Consultation on the Area of Outstanding Natural Beauty (Conservation Board) (Amendment) Order

Landscape Conservation team
Defra
Temple Quay House
2 The Square
Temple Quay
Bristol
BS1 6EB

Tel: 0117 372 8106

30 March 2009

Dear Consultee

Consultation on the Area of Outstanding Natural Beauty (Conservation Board) (Amendment) Order

I am writing to invite your views on a proposed amendment to the Establishment Orders of the Areas of Outstanding Natural Beauty (AONB) Conservation Boards, Statutory Instruments 2004 No.1777 and 2004 No.1778.  The proposed amendment is to allow both of the existing AONB Conservation Boards (for the Cotswolds and the Chilterns (“the Boards”) respectively) to reverse the effect of the Financial Reporting Standard 17 (FRS 17) adjustment to the pension fund in the same way as local authorities are permitted to do when compiling the Annual Statement of Accounts, i.e. in the expectation that not all employees are made redundant at the same time. This would put the Boards on the same footing as local authorities.

The Boards are modelled on the National Park Authorities but have no levying or planning powers.  The Cotswolds and the Chilterns AONBs are currently the only AONBs to have Conservation Boards.  The Cotswolds Conservation Board has a turnover that is above the £1 million threshold in the Accounts and Audit Regulations 2003 (S.I. 2003/533) for the preparation of a statement of accounts and is therefore subject to FRS 17 requirements.  The Chilterns Conservation Board is currently below this threshold and therefore unaffected by the FRS 17 requirement although it may well move over this threshold in future years.  As section 21 of the Local Government Act 2003 does not apply to Conservation Boards, there is no statutory definition of the accounting practices to be applied to them, but in practice both of the Boards follow the relevant parts of the Code of Practice on Local Authority Accounting in the UK, “A Statement of Recommended Practice” (SORP).

The Boards’ employees are members of the Local Government Pension Scheme.  As section 21 of the Local Government Act 2003 does not apply, the statutory exemption from the financial implications of FRS 17 (regulation 30 of the Capital Finance and Accounting Regulations S.I. 2003/3146) is not available to the Boards.  This means that the charge to the revenue account for pensions is higher for Conservation Boards than for mainstream local authorities.

Following the 2007/08 Statement of Accounts for the Cotswolds Conservation Board, it has become clear that the effect of the non-reversal is the reduction of any surplus or the increase of any deficit by the difference between the actuary’s valuation and the Board’s actual contribution each year.  This has the effect of transferring resources from the Board’s Working Balance into the Pension Fund Reserve on the Balance Sheet against the hypothetical event that the Board is wound up and all its staff take their pension entitlement.  These funds cannot then be used for any other purpose.

The effect is cumulative and is now becoming a serious drain on the Cotswolds Conservation Board’s finances as it is a significant and growing part of the Board’s budget.  It is believed that the Working Balance will become insufficient to support the provision in future years and, unless action is taken, the funding that the Cotswolds Conservation Board receives from Natural England and constituent local authorities will be used to meet the pension fund requirements instead of being spend on environmental projects.

To overcome this, Defra proposes applying regulation 30 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 to the Conservation Boards through an order amending the Establishment Orders of the Boards.  This would mean that the Boards would only need to maintain a level of pension fund sufficient to finance the occasional redundancy rather than the hypothetical situation of the Boards’ entire staff being made redundant at the same time, as is the case now.

This proposal, which is exceptional business, has been developed in conjunction with the Communities and Local Government department who are fully supportive of this measure.  It will not be putting the Boards at any risk as it is simply putting them on the same footing as local authorities. 

Responses
We welcome your views and comments on the proposals, and would be grateful if you could discuss this accounting issue with your finance colleagues.  Please send responses to either:

Tina Blandford at:
Defra,
Zone 1/03, 
Temple Quay House,
2 The Square,
Temple Quay
Bristol
BS1 6EB
Tel: 0117 372 8106

Or email: cbpensionprovision@defra.gsi.gov.uk

This is a three week consultation and responses should be received by 20 April 2009.

We apologise for the short timescale, which is necessary in order for the Cotswolds Conservation Board to avoid having to make a provision for its pension for another year.

Consultation Criteria
This consultation has been prepared in line with the Code of practice on consultations.  This can be found at http://www.berr.gov.uk/bre/  

When this consultation ends, we intend to put a copy of the responses in the Defra library at Ergon House, London.  This is so that the public can see them.  Also, members of the public may ask for a copy of the responses under freedom of information legislation.

If you do not want your response - including your name, contact details and any other personal information - to be publicly available, please say so clearly in writing when you send your response to the consultation.  Please note, if your computer automatically includes a confidentiality disclaimer, that will not count as a confidentiality request.

Please explain why you need to keep details confidential.  We will take your reasons into account if someone asks for this information under freedom of information legislation.  Please note that, because of the law, we cannot promise that we will always be able to keep those details confidential.  We will summarise all responses and place this summary on our website at www.defra.gov.uk/resources/consultation/index.htm.  This summary will include a list of names of organisations that responded but not people’s personal names, addresses or other contact details.

To see consultation responses and summaries, please contact the library at:
      Defra
      Information Resource Centre
      Lower Ground Floor
      Ergon House
      17 Smith Square
      London
      SW1P 3JR

      Telephone: 020-7238-6575
      Email:  defra.library@defra.gsi.gov.uk

Please give the library 24 hours’ notice.  There is a charge for photocopying and postage.

If you have any comments or complaints about the consultation process, please address them to Marjorie Addo, Defra’s Consultation Co-ordinator, Area 7C Nobel House,17 Smith Square, London SW1P 3JR, or email consultation.coordinator@defra.gsi.gov.uk.

Thank you for your help in this matter. If you have any queries please contact us as above.

Yours faithfully

Hugh Llewelyn
Department of Environment, Food & Rural Affairs

 

Page published: 30 March 2009