A year in the LGA 2022/23

Directors

The members of the LGA Board for the year were:

Conservative

• James Jamieson OBE [Chairman]
• Izzi Seccombe OBE [Deputy-chairman]
• John Fuller OBE [Deputy-chairman]
• Robert Alden [Deputy-chairman]
• Baroness Teresa O’Neill OBE [Deputy-chairman]

Labour

• Shaun Davies [Senior Vice-chair] Appointed 28 June 2022
• Nick Forbes CBE [Senior Vice-chair] Resigned 5 May 2022
• Michael Payne [Deputy-chair]
• Tudor Evans OBE [Deputy-chair]
• Georgia Gould [Deputy-chair]
• Anntoinette Bramble [Deputy-chair] Appointed 28 June 2022
• Shabir Pandor [Deputy-chair] Resigned 28 June 2022

Liberal Democrat 

• Joseph Harris [Vice-chair]
• Bridget Smith [Deputy Chair] 

Independent

• Marianne Overton MBE [Vice-chair]
• Hannah Dalton [Deputy-chair]

Company Secretary 

Claire Holloway

Registered office 

18 Smith Square
London, SW1P 3HZ

Bankers 

Barclays
UK Banking
1 Churchill Place
London, E14 5HP

Independent Auditor 

PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London, E14 4HD

Company number 

11177145

 Year ended 31 March 2023

The Local Government Association (LGA) is the voice of local government, working with councils to support, promote and improve local government.

We are a politically-led, cross-party organisation. We receive funding from the subscriptions of our member councils to ensure local government has a strong, credible voice on the national stage, and from central government to deliver a range of services to councils.

We aim to influence and set the political agenda on issues that matter to councils, so they are able to deliver local solutions to national problems. We support councils through increasingly challenging times and focus our efforts where we can have most impact for our members.

We support councils to improve and help them to provide the best possible services to the people they serve. We play a leading role in improvement and innovation so that councils can continue to make a difference in their local areas and to the lives of their residents.

As the national membership body for local authorities, we provide the bridge between central and local government, and we help councils deliver the best services to their local communities.

We work with councils in every part of England and Wales - county and district councils, metropolitan and unitary councils, London boroughs and Welsh unitary councils. Through our associate scheme we provide services to other organisations including fire and rescue and national park authorities, police and crime commissioners and town and parish councils.

In 2022/23 we had 333 English member councils along with the 22 Welsh authorities, in corporate membership through the Welsh Local Government Association (WLGA).

Working with and on behalf of our membership we:

• influence critical legislative, financial and policy decisions and shape the policies that underpin councils’ service delivery
• press for more powers to be devolved from Whitehall to local government
• shape emerging government thinking, ensuring councils’ views are represented
• work with public, private, community and voluntary organisations to secure their support for local priorities
• campaign on behalf of our membership, promote local government and defend its reputation through the local, regional and national media
• ensure the voice of local government is heard in Parliament
• support councils to share best practice, drive innovation and improvement and to continue to deliver essential services
• negotiate, in our role as national employer, fair pay and pensions and provide support and advice on workforce issues
• coordinate collective legal action on behalf of member councils
• deliver broader services to local government and beyond via our wholly owned companies and our joint ventures such as Local Partnerships, Geoplace and Public Sector Audit Appointments.

The LGA Board closely monitors the LGA Group’s financial performance against the agreed budget.

The LGA’s leadership undertook significant work to develop the medium-term financial strategy of the LGA and its associated organisations. This includes a commercial strategy, whose purpose is to diversify the LGA’s sources of income, which is now being implemented.

The LGA Board has also reviewed the strategy for managing the pension costs of the LGA and the IDeA, in view of the additional contributions to reduce deficits over the past few years, which has contributed towards a significantly improved surplus position reported in the Triennial Valuation as at 31 March 2022, leading to additional deficit reduction contributions of £nil annually for the next three years.

Review of the year

Over the past 12 months local government has once again clearly demonstrated its clarity of purpose and unstoppable determination to lead and serve local residents. The LGA has worked to be the strong national voice of councils and also to promote, support and improve local government as you’ve led your council and community through yet another challenging year.

We’ve continued to press the merits of local leadership with government as councils and their officer teams steered your communities through COVID-19 recovery, responded to the war in Ukraine, stepping up to welcome thousands of new arrivals into your local areas, and provided opportunities for communities to come together to pay tribute to Her Majesty Queen Elizabeth II.

In a year of significant change across central government, we highlighted councils’ priorities, offers and asks to new Ministers as they took up their roles

In the face of growing cost of living challenges, we made clear that councils are vital to achieving government’s goals and should be a priority for investment and support.

Our #SaveLocalServices campaign, calling for council services to be protected, achieved significant national media coverage with many of the LGA’s asks reflected in the 2022 Autumn Statement announcement on 17 November.

Overall, over the past year the LGA was featured 23,089 times in national, trade, regional, broadcast and online media, including 1,239 LGA mentions in national newspapers, broadcast and online articles – that’s an average of 23 times a week. As well as a number of front-page stores in national newspapers, our lead political spokespeople have been interviewed 85 times on national broadcast media.

We continue to deliver a full programme of parliamentary engagement, briefing for debates, influencing legislation and shaping parliamentary committee reports.

To help deliver this, we have briefed for 37 parliamentary debates. As part of our engagement with select committees and all-party parliamentary groups (APPGs), we provided evidence to inquiries 39 times. In the last financial year, the LGA has been quoted 225 times in the chamber of the Commons and the Lords.

In the past year some 16,000 delegates attended an in-person, hybrid or virtual event from our wide-ranging programme – and in July 2022, over 1,600 people joined us in Harrogate for our first in-person Annual Conference for three years.

Our comprehensive sector support offer, which is partially funded by Government and provides councils with assistance across areas such as finance, governance, leadership, research and data, communications, climate change, cyber, housing planning and more. It includes our One Public Estate, care and health and children’s service support offers, as well as our workforce programme – which recently delivered an important agreement on the local government pay award.

Our regional support programme has helped councils to enhance performance and drive improvements through access to peer challenges (including corporate peer challenges) and wide-ranging bespoke support, provided by expert peers and regional teams. This programme has already helped more than 200 councils this financial year.

Our award-winning platform, LG Inform, has been viewed more than four million times and offers current performance data relating to councils, local areas and live issues.

Our climate change programme has been utilised by more than 95 per cent of all councils and features a greenhouse gas accounting tool, which can be used to help calculate your council’s emissions. Both LG Inform and the greenhouse gas accounting tool are free to all councils.

In 2022/23 the Improvement and Development Agency for Local Government (IDeA) provided local authorities with support to improve delivery of vital public services. Support included:

• The delivery of 143 peer challenges and remote peer support, including Corporate Peer Challenges.
• Providing more than 40 councils facing significant financial challenges with direct finance support, including intensive support to those councils most in need.
• Providing support through our Climate Change Programme to 99 per cent of all councils
• Reaching more than 3,000 councillors through training and development opportunities organised via our Leadership team.
• Providing targeted workforce support to 56 councils including HR/employment law support, collective agreements protocols advice, DMA support and workforce planning support.
• Expanding the Equalities, Diversity and Inclusion Hub with more resources, including cost-of-living updates, community engagement resources and equalities case studies.
• The National Graduate Development Programme, which develops leaders in the local government for the future, received over 4,600 applications this year.

Corporate Peer Challenge

In the spirit of continuous improvement, the LGA commissioned a Corporate Peer Challenge in December 2022.

The report, published in March 2023, was very positive, concluding that the LGA remains a “strong organisation” that has continued to improve since its last review in 2015 adding that “If the LGA didn’t exist – we’d have to invent it”.

The report further highlighted the important role the LGA has played in supporting councils to respond to a number of national crises in recent years.

The LGA’s action plan, responding to recommendations and areas for further consideration, is now being delivered following agreement by the LGA Board.

At a glance: a year in the LGA

Over the last 12 months, we continued to campaign on behalf of our membership, taking every opportunity to secure the funding and powers that councils need to best serve their local communities and improve residents’ lives.

Through our work with our members, government ministers and departments, our parliamentary Vice-Presidents and other partners we secured a number of benefits for councils over the past year.

Highlights include:

February and March 2023

• The Chancellor delivered the Spring Budget which included an expansion of free childcare for children over the age of nine months, reforms to support people into work and greater responsibilities for local leaders over local economic growth, and more than £60 million of support for public swimming pools across England
• Councils are now allowed to retain 100 per cent of RTB receipts for 2022/23 and 2023/24 and will have five years to spend the money
• Existing Local Authority Housing Fund to be increased by £250 million to help councils source homes to house Afghan refugees. Councils will be given £35 million in new funding to support move on, integration and to minimise homelessness risks, with £2.5 million for the case working process.
• We hosted our Urban Summit, in conjunction with Core Cities, Key Cities and London Councils, Culture, Tourism and Sport Conference and annual Public Health Conference which coincided with the publication of our Annual Public Health report.
• Recommendations in the Hewitt Review of integrated care systems included many of the policy messages in the LGA’s evidence to the Review
• Government plans to reform supported accommodation for 16-17-year-olds included £142 million in funding over three years, including £123 million to support councils with the reforms.
• Agreement reached within the National Joint Council for Local Authority Fire and Rescue Services on a two-year pay deal covering uniformed employees from firefighter to middle managers for 2022 and 2023
• Final local government finance settlement confirmed a 9.4 per cent increase in Core Spending Power (CSP) in 2023/24
• Following extensive lobbying from the LGA and bus groups, the Government extended funding by three months for the Bus Recovery Grant and the £2 bus fares gap until the end of June 2023
• £842 million of additional funding allocated to the Household Support Fund from 1 April 2023 to help the most vulnerable households to pay for energy bills or groceries
• £200 million investment to transform the current care system as part of the Government’s children’s social care implementation strategy and consultation.
• Councils across England to receive £421 million in funding through to 2025 to combat drug and alcohol misuse

December 2022 and January 2023

• A fully subscribed annual local government finance conference came together to discuss the 2023/24 Provisional Local Government Finance Settlement.
• We launched the final report of our independent Commission on Culture and Local Government into how local cultural services support our places and communities.
• New flexibilities introduced to Levelling Up and Regeneration Bill for councils to determine numbers of new homes in their areas, the removal of requirement to maintain a five-year land supply for housing and measures to incentivise developers to build out schemes.
• Government announced plans to ensure new homes in England are built with gigabit broadband connections, and for telecommunications firms to be able to get faster broadband to people living in blocks of flats across the UK.
• Approval of local spending plans for the UK Shared Prosperity Fund which will see £2.6 billion of funding replacing previously available funding through the EU for investments in local areas.
• A £32.9 million ‘Capability Fund’ to support local councils across the country to train and retain local engineers and planners.
• £8 million of funding to be made available to council enforcement teams to pursue building owners taking too long to start repairs or refusing to begin repairs.
• The Government announced £200 million of funding to buy short-term care placements to allow people to be discharged safely from hospitals into the community.
• A new lump sum payment of £15,000 up to the end of February 2023 to accompany the transfer of each unaccompanied child from a Home Office-run UASC-designated hotel or the Kent Reception and Safe Care Service.
• A revised package of funding for councils for their work in supporting arrivals from Ukraine and their hosts, including an increase of 'thank you' payments to long term hosts. A significant number of councils in England will also be able to apply for a share of £500 million of new capital funding to increase housing supply for resettled refugees including those from Ukraine and Afghanistan.
• £257 million to be made available to councils to ensure safe accommodation spaces such as refuges and shelters can provide vital support for domestic abuse victims.

October and November 2022

• The Autumn Statement included additional grant funding for adult social care for next year and the year after and a two-year delay to adult social care charging reforms with funding being retained in local authority budgets to meet current pressures
• The All-Party Parliamentary Group (APPG) for Devolution, which the LGA supports, launched its Inquiry Report into the Levelling Up White Paper
• The Government unveiled a £500 million adult social care grant to free up hospital beds, and address care workforce challenges this winter
• LGA commemorated the 175^th anniversary of the role of the directors of public health by publishing a series of eight interviews with current Directors of Public Health. The interviews explored a variety of themes, including health in rural areas, the role of culture in health and the role of the DPH over.
• The Government confirmed further investment in energy efficiency measures, alongside establishing an Energy Efficiency Taskforce, something the LGA had called for.
• National Employers for the local government workforces reached agreements on the pay awards for 2022-23 covering 1.4 million employees in England, Wales and Northern Ireland.

August and September 2022

• The Energy Bill Relief Scheme announced plans to cut energy prices for non-domestic energy customers such as businesses, charities and public sector organisations – including councils and schools.
• We launched our National Energy Category Strategy for Local Government 2022, to help local authorities optimise the way they manage and procure energy.
• We published our Housing our ageing population report, commissioned by the LGA from the Housing Learning and Improvement Network, which makes recommendations to government on how we can best meet the housing needs of people in later life.
• A £130 million extension of emergency bus funding for operators, as passenger numbers still remain below pre pandemic levels.

June and July 2022

• The 2022 LGA Annual Conference and Exhibition saw over 1,600 people from the local government family and other public and voluntary sectors join us in Harrogate, which included the launch of our Debate not Hate campaign which aims to tackle the abuse and intimidation our councillors and officers face.
• Publication of the first ever 10-year Women's Health Strategy for England to tackle the gender health gap, including the expansion of Women’s Health Hubs to bring essential women’s services together to support women to maintain good health.
• Changes to the National Transfer Scheme (NTS) for Unaccompanied Asylum Seeking Children (UASC) with the 10-day transfer deadline reduced to five working days for new arrivals who aren’t already in the care of a council, with councils to receive an additional £6,000 for each child transferred from a hotel. The threshold above which a council can no longer be directed to participate in the NTS will be increased from 0.07 per cent to 0.1 per cent of a council’s general child population.
• We published a new report, ‘Working in partnership: creating an effective rough sleeper strategy’ discussing the findings from our workshops with over 30 councils, highlighting recommendations for the upcoming Rough Sleeping Strategy.
• New Government Property Strategy to include £300 million in grant funding to deliver a better, more effective public estate, including through the LGA’s One Public Estate (OPE) programme, delivered in partnership with the Cabinet Office and DLUHC
• Licensing authorities begin to receive new burdens funding for year two of the temporary pavement licensing regime introduced by the Business and Planning Act 2020.
• We launched our refreshed National Procurement Strategy to support local authorities of all types and sizes to maximise opportunities in their supply chains
• Our LGA in Parliament 2021/22 report provided an update on our engagement with MPs and Peers over the past year, including our lobbying activity on the issues impacting councils.
• The Draft Mental Health Bill accepted the majority of the recommendations from Sir Simon Wessely’s independent review of the Act.

April and May 2022

• We launched Work Local, including our employment and skills devolution proposals and set out how more targeted support, coordinated by councils and combined authorities, is needed to match employers with jobseekers, engage those who have left the jobs market, and ensure sufficient skills training is in place to meet necessary demand.
• An independent review into tobacco control led by Dr Javed Khan set out a raft of recommendations to meet the government’s smokefree by 2030 ambition, including £125 million for tobacco control
• Our One Public Estate programme (OPE) made up to £180 million of capital grant funding available to English councils through their newly launched Brownfield Land Release Fund (BRLF2).
• We launched a new peer challenge to support stock-holding councils to improve their management of social housing.
• Approximately £18 million of new funding for universal infant free school meals will be allocated to help schools provide for children in reception, Year 1 and Year 2, in recognition of the rising cost of living
• Health and Care Act 2022 received Royal Assent and acted on the LGA proposals that the Secretary of State’s increased powers must be used in consultation with local government and relevant, local NHS organisations
• The Government published its prospectus and allocations for the UK Shared Prosperity Fund (UKSPF), the domestic replacement for EU funding.
• The Draft Civil Enforcement of Road Traffic Contraventions Regulations 2022 cleared parliamentary scrutiny meaning highways authorities could apply for designated powers to enforce against moving traffic offences.
• span>The Fire Reform White Paper confirmed that government will not make mandatory changes to fire governance and is consulting on a range of governance models for fire and rescue services.

This year the LGA has continued to deliver for local government, and I know we will continue to provide excellent and much valued support to our member councils in the coming year.

Mark Lloyd CBE
Chief Executive           

The Directors present their strategic report on the Group for the year ended 31 March 2023.

Principal activities

The Local Government Association (LGA) was incorporated on 30 January 2018. On 1 April 2019 the LGA took on the business, assets and liabilities of the unincorporated Local Government Association, which had been set up on 1 April 1997 following the merger of the three previous local authority associations covering England and Wales (the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities), to provide a single national voice for local government.

On 23 December 2022, the LGA took on the business, assets and liabilities of its subsidiary LGA Commercial Services Limited.

On 1 April 2021, the administration of the IDeA Local Government Pension Scheme (IDeA LGPS) was transferred from Camden Borough Council to the Merseyside Pension Fund (though the funds were not merged with the LGA LGPS).

The shared objective of the LGA and its subsidiaries is to make an outstanding contribution to the success of local government working with and on behalf of the LGA’s member authorities to support, promote and improve local government.

Departure from United Kingdom Generally Accepted Accounting Principles (UKGAAP)

In line with prior years, the financial statements do not include a detailed note on the Association’s defined benefit pension scheme, instead just showing the combined Group view.

The LGA Board believe that this exception results in the financial statements still showing a true and fair view.

Report of the business 

In October 2022, the LGA Board agreed a new 3-year business plan, based on those issues of greatest importance to our member councils.

Through the work of our Boards and Task and Finish Groups, made up of members from councils across England and Wales, the LGA has continued to make progress on delivering its priorities.

Despite ongoing pressure on our core funding, we have delivered a satisfactory financial outcome in 2022/23. From 1 April 2016, IDeA become the recipient of Direct Government Funding from the Department of Levelling Up, Housing and Communities (DLUHC) to pay for improvement services to councils, replacing Revenue Support Grant (“RSG top slice”). Our income from DLUHC Funding remained steady in the year, but with revised priorities and reflecting the change to remote working practices, and while other grants and service contracts were secured, overall income increased by a total of 9 per cent in 2022/23 compared with the previous year. We continued to keep costs down and invested in reducing costs of back office services, at the same time as continuing to deliver on our key priorities and deliver direct support to councils.

As agreed by the LGA Board, the 2022/23 consolidated operating surplus (excluding pension scheme and investment property revaluation adjustments) has replenished the risk and contingency reserve in our statement of financial position. This was created to support opportunities to invest to save costs or generate additional commercial income, and also to cover the potential risks to the 3 Year plan included in the LGA’s Financial Strategy.

The LGA Board has overseen the LGA’s approach to Treasury Management and concluded that the LGA should continue to be cautious in its investment strategy. Substantial use has been made of the Public Sector Deposit Fund, a qualifying money market fund operated by CCLA Investment Management Ltd. No losses arose on treasury activities.

Following a real terms reduction in subscription income of over 48 per cent in the seven years to 2019 the LGA Board agreed an inflationary 2 per cent increase in membership subscriptions for 2022/23.

Future developments

In common with other parts of the public sector, we are taking steps to ensure we develop new sources of income as well as continuing to reduce our costs. Our future success relies on delivering ever greater value to member councils at a time when councils will face cost of living pressures, increasing service demands and uncertain future funding levels.

During 2023/24 the LGA will continue to develop and manage its property assets to maximise their capital values and offset the liabilities arising from our pension funds and to reduce costs and deliver additional commercial income to maximise levels of support to our membership.

The impact of COVID-19 on the Group and Company’s business has been assessed and has been determined to not be material. The IDeA receives grant funding from the Department for Levelling Up, Housing and Communities (DLUHC). This funding is received on behalf of the Local Government Association and its related bodies. The level of funding has been formally determined by DLUHC for the year to 31 March 2024. Funding for some of the Company’s principal funded programmes has also been agreed by the funders, with further awards expected shortly, despite some funding now being required to be secured via competitive tender. The majority of Member subscription income has been received for the year, with more than 80 per cent of members signed up to our Direct Debit collection scheme.

For the investment property rental income streams, there has been, and is expected to be, no interruption for 18 Smith Square. At Layden House we have secured a single tenant for the office floors on a long term lease, and active marketing of the two ground floor retail units has begun, such that no material impact is expected to the Group.

Therefore, it is considered that the majority of the Group and Company’s income for the foreseeable future is secure and the Directors have therefore adopted the going concern basis for the preparation of these accounts.

Our priorities 

In October 2022, based on feedback from our member councils and agreed by our politicians, we launched a new three-year business plan that set out our priorities:

• A sustainable financial future: High levels of inflation and energy costs and higher than expected forecasts of the National Living Wage mean that councils are facing significant additional cost pressures. Fair and sustainable funding would allow councils to plan and deliver essential, resilient public services beyond the short term.
• Stronger local economies, thriving local democracy: Strong local economies help to build a resilient national economy which can unlock economic potential across the country and ensure no community is left behind. Councils already have an important role in securing private and foreign investment in infrastructure. With more localised powers, greater diversity of elected representatives and high standards of conduct they can help to level up the country.
• Putting people first: Local government is unique in offering a range of specialised services which impact the direct quality of life that residents of all ages experience on a daily basis. Councils can convene local partners to help everyone live safe, healthy, active, independent lives.
• Championing climate change and local environments: Everyone wants to live in a green and safe local environment. Councils are actively working to address climate change whilst continuing to consider the broader environmental factors which help to make safer more sustainable communities.

We will support all this work through our four priority campaigns:

• Debate not hate
• Build back local
• The future of adult social care
• Bright futures

Over the period of this business plan we will continue to develop new campaigns that match our priorities.

We will continue to keep the business plan under review and adjust as necessary in the light of changing priorities.

Principal risks and uncertainties

Our arrangements for risk management include the regular review of the LGA’s strategic risk register with clear responsibilities assigned to named senior officers for the management of the principal risks. These included ensuring that we deliver on our objectives and have impact for our members, ensuring that membership levels are maintained, ensuring that we have effective governance arrangements and financial sustainability, and ensuring that we maintain employee capacity and capability. We have also put in place clear governance and project management arrangements for projects designated as being high risk from a financial or operational point view.

Our principal liabilities other than those arising in ordinary day to day business relate to our combined pension position and four main liabilities: structural interest free debt of £8.2 million due to the predecessor Local Authority Associations and related to the purchase of the Smith Square property; bank debt of £1.04 million on separate loans due to Barclays relating to the Smith Square property, which is currently being repaid at the rate of £0.52 million each year; £19.0 million from Westminster City Council which we are using to fund the development of our properties; and a liability of less than £0.1 million until 2023 for funding the District Councils’ Network (DCN), financed from cash received from the predecessor Local Authority Association.

The valuation of our combined pension surplus was £34.56 million at 31 March 2023 (£67.63 million deficit at 31 March 2022), driven by changes in the actuarial assumptions. In order to pay off the historic pension deficit and liabilities for past employees, we have been making additional contributions as directed by the actuaries. Following the Triennial Valuation as at 31 March 2022 showing an overall Scheme surplus, these additional contributions have reduced to £nil per annum for the next three years. Actuarial advice indicates that on reasonable long term assumptions, there will be no deficit over a period of 12 years for the LGA and IDeA. We have transferred the administration of the IDeA LGPS from Camden to Merseyside (administrators of the LGA LGPS) as at 1 April 2021 to align actuarial assumptions and generate cost savings.

Key performance indicators

We have reviewed the impact of our work and the delivery of our priorities through robust performance management which has included regular reports to the LGA Board. In addition we have reviewed our own efficiency and effectiveness through a number of key indicators. These include the number of organisations in membership, which has improved in 2022/23, with only two (compared to five in 2021/22) councils out of membership at the year end. All 22 Welsh councils are in membership through the Welsh LGA’s corporate membership of the LGA.

In 2021 we carried out a survey of our members which gave us important information about customer satisfaction with 76 per cent of members indicating that they were satisfied overall with the work of the LGA. We have set ourselves the target of increasing member satisfaction and also their perceptions of the value for money we offer and we will monitor our progress with these through member surveys.

We review our financial sustainability by carefully controlling our staff costs. Currently we have 443 employees in the year ended 31 March 2023 (compared to 432 in the previous year). We continue to monitor employee absence and our average annual number of sick days per employee has remained consistent at 3.9 days, unchanged from March 2022. As an absence rate (1.5 per cent), this remains below national averages for sickness (3 per cent for public sector – Source: Office for National Statistics 2021).

We continue to pay close attention to the collection of outstanding debt. The percentage of debtors over 12 months was 3 per cent of the total trade debtors at March 2023 (2 per cent 2022).

Market value of land and buildings

The market value of 18 Smith Square, which was previously owned by Local Government Association (Properties), is considered at the latest valuation in March 2023 to be £45.0 million (2022 £49.5 million) with a net decrease of £4.5 million in the year reflecting rental market conditions in the Westminster area. In the Group accounts 34 per cent (2021/22 34 per cent) of the above market value is reflected as an investment in the Group’s balance sheet. The remainder held as an operational fixed asset at the current net book value of £16.3 million.

Layden House is classified as an investment property and has a market value at 31 March 2023 of £62.5 million (2022 £66.0 million), a decrease of £3.5 million reflecting the current volatility of the Farringdon rental market.

Environmental matters – minimising the impact of climate change

Through the General Assembly in July 2019, the LGA declared a climate emergency, and aligned its priorities to the United Nations Sustainable Development Goals.

The LGA is committed to minimising the environmental impacts of its activities, reducing pollution and CO2 emissions and contributing to a healthy future for all. The past two years has demonstrated that working and attending remotely now provides a real alternative to travelling to 18 Smith Square, both for staff and for the elected members who are actively engaged in the work of the LGA.

Flexible working 

Our flexible working policy brought added flexibility for office-based staff to vary their work locations, subject to their role and to the needs of the business. For those who do not need to be based in 18 Smith Square, we offer home-based contracts. This means less journeys to work and a better work-life balance. Longer term it may enable us to further reduce the amount of office space that we occupy.

Our ICT is designed to support flexible working, enabling staff to log in from home or other venue with a secure wi-fi connection, or from public transport when they are on the move.

Head office - 18 Smith Square 

All meeting rooms at 18 Smith Square are equipped with videoconferencing facilities, cameras and sound bars to support virtual or hybrid meetings and events.

Secure cycle facilities and showers are provided for those who prefer to cycle or run to work. There are no car parking facilities.

Following its refurbishment 18 Smith Square’s EPC rating moved from F to B – a significant achievement for a heritage building in a conservation area. Lights are energy efficient LEDs, with motion sensors that switched off when not required. Windows that do not face the conservation area are triple glazed to reduce energy loss. Recycling bins are provided on every floor.

Travel 

Where staff and members need to travel they are encouraged to use public transport wherever practicable to reduce the impact on the environment.

Procurement 

The LGA has a robust procurement policy and process, which underpins the importance of all our contractors being able to demonstrate a commitment to sustainability and combatting climate change. Our policy has undergone a full review during 2021/22 in the light of our renewed commitment to equality, diversity and inclusion and will be relaunched during 2023/24. Our procurement documentation states:

“In adhering to our commitments, the contractor should have systems in place to account for and minimise environmental impacts in all areas of contract delivery”.

Community and social issues, respect for human rights

At their meeting on 11 March 2020, the LGA Board agreed to adopt the International Holocaust Remembrance Alliance definition of antisemitism.

The LGA’s Public Duties and Volunteering policy makes provision for colleagues to take time off for approved public and community activities.

A significant strand of our policy work is targeted at improving social cohesion, adult and children’s social care, and enhancing communities.

The LGA recognises that it has a responsibility to take a robust approach to modern slavery and human trafficking. The organisation supports the Modern Slavery Act 2015 and opposes modern slavery and human trafficking. It is committed to ensuring that such practices have no place within its supply chain or other activities.

In addition to the LGA’s responsibility as an employer, it also acknowledges its duty to notify the Secretary of State of suspected victims of modern slavery or human trafficking as introduced by section 52 of the Modern Slavery Act 2015.

Anti-fraud, bribery and corruption matters

The LGA has an anti-fraud, bribery and corruption policy and response plan which is reviewed annually. The Audit Committee receives an annual report on any instances of fraud, bribery or corruption. No instances were reported in the past year. 

Section 172 statement

Section 172(1) of the Companies Act 2006 states that directors of a company must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

• The likely consequences of any decision in the long term
• The interests of the company's employees
• The need to foster the company's business relationships with suppliers, customers and others
• The impact of the company's operations on the community and the environment
• The desirability of the company maintaining a reputation for high standards of business conduct, and
• The need to act fairly as between members of the company.

At the commencement of all Board meetings, Directors are reminded of their responsibilities in regard to this requirement, and agree to abide by it in their decision making.

James Jamieson OBE
LGA Chairman and Chairman of the LGA Board

7 June 2023

The Directors present their report and the audited financial statements of the Group and Company for the year ended 31 March 2023.

Future Developments

Future developments are set out in the Strategic Report.

Dividends

The LGA Constitution and the articles of the companies that the LGA controls directly do not permit the payment of dividends.

Directors

The Directors of the Company during the year ended 31 March 2023 were:

Conservative

• James Jamieson OBE [Chairman]
• Izzi Seccombe OBE [Deputy-chairman]
• John Fuller OBE [Deputy-chairman]
• Robert Alden [Deputy-chairman]
• Baroness Teresa O’Neill OBE [Deputy-chairman]

Labour

• Shaun Davies [Senior Vice-chair], Appointed 28 June 2022
• Nick Forbes CBE [Senior Vice-chair], Resigned 5 May 2022
• Michael Payne [Deputy-chair]
• Tudor Evans OBE [Deputy-chair]
• Georgia Gould [Deputy-chair]
• Anntoinette Bramble [Deputy-chair], Appointed 28 June 2022
• Shabir Pandor [Deputy-chair], Resigned 28 June 2022

Liberal Democrat

• Joseph Harris [Vice-chair]
• Bridget Smith [Deputy Chair]

Independent

• Marianne Overton MBE [Vice-chair]
• Hannah Dalton [Deputy-chair]

Directors’ Indemnity

The company has provided qualifying third-party indemnities for the benefit of its Directors. These were provided during the year and remain in force at the date of this report.

Financial Instruments

The Group operates a centralised treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the Group’s activities.

Our operations expose us to a variety of financial risks that include ensuring that the funds held by us are, first and foremost, secure; second, that adequate liquidity is maintained so that sufficient funds are always available to meet current liabilities; and third that the best return on investment is obtained subject to achievement of the first two objectives.

Price risk

We have relatively low exposure to price risk, despite emerging inflationary pressures. Our employee costs are controlled through formal annual negotiations with employee representatives. Our back office services are now mainly delivered in house, with ICT services delivered through a jointly owned company with Brent Council, by Brent ICT team. Other services are procured from a range of external providers through competitive tendering arrangements in line with our formal procurement procedures.

Credit risk

We have a debt management policy and clear credit control procedures which include regular review and follow-up of our trade debtors.

Liquidity risk

Our agreed approach is to manage our revenue budget so as to deliver a balanced budget that does not require a net call on cash for the financial year as a whole. We maintain an adequate level of day to day liquid funds to pay liabilities promptly as they fall due.

Cash flow risk

We have both interest-bearing assets and liabilities. Subject to our liquidity requirements, which are assessed on a weekly basis, surplus funds are deposited in accordance with the Approved Investment Strategy as agreed by the LGA Board.

Political and charitable contributions

Neither the LGA nor its subsidiaries made any charitable donations over £2,000 or any political donations or incurred any political expenditure during the year. 

Branches outside the UK

The Group has a branch in Brussels.

Post Balance sheet events

The Directors are not aware of any material Post Balance sheet events.

Employees

Details of the number of employees and related costs can be found in Note 3 to the financial statements. In line with the LGA Pay Policy the LGA publishes the salaries of its Corporate Leadership Team on its website. These are updated annually to reflect the national pay award. Details of the statutory requirement to publish gender pay-gap remuneration statistics can also be found on the LGA website.

Consultation with employees and their representatives has continued at all levels, with the aim of ensuring that their views are taken into account when decisions are made that are likely to affect their interests. Communication with all employees continues through direct briefing and regular use of our intranet. Directors receive periodic updates on staff performance measures, and the results of biennial staff surveys.

Staff are provided with relevant information on the LGA’s activities, and are encouraged to be involved in the LGA’s performance, by being invited to regular informal engagement opportunities such as the monthly All Staff webinar (which includes an annual update on financial performance), by sitting on panels such as the Commercial Ideas Lab and IT Strategy Board, as well as receiving updates through the intranet and associated bulletins. Managers are encouraged to have regular one-to-one updates with their direct reports. Our HR team meets with union representatives monthly.

The LGA launched its 3-year People Plan in February 2023 which is aligned to our Business Plan. It sets out our commitments to ensure that we can attract, recruit, retain and develop an engaged workforce, whilst recognising the contributions that staff make to the success of our organisation. The People Plan includes our commitment to equality, diversity and inclusion with a specific EDI strategy and action plan.

The LGA and its leadership are committed to listening and responding to staff concerns, to closely monitoring what our data tells us and to developing the organisation as a fully inclusive and safe environment where everyone can bring their whole-selves to work. The LGA have set up an EDI Steering Group to oversee and drive delivery of the strategy and action plan which is chaired by senior management’s EDI champion and includes representatives from all directorates, our four staff network groups and the Trade Union.

The strategy and action plan are focused on the work we are doing internally in the LGA. There is also work happening to improve the work we do with councils on improvement and policy and discussions with Members are getting underway with the newly appointed Equalities Advocates on our Boards.

The LGA offers apprenticeship and leadership development programme opportunities, and all staff have personal training and development plans with access to a variety of learning opportunities

Statement of engagement with suppliers, customers and others in a business relationship with the Company

The LGA Executive Advisory Board comprises representative Members to ensure its ‘customers’ are at the heart of its decision making on policy decision. Councillors’ Forum and the General Assembly / Annual Conference also make sure that the customer views are regularly canvassed.

The LGA follows all public procurement rules (including OJEU where required) to ensure that suppliers and others in a business relationship are treated fairly and transparently. A list of the largest spend by supplier is available on the company website. The LGA expects its suppliers to pay their employees the London Living Wage, have in place a Modern Slavery policy, and to support the LGA in achieving the United Nations Strategic Development Goals.

The LGA voluntarily follows the Government Prompt Payment Policy, with the aim of ensuring that 100 per cent of all undisputed and valid invoices are paid within 30 days, with the Strategic Management Team receiving quarterly Key Performance Indicators on adherence.

Statement of corporate governance arrangements

The LGA Board oversees management of the LGA’s financial and other resources, and the financial and accommodation strategies for the wider group.

The LGA Board has considered these accounts in the light of a report from the LGA Audit Committee, chaired by Cllr Daniel Humphreys, whose membership is independent of the LGA’s other Boards and Panels.

Provision of Information to Auditors

So far as each of the Directors is aware at the time this report is approved:

• there is no relevant audit information of which the Company’s auditors are unaware: and
• the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Auditor

PKF Littlejohn LLP has signified its willingness to continue in office as auditor.

This report was approved by the Board on 7 June 2023 and signed on its behalf. 

 Year ended 31 March 2023

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

• selected suitable Accounting Policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards, including FRS102 have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Opinion

We have audited the financial statements of the Local Government Association (the ‘Association’) and its subsidiary (the ‘Group’) for the year ended 31 March 2023 which comprise the Consolidated and Association Statements of Comprehensive Income, the Consolidated and Association Statements of Financial Position, the Consolidated and Association Statements of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

• give a true and fair view of the state of the Group’s and of the Association’s affairs as at 31 March 2023 and of the Group’s profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. 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 company 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 

In auditing the financial statements, we have concluded that the directors’ 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 parent Association'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 directors 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 annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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 course of 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 this gives rise to 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the Strategic Report and Directors’ Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception 

In the light of the knowledge and understanding of the group and the parent Association and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of directors 

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the Group and parent Association financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the Group and parent Association financial statements, the directors are responsible for assessing the Group’s and the parent Association’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 the directors either intend to liquidate the group or the parent Association to cease operations, or have no realistic alternative but to do so.

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. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• We obtained an understanding of the Group and parent Association and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, sector research and application of cumulative audit knowledge and experience.
• We determined the principal laws and regulations relevant to the company in this regard to be those arising from the Companies Act 2006, Financial Reporting Standard 102 and relevant employee legislation.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to enquiries of management, review of minutes and review of legal and regulatory correspondence.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that there was potential for management bias in the valuation of the investment properties. We addressed this through review of the valuation report prepared by management’s expert, testing the reasonableness of inputs to their calculation, and challenging assumptions applied in the valuations for example by agreement to third party metrics.
• We also identified potential for management bias in the judgements made around recoverability of debtors. We addressed this through examination of post year end cash received, review of correspondence with debtors and discussion of recoverability with management.
• We also identified potential for management bias in the accounting for the defined benefit pension schemes. We addressed this through review of the actuary reports prepared by management’s expert, testing the reasonableness of inputs to their calculation, and challenging assumptions applied in the valuations.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included but were not limited to the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Alastair Duke (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP 
Statutory Auditor

15 Westferry Circus, Canary Wharf, London E14 4HD

Date: 9 October 2023