Local Financial Return (LFR) 2020-2021: guidance

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.

Third party payments (Rows 21 to 24) are payments to an external provider, or an internal service delivery unit, which is operating independently in return for the provision of a service. Where a service being paid relates to the type of expenditure (e.g. building repairs, cleaning, catering etc.) then the payment should be recorded under supplies and services. 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.

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 and was previously captured in CR Final (Part L).

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

Total Support Services on a Funding Basis (Row 37): Record here expenditure on support services by service allocation. 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), 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): Ring-Fenced Revenue Grants (RFRG) received from Scottish Government should be recorded in this line against the relevant service area. In 2020-21, RFRGs that may be recorded are:

• LFR 01: Gaelic; Pupil Equity Fund; Early Learning and Child Care
• LFR 03: Criminal Justice Social Work
• LFR 05: Support for Ferries

Please note that, due to Covid-19, ring-fencing was lifted on ELC and PEF grants, but on the condition the money still be spent on Education. Row 47 should only reflect the amount of grant spent on the ring-fenced area. Any grant used more generally should be recorded as 'Other central government grants' in Cell C51. Validation of Education RFRG figures will be updated to reflect this guidance.

The remaining RFRGs listed above remained fully ring-fenced in 2020-21 and so the full value of RFRG received and applied should be recorded in Row 47.

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.

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 D106.

The validation check in Cell Q77 requires the total RCC recorded in this row to match capital expenditure funded from GF / HRA / Harbour Accounts as recorded in LFR A0, Cell F106.

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 previous LFRs.

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 previous LFRs.

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 bodieswill 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.

Additional Gross Expenditure directly related to Covid-19 (Row 97): 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. These figures will already be included in the Expenditure section of LFR 00 (Rows 9 to 37).

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. The following should not be included as additional Covid-19 expenditure within LFR 00:

• 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.