2021-22 local financial returns (LFRs) - guidance notes

5. LFR 00: Subjective Analysis by Service

LFR 00 requires local authorities to provide a detailed breakdown of gross expenditure and gross income by service. LFR 00 also collects data required for:

• Bridge Authorities (Column G);
• Housing Revenue Account (HRA) (Column N);
• Statutory Harbour Account, for Orkney and Shetland only (Column T);
• Common Good (Column U).

All figures in LFR 00 should be provided on a funding basis. Total Net Revenue Expenditure for both the General Fund and HRA (Row 72) are separately validated against the net cost of services on a funding basis calculated in LFR A0, Row 12.

LFR 00 provides the Control Total figures in all service-level LFRs and so should be completed before the service-level LFRs.

All local authorities are required to complete LFR 00, however they will not all have to complete every column. Table 1 sets out which columns should be completed for each type of local authority.

Table 1: Which columns in LFR 00 should contain data by authority type

Column in LFR 00	Councils	VJBs	Bridge Authority	RTPs
LFR 01: Education	X
LFR 02: Culture and Related Services	X
LFR 03: Social Work	X
LFR 05: Roads and Transport	X			X
Road Bridges			X
LFR 06: Environmental Services	X
LFR 07: Building, Planning & Development	X
LFR 09: Central Services	X	X		X
LFR 20: Non-HRA Housing	X
Trading Services	X
HRA (Housing Revenue Account)	X

Trading Services (Column L): Record all expenditure and income relating to trading with the public and internal significant trading operations. This will include, but is not limited to, costs associated with fishery harbours and markets; statutory Harbour Accounts for Orkney and Shetland; other harbours; airports; tunnels; piers and slaughterhouses. The only exception is expenditure and income relating to local authority transport undertakings which should be recorded in LFR 05.

Statutory Harbour Accounts (Column T): Record expenditure and income relating to statutory harbour accounts – to be completed by Orkney and Shetland only.

5.1 Service Analysis

A detailed analysis of expenditure and income is required to be broken down by the services set out in CIPFA's SeRCOP guidance.

Employee Pension Costs (Rows 11 & 13): This should include the employer's pension contributions only. Do not include IAS 19 costs.

Operating Costs (Rows 16 to 25): Due to the change in accounting arrangements for Public Private Partnerships (PPP) and Private Finance Initiatives (PFI) schemes, as set out in Finance Circular 4/2010, only the 'fair value of services' element of the total unitary payment to the operator in year should be recorded here.

Do not include any capital charges within operating costs; these are dealt with in the statutory adjustments part of LFR A0. Capital charges include:

• depreciation of assets;
• amortisation of intangible assets;
• loss on impairment of assets;
• amortisation of government and non-government grants deferred.

Premises related costs (Row 17) should include expenses directly related to the running of premises and land, including:

• repairs, alterations and maintenance;
• energy costs, water services and CRC allowances;
• rents and rates;
• fixtures and fittings physically attached to buildings (equipment, loose furniture and materials should be recorded under 'Supplies and Services');
• cleaning and domestic supplies, including expenditure on contract cleaning (cleaning equipment should be recorded under 'Supplies and Services');
• grounds maintenance costs;
• premises insurance;
• contributions to premises-related provisions.

The total amount of Rates should also be recorded in Cell O18. If no rates have been paid, please record a zero here to resolve the validation check in Cell Q18.

Transport related expenditure (Row 19) should include all costs associated with the provision, hire or use of transport, including:

• direct transport costs, including repairs and maintenance, running costs and contributions to provisions in respect of vehicles;
• staff travelling expenses, including public transport and car allowances;
• home to school transport;
• recharges for vehicles hired from a central pool;
• contract hire and operating lease payments to outside firms;
• transport insurance, including premiums or contributions to provisions;
• contributions to transport-related provisions.

Supplies and Services (Row 20) should include all direct supplies and services expenses to the authority. This includes:

• equipment, furniture and materials;
• catering, including food and expenditure on contract catering;
• clothes, uniform and laundry;
• printing, stationery and general office expenses;
• communications and computing, including postage, telephones, radio and computer costs;
• members' allowances (and salaries where paid), including attendance allowances and special responsibility allowances;
• expenses, including subsistence and conference expenses;
• grants and subscriptions, including payments to individuals where good are received in return;
• payments for supplies and services under PFI and PPP schemes;
• contributions to provisions;
• services not otherwise distinguished in the standard SeRCOP classification, such a services on behalf of pupils and professional fees where there is no similar contact of employment.

Third party payments (Rows 21 to 24) are payments to an external provider, or an internal service delivery unit defined as a trading operation which is operating independently, in return for the provision of a service.

Third party payments will include those made to other local authorities, NHS Boards, government departments, voluntary associations, other establishments, private contractors and other agencies. In particular:

• To RTPs and VJBs (Row 21): All payments made to RTPs and VJBs must be recorded against this line.
• To NHS Boards (Row 23): Record here direct payments made to NHS Boards only. Do not include payments made to IJBs.

Where the service being provided relates to premises, transport or supplies and services, the payment should be recorded against the specific operating cost line in LFR 00 (Rows 17, 19 and 20 respectively). For example, payments for repairs or cleaning should be recorded against 'Premises related expenditure' in Row 17; or payments for catering should be recorded against 'Supplies and Services' in Row 20.

Third party capital projects funded from capital grant (Row 32): Record here the value of grants paid to third parties, including other local authorities, to finance capital projects undertaken by these third parties which were funded from capital grants, including capital grants received in year and capital grants unapplied.

The total for this row is expected to be equal and opposite to the sum of LFR 00, Rows 49 & 50 and LFR 23, Cells C36 to E36 as per the control total validation check. The HRA value has also been pre-populated on this basis.

Third party capital projects funded from revenue (Row 33): Record here the value of grants paid to third parties, including other local authorities, to finance capital projects undertaken by these third parties which were funded from revenue.

This data is required by the Office of National Statistics (ONS) and HM Treasury for National Accounts purposes.

Other Transfer Payments (Row 34): This should include debits resulting from soft loans to clients etc.

Support Services (Row 37): Record here expenditure on support services by service allocation on a funding basis. Section 15 provides detailed guidance on support services. In particular, any costs which do not come under the activities listed in Section 15.1 must not be included as support costs but must be recharged to the relevant service and included within the appropriate LFR.

Recharge income from other services (Row 39): Record here all recharge income received from other services. The expenditure side of the transaction must be recorded in the relevant expenditure line (Rows 9 to 35) and in the additional 'Expenditure recharged to other services' section (Rows 101 to 105). Local authorities should only enter zeroes in this line if there has been no recharge income. This line should also not be used to allocate shared services.

Recharges are included in the expenditure section to ensure double counting caused by internal charging is eliminated within the gross expenditure calculation.

Gross Expenditure adjusted for LFR purposes (Row 43): This line makes adjustments to the gross expenditure figure to eliminate double counting in aggregate figures caused by transfers between local authorities. This will be the basis of the Scotland gross expenditure figure reported by the Scottish Government in official statistics. It is calculated as:

Gross expenditure on a funding basis (Row 41)

Plus contributions from other local authorities (Row 55)

Plus requisitions from constituent councils (Row 56, LFR 05 and LFR 09 only)

Ring-Fenced Revenue Grants (Row 47): Record here grant income relating to Ring-Fenced Revenue Grants (RFRGs) received from Scottish Government as identified within Annex E of Finance Circular 5/2021. This line should reflect the amount of grant utilised in year against the service-specific LFR noted here:

• LFR 01: Gaelic; Pupil Equity Fund; Early Learning and Child Care Expansion
• LFR 03: Criminal Justice Social Work, including Top-up amount
• LFR 05: Support for Ferries

COVID-19 Specific Grants (Row 48): Record here COVID-19 specific grants against the service they have been used to fund. A full list of COVID-19 specific grants is provided in Annex B of this guidance.

Requisitions from constituent councils (Row 56): VJBs and RTPs should record income received from their constituent councils in this line, against LFR 05 and LFR 09 as appropriate. An adjustment has been made to calculations in LFR A0 to eliminate double counting for VJBs and RTPs who treat requisition income as non-service income in their accounts.

Contributions from NHS Boards (Row 57): Record here all payments received from NHS Boards, including any elements of SG Grant that has been paid to NHS Boards and then distributed to local authorities. Do not include any amounts received from IJBs in this line.

Income from fees or charges to service users (Row 63): Record here all income received from fees & charges for services, use of facilities, admissions and lettings.

Rent Income (Row 64): Record here all income received from rents, tithes, acknowledgements, way leaves and other land and property-based charges of a non-casual user.

Other customer and client receipts (Row 65): Record here any income from customer and client receipts that has not already been recorded in Rows 63 and 64. This should include sales of products or materials, data technology, surplus products and credits resulting from soft loans.

Gross Income adjusted for LFR Purposes (Row 70): This line makes adjustments to the gross income figure to eliminate double counting in aggregate figures caused by transfers between local authorities. This will be the basis of the Scotland gross income figure reported by the Scottish Government in official statistics. It is calculated as:

Gross income on a funding basis (Row 68)

Minus contributions from other local authorities (Row 55)

Minus requisitions from constituent councils (Row 56, LFR 05 and LFR 09 only)

Net Revenue Expenditure on a funding basis (Row 72): This line calculates net revenue expenditure based on Rows 41 and 68. The validation check in Cell Q72 ensures the General Fund and HRA figures match those in LFR A0, Row 12.

5.2 Additional Information

Total Revenue Contributions to Capital (RCC) (Row 77): Record here all revenue contributions to capital (RCC) by General Fund service. RCC for the HRA is pre-populated based on LFR A0, Cell D109.

The validation check in Cell Q77 requires the total RCC recorded in this row to match capital expenditure funded from General Fund / HRA / Harbour Accounts as recorded in LFR A0, Cell F109.

Integrated Joint Boards (Rows 79 to 83): This section captures the required figures for transactions relating to Integration Joint Boards (IJBs). In particular:

Transfer Payment to IJB (Row 80): Record here the total amount transferred to the IJB in Column O. This should match the amount stated in your annual accounts. This figure is then used to pre-populate LFR 00, Cell E31 and LFR 03, Cell H12, replacing the 'Contributions to IJBs' row required in LFRs prior to 2019-20.

Where an element of the transfer payment to the IJB comes directly from the HRA, the following additional transactions must also be recorded:

• the transfer amount paid directly from the HRA should be recorded as expenditure in Cell N34 to ensure the amount of expenditure recorded against the HRA is correct and in line with figures entered in LFR A0;
• a recharge to LFR 03 (Cell E39) for the same value to ensure the double counting of this expenditure against both LFR 03 and HRA is eliminated.

If these additional transactions are not recorded, the net revenue expenditure split between General Fund and HRA in LFR 00 will not match to that in LFR A0 and the validation check at LFR 00, Cell Q72 will fail.

Income from IJB to commission services (Row 81): Record here the total amount of income to commission services received from the IJB in Column O. This should match the amount stated in your annual accounts.

Expenditure on services commissioned by IJB (Row 82): Record here the expenditure commissioned using income received from the IJB split by service, as included in the expenditure figures recorded in Rows 8 to 43 of LFR 00.

Rows 81 and 82 are expected to be equal and opposite to each other, as per the validation check in Cell Q82. On this basis, Row 82 is used to pre-populate 'Income from IJB to commission services' (Row 58), replacing the 'Contributions from IJBs' row in LFRs prior to 2019-20.

Grants and Payments to Third Sector Bodies (Rows 85 to 94): Record here gross grants and payments to third sector bodies, and any grants used to fund these. This data was collected in LFR 10 in returns prior to 2019-20.

Third sector organisations are non-governmental, value-driven and principally reinvest any financial surpluses to further social, environmental or cultural objectives. They include voluntary and community organisations, charities, social enterprises, cooperatives, housing associations, credit unions, mutual and development trusts. Trade Unions and political parties should be excluded.

Payments for the provision of services by third sector bodies (Row 86) should include fees, charges and subsidies paid by the local authority to the third sector body for the provision of services.

These amounts should also be included in the expenditure and income sections of LFR 00, as well as the relevant service-level LFRs. Grants paid to third sector bodies will be included as a transfer payment. Payments for the provision of services by third sector bodies will be included within Operating Costs as a third party payment. Grants received by the local authority that are used to fund grants or payments to a third sector body should be recorded in the appropriate income line.

IFRS 16: Leases (Rows 96 to 99): The Financial Reporting and Advisory Board (FRAB) have permitted a further extension to the timeframe for adoption of IFRS 16 to 1 April 2024. However, local authorities are strongly encouraged to adopt IFRS 16 earlier and can choose to do so from 1 April 2022.

To ensure the impact of adoption of IFRS 16 can be quantified throughout the transition period, this section has been added to LFR 00 to capture the operating lease costs currently reflected in revenue expenditure figures recorded in LFR 00, Rows 8 to 43. Principal repayment values should be recorded in Row 97, with the associated interest costs recorded in Row 98. Where these two separate elements are not readily identifiable, the total value should be recorded in Row 97.

Expenditure Recharged to Other Services (Rows 101 to 105): It has been noted that, whilst the current recording of recharge income within LFRs eliminates double counting due to intra-authority transfers at a gross expenditure level, there may still be double counting within specific expenditure categories. As an initial step to understand the impacts of this, a new section to capture the amount of expenditure recharged to other services has been added to LFR 00.

This section should reflect the expenditure element associated with the figures that are reflected in the 'Recharge income from other services' line (LFR 00, Row 39) by the three expenditure categories in Rows 102 to 104 respectively.

For example, say Education recharges Environmental Service for £100k of Supplies & Services costs, the following amounts would be recorded in LFR 00:

• Environmental Services record the actual £100k expenditure associated with paying for the Supplies & Services in Cell H20;
• Environmental Services also record the £100k recharge income received from Education in Cell H39;
• Education record the recharge expenditure paid to Environmental Services for Supplies & Services in Cell C20 (creating a double count in Row 20) and record this expenditure in Cell 103.

The Total Expenditure Recharge value in Cell O105 must be equal and opposite to the value of recharge income recorded in Cell O39 and this is validated via the control total check in Row 105.

Additional Gross Expenditure directly related to COVID-19 (Row 108): Record here new gross expenditure that has been incurred as a direct result of the local authority response to the COVID-19 pandemic for each service. This should not include any reduced expenditure due to savings. These figures will already be included in the Expenditure section of LFR 00 (Rows 8 to 43).

As a guide, figures should be in line with additional expenditure recorded in the COVID-19 Local Government Financial Pressures data collection run by CoSLA. However, please note that the following should not be included as additional COVID-19 expenditure in this line:

• any reduced expenditure / netting off due to savings or reduced costs;
• redeployment of staff resources;
• continued payment of service providers to ensure future service provision;
• lost income, for example from sales, fees and charges, due to COVID-19.