Chilterns Area of Outstanding Natural Beauty (Establishment of Conservation Board) (Amendment) Order 2009

I shall speak also to a similar order, with an almost identical title, relating to the Cotswolds. These draft orders will allow the conservation boards of the Cotswolds and Chilterns areas of outstanding natural beauty to reverse the effect of Financial Reporting Standard 17 in respect of pension fund adjustments when compiling their annual statements of accounts. FRS 17 requires a conservation board, when compiling its accounts and subject to having a turnover in excess of £1 million, to provide for the possibility of all its staff being made redundant at the same time and taking their pension entitlement. The background is that currently there is no legislative requirement for any particular accounting practice to be followed by conservation boards. In practice, the two conservation boards—the Chilterns and the Cotswolds—follow the relevant parts of the code of practice of local authority accounting in the UK, a statement of recommended practice. Under current regulations, when the turnover of a conservation board exceeds £1 million, it becomes subject to FRS 17 requirements. The Cotswolds Conservation Board’s turnover exceeds £1 million and although the Chilterns Conservation Board’s turnover is less than that at the moment, it is anticipated that it will increase to more than £1 million in the next few years. In contrast to conservation boards, local authorities are exempt from the financial implications of FRS 17, but conservation boards do not currently fall within the ambit of that exemption. That means that the charge which conservation boards have to make to the revenue account for pensions is higher than for mainstream local authorities, as local authorities need only to provide for a regular but small-scale series of retirements and redundancies. The requirements of FRS 17 mean that the conservation boards must allocate a higher proportion of their budget to provide for pensions than local authorities are required to. It is this inconsistency that the draft orders are intended to address. The long-term effect of FRS 17 on conservation boards with an annual budget of more than £1 million is that an increasing amount of resources will be transferred away from their environmental work into their pension fund reserve so as to provide for the winding-up of the board and all its staff taking their pension entitlements. However, a conservation board is no more likely to be wound up than a local authority, and local authorities do not have to include provision in their accounts for all their staff being made redundant at the same time. When a local authority is abolished, its duties and any outstanding liabilities are simply transferred to the local authority that takes over its responsibilities, and often many of the staff are taken on by the new authority. If no action is taken, the eventual outcome could be that a large proportion of the funds that the Cotswolds and Chilterns conservation boards receive from Natural England and local authorities would go towards meeting pension fund requirements rather than the environmental work which is, after all, what a conservation board is all about. While the Chilterns Conservation Board is not currently in the same position as the Cotswold board, which already has a budget of more than £1 million, with a growing budget it is anticipated that the Chilterns will eventually be similarly affected. The order would apply Regulation 30 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 to the Cotswold and Chilterns conservation boards. This means that the boards would need to provide pension funds only in the event of occasional redundancy rather than in the unlikely situation of the entire body of staff being made redundant at the same time, as is the case now. The draft orders will ensure that the boards will be able to make best use of their budgets. It is important that the boards are able to devote more of their resources to fulfilling their duty to conserve and enhance the natural beauty of the AONB and to increase the understanding and enjoyment of the area’s special qualities while at the same time providing for pensions in the same way that local authorities are required to do. Without the order, it seems inevitable that the Cotswolds and Chilterns conservation boards will encounter increasing difficulty in carrying out the functions for which they were created as an increasing amount of their budget is set aside to meet FRS 17 requirements. I commend the draft orders to the Committee. I beg to move.