Statement of Accounts 2024-2025

This Statement of Accounts covers the financial year ended on 31 March 2025 (referred to as 2024/25). It has been prepared in accordance with the Accounts and Audit Regulations 2015 as amended by the Accounts and Audit (Amendment) Regulations 2021 and the Code of Practice on Local Authority Accounting in the United Kingdom. The Statement contains:

Statement on Annual Governance Arrangements – Sets out the Authority’s responsibilities regarding the system of internal control and corporate governance.

Independent Auditor’s Report to the Members of Lancashire Combined Fire Authority – The Auditor's report to the CFA on the accounts for 2024/25, which are set out in the sections shown below.

Statement of Responsibilities for the Statement of Accounts – Sets out the responsibilities of the Authority and the Treasurer with regards to the statement of accounts.

Comprehensive Income & Expenditure Statement - This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Fire Authority raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

Movement In Reserves Statement – This statement shows the movement in year on the different reserves held by the Fire Authority analysed between usable and other reserves. The surplus or (deficit) on the Provision of Services line shows the true economic cost of providing the Fire Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement.

Balance Sheet – This shows information on the financial position of the Fire Authority as at the 31 March 2025, including the level of balances and reserves at the Fire Authority’s disposal, its long-term indebtedness and the value of the assets held by the Fire Authority.

Cash Flow Statement – This shows the cash and cash equivalent movements in and out of the Fire Authority due to transactions with third parties for revenue and capital purposes.

Fire Fighters Pension Fund Account and Net Assets Statement – Shows the financial position of the fire fighters pension fund account, showing whether the Authority owes, or is owed, money by the Government to balance the account, together with details of its net assets.

Preventing fires and other emergencies is one of our key priorities and the most effective way to make Lancashire safer. It is pleasing that we saw a reduction in the number of accidental house fires of more than double the national average, reflecting dedicated prevention services that provide safety interventions in homes, educate people in our fire safety campaigns, and teach children fire safety in schools.

Supporting businesses, employers, and landlords to meet their legal duties and keep people safe in their buildings amid changes to fire safety legislation remained an area of focus. Our business fire safety check service delivered more interventions than ever before and when those responsible for fire safety failed to comply, we took enforcement action.

Last year a supported living care provider was prosecuted for fires safety breaches in a case believed to be the first of its kind, and in which tragically someone lost their life. We will always work with those willing to address fire safety issues however we will not hesitate to act when necessary.

 Firefighters responded to 17,000 incidents across Lancashire during the year, including complex, challenging, and protracted emergencies demanding expert operational skills and, in some cases, exceptional dedication and bravery.

Investment in two new water towers strengthened firefighting capabilities in tall buildings. These innovative fire engines can penetrate buildings at height to inject water, simultaneously minimising damage to homes and businesses and improving firefighter safety. We now have four water towers providing greater cover across Lancashire.

As part of our work to improve the sustainability of our on-call fire engines, we invested in research into recruitment and retention challenges and opportunities. In a first for the fire and rescue service nationally, this led to the development of an innovative online tool which provides local leaders with data and insight to support their stations and maximise fire engine availability.

Our people are central to everything we achieve and investment in their training, equipment, wellbeing, and safety is a long-held priority. Last year this focussed on supporting mental health alongside investment in body worn cameras to improve firefighter safety and operational learning.

We also created a wider range of opportunities for people in our Service to develop their careers and take their next step, be that through specialist skills, different roles or promotion. The way we deliver training changed from a fixed model in a central location to flexible provision, using technology or taking training to fire stations.

 I am proud of the contribution everyone in the Service makes every day, on the frontline and supporting behind the scenes. There is an unwavering determination to achieve our goals, respond positively to challenges, and make a difference in our communities.

The Authority’s spending is planned and controlled by an annual budget process, which leads to the setting of its budget requirement. Expenditure on the day-to-day running costs of the service is determined through the Revenue Budget and is recorded in the Comprehensive Income and Expenditure Statement.

In setting its budget the Authority aims to balance the public’s requirement for and expectations of our services with the cost of providing this. As such the revenue budget focuses on the need to:-

• deliver services as outlined in the Risk Management Plan and other plans;

• maintain future council tax increases at reasonable levels;

• continue to deliver efficiencies in line with targets;

• continue to invest in improvements in service delivery and facilities;

• set a robust budget that takes account of known and anticipated pressures; and

• maintain an adequate level of reserves.

The Authority agreed a net revenue budget of £75.2m and a council tax of £84.73 for the financial year 2024/25. This represented a 2.99% (£2.46) increase in council tax, in line with the Council Tax referendum limit. Based on this, the budget was considered affordable, prudent, and sustainable, whilst ensuring that the Authority was able to deliver against its corporate priorities.

The net revenue position shows a small underspend of £0.8m over the year:

The following reconciliation shows the comparison between the revenue budget position, as set out above, and the Total Comprehensive Income and Expenditure figure reported in the accounts.

The Authority’s general fund balance, that includes our share of North West FireControl, was £5.66m at the start of the year. Following a review of reserves during the year and the transfer of the underspend the reserve balance at the end of the year is £6.56m. The Authority’s year-end balance excluding our share of North West FireControl is £5.72m (this is above the minimum level of reserves approved by the Authority at its budget meeting in 2024).

 The Authority also holds an additional £29.01m of earmarked reserves and £0.19m of capital receipts. The earmarked reserves designated for capital funding and capital receipts are fully utilised within the medium-term financial strategy. It is also worth noting that £5.29m of the earmarked reserve relates to the Authority’s two PFI schemes, whereby monies are set aside in the early years of the schemes to meet future costs, thus smoothing out the impact of inflationary pressures.

The Authority has continued to invest in its asset base, with capital expenditure excluding NW FireControl Limited incurred in the year totalling £4.1m, with the main contributors to this being set out below:-

The Balance Sheet shows that the Authority’s Total Net Liabilities have reduced from (£503.0m) to (£435.2m) mainly because of the change in actuarial assumptions of the uniformed firefighters pension scheme. The reduction in the liability was c£60m and £50m of this was due to a gain due to changes in financial assumptions; essentially reflecting increasing assumptions about inflation and interest rates compared to the previous year. The net liability reflects the Authority’s compliance with International Accounting Standards and in particular the requirement to show the full pensions liability in the accounts. Whilst the liability on the Local Government Pension Scheme is funded the Fire-fighters Pension Scheme is unfunded, there are no assets from which future liabilities will be paid, and hence the Authority’s overall Fire-fighters pension liability of (£588m) is extremely large. If this liability was excluded the Authority’s Total Net Assets would be £153m.

Long-term assets have increased slightly in value to £130m from £128m, reflecting the investment in our asset base and the impact of revaluations.

A new Government was elected in 2025 and thus a one-year settlement was provided for the final year of the previous Government for 2025/26. The new Government has committed to a spending review, a multi-year settlement, a review of the funding formula and review of business rates retention scheme for 2026/27; all of which may impact on future plans. The 2024/25 Local Government Finance Settlement showed an increase in the Governments Settlement Funding Assessment of 7.5%.

The Government allowed Fire Authorities to increase council tax levels by £5 compared to 2.99% the previous year, resulting in a council tax of £89.73 per band D property.

The Authority agreed a net revenue budget of £77.5m, allowing for inflationary pressures. Based on this the budget, as presented, is considered affordable, prudent, and sustainable, whilst ensuring that the Authority can deliver against its corporate priorities. Overall, the net budget increased by 3%.

Given economic uncertainty, the potential impact of the Fair Funding Review and potential changes to local retention of Business rates, it is extremely difficult to anticipate what funding will look like beyond the existing settlement, hence for the purpose of medium-term financial strategy we had assumed that the funding will increases broadly in line with inflation. Based on this we have been able to set a balanced budget in future years, after allowing for council tax increases in line with forecast inflation.

The capital budget continues to invest in our asset base, in particular new buildings/stations, vehicle replacement, new operational equipment, and new IT requirements. This gives rise to a capital program of £86m over the next five years.

We will continue to invest to ensure that our staff have the best equipment available, our vehicle programme sees us investing in enhanced aerial capability, whilst our operational equipment investment includes the replacement of our Breathing Apparatus sets and telemetry.

When the national Emergency Services Mobile Communications Programme (ESMCP) progresses to a stage where we can purchase replacement radio and mobilising equipment, we will upgrade our current provision. This project has incurred delays and is outside of our control. It is assumed that any costs to the Authority will be funded by specific capital grant.

Most of the capital programme relates to planned enhancements to our building stock, including the potential replacement of Service HQ and Preston Fire Station, together with enhancements to our training props at our Service Training Centre.

The capital programme shows the Authority utilising all its capital reserves and receipts by the end of 2026/27, meaning that the remainder of the capital programme will need to be met from £49m of new borrowing. New borrowing will impact the revenue budget as capital financing (interest payable and Minimum Revenue Provision - MRP) charges and therefore efficiency savings of £2.5m will need to be delivered in the medium term, and this is reflected in our Medium-Term Financial Strategy.

The following significant financial risks have all been assessed and the Treasurer feels that these are adequately covered within the budget estimates or within the level of reserves currently held:-

• Reduction in Business Rate funding following the reset of business rates due in 2026/27.

• Adverse impact for the Fire Sector following the three-year Spending Review that is due for completion in late 2025.

• Adverse impact for LFRS following the review of the Funding Formula

• Non delivery of savings required in the MTFS.

• Changes to the Business Rates Retention Scheme.

• Adverse changes because of the implementation of the Fair Funding Review.

• Reduction in Council Tax funding.

• Higher than anticipated inflation.

• Larger increases in pension costs.

• Significant changes to retirement profiles.

• Increase in demand led pressures.

• Higher insurance claims.

• Higher interest rates assumed for borrowing.

The accounts have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (the Code).

Scope of Responsibility

Lancashire Combined Fire Authority (the Authority) is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Authority also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

In discharging this overall responsibility, the Authority is responsible for putting in place proper arrangements for the governance of its affairs facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.

The Authority approved and adopted an updated Local Code of Corporate Governance in 2018, and this was reviewed by the Audit Committee in July 2024. It aligns with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government Framework 2016. Included within the Code are the following core principles:-

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

2. Ensuring openness and comprehensive stakeholder engagement

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

4. Determining the interventions necessary to optimise the achievement of the intended outcomes

5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it

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

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

(A copy of the code, setting out the core and supporting principles, what the Authority commits itself to do and how it will do this can be found on our website at Code of Corporate Governance | Lancashire Fire and Rescue Service.

This statement explains how the Authority has complied with the code and meets the requirements of regulation 6(2) of the Accounts and Audit Regulations 2015 in relation to the publication of a statement on internal control.

The Purpose of the Governance Framework

The governance framework comprises the systems and processes, and culture and values, by which the Authority is directed and controlled and its activities through which it accounts to, engages with and leads the community. It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of the Authority’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.

The governance framework has been in place at the Authority for the year ended 31 March 2025 and up to the date of approval of the 2024/25 Statement of Accounts.

The Governance Framework

The Authority’s Local Code of Corporate Governance set out its framework for corporate governance. The key elements of the systems and processes that comprise the Authority’s governance arrangements in accordance with the seven principles of the Local Code of Corporate Governance include:-

 · The Community Risk Management Plan (CRMP) sets out the direction of the Service and how we will make Lancashire safer. It is informed by the greatest risks to the people and communities of Lancashire which are identified in our strategic assessment of risk (opens in a new tab). The plan describes our aim, priorities, equality objectives and values, alongside how we will prevent, protect and respond to the risks in Lancashire. The current plan covering 2022-2027 can be found on our website at Community Risk Management Plan 2022-2027 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk).

 · Lancashire Fire and Rescue Service has six core strategies: our People, Prevention, Protection, Response, Financial and Digital Strategies. Our prevention, protection and response activities address the fire and rescue related risks that are identified in those strategies and outline the measures in place and actions we take to make Lancashire safer. Each strategy is periodically reviewed and evaluated to ensure we are delivering against our outlined objectives and are doing so in the most efficient and effective way. Wherever necessary, changes will be made within each strategy to ensure we operate in line with our aim, priorities and values.

 · The Strategic Assessment of Risk’ (SAoR) seeks to underpin our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. This document can be found on our website at Strategic Assessment of Risk 2023-2024 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk);

· The Annual Service Plan details the activities we will undertake to deliver the strategy set out in our CRMP. The current plan was approved this year and can be found on our website at Annual Service Plan 2025-2026 | Lancashire Fire and Rescue Service;

· The Lancashire Combined Fire Authority’s consultation strategy has been in place since the integrated risk management planning arrangements were introduced in 2003 Consultation Strategy | Lancashire Fire and Rescue Service;

· A comprehensive performance management framework, with the Performance Committee and Service Management Team receiving regular reports on performance against targets and any corrective action taken to address any variances. On an annual basis the Authority publishes an Annual Service Report, this can be found on our website at Annual Service Report 24_25.pdf;

· A Corporate Programme Board provides oversight across 5 areas:-

o Business Process Improvement Programme

o Service Delivery Change Programme

o Capital Projects Programme.

o People Strategy

o Risk Management

All major projects and reviews follow similar format and report to the Corporate Programme Board;

· The Authority operates a Committee Structure aligned to strategic objectives, within agreed Terms of Reference, as follows:-

o The Audit Committee - To advise on the adequacy and effectiveness of the Authority's Internal and External Audit Service and risk management arrangements, which operates in line with the core functions identified in CIPFAs Audit Committees – Practical Guidance for Local Authorities.

o The Resources Committee - To consider reports and make decisions relating to financial, human resources and property related issues.

o The Planning Committee - To consider reports and make decisions relating to all aspect of planning arrangements, including consultation and communication arrangements.

o The Performance Committee - To consider reports and make recommendations on all aspects of performance management.

o The Appeals Committee -To hear relevant appeals, grievances and complaints.

· Clear management structure within the Service. The Executive Board, comprising the Chief Fire Officer (head of paid service), and 4 Executive Directors, is responsible for determining policy, monitoring performance and developing service plans in line with the Authority’s overall strategic objectives and is assisted in this process by the Service Management Team.

· The Combination Scheme Order, Standing Orders, Terms of Reference of individual Committees, Scheme of Delegation and Financial Regulations establish overall arrangements for policy setting and decision making and the delegation of powers to members and officers.

· Comprehensive suite of strategies and policies in place and regularly reviewed.

· Codes of Conduct for members and officers, and member/officer protocol, which set out clear expectations for standards of behaviour.

· Both the Monitoring Officer and Treasurer are involved in the Authority’s decision-making process, and ensure compliance with established policies, procedures, laws and regulations; All Authority reports are considered for human resource, financial, business risk, environmental and equality and diversity implications to identify key issues.

· The Treasurer’s role and financial management arrangements align with requirements set out in CIPFAs Statement on the Role of the Chief Financial Officer in Local Government and CIPFAs Financial Management Code.

· Well publicised arrangements for dealing with complaints and whistleblowing, and for combating fraud and corruption.

· A Risk Management Strategy and framework which ensures that risks to the Service’s objectives are identified and appropriately managed.

· Comprehensive Business Continuity arrangements in place and tested on a regular basis.

· A framework to review potential partnership arrangements utilising set criteria prior to entering such arrangements.

· Compliance with data transparency requirements, including publication of all key documents, committee agenda and minutes, pay policy and publication scheme on the internet.

· Regular assessment of training & development needs of both members and officers, including appropriate appraisal system. Sufficient budget to meet relevant training requirements; and

· Comprehensive service review process in place, comprising external views in the form of HMICFRS Inspection review, External Audit reviews, Internal Audit reviews and internal reviews undertaken by our own staff. Ultimately these culminate in the production, and publication, of an Annual Assurance Statement.

Review of effectiveness

 The Authority has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the work of the executive managers within the Authority who have responsibility for the development and maintenance of the governance environment, the Internal Auditors annual report, and by comments made by the external auditors and other review agencies and inspectorates.

A statement of assurance was approved by the Authority in February 2025, it sets out the effectiveness of the governance arrangements for which it is responsible, including the system of internal control. The statement of assurance covers all the principles set out in the Authority’s Code of Corporate Governance. The statement of assurance reveals no areas of weakness in the Authority’s corporate governance arrangements; the arrangements are in all cases at least adequate and in most areas good.

In maintaining and reviewing the effectiveness of the Authority’s governance arrangements the following have been considered:-

· A review of minutes of the Executive Board, Audit Committee and Authority to ensure that periodic monitoring and reviews are being reported appropriately and governance issues are addressed.

· We updated our Strategic Assessment of Risk that underpins our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. We undertook an emergency cover review (ECR) in 2022 to ensure that its emergency response remains effective and efficient, and that the Service is well equipped to respond to future challenges.

· Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) reported the outcome of their second full inspection in July 2022; the focus was on the service they provide to the public, and the way they use the resources available. The HMICFRS reported that the Service is performing exceptionally well and has been recognised as ‘outstanding’ for promoting values and culture. As well as being rated ‘outstanding’ for culture and values, the service was rated as ‘good’ in the other 10 categories and there were no areas that ‘require improvement.’ The results mirror those of the service’s first full inspection in 2018, with the new report highlighting that the service has improved in almost all areas since then. The next inspection was undertaken in early 2025 and is expected to be reported in mid-2025.

· A new Annual Service Plan has been published, providing clarity, both internally and externally, on our priorities set out in the CRMP and describes what our ambitions are for each priority, as well as setting out the projects and actions that will be delivered, developed or reviewed during the coming year against each of our priorities. This is supported by Local Delivery Plans.

· Statement of Intent: Enhanced Collaboration agreed between LFRS, Lancashire Constabulary and Northwest Ambulance Services. Collaboration group established with regular reports to Members.

· An Organisational Assurance Team. The newly formed Organisational Assurance team under Planning, Performance and Assurance was formed in 2024 and has a broader reference than just a focus on operational assurance. The team has the responsibility for HMICFRS liaison, operational preparedness and will undertake internal audits/ assurance across the whole organisation based on trends, themes and emerging needs. The team will identify and share good practice as well as areas for improvement, items will be tracked through to completion. The Organisational Assurance team will work closely with the Operational Assurance team (under Training and Operational Review) who have the responsibility for operational learning and response. The Operational Assurance team will continue to create the operational assurance performance summary which is published quarterly. A programme of preparedness visits will be managed by the Organisational Assurance team which has expanded on the operational audits undertaken previously.

· Performance appraisal incorporating values is undertaken throughout the Service.

· Internal Audit services were provided by Lancashire County Council, who comply with CIPFA’s Code of Internal Audit Practice. The Head of Internal Audit is required by professional standards to provide an opinion addressing governance, risk management and control and thereby to provide assurance that the risks to the objectives of Lancashire Combined Fire Authority are being adequately and effectively controlled. As part of the 2024/25 internal audit plan the auditors undertook various reviews and gave the overall opinion that they can “provide substantial assurance regarding the adequacy of design and effectiveness in operation of the organisation's frameworks of governance, risk management and control.”

· The Authority’s external auditors are Grant Thornton, Auditors of fire authorities in the UK have specific legal responsibilities under the Local Audit and Accountability Act 2014. Under Section 20(1)(c) of the Local Audit and Accountability Act 2014, auditors are required to assess whether fire authorities have made proper arrangements for securing economy, efficiency, and effectiveness in their use of resources. The Code of Audit Practice, issued by the National Audit Office (NAO), mandates auditors to provide a Value for Money (VfM) commentary, focusing on financial sustainability, governance, and the authority’s ability to improve its economy, efficiency, and effectiveness. A summary of their key judgements is provided below:

o Financial Sustainability – “No significant weaknesses in arrangements identified”.

o Governance – “No significant weaknesses in arrangements identified”.

o Improving economy, efficiency and effectiveness - “No significant weaknesses in arrangements identified”.

· On 18 November 2024 Grant Thornton gave an unqualified opinion on the Authority’s finance statements ended 31 March 2024.

Last year’s Annual Governance Statement identified several areas for improvement, and progress against these are set out below:

Significant governance issues

On the basis of the review of the sources of assurance and opinions from both the external and internal auditors set out in this statement, there are no significant governance arrangements.

Approved:

Report on the audit of the financial statements

Opinion on financial statements

We have audited the financial statements of Lancashire Combined Fire Authority (the ‘Authority’) for the year ended 31 March 2025, which comprise which comprise the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including a summary of significant accounting policies and include the firefighters' pension fund financial statements comprising the Fund Account, the Net Assets Statement and notes to the financial statements. The notes to the financial statements include notes to the core financial statements and firefighters’ pension fund. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25.

 In our opinion, the financial statements:

· give a true and fair view of the financial position of the Authority as at 31 March 2025 and of its expenditure and income for the year then ended.

· have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25; and

· have been prepared in accordance with the requirements of the Local Audit and Accountability Act 2014.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law, as required by the Code of Audit Practice (2024) (“the Code of Audit Practice”) approved by the Comptroller and Auditor General. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent of the Authority in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We are responsible for concluding on the appropriateness of the Treasurer’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Authority’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Authority to cease to continue as a going concern.

In our evaluation of the Treasurer’s conclusions, and in accordance with the expectation set out within the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 that the Authority’s financial statements shall be prepared on a going concern basis, we considered the inherent risks associated with the continuation of services provided by the Authority. In doing so we had regard to the guidance provided in Practice Note 10 Audit of financial statements and regularity of public sector bodies in the United Kingdom (Revised 2024) on the application of ISA (UK) 570 Going Concern to public sector entities. We assessed the reasonableness of the basis of preparation used by the Authority and the Authority’s disclosures over the going concern period.

 In auditing the financial statements, we have concluded that the Treasurer’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Authority’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 Our responsibilities and the responsibilities of the Treasurer’s with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Statement of Accounts other than the financial statements and our auditor’s report thereon. The Treasurer’s is responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 We have nothing to report in this regard.

Other information we are required to report on by exception under the Code of Audit Practice

Under the Code of Audit Practice published by the National Audit Office in November 2024 on behalf of the Comptroller and Auditor General (the Code of Audit Practice) we are required to consider whether the Annual Governance Arrangements does not comply with the requirements of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25, or is misleading or inconsistent with the information of which we are aware from our audit. We are not required to consider whether the Annual Governance Arrangements addresses all risks and controls or that risks are satisfactorily addressed by internal controls.

 We have nothing to report in this regard.

Opinion on other matters required by the Code of Audit Practice

 In our opinion, based on the work undertaken in the course of the audit of the financial statements, the other information published together with the financial statements in the Statement of Accounts for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

 Under the Code of Audit Practice, we are required to report to you if:

· we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of the audit; or

· we make a written recommendation to the Authority under section 24 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of the audit; or

· we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of the audit; or

· we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of the audit; or

· we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014, in the course of, or at the conclusion of the audit.

We have nothing to report in respect of the above matters.

Responsibilities of the Authority and the Treasurer

 As explained more fully in the Statement of Responsibilities, the Authority is required to make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this authority, that officer is the Treasurer. The Treasurer is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25, for being satisfied that they give a true and fair view, and for such internal control as the Treasurer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 In preparing the financial statements, the Treasurer is responsible for assessing the Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have been informed by the relevant national body of the intention to dissolve the Authority without the transfer of its services to another public sector entity.

Auditor’s responsibilities for the audit of the financial statements

 Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

 Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

· We obtained an understanding of the legal and regulatory frameworks that are applicable to the Authority and determined that the most significant which are directly relevant to specific assertions in the financial statements are those related to the reporting frameworks (the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25, the Local Audit and Accountability Act 2014, the Accounts and Audit Regulations 2015, the Accounts and Audit (Amendment) Regulations 2024 and the Local Government Act 2003.

· In addition, we concluded that there are certain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial statements and those laws and regulations relating to the Fire and Rescue Services Act 2004, the Public Service Pensions Act 2013, the Firefighters’ Pension Scheme (England) Regulations 2014 and the Firefighters’ Pension Scheme (England) Order 2006).

· We enquired of management and the Audit committee, concerning the Authority’s policies and procedures relating to:

o the identification, evaluation and compliance with laws and regulations.

o the detection and response to the risks of fraud; and

o the establishment of internal controls to mitigate risks related to fraud or non-compliance with laws and regulations.

· We enquired of management, internal audit and the audit committee, whether they were aware of any instances of non-compliance with laws and regulations or whether they had any knowledge of actual, suspected or alleged fraud.

· We assessed the susceptibility of the Authority’s financial statements to material misstatement, including how fraud might occur, by evaluating management’s incentives and opportunities for manipulation of the financial statements. This included the evaluation of the risk of potential management bias in determining accounting estimates for the valuation of land and buildings and the pension liability/asset, and management override of controls. We determined that the principal risks were in relation to processing of inappropriate journals.

· Our audit procedures involved: 

o evaluation of the design effectiveness of controls that management has in place to prevent and detect fraud.

o journal entry testing, with a focus on large and unusual journals.

o challenging assumptions and judgements made by management in its significant accounting estimates in respect of land and buildings and the defined pension fund net liability valuations, and

o assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item.

· These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it.

· We communicated relevant laws and regulations and potential fraud risks to all engagement team members, including the potential for fraud in revenue and expenditure recognition, and the significant accounting estimates related to land and buildings and defined pension fund net liability valuations. We remained alert to any indications of non-compliance with laws and regulations, including fraud, throughout the audit.

· Our assessment of the appropriateness of the collective competence and capabilities of the engagement team included consideration of the engagement team's.

o understanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation

o knowledge of the local government sector

o understanding of the legal and regulatory requirements specific to the Authority including:

o the provisions of the applicable legislation

o guidance issued by CIPFA/LASAAC and SOLACE

o the applicable statutory provisions.

· In assessing the potential risks of material misstatement, we obtained an understanding of:

o the Authority’s operations, including the nature of its income and expenditure and its services and of its objectives and strategies to understand the classes of transactions, account balances, expected financial statement disclosures and business risks that may result in risks of material misstatement.

o the Authority's control environment, including the policies and procedures implemented by the Authority to ensure compliance with the requirements of the financial reporting framework.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements – the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources

 Matter on which we are required to report by exception – the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources

 Under the Code of Audit Practice, we are required to report to you if, in our opinion, we have not been able to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2025.

 We have nothing to report in respect of the above matter.

Responsibilities of the Authority

 The Authority is responsible for putting in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

 Auditor’s responsibilities for the review of the Authority’s arrangements for securing economy, efficiency and effectiveness in the Authority’s use of resources

 We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 to be satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority's arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

 We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance issued by the Comptroller and Auditor General in November 2024. This guidance sets out the arrangements that fall within the scope of ‘proper arrangements’. When reporting on these arrangements, the Code of Audit Practice requires auditors to structure their commentary on arrangements under three specified reporting criteria:

· Financial sustainability: how the Authority plans and manages its resources to ensure it can continue to deliver its services;

· Governance: how the Authority ensures that it makes informed decisions and properly manages its risks; and

· Improving economy, efficiency and effectiveness: how the Authority uses information about its costs and performance to improve the way it manages and delivers its services.

We have documented our understanding of the arrangements the Authority has in place for each of these three specified reporting criteria, gathering sufficient evidence to support our risk assessment and commentary in our Auditor’s Annual Report. In undertaking our work, we have considered whether there is evidence to suggest that there are significant weaknesses in arrangements.

Report on other legal and regulatory requirements – Audit certificate

We cannot formally conclude the audit and issue an audit certificate for Lancashire Combined Fire Authority for the year ended 31 March 2025 in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of Audit Practice until we have received confirmation from the National Audit Office the audit of the Whole of Government Accounts is complete for the year ended 31 March 2025. We are satisfied that this work does not have a material effect on the financial statements for the year ended 31 March 2025

Use of our report

This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014 and as set out in paragraph 85 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the Authority’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority's members as a body, for our audit work, for this report, or for the opinions we have formed.

Statement of Responsibilities for the Statement of Accounts

 The Authority’s Responsibilities

 The Authority is required:

· To make arrangements for the proper administration of the financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Treasurer to the Fire Authority.

· To manage its affairs to secure economic, efficient, and effective use of resources and safeguard its assets.

· To approve the Statement of Accounts.

The Treasurer’s Responsibilities

 The Treasurer is responsible for the preparation of the Authority’s Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting (‘the Code’), is required to present a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year ended 31 March 2024.

 In preparing this Statement of Accounts, the Treasurer has:

· Selected suitable accounting policies and then applied them consistently;

· Made judgements and estimates that were reasonable and prudent;

· Complied with the Code.

The Treasurer has also:

· Kept proper accounting records which were up-to-date;

· Taken reasonable steps for the prevention and detection of fraud and other irregularities.

Comprehensive Income and Expenditure Statement

This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in both the Expenditure and Funding Analysis and the Movement in Reserves Statement.

Movement in Reserves Statement

This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘Usable Reserves’ (those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the provision of services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Comprehensive Income and Expenditure Statement for council tax setting purposes. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Authority.

Balance Sheet

 The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories, usable reserves are those that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example capital receipts may only be used to fund capital expenditure). The second category is unusable reserves and includes reserves that hold unrealised gains and losses (for example the revaluation reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

*see Note 31, Prior Year Adjustments for restatement details.

*see Note 31, Prior Year Adjustments for restatement details.

This Statement of Accounts is that upon which the Auditor should enter his certificate and opinion. It presents a true and fair view of the financial position of the Authority at 31 March 2025 and its income and expenditure for the year then ended.

The cash flow statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flows arising from operating activities is an indicator of the extent to which the operations are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery.

1 Expenditure and Funding Analysis

The objective of the Expenditure and Funding Analysis is to demonstrate to council taxpayers how the funding available to the Authority (Government grants, council tax and business rates) for the year has been used in providing services in comparison with those resources consumed or earned by the Authority in accordance with generally accepted accounting practices. The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the Authority’s directorates. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.

*see Note 31, Prior Year Adjustments for restatement details.

1a Note to the Expenditure and Funding Analysis

*see Note 31, Prior Year Adjustments for restatement details.

Note 1 – Adjustments for capital purposes – this column adds in depreciation, impairments and revaluation gains and losses. It also adjusts for capital disposals with a transfer of the income on the disposal and the amounts written off. MRP is deducted because it is not chargeable under generally accepted accounting practices. Adjustments are also made to recognise capital grant income.

Note 2 – Pensions Adjustments - This shows which lines have been affected by the removal of pension contributions and replaced with IAS19 debits and credits.

Note 3 – Other Differences - This column adjusts for timing differences on the amounts chargeable for Business Rates and Council Tax under Statute and the Code and transfers to reserves.

2 Fire Authority Costs

 In 2024/25 Fire Authority costs amounted to £0.386m (2023/24: £0.376m), analysed as follows:

3 Employees Emoluments

 Details of the Authority’s employees, out of an estimated 1,181 employees, who have received pay and benefits of more than £50,000 are:

The above table excludes Senior Officers, who are disclosed individually in the following tables

Senior Officers Remuneration

 During the year, Senior Officers received remuneration packages as detailed below – these employees are also excluded from the table above.

*see Note 31, Prior Year Adjustments for restatement details.

Exit Packages

 In 2024/25 there was one compulsory redundancy in the banding of £20,001-£40,000. In 2023/24 there was one compulsory redundancy which was in the banding of £40,001-£60,000.

4 External Auditors Fees

 In 2024/25, the Fire Authority paid a total of £0.103m to its external auditors, Grant Thornton (2023/24: £0.106m), as follows:

 The 2023/24 audit fee charge includes additional charges of £8,300 relating to 2022/23.

5 Related Parties Transactions

The Authority is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by the Authority. Disclosure of these transactions allows readers to assess the extent to which the Authority might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the authority. Consideration must be given to materiality from both the viewpoint of the Authority and the related party.

 Central Government

 Central government has effective control over the general operations of the Authority – it is responsible for providing the statutory framework within which the Authority operates, provides most of its funding in the form of grants and prescribes the terms of many of the transactions that the Authority has with other parties (for example council tax bills).

 Members

 Members of the Authority have direct control over the Authority’s financial and operating policies. The total of members’ allowances paid in 2024/25 is shown in Note 2. As required under Section 81 of the Local Government Act 2000, members’ outside interests are recorded in a formal register and the Code of Conduct operated by the Authority requires members to declare any related interests they have, and to take no part in meetings or decisions on issues concerning those related interests.

 In addition, a survey of the related party interests of members and their immediate family members was carried out in preparing the Statement of Accounts. This survey showed that members have outside interests in bodies that have transactions with the Authority, such as:

- roles as members of Lancashire County Council, the district and unitary authorities;

- roles with voluntary organisations;

There is no evidence in these cases of control of one party by the other, however material transactions of £1.029m spend with Lancashire County Council requires disclosure in this note. Most of this sum relates to maintenance of the Authority’s vehicle fleet, in addition to services provided under Service Level Agreements.

 Officers

Officers of the Authority are required to declare interests in related parties on an annual basis in respect of the financial statements. There were no reported material related party transactions regarding 2024/25. This is consistent with 2023/24.

6 Property, Plant & Equipment

 Details on policies can be seen in Note 30, Accounting Policies.

 Movements during the Year

 The table below summarises the movements in Property, Plant and Equipment during the year. Land and buildings, vehicles, plant, furniture, and equipment are all disclosed at their net current value. All additions (new expenditure) are shown at cost. Assets under construction (AUC) are held at cost and not depreciated until they come into service.

 Movements in Property, Plant and Equipment analysed into their different categories for 2024/25 are:

On 31 March 2025 the Authority undertook a full revaluation review on approximately one fifth of its land and buildings, and in addition carried out a desktop revaluation exercise on the remainder, which resulted in a gross revaluation gain of £5.579m (2023/24: net gain of £5.441m).

The restated* comparative figures detailing the movement during 2023/24:

*see Note 31, Prior Year Adjustments for restatement details.

 The vehicle, plant & equipment disposal/de-recognition figures in the above table, include 2022/23 disposals and de-recognitions not previously recognised.

Heritage Assets

 The Authority holds several heritage assets, in the form of both fire memorabilia such as antique fire extinguishers, and two vintage fire appliances. Due to the nature of these assets, it is not possible to market test the value of these, therefore they are not included in the Property, Plant and Equipment note.

 Capital Expenditure

 The total capital expenditure in 2024/25 is shown in the table below, together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Authority that has yet to be financed. The CFR is analysed in the second part of this note.

*Includes NWFC balances.

**see Note 31, Prior Year Adjustments for restatement details.

 Details of Assets Held

 The number of main assets held by the Authority are shown below:

Capital Commitments

 Capital projects often take several years to complete, which means that the Authority is committed to capital expenditure in following years arising from contracts entered into at the Balance Sheet date, but on which all or part of the capital work has yet to be undertaken. The estimated capital expenditure committed at 31 March 2025 is £1.017m (2023/24: £1.554m).

7 Intangible Assets

The Authority accounts for its software as intangible assets. All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Authority.

The disposal/de-recognition figures in the above table, include 2022/23 de-recognitions not previously recognised.

The following table provides details of intangible assets under development at 31 March:

 Intangible assets under construction are held at cost and not amortised until they come into service.

8 Financial Instruments

 A financial instrument is a contract which gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. No-exchange transactions such as those relating to taxes and government grants do not give rise to financial instruments.

 Financial assets – balances

 A financial asset is a right to future economic benefits controlled by the Authority that is represented by cash, equity instruments or a contractual right to receive cash or other financial assets or a right to exchange financial assets and liabilities with another entity that is potentially favourable to the Authority. The financial assets held by the Authority during the year are all accounted for under the amortised cost, comprising:

o Investments, which are loans to other local authorities.

o Cash in hand and bank current and deposit accounts.

o Trade receivables for goods and services provided.

 The financial assets disclosed in the Balance Sheet are analysed across the following categories: 

Financial liabilities – balances

 A financial liability is an obligation to transfer economic benefits controlled by the Authority and can be represented by a contractual obligation to deliver cash or financial assets or an obligation to exchange financial assets and liabilities with another entity that is potentially unfavourable to the Authority.

 All the Authority’s financial liabilities held during the year are measured at amortised cost, and comprise:

o Long-term loans from the Public Work Loans Board.

o Private Finance Initiative (PFI) contracts, detailed in Note 15.

o Lease payables.

o Trade payables for goods and services received. 

Financial Instruments - Gains and Losses 

The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments consist of the following:

Fair Values of Financial Instruments

In accordance with IFRS 9, financial liabilities, financial assets represented by investments and long-term creditors, are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions:

· Estimated ranges of interest rates at 31 March 2025 of 5.50% to 5.60% for loans from the PWLB.

· The fair values of PWLB loans have been discounted at the market rates for new instruments with the same remaining terms to maturity.

· Where an instrument will mature in the next 12 months, carrying amount is assumed to approximate to fair value.

· The fair value of trade and other receivables is taken to be the invoiced amount.

· Following the adoption of IFRS 16 the fair value of the PFI liabilities is represented by balance sheet carrying value due to the liability being remeasured at each indexation date.

The fair values calculated are as follows:

Without the addition of accrued interest, the actual Public Works Loan Board debt outstanding at 31 March 2025 is £2.000m (2023/24: £2.000m) and it is due for repayment as shown in the following table:

9 Debtors

10 Cash & Cash Equivalents

 The balance of cash & cash equivalents is made up of the following elements:

The call account balance was placed with Lancashire Country Council during the first half of the financial year. Interest on these balances was paid to the Authority. During the second half of the year the Fire Authority took control of its own treasury management, redeeming the funds from the call account with Lancashire County Council. The Fire Authority began investing in fixed term deposits with the Debt Management Office.

11 Creditors

12 Grants Received in Advance

The Authority has received the following revenue grants receipts in advance (see accounting policy Note 30, section h):

13 Provisions

The Authority has the power to establish provisions for any liabilities of uncertain timing or amount that have been incurred.

 The Authority has established an Insurance Liabilities Provision to meet liabilities, the precise cost of which is uncertain, but which are not reimbursable from insurers as they fall below individual excess clauses and the annual self-insured limits.

 The Authority has also recognised a provision in relation to its share of the Business Rates Collection Fund outstanding appeals, which is calculated and provided by billing authorities based on their assumptions of outstanding appeal success rates.

 The balances set aside, together with the movement on the provisions, is shown below:

14 Other Long-Term Liabilities

Other long-term liabilities comprise the following:

15 PFI Schemes

The Authority operates two PFI schemes with separate Private Sector Partners (PSP), details of which are as follows:

PFF Lancashire Limited

 The Authority signed a contract in May 2002 with a Private Sector Partner (PSP), a consortium known as PFF Lancashire Limited, under the Government's Private Finance Initiative, for two fire stations at Morecambe and Hyndburn.

 Under the contract the Authority pays an annual unitary charge to PFF Lancashire Limited for serviced accommodation over the life of the 30-year contract, commencing in 2003/04. The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration. The estimated capital value of the scheme at the point of financial close was £3.500m.

 Under the contract PFF Lancashire Limited contributed £0.150m towards the development costs, which is repaid through the annual unitary charge on the life of the 30-year contract commencing in 2005/06. In accordance with recommended accounting practice, the reimbursement has been classed as a loan and the liability reflected as such in the Authority’s accounts. At 31 March 2024 the total outstanding loan was £0.040m (2023/24: £0.045m).

Fire and Rescue NW Limited

 The Authority is also involved in a second PFI project, with Merseyside Fire and Rescue Authority and Cumbria County Council to deliver 16 new fire stations, 4 of which will be in Lancashire. Contracts were signed with Balfour Beatty Fire and Rescue NW Limited in February 2011, with phased construction beginning in 2011/12 and completing in 2013/14.

 Balfour Beatty sold its’ interest in the PFI scheme in July 2021 to BBGI, a company who already operates several PFI schemes in the UK including within the emergency services sector. BBGI undertook a refinancing deal in December 2021, resulting in a one-off saving of £0.9m for the three authorities, of which Lancashire’s share was £0.2m.

 Under the contract the Authority pays an annual unitary charge to Fire and Rescue NW Limited for serviced accommodation over the life of the contract, which runs for 25 years from initial handover of each station commencing in March 2011/12 for the Authority. The buildings and any plant installed in them at the end of the contract will be transferred to the Authority for nil consideration. The estimated capital value of the total scheme at the point of financial close was £47.886m, and for the Authority was £12.161m.

All PFI Schemes

 All PFI stations are recognised on the Authority’s Balance Sheet from the date of initial handover. Movements in their value over the year are detailed in the analysis of the movement on Property, Plant & Equipment balance in Note 6.

 Payments made under the contracts are performance related, so deductions are made if parts of the building are not available or if service performance (including maintenance) falls below an agreed standard. The Authority makes an agreed payment each year which is increased by inflation and can be reduced if the contractor fails to meet availability and performance standards in any year but is otherwise fixed. In addition, the Authority receives Government Grant to offset some of these costs.

 The following tables show the impact on the Movement in Reserves (MiRS) and Comprehensive Income and Expenditure Statement (CIES) for both PFI schemes after the transition from IAS 17 to IFRS 16 on 1 April 2024, prior to indexation:

Payments remaining to be made under both PFI contracts and Government Subsidies to be received at 31 March 2025 are as follows:

Although the payments made to the contractor are described as unitary payments, they have been calculated to compensate the contractor for the fair value of the services they provide, the capital expenditure incurred and interest payable over the life of the contract. The liability outstanding to pay the contractor for capital expenditure incurred is as follows:

16 Net Liability Related to Local Government and Firefighters’ Pensions Schemes

During the year the Authority made contributions to the cost of pensions for all employees (except for those who chose not to be members of the scheme) as required by statute.

The Authority participates in two pension schemes:

i) Uniformed Firefighters are covered by an unfunded, defined benefit scheme, meaning that there are no investment assets built up to meet the pensions liabilities and that cash must be generated by the Authority to meet actual pensions payments as they fall due.

ii) Other staff pensions are provided from the Lancashire County Pension Fund. This is a funded scheme, meaning that the Authority and employees pay contributions into a fund calculated at a level intended to balance the pensions liabilities with the investment assets.

Transactions Relating to Post-employment Benefits

We recognise the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against council tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement.

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

The change in the net pension liability is analysed into seven components:

Current service cost – the increase in liabilities because of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked.

Past service cost/(gain) – the increase/(decrease) in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited/(credited) to the deficit on the provision of services in the Comprehensive Income and Expenditure Statement.

Interest on liabilities – the expected increase in the present value of liabilities during the year as they move one year closer to being paid.

Interest on assets – the average rate of return expected on the investment assets held by the pension scheme.

Actuarial (gains) and losses – changes in the net pension liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – (credited)/debited to the pensions reserve.

Employers’ contributions – the payments made into the pension scheme by the Authority during the year in respect of current employees.

Retirement benefits payable to pensioners – the net payments made in respect of the Firefighter pension scheme. Note, the fund also received a top up grant of £18.594m (2023/24: £19.508m) in addition to these, which can be seen in the Firefighters Pension Fund Account on page 83.

A full set of audited accounts for the Lancashire County Pension Fund, together with information relating to membership, actuarial and investment policy, and investment performance, are published in the ‘Lancashire County Pension Fund Annual Report’, available from the administering authority, Lancashire County Council, on request.

Assets and Liabilities in Relation to Post-employment Benefits

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

Reconciliation of the fair value of the scheme assets:

The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields at the Balance Sheet date. Expected returns on equity investments reflect long-term rates of return experienced in the respective markets. The actual return on scheme assets in the year was a gain of £2.677m (2023/24: gain of £6.203m).

Pension Asset Ceiling

 An asset ceiling test limits the amount of the net pension asset that can be recognised to the lower of the amount of the net pension asset or the present value of any economic benefits available in the form of refunds or reductions in future contributions to the plan.

The Authority’s LGPS asset ceiling has been calculated using the present value of accounting service cost in perpetuity less the total of present value of primary contributions in perpetuity and present value of secondary contributions over the recovery period.

Scheme history

The liabilities show the underlying commitments that the Authority has in the long‑term to pay post-employment benefits. The total liability of both schemes, £588.430m, has a substantial impact on the net worth of the Authority, as recorded in the Balance Sheet. However, statutory arrangements for funding the liability mean that the financial position of the Authority remains healthy:

· Whilst there is a surplus on the LGPS scheme any future deficits that may arise will sought to be recovered by annual repayments from/to the fund, as assessed by the scheme actuary, throughout the agreed surplus recovery period.

· Finance is only required to be raised to cover fire fighter pensions when the pensions are actually paid.

Estimated contributions expected to be paid by the Authority into each scheme during the next financial year:

*LGPS contributions shown are gross of surplus recovery referred above.

** Firefighter contributions are part funded from government top up grant.

Basis for Estimating Assets and Liabilities

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

The Firefighters’ Scheme has been assessed by GAD (the Government Actuarial Department), an independent firm of actuaries. Estimates for the Firefighters pension scheme are based on a ‘roll forward approach’ which updates the last full valuation on 31 March 2020, taking account of any significant changes since this. The Local Government Fund liabilities have been assessed by Mercer Resource Consulting Limited, an independent firm of actuaries. The last full valuation was as at 31 March 2022.

The principal assumptions used by the actuary have been:

The Firefighters’ Pension Scheme has no assets to cover its liabilities. The Local Government Pension Fund’s assets consist of the following categories, by proportion of the total assets held by the Fund:

17 Usable Reserves

 Movements in the Authority’s usable reserves are detailed in the Movement in Reserves Statements, on pages 26 and 27.

*see Note 31, Prior Year Adjustments for restatement details.

At 31 March 2025 the Authority’s earmarked reserves include £18.331m which has been earmarked to fund future capital requirements.

18 Transfers (to)/from Earmarked Reserves

*see Note 31, Prior Year Adjustments for restatement details.

19 Unusable Reserves

 The total Unusable Reserves are shown in the Movement in Reserves Statement, and details of each reserve and the movements are shown in the following tables:

Revaluation Reserve

The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are:

· Revalued downwards or impaired and the gains are lost.

· Used in the provision of services and the gains are consumed through depreciation, or

· Disposed of and the gains are realised.

The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

Capital Adjustment Account

 The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition under statutory provisions. The account is debited with the cost of acquisition as depreciation, impairment losses, and amortisations are charged to the Comprehensive Income and Expenditure Statement. The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition.

In addition, the account contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains.

Pensions Reserve

 The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions. The reserve relates to both the LGPS and Firefighters pension schemes, and the large negative value of the reserve reflects the unfunded nature of the Firefighters pension scheme.

Collection Fund Adjustment Account

 The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and business rates income in the Comprehensive Income and Expenditure Statement as it falls due from council tax and business rates payers compared with the statutory arrangements for paying across amounts to the General Fund.