Annual Report and Financial Statements Year ended 31 March 2007
September 2007
Contents
Annual report
page
Chairman’s Statement
1-2
Chief Executive’s Review
3-4
Operating Review Governance Environmental Policy Statement
5 - 13 14 - 17 18
Directors Report
19 - 23
Remuneration Report
24 - 29
Statement on Internal Control
30 - 31
Certificate and Report of the Comptroller and Auditor General
32 - 33
Financial statements Income & Expenditure account
34
Statement of recognised gains and losses
35
Balance sheet
36
Cash flow Statement
37 - 38
Notes to the financial statements
39 - 63
1
Chairman’s Statement
The Northwest Regional Development Agency (NWDA) has a bold ambition for the region – to build on our strengths, seize new opportunities and grow our £106 billion economy. The last seven years have taught us much about how to achieve this growth. One of the most crucial lessons is that investing in significant transformational projects has the most impact on our economy and this is increasingly where the NWDA is focusing its attention. Last year saw significant progress on many of the transformational actions identified in the five themes of the Regional Economic Strategy (RES) – Business, Skills & Education, People & Jobs, Infrastructure and Quality of Life. The digital and creative industries sector has the potential to be a key driver of growth for the Northwest. The development of mediacity:uk at Salford Quays, including the BBC’s decision to move 1,500 jobs to mediacity:uk, was a major boost for the sector last year and will cement Greater Manchester’s reputation as a hub for world-class creative industries. The development will define the Northwest as a global centre for media and creative industries, employing 15,500 people and adding £200 million annually to the regional economy. Another important development was the launch of Business Link Northwest in April 2007. The new service is providing the region’s businesses with a primary access point for business support and a more efficient, consistent and targeted service. Enabling companies to access the support that they need is essential and we are confident that the new service will deliver high quality, appropriate advice. Together with Business Link Northwest, the Agency also secured the contract for the regional Skills Brokerage Service delivered under the Train to Gain brand in the Northwest. The service marks the beginning of a new and more dynamic way of identifying comprehensive solutions to the business and skills requirements of employers.
Improving the provision of Higher Education for young people across the region is essential. In 2006/7, progress has continued on two major developments the new University of Cumbria, which opens its doors to students in September, and a new campus and University Centre for Burnley College. For a number of years, partners have been working hard to build a stronger Higher Education framework for Cumbria and East Lancashire; both developments will help to retain our talented young people in the region. The RES recognised that the city-regions of Manchester, Liverpool and Central Lancashire, drive our economy. There are also other areas with acute needs. In Blackpool, new solutions are needed to support the town’s regeneration and economic growth. Following the regional casino decision, our commitment to the town’s development is an even greater priority. I am pleased that the NWDA, Government Office for the North West and ReBlackpool, have been asked by Government to expand an existing group of organisations into a task force to secure Blackpool's future regeneration. The task force will be working hard to examine Blackpool’s economic, social and environmental plans and develop innovative long-term solutions. Economic growth relies on effective transport and communications networks, together with high-quality employment sites and sustainable uses for brownfield land. Strong progress has been made on key business sites including Kingsway in Greater Manchester and Luneside in Lancaster, while the £23 million Newlands programme is helping to transform brownfield land across the Northwest. The RES emphasises the importance of our Quality of Life – our culture and image, communities and environment. Culture is taking centre stage with the fourth Liverpool Biennial last Autumn and good progress on both the Manchester International Festival and Liverpool as European Capital of Culture. As Liverpool begins the countdown to its 2008 celebrations with its
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800th birthday in 2007, we must work together to seize the opportunity to showcase both Liverpool and the Northwest to the UK and overseas. The Agency will be working closely with the Culture Company to make the most of the economic benefits it provides for the whole region. The growing emphasis on climate change and our environment was a key priority during 2006/7 and will continue to be so. The NWDA is working hard with its partners to address the causes and respond to the £30 billion opportunity that climate change offers British business over the next ten years. In November 2006 the region launched its Climate Change Action Plan, designed to maximise the positive impact of environmental change and ensure that we understand both the risks and the opportunities for the environmental technologies sector. Over the coming year the Agency will be playing a full part in ensuring that the Action Plan delivers real progress for the region. The RES is now widely recognised as the blueprint for the Northwest’s sustainable future. I would like to thank everyone for their efforts and encourage continued enthusiastic and vigorous support. I would like to thank specifically NWDA’s Chief Executive and everyone of the Agency for their contribution. I also thank the NWDA Board for their dedication and commitment and specifically to thank those Board members who will retire this year, namely Anil Ruia, Mike Storey, Pauleen Lane, John Moverley and David Brockbank.
Bryan M Gray, Chairman
3
Chief Executive’s Review
In 2006/07 the Agency focused on working with partners to implement the priorities and transformational actions identified in the Regional Economic Strategy (RES). I am pleased to say that the delivery of the RES has reflected the process of the Strategy’s development - with all of our partners working together to ensure we are focusing on delivering the priorities that will make the most impact on our economy. The Agency has continued to strengthen its relationship with Sub-Regional Partnerships throughout the year to ensure the RES is supported at a sub-regional and local level. Over the coming year, we will be focusing on driving forward the development of the City Regions of Manchester, Liverpool and Preston/Lancashire, given their capacity to increase the region’s economic performance. I was pleased to see Government’s positive response to the Northern Way’s focus on the key policy areas that will improve the North’s economic performance. In 2006/07, a review of Northern Way priorities ensured a greater focus on major projects that will have the most impact across the North and three areas were prioritised for activity – transport, innovation in industry and levering in more private sector investment. Following our ‘Performing Strongly’ rating in last year’s Independent Performance Assessment (IPA), the National Audit Office, working with the Agency, identified several areas for improvement. The assessment was a great opportunity for the Agency to take stock of progress we have made and we have already begun to implement changes to ensure that we are continually striving for improvement. A key focus for the Agency’s work for the coming year will be delivering efficiency and value for money across all of its activities, in line with central Government targets, which will enable the Agency to release resources for front line programmes. Enhancing our approach to the evaluation of our projects and programmes will also ensure that all of our decisions are based on a robust evidence base.
It is vital that we have an efficient and effective organisation in place to ensure the Agency is equipped to deliver its part in the RES. Continuing to develop highquality people management practices and delivering on our equality and diversity obligations will be an important factor in this. Many of the Agency’s achievements throughout the year are included within this annual report, but I would like to highlight the following: • Key milestones reached in the region’s scientific capabilities, including the opening of Daresbury Science and Innovation Centre and Campus, the Cockcroft Institute, and the launch of the National Biomanufacturing Centre. • The launch of the second Northwest Science Strategy, which aims to position the region as an international centre of excellence. • The development of Business Link Northwest, the new business support service for the region, designed to increase the number of businesses and individuals accessing business support across the Northwest. • Confirmation of the BBC’s move to Salford, bringing together several departments as the anchor tenant for mediacity:uk. • Helping to safeguard the future of the Vauxhall plant at Ellesmere Port as the new Astra is secured for the plant. • The region working together to develop the Northwest Climate Change Action Plan which highlights key priorities for action and the economic opportunities climate change presents. • The launch of NorwePP, a public private partnership between the Agency and Ashtenne Industrial Fund, a critical tool in improving the performance of the Agency’s property portfolio. • Major developments in the region’s Higher Education infrastructure, including the new University of Cumbria, which opens its doors to students in September this year, and a new campus and University Centre for Burnley College.
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• Construction commencing on the Nuclear Academy in Cumbria, a world class centre of excellence for nuclear skills development. • The creation of the Blackpool Task Force, a crucial step forward in securing Blackpool's future regeneration, along with excellent progress being made on the Central Seafront redevelopment. • The most successful Open Golf Championship ever staged in England, which attracted around 230,000 visitors. • Significant progress made on the Kings Dock Arena and Convention Centre in Liverpool, which has so far attracted over 80 national and international events. • The results of our latest Ipsos MORI research, which revealed excellent trends in the perceptions of England’s Northwest as a place to live, visit and do business. • Liverpool’s countdown to its European Capital of Culture celebrations, which offers a unique opportunity to showcase both Liverpool and the Northwest to the UK and overseas. Whilst excellent progress is being made in the region, the coming year will be vital in maintaining this momentum and ensuring that all of our partners – local, regional and national - are delivering an improved economy for the Northwest. I am determined to build upon the region’s strong position and ensure that the Agency leads the Northwest to even greater success. I would like to sincerely thank those members of the Board who will be leaving in December 2007. I have valued their advice and guidance.
Steven Broomhead, Chief Executive
5
Operating Review
Key achievements against output indicators The following section provides an overview of the Agency’s performance during 2006/07 against the indicators determined by the DTI for assessing and comparing Regional Development Agency performance. The Agency also publishes (as a separate document) an Annual Performance Monitoring Report summarising its
key achievements during the year. This provides further analysis of progress made against the objectives and priorities of the 2006/07 Business Plan. The Agency exceeded mid-point targets in each of the ten headline and mandatory indicators. These are detailed below:
Summary of performance Key achievements Target Range Number of jobs created or safeguarded.
12,750
15,000
Achieved 19,756
This target has been exceeded thanks to a number of large scale inward investment and economic regeneration projects.
Target Range Number of people assisted to get a job.
1,500
2,500
Achieved 3,654
Target has been exceeded due mainly to Urban Regeneration programmes.
Target Range Number of new businesses created/attracted to the region.
1,720
2,580
Achieved 3,306
Target achieved mainly through Business Link operation.
Target Range Number of businesses assisted to improve their performance.
16,800
25,200
Achieved 23,952
Mid point target achieved mainly through Business Link operation and a series of successful Tourist Board projects in the Region.
Target Range Number of businesses within the region assisted to engage in new collaborations with the UK knowledge base.
750
Target achieved mainly through the Higher Education Innovation fund programme.
1,250
Achieved 1,341
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Operating Review (continued)
Target Range
Achieved
Public and private regeneration infrastructure investment levered. Total ÂŁm % private leverage
320 38%
540 62%
347 74%
Out-turn figure for overall ÂŁ investment is within target range. The proportion of private sector investment has exceeded the target range.
Target Range Hectares of brownfield land reclaimed and/or redeveloped.
245
335
Achieved 299
Out-turn within the target range. NWDA remains a major contributor to the Government’s national brownfield land target.
Target Range Number of people assisted in their skills development.
10,000
15,000
Achieved 25,793
Target greatly exceeded. Most productive year to date for skills assists. However through a more rigorous project appraisal process the Agency is becoming more efficient at identifying the true delivery from projects and this has contributed in part to the gap between forecast and actual delivery. Target Range Number of adults in the workforce achieving at least National Vocational Skills Qualification Level 2 or equivalent.
340
560
Achieved 1,028
The Agency has exceeded its maximum target for the year. Target Range Number of adults gaining basic skills. The Agency has exceeded its maximum target for the year.
825
1,375
Achieved 1,908
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Key Activities 2006/07 Business Developing an enterprise culture The implementation of key transformational actions within the Regional Economic Strategy (RES) has been a main focus of the Agency’s business activity throughout the year. One critical project to get underway was the streamlining and simplification of business support, and a key milestone in this area was the introduction of Business Link Northwest. The new service will provide a highquality, consistent and targeted service for businesses. Importantly, it will address their needs and skills gaps whilst also impacting positively on the regional economy through encouraging business growth. Promoting an enterprise culture, particularly amongst the region’s young people, plays an important role in nurturing future talent for the Northwest. During the year, the Agency supported a number of initiatives to raise the profile of enterprise at a local and regional level, including ‘The Next Big Thing’, an event held as part of National Enterprise Week, aimed at inspiring young people to turn their business ideas into reality. Knowsley was also named the Northwest regional winner of the Enterprising Britain 2006 competition, following its success in developing a grassroots enterprise culture and reducing unemployment in the borough from 22% to 4% over the past 20 years. As part of the competition, the borough was awarded an Agency grant to further stimulate enterprise activity. With flexible working practices also proven to generate significant returns for employers in terms of productivity and reduced costs, this year saw the launch of the Northwest Flexible Working Group, to encourage and support this activity further in the region. Recognising the important contribution that social enterprise make to the regional economy, the Agency has introduced an active programme of support for the sector. Following the establishment of Social Enterprise
Partnerships in each sub-region, the Agency has provided investment to take forward the development and implementation of key action plans. These are targeted at developing new mark opportunities for social enterprise organisations and tackling the barriers faced when bidding for contracts. Growing key regional sectors Support for key sectors with high growth potential, including creative industries, biomedical, food and drink and advanced engineering and materials, continues to be a goal for the Agency. Greater Manchester’s reputation as a hub for world-class creative industries has been strengthened over the last year, following the ongoing development of mediacity:uk at Salford, another transformational action in the RES. The development is set to employ 15,500 people and add £200 million every year to the regional economy. Central to the project is the BBC Trust’s intention to move1,500 jobs from London to Salford, creating the largest BBC presence outside of London and bringing together several departments as the anchor tenant for mediacity:uk. The Agency’s intervention is placing the region at the cutting edge of biopharmaceutical progress. Following a £23 million investment by the NWDA and the Objective One programme, the Liverpool School of Tropical Medicine’s new Centre for Tropical and Infectious Diseases has been officially opened. Having since levered in a further $73 million from the Gates’ Foundation, the facility is attracting scientists from around the world and will maintain the School’s position as a leading research institute. Another project which is adding to the region’s growing importance in worldwide biotechnology is the National Biomanufacturing Centre at Speke, which was also opened this year. The £34 million centre, which was made possible with funding from the NWDA, the Objective One programme and the DTI, provides expertise to support new and existing biotechnology companies and is poised to lead the next wave of biopharmaceutical development.
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Operating Review (continued)
As part of the business simplification agenda, a new organisation to support the food and drink sector in the region has been established. Food Northwest, which draws together the expertise of Northwest Food Alliance and Northwest Fantastic Foods Partnership, will focus on priority areas including market development, productivity and sustainable farming and food. The Agency is reinforcing the reputation of the region as a major player in the aerospace sector, through investment support for a major research and development programme at BAE Systems, Warton. The initiative forms part of the ASTRAE initiative, which aims to put the UK at the heart of Unmanned Aerial Vehicle (UAV) technology, and will ensure the Northwest is in a strong position to exploit this emerging market. Encouraging scientific excellence The Northwest was the first region to recognise the importance of science as a driver for economic growth and is increasingly recognised as a centre of excellence for scientific and medical research. Building on this success, an important milestone was the launch of the new Northwest Science Strategy, which aims to ensure that the region can meet the science and technology needs of regional businesses. Developed by the Northwest Science Council, the new strategy reflects the growing importance of science and R&D investment as a key driver for economic growth. Another scientific achievement was the opening of the flagship Daresbury Science and Innovation Campus, which received £50 million investment from the Agency, and the launch of the Cockcroft Institute, the national centre for accelerator science. The development of this strategic national site reinforces Daresbury’s future as one of the UK’s two premier science and innovation campuses. Driving forward sustainability Climate change is a critical issue for the region and the NWDA is working hard with its partners to address the causes of climate change and respond to the £30 billion opportunity that it presents British business over the next ten years.
To mark the beginning of increased action in this area, last year saw the launch of the region’s Climate Change Action Plan, which highlights key priorities for action to ensure the region is prepared for the challenges of a changing climate. With energy efficiency and waste disposal both major issues for the region, the Agency is continuing to assist Northwest businesses in reducing waste and managing their resources more efficiently. Through the BREW Northwest programme, the Agency is supporting Environment Connect, a new service providing a single point of contact for a variety of environmental business services. The service will help Northwest companies save £3 million every year through improved environmental performance. Reinforcing the important area of energy research and development is the Joule Centre, an international centre for energy research which has been developed by the Agency and Northwest universities. Projects underway include an investigation into the region’s available tidal power resources. Increasing competitiveness and investment Foreign-owned companies gave the Northwest economy a major boost in 2006/07 by investing in over 132 inward investment projects, 40 more than the previous year, and creating or safeguarding over 7,000 jobs, according to figures released by UK Trade and Investment (UKTI). The Agency supported UKTI in assisting 107 companies to become new exporters and a further 155 to enter new markets. Capitalising on the increasing confidence in the Northwest as an international business location, the Agency has developed the Northwest Internationalisation Strategy. The plan is an ambitious, integrated approach to international trade and is set to further boost the Northwest’s global profile. Working in partnership, the Agency has also supported a number of investment projects through the Selective Finance for Investment scheme (SFI). Key projects include a grant for Blackburn-based manufacturing company PPE, enabling them to invest in state-of-the-art machinery and streamline production.
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Investing in workforce development As the lead Regional Development Agency for employment, skills and higher education, the NWDA continues to drive forward a number of programmes to build a skilled workforce relevant to the needs of business and industry. In July 2006, working with Business Link the Agency secured the contract for the regional Skills Brokerage Service delivered under the Train to Gain brand in the Northwest. The service, designed to help businesses identify their workforce training needs and link these with training and learning providers, marks the beginning of a new and more dynamic way of identifying comprehensive solutions to the business and skills requirements of employers. The Leitch Review, published in December 2006, identified a greater future emphasis on knowledgebased jobs. In response to this, the Agency and its partners are investing heavily to ensure that the region is able to compete internationally and become a world leader for skills. Initiatives being pioneered in this area include the £19 million Nuclear Academy in Cumbria, an NWDAfunded project which will help to identify and improve standards and training throughout nuclear industries across the UK and will form part of the National Skills Academy for Nuclear. With construction now underway, the Academy is set to become a world-class centre of excellence in terms of nuclear decommissioning and energy production. Delivering the skills required by priority sectors is essential to support their growth. In the Northwest, the Agency is working closely on the development of skills academies for food and drink, construction, manufacturing and financial services, which aim to tackle skills shortages in these sectors. Additional support is also being provided to ensure the important digital and creative section is equipped to capitalise on Salford’s mediacity:uk development.
Enabling Northern businesses to access world-class knowledge remains a significant objective for the Northern Way, which is driving forward the Northern Leadership Academy, a £5 million project to strengthen leadership across the North. The Academy has already published its first set of principles of leadership development, the first in a series to address the issues and requirements facing leadership development in the private, public and voluntary sectors. Developing educational infrastructure A number of significant projects have been supported by the Agency throughout the year to develop greater links between business and Higher Education (HE) and encourage universities and colleges to play a larger role in the regional economy. Key transformational actions for skills development identified within the Regional Economic Strategy (RES) have also taken major steps forward. A major development in this area includes the new University of Cumbria, which opens its doors to students in September 2007. The new university is expected to take 15,000 students on opening day, a figure which will rise to 20,000 in the next ten years, and will be critical to retaining talent in the region. Education in Lancashire has also received a significant boost, following a £20 million investment by the Agency and the University of Central Lancashire (UCLan) for a new state-of-the-art campus and University Centre for Burnley College. The investment will help to build a stronger Higher Education framework for East Lancashire by promoting enterprise and entrepreneurialism, as well as making education provision more responsive to local business needs. Meanwhile, in Cheshire, construction on a £38 million world-class education campus is underway, which will transform education opportunities for 14 – 19 year-olds in the area. Macclesfield Learning Zone will provide a high quality education service to address the needs of local businesses, as well as housing a flagship Centre of Vocational Excellence for aerospace engineering.
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Operating Review (continued)
Transforming the region The Agency has made considerable progress throughout the year to ensure that focused and integrated regeneration plans are developed across the Northwest which reflect regional and sub-regional strategic priorities. The regeneration of the region’s towns and cities remains a priority in driving forward economic growth and across the region’s urban areas. The Agency continues to work with Urban Regeneration Companies (URCs) in implementing master plans for the transformation of their areas. In Liverpool, investor demand is driving capital growth faster than any other provincial city, not least due to the high quality retail, leisure, office, residential and public realm schemes which are transforming the city centre. One such project is the regeneration of the Hope Street area of the city, where a £2.9 million scheme, partfunded by the Agency, has helped to lift the quality of Liverpool’s cultural quarter. East Manchester’s physical, economic and social renewal continues, with a mid-term evaluation of New East Manchester (NEM) activities showing that East Manchester has ‘added value’ to the economic success of the city centre over the past decade. NEM’s key achievements to date include the construction of more than 3,400 new homes – with a further 6,000 in the pipeline – and the creation or safeguarding of more than 3,000 jobs. In Salford, plans to transform the Chapel Street corridor to the city are taking shape, following Agency support to regenerate land for development. The scheme, which will be delivered by Central Salford URC, aims to encourage new employment opportunities in, or near to, deprived communities. In Lancashire, the Agency is working with ReBlackpool URC by providing strategic leadership to secure Blackpool’s economic future. Key Agency-funded projects completed or underway in the resort include an upgrade of the Central Seafront area, supported by a £12 million NWDA investment, and an additional
£9 million funding for the creation of urban park along the gateway into the resort. In addition, the Agency and partners have established a regeneration taskforce for Blackpool, with a clear focus on examining the economic, social and environmental development plans for the area. Through West Lakes Renaissance, the Agency is implementing a number of programmes to regenerate communities, encourage new business opportunities and enhance skills in West Cumbria and Furness. In Workington and Maryport, a £14.5 million investment by the Agency will provide key public realm improvements, expand Maryport Harbour and examine the development potential of the former Corus steelworks. In Barrow, plans for the £60 million redevelopment of Barrow Port are progressing well, with key site acquisitions having taken place this year. In Cheshire, a £4 million investment by the Agency is facilitating a number of environmental improvement and infrastructure schemes to create new business and employment opportunities within Ellesmere Port’s Economic Development Zone. The investment is expected to attract other public and private sector development and local employment initiatives. Providing economic leadership The NWDA has been using its strategic influence to secure a future for West Cumbria through the development of a spatial master plan, which will act as a blueprint for future investment priorities in the area. Jointly funded between the Agency and the Nuclear Decommissioning Authority, the plan is designed to counter the effect of job losses through decommissioning and aims to establish West Cumbria as a centre for energy technology and innovation. The Agency also continued to strengthen its relationship with Sub-Regional Partnerships (SRPs) throughout the year to ensure the Regional Economic Strategy (RES) is supported at a sub-regional and local level. Key action plans are now in place for each SRP, which identify the economic priorities for improving the economic performance of each sub-region.
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The three city regions of Greater Manchester, Merseyside and Central Lancashire are key growth drivers of the Northwest, with the potential to lift the long-term economic growth of the region. Activity to deliver the second round of City Region Development Plans is already well underway, following their submission to the Northern Way in September 2006. In other areas of work, the Northern Way is also continuing to pioneer initiatives to improve employability and provide targeted training support for the unemployed, helping to deliver skills required by employers. Liverpool and Birkenhead are the latest areas to benefit from a programme to drive down the number of people claiming incapacity benefit and improve career prospects. Strengthening rural communities Supporting the ongoing growth of the rural economy remains a priority for the Agency, which is working to provide new economic opportunities for rural communities and businesses. In Cheshire, the NWDA-supported Rural Enterprise Programme has already exceeded all of its targets ahead of schedule, investing over £10 million in the local economy, supporting the establishment of 115 new businesses and creating or safeguarding over 1,200 jobs. The region’s Market Town Initiative continues to deliver social and community regeneration by raising rural living standards and attracting investment, with over £11 million invested by the NWDA to date. In Barnoldswick (Lancashire) the creation of an enterprise centre will create 20 new jobs and lever in a further £440,000 public funds, while in Millom (Cumbria) a new network centre is providing a range of facilities to support local enterprise and start-up businesses. Across the region, a valuable service assisting rural businesses with their development proposals has received a further 3 years investment by the NWDA. The Rural Planning Facilitation Service, which will create 200 new jobs, 45 new farm-based enterprises and 50 other businesses, will also lever in an additional £1.5 million of private sector investment.
Determining priorities Improving the region’s transport and land and property infrastructure remains an investment, planning and lobbying priority for the Agency, which continues to use its strategic influence to ensure that regional spatial, transport and housing priorities are aligned to the Regional Economic Strategy (RES). Working in partnership with the North West Regional Assembly and Government Office for the North West (GONW), the NWDA is building on advice set out to government in the Regional Funding Allocations, a key document which sets out agreed housing, transport and economic development priorities for the regions. Significant progress was the announcement of the Department for Transport’s 10-year transport programme for the Northwest, which saw schemes including Manchester’s Metrolink expansion and the Mersey Gateway receive vital government support. Intra-regional connectivity, as well as links to other regions in the UK, Europe and the world, remains vital in improving access for businesses, people and goods. Through the £6.5 million Air Services Development Fund Alternative Measures programme, the Agency is helping to support growth, attract new carriers and improve international connectivity at Liverpool, Manchester, Blackpool and Carlisle airports. Creating high quality business locations Key progress has been made by the Agency throughout the year on a number of strategically important employment sites across the region, creating jobs and attracting significant private sector investment. Infrastructure works at the £5.9 million Agecroft Commerce Park, a former Salford colliery site, are now complete, with several major companies having already relocated their business to the site. In Greater Manchester, Kingsway’s growing reputation as a business location has been reinforced, with the majority of the first phase of the £350 million project expected to be allocated over the next 12 months.
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Operating Review (continued)
Luneside East’s redevelopment has taken a visible step forward following demolition works and the drawing up of detailed proposals for the final development of the site. The project will bring much-needed affordable housing to the area, as well as contribute to Lancaster’s riverside commercial and leisure offer. Work is also underway at key employment sites at Edge Lane, Liverpool, where a £4.6 million NWDA investment is supporting the development of Liverpool Innovation Park. The improvements to the Park, which aim to attract investment from businesses in the science, technology, digital, creative and IT sectors, are expected to generate 1,000 jobs for the area. In other improvements to the area, the NWDA-owned former Littlewoods building is currently being transformed into apartments, commercial space and a hotel, as part of a £65 million scheme by property experts Urban Splash. Widnes Waterfront’s regeneration also continues, following a £5.6 million investment by the Agency to bring over eighty hectares of derelict land back into productive commercial and tourism use, creating 2,700 new jobs and levering in an additional £70 million investment from the private sector. To enable the Agency to focus on further opportunities to bring forward strategic employment sites, in December 2006 the public-private partnership NorwePP was launched by the NWDA and Ashtenne Industrial Fund (AIF) to manage and develop the Agency’s portfolio of commercial property. The joint venture will maximise the growth potential of the portfolio, particularly in providing accommodation for companies to create employment within the region. Developing cultural appeal As one of the most artistic and culturally dynamic regions in Europe, England’s Northwest is becoming increasingly recognised at both national and international level.
As Liverpool begins the countdown to its European Capital of Culture celebrations, the Agency is working closely with the Liverpool Culture Company on marketing the city, and the Northwest, to the UK and overseas. Helping to maximise the impact of Capital of Culture are complementary programmes being run by the subregional Tourist Boards, including Cheshire’s Year of Gardens and Taste Lancashire ’08. Liverpool’s reputation for culture and the arts was reinforced as the Liverpool Biennial, supported by the Agency, continued to go from strength to strength with over 400,000 visitors to the event in 2006 – an increase of 50,000 on 2004. Elsewhere in the region, the world’s first international festival of original new work, Manchester International Festival, is expected to attract thousands of local, national and international visitors. The Agency is a major sponsor of the Festival, which was launched in 2006 with a series of trailblazer events. Strategic tourism leadership With the Northwest’s tourism industry valued at almost £11 billion, it is essential to ensure that the region is well placed to take advantage of the opportunities presented by the market’s changing nature. To reinforce the region’s competitive edge, this year the Agency published a reviewed Tourism Strategy and developed a regional Business Tourism Strategy. The region’s reputation for excellence was bolstered further when the Northwest went on to win a record-breaking four Gold accolades in the national Enjoy England Awards for Excellence 2007. Encouraging visitor and investment to the region and showcasing the very best of the Northwest’s offer continues to pay dividends. An Ipsos MORI survey, commissioned by the Agency, revealed upbeat trends in the perceptions of the region as a place to live, work, visit and do business, with 35% of British people living outside the region associating the Northwest with success, a 13% increase from 2001.
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Marketing the region The Agency is continuing to exploit a number of themes with clear market potential in order to capitalise on the region’s distinct range of experiences and to encourage visitors. The eyes of the golfing world fell on Hoylake in July 2006, as the Open Championship returned to the region, showcasing England’s Northwest to an international audience and generating over £4.2 million of coverage in UK newspapers alone. Agency-supported initiatives to capitalise on the economic benefits of the event include a visitor guide providing tourist information for the 200,000 visitors to the Open, and an ‘England’s Golf Coast’ marketing campaign.
On Merseyside, efforts to spearhead the second phase of Mersey Waterfront Regional Park have stepped up following additional investment of almost £18 million from the NWDA and the European Regional Development Fund. Ambitious plans include the creation of Liverpool Riverlands urban park, a waterbased recreation centre at Crosby, a comprehensive resort redevelopment at New Brighton and a new ferry terminal at Pier Head. Elsewhere, the Agency is working with the regional tourist boards on developing tourism products to grow the visitor economy. Key proposals include masterplans for Chester Zoo, Blackpool and Lowther Castle and Gardens. Investing in communities and the environment
Visitor marketing campaigns have been launched to highlight the region’s cultural assets and natural environment. The Agency challenged London’s position as the arts capital of the UK by profiling some of the best artistic work from the region at ‘Exposed’, a one-off showcase event at Manchester Square, London, which attracted major figures in the arts and culture scene. With the Lake District at the heart of the Beatrix Potter biopic, Miss Potter, the Agency has also focused attention on promoting the Northwest’s stunning natural environment and encourage visitors to discover the beauty of the area, and the region. The Northwest continues to be successful in attracting major events, helping to project a positive image of the region to an international audience. Major events secured for 2007 include the WTF World Taekwondo Qualification Tournament and the Dunlop British Open. Improving the visitor experience With estimates suggesting that the heritage tourism market could be worth as much as £3 billion to the region, support is essential to capture the economic benefits. The £1 million Heritage Tourism Improvement Scheme, funded by a partnership including the NWDA and English Heritage, has encouraged heritage attractions to improve educational activities, disabled access and interpretive facilities.
With over £24 billion of public money spent each year on regeneration and economic renewal in the Northwest, the ‘Places Matter!’ programme is working to raise the quality of the region’s build environment. A regional design review service supporting public and private sector developers in driving up quality forms part of the scheme, which is being led by RENEW Northwest. Developing regeneration skills also forms a key part of RENEW Northwest programme. Working alongside the Academy for Sustainable Communities and local partners, the organisation is helping to identify regeneration skills gaps through Fusion – The Pennine Lancashire Learning Laboratory.
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Governance
The Board
Vanda Murray OBE (appointed April 2006)
Board Members, including their occupations and interests are listed below. The full Register of Board Members Interests is available from the Agency’s Headquarters in Warrington. Details of transactions with such entities in the financial year are disclosed in note 31.
Deputy Chair elect of the NWDA from 1 January 2007. Over 20 years’ experience at a senior management level across a range of industries in the UK, Europe, Asia and the USA. Currently holds non-executive roles with Carillion plc and the Cheshire Building Society. She is also non-executive Chair of Eazyfone, a mobile phone recycling company. She was awarded an OBE for services to Industry and to Export in 2002.
Bryan Gray MBE DL (appointed April 2002) Bryan Gray is Chairman of the Northwest Regional Development Agency (NWDA). He is also: • Chairman of Baxi Technologies • Vice President of Micropower, promoting new energy • Non-executive director of Energetix plc. • Pro Chancellor of the University of Lancaster • Honorary Professor at the University of Nottingham • A member of the National Learning & Skills Council • A member of the Liverpool Capital of Culture Board • Trustee of National Museums Liverpool • A member of Liverpool Cathedral Council • Director of Culture Northwest • Non-executive Chairman of Westmorland Ltd • A member of Lake District National Park Authority • Non-executive Chairman of Urban Splash Hotel company
David Brockbank (appointed December 2004) Chairman of Cumbria Vision, the private-sector led organisation responsible for the economic development of Cumbria, and a member of Lancaster University Council and Cumbria Tourist Board.
Joe Dwek CBE (appointed December 2003) Executive Chairman and Chief Executive of Bodycote International Plc from 1972 until his retirement in 1998. Formerly Chairman of the Mersey Basin Campaign and the Healthy Waterways Trust and a council member of environmental charity, ENCAMS. Currently:
He received the Prince of Wales Ambassador Award for the Northwest in July 2006.
• Chairman of Envirolink • Director of Jerome Group Plc, Penmarric Plc, Opal Property Group Ltd and Mercury Recycling Ltd. • Chairman and Chief Executive of Worthington Group Plc.
Professor Sir Martin Harris CBE DL
He is also a member of the Board of the DTI’s Environmental Innovation Advisory Group.
(appointed December 2001) Deputy Chairman of the NWDA. Chancellor of the University of Salford. Chair of USS Limited and Manchester Knowledge Capital. Director of the Office for Fair Access, which promotes fair access to higher education.
15
Peter Hensman DL (appointed December 2004)
Labour party and canvassed on its behalf.
A chartered accountant and engineer who has spent most of his career in the general and financial management of manufacturing companies. Executive Director of a small group of companies involved in tourism, leisure and property in Cumbria. Also Vice Chairman of Cumbria Rural Enterprise Agency and a Non-executive Director of Furness Building Society. Chairs Cumbria Community Foundation and is a member of the Kendal Regeneration Steering Group.
Professor John Moverley OBE (appointed December 2004) Chief Executive of the Royal Agricultural Society for England. He was an invited member of the All Party Rural Economy Group, founded in the House of Lords. He is a member of the Regional Steering Group for the Department for Food and Rural Affairs (Defra) and a Theme Champion for Sustainable Food and Farming. He is also a former Principal of Myerscough College in Lancashire.
Dr Pauleen Lane CBE (appointed December 2001) Elected member (Labour) of Trafford Metropolitan Borough Council. A civil engineer who has worked in engineering practice, Dr Lane currently lectures in geotechnics and computing at the University of Manchester. She is also a Non-executive director and Deputy Chair of English Partnerships.
Dave McCall (appointed December 2003) Regional Secretary of the Transport and General Workers' Union since 1996 and Chair of the Northwest Trades Union Congress (TUC) since 2002. He has been a full-time trade union official since 1980 and served on the Northwest Industrial Development Board. He served on the governing body of Manchester Metropolitan University. Currently chairperson of Migrant Workers North West.
Councillor John Merry (appointed December 2004) Leader (Labour) of Salford City Council. He is a Board Member of the National Learning & Skills Council and the Greater Manchester Learning & Skills Council. He has previous membership of various organisations and committees with an education and training remit. He has been a full-time Councillor since 1990 with previous career experience in retail and sales. In addition to being a Councillor, he has held office at the local branch of the
Cllr Marie Rimmer CBE (appointed December 2002) Elected member (Labour) of St Helens Metropolitan Borough Council. She is a Governor of Cowley Language College and a member of the Management Board of Red Bank Community Home. She was the Chair of the former Association of Metropolitan Authorities Housing Committee and served on the European Committee of the Northwest's Social Affairs Committee. She was also the Chair of the Northwest Coalfields Communities Campaign. She has been politically active on behalf of the Labour party since 1969, and has held office at branch, constituency and district party level.
Anil Ruia OBE JP LLB (appointed December 2001) Director of Wrengate Limited. The company imports, distributes and converts textiles. Also a Director of Warren Tea Limited in India, which grows, manufactures and sells tea. A Magistrate, Mr Ruia also holds a number of positions which contribute to the economic regeneration of the Northwest including Chairman of the Northwest International Trade Forum, Deputy Chair of Manchester Knowledge Capital and a Non-executive Director of Granada Television.
16
Governance (continued)
Brenda Smith (appointed December 2001)
Board Meetings and Committees
Group Managing Director of Granada Television and Managing Director of Granada Studios Plc until May 2004. She was also Deputy Chair of Granada Television Ltd until July 2006.
The Agency’s Board met 11 times during the year. There are two formal committees to the Board as follows:
Board member of Liverpool Vision also she has chaired the NW Regional Marketing Forum since December 2002. Member of Tourism Forum, Non-executive Director of Manchester Airport Aviation Services, a Non-executive Director of AFM Lighting Ltd and Chair of Skillset London Forum.
Councillor Mike Storey CBE (appointed December 2001) Longest serving elected member (Liberal Democrats) of Liverpool City Council. He is the Head Teacher of Plantation Community Primary School in Halewood, Merseyside. Also Director of the Capital of Culture Company, Liverpool Arena and Convention Centre and a Trustee of St Georges Hall. He was a founder member of the Mersey Partnership and is Liverpool City Council Executive Member for Regeneration.
Professor Maureen Williams (appointed December 2002) Professor Maureen Williams is the Chief Executive and founder of the Merseyside Development Foundation. She is an Honorary Fellow and Visiting Professor of Sociology (Governance) at Liverpool John Moores University. She is a Non-executive director of Liverpool Primary Care Trust, the Mersey Partnership and a council member of Greater Merseyside Learning and Skills Council. She is currently Vice Chair of the North West Region European Partnership where she leads on Energy and Climate Change. Professor Williams remains a trustee of various local and national charities and a senior expert/consultant with the Council of Europe. She is co-founder of Community North West and a former Chair of the Big Lottery Fund’s North West Community and Voluntary Sector Funding Programme.
• The Remuneration and Appointments Committee which, during the year to 31 March 2007, convened on 5 occasions, and • The Audit Committee which also convened on 5 occasions. There are seven Sub Committees to the main Board, which met regularly throughout the year: Enterprise, Innovation and Skills Infrastructure Health and Social Inclusion Environment Marketing, Communications and Tourism LSC Liaison Committee SRP Strategic Liaison Committee
Executive Management Board Executive Management Board (EMB) is made up of Executive Directors and Directors from the NWDA and is Chaired by the Chief Executive. EMB meet approximately twice per month and its roles and responsibilities include determining policy with Board approval where appropriate; achieving and maintaining operational integration across the Agency and to achieve and maintain communication flows between management and staff.
Rural Advisory Forum The Rural Advisory Forum was established to advise the Agency on rural matters and particularly to ensure that the Agency’s activities, programmes and projects reflect, where appropriate, the new RES, and Rural Delivery Framework and the region’s rural priorities as determined by the Regional Rural Priorities Board.
17
Annual General Meeting
Equality and Diversity
The Agency’s Annual General Meeting was held on 4 October 2006 at the Manchester International Conference Centre. The conference outlined the key activities of the Agency and its partners in the preceding year. The Chief Executive and Chairman presented their future plans for the Agency and the region.
The Agency has a commitment to equality and diversity across its operating remit. All employees and Board members are expected to promote this commitment in the ways in which they interact with contractors, service providers and partners. A copy of the Agency’s policy on equality and diversity can be found on its website www.nwda.co.uk .
The 2007 Annual General Meeting will be held on 18 October 2007.
Within this framework the Agency has a statutory duty in respect of gender, disability and race discrimination and harassment; and to promote equality and opportunity.
Code of Best Practice Board Members are governed by a Code of Best Practice, which amongst other things outlines:
Freedom of Information Act and the publication of information
• The Board’s requirement to demonstrate Public Service Values and their accountability for public funds.
The Freedom of Information Act became fully operational on 1 January 2005. The Act applies to some 100,000 public authorities, including England’s nine Regional Development Agencies. The Act provides greater access to all types of recorded information held by public authorities and imposes obligations on them to disclose information, subject to a range of exemptions.
• Relationship with Central Government. • The role of the Chairman and Chief Executive. • Corporate and individual responsibilities of Board Members. • Handling conflicts of interest.
The Agency has ensured adherence to the Code through the robust and thorough monitoring and recording systems that are in place. Board Members have declared interests at particular Board discussions as appropriate. Staff have followed a similar requirement in compliance with the Agency’s Code of Conduct. Further information concerning any of the above can be obtained from the Agency’s Warrington Headquarters.
Section 19 of the Act requires public authorities to adopt and maintain a publication scheme which relates to the publication of information by the authority and in accordance with its publication scheme. Eight of the nine English RDAs agreed to a collective publication scheme which outlines the information that will be published by each of those RDAs. The Northwest Regional Development Agency took responsibility for the development of the RDAs model publication scheme and the Information Commissioner approved this in October 2002. The publication scheme is available at www.nwda.co.uk. The Agency received 31 requests for information under the Act between 1 April 2006 and 31 March 2007.
18
Environmental Policy Statement
Our aim is to contribute towards the delivery of sustainable economic development in the region and ensure that environmental objectives are integrated into business objectives of the NWDA, our partners and suppliers. We are committed to reducing our environmental footprint, with an emphasis on reducing our contribution to climate change, through the ongoing measurement and continual improvement of our environmental performance. We will conduct our own activities and operations to reflect best environmental practice.
• Develop and implement a sustainable procurement policy; • Promote environmental awareness amongst employees through specific induction training, topic specific training and in house media; • Ensure good management practice by repeating an Environmental Audit of the organisation every two years with the next audit to be undertaken in 2008; • Review and revise this policy statement on an annual basis.
Specifically we will: • Comply with all relevant UK, European and International environmental legislative and regulatory requirements; • Achieve ISO 14001 accreditation by November 2007; • Demonstrate a high-level commitment to environmental best practice under the guidance of the Board Environment Sub Committee; • Ensure through our policies, programmes, projects and key stake holders, the Agency influences environmental sustainability across the economic agenda; • Quantify the NWDA’s environmental impact in relation to energy usage and waste production and establish annual reduction targets & publicise our environmental performance annually; • Implement continuous improvement through an environmental action plan; • Ensure that all projects and programmes we fund incorporate environmental aspects in their development and are appraised for their environmental impacts through sustainable development appraisal;
Steven Broomhead, Chief Executive July 2007
19
Directors Report
Statutory background The Northwest Regional Development Agency (‘the Agency’) was established under the provisions of the Regional Development Agencies Act 1998. It came into existence on 14 December 1998, following Parliamentary approval of the Regional Development Agencies Act 1998 and the appointment of Board Members. The Agency is an Executive Non-Departmental Public Body (NDPB) sponsored by the Department of Trade and Industry (DTI). The Agency became fully operational on 1 April 1999 when it took over the regional activities of English Partnerships and the Rural Development Commission and the SRB Challenge Fund formerly administered by Government Office for the North West. A number of other activities have subsequently been transferred into the Agency, notably the business of Inward Limited, the Northwest Tourist Board, the Selective Finance for Investment Programme, the development of skills and employment, policy and business support and delivery mechanisms, and the North West Business Link organisations.
Statement of the Agency’s and Chief Executive’s responsibilities
• Prepare the accounts on the going concern basis, unless it is inappropriate to presume that the Agency will continue in operation. The Accounting Officer for the Department of Trade and Industry has designated the Chief Executive as the Accounting Officer of the Northwest Regional Development Agency. His responsibilities as Accounting Officer include responsibility for the propriety and regularity and value for money of the public finances; the keeping of proper records and advising and informing the Board of financial considerations. These requirements are set out in the ‘‘Non-Departmental Public Bodies’ Accounting Officer’s Memorandum” issued by the Treasury and published in Government Accounting. The Agency and the Chief Executive are also responsible for ensuring that there are appropriate controls over any publication of the Financial Statements, including the publication of the audit certificate on the Agency’s website and in other electronic forms. So far as the Accounting Officer is aware, there is no relevant audit information of which the entity’s auditors are unaware. The Accounting Officer has taken all the steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the entity’s auditors are aware of that information.
Under section 14 of the Regional Development Agencies Act 1998 the Agency is required to prepare a statement of account for each financial year in the form and on the basis determined by the Secretary of State, with the consent of Treasury. The Financial Statements are prepared on an accruals basis and must give a true and fair view of the Agency’s state of affairs at the year end and of its income and expenditure, total recognised gains and losses and cash flows for the financial year. In preparing the Financial Statements the Agency is required to:
Management Statement and Financial Memorandum
• Observe the Accounts Direction issued by the Secretary of State, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
Results for the year and review of activities
The Secretary of State has issued the Agency with a Management Statement and Financial Memorandum setting out the financial framework under which the Agency should operate. The Agency has complied in all material respects with the terms of this memorandum during the course of financial year.
The net expenditure for the year after taxation was £396.3m (2006: £368.8).
• Make judgments and estimates on a reasonable basis; • State whether applicable accounting standards have been followed, and disclose and explain any material departures in the Financial Statements;
The Agency’s total expenditure for the year amounted to £462.5m (2006: £421.7m), of which £406.7m (2006: £357.5m) was spent on delivering programme activities. The full results for the year are contained in the Agency’s financial statements set out below.
20
Directors Report (continued)
The Agency continued to work with Yorkshire Forward and ONE North East to develop and establish the Northern Way Growth Region, stretching from Liverpool to Hull and northwards to the Borders. The aim is to boost the economic regeneration and productivity of the whole of the North of England, reduce regional disparities, and tackle social and economic exclusion by linking areas of opportunity and need.
The parts of the programme to be delivered by the NWDA to the Northwest Region include 1) The competitiveness of farming and forestry sectors, and 2) Rural business diversification and quality of life.
The Agency continued to develop the concept of SubRegional Partnerships. The SRPs are being delivered through funded Action Plans which include initiatives to strengthen delivery capacity.
NWDA’s new regional Business Link service launched in April 2007, replacing the existing sub-regional activity. The service will deliver an independent, client driven information, diagnostic and brokerage service, which will facilitate a step change in the rate of new business transformation and growth of existing businesses in the Northwest.
Significant changes in fixed assets During the course of the financial year, the Agency entered into a partnership with Ashtenne Industrial Fund Limited Partnership in relation to its investment property portfolio. The Agency transferred £132.8 million of property in Liverpool and Cumbria into a Limited Partnership. In return for transferring the properties, the Agency has received two loan notes to the value of the transfer value which will be repaid over the duration of the partnership. The management of the properties will be carried out by Ashtenne Asset Management Limited and the Agency will continue to receive a share in rental income and any uplift in value of the properties.
Future developments During the financial year 2007/08 the responsibility for the delivery of the 2007/13 European Development Fund Programme will transfer from the Government Office North West to the NWDA. The programme will deliver 3756 million additional support to the Northwest economy, and is expected to commence in October 2007. The Agency will also assume responsibility from DEFRA for the delivery of elements of the Rural Development Programme for England during 2007. This particular programme is the Government’s implementation of the EU Rural Development regulation which covers the period from 2007 to 2013.
It is anticipated that the programme will commence during the second half of 2007.
Board members Board Members are appointed by the Secretary of State. They include Local Authority, Trade Union, Community and Private Sector representatives. Their corporate responsibilities are detailed in the Code of Best Practice for the Board of the Northwest Regional Development Agency, which is a public document available from the Agency’s offices. Bryan Gray MBE DL, Chairman (appointed 1 April 2002) Professor Sir Martin Harris CBE DL, Deputy Chairman (appointed December 2001) Vanda Murray OBE Deputy Chair elect (appointed April 2006) David Brockbank (appointed December 2004) Joe Dwek CBE (appointed December 2003) Peter Hensman DL (appointed December 2004) Dr Pauleen Lane CBE (appointed December 2001) Dave McCall (appointed December 2003) Cllr John Merry (appointed December 2004) Professor John Moverley OBE (appointed December 2004) Cllr Marie Rimmer CBE (appointed December 2002) Anil Ruia OBE JP LLB (appointed December 2001) Brenda Smith (appointed December 2001) Cllr Mike Storey CBE (appointed December 2001) Professor Maureen Williams (appointed December 2002)
21
Brief biographies for the Board Members are shown in the Governance section of this document. Board Members are contracted to carry out two days work per month on behalf of the Agency. The Chairman is contracted for three days per week and the Deputy Chairman and Deputy Chair elect one day per week. The Agency maintains a Register of Board Members’ Interests, which is available on request by contacting the Chief Operating Officer at the Agency’s offices at Renaissance House, Warrington. Members declare their interests to the Board in any transactions involving relevant organisations. Related party transactions relating to Board Members and senior members of staff are detailed further in note 31. Board representation on the Audit Committee and the Remuneration and Appointments Committee was as follows: Audit Committee Peter Hensman Marie Rimmer (Chair) Joe Dwek Dave McCall Maureen Williams Remuneration and Appointments Committee Bryan Gray (Chairman) Dave McCall (Vice Chairman) Anil Ruia Martin Harris Brenda Smith Peter Hensman assumed responsibility as Chair of Audit Committee from 1 April 2007. Marie Rimmer was the Chair from 1 April 2006 to 31 March 2007.
Audit Committee The Board is independently advised by an Audit Committee whose role is to provide the Board with advice and information to undertake a governance and supervisory role as required in accordance with Corporate Governance Best Practice. The Terms of Reference of the Audit Committee, including its role and the authority delegated to it by the Board, has been made available to the public on the Agency’s website.
The Audit Committee met five times during 2006/07 to receive assurance on the Agency’s systems of corporate governance, risk management and internal control. The Committee also received regular reports from Baker Tilly as independent Internal Auditors. The range of Audit Committee activity carried out during 2006/07 has provided positive assurance about the Agency’s governance and control environment and has supported the Accounting Officer in signing a satisfactory Statement on Internal Control for the year. The Committee was active in managing the governance agenda by requiring updates of Agency policies to ensure they remained at the leading edge of best practice, including risk management arrangements, Financial Regulations and the Scheme of Delegations, whistle-blowing and anti-fraud arrangements.
Remuneration and Appointments Committee The work of the Remuneration and Appointments Committee is detailed in the Remuneration Report contained in pages 24 to 29 of this report.
Employment of disabled persons The Agency is committed to providing equal opportunities for all and will make reasonable adjustments to working arrangements to meet special needs. We will work towards an environment and culture where everyone is encouraged and supported to develop their full potential regardless of individual characteristics, which may limit a person’s opportunities in life.
Provision of information to and consultation with employees The Agency is fully committed to effective and open communication and consultation with its employees. This is achieved through a variety of means including a Staff Consultative and Negotiation Committee involving the Public and Commercial Services (PCS) and Prospect Trade Unions together with staff representatives; a Health and Safety Committee; and staff events to communicate key issues and receive feedback.
22
Directors Report (continued)
Better payment practice code
Independent Performance Assessment
The Agency is committed to the Better Payment Practice Code and aims to pay 95% of all undisputed invoices either within 30 days or the terms agreed with the supplier.
The NWDA scored 20 points out of a possible 24. The NAO determined that the Agency was performing strongly, the top ranking available.
In 2006/07 the Agency did not quite achieve this target, paying 92% (2006: 89%) of invoices within 30 days. The Agency’s ability to pay suppliers within the target timescale has improved on the previous year, and the Agency will seek to continue this improvement in 2007/08 with the aim of achieving its prompt payment target.
Audit services The Comptroller and Auditor General is appointed by statute to audit the Northwest Regional Development Agency, and reports to Parliament on the truth and fairness of the annual Financial Statements and the regularity of income and expenditure. The following costs have been incurred in relation to services provided by the Comptroller and Auditor General: Audit Services IPA fee
£74,500 £100,000
The Comptroller and Auditor General also has statutory powers to report on economy, efficiency and effectiveness with which the Agency has used its resources. In November 2003 the Comptroller and Auditor General published the ‘Success in the Regions’ report on how the Agencies and the departments work together. This and other reports issued by the Comptroller and Auditor General can be found on the National Audit Office Website at www.nao.org.uk.
The assessment recognised key strengths of the Agency, including the very high quality and commitment of staff, strong partnership working, effective leadership, strong financial control and excellent record of achieving outputs. The report also praised the review and development of the new Regional Economic Strategy (RES) which it cited as a ‘strong process which demonstrates a shared vision and ambition for the region’.
Statement on the Agency’s policy for conserving energy, reducing waste and minimizing the release of greenhouse gases In 2006/07 the Executive Management Board and the Environment Sub-committee approved ISO14001 as the Environmental Management System (EMS) for the Agency. Accreditation of ISO 14001 by November 2007 has been incorporated into the Agency 2007/08 Business Objectives. At the heart of ISO14001 is the production of an Environmental Policy. In February 2007, the Board approved a revised NWDA Environmental Policy. Through the EMS process the Agency’s Significant Environmental Aspects have been reviewed and will result in a series of actions that will enable the Agency to better quantify its resource use and environmental impact. Included in such actions will be the development of detailed monitoring data on business travel, paper use and recycling rates as well as energy consumption which will contribute towards a comprehensive Carbon Management plan.
23
The Agency has continued to support and deliver a Business Resource Efficiency and Waste (BREW) programme with key partners. Through the single programme the Agency has developed and supported a number of projects that cut across socio economic and environmental areas. Natural Economy North West is a three year programme with Natural England that will undertake research and practical projects to promote and develop the economic opportunities from our natural environment. In addition, the Agency continues to support programmes aimed at developing the environmental technologies sector including transforming waste into products. The Agency continues to fund business support programmes to assist regional businesses in reducing their greenhouse gas emissions, adapting to climate change, reducing their energy consumption and support them in achieving excellence in corporate responsibility. The Northwest Regional Development Agency’s Environmental Policy is laid out on page 18. The Policy will be reviewed and updated as part of the Agency’s Environmental Audit.
Steven Broomhead Chief Executive Officer
24
Remuneration Report
This report for the year ended 31 March 2007 is produced by the Board on the recommendation of the Remuneration and Appointments Committee and deals with the remuneration of the Chair, Chief Executive, Board members and Executive Directors who have influence over the decisions of the Agency as a whole.
Remuneration and Appointments Committee The remuneration of the Board is set by the Department of Trade and Industry. The remuneration figure for the Board is reviewed every year by DTI in line with the recommendations of the Senior Salaries Review Board.
Remuneration Policy Performance pay for the Chief Executive is determined by the Chairman on the recommendation of the Remuneration and Appointments Committee. Performance is measured against targets determined by the Chairman following consultation with the Director of the Government Office. These are subject to regular performance monitoring during the year. The amount of the performance award can be up to a maximum of 20% of salary. In 2006/07 the targets related to the financial objectives of the Agency; the performance targets set by Government; the objectives for the Agency’s lead role with DfES/DWP, improving project management, developing sub-regional partnership arrangements and improving the organisation’s overall effectiveness.
The Remuneration and Appointments Committee, which includes five members of the Board, met five times during the course of the year to advise the Chairman on the remuneration of the Chief Executive Officer (CEO) and to advise the CEO on Directors' remuneration.
Performance pay of the senior management team is determined by the Chief Executive on advice from the Remuneration and Appointments Committee. Performance is measured against targets set individually for each Director by the Chief Executive and the amount of the performance award can be up to 10% of salary.
In reaching its recommendations, the Remuneration and Appointments Committee is to have regard to the following considerations:
Service contracts
• the need to recruit, maintain and motivate suitably able and qualified people to exercise their different responsibilities; • regional/local variations in labour markets and their effects on the recruitment and retention of staff; • the Government's inflation target.
All Board members have been appointed on a fixed-term contract and except for the Chairman, Deputy Chairman and Deputy Chair elect are contracted to carry out two days work per month (three days per week for the Chairman and one day per week for the Deputy Chairman and Deputy Chair elect) on behalf of the Agency. Please see the emoluments table for details of the terms of appointment of the Board members. Board members appointments are made in accordance with the Commission of Public Appointments Code. There is no provision in place for the early termination of appointment of Board Members. The following sections provide details of the remuneration and pension interests of Board members, Chief Executive and Senior Managers.
25
Part of the Remuneration Report to be audited Emoluments of Board members The emoluments of Board Members can be analysed as follows: Name
Bryan Gray (Chairman) Professor Sir Martin Harris* Vanda Murray** David Brockbank Joe Dwek Peter Hensman Dr Pauleen Lane Dave McCall John Merry Professor John Moverley Marie Rimmer Anil Kumar Ruia Brenda Smith Mike Storey Professor Maureen Williams
Period of Appointment From To Apr 2002 Dec 2001 Apr 2006 Dec 2004 Dec 2003 Dec 2004 Dec 2001 Dec 2003 Dec 2004 Dec 2004 Dec 2002 Dec 2001 Dec 2001 Dec 2001 Dec 2002
– Dec 2008 – Dec 2008 – Dec 2011 – Dec 2007 – Dec 2009 – Dec 2010 – Dec 2007 – Dec 2009 – Dec 2007 – Dec 2007 – Dec 2008 – Dec 2007 – Dec 2008 – Dec 2007 – Dec 2008
Salary £
Pension £
Total 2007 £
Total 2006 £
79,358 16,631 10,394 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316
16,615 -
95,973 16,631 10,394 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316 8,316
85,724 16,305 8,153 8,153 8,153 8,153 8,153 8,153 8,153 8,153 8,153 8,153 8,153 8,153
* Deputy Chairman ** Deputy Chair elect from 1 January 2007
Emoluments of the Chief Executive and senior managers The Chief Executive Steven Broomhead and all other members of the senior management team are employed under permanent employment contracts. The Chief Executive and senior managers work for the Agency full-time. For the Chief Executive and senior management team early termination, other than for misconduct, will be under the terms of the Principal Civil Service Pension Scheme (PCSPS). The terms of this scheme come under the terms of the Civil Service Compensation Scheme.
26
Remuneration Report (continued)
The emoluments of the Chief Executive and senior managers can be analysed as follows: Name
Salary for relevant period £
Bonus £
Benefits £
Pension £
2007 Total £
2006 Total £
Steven Broomhead Chief Executive
128,347
22,649
13,869
27,693
192,558
177,972
Bernice Law Executive Director of Operations
107,518
10,420
1,262
26,944
146,144
140,036
Ian Haythornthwaite Executive Director of Corporate Resources
102,763
9,959
4,328
25,856
142,906
130,235
Helen France Executive Director of Development and Partnerships (to 11th August 2006)
35,341
3,684
1,492
9,060
49,577
130,387
101,319
7,551
3,748
25,525
138,143
125,790
97,617
8,585
2,806
24,652
133,660
9,320
Mark Hughes Executive Director of Enterprise and Innovation Peter White Executive Director of Infrastructure
Benefits in kind Benefits in kind for the senior managers consist of lease cars provided by the Agency. There are no loans made to Directors. Board members received no benefits in kind.
Pension benefits Pension benefits of Board members No Board Members are eligible for pension contributions, performance related pay or any other taxable benefit as a result of employment with the Agency with the exception of the Chairman.
27
Pension benefits of the Chairman With the approval of DTI, a ‘by analogy’ pension scheme has been put in place for the Chairman with contribution rates and benefits which are identical to the Principal Civil Service Pension Scheme but which are funded directly by the Agency. The Agency is not permitted to pay these contributions to a personal pension scheme or other pension plan provider. On retirement, payment of the Chairman's pension will be the responsibility of the Agency, underwritten by DTI.
Bryan Gray Chairman
Real increase in pension £000
Real increase in lump sum £000
Pension at 31 March 2007 £000
Lump sum at 31 March 2007 £000
CETV at 31 March 2006 £000
CETV at 31 March 2007 £000
Real increase in CETV as funded by employer £000
0 – 2.5
0 – 2.5
2.5 – 5
0 – 2.5
50
68
14
The arrangement shadows the benefits provided under the Premium scale of the Civil Service Pension Plan. The arrangement provides benefits to the present Chairman and one former Chairman of the Northwest Regional Development Agency. A full actuarial valuation was carried out as at 31 March 2007 by a qualified independent actuary. The major assumptions of the actuary were: Financial Assumptions The inflation assumptions The rate of increase in salaries The rate of increase for pensions in payment and deferred pensions The rate used to discount scheme liabilities
31 March 2007 2.75% 4.3% 2.75% 4.6%
31 March 2006 2.5% 4% 2.5% 5.4%
The effect of accrual during year The current service cost(net of employee contributions) Any past service costs Gains and losses on any settlements and curtailments The interest cost
£000’s 15 0 0 5
£000’s 16 0 0 4
Actuarial gains and losses during year
£000’s
%age*
Experience losses(gains) Effect of changes in demographic and financial assumptions
2 24
1.1% 17.1%
Total actuarial losses(gains)
26
18.2%
*Here the amounts are expressed as a percentage of the present value of the scheme liabilities as at the balance sheet date
28
Remuneration Report (continued)
31 March 2007
31 March 2006
Liability (£000’s) Actives Deferreds Pensioners Dependent pensioners
104 0 36 0
62 0 32 0
Total Present value of the scheme liabilities
140
94
£000’s 94
£000’s 67
Current Service cost (net of employee contributions) Overnight increase in liabilities (change in real return) Employee contributions Interest cost Actuarial Losses (gains)
15 0 2 5 26
16 7 1 4 1
Less Benefits paid Less Net Individual Transfers Out
(2) 0
(2) 0
140
94
Liability calculation Present value of scheme liability at start of year
Present Value of Scheme Liabilities at end of year
Pension benefits of Chief Executive and senior managers Steven Broomhead, Bernice Law, Ian Haythornthwaite, Mark Hughes are all members of PCSPS Premium Scheme. Peter White is a member of the PCSPS Classic Scheme.
Real increase in pension £000 Steven Broomhead Bernice Law Ian Haythornthwaite Helen France Mark Hughes Peter White
0-2.5 0-2.5 0-2.5 0-2.5 0-2.5 0-2.5
Real Pension increase at in lump 31 March sum 2007 £000 £000 N/A N/A N/A 0-2.5 N/A 5-7.5
50-55 50-55 40-45 30-35 0-5 5-10
Lump sum at 31 March 2007 £000 N/A N/A N/A 100-105 N/A 20-25
CETV CETV Employee at at contributions 31 March 31 March and 2006 2007 transfers in £000 £000 £000 740 770 538 535 19 135
778 819 553 511 39 181
2.5-5 2.5-5 2.5-5 0-2.5 2.5-5 0-2.5
Real increase in CETV as funded by employer £000 19 27 4 5 16 39
29
Cash Equivalent Transfer Values A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.
Real increase in CETV This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.
Non Cash remuneration During the year there has been no element of non cash remuneration.
Compensation paid, significant awards to former senior managers During the year there was no compensation paid or significant award to former senior managers.
Amounts payable to third party for services as a senior manager There are no amounts payable to a third party for services as a senior manager.
Payments made for loss of office During the year there were no payments made for loss of office to senior managers.
Bryan M Gray Chairman
Steven Broomhead Chief Executive
30
Statement on Internal Control
Scope of Responsibility As Accounting Officer, I have responsibility for maintaining a sound system of internal control within the Northwest Regional Development Agency. This system supports the achievement of the Agency’s policies, aims and objectives, set by the Board, whilst safeguarding its assets and the public funds that it utilises, for which I am personally responsible, in accordance with the responsibilities assigned to me in Government Accounting and the Agency’s Financial Memorandum. The NWDA is a Regional Development Agency classified as a non-departmental public body of the sponsoring Department of Trade and Industry. The Secretary of State is accountable to Parliament for the activities and performance of the Agency. Operational responsibility for monitoring the Agency’s activities rests with the DTI. The NWDA provides comprehensive half yearly reports on performance against targets to Government Office North West (GONW) for onward transmission to the DTI. The NWDA has corporate responsibility for ensuring that it fulfils the aims and objectives set by the Secretary of State and for promoting the efficient and effective use of its resources. The NWDA is committed to the pursuit of economy, efficiency and effectiveness and constantly seeks to employ best practice in accordance with our Corporate Values. As Accounting Officer, I establish the NWDA’s corporate and business plans in line with the DTI’s wider strategic aims and the Regional Economic Strategy (RES). I advise the Board on the Agency’s performance compared with its aims and objectives and ensure that its governance responsibilities can be discharged in accordance with established guidelines and criteria.
The Purpose of the System of Internal Control The system of internal control is designed to manage risk to a reasonable level rather than eliminate the risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness.
The system of internal control is based on a continuous process designed to identify and prioritise the risks to the achievement of the Agency’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. This process has been in place for the year ended 31 March 2007 and up to the date of approval of the annual report and accounts and accords with HM Treasury guidance.
Capacity to Manage Risk The Board sets the Agency’s policy and attitude towards risk. The Audit Committee, on behalf of the Board, determines the effectiveness of those policies and procedures, basing its assurance on the reporting of External and Internal Audit as well as the Head of Risk. The Executive Management Board, led by the Chief Executive, is responsible for the operation of the Agency’s corporate risk management process. The Risk and Performance Management Group supports the Executive Management Board and Audit Committee. The corporate risk management process has been refreshed and reviewed by the Head of Risk, Executive Management Board and Audit Committee.
The Risk and Control Framework The main processes which the Agency has in place for identifying, evaluating and managing risk are: (a) Risk Management Strategy Our risk management strategy is updated annually and approved by the Audit Committee. The risk management strategy sets out the Agency’s risk philosophy, its strategy, and risk cycle including risk identification, assessment, how it is addressed and reviewed.
31
(b) Risk Registers
Project Management System
Risk registers are maintained where appropriate throughout the Agency, whether this is by project, function or directorate. The most significant risks are elevated through the Risk and Performance Management Group onto the Corporate Risk Register. This is updated quarterly.
The Agency has continued to develop its project management procedures and capacity during this year. The Systems and Process Improvement Programme, SAPIP, has remained the basis of that work and its employment has been underpinned by regular training for staff.
(c) Review of Risk Registers
The Agency has also made SAPIP available to our partner URCs and has conducted a roll out training programme to support them.
All risk registers are updated at least quarterly. Within projects they are used as a key business tool and will be updated at each project meeting. Where controls are not considered to be working effectively, further action is put in place. The Executive Management Board and Audit Committee review the Corporate Risk Register on a quarterly basis and make changes as appropriate.
Significant Internal Control Issues Any significant internal control issues will be dealt with by Executive Management, with advice where appropriate, from the Head of Risk, Internal and External Audit.
Information and Communication
There were no significant control issues during the year.
The Board meets eleven times per annum and receives progress reports on significant projects, a monthly Finance Director’s report on the Agency’s financial position, and the Agency’s quarterly performance report that summarises progress against key outcome targets.
Review of Effectiveness
The Executive Management Board meets fortnightly to make key decisions, agree actions and specific initiatives and to review financial and operational performance. Key decisions made and actions agreed are communicated to managers via a monthly Core Briefing session and cascaded to all staff through regular team meetings. Specific policies and procedures are approved by the Executive Management Board and delivered to the relevant teams through induction training, team meetings, and via email and the Intranet. These address issues such as project appraisal and monitoring, financial management and control, procurement and legislation, for example the Freedom of Information Act.
As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review of the effectiveness of the system of internal control is informed by the work of the Internal Auditors and the Executive Directors within the Agency who have responsibility for the development and maintenance of the internal control framework, and comments made by the External Auditors in their management letter and other reports. The Board and the Audit Committee have advised me on the implications of the result of my review of the effectiveness of the system of internal control, and a plan to address weaknesses and ensure continuous improvement of the system is in place.
Steven Broomhead Accounting officer
July 2007
32
THE CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE HOUSES OF PARLIAMENT AND THE NORTHWEST REGIONAL DEVELOPMENT AGENCY
report whether in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.
I certify that I have audited the financial statements of the Northwest Regional Development Agency for the year ended 31 March 2007 under the Regional Development Agencies Act 1998. These comprise the Income and Expenditure Account, the Balance Sheet, the Cashflow Statement and Statement of Recognised Gains and Losses and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.
In addition, I report to you if the Agency has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specified by HM Treasury regarding remuneration and other transactions is not disclosed. I review whether the Statement on Internal control reflects the Agency’s compliance with HM Treasury’s guidance, and I report if it does not. I am not required to consider whether this statement covers all risks and controls, or form an opinion on the effectiveness of the Agency’s corporate governance procedures or its risk and control procedures.
Respective responsibilities of the Agency, Chief Executive/Accounting Officer and Auditor
I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.
The Agency and Chief Executive as Accounting Officer are responsible for preparing the Annual Report, the Remuneration Report and the financial statements in accordance with the Regional Development Agencies Act 1998 and the directions made thereunder by the Secretary of State and for ensuring the regularity of financial transactions. These responsibilities are set out in the Statement of the Agency’s and Accounting Officer’s Responsibilities. My responsibility is to audit the financial statements and the part of the remuneration report to be audited in accordance with relevant legal and regulatory requirements, and with International Standards on Auditing (UK and Ireland). I report to you my opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Regional Development Agencies Act 1998 and the directions made thereunder by the Secretary of State. I report to you whether, in my opinion, certain information given in the Annual Report, which comprises the Chairman’s Statement, the Chief Executive’s Review, the Directors Report, the Operating Review and the unaudited parts of the Remuneration Report, is consistent with the financial statements. I also
Basis of audit opinion I conducted my audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the Agency and Accounting Officer in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the Agency’s circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and income have been applied to the
33
purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.
Audit opinion and Regularity
Audit opinion
Report
In my opinion: • the financial statements give a true and fair view, in accordance with the Regional Development Agencies Act 1998 and the directions made thereunder by the Secretary of State, of the state of the Northwest Regional Development Agency’s affairs as at 31 March 2007 and of its net expenditure for the year then ended;
I have no observations to make on these financial statements.
• the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Regional Development Agencies Act 1998 and the directions made thereunder by the Secretary of State; and • information given within the Annual Report, which comprises the Chairman’s Statement, the Chief Executive’s Review, the Directors Report, the Operating Review and the unaudited parts of the Remuneration Report, is consistent with the financial statements.
In my opinion, in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.
John Bourn Comptroller and Auditor General National Audit Office 157-197 Buckingham Palace Road Victoria London SWIW 9SP 18 July 2007
34
Financial Statements
Income & Expenditure account For the year ended 31 March 2007
£000
2006 Restated £000
Income Small Business Service funding European funding Coalfield and other government grants Rents and maintenance charges Claw-back of grant and contributions Proceeds from disposal of Operating Assets Proceeds from disposal of Investment Properties Proceeds from disposal of Investments Proceeds from disposal of Development Assets Northern Way income Other income
375 5,926 9,145 9,563 12,236 7,957 4,100 1,436 8,349 3,235
1,106 6,294 2,461 11,810 4,157 1 8,987 8,728 3,567 1,515
Total Income
62,322
48,626
175,175 190,644 40,834 20,137 19,520 2 6,848 2,000 775 529 15,109 (956) (7,606) (581) 96
152,695 177,776 27,026 17,841 16,723 10 8,154 7,746 3,180 11,666 (925) (340) 195
462,526
421,747
Expenditure Grants paid for programme expenditure – public sector Grants paid for programme expenditure – private sector Non-grant programme expenditure Salaries and wages Other administrative costs Book value of Operating Assets disposed Book value of Investment Properties disposed Book value of Investments disposed Book value of Development Assets disposed Asset valuation write-down – Investments Asset valuation write-down – Development Assets Asset valuation write-back – Investments Asset valuation write-back – Development Assets Movements in provisions Bad debts and movements in provision for bad and doubtful debts
Note
2 2 2 6 3
21
Total Expenditure Net expenditure on continuing operations Interest payable Interest receivable Notional cost of capital
4 5 9
Net expenditure on ordinary activities Taxation
10
Net expenditure after tax Reversal of notional cost of capital
2007
(400,204)
(373,121)
(29) 3,957 (5,402)
1,573 (6,838)
(401,678)
(378,386)
(401,678)
9
Net expenditure taken to reserves All activities are from continuing operations. Net expenditure is financed by Grant in Aid as explained in accounting policy note 1. The notes on pages 39 to 63 form part of these accounts.
5,402 (396,276)
2,737 (375,649) 6,838 (368,811)
35
Statement of recognised gains and losses For the year ended 31 March 2007 2007
Revaluation on Investment and Development Assets Actuarial (loss)/gain on FRS17 pension scheme Gains and losses recognised for the year
ÂŁ000
2006 Restated ÂŁ000
29,497
4,725
(26) 29,471
(1) 4,724
36
Financial Statements (continued)
Balance sheet As at 31 March 2007 Note
Fixed Assets Intangible Operating Assets Tangible Operating Assets Investment Properties Investments Investments in Joint Ventures and Associates Long-term Loans
Current Assets Development Assets Debtors Cash at bank and in hand
Creditors: Amounts falling due within one year
11 12 13 14 15 16
17 18
19
2007 ÂŁ000
2006 Restated ÂŁ000
462 3,319 23,870 2,277 109,960
482 2,619 95,018 19,643 -
139,888
117,762
88,034 38,208 58,702
94,581 21,963 19,370
184,944
135,914
(176,182)
(127,661)
8,762
8,253
Creditors: Amounts falling due after more than one year
20
(20,901)
(17,609)
Provisions For Liabilities And Charges
21
(12,749)
(978)
Total Assets Less Total Liabilities excluding Pension Liability
115,000
FRS17 Pension Liability (see Remuneration Report)
(140)
Total Assets Less Total Liabilities
Reserves General Reserve Revaluation Reserve Grant in Aid Reserve
22 23 24
(94)
114,860
107,334
20,133 63,261 31,466
14,866 33,764 58,704
114,860
107,334
These financial statements were approved by the Board on 12th July 2007.
Bryan M Gray Chairman
107,428
Steven Broomhead Chief Executive
37
Cash flow statement For the year ended 31 March 2007 2007 ÂŁ000 (359,334)
2006 Restated ÂŁ000 (335,500)
3,957 (29)
1,573 -
-
(11)
(1,905) (297) (6,259) 7,957 4,100 1,436 12,800
(736) (1,379) (8,950) 1 8,987 8,728 -
(337,574)
(327,287)
369,000 7,638 268
305,000 11,873 3,035
39,332
(7,379)
Net liquid funds at 1 April 2006
19,370
26,749
Net liquid funds as at 31 March 2007
58,702
19,370
Net Cash Outflow from Operating Activities Returns on Investments and Servicing Of Finance Interest Received Interest Paid Taxation UK Corporation Tax paid Capital Expenditure and Financial Investment Purchase of Fixed Operating Assets Purchase of Investment Properties Purchase of Investments Proceeds from disposal of Operating Assets Proceeds from disposal of Investment Properties Proceeds from disposal of Investments Proceeds from disposal of Development Assets Repayment of Loan Note Net Cash Outflow before Financing Financing Grant in Aid received EU financing for assets Coalfields financing for assets Increase in Cash
38
Financial Statements (continued)
Reconciliation of net operating expenditure to net cash outflow from operating activities 2007
Net expenditure on continuing operations Additions to Development Assets Decrease/(Increase) in debtors Adjustment for capital debtors Increase in creditors and provisions Depreciation and amortisation Environmental liability provision increase Transfer from General Reserve EU funded assets Transfer to Grant in Aid Reserve Actuarial loss on FRS17 pension scheme European advance funding for BIS Loss/(profit) on disposal of Fixed Operating Assets Loss/(profit) on disposal of Investment Properties Loss/(profit) on disposal of Investments Loss/(profit) on disposal of Development Assets Investments valuation write-down Development Asset valuation write-down Investments Valuation write-back Development Asset valuation write-back Net cash outflow from operating activities
ÂŁ000 (400,204)
2006 Restated ÂŁ000 (373,121)
(21,541) (16,245) 10,508 63,630 1,335 (2,624) (26) 2 (1,109) (2,100) (661) 529 17,734 (956) (7,606)
(19,867) 7,604 44,912 1,461 (340) (5,867) 2,231 (1) (4,618) 9 (833) (982) 3,180 11,657 (925) -
(359,334)
(335,500)
39
Notes to the financial statements
1. Accounting policies 1.1 Basis of Accounting The Financial Statements of the Northwest Regional Development Agency have been prepared in a form directed by the Secretary of State for Trade and Industry, with the approval of H M Treasury, in accordance with the Regional Development Agencies Act 1998. The Financial Statements have been prepared as set out in Treasury guidance under the modified historical cost basis as explained in the sub-paragraphs below and in accordance with applicable Accounting Standards. Compliance with SSAP 19 "Accounting for Investment Properties" requires departure from the requirements of the Companies Act 1985 relating to depreciation and an explanation of the departure is given below. 1.2 Change in Accounting Policy With effect from the 2006-2007 reporting period the FReM requires non-departmental public bodies to account for Grants in Aid received as financing because they are regarded as contributions from a controlling party which gives rise to a financial interest in the residual interest of NDPBs. This is a change in accounting policy from earlier periods when such items were recorded as income. The effect of this change on the certified 2005-06 accounts and the impact on results of the current year is shown below.
Government Grant Reserve European Funding Reserve Income and Expenditure Reserve General Reserve Revaluation Reserve Grant in Aid Reserve
At 31 March 2007 without applying new policy £000 224,553 17,484 (9,089)
232,948
Government Grant Reserve European Funding Reserve Income and Expenditure Reserve General Reserve Revaluation Reserve Grant in Aid Reserve
At 31 March 2006 as previously stated £000 204,553 9,526 (9,089)
204,990
Impact of adopting new policy £000 (224,553) (17,484) 9,089 20,133 63,261 31,466
At 31 March 2007 (restated) £000
(118,088)
114,860
Impact of adopting new policy £000 (204,553) (9,526) 9,089 14,866 33,764 58,704
At 31 March 2006 (restated) £000
(97,656)
107,334
20,133 63,261 31,466
14,866 33,764 58,704
40
Notes (continued)
1.
Accounting policies (continued)
1.3 Basis of Consolidation The Agency holds a number of investments in other subsidiary and associate undertakings. No consolidated financial statements are presented on the grounds that there is no material difference between the Agency’s own financial statements and those prepared on a consolidated basis. 1.4 Intangible Operating Assets Intangible Operating Assets consisting of software licences are valued at amortised historic cost, which is not materially different from amortised replacement cost. They are capitalised where the cost exceeds £500 on a grouped basis where appropriate. 1.5 Tangible Operating Assets Tangible fixed assets are valued at depreciated historic cost, which is not materially different from depreciated replacement cost. Assets are capitalised where the cost exceeds £500 on a grouped basis where appropriate. 1.6 Investment Properties The portfolio of industrial and commercial investment properties held at any one time is treated in such a way that surpluses and deficits on revaluation of industrial and commercial properties are netted off. Any overall write-down of these properties to open market value, and subsequent adjustments thereto, are accounted for annually and separately identified in the Income & Expenditure Account. Any overall surplus on revaluation of these properties to open market value, and subsequent adjustments thereto, are credited to the revaluation reserve after eliminating the overall accumulated unrealised deficit, as originally charged, by revaluation adjustment, to the Income and Expenditure Account. In accordance with SSAP 19, no depreciation is provided in respect of investment properties. This departure from the requirement of the Companies Act 1985 for all properties to be depreciated is, in the opinion of the Board, necessary for the Financial Statements to give a true and fair view in accordance with applicable accounting standards as properties are included in the Financial Statements at their open market value. Depreciation is only one of the many factors reflected in the annual valuation of the properties and the amount attributed to this factor by the valuers cannot reasonably be separately quantified. Acquisitions and disposals of land and buildings are accounted for on the date of legal completion. 1.7 Investments Loan investments are shown at cost and net of provision for amounts considered doubtful and of write-offs for amounts considered irrecoverable. Provision has been made for all loans where recovery appears doubtful. No loan is written off until the impossibility of recovery is beyond doubt. Approval from the DTI is obtained for any write-off in excess of £250,000. Returns on loan investments are shown at market value over and above the value of the loan. Movements arising on the revaluation of investments are reflected in the revaluation reserve, except for impairments and reductions in value below historical cost, which are reported in the income and expenditure account.
41
1.
Accounting policies (continued)
1.8 Development Assets Development Assets, consisting of land and buildings, are shown at the lower of current replacement cost and net realisable value, any reductions in carrying value being written off to the Income & Expenditure Account. Movements arising on the revaluation of development assets in excess of historical cost are reflected in the revaluation reserve. Acquisitions and disposals of Development Assets are accounted for on the date of legal completion. Valuations are carried out in accordance with best practice as contained in the Statement of Asset Valuation Practice and Guidance Notes (4th Edition) published by the Royal Institute of Chartered Surveyors. A valuation of the whole portfolio was carried out as at 31st December 2006, by King Sturge, International Property Consultants. This valuation is not materially different to the values at 31 March 2007. 1.9 Depreciation and amortisation Depreciation and amortisation is provided to write off the replacement cost of intangible and tangible fixed assets over their anticipated useful lives on a straight line basis at the following annual rates: Owned property 50 years Leasehold buildings with less than 25 years to run Period of lease Office furniture, fittings and equipment 5 years Computer equipment 3 years Software licences 3 years 1.10 Pension Costs Employees of the Agency participate in the following defined benefit schemes: Principal Civil Service Pension Scheme (PCSPS) and the English Partnerships Pension Scheme (EPPS). These are multi-employer schemes in which it is impossible to identify the share of the underlying assets and liabilities relating to the Agency. Employer contributions to these schemes are accounted for in the period to which they relate. The ‘by analogy’ scheme is for Chairs past and present with rules equivalent to those of PCSPS. The arrangement is a UK-based benefit promise made by the employer, providing benefits at retirement and on death-in-service. The arrangement is unfunded and the employer pays benefits as and when they arise. Further details are provided in the remuneration report. The scheme is subject to regular valuations by independent, professionally qualified actuaries. These determine the level of contributions required to fund future benefits. Differences between actual and expected returns on assets during the year are recognised in the Statement of Recognised Gains and Losses, together with differences arising from changes in actuarial assumptions. 1.11 Government Grants The Agency’s activities are funded primarily by Grants in Aid provided by the Department of Trade and Industry for specified types of expenditure. Grants in Aid used to finance activities and expenditure which support the statutory and other objectives of the Agency are treated as financing and are credited to the Grant in Aid Reserve as they are regarded as contributions from a controlling party. Grant relating to capital expenditure used to acquire specific capital items is credited to Grant in Aid Reserve.
42
Notes (continued)
1.
Accounting policies (continued)
1.12 European Grants The Agency’s activities are funded in part by European Funding for specified types of expenditure. European Funding Grants receivable of a revenue nature are credited to the Income & Expenditure Account in the year to which they relate. European Funding Grants in respect of capital expenditure are credited to the General Reserve and released to the Income & Expenditure Account either over the expected useful life of the asset for assets that are depreciated or, upon disposal or loss in value, for assets that are not depreciated. 1.13 Deferred Taxation Full provision has been made for deferred tax liabilities arising from timing differences between the recognition of gains and losses in the Financial Statements and their recognition in the tax computation. In accordance with FRS 19 a deferred tax asset is only recognised if there is sufficient evidence that it is likely to be recoverable at the balance sheet date. 1.14 Foreign Currency Transactions Transactions in foreign currencies are recorded in sterling at the rates prevailing at the date of transaction. Resulting exchange gains and losses are taken to the Income & Expenditure Account. 1.15 Leases Operating lease rentals are charged to the Income & Expenditure Account over the period of the lease. The Agency does not hold any finance leases.
2.
Analysis of programme expenditure by key driver Total expenditure recorded in I&E Account 2007 ÂŁ000
Business Skills & Education People & Jobs Infrastructure Quality of Life Regional Research Legacy
115,048 7,164 101,173 85,309 50,901 390 46,668 406,653
The new Regional Economic Strategy in place for 2006/07 has resulted in seven themes being created. These are new for 2006/07 and it is not possible to provide direct comparisons with 2005/06.
43
3.
Other administration costs
Professional costs Marketing and PR Estate management Non-recoverable VAT Office costs Operating lease rentals Other staff costs IT and communication Travel and subsistence Depreciation and amortisation Contributions to Joint Ventures External auditors’ remuneration – statutory audit – IPA audit
4.
2006 £000
3,944 2,483 4,245 11 2,375 1,544 922 1,410 915 1,335 161 75 100
2,535 2,787 2,950 469 2,216 1,436 715 965 805 1,461 311 73 -
19,520
16,723
2007 £000
2006 £000
29
-
2007 £000
2006 £000
2,027 1,900 30
23 1,549 1 -
3,957
1,573
Interest payable
Other interest
5.
2007 £000
Interest receivable
Interest on Loan Notes – NorwePP (see Note 26) Corporation tax interest Bank interest receivable Rural loan interest Other interest
44
Notes (continued)
6.
Salaries and wages
Board Members Board members salaries Chair’s pension contributions Social security costs
Staff Salaries and wages Pension costs Social security costs Redundancy costs
Temporary staff Recruitment agency staff Seconded staff salary costs
Total salaries and wages
7.
2007 £000
2006 £000
206 20 16
197 20 16
242
233
14,002 2,742 1,215 574
11,727 3,059 1,151 828
18,533
16,765
977 385
340 503
1,362
843
20,137
17,841
Staff numbers
The average number of staff employed by the Agency during the year (including all seconded staff) was 402 (2006: 378). The figures do not include recruitment agency staff. 2007 2007 Senior 2007 Seconded 2007 2006 Department Management Staff In Staff Total Total Chief Executive’s Office Human Resources Operations Enterprise and Innovation Development and Partnerships Policy and Performance Infrastructure Corporate Resources
1 1 1 1 1
10 12 112 117 30 31 78
1 5 1 -
11 12 114 123 30 33 79
21 90 100 91 76
5
390
7
402
378
During the year there was a directorate restructuring which resulted in the following changes: The work and responsibilities of Development and Partnerships was allocated to Operations, Enterprise and Innovations and the new directorates of Policy and Performance and Infrastructure. Human Resources directorate is now shown separately from Chief Executive’s office.
45
8.
Pension arrangements
Principal Civil Service Pension Scheme (PCSPS) The PCSPS scheme is an unfunded multi-employer defined benefit scheme but NWDA is unable to identify its share of underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2003. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk). For 2006/07, employers' contributions of £2,565,633 were payable to the PCSPS (2005/06 £2,157,583) at one of four rates in the range 17.1% to 25.5% of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates reflect benefits as they accrue, not the costs as they are actually incurred, and reflect past experience of the scheme. From 1 October 2002, civil servants may be in one of three statutory based "final salary" defined benefit schemes (classic, premium, and classic plus). The Schemes are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, and classic plus are increased annually in line with changes in the Retail Prices Index. New entrants after 1 October 2002 may choose between membership of premium or joining a good quality "money purchase" stakeholder arrangement with a significant employer contribution (partnership pension account).
Classic Scheme Benefits accrue at the rate of 1/80th of pensionable salary for each year of service. In addition, a lump sum equivalent to three years pension is payable on retirement. Members pay contributions of 1.5% of pensionable earnings. On death, pensions are payable to the surviving spouse at a rate of half the member's pension. On death in service, the scheme pays a lump sum benefit of twice pensionable pay and also provides a service enhancement on computing the spouse’s pension. The enhancement depends on length of service and cannot exceed 10 years. Medical retirement is possible in the event of serious ill health. In this case, pensions are brought into payment immediately without actuarial reduction and with service enhanced as for widow(er) pensions. Premium Scheme Benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum, but members may commute some of their pension to provide a lump sum up to a maximum of 3/80ths of final pensionable earnings for each year of service or 2.25 times pension if greater (the commutation rate is £12 of lump sum for each £1 of pension given up). For the purposes of pension disclosure the tables assume maximum commutation. Members pay contributions of 3.5% of pensionable earnings. On death, pensions are payable to the surviving spouse or eligible partner at a rate of 3/8ths the member's pension (before any commutation). On death in service, the scheme pays a lump-sum benefit of three times pensionable earnings and also provides a service enhancement on computing the spouse’s pension. The enhancement depends on length of service and cannot exceed 10 years. Medical retirement is possible in the event of serious ill health. In this case, pensions are brought into payment immediately without actuarial reduction. Where the member’s ill health is such that it permanently prevents them undertaking any gainful employment, service is enhanced to what they would have accrued at age 60.
46
Notes (continued)
8.
Pension arrangements (continued)
Classic Plus Scheme This is essentially a variation of premium, but with benefits in respect of service before 1 October 2002 calculated broadly as per classic. Pensions payable under classic, premium, and classic plus are increased in line with the Retail Prices Index. Further details about the CSP arrangements can be found at the website www.civilservice-pensions.gov.uk.
Partnership Pension Scheme Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill health retirement). In 2006/07 employers' contributions of £28,720 (2005/06 £20,656) were paid to one or more of a panel of three appointed stakeholder pension providers.
English Partnerships Pension Scheme Former employees of English Partnerships participate in the English Partnerships Pension Scheme. The English Partnerships Scheme is a multi-employer defined benefit scheme but NWDA is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out at 31 March 2007 and more details can be found in the separate scheme statement of the English Partnerships Pension Scheme. For 2006/07, normal employer contributions of £148,352 were payable to the English Partnerships Pension Scheme (2005/06 £88,602) at the rate of 14.5% of pensionable pay (2005/06 14.5%). It has been agreed that contributions will be reviewed on an annual basis although the Actuary conducts a full revaluation of the fund every three years. The contribution rates reflect benefits as they are accrued, not when the costs are actually incurred, and they reflect past experience of the scheme. At the Balance Sheet date there were no outstanding or prepaid contributions to the scheme.
9.
Notional cost of capital
When calculating the net expenditure for the year, the Agency is required to include a notional cost of capital as expenditure, to the extent that there is no real charge for this. This has been calculated as 3.5% (2005/06: 3.5%) of the average of total assets less total liabilities. After net expenditure for the year there is an entry reversing this amount.
47
10. Taxation a) Analysis of the tax charge / (credit) in year: 2007 £000
2006 £000
Current taxation Adjustments relating to previous year
-
11
Deferred taxation Deferred Tax provision
-
(2,748)
-
(2,737)
2007 £000
2006 Restated £000
Net expenditure on ordinary activities before taxation
(401,678)
(378,386)
Net expenditure on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2006: 30%)
(120,503)
(113,516)
Effect of: Notional cost of capital Non taxable grant funding Non relievable grant funded expenditure Expenses not deductible for tax purposes Depreciation for the year in excess of capital allowances Other timing differences Restriction on development assets written off Accounting profit in excess of capital gain arising on disposal of investment assets Creation / (utilisation) of tax losses Adjustments to tax charge in respect of previous years Permanent differences Grant in Aid adjustment
1,620 (131,336) 116,977 4,259 (32) 5 2,408 3,647 6,194 (2,228) 118,989
2,053 (114,020) 107,632 2,933 (112) 3 3,502 (388) 2,767 11 87 109,059
-
11
b) Factors affecting the tax charge (credit) for the year
A potential deferred tax asset totalling £21.7m has been calculated by the Agency’s tax advisers for 2006/07 largely as a result of accumulated tax losses. It is not considered probable that taxable profits will arise in the future to utilise these losses. For this reason, in accordance with FRS 19, an asset has not been recognised in the accounts.
48
Notes (continued)
11. Intangible operating assets Software Licences £000 Cost As at 1 April 2006 Additions in year
668 130
As at 31 March 2007
798
Amortisation As at 1 April 2006 Amortisation in year
186 150
As at 31 March 2007
336
Net Book Value As at 31 March 2007
462
As at 31 March 2006
482
12. Tangible operating assets
Cost or Valuation As at 1 April 2006 Additions in year Transfers from Development Assets Transfers to Development Assets Disposals in year As at 31 March 2007 Depreciation As at 1 April 2006 Depreciation in year Transfers to Development Assets Disposals in year
Land & buildings £000
Fixtures & fittings £000
Computer equipment £000
1,108
3,731 478
3,071 1,297
1,045 (1,108) (99) 1,045
155 20 (175)
Total £000 7,910 1,775 1,045 (1,108) (99)
4,209
4,269
9,523
2,786 605
2,350 560
5,291 1,185 (175) (97)
(97)
As at 31 March 2007
-
3,391
2,813
6,204
Net Book Value As at 31 March 2007
1,045
818
1,456
3,319
As at 31 March 2006
953
945
721
2,619
The Net Book Value of tangible operating assets does not differ materially from the depreciated replacement cost of the assets.
49
13. Investment properties 2007 £000 Cost or valuation As at 1 April Additions Disposals Transfers to NorwePP Limited Partnership (see Note 26) Transfers to Development Assets Revaluations
2006 £000
95,018 297 (6,848) (104,203) (5,181) 20,917
As at 31 March
100,515 1,379 (8,154) 1,278
-
95,018
14. Investments held as fixed asset investments North West BIS £000
North West Seed Fund £000
Rising Stars £000
Other £000
Total restated £000
Cost As at 1 April 2006 Additions in year Disposals and repayments in year
11,825 3,920 (34)
2,518 1,155 -
6,598 1,184 (474)
As at 31 March 2007
15,711
3,673
7,308
-
26,692
(873) (529)
(1,927) 458
-
(3,298) 427
(1,402)
(1,469)
-
(2,871)
Provisions As at 1 April 2006 Movement in provision
(498) 498
2,000 (2,000)
22,941 6,259 (2,508)
As at 31 March 2007
-
Net Book Value As at 31 March 2007
15,711
2,271
5,839
-
23,821
49
-
-
-
49
Valuation as at 31 March 2007
15,760
2,271
5,839
-
23,870
Net Book Value As at 31 March 2006
11,327
1,645
4,671
2,000
19,643
Valuation as at 31 March 2006
11,327
1,645
4,671
2,000
19,643
75.00%
80.00%
37.90%
Agency share of unrealised gains
Agency Interest
The Agency has loan investments in the North West Business Investment Scheme (BIS), the North West Seed Fund and The Rising Stars Growth Fund. These limited liability partnerships provide funding, in the form of loans and equity, to small businesses in the Northwest region. After recovery of the loan investment, the Agency is entitled to a return on investments equivalent to its interest in the fund as shown above. The BIS has been primarily funded by the European Union with the objective of making equity based investments in SMEs in the Northwest region.
50
Notes (continued)
15. Interests in subsidiaries, associates and joint ventures Subsidiaries Name
Interest
Nature
Type
Estuary Management Company Limited
100%
Provision of Services at the Estuary Commerce Park
Company Limited by Guarantee
Rural Regeneration Cumbria Limited
81%
Regeneration for Furness and Cumbria
Company Limited by Guarantee
NorwePP (NWDA Subsidiary) Limited
100%
Shareholder in NorwePP (General Partner) Limited
Private Limited Company
North West Business Link Limited
100%
Business support, advice and information service
Company Limited by Guarantee
Name
Interest
Nature
Type
Renewables NorthWest Limited
50%
Development of Initiatives for Renewable Energy
Company Limited by Guarantee
Joint Ventures
51
Associates Name
Interest
Nature
Type
New East Manchester Limited URC
33%
Regeneration of East Manchester
Company Limited by Guarantee
Liverpool Vision Limited URC
33%
Urban Regeneration of Liverpool
Company Limited by Guarantee
Furness West Cumbria New Vision URC Limited
20%
Regeneration of West Cumbria
Company Limited by Guarantee
Liverpool Land Development Company Limited Brunswick Business Park Limited
33%
Regeneration of Strategic Investment Areas in Liverpool
Company Limited by Guarantee
23.86%
Management of Brunswick Business park
Company Limited by Guarantee
Maryport Developments Limited
20.4% ordinary Management of the Development share capital of Maryport Harbour 100% preference share capital
Private Limited Company
Elevate East Lancashire Limited
12.5%
To develop an integrated and coherent strategy for housing market renewal
Company Limited by Guarantee
NorwePP Limited Partnership
49.95%
Investment in properties in the Northwest
Limited Liability Partnership
Cumbria Vision Limited
12.5%
Regeneration of Cumbria
Private Limited Company
Daresbury Science and Innovation Campus Limited
16.6%
Management of Daresbury Innovation Campus
Company Limited by Guarantee
Hadrians Wall Heritage Limited
20%
Regeneration of the Hadrian’s Wall World Heritage Site
Company Limited by Guarantee
52
Notes (continued)
15. Interests in subsidiaries, associates and joint ventures (continued) Investments in Subsidiaries Estuary
NorwePP
Total
Agency Share
Gross Income
£291,610
NIL
£291,610
£291,610
Gross Expenditure
£291,610
NIL
£291,610
£291,610
Profit/(Loss) after tax
NIL
NIL
NIL
NIL
Estuary
NorwePP
Total
Agency Share
Fixed Assets
NIL
£500
£500
£500
Current Assets
£110,121
NIL
£110,121
£110,121
Gross Assets
£110,121
£500
£110,621
£110,621
Liabilities due within one year
£110,320
NIL
£110,320
£110,320
Liabilities due after one year
NIL
NIL
NIL
NIL
Gross Liabilities
£110,320
NIL
£110,320
£110,320
Net Assets
£(199)
£500
£301
£301
1. NWDA has no material subsidiaries requiring the preparation of Group Accounts. 2. The Estuary Management Company Limited is a non-profit making company. Any surplus/deficit is returned to/recovered from, the tenants. 3. Rural Regeneration Cumbria Limited ceased trading during the year. All of the assets and liabilities of the company were transferred at their current value to Cumbria Vision Limited. 4. NorwePP (NWDA Subsidiary) Limited did not trade during the year. 5. North West Business Link Limited commenced trading on 1 April 2007. Investment in Joint Ventures Net Assets Name
Total
Agency Share
Renewables Northwest Limited
£14,399
£7,199
53
Investments in Associates Net Assets Name
Total Net Assets / (Liabilities)
Agency Share
New East Manchester Limited URC
(£93,890)
(£31,297)
Liverpool Vision Limited URC
£343,596
£114,532
Furness West Cumbria New Vision URC Limited
£185,220
£37,044
Liverpool Land Development Company Limited
NIL
Brunswick Business Park Limited
£54,899
£13,099
Maryport Developments Limited
£(523,215)
£(106,736)
Elevate East Lancashire Limited
NIL
NIL
NorwePP Limited Partnership
£4,482,001
£2,236,518
Cumbria Vision Limited
NIL
NIL
Daresbury Science and Innovation Campus Limited
NIL
Hadrians Wall Heritage Limited
£35,157
£7,031
Total
£4,483,768
£2,270,191
NIL
NIL
New associates in the year: NorwePP Limited Partnership – see Note 26 for details. Cumbria Vision Limited – acquired the net assets of Rural Regeneration Cumbria Limited which ceased trading during the year. Daresbury Science and Innovation Campus Limited – estate management company which manages Daresbury Science Park. Hadrians Wall Heritage Limited – objective is to realise the tourism potential of Hadrians Wall.
16. Long Term Loans As at 1 April Arising in year – NorwePP Limited Partnership (see Note 26) Amounts repaid in year Amount repayable within 12 months
2007 £000 132,760 (12,800) (10,000)
2006 £000 -
As at 31 March
109,960
-
54
Notes (continued)
17. Development Assets
As at 1 April Additions in year Transfers from Investment Properties Transfers from Operating Assets Transfers to Operating Assets Transfers to NorwePP Limited Partnership (see Note 26) Disposals Amounts written down: European aid-Funded Amounts written down: Grant In Aid-Funded Revaluations As at 31 March
2007 £000
2006 £000
94,581 21,541 5,181 933 (1,045) (28,557) (775) (2,625) (15,109) 13,909
90,670 19,867 (7,746) (763) (10,894) 3,447
88,034
94,581
2007 £000
2006 Restated £000
11,400 8,726 3,051 869 4,112 10,000 50
10,022 6,738 1,497 3,639 67
38,208
21,963
2007 £000
2006 £000
10,122 4,598 23,488
6,262 2,514 13,187
38,208
21,963
18. Debtors
Trade debtors Other debtors Prepayments and accrued income Value Added Tax European Regional Development Fund Loan Note repayment due within 12 months Rural Loans
Intra-government balance analysis:
Balances with other central government bodies Balances with local authorities Balances with bodies external to government
55
19. Creditors: Amounts falling due within one year
Trade creditors Accruals and deferred income Other creditors Value Added Tax Other Taxes and social security
2007 £000
2006 £000
64,792 109,084 1,851 455
33,097 90,635 2,831 638 460
176,182
127,661
2007 £000
2006 £000
9,018 70,484 80 96,600
11,453 55,600 134 60,474
176,182
127,661
2007 £000
2006 £000
559 20,342
616 16,993
20,901
17,609
Dilapidations £000
Total £000
Intra-government balance analysis:
Balances Balances Balances Balances
with with with with
other central government bodies local authorities NHS trusts bodies external to government
20. Creditors: Amounts falling due after more than one year
Deferred Income – Other Deferred Income - European Capital Grants
21. Provisions for liabilities and charges CPOs £000 As at 1 April 2006 Charge / (credit) to the Income & Expenditure account Arising during the year Released during the year
12,718 -
As at 31 March 2007
12,718
978 (581) (366) 31
978 (581) 12,718 (366) 12,749
CPOs: Represents liability for compensation payments for land and buildings which have transferred to the Agency under Compulsory Purchase Orders. These should be settled within the next three years. The provision above has been provided by an independent chartered surveyor, but the final liability may be settled by arbitration. Dilapidations: Provision is made for the cost of repairs to buildings where, under the terms of the lease, the repairs are the responsibility of the tenant. The provision represents the amounts invoiced to tenants less expenditure incurred by the Agency for repairs.
56
Notes (continued)
22. General Reserve 2007 £000
2006 Restated £000
EU funded assets: As at 1 April Additions Amounts written off Amounts written back Revaluation Transfer from Grant In Aid Reserve
11,933 7,638 (2,624) 49 497
5,002 11,873 (5,867) 925 -
As at 31 March
17,493
11,933
English Partnerships funded assets: As at 1 April Additions Transfer from Grant In Aid Reserve
3,027 268 (515)
777 3,035 (785)
As at 31 March
2,780
3,027
Pensions: As at 1 April Actuarial loss Transfer from Grant In Aid Reserve As at 31 March
Total general reserve
(94) (26) (20)
(74) (1) (19)
(140)
(94)
20,133
14,866
2007 £000
2006 Restated £000
As at 1 April Revaluations during the year
33,764 29,497
29,039 4,725
As at 31 March
63,261
33,764
23. Revaluation Reserve
57
24. Grant in Aid Reserve 2007 £000 As at 1 April Grant in Aid received in year and applied to expenditure Net expenditure from Income and Expenditure Account Transfer to General Reserve – English Partnerships funded assets Transfer to General Reserve – Pensions Transfer to General Reserve – EU funded assets As at 31 March
58,704 369,000 (396,276) 515 20 (497) 31,466
2006 Restated £000 121,711 305,000 (368,811) 785 19 58,704
25. Third Party Assets The Agency holds a third party asset of £74,383 relating to the Train to Gain programme. The funds are held on behalf of the Learning and Skills Council for subsequent distribution to North West Business Link.
26. Public Private Partnership During the course of the financial year, the Agency entered into a 10 year partnership with Ashtenne Industrial Fund Limited Partnership in relation to its property portfolio. All investment property assets and some of the development property assets have been transferred to a 50:50 joint venture arrangement with Ashtenne Industrial Fund Limited for a consideration of £132,759,667.
Consideration details The value of properties transferred was as follows: Investment properties £104,203,046 Development assets £28,556,621 In return for transferring the properties the Agency received two loan notes to the value of the transfer which will be paid over the duration of the partnership: Loan note A £32,689,917 Loan note B £100,069,750
Loan Note B carries interest at 5% per annum and is repayable by instalments up to 31 March 2016. Loan Note A carries interest of 5% on the excess of the loan over the amount of the Loan Note of Ashtenne Industrial Fund (Ashtenne will have matched the value of the loan by 31st March 2009). Loan note A is only repayable at the end of the partnership.
58
Notes (continued)
During the year the Agency received £2,026,817 interest from the Loan Notes. The management of the properties is carried out by Ashtenne Asset Management Limited and the Agency will receive a share in rental income and any uplift in value of properties. NWDA will have first ranking security over the assets of the Partnership to the value of any outstanding amount that has not been redeemed from Loan Note B. This security will take priority above that of any third party finance taken out by the partnership. Structure of the Joint venture arrangement NorwePP Limited Partnership is effectively the joint venture vehicle. NWDA owns 49.95%, Ashtenne Industrial Fund Limited owns 49.95%, and 0.1% is owned by NorwePP (General Partner) Limited. NorwePP (General Partner) Limited is owned equally by NorwePP (NWDA Subsidiary) Limited and Ashtenne Industrial Fund Limited Partnership. In turn NorwePP (NWDA Subsidiary) Limited is 100% owned by NWDA and Ashtenne Industrial Fund Limited Partnership is 100% owned by Ashtenne Industrial Fund General Partner Limited.
27. Contingent liabilities The regeneration of Ancoats as an urban village is a major project for the Agency which is anticipated to make a vital contribution to the regeneration of East Manchester and the growth of the region. The project includes a programme of purchases under a Compulsory Purchase Order (CPO). Over the last three years the Agency has acquired nearly 200 plots of land and repackaged these into a smaller number of plots more suitable for redevelopment. The CPO process enables these acquisitions to take place without the price of each purchase needing to have been agreed with or paid to the former landowners. Under CPO legislation, the former owners submit claims to us for the compensation they believe is due. A period of negotiation then follows. If we cannot agree a valuation through negotiation, the final settlement is ultimately resolved through a reference to and ruling of The Lands Tribunal. Over half the amount of compensation due has already been paid. We have made a provision in our accounts for £8 million for the compensation outstanding for payment on the Ancoats project. This is based on both the judgement exercised by the management of the Agency and an independent valuation and assessment by GVA Grimley, our appointed Consultant Surveyors. This provision covers the most likely cost of the compensation not yet agreed or paid. We believe that the valuation provided is sufficient in terms of market conditions at the date of vesting and capable of being successfully defended at a Tribunal if this proves necessary. However there is a contingent liability of £2.2 million based upon the difference between the amounts of compensation which we have offered and provide for and the former land owners’ views of the compensation amounts they are entitled to.
59
28. Commitments (a) Operating leases As at 31 March 2007 the Agency had annual commitments under operating leases as follows: 2007
2006
Buildings £000
Others £000
Buildings £000
Others £000
126 931
48 199 -
110 996
37 157 -
1,057
247
1,106
194
Leases expiring - within one year - between one and five years - over five years
Rental costs of operating leases are charged to the Income & Expenditure Account on a straight line basis over the term of the lease. (b) Capital commitments Capital commitments at the end of the financial year, for which no provision has been made, are as follows:
Authorised by the Board and contracted
2007 £000
2006 £000
3,776
38,795
29. Financial instruments The Agency has no borrowings and relies primarily on departmental grants for its cash requirements and is therefore not exposed to liquidity risks. It has no material deposits and all material assets and liabilities are denominated in sterling, so it is not exposed to interest rate risk or currency risk. Transactions entered into which result in debtors due after more than one year have a low credit risk.
30. Post balance sheet events 1. North West Business Link Limited, a wholly owned subsidiary of the Agency, commenced trading on 1 April 2007. 2. The Northwest Regional Development Agency’s financial statements are laid before the Houses of Parliament by the Secretary of State for the Department of Trade and Industry. FRS21 requires the Northwest Regional Development Agency to disclose the date on which the accounts are authorised for issue. This is the date on which the certified accounts are dispatched by the Agency to the Secretary of State for the Department of Trade and Industry. The authorised date for issue is July 2007. 3. It is anticipated that the Northwest Regional Development Agency will take responsibility for the implementation of the European Regional Development Fund Programme from Government Office for the North West during the financial year 2007/08.
60
Notes (continued)
31. Related party transactions The Northwest Regional Development Agency is a Non-Departmental Public Body sponsored by The Department of Trade and Industry (‘DTI’). DTI is regarded as a related party with which, during the year, Northwest Regional Development Agency has had a significant number of material transactions. In addition, the Agency has had various material transactions with other Government Departments and other central bodies. Most of these transactions have been with the Department for Communities and Local Government and English Partnerships (EP). Other Regional Development Agencies are also sponsored by the DTI and so are regarded as related parties. The Agency has had transactions with East of England Development Agency, East Midlands Development Agency, Advantage West Midlands, One North East, South East England Development Agency, South West of England Development Agency and Yorkshire Forward in the year. Board Members took no part in the discussions which concerned organisations that Board Members have connections with as reported in the Register of Members’ Interests. During the year none of the Board Members, key management staff or other related parties has undertaken any material transactions with the Northwest Regional Development Agency apart from those detailed below. (a) Subsidiary and associated undertakings
Connected Party Investments Northwest Business Investment Scheme Northwest Seed Fund Rising Stars Subsidiary undertakings The Estuary Management Company Limited Rural Regeneration Cumbria NorwePP (NWDA Subsidiary) Limited North West Business Link Limited Associated undertakings New East Manchester Limited Liverpool Land Development Company Limited Liverpool Vision Limited Brunswick Business Park Limited Furness West Cumbria New Vision Limited – trading as West Lakes Renaissance Maryport Developments Limited Elevate East Lancashire Limited NorwePP Limited Partnership Cumbria Vision Daresbury Science and Innovation Campus Limited Hadrian’s Wall Heritage Limited Joint ventures Renewables Northwest Limited
Sales/ (Purchases) £
Debtor/ (Creditor) £
(4,170,315) (1,154,750) (1,184,211)
-
18,228 (553,026) -
-
(4,299,102) (7,218,918) (521,115) (12,316) 262,500 61,323 (47,254) (145,509)
(7,133,404) (5,348,776) (4,315,624) 1,663 (238,774)
-
-
61
31. Related party transactions (continued) (b)
Board members
Name and position
Related Party
Position
Bryan Gray MBE, DL
Lancaster University
Pro Chancellor
Chairman
National Museum Liverpool
Trustee
University of Central Lancashire
Honorary Fellowship
Learning & Skills Council (National) Board Member Culture Northwest
Board Member
Lake District National Park Authority Member Professor Sir Martin Harris CBE, DL Board Member
University of Salford
Chancellor
Income to the Agency ÂŁ
Payments made to Organisations ÂŁ
Nature of transaction
77,925
4,854,765
Grant claims Grant claims
-
1,619,741
55,601
1,451,440
Grant claims
2,756,232
224,739
Grant claims
97,103
269,519
Grant claims
-
5,000
Grant claims
31,306
1,174,946
Grant claims
-
76,185
Grant claims
Anil Ruia OBE, JP, LLB Asian Business Federation
Member
Board Member
The University of Manchester
Trustee
2,494
13,023,460
Grant claims
National Museum Liverpool
Trustee
-
1,619,741
Grant claims
UMIP
Member
1,015
-
Sport England North West
Member
2,350
-
Goods & services
Granada Television Limited
Director
352
-
Goods & services
Cllr Mike Storey CBE Board Member
Liverpool City Council
Councillor
40,447
17,521,728
Brenda Smith
Liverpool Vision
Director2
Board Member
Granada Television Limited
Non-executive Deputy Chair
University of Salford
Member
The University of Manchester
Governor
Business in the Community
Member
Manchester Airport Aviation Services Dr Pauleen Lane CBE Trafford Metropolitan Borough Board Member Council
Marie Rimmer CBE Board Member
Goods & services
Grant claims
-
521,115
Goods & services
352
-
Goods & services
-
1,174,946
Grant claims
2,612
13,023,460
Grant claims
-
59,750
Grant claims
Non-executive Director
-
52,980
Grant claims
Elected Member
-
188,771
Grant claims
2,612
13,023,460
Grant claims
4,004,900
20,825
76,034
1,493,058
The University of Manchester
Lecturer
English Partnerships
Deputy Chair
St Helens Metropolitan Borough Council
Councillor
St Helens Chamber of Commerce
Member (part year)
The Mersey Partnership
Board Member (part year)
The World of Glass (St Helens) Ltd Director (part year)
Goods & services Grant claims
-
44,809
Grant claims
4,373
2,656,966
Grant claims
-
4,932
Goods & services
62
Notes (continued)
31. Related party transactions (continued) (b)
Board members (continued) Income to the Agency ÂŁ
Payments made to Organisations ÂŁ
Nature of transaction
Name and position
Related Party
Position
Professor Maureen Williams
Liverpool John Moores University
Visiting Professor of Sociology
42,300
2,552,162
Grant claims
Board Member
The Mersey Partnership
Board Member2
4,373
2,656,966
Grant claims
Dave McCall Board Member
none
Joe Dwek CBE
University of Manchester
Member
2,612
13,023,460
Grant claims
Board Member
Envirolink (North West) Ltd
Chairman
-
2,254,329
Grant claims
ENWORKS
Board Member (part year)
-
1,650,753
Grant claims
Mercury Recycling Ltd.
Director
-
45,000
Grant claims
Lancashire Business Link
Director
-
6,517,108
Grant claims
Professor John Moverley OBE Board Member David Brockbank
Cumbria Vision
Chairman
61,323
-
Board Member
Lancaster University
Member (part year)
77,925
4,854,765
Goods & services
Peter Hensman DL
Lancaster University
Member
77,925
4,854,765
Grant claims
Board Member
Cumbria Rural Enterprise Agency
Vice Chairman
-
1,133,906
Grant claims
Tiss Ltd.
Director
-
13,027
Grant claims
John Merry
Salford City Council
Leader
5,955,592
7,608,123
Grant claims
Board Member
Learning & Skills Council (National) Board Member
2,756,232
224,739
Grant claims
Grant claims
MIDAS
Director
507
1,447,808
Grant claims
Marketing Manchester
Director
8,445
1,308,318
Grant claims
Vanda Murray OBE
TPMI Trading Ltd.
Non-executive director
20,562
3,182,010
Grant claims
Board Member
Carillion plc
Non-executive director
8,813
-
Goods & services
The Manufacturing Institute
Trustee and non-executive director
-
2,333
Goods & services
Notes
1Indirect
interest
2 NWDA
Representation
63
31. Related party transactions (continued) (c)
Executive Management Board & Board Members Income to the Agency £
Payments made to Organisations £
-
23,515
Goods & services
Board Member
56,217
7,269,136
Grant claims, Goods & services
Board Member
-
521,115
Grant claims, Goods & services
Name and position
Related Party
Position
Steven Broomhead
Warrington Chamber of Commerce Director Liverpool Land Development Co
2
Liverpool Vision 2 Liverpool John Moores University
Governor
42,300
2,552,162
The Princes Trust 2
Board Member
-
270,610
Grant claims, Goods & services
University of Central Lancashire
Board Member
55,601
1,451,440
Grant claims, Goods & services
Cumbria Vision
Director
61,323
-
Goods & services
1,311
-
33,373
2,955,232
-
32,100
17,625
-
-
59,750
97,103
269,519
-
20,000
Goods & services
61,323
-
Goods & services
LSC Regional Board (North West) 2 Member
Peter Mearns
Manchester Enterprises 2
Board Member
Arts Council England (Northwest)
Non-Exec Council Member
England’s North Country
Non-Exec Board Member 2
Business in the Community Northwest
Ian Haythornthwaite
Note
Community Enterprise Mentor
Culture Northwest
Non-Exec Member 2
National Football Museum
Director of Finance
Cumbria Vision Bernice Law
Nature of transaction
2
Board Member
Grant claims
Grant claims, Goods & services Promotional Events Invoices
Goods & services Grant claims
Warrington Collegiate Institute
Governor
-
2,505,918
Grant claims, Goods & services
Liverpool Vision Board 2
Alternate Member
-
521,115
Grant claims, Goods & services
Liverpool LDC 2
Alternate Member
56,217
7,269,136
Grant claims, Goods & services
2
NWDA Representation