accounts which this year must be no later than 30 September 2021, extended due to the ongoing disruption resulting from the COVID-19 Pandemic.

Note 7 - Expenditure and income analysed by nature 

The Chief Constable’s expenditure and income is analysed as follows:

Expenditure and income analysed by nature

 

2019/20 £’000

2020/21 £’000

Fees Charges and Other Service Income

-8,577

-8,310

Government Grants and Contributions

-3,563

-6,855

Employee Benefit Expenses

214,815

228,895

Other Service Expenses

33,140

34,013

Interest Payments

46,055

44,638

PCC funding To CC for financial resources consumed

-220,774

-227,141

(Surplus) or Deficit on the Provision of Services

61,096

65,240

Note 8 - Expenditure and funding analysis 2020/21 

The PCC provides a segmental report in the notes to the financial statements together with supporting details and a reconciliation to the Comprehensive Income and Expenditure Statement. The segments mirror the PCC’s internal reporting arrangements for reporting at a service level on its budget requirements and monitoring against the approved budget.

The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants and council tax) by the Chief Constable in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices.  It also shows how this expenditure is allocated for decision making purposes across the Chief Constable’s reporting structure.  Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.

Expenditure and funding analysis

Expenditure and funding analysis

2019/20

 

2020/21

Net Expenditure in the CIES*

Adjustments between the Accounting and Funding basis

Net Expenditure Chargeable to the General Fund

 

Net Expenditure in the CIES*

Adjustments between the Accounting and Funding basis

Net Expenditure Chargeable to the General Fund

£’000

£’000

£’000

 

£’000

£’000

£’000

124,794

-16,782

108,012

Local Policing

135,083

-18,686

116,397

29,615

-4,514

25,101

Protective Services

31,458

-4,778

26,680

28,516

-3,773

24,743

Operational Support

40,820

-5,845

34,975

44,581

-6,167

38,414

Organisational Support

35,504

-5,059

30,445

8,309

1,615

9,924

Corporate Budgets

4,878

1,905

6,783

-

-

-

Past Service Pension Costs

-

-

-

-

-

-

One-Off Constabulary Spend

-

-

-

235,815

-29,621

206,194

Cost of Services

247,743

-32,463

215,280

-174,719

-31,475

-206,194

Other Operating Expenditure

-182,503

-32,777

-215,280

61,096

-61,096

0

(Surplus) or Deficit on

the Provision of Services

65,240

-65,240

0

 

-

Opening General Fund

 

-

-

Less Surplus / Plus (Deficit) on the General Fund for the Year

-

 

0

Closing General Fund

 

0

* Comprehensive Income and Expenditure Statement

Note to the expenditure and funding analysis - adjustment between accounting and funding basis

Note to the expenditure and funding analysis - adjustment between accounting and funding basis

2019/20

Adjustment for Capital Purposes

£’000

Net Change for the Pensions Adjustments

£’000

Other Differences

 

£’000

Total Adjustments

 

£’000

Local Policing

-

-16,578

-204

-16,782

Protective Services

-

-4,519

5

-4,514

Operational Support

-

-3,777

4

-3,773

Organisational Support

-

-6,174

7

-6,167

Corporate Budgets

1,038

-

577

1,615

Past Service Pension Costs

-

-

-

0

One-Off Constabulary Spend

-

-

-

0

Cost of Services

1,038

-31,048

389

-29,621

Other Operating Expenditure

-1,038

-30,081

-356

-31,475

(Surplus) or Deficit on

the Provision of Services

0

-61,129

33

-61,096

Note to the expenditure and funding analysis - adjustment between accounting and funding basis

2020/21

Adjustment for Capital Purposes

£’000

Net Change for the Pensions Adjustments

£’000

Other Differences

 

£’000

Total Adjustments

 

£’000

Local Policing

-

-17,201

-1,485

-18,686

Protective Services

-

-4,444

-334

-4,778

Operational Support

-

-5,437

-408

-5,845

Organisational Support

-

-4,706

-353

-5,059

Corporate Budgets

1,198

-

707

1,905

Past Service Pension Costs

-

-

-

0

One-Off Constabulary Spend

-

-

-

0

Cost of Services

1,198

-31,788

-1,873

-32,463

Other Operating Expenditure

-1,198

-31,065

-514

-32,777

(Surplus) or Deficit on

the Provision of Services

0

-62,853

-2,387

-65,240

Note 9 - Adjustments between accounting basis and funding basis under regulations 

This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the PCC in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the PCC to meet future capital and revenue expenditure.

Adjustments between accounting basis and funding basis under regulations

2019/20

Police Fund Balance

£’000

Capital Receipts Reserve

£’000

Capital Grants Unapplied

£’000

Unusable Reserves

 

£’000

Adjustments primarily involving the Pensions Reserve:

 

 

 

 

Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement (see note 21)

110,301

-

-

-110,301

Employer's pensions contributions and direct payments to pensioners payable in the year

-49,173

-

-

49,173

Adjustment primarily involving the Accumulated Absences Account:

 

 

 

 

Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

-33

-

-

33

Total Adjustments

61,095

0

0

-61,095

Adjustments between accounting basis and funding basis under regulations

2020/21

Police Fund Balance

£’000

Capital Receipts Reserve

£’000

Capital Grants Unapplied

£’000

Unusable Reserves

 

£’000

Adjustments primarily involving the Pensions Reserve:

 

 

 

 

Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement (see note 21)

112,852

-

-

-112,852

Employer's pensions contributions and direct payments to pensioners payable in the year

-49,999

-

-

49,999

Adjustment primarily involving the Accumulated Absences Account:

 

 

 

 

Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

2,387

-

-

-2,387

Total Adjustments

65,240

0

0

-65,240

Note 10 - Financing and investment income and expenditure 

Financing and investment income and expenditure

 

2019/20

£’000

2020/21

£’000

Net interest on the net defined liability

46,055

44,638

Total

46,055

44,638

Note 11 - Police and Crime Commissioner funding for financial resources consumed 

The Comprehensive Income and Expenditure Statement summarises the financial resources that have been generated and consumed in providing policing and crime reduction services during the year.  It includes all day to day expenses and related income on an accruals basis, as well as transactions measuring the value of fixed assets actually consumed and the real projected value of retirement benefits earned by employees in the year. 

The Police and Crime Commissioner provided funding to the Chief Constable for financial resources consumed.  The funding provided covers the day to expenses on an accruals basis as well as charges for operational assets consumed in the year.  These transactions are reflected in the intra-group accounts of both entities. 

The funding does not cover pension (IAS 19) charges and charges for compensated absences as these charges to the Comprehensive Income and Expenditure Statement are reversed in the Movement in Reserves Statement and charged to the Pensions Reserve and Accumulated Absences Account resulting.

Police and Crime Commissioner funding for financial resources consumed

 

2019/20

£’000

2020/21

£’000

Cost of Service

235,815

247,743

Pensions interest cost

46,055

44,638

Re-measurement of the net defined benefit liability

-220,300

179,522

CI&E Statement (Surplus) Deficit Pre-PCC Funding

61,570

471,903

 

 

 

Items Removed through MIRS

 

 

Pensions

 

 

Opening Balance

2,133,167

1,973,995

Less Closing Balance

-1,973,995

-2,216,370

 

159,171

-242,375

Accumulated Absences

 

 

Opening Balance

2,424

2,391

Less Closing Balance

-2,391

-4,778

 

33

-2,387

Police and Crime Commissioner Funding for Resources Consumed

220,774

227,141

Note 12 - Short-term debtors 

The following table provides an analysis of money owed to the Chief Constable by debtors: 

Short-term debtors

 

31 March 2020

£’000

31 March 2021

£’000

Net Trade Debtors

542

927

Year End Accruals

14,424

13,766

Grant & Partner Contributions Due

127

-

VAT Refund

1,540

802

Payments in Advance

5,174

1,685

Payroll Debtor

2

1

Total

21,809

17,181

All outstanding debts are reviewed throughout the year and a bad debt provision made in respect of those debts for which payment is considered doubtful.  At 31 March 2021 the bad debt provision was £0.063m (2019/20 £0.060m).

Note 13 - Short-term creditors 

The following table provides an analysis of money owed by the Chief Constable to creditors: 

Short-term creditors

 

31 March 2020

£’000

31 March 2021

£’000

Net Trade Creditors

-836

-63

Conditional Grant

-179

-371

Year End Accruals and Grant Held at Year End

-9,717

-12,523

Payroll Deductions

-5,525

-5,898

Intra-Entity Balance

-

-

Total

-16,256

-18,855

Note 14 - Intra-entity creditor/debtor 

Intra-entity creditor/debtor

 

31 March 2020

£’000

31 March 2021

£’000

Short Term Debtors

21,809

17,180

Short Term Creditors

-16,256

-18,855

Provisions

-442

-1,030

Intra-Entity (Debtor)/Creditor to the PCC

5,109

-2,705

Note 15 - Unusable reserves 

Unusable reserves

 

31 March 2020 £’000

31 March 2021 £’000

Pensions Reserve

-1,973,995

-2,216,370

Accumulated Absences Account

-2,391

-4,778

Total Unusable Reserves

-1,976,386

-2,221,148

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 Chief Constable accounts for post-employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Chief Constable makes employer's contributions to pension funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Chief Constable has set aside to meet them.  The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid. 

Pensions reserve

 

2019/20

£’000

2020/21

£’000

Balance at 1 April

-2,133,167

-1,973,995

Actuarial gains or losses on pensions assets and liabilities

220,300

-179,522

Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement

-110,301

-112,852

Employer's pensions contributions and direct payments to pensioners payable in the year

49,173

49,999

Balance at 31 March

-1,973,995

-2,216,370

Accumulated absences account 

Accounting policy 

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, bonuses and non-monetary benefits for current employees and are recognised as an expense for services in the year in which employees render service to the Chief Constable. An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. 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 ischarged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement to the Accumulated Absences Account which absorbs the differences that would otherwise arise on the Police Fund Balance, so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.  All transactions and balances relating to the above are disclosed within the accounts of the Chief Constable on the basis of materiality. 

Accumulated absences account

 

2019/20

£’000

2020/21

£’000

Balance at 1 April

-2,424

-2,391

Settlement or cancellation of accrual made at the end of the preceding year

2,424

2,391

Amounts accrued at the end of the current year

-2,391

-4,778

Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

33

-2,387

Balance at 31 March

-2,391

-4,778

Note 16 - Financial instruments 

Categories of financial instruments 

The financial instruments carried in the Balance Sheet are as follows: 

Categories of financial instruments

 

Current

 

31 March 2020 £’000

31 March 2021 £’000

Financial Assets

 

 

 - Amortised cost

15,030

14,757

Financial Liabilities

 

 

 - Amortised cost

-10,282

-12,058

Fair values of assets and liabilities that are not carried at fair value but for which fair value disclosures are required 

All financial liabilities and financial assets held by the Chief Constable are carried in the balance sheet at amortised cost. The fair values calculated are as follows. 

Fair values of assets and liabilities that are not carried at fair value but for which fair value disclosures are required

 

2019/20

2020/21

 

Carrying Amount

£’000

Fair Value

 

£’000

Carrying Amount

£’000

Fair Value

 

£’000

Financial Assets

 

 

 

 

 - Amortised cost

15,030

15,030

14,757

14,757

 

 

 

 

 

Financial liabilities

 

 

 

 

 - Amortised cost

-10,282

-10,282

-12,058

-12,058

           

Short term debtors and creditors are carried at cost as this is a fair approximation of their value.

Note 17 - Grant and partner income – government and non-government grants 

Accounting policy

All government grants are received in the name of the PCC.  However, where grants and contributions are specific to expenditure incurred by the Chief Constable, they are recorded as income within the Chief Constable’s Accounts.  Whether paid on account, by instalments or in arrears, government grants and third-party contributions and donations are recognised as due to the Chief Constable when there is reasonable assurance that: 

  • the Chief constable will comply with the conditions attached to the payments, and
  • the grants or contributions will be received. 

Amounts recognised as due to the Chief Constable are not credited to the Comprehensive Income and Expenditure Statement until the conditions attached to the grant or contributions have been satisfied.  Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor. 

Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line in the Comprehensive Income and Expenditure Statement. 

The Chief Constable credited the following government grants, other grants, contributions and donations representing the receipts on an accruals basis to the Comprehensive Income and Expenditure Statement in 2020/21:

Grant and partner income – government and non-government grants

 

2019/20

£’000

2020/21

£’000

Credited to Cost of Service

 

 

Police Community Support Officers Partner Contributions

-658

-654

Police Uplift Programme

-425

-2,564

NATO Conference

-1,423

-

Covid Grants

-

-994

Other Grants and Contributions

-1,057

-1,462

 

 

 

Total Grants Credited

-3,563

-5,674

Note 18 - Long-term contracts – operating leases 

Accounting policy 

All leases are in the name of the PCC.  However, where leases are specific to the provision of policing services by the Chief Constable, substance over form requires that they are recorded within the Chief Constable’s accounts. 

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment to the lessee. All other leases are classified as operating leases. The PCC neither holds, nor has granted, any finance leases.

Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. 

Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets. 

The group/PCC as lessee 

The PCC has no finance leases, but has entered into several operating lease agreements for the occupancy of premises for policing purposes.  The ownership of assets acquired under operating leases does not pass to the PCC and they are not included in the PCC’s asset valuations on the balance sheet. 

Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefitting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease; even if this does not match the pattern of payments (e.g. if there were a rent-free period at the commencement of the lease). 

The future minimum payments due under these leases are shown in the following table and are analysed between the time periods in which the lease payments become due for payment. There are no future minimum sub-lease payments receivable by the PCC.

The group/PCC as lessee

 

31 March 2020

£’000

31 March 2021

£’000

Not later than one year

581

500

Later than one year and not later than five years

2,145

1,820

Later than five years

9,562

9,600

Total Future Minimum Payments

12,288

11,920

The amount charged to the Surplus or Deficit on Provision of Services in the Comprehensive Income and Expenditure Statement was £0.774m (2019/20 £0.567m). 

The group/PCC as lessor 

The PCC has not entered into any finance lease or operating lease arrangements as a lessor.

IFRIC 12 

The PCC’s contractual arrangements with third parties are kept under continuous review and there are no service concessions under IFRIC 12.

Lease terms 

None of the PCC’s lease agreements have terms and conditions in respect of contingent rents, purchase options or escalation clauses.  It is considered that there are no restrictions other than those that are standard conditions in operating lease agreements such as the occupier’s responsibilities and changes of use. 

The property lease agreements include clauses in respect of the renewal of leases at specified points in the future.  The PCC will wish to discuss renewal terms with lessors at such future dates.

Note 19 - joint arrangements 

Accounting policy 

A joint arrangement is an arrangement of which two or more parties have joint control where the parties are bound by a contractual arrangement and the contractual arrangement gives two or more of those parties joint control of the arrangement.  A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. To be a joint operation, the arrangement must meet the definition of joint control where decisions about the relevant activities of the arrangement require the unanimous consent of all the parties sharing control. 

The Chief Constable in conjunction with other parties participates in a number of joint operations that involve the use of the assets and resources of the parties. Jointly controlled assets are items of property, plant or equipment that are jointly controlled by the Chief Constable and other parties, with the assets being used to obtain benefits for all the parties.  The joint operations do not involve the establishment of a separate entity. 

The Chief Constable deems these arrangements to be jointly co-controlled operations in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom and consequently the Statement of Accounts and the accounting statements only reflect Hertfordshire’s share of the associated financial transactions and balances. 

Bedfordshire, Cambridgeshire and Hertfordshire collaborative units 

Bedfordshire Police, Cambridgeshire Constabulary and the Chief Constable operate a number of collaborative units. The units are jointly funded by the Forces in accordance with agreements approved by the Policing Bodies under Section 22 of the Police reform and Social Responsibility Act 2001.  The collaborated units are jointly staffed and funded by the two or three forces as appropriate.  The material benefits from working together include improved efficiency, effectiveness and resilience for each of the forces.  The table below sets out the aggregate income and expenditure on all collaborative units.  Each force’s contribution reflects its share of the units and its contribution towards support and accommodation costs.

Bedfordshire, Cambridgeshire and Hertfordshire collaborative units

Beds

2019/20

£’000

Cambs

2019/20

£’000

Herts

2019/20

£’000

Total

2019/20

£’000

 

Beds

2020/21

£’000

Cambs

2020/21

£’000

Herts

2020/21

£’000

Total

2020/21

£’000

 

 

 

 

Joint Protective Services

 

 

 

 

2,809

2,471

2,816

8,096

Armed Policing Unit

3,467

3,110

3,686

10,263

731

913

1,221

2,865

Dogs

812

998

1,353

3,163

2,492

3,022

3,691

9,205

Major Crime Unit

2,495

2,980

3,690

9,165

 280

362

506

1,148

Operational Planning & Public Order

313

396

565

1,274

 245

318

444

1,007

Protective Services Command Team

258

327

466

1,051

95

123

171

389

Resilience

94

119

169

382

2,471

3,591

4,769

10,831

Roads Policing Unit

2,553

3,651

4,912

11,116

2,433

2,986

4,019

9,438

Scientific Services Unit

2,457

2,968

4,049

9,474

 11,556

13,786

17,637

42,979

Total Joint Protective Services

12,449

14,549

18,890

45,888

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational Support

 

 

 

 

-356

-454

-593

-1,403

Camera, Tickets, Collisions

-201

-251

-333

-785

277

359

502

1,138

Criminal Justice & Custody Management Team

285

180

514

979

655

850

1,187

2,692

Criminal Justice

586

742

1,057

2,385

108

210

171

489

Firearms & Explosives Licensing

114

221

180

515

3,603

4,671

6,527

14,801

ICT

3,711

4,696

6,695

15,102

303

393

549

1,245

Public Contact Senior Leader Team

288

364

519

1,171

 4,590

6,029

8,343

18,962

Total Operational Support Expenditure

4,783

5,952

8,632

19,367

 

 

 

 

 

 

 

 

 

 

 

 

 

Organisational Support

 

 

 

 

455

590

825

1,870

Collaboration Team

415

525

748

1,688

4,056

5,257

7,345

16,658

HR / L&D

3,963

5,015

7,148

16,126

668

866

   1,210

2,744

Information Management Department

796

1007

1,435

3,238

1,104

1,149

1,659

3,912

Professional Standards Unit

1,249

1,279

1,873

4,401

279

362

506

1,147

Procurement*

-

-

-

-

 6,562

8,224

11,545

26,331

Total Organisational Support Expenditure

6,423

7,826

11,204

25,453

 

 

 

 

 

 

 

 

 

22,708

28,039

37,525

88,272

Total BCH Net Operating Costs

23,655

28,327

38,726

90,708

 

 

 

 

 

 

 

 

 

-

-

-

-

Regional Procurement*

270

342

487

1,099

 

 

 

 

 

 

 

 

 

22,708

28,039

37,525

88,272

Total Net Operating Costs

23,925

28,669

39,213

91,807

Eastern Region Special Operations Unit (ERSOU) 

The Eastern Region Special Operations Unit (ERSOU) was established in 2010/11 and is a joint unit consisting of the six eastern region police forces: Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk and Suffolk.  The unit provides a single serious and organised crime unit as well as Counter Terrorism capability across the region. 

Bedfordshire Police have lead force responsibility for ERSOU.  Police Officers from each member force are seconded to the unit broadly in line with funding shares.  Legal title to all vehicles, equipment and premises owned and used by the unit transferred sit with Bedfordshire and the assets are recorded in its capital accounts and asset register. 

All revenue costs and capital expenditure are shared between the six forces in accordance with the percentages defined in the Section 22 agreement.  All capital expenditure is fully funded in the year of expenditure and there is therefore no capital financing charge to the six participating forces.

ERSOU is a joint operation with no separate entity and is therefore not able to hold reserves in respect of any cumulative surplus or deficit at year end.  Each participating Local Policing Body shows its share of the carried forward surplus in its accounts.  The ERSOU operating account is shown in the following table.  The expenditure figures do not include depreciation charges. 

The Home Office grants were paid to Bedfordshire as agent for the participating forces.

ERSOU income and expenditure statement 2020/21 

ERSOU income and expenditure statement 2020/21

 

2019/20 £’000

2020/21 £’000

 

 

 

Operating costs

21,834

20,231

Specific HO grant

-4,336

-4,796

Net expenditure

17,498

15,435

 

 

 

Contributions

 

 

Bedfordshire

-1,997

-1,746

Cambridgeshire

-2,567

-2,224

Essex

-1,953

-1,735

Hertfordshire

-3,607

-3,159

Kent

-2,249

-2,095

Norfolk

-2,918

-2,542

Suffolk

-2,207

-1,934

Total Contributions

-17,498

-15,435

 

 

 

(Surplus) / Deficit for year

645

-263

(Surplus) / Deficit b/f

-645

-

(Surplus) / Deficit c/f

0

-263

The capital assets for ERSOU at 31 March 2021 are analysed as follows:

The capital assets for ERSOU at 31 March 2021

 

2019/20

£’000

2020/21

£’000

Net book value brought forward 1 April

1,282

1,645

Opening Balance Adjustment

-

-  

Revised Net book value

1,282

1,645

 

 

 

Expenditure for the year:

 

 

-    Vehicles

608

193

-    Land and Buildings

-

-

-    Equipment

-

182

Depreciation for the year

-245

-345

Net book value carried forward 31 March

1,645

1,675

Hertfordshire’s share of the total Net Book Value of ERSOU assets as at 31 March 2021 was £0.445m (£0.368m as at 31 March 2020). Two additional properties are jointly owned by the 7 forces, and are held on individual forces’ balance sheets. Hertfordshire share of these properties as at 31 March 2021 was £1.731m. 

The capital expenditure for 2020/21 was funded in accordance with the formulae agreed by the forces.  Details are shown in the following table:

The ERSOU capital expenditure for 2020/21

 

2019/20

£’000

2020/21

£’000

Bedfordshire

-67

-49

Cambridgeshire

-86

-62

Essex

-94

-24

Hertfordshire

-121

-88

Kent

-68

-26

Norfolk

-98

-71

Suffolk

-74

-54

Total

-608

-374

Note 20 - contingent liabilities

Accounting policy 

A contingent liability arises where an event has taken place that gives the Chief Constable 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 Chief Constable. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. 

Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. 

The Chief Constable potentially has a liability in respect of historic overtime claims following a similar claim from another force which were upheld at the Court of Appeal. The claims relate to a cap being placed on overtime claims by the Chief Constable, which has historically been generally applied across the Police Service. At this point in time the Chief Constable has received 21 claims in respect of overtime claims. The final number and value of potential claims has yet to be quantified. Test claims are progressing through the courts and they will have a bearing on claims against the Force once the outcomes are known. 

Following the rulings in the McCloud and Sargeant cases in relation to unlawful discrimination, and associated remedial proposals as outlined in Note 21, 18 claims for compensation have been lodged against the Chief Constable of Hertfordshire. Test cases for these claims are due to be heard by the Employment Tribunal in December 2021. Claims for financial losses are currently stayed as consideration is given to the HM Treasury consultation response. As at 31 March 2021, it is not possible to reliably estimate the extent or likelihood of these claims being successful, and therefore no liability in respect of compensation claims is recognised in these accounts. 

Note 21 - defined benefit pension schemes 

Accounting policy 

Post-employment benefits 

The Chief Constable participates in four pension schemes.  Each scheme provides members with defined benefits related to pay and service.  The costs of providing pensions for employees are charged to the Police Fund in accordance with the statutory requirements governing each scheme.  The schemes are as follows: 

Police officer schemes 

There are three schemes for police officers; - The 1986 Police Pension scheme which closed to new members on the 31 March 2006, the 2006 Police Pension scheme which closed to new members on the 31 March 2015 and the 2015 Police Pension Scheme which was introduced from 1st April 2015.  These are unfunded defined benefit final salary schemes, charged to the Police Fund based upon an equivalent employer’s contribution rate of 31.0% of pensionable pay. 

Unfunded means that there are no investment assets built up to meet the pension liabilities, and cash has to be generated to meet actual pension payments as they eventually fall due.  The direct expenditure and income in respect of these schemes is accounted for in the Police Pension Fund Account.  Under the Police Pension Fund Regulations 2007, if the amount payable by the pension fund for the year is less than the amount receivable, the Chief Constable must annually transfer an amount required to meet the deficit to the pension fund.  Up to 100% of this cost is met by central government pension top up grant shown in the OPCC’s Accounts under Other Operating Expenditure.  If however the pension fund is in surplus for the year, the surplus is required to be transferred from the pension fund to the Chief Constable and the amount repaid to central government. 

Police staff 

All transactions and balances relating to the accounting for Post-Employment Benefits of Police Staff, other than the cost of employee contributions for staff employed by the PCC, are disclosed within the accounts of the Chief Constable on the basis of materiality. 

All police staff are eligible to join the Local Government Pension Scheme (LGPS), managed by Hertfordshire County Council.  The total pension cost that is charged to the Police Fund equals the contribution paid to the funded pension scheme for these employees. 

The LGPS Scheme is accounted for as a defined benefits scheme as follows: 

a)    The liabilities of the fund attributable to the Chief Constable are included in the Balance Sheet on an actuarial basis using the projected unit method.  This is an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc., and projections of projected earnings for current employees. 

b)    Liabilities are discounted to their value at current prices, using a discount rate based on the indicative rate of return on high quality corporate bonds.

c)     The assets of the fund attributable to the Chief Constable are included in the Balance Sheet at their fair value: 

  • Quoted securities – current bid price
  • Unquoted securities – professional estimate
  • Unitised securities – current bid price
  • Property – market value

d)    The change in the net pensions liability is analysed into seven components: 

i. Current Service Cost - The increase in liabilities as a result of years of service earned this year is allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked.

ii. Past Service Cost - The increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years is debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non-Distributed Cost
iii. Interest Cost - The expected increase in the present value of liabilities during the year as they move one year closer to being paid is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement
iv. Expected Return on assets - The annual investment return on the fund assets attributable to the Chief Constable, based on an average of the expected long-term return is credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement
v.  Gains or Losses on settlements and curtailments - The result of actions to relieve the Chief Constable of liabilities or events that reduce the expected future service or accrual of benefits of employees is debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non-Distributed Costs
vi. Re-measurements of the net defined liability.  This includes actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest on the net defined benefit liability.
vii. Contributions Paid to the pension fund - Cash paid as employer's contributions to the pension fund in settlement of liabilities; not accounted for as an expense. 

In relation to retirement benefits, statutory provisions require the Police Fund balance to be charged with the amount payable by the Chief Constable to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards.  In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact to the Police Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees. 

Discretionary benefits 

The Chief Constable also has restricted powers to make discretionary awards of retirement benefits to Police Officers in the event of early retirements.  Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year the award was made and accounted for using the same policies as are applied to the Local Government Pension Scheme or Police Pension Schemes. There are no investment assets built up to meet these pension liabilities, and cash has to be generated to meet actual pension payments as they eventually fall due. 

Participation in pension schemes

As part of the terms and conditions of employment of its officers and other employees, the Chief Constable offers retirement benefits.  Although these will not actually be payable until employees retire, the Chief Constable has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement. 

The Chief Constable participates in three pension schemes:

  • The Local Government Pension Scheme for police staff.  Administrated by Hertfordshire County Council - this is a funded defined benefit final salary scheme, meaning that the Chief Constable and its employees, pay contributions into a fund, calculated at a level estimated to balance the pensions liabilities with investment assets.
  • The Police Pension Scheme 1987, the Police Pension Scheme 2006 and the Police Pension Scheme 2015 for police officers - these are unfunded defined benefit final salary schemes administrated by the Chief Constable.  Unfunded means that there are no investment assets built up to meet the pension liabilities, and cash has to be generated to meet actual pension payments as they eventually fall due.  Under the Police Pension Fund Regulations 2007, if the amount payable by the pension fund for the year is less than the amount receivable, the PCC must annually transfer an amount required to meet the deficit to the pension fund.  Up to 100% of this cost is met by central government pension top up grant.  If however the pension fund is in surplus for the year, the surplus is required to be transferred from the pension fund to the Chief Constable and must be repaid to central government.
  • Arrangements for the award of discretionary post-retirement benefits to Police Officers 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 pension liabilities, and cash has to be generated to meet actual pension payments as they eventually fall due. 

Transactions relating to post-employment benefits 

The Chief Constable recognises the cost of retirement benefits in the reported cost of services in the Comprehensive Income and Expenditure Statement when they are earned by employees, rather than when the benefits are eventually paid as pensions.  However, the charge the Chief Constable 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 Police Fund within the PCC’s accounts via the Movement in Reserves Statement. 

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

Transactions relating to post-employment benefits

 

LGPS

Police Pension Scheme

 

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

Cost of Service included in CIES Service

 

 

 

 

Current Service Cost

21,091

16,147

54,120

52,060

Past Service Cost / Settlements and Curtailments

115

7

-11,080

-

Financing and Investing Income & Expenditure

 

 

 

 

  Net interest expense

2,645

1,328

43,410

43,310

Total Group Post-Employment Benefits charged to the Surplus or Deficit on the Provision of Service

23,851

17,482

86,450

95,370

Re-measurement of the net defined benefit liability comprising:

 

 

 

 

Return on plan assets

(excluding amount included in net interest expense)

16,137

-55,124

-

-

  Actuarial gains and Losses

 

 

 

 

  • Demographic Assumptions

-9,670

6,755

-61,220

-

  • Financial Assumptions

-48,021

123,449

-62,300

233,040

  • Other

-22,946

-3,518

-32,280

-125,080

Total Group Post Employment Benefit Charged to the CIES

-40,649

89,044

-69,350

203,330

 

Movement in Reserves Statement:

 

 

 

 

Reversal of the net charges made to the Surplus or Deficit for the provision of services for post-employment benefits in accordance with the code

-23,851

-17,482

-86,450

-95,370

 

 

 

 

 

Actual Amount Charged Against the General Fund Balance for Pensions During the Year:

 

 

 

 

  Employer’s Contributions Payable to the Schemes

8,763

9,299

40,410

40,700

Claims arising from the transitional provisions in the Police Pension Regulations 2015

The Chief Constable of Hertfordshire, along with other Chief Constables and the Home Office currently has a number of claims in respect of unlawful discrimination arising from transitional provisions in the Police Pension Regulations 2015. The claims against the Police pension scheme (the Aarons case) had previously been stayed behind the McCloud/Sargeant judgement, but a case management was held in Oct 2019, with the resulting Order including an interim declaration that the claimants are entitled to be treated as if they had been given full transitional protection and had remained in their existing scheme after 1 April 2015. Whilst the interim declaration applied only to claimants, the Government made clear through a Written Ministerial Statement on 25 March 2020 that non-claimants would be treated in the same way. 

On 16 July 2020, HM Treasury issued a consultation regarding transitional arrangements for public sector pensions to eliminate discrimination as identified through the McCloud/Sargeant cases. This consultation introduced a requirement for members to have been members of the scheme on or before 31 March 2012 and on or after 1 April to be eligible for remedy. 

On 4 February 2021, HM Treasury issued their response to the consultation which confirmed the remedy arrangements set out in the consultation, and states that members would be given a choice as to whether to retain benefits from their legacy pension scheme, or their new scheme, during the remedy period (2015-2022). This choice will be deferred for members until retirement. As the findings of the original Employment Tribunal did not identify that the introduction of the new public sector pension schemes were discriminatory (rather it was the transitional provisions), the legacy schemes will be removed from April 2022 to be replaced by the new pension schemes originally introduced in 2015. 

Impact on pension liability

Allowing for all eligible members to accrue benefits from their legacy scheme during the remedy period would lead to an increase in the Police Pension Scheme liabilities. 

The impact of an increase in scheme liabilities arising from McCloud/Sargeant judgement will be measured through the pension valuation process, which determines employer and employee contribution rates. The next Police Pension valuation is due to be reported in 2023/24, although this timetable is subject to change. 

The impact of an increase in annual pension payments arising from McCloud/Sargeant is determined through the Police Pension Fund Regulations 2007. These require a police authority to maintain a pension fund into which officer and employer contributions are paid and out of which pension payments to retired officers are made. If the police pension fund does not have sufficient funds to meet the cost of pensions in year the amount required to meet the deficit is then paid by the Secretary of State to the police authority in the form of a central government top-up grant. 

Compensation claims

Claimants have lodged claims for compensation. Test cases for these claims are due to be heard by the Employment Tribunal in December 2021. Further details can be found in Note 20 – Contingent Liabilities. 

Pension assets and liabilities recognised in the balance sheet 

The amount included in the balance sheet arising from the Commissioners obligation in respect of its defined benefit plans is as follows:

Pension assets and liabilities recognised in the balance sheet

 

2019/20 £’000

2020/21 £’000

 

 

 

Present Value of Defined Benefit Obligations

 

 

LGPS

-344,981

-493,223

Police Pension Scheme

-1,919,630

-2,082,250

Total Chief Constable Liabilities

-2,264,611

-2,575,473

 

 

 

Fair value of plan assets

 

 

LGPS

290,616

359,113

Total Chief Constable Assets

290,616

359,113

 

 

 

Net liability arising from defined benefit obligation:

 

 

LGPS

-54,365

-134,110

Police Pension Scheme

-1,919,630

-2,082,260

Total Chief Constable Net Liability

-1,973,995

-2,216,370

The net liabilities show the underlying commitments that the Chief Constable has in the long run to pay retirement benefits.  The total liability of £2,216.370m (£1,973.995m as at 31 March 2020) has a substantial impact on the net worth of the Chief Constable as recorded in the Balance Sheet, resulting in a negative overall balance of £2,221.148m as at 31 March 2021 (£1,976.386m as at 31 March 2020). 

However, statutory arrangements for funding the deficit mean that the financial position of the Chief Constable remains healthy:

  • The deficit on the local government scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary.
  • Finance is only required to be raised to cover police pensions when the pensions are actually paid.  Following the introduction on the 1st April 2006 of the new scheme of finance for police officer pensions, the Chief Constables’ liability is in general limited to an equivalent contribution rate currently set at 31.0% of pensionable pay with the government meeting additional costs above this level. 

The contribution expected to be made to the Local Government Scheme in 2021/22 is £9.299m.  The expected contribution to the police pension schemes in 2021/22 is £25.020m. 

Reconciliation of the movements in the fair value of scheme

Reconciliation of the movements in the fair value of scheme

 

LGPS

 

2019/20

£’000

2020/21

£’000

Fair value of scheme assets at 1 April

293,949

290,616

  Interest Income

7,137

6,755

  Re-measurement gain/(loss)

 

 

  • Return of plan assets excluding amount included in net interest expense.

-16,137

55,124

  Employer Contributions

8,763

9,299

  Contribution by employees in the scheme

3,010

3,278

  Benefits paid

-6,106

-5,959

  Settlements and Curtailments

-

-

Fair value of scheme assets at 31 March

290,616

359,113

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

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

 

LGPS

Police Pension Scheme

 

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

Chief Constable Opening Balance at 1 April

-397,726

-344,981

-2,029,380

-1,919,620

 

 

 

 

 

  Current service cost

-21,091

-16,147

-54,120

-52,060

  Interest cost

-9,782

-8,083

-43,410

-43,310

  Contribution from scheme participants

-3,010

-3,278

-10,190

-11,070

 

 

 

 

 

Re-measurement of the net defined benefit liability comprising:

 

 

 

 

   Actuarial gains / (loss) Demographic Assumptions

9,670

-6,755

61,220

-

   Actuarial gains / (loss) Financial Assumptions

48,021

-123,449

62,300

-233,040

   Actuarial gains / (loss) Other

22,946

3,518

32,280

125,080

 

 

 

 

 

  Past Service Cost / Settlements and Curtailments

-115

-7

11,080

-

  Benefits paid / Transfers

6,106

5,959

50,600

51,770

 

 

 

 

 

Chief Constable Liability at 31 March

-344,981

-493,223

-1,919,620

-2,082,250

Fair value of employers assets – LGPS only 

The Police Pension Schemes have no assets to cover their liabilities.  The LGPS’s assets consist of the following categories, by proportion of the total assets held: 

Fair value of employers assets – LGPS only

 

Period Ended 31 March 2020

Period Ended 31 March 2021

 

Quoted Prices in active markets

£’000

Quoted prices not in active markets

£’000

Total

£’000

% of Total Assets

Quoted Prices in active markets

£’000

Quoted prices not in active markets

£’000

Total

£’000

% of Total Assets

Equity Securities:

Consumer

5,548

 -  

 5,548

1.9%

 3,213

 -  

3,213

0.9%

Manufacturing

 4,429

-  

 4,429

1.5%

2,835

-  

2,835

0.8%

Energy and Utilities

 -  

-  

 -  

0.0%

-  

-  

-  

0.0%

Financial Institutions

 4,258

-  

 4,258

1.5%

2,317

-  

2,317

0.6%

Health and Care

 2,615

-  

 2,615

0.9%

1,431

-  

1,431

0.4%

Information Technology

 9,956

-  

 9,956

3.4%

8,246

-  

8,246

2.3%

Other

476

-  

476

0.2%

322

-  

322

0.1%

Debt Securities:

Corporate Bonds (investment grade)

-

-

0

0.0%

-  

-  

-  

0.0%

Corporate Bonds (non-investment grade)

-

-

0

0.0%

-  

-  

-  

0.0%

UK Government

-

-

0

0.0%

18,529

-  

18,529

5.2%

Other

-

7,531

7,531

2.6%

-  

8,701

8,701

2.4%

Private Equity:

All

-

15,548

15,548

5.4%

-  

18,772

18,772

5.2%

Real Estate:

UK Property

-  

8,787

 8,787

3.0%

-  

20,012

20,012

5.6%

Overseas Property

-  

17,343

17,343

6.0%

-  

16,665

16,665

4.6%

Investment Funds and Unit Trusts:

Equities

90,407

-  

90,407

31.1%

166,363

-  

166,363

46.3%

Bonds

95,281

-  

95,281

32.8%

58,479

-  

58,479

16.3%

Hedge Funds

-  

-  

-  

0.0%

-  

-  

-  

0.0%

Commodities

 -  

-  

-  

0.0%

-  

-

0.0%

Infrastructure

-  

 268

268

0.1%

-  

151

151

0.0%

Other

 2,451

19,749

22,200

7.5%

3,347

19,694

23,041

6.4%

Derivatives:

Inflation

-

-

0

0.0%

-  

-

-

0.0%

Interest Rate

-

-

0

0.0%

-  

-  

-

0.0%

Foreign Exchange

-

-307

-307

-0.1%

-  

-143

-143

0.0%

Other

-

-

0

0.0%

-  

-

-

0.0%

Cash and Cash Equivalents:

All

 6,276

-  

 6,276

2.2%

10,181

-

10,181

2.8%

Totals

221,697

68,919

290,616

100.0%

275,262

83,851

359,113

100%

Basis for estimating assets and liabilities 

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

For the Police Pension Schemes a full actuarial valuation is required every four years under the Public Service Pensions Act 2013.  The Police Scheme has been assessed by the Government Actuary’s Department.  The most recent valuation was undertaken as at 31 March 2016, and the next scheduled valuation is as at 31 March 2020. The appointed actuaries produce pension disclosures by rolling forward data for years between full valuations.

For the LGPS a full actuarial review is undertaken every three years, with the latest valuation being as at 31 March 2019.  The Local Government Pension Scheme Fund is assessed by Hymans Robertson, an independent firm of actuaries.

The value of scheme assets and liabilities are dependent upon financial market conditions as at 31 March.  Both GAD and Hymans Robertson have confirmed the use of data as at 31 March rather than estimated figures and as such, the effect of COVID-19 on market conditions and discount rates have been reflected in these valuations. 

The principal assumptions used by the actuaries have been: 

Basis for estimating assets and liabilities

 

LGPS

Police Pension Schemes

 

2019/20

%

2020/21

%

2019/20

%

2020/21

%

 

Mortality Assumptions:

 

 

 

 

Longevity at 65 for current pensioners:

 

 

 

 

        Men

21.9

22.1

21.9

21.9

        Women

24.1

24.5

23.6

23.6

Longevity at 45 for future pensioners:

 

 

 

 

        Men

22.8

23.2

23.6

23.6

        Women

25.5

26.2

25.2

25.2

 

 

 

 

 

Rate of increase in salaries

2.2

2.2

4.00

4.00

Rate of increase in pensions

1.8

1.8

2.00

2.00

Rate for discounting scheme liabilities

2.3

2.3

2.25

2.25

Sensitivity of the defined benefit obligation in the significant actuarial assumptions 

Sensitivity of the defined benefit obligation in the significant actuarial assumptions

 

Approximate % increase to Employer Liability

Approximate monetary amount

(£’m)

LGPS

 

 

0.5% decrease in real discount rate

13

62

1 year increase in member life expectancy

3 to 5

15 to 25

0.5% increase in the Salary Increase Rate

1

6

0.5% increase in the Pension Increase Rate

11

55

Police Pension Schemes

 

 

0.5% increase in real discount rate

-10.0

-212

1 year increase in member life expectancy

3.5

71

0.5% increase in the Salary Increase Rate

1.5

27

0.5% increase in the Pension Increase Rate

9.5

198

Note 22 - Senior officers’ remuneration

The remuneration paid to the PCC’s senior police officers and employees is as follows:

Senior officers’ remuneration

2019/20

Post Holder Information (Job Title) For individuals changing roles, role titles used are those as at 31st March 2020. Final role title is used for individuals no longer employed. (1)

Salary (inc Fees, Allowances & Salary Sacrifice)

£

Bonuses

 

 

£

Expense Allowances

 

£

Benefits in Kind

 

£

Total Remuneration exc pension contr.

£

Pension Contributions

(2)

£

Total Remuneration inc pension contri.

£

Chief Constable - Mr C Hall

170,535

-

-

7,807

178,342

51,600

229,942

Deputy Chief Constable

127,310

-

-

6,628

133,938

38,697

172,635

Assistant Chief Constable (Op Support)

111,082

-

-

7,336

118,418

33,220

151,638

Assistant Chief Constable (Op Support) (3)

2,593

-

-

-

2,593

736

3,329

Assistant Chief Constable (Local Policing)

128,823

-

-

-

128,823

35,690

164,513

Director of Resources

132,321

-

13,042

-

145,363

24,612

169,975

Director of Resources (4)

2,782

-

-

-

2,782

518

3,300

Total Chief Constable

675,446

0

13,042

21,771

710,259

185,073

895,332

Senior officers’ remuneration

2020/21

Post Holder Information (Job Title) For individuals changing roles, role titles used are those as at 31st March 2020. Final role title is used for individuals no longer employed (1)

Salary (inc Fees, Allowances & Salary Sacrifice)

£

Bonuses

 

 

£

Expense Allowances

 

£

Benefits in Kind

 

£

Total Remuneration exc pension contr.

£

Pension Contributions

(2)

£

Total Remuneration inc pension contri.

£

Chief Constable - Mr C Hall

174,696

-

-

5,855

180,551

52,890

233,441

Deputy Chief Constable

130,430

-

-

3,827

134,257

39,665

173,922

Assistant Chief Constable (Op Support) (5)

39,838

-

-

1,758

41,596

11,948

53,544

Assistant Chief Constable (Change Portfolio Office) (5)

79,676

-

-

3,517

83,193

23,896

107,089

Assistant Chief Officer (Op Support) (6)

111,253

-

-

-

111,253

31,143

142,396

Assistant Chief Constable (Local Policing)

131,629

-

-

-

131,629

36,583

168,212

Director of Resources (7)

19,489

-

1,087

-

20,576

2,072

22,648

Director of Resources (8)

116,678

-

-

165

116,843

21,702

138,545

Total Chief Constable

803,689

0

1,087

15,122

819,898

219,899

1,039,797

In addition to the requirements of the Accounts and Audit Regulations 2015, the PCC has voluntarily disclosed details for all members of the Executive team. 

  1. The BCH role of Assistant Chief Constable (Joint Protective Services) is currently held by an officer within Cambridgeshire Constabulary and their remuneration is included as part of the Cambridgeshire Senior Officer Remuneration statement.
  2. The employer pension contribution rate is 31% for Police Officers and 18.6% for the Director of Resources role.
  3. G Telfer temporarily covered the role of Assistant Chief Constable (Op Support) from the 23 to 31 March 2020. The annualised salary (including fees, allowances, and employers pension contribution) of £125,500.
  4. J Cook joined the Constabulary as Director of Resources effective 23 March 2020 on a permanent basis – annualised salary (including fees, allowances, and employers pension contribution) of £136,390.
  5. N Doust-Briant occupied the ACC (Op Support) role but worked on Operation Bullrush from 1 April to 31 July 2020. From the 1 August 2020 through to retirement on the 28 March 2021, he took over the ACC (Change Portfolio Office) role. This is a BCH role where costs are shared between Herts, Beds & Cambs Constabularies. The table costs show the full remuneration prior to any BCH allocation.
  6. G Telfer temporarily covered the role of ACC (Op support) through 2020/21 and was appointed permanently effective 8 March 2021.
  7. J Hurley continued to carry out the role of Director of Resources until the 30 April 2020. The salary includes an annual leave payment owing.
  8. The benefit in kind value reflects the use of a fully electric car to the 25 March 2021 which has a zero value in respect of the P11d calculation.

Note 23 - Officers’ emoluments 

The Accounts and Audit Regulations 2015, as amended by regulations, require the Chief Constable to disclose the numbers of senior police officers and police staff whose remuneration, excluding pension contributions was £50,000 or more in the relevant financial year.  The Chief Constable has extended this disclosure to include all police officers whose remuneration was greater than £50,000. Individuals whose remuneration is disclosed separately in note 22 above are not included within the table.

Officers’ emoluments

Remuneration Band

2019/20

2020/21

£130,000 - £134,999

 

1**

£115,000 - £119,999

1 **

 

£105,000 - £109,999

 

 

£100,000 - £104,999

 

1

£95,000 - £99,999

1

3

£90,000 - £94,999

4

4

£85,000 - £89,999

6

4

£80,000 - £84,999

3

5

£75,000 - £79,999

3

5

£70,000 - £74,999

7

11

£65,000 - £69,999

9

15

£60,000 - £64,999

46

70

£55,000 - £59,999

121 *

125

£50,000 - £54,999

162

235

 

363

479

* includes a redundancy payment, **ACC seconded to national body

Note 24 - External audit costs

In 2020/21 the Chief Constable incurred the following fees, payable to the appointed external auditors BDO LLP under the Local Audit and Accountability Act 2014, relating to external audit and inspection.

External audit costs

 

2019/20* £’000

2020/21 £’000

Chief Constable

12

12

*2019/20 fees subject to finalisation

Note 25 - Related parties 

The Chief Constable is required to disclose material transactions with related parties - bodies or individuals that have the potential to control or influence the Chief Constable or to be controlled or influenced by the Chief Constable.  Disclosure of these transactions allows interested parties to assess the extent to which the Chief Constable 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 Chief Constable. 

Police and Crime Commissioner 

The PCC has direct control over the Chief Constable’s finances and is responsible for setting the Police and Crime Plan.  The Chief Constable retains operational independence and operates within the budget set by the PCC, to deliver the aims and objectives set out in the Police and Crime Plan. Section 28 of the Police Reform and Social Responsibility Act 2011 requires that the local authorities covered by the police area must establish a Police and Crime Panel (PCP) for that area. The PCP scrutinises the decisions of the PCC, reviews the Police and Crime Plan and has a right of veto over the precept.

Central government

The UK government has effective control over the general operations of the PCC and therefore the Chief Constable – it is responsible for providing the statutory framework within which the PCC operates, and provides the majority of its funding in the form of specific or non-specific grants.

Chief Constable’s executive team (including their close family) 

No transactions were disclosed by this group. 

Other public bodies 

Transactions with the County Council, district and borough councils of Hertfordshire have been disclosed within the Income and Expenditure Account, Cash Flow Statement and notes to the accounts.

Note 26 - Termination benefits 

Accounting policy 

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, bonuses and non-monetary benefits for current employees and are recognised as an expense for services in the year in which employees render service to the Chief Constable. An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. 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 ischarged to Surplus or Deficit on the 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.  All transactions and balances relating to the above are disclosed within the accounts of the Chief Constable on the basis of materiality. 

The Chief Constable terminated the contracts of a number of employees in 2020/21 incurring liabilities of £0.452m (£0.375m in 2019/20). See note 27 for the number of exit packages and total costs per band. There were no payments to Directors or equivalent in the form of compensation for loss of office or for enhanced pension benefits and all costs relate to police staff who were made redundant in a number of cost centres as part of the Chief Constable’s savings plan and financial strategy.

Note 27 - Exit packages

All redundancies in 2019/20 and 2020/21 were compulsory redundancies.  The numbers of exit packages and total costs of the compulsory redundancies including pension strain costs paid to the Local Government Pension Scheme are set out in the table below. 

Where an exit package was paid as part of the implementation of a BCH change programme, costs were pooled and shared between the three forces.  As a result, the total costs of exit package set-out in the below table include Hertfordshire’s share of such costs irrespective of the employing force.

Exit packages

Exit package cost band including special payments

Total number of exit packages

Herts Share of cost of exit packages

Total cost of exit packages

2019/20

2020/21

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

£0 - £20,000

8

14

47

54

89

123

£20,001 - £40,000

3

6

64

88

97

198

£40,001 - £60,000

1

4

22

87

50

197

£60,001 - £80,000

2

-

62

-

141

-

£80,001 - £100,000

1

1

36

39

82

88

£120,001 - £140,000

-

2

-

109

-

245

£140,001 - £160,000

1

-

66

-

149

-

£160,001 - £180,000

1

1

78

75

177

169

Total

17

28

375

452

785

1,020

In total 16 exit packages (10 in 2019/20) were paid to Hertfordshire employed staff during 2020/21 at a cost of £0.545m (£0.338m in 2019/20).

Fund account

Fund account

 

 

 

 Note

Police Pension
 Scheme 1987

Police Pension Scheme 2006

Police Pension Scheme 2015

Total
All Schemes

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

2019/20

£’000

2020/21

£’000

Contributions receivable

                 

From employer

                 

- normal 21.3%; 31.0%

P3

-3,477

-2,402

-300

-296

-18,454

-21,136

-22,231

-23,834

- early retirements

P3

-253

-148

0

-

-17

-23

-270

-171

- additional 2.9%

P3

-

-

0

-

-

-

-

-

                   

From members

P3

-1,608

-1,117

-117

-111

-7,827

-8,993

-9,552

-10,221

                   

Transfers in

                 

- individual transfers in from other schemes

P4

-139

-128

0

-8

-528

-686

-667

-822

                   

Other Income

 

-

-

-

-

-

-

-

-

                   

Benefits payable

                 

- pensions

 

38,940

40,165

24

38

76

109

39,040

40,312

- commutations and lump sum retirement benefits

 

9,207

7,759

116

110

36

29

9,359

7,898

- commutation top up payments

 

-

-

-

-

-

-

-

-

- lump sum death benefits

 

-

-

-

-

81

113

81

113

                   

Payments to and on account of leavers

                 

- refunds of contributions

 

-

-

-

-

77

49

77

49

- individual transfers out to other schemes

P4

-

204

31

-

103

46

134

250

                   

Net amount receivable for the year before top-up grant

 

42,670

44,333

-246

-267

-26,453

-30,492

15,971

13,574

                   

Transfer received from the Policing Body

P5

-42,670

-44,333

246

267

26,453

30,492

-15,971

-13,574

Balance as at 31 March

 

0

0

0

0

0

0

0

0

Net assets statement

Net assets statement
 

31 March 2020 £’000

31 March 2021 £’000

April pension paid in advance in March

3,312

3,418

Total Assets

3,312

3,418

     

Commutation Payments Owing

0

-59

Taxation Owing

-307

-359

Amount Owing to Police Fund

-3,005

-3,000

Total Liabilities

-3,312

-3,418

     

Net Assets

0

0

Note P1 - Summary of the Police Pension Scheme Fund operations 

Employee contributions and employer's contribution are paid into the Police Pension Scheme Fund from which pension payments are made.  The fund has no investments and is topped up by the PCC if the contributions are insufficient to meet the cost of pension payments.  The PCC is then reimbursed by the Home Office.  Any surplus in the fund is recouped by the PCC and paid to the Home Office.  The underlying principle is that employer and employee contributions together will meet the full costs of pension liabilities being accrued in respect of currently serving employees while the Home Office will meet the costs of retirement pensions in payment, net of employee and the new employer contributions. 

The financing of pension payments was taken out of the Formula Grant from April 2006 which instead takes into account the funding needed to support the cost of the employer contributions and lump sum payments, in respect of ill-health retirements. 

Note P2 - Accounting policies 

The accounts have been prepared in accordance with the 2020/21 Code of Practice on Local Authority Accounting in the United Kingdom, issued by the CIPFA. 

The accounts summarise the transactions and net assets of the Police Pension Scheme Fund.  They do not, however, take account of liabilities to pay pensions and other benefits after 31 March 2021. 

All amounts have been prepared on an accruals basis except pension transfers to and from the scheme. 

Note P3 - Contributions receivable 

Employer and employee contributions 

The purpose of the employee and employer contribution rates under the new arrangements is to meet the accruing pension liabilities of currently serving police officers.  This means the PCC meets all the costs of employing police officers, including the cost of future pension liabilities, at the time of employing them.  From 1 April 2019, the employer’s contribution rate was increased to 31.0% (from 21.3%) following the latest scheme valuation.

Separate contribution rates, a percentage of pensionable pay as shown below, apply to the three Police Pension Schemes. 

Employer and employee contributions

 

Employer Defined %

Employee %

Police Pension Scheme 1987

31.0

14.25 - 15.05

Police Pension Scheme 2005

31.0

11.00 - 12.75

Police Pension Scheme 2015

31.0

12.44 - 13.78

Early retirements 

Early retirements due to ill-health from 1 April 2006 require the PCC to make a lump sum payment into the pension fund of twice the average pensionable pay in respect of all ill-health retirements. 

Note P4 - Transfers to or from other schemes 

Where a police officer transfers to or from another police force there is no need for a cash transfer.  A police officer who transfers out of the Police Pension Scheme to another pension scheme is entitled to ask for a cash equivalent transfer value to be paid across, equivalent to the value of their pension rights on leaving the scheme. This is paid from the Police Pension Fund.  Similarly an inward Transfer Value should be paid into the fund. 

Note P5 - Top-up grant 

Where employer and employee contributions paid into the Police Pension Scheme Fund are not sufficient to meet pension payments for that year, the deficit will be met by the PCC who is in turn reimbursed by a central government top-up grant paid by the Home Office.  Any surplus in the fund would be paid back to the PCC who would then reimburse the Home Office as the party that brings the account into balance. 

Note P6 - Liabilities after year end 

The Fund’s financial statements do not take account of the liabilities to pay pensions and other benefits after 31March 2021. The details in respect of the PCC’s long-term police pension obligations are set out in the pensions-related disclosure note 21 that follows the main financial statements.

Note P7 - Claims arising from the Transitional Provisions in the Police Pension Regulations 2015 

The Chief Constable of Hertfordshire, along with other Chief Constables and the Home Office, currently has 50 claims lodged against them with the Central London Employment Tribunal. The claims are in respect of alleged unlawful discrimination arising from the Transitional Provisions in the Police Pension Regulations 2015. 

Claims of unlawful discrimination have also been made in relation to the changes to the Judiciary and Firefighters Pension regulations and in December 2018 the Court of Appeal (McCloud / Sargeant) ruled that the ‘transitional protection’ offered to some members as part of the reform to public sector pensions amounts to unlawful discrimination. On 27 June 2019, the Supreme Court refused leave to appeal on the McCloud case.  In response to this, a written Ministerial Statement was made on 15 July 2019 stating that ‘setting out that the matter would be determined by an Employment Tribunal in respect of the litigants in the firefighters and judicial pension schemes. It will be for the Tribunal to determine a remedy. And that alongside this process, government would be engaging with employer and member representatives, to help inform their proposals to the Tribunal and in respect of the other public service pension schemes.’ 

The impact of an increase in scheme liabilities arising from McCloud / Sargeant judgment will be measured through the pension valuation process, which determines employer and employee contribution rates. The next Police Pension valuation is currently in progress as at 2020 with implementation of the results planned for 2023/24 and forces will need to plan for the impact of this on employer contribution rates alongside other changes identified through the valuation process.

Chief Constable for Hertfordshire - annual governance statement 2020/21

1 Executive summary

Overview

The Chief Constable is responsible for putting in place proper arrangements for the governance of his affairs and facilitating the exercise of his functions, which includes ensuring a sound system of internal control is maintained through the year and that arrangements are in place for the management of risk.

The governance framework comprises of the systems and processes by which the Chief Constable and their office are directed and controlled and the activities through which they are accountable. It enables the PCC to monitor the achievements of the Chief Constable through the delivery of the Local Policing Plan and to take account of the delivery of appropriate, cost-effective services, including achieving value for money.

CIPFA published their “Delivering Good Governance in Local Government: Framework” followed by specific guidance notes for Policing Bodies. The framework contains seven principles, to which the Chief Constable is committed, are set out below: 

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

B) Ensuring openness and comprehensive stakeholder engagement.

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

D) Determining the interventions necessary to optimise the achievement of the intended outcomes.

E) Developing the entity's capacity, including the capability of its leadership and the individuals within it.

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

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

The Chief Constable is committed to keep governance arrangements under review and address issues as they arise.

Opinion

Based upon the opinion of Internal Auditor in their year-end report, the areas set-out in this statement and our on-going work, we are satisfied that our arrangements for governance, risk management and control are adequate and effective.

Summary of the significant governance issues identified 2020/21 

BCH procurement follow up

Internal Audit reported that in their opinion the organisations had demonstrated poor progress in implementing the agreed management actions at the time of the audit. 

Signatures of the Chief Constable and Director of Resources 

Signed: 

Charlie Hall
Chief Constable for Hertfordshire 

Signed: 

James Cook
Director of Resources

2 Key governance arrangements 

CIPFA published their “Delivering Good Governance in Local Government: Framework” followed by specific guidance notes for Policing Bodies. The key elements of the systems and processes which the Chief Constable has in place are aligned to the seven principles are set out below:

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

Professional Standards Board

The Constabulary has a Bedfordshire, Cambridgeshire and Hertfordshire (BCH) Professional

Standards Governance Board chaired by the BCH Professional Standards lead with the PCC or a member of his Executive Team for Hertfordshire being members of this Board. The teams cover:

  • Anti-Corruption.
  • Complaints, Conduct and Crime Investigation.
  • Business Management; and
  • Vetting. 

Professional Standards Department

The Professional Standards Department (PSD) continue to deliver a range of briefings and communications to ensure that all officers and staff are aware of the required standards of professional behaviour and the code of ethics including the PSD’s responsibility of promoting prevention, identifying a clear pathway for investigations of fraudulent and/or corrupt activities, abuse of authority and unacceptable behaviour expected of the Constabulary’s employees.

Annual control strategy

The PSD has an Annual Control Strategy that has been designed to ensure the core principles of preventing and detecting unethical behaviour, dishonesty and corruption are the focus of its responsibility, this is reviewed and updated annually. 

PCC review

The PCC or a member of his Executive Team review all case files covering conduct, public complaints and discrimination on a monthly basis and will dip sample files that relate to topical issues to ensure that all are being dealt with in an acceptable way and that any lessons learnt are taken forward by the Constabulary.

Each quarter the PCC or a member of his Executive Team will meet Senior Leaders of the PSD to discuss any concerns or highlight practices or learning they feel should be actioned that have been identified through the dip sampling of cases. 

Confidential and anonymous reporting

The PSD’s internal website gives a range of methods that employees may use to contact them, including options for confidential and anonymous reporting. All allegations made are investigated by PSD or the Independent Office for Police Conduct (IOPC), depending on the severity of the issue raised.

Complaints

Complaints from members of the public can be made at any police station, electronically via the Constabulary’s website, via a gateway organisation, telephoning into the Constabulary or the OPCC office. Alternatively, complaints may be addressed to the Independent Office for Police Conduct

(IOPC).

The reforms in 2020 have created the ability for the Constabulary or OPCC to be able to deal with low level dissatisfaction immediately outside of the formal process, which is envisaged to give the public an immediate response and resolve their concerns to their satisfaction. 

The OPCC have established an enhanced complaints procedure managed by the Complaint Resolution Team (CRT).  This includes a Constabulary online complaint form that is directed immediately to CRT for CRT to register, triage, process and resolve where applicable.

If the content of the complaint raised is suitable for a local line manager to deal with and give a reasonable and proportionate response to the complainant, then the local complaint process is engaged and followed.  Should the member of the public not be satisfied with the immediate response, they have the right to request that their complaint be formally recorded and progressed. 

PSD continue to investigate complaints made by members of the public that have been evaluated as sufficiently serious to warrant a formal investigation and the IOPC continue to investigate the most serious complaints and sensitive incidents and allegations involving the police. 

With the introduction of the new legislation, PCCs have been given the mandatory function of dealing with complaint reviews for certain complaints.  The PCC’s office will review the complaint at the request of the member of the public after the conclusion of their review, they will ascertain if the complaint has been dealt with properly and a reasonable and proportionate response has been given by the Constabulary and identify where there is learning that should be considered by the Constabulary to improve the service for the public.

Ethics and equality

There is a BCH Equality, Diversity and Inclusion Board within the collaborative governance structure with the responsibility for ensuring that all actions under the National Police Chiefs’ Council (NPCC) Diversity, Equality and Inclusion Strategy are brought together across BCH and delivered. 

There is also a local Equality & Inclusion Group (EIG) within Hertfordshire which has the responsibility to:

  • To ensure Hertfordshire Constabulary acts in accordance with its statutory duties to eliminate unlawful discrimination, advance equality of opportunity and foster good relations.
  • To ensure Hertfordshire Constabulary meets its duties and responsibilities under Equality, Diversity and Human Rights Legislation. 

Everyone working for Hertfordshire Constabulary, in whatever capacity, signs up to and is required to follow the National Code of Policing Ethics.

Financial regulations

A BCH Scheme of Governance and Financial Regulations are in place which were jointly agreed with Bedfordshire and Cambridgeshire and last reviewed in February 2021.

Legal services

The Constabulary has an established Legal Services Department that provides a comprehensive legal advice service to officers and staff within the Constabulary. It has processes in place to identify and review changes in legislation and act appropriately to action these.

Business interests

Hertfordshire Constabulary allows police officers and police staff to pursue legitimate business Interests (including additional occupations and voluntary work) where compatible with their duties as a member of the Constabulary.  All police officers and police staff have a duty to declare a business interest.  A failure to do so could result in disciplinary action. 

B Ensuring openness and comprehensive stakeholder engagement 

The Constabulary has a Communications Strategic Plan which sets out the Constabulary’s aims and communication deliverables for 2020/21 together with communication activity and links to the PCC’s Community Safety and Criminal Justice Plan.

A web chat service is available to the public to keep up-to-date with all of the latest news from around the county and districts by downloading the Hertfordshire Constabulary mobile app which is available on the Constabulary website

The Constabulary operates a system called Echo, which provides fast time text messaging in response to calls and surveys on the quality of service.  Call handlers can see the responses to the service that they are providing as the responses are received.  Echo can also be used to target surveys on specific issues and crimes.

Officers are still providing a visible presence in their local areas, but with face to face engagement events, such as neighbourhood surgeries and street meets remaining postponed due to COVID-19, they are keeping a close eye on their echo feedback system, as more people use the new platform to share their views about what’s happening in their local area.

In addition to Echo, the Constabulary uses tools such as MeetingSphere, SNAP!, Vevox and Sli.Do to further engage with the public and staff to help understand concerns, explore and resolve problems and encourage innovation. A further application of Echo is by use of Safer Neighbourhood Teams across the county to gain feedback and suggestions for setting the local policing priorities. 

Staff Surveys are conducted circa every two to three years, led by Durham University on behalf of the Constabulary. The most recent staff survey was conducted in 2020 and achieved a high response rate of 41%. The findings are shared with the organisation in Chief seminars. The outcomes are used for organisational improvement and as discussion items in the Force Wellbeing groups.

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

The Constabulary works with the OPCC to produce a Medium-Term Financial Plan (MTFP), aligned to the Police and Crime Commissioners Community Safety and Criminal Justice Plan, approved by the Strategic Executive Board (SEB) and presented to Police and Crime Panel (opens in a new window) for 2021/22 in February 2021.

Financial planning has been a Constabulary strength for many years. Substantial budgetary savings have been delivered whilst simultaneously maintaining an annual budget that has not required severe resource reductions as a consequence of using balancing funds enabled by healthy reserves. From 2020/21 onwards, the reliance on reserves to support base budget expenditure has been removed thus increasing financial resilience. 

The Chief Constable has ultimate responsibility for his officers and staff in a collaborated unit (BCH and Regional) and is ultimately vicariously liable for their actions. Officers and staff are subject to the command structure of each unit for daily Shared Service delivery. Each PCC retains their individual responsibility for the maintenance of efficient and effective policing in their county and each Chief Constable retains their operational independence. Each PCC retains responsibility for holding their Chief Constable to account for operational police services delivered through collaboration. 

BCH collaborated units have been established in three work streams, each led by one Force with a governance structure to allow each Chief Constable and PCC to have oversight and fulfil their responsibilities. This means that shared collaborated services are provided to the parties with shared resources being instructed through a single line management structure and those resources remaining under the legal direction and control of their respective Chief Constable. 

The BCH Delivery Management Office continues to deliver projects across the three Forces within the existing workstreams in order to maximise efficiency and effectiveness of the teams.

In addition, collaboration across Bedfordshire, Cambridgeshire, Hertfordshire, Norfolk and Suffolk, Essex and Kent known as 7Force has established a programme to progress consideration of joint working. A collaborated procurement service across the 7Forces has been established with other projects in place and under development.

D Determining the interventions necessary to optimise the achievement of the intended outcomes 

A Medium-Term Financial Plan is in place. In February 2021 the Police and Crime Panel received the plan covering the period to 2024/25. The financial plan supports the achievement of the objectives within the Police and Crime Commissioners Community Safety and Criminal Justice Plan and the Operational Policing Plan. 

The Constabulary routinely assesses its strengths, weaknesses, opportunities and threats in the context of its operating environment (PESTELO/Horizon Scanning) alongside the expectations placed upon it by the Community, the Home Office (including Her Majesty's Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) and the Strategic Policing Requirement), the Police and Crime Commissioners Community Safety and Criminal Justice Plan, partners and other agencies.

This activity both informs and helps update the force’s Force Management Statement (FMS), which is an annual statement designed to ensure the highest practicable levels of efficiency and effectiveness in addition to providing accountability to public institutions. Furthermore, the FMS details the Chief Constable’s plans for improving the efficiency and effectiveness of the Force in the period covered by the statement and therefore, it is linked to the Demand Management Strategy, which identifies and provides opportunities to address or inform the FMS. The delivery of which is then monitored and managed throughout each year across a number of formal performance Boards. 

The Constabulary monitors financial and operational performance through the governance structure with a clear distinction of responsibilities at operational and strategic levels such as the Strategic Performance Board, Tasking and Coordination processes and tracking of risks.  There is onward reporting to the PCC’s Strategic Executive Board where the PCC holds the Constabulary to account for performance. 

In addition, a development this year has been the development of a policing strategy and operating model called ‘Prevention First’ Still under development but moving towards implementation, this will eventually see officers and staff approaching all matters of policing with a preventative mindset. Much wider than crime prevention, the strategy will use problem solving techniques from preventing harm within communities through to preventing inefficiencies and duplication within the organisation.

E Developing the entity's capacity, including the capability of its leadership and the individuals within it 

Human Resources policies have been established by the BCH collaborated HR department. This includes ‘My Conversation’ which is a performance development review (PDR) process.  Regular conversations take place between individuals and managers to ensure oversight of wellbeing, to guide and support in the achievement of work-based objectives and to support personal and professional development. 

A BCH governance structure is in place around wellbeing issues and this is supplemented by a Hertfordshire Wellbeing Steering Group which supports work at a more tactical level and operates to support and develop local Wellbeing champions. 

The Constabulary takes the wellbeing of its staff extremely seriously and have appointed a strategic lead that operates within the national Oscar Kilo Blue Light Framework. This work is supported by a new wellbeing coordinator and a network of 40 volunteer wellbeing champions. Recent initiatives have included ‘Spot the signs’ suicide prevention training, a Stop the Stigma Campaign, and a frontline support national awareness campaign. The governance of the work is by the BCH Engagement and Wellbeing Board chaired by the Deputy Chief Constable. 

The Workforce Plan is agreed with the Constabulary and HR and training teams to ensure we have the right recruitment plan and training delivery plans in place to meet establishment numbers. This includes a focus on the achievement of National Police Uplift targets, which for 2020/21 was an increase of 60 Police Officers and this target has been met. 

The Constabulary manages requirements for training and development via an annual Learning Needs Assessment which seeks to capture requirements and assess and allocate these on a priority/risk basis against a BCH external training budget and internal training resources. Throughout the year emerging learning needs are managed and prioritised by means of tactical and strategic Learning and Development governance boards.

The Constabulary has a clear understanding of current and future demand and the resources required to meet that demand.  This is obtained through the data collection and analysis processes that support the Force Management Statement (FMS), including a Strategic Demand Assessment. 

The assessment of demand together with strategies to manage demand, including change programmes are monitored through the Change and Demand Management Board and the Organisational Development Board. 

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

The Constabulary has a record of successfully managing risk in order to deliver innovative programmes of change. A proactive approach is taken to managing opportunities that can deliver business and performance benefits, as well as risks. The Constabulary uses a risk database called ‘Orchidsoft’ to record its risks, which is also used by BCH collaborated units. The benefits of using the system are that: risks can be accessed via the Force Intranet; access to users can be tailored to ensure they only view what they need to; there is a full audit trail built into the system; and, it provides consistency in managing risk.

The risk register review process is monitored by the FMS Coordinator/Inspection and Risk Manager who reports to the Risk Management Board (RMB). The RMB reviews both collaboration and Hertfordshire only risks and reports to the Joint Audit Committee (JAC). 

The Constabulary’s Thinking and Analysis Department has the purpose of holding the organisation to account and allowing the organisation to flourish. This is achieved through:e 

  • Problem solving;
  • Bringing in information / benchmarking from other organisations;
  • Supporting change;
  • Action tracking from internal and external inspections;
  • Asking questions of leads to monitor performance;
  • Highlighting risk; and,
  • Directing focus.

The Thinking and Analysis Department is a multi-disciplinary team involved daily in auditing and inspecting processes, assessing and managing corporate risks, assessing performance, engaging with the public, victims and colleagues, scanning, benchmarking, ensuring the integrity of crime and incident recording, assessing and influencing data quality, planning (including developing the Force Management Statement, Strategic Assessment and Policing Plan) and conducting research.

A new development in 2020/21 is the implementation of a Strategic Hub. This small team has been formed to work on strategic organisational developments making best use of horizon scanning and knowledge of societal changes in order to meet future policing challenges and demand. 

The Thinking and Analysis Department is responsible for all data to support the meetings of the Strategic Performance Board (SPB), there is also presentations around themes for example serious violence, business crime and the best use of body worn video. 

The SPB is the Constabulary’s primary performance management meeting for monitoring and managing progress toward the Constabulary’s strategic targets and objectives as stated in the Operational Policing Plan and the Police and Crime Commissioners Community Safety and Criminal Justice Plan.

The PCC’s Strategic Executive Board (SEB) is responsible for monitoring budgets and variances on a quarterly basis. Including on the forecast outturn position for revenue and capital expenditure. Budget holders are asked to provide action plans to mitigate overspend pressures where they occur.

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

Openness is one the Constabulary’s core values and therefore it strives to release information which is suitable for public knowledge by working in line with the Freedom of Information Act.

There is a Joint Audit Committee (JAC) that operates within the guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Home Office Financial Management Code of Practice. The minutes and papers of the JAC are published on the PCC’s website (opens in a new window).

The PCC’s Strategic Executive Board is the forum for issues related to the legitimacy, effectiveness and efficiency of the policing service delivered in Hertfordshire and where decisions need to be taken that require both parties to discuss and agree in accordance with the Scheme of Governance, the Policing Protocol Order 2011 and the respective duties of each holder of office. Its role includes: 

  • Any matters relating to the legitimacy, effectiveness and efficiency of the policing service delivered in Hertfordshire;
  • The monitoring and management of delivery against the Police and Crime Plan and the Strategic Policing Requirements;
  • Consideration of HMICFRS, Joint Audit Committee reports and similar external inspections; and,
  • The review and monitoring (opens in a new window) of the management of the budget by the Chief Constable.

The Constabulary cooperates with external inspection for example HMICFRS and has an externally contracted Internal Audit function.

3 Responded to the COVID-19 pandemic 

During 2020/21 the Constabulary operated a four Gold Group model with Bedfordshire and Cambridgeshire, each with their own Gold Group meetings managing local issues, and a fourth incorporating all three to cover collaboration issues. The Constabulary continues to review abstraction rates on a regular basis with regular reporting to the Chief Officer Team and SEB.  Whilst work was undertaken to consider the most cost effective approach to bolster resources, abstraction levels remained relatively low.  Demand during 2020/21 was on average significantly lower than 2019/20. A significant proportion of support staff continued working remotely and the full system of internal control remains in place.

4 Evaluation of the effectiveness of governance 

The Chief Constable has the responsibility for conducting, at least annually, a review of the effectiveness of the governance framework for his office, including the system of internal control. The review is published as the Annual Governance Statement alongside the Statement of Accounts.  The review is informed by the following:

Annual assurance statements

Senior officers within the Constabulary who have produced departmental assurance statements to support the review, and the Constabulary as a whole has produced an overall assurance statement. 

The Joint Audit Committee (JAC) 

The JAC undertakes the core functions of an audit committee, in accordance with the guidance set out in the CIPFA publication ‘Audit Committees – Practical Guidance for Local Authorities and Police’, including: 

  • playing a pivotal role in the system of internal control through its oversight of audit arrangements,
  • approval of the external audit plan and receives the annual audit letter from the external auditor,
  • considers the annual Internal Audit plan,
  • receiving regular Internal Audit reports and monitoring management performance against agreed action plans to address any weaknesses identified, and
  • reviewing progress on risk management and related issues. 

Internal audit 

Internal audit provided an independent opinion on the adequacy and effectiveness of the Constabulary’s system of internal control, stating that the organisation has an adequate and effective framework for risk management, governance and internal control. However, Internal Audit identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective. 

RSM provides the Internal Audit service to the OPCC and Constabulary and also provides Internal Audit services to Bedfordshire and Cambridgeshire OPCCs and Constabularies. This results in joined up audit work to the benefit of all the organisations.

Internal Audit issued seven reports during 2020/21 for the OPCC and the Constabulary concluding that substantial assurance could be taken in five reports and partial assurance could be taken in two (Estates and Storage and disposal of Drugs). 

Internal Audit also undertook audits in relation to BCH collaborated activity and issued one report with substantial assurance (Health and Safety), one report with reasonable assurance (Procurement – 7Force) and three advisory reports.  In addition, a follow up audit on BCH Procurement was undertaken and poor progress was identified. 

Internal Audit also performs an annual follow up of agreed management actions, as part of that work Internal Audit confirmed that all the actions agreed within those partial assurance reports had been completed. The Constabulary also tracks the completion of management actions. 

Internal Audit has co-ordinated the first draft of this Annual Governance Statement, with assistance from senior officers and staff in the OPCC and Constabulary.

External audit 

The external auditors issued the following reports during the year: 

  • Opinion on financial statements; and,
  • Annual audit letter.
  • The key matters that the Joint Audit Committee reported were that Hertfordshire Constabulary had:

An unqualified opinion on their accounts and had prepared its financial statements well;

  • Had an adequate internal control environment; and,
  • Had an unqualified value for money conclusion. 

Her Majesty’s Inspectorate of Constabularies and Fire & Rescue Service (HMICFRS) HMICFRS are commissioned by the Home Secretary to undertake inspections of police forces and fire and rescue services. 

PEEL (Police Effectiveness, Efficiency and Legitimacy) is HMICFRS’s annual assessment of police forces in England and Wales. Forces are assessed on their effectiveness, efficiency and legitimacy. Until 2018/19 each was inspected separately each year. HMICFRS has now adopted an integrated approach to inspections. Integrated PEEL Assessment (IPA) combines the forces into a single inspection on the areas of PEEL. 

Due to COVID-19, inspections were suspended in 2020/21, and therefore the latest inspection of Hertfordshire Constabulary by HMICFRS was in September 2019. However, areas for improvement highlighted within the previous inspection are monitored through to completion via the Constabulary’s Action Management System through to close by the HMICFRS.

5 A summary of significant issues identified in 2020/21

A summary of significant issues identified in 2020/21

Issue

Action

BCH Procurement follow up

Internal Audit reported that in their opinion the organisations had demonstrated poor progress in implementing the agreed management actions at the time of the audit.

Whilst some progress was noted within the new 7 Force service in implementing actions, Internal Audit we were not able to perform any sample testing of transactions below the £50k threshold which are the responsibility of local teams, as systems are not in place to enable the monitoring of these contracts and therefore compliance checks against the Financial Regulations could not be undertaken.

 

Accountability and action plans 

Account for actions taken in 2020/21 to address significant issues identified in previous year’s AGS.

Accountability and action plans

As stated in 2019/20

Current Position

Health and Safety

Internal Audit issued a report which concluded that no assurance could be taken following their review. In particular we found:

  • A H&S audit programme had not been developed. Following this audit recommendations from completed audits would be tracked formally in action trackers for each organisation. 
  • An action relating to an analysis on role specific training was agreed, however at the time of the review not all needs assessments had been returned.

A set of health and safety KPIs were in development, but had not yet been finalised. These would be reported consistently across the local Health and Safety Boards with summary reporting to the BCH Board.

This area will be subject to another audit in 2020/21 to ensure actions have been embedded within processes.

Internal Audit performed a follow up of actions agreed in 2019/20 and reported good progress.  A further audit of Health and Safety in November 2020 resulted in a substantial assurance opinion.

BCH Procurement

Internal Audit concluded that partial assurance could be taken following their review. This covered the BCH collaborated service, which was in transition to a new 7 Force arrangement, this transition has since been completed. Internal Audit will follow up the issues identified within their 2020/21 plan with reviews of the new service.

Issues identified in 2019/20 have been carried forward into 2020/21 and noted above.

Glossary of terms

The definitions within this glossary are designed to give the user an understanding of the technical terminology contained within the Statement of Accounts.

Accounting policies

Those principles, bases, conventions, rules and practices applied by the PCC, that specify how the effects of transactions and other events are to be reflected in its financial statements through: i) recognising, ii) selecting measurement bases for, and iii) presenting assets, liabilities, gains, losses and changes to reserves.

Accrual

The recognition of income and expenditure as it is earned or incurred, rather than as cash is received or paid.

Actuarial Gains and Losses

For a defined benefit pension scheme, the changes in actuarial deficits or surpluses that arise because: a) events have not coincided with the actuarial assumptions made for the last valuation (experience gains and losses), or b) the actuarial assumptions have changed. 

Budget

A statement of the PCC’s financial plans for a specified period of time, usually one year. 

Capital Programme

A statement of proposed capital projects for current and future years. 

Capital Receipts

Proceeds of not less than £10,000 from the sale of fixed assets.  They may be used to finance new capital expenditure or repay debt.  They cannot be used to finance normal day to day revenue spending. 

Carry-forwards

These are underspends at the year-end which are carried forward into the next financial year to support that year’s expenditure plans.

Creditors

Amounts owed by the PCC at the 31 March for goods received or services rendered but not yet paid for. 

Capital Expenditure

Expenditure on the acquisition of a fixed asset or expenditure which adds to and not merely maintains the value of an existing fixed asset. 

Current Service Cost (Pensions)

The increase in the present value of a defined benefit scheme’s liabilities expected to arise from employee service in the current period. 

Debtors

Amounts owed to the PCC which are collectable or outstanding at 31 March.

Defined Benefit Scheme

A pension or other retirement benefit scheme where the scheme rules define the benefits independently of the contributions payable, and the benefits are not directly related to the investments of the scheme. The scheme may be funded as in the case of the LGPS or unfunded as in the case of the Police Pension Scheme. 

Depreciation

The measure of the cost or re-valued amount of the benefits of the fixed asset that have been consumed during the period. 

Consumption includes the wearing out, using up or other reduction in the useful life of a fixed asset whether arising from use, passing of time or obsolescence, through either changes in technology or demand for the goods and services produced by the asset.

Emoluments

All sums paid to or receivable by an employee and sums due by way of expenses allowances (as far as those sums are chargeable to UK income tax) and the money value of any other benefits received other than in cash. Pension contributions payable by either employer or employee are excluded. 

Expected Rate of Return on Pensions Assets

For a funded, defined benefit scheme, the average rate of return, including both income and changes in fair value but net of scheme expenses, expected over the remaining life of the related obligation on the actual assets held by the scheme. 

Fair Value

The fair value of an asset is the price at which it could be exchanged in an arm’s-length transaction less, where applicable, any grants receivable towards the purchase or use of the asset. 

Finance Lease

A finance lease is one that transfers substantially all of the risks and rewards of ownership of a fixed asset to the lessee. 

Government Grants

Assistance by government and inter-government agencies and similar bodies, whether local, national or international, in the form of cash or transfers of assets to a PCC in return for past or future compliance with certain conditions relating to the activities of the PCC. 

Impairment

A reduction in the value of a fixed asset, reflecting a general fall in prices or losses due to physical damage or deterioration in an asset. 

Intangible Fixed Assets

Non-financial fixed assets that do not have physical substance but are identified and controlled by the PCC through custody and legal rights.

Interest Cost (Pensions)

For a defined benefit scheme, the expected increase during the period in the present value of the scheme liabilities because the benefits are one period closer to settlement. 

Inventories

The amount of unused or unconsumed stocks held in expectation of future use. When use will not arise until a later period, it is appropriate to carry forward the amount to be matched to the use or consumption when it arises. 

Investments

A long-term investment is an investment that is intended to be held for use on a continuing basis in the activities of the PCC. Investments should be so classified only where an intention to hold the investment for the long term can clearly be demonstrated or where there are restrictions as to the investor’s ability to dispose of the investment. 

Liquid Resources

Current asset investments that are readily disposable by the PCC without disrupting its business and are either: readily convertible to known amounts of cash at or close to the carrying amount, or traded in an active market. 

Minimum Revenue Provision (MRP)

The aim of the MRP charge is to set cash aside in order to ensure the PCC has the funds to repay outstanding principal or replenish internal cash balances.  Each year the PCC is required to set a policy as to the approach it will take in making MRP. 

Net Book Value

The amount at which fixed assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amounts provided for depreciation.

Net Current Replacement Cost

The cost of replacing or recreating the particular asset in its existing condition and in its existing use, i.e. the cost of its replacement or of the nearest equivalent asset, adjusted to reflect the current condition of the existing asset. 

Net Debt

The PCC’s borrowings less cash and liquid resources. Where cash and liquid resources exceed borrowings, reference should be to net funds rather than net debt. 

Net Realisable Value

The open market value of the asset in its existing use (or market value in the case of non-operational assets), less the expenses to be incurred in realising the asset. 

Non Distributed Costs

These are overheads for which no user now benefits and should not be apportioned to services. 

Operating Lease

A lease other than a finance lease. 

Police Grant

A specific grant paid by the Home Office to support the PCC’s revenue expenditure.  It is a fixed sum calculated by the government on an assumed needs basis. 

Precept

A levy which the PCC makes through the council tax to pay for services. 

Past Service Cost

For a defined benefit scheme, the increase in the present value of the scheme liabilities related to employee service in prior periods arising in the current period as a result of the introduction of, or improvement to, retirement benefits.

Prior Period Adjustments

Those material adjustments applicable to prior years arising from changes in accounting policies or from the correction of fundamental errors. A fundamental error is one that is of such significance as to destroy the validity of the financial statements. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years. 

Reserves

Amounts set aside to cover general expenditure needs in the future. 

Revenue Contributions to Capital Outlay (RCCO)

Contributions from revenue to finance capital expenditure and thus reduce the requirement to borrow. 

Revenue Expenditure

Spending on day to day items, including salaries, premises costs and supplies and services. 

Revenue Support Grant

A grant paid by central government towards the costs of the service. 

Specific Reserves

Amounts set aside for a specific purpose to meet future commitments or liabilities. 

Sponsorship

The voluntary provision of non-public funds, services or equipment which enables the police to enhance or extend the normal services provided.


 

Our website uses cookies to improve your experience.

OK