1. STATEMENT OF ACCOUNTING POLICIES

The financial statements have been prepared with reference to the 2009-10 Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be the most appropriate to the particular circumstances of the House of Lords for the purpose of giving a true and fair view has been selected. The particular policies adopted by the House of Lords are described below. The accounting policies have been applied consistently in dealing with items that are considered material to the accounts. Whilst the House of Lords is not obliged to comply with the HM Treasury's Corporate Governance in Central Government Departments: Code of Good Practice, it seeks to apply best practice principles wherever possible.

In addition to the primary statements prepared under IFRS, the Manual also requires the House to prepare two additional primary statements. The Statement of Parliamentary Supply and supporting notes show outturn against Estimate in terms of the net resource requirement and the net cash requirement. The Statement of Operating Costs by Aim and Core Tasks and supporting notes analyse the income and expenditure by the objectives of the House of Lords Administration.

The Palace of Westminster is a Royal Palace and is under the joint stewardship of the House of Lords and the House of Commons. Responsibility for maintenance of the Palace and the Parliamentary Estate is a function resting with the Parliamentary Estates Directorate and the Director General of Facilities in the House of Commons. Expenditure on the Palace and the Parliamentary Estate is apportioned in a 40:60 ratio (Lords:Commons), or solely allocated to the House of Lords or the House of Commons where appropriate. Expenditure is made on behalf of the House of Lords by the Department of Resources in the House of Commons. Expenditure is then recharged to the House of Lords over the course of the year.

The Parliamentary Archives is a shared facility with relevant costs split in a 60:40 ratio between the House of Lords and the House of Commons.

Security costs are arranged and monitored jointly but are billed separately to the two Houses by the Metropolitan Police, apportioned in 31:69 ratio (Lords:Commons). Additionally, the two Houses incur administration costs on each other's behalf. These are recharged over the course of the year, on the basis of agreed proportions.

Since 1 January 2006 ICT services have been managed by Parliamentary Information and Communication Technology (PICT) service for both Houses. Each House pays for its own ICT hardware with the costs of shared services being split on an 80:20 (Commons:Lords) ratio. Joint ICT development project costs are shared on an agreed project by project basis.

1.1 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, and inventories, where material, at their value to the House of Lords by reference to their current costs.

1.2 Basis of preparation

These accounts comprise of the House of Lords Members' expenses and administration costs, the transactions of the House of Lords Refreshment Department, and the House of Lords Works of Art Collection Fund.

1.3 Property, Plant and Equipment

The minimum level for the capitalisation for property, plant and equipment, and intangible non current assets is £1,000. Smaller items may be grouped depending on whether such groups have a significant value above the capitalisation threshold.

NOTES TO THE RESOURCE ACCOUNTS - continued

i. Land and Buildings

Land and buildings shown in the accounts are as follows:

1. property on the Parliamentary Estate administered by the House of Lords;
2. property on the Parliamentary Estate administered by the House of Lords and House of Commons jointly.

In accordance with IAS 16 property, plant and equipment (excluding the Palace of Westminster) are valued at fair value using a method determined by the Valuation Office Agency (VOA). The Palace of Westminster is valued at Depreciated Replacement Cost due to its specialised nature and all other buildings are valued at fair value using the existing use method.

The Parliamentary Estate is subject to a full professional revaluation every 5 years, supplemented by an annual VOA desktop valuation in the interim years (previously indexed in prior years). The Parliamentary Estate was re-valued during 2009-10 by the VOA using a desktop valuation, the valuation date was as at 31 March 2010. The last full revaluation was as at 31 March 2008.

Revalued losses are taken first to the revaluation reserve and then to the Operating Cost Statement for any loss in excess of previous revaluation gains.

ii. Long Leasehold Buildings

The House of Lords holds a number of properties on long leaseholds. The building element of the property is capitalised, revalued annually and depreciated over the remaining life of the lease.

iii. Antique Furniture

Each year the Furniture Manager in the Parliamentary Estates Directorate carries out an internal review to assess if any revaluation adjustment is required. During 2009-10 the furniture was valued by H Blairman & Sons who gave an indicative valuation for purposes of insurance which was the value used at 31 March 2010.

iv. Plant and Machinery

Plant and Machinery comprises the clock mechanism in the Clock Tower, popularly known as 'Big Ben', and equipment in the Cromwell Green Entrance.

v. Other Non Current Assets

Other non current assets have been stated at current cost using appropriate indices where appropriate. For 2009-10 other non current assets were not subject to revaluation as the modified costs were not material.

vi. Assets Under Construction

The Millbank Island site has been transferred to an Asset Under Construction for a period of two years whilst the buildings undergo renovation. The assets were transferred at their current NBV as at 1 September 2009. The assets were last revalued on 31 March 2008 and will be revalued by the VAO once the buildings are back in occupational use. Assets under construction additions have been capitalised at cost.

vii. Intangible Non Current Assets

Intangible non current assets relate to development costs and licences to use software developed by third parties, which are valued at cost.

1.4 Non-Operational Heritage Assets

The House of Lords has the following categories of non-operational heritage assets - the Works of Art Collection, the Parliamentary Archives, early printed books and Members' Robes. Of these, only the value of the Members' Robes and additions to the Works of Art Collection since 1 April 2000 are included in the Statement of Financial Position. The others are not capitalised as it is not practicable or appropriate to obtain valuations for assets acquired pre 1 April 2000. Additions since 1 April 2000 are valued at cost.

NOTES TO THE RESOURCE ACCOUNTS - continued

i. Works of Art Collection

Parliament has collected Works of Art since 1841, depicting parliamentary institutions and statesmen and stateswomen. The collection originally consisted of works of art commissioned by the Fine Arts Commission, with the purpose of bringing the history of the nation to life on the walls of the interiors of the Houses of Parliament. Many of the works added later were acquired as donations from Members of both Houses. Until 1991 the collection was held jointly by both Houses of Parliament; at that date the works were nominally split between the two Houses on the basis of where works were situated at that date. However, this split did not necessarily reflect actual ownership at the date of acquisition, or the locations for which the works were originally commissioned or intended. The total size of the collection is disclosed in a footnote to note 10. Details of the House of Lords Works of Art Collection Fund are contained in note 27.

ii. The Parliamentary Archives

The Parliamentary Archives comprise several million documents that have been preserved at the Palace of Westminster from 1497 in a variety of formats, from vellum and parchment to modern computer disk. Parliamentary records prior to 1497 form part of The National Archives. The records are predominantly unique and irreplaceable and have been preserved for their historical, legal and administrative value.

The Record Office was established in the House of Lords in 1946, became a shared facility with the House of Commons in 1999 and was renamed the Parliamentary Archives in 2006. The Parliamentary Archives publishes an Annual Report which is available via www.parliament.uk.

iii. Early Printed Books

The House of Lords Library holds a collection of early printed books, which dates back to the fifteenth century.

iv. Members' Robes

The House of Lords holds robes which are lent to Members for ceremonial use on State occasions. These were donated or bequeathed to the House by former Members, are secured within the Palace and cleaned and repaired as necessary. The Donated Assets Reserve is comprised of these robes which, due to their long life, are not depreciated.

1.5 Depreciation and Amortisation

Depreciation is charged to expenditure on the historic value of assets. For buildings and a selection of non current assets, that element of the depreciation which relates to the increase in valuation in prior years is charged to the Revaluation Reserve. This amount is realised by transferring the balance in the Revaluation Reserve to the General Fund over the remaining useful life of the asset. Land assets are not depreciated.

Depreciation is provided at rates calculated to write off the valuation of freehold buildings and also for plant, equipment and intangible assets by equal instalments over their estimated useful lives, with the exception of heritage assets with an estimated life of more than 200 years. Heritage assets are not depreciated (as per IAS 16) because the long remaining life or high residual value of the asset makes any such charge immaterial. Capital works on leasehold property are depreciated on a straight line basis over the lease period.

The capitalised costs for assets in the course of construction are not depreciated until the assets are brought into use.

Asset lives are usually in the following range:

Palace of Westminster        86 years

Other buildings          remaining life (between 22-35 years)

Fixtures and fittings        10 years

Refreshment Department silverware    20 years

Broadcasting equipment        10 years

Telephone equipment        5-10 years

General office equipment        5-10 years

Plant and Machinery (excluding clock mechanism)  5-10 years

Computer file servers and software    3-5 years

Other IT equipment        3-4 years

NOTES TO THE RESOURCE ACCOUNTS - continued

Non-operational heritage assets are not depreciated as the long economic life or high residual value makes any such charge immaterial.

1.6 Inventories

Inventories include goods for resale and other inventories held by the Refreshment Department. Finished goods for resale are valued at cost or, where materially different, current replacement cost and at net realisable value only when they either cannot or will not be used.

1.7 Research and Development

Any expenditure on research and development is treated as an operating cost in the year in which it is incurred.

1.8 Income

Income relates directly to the operating activities of the House of Lords. It includes receipts from fees from Judicial proceedings and taxation of costs up until July 2009, Private Bill proceedings, and reproduction of parliamentary archives, receipts in connection with the provision of catering facilities, rental income, staff pension contributions and other pension receipts. It includes not only income appropriated in aid of the Estimate, but may include income to the Consolidated Fund, which is treated as operating income.

1.9 Administration and programme expenditure

The House of Lords is outside HM Treasury's administration costs control regime.

1.10 Capital charge

A charge, reflecting the cost of capital utilised by the House of Lords, is included in operating costs. The charge is calculated at the real rate set by HM Treasury, currently 3.5%, on the average carrying amount of all assets less liabilities, except for:

• donated assets and cash balances with the Office of the Paymaster General, where the charge is nil
• additions to heritage collections where the existing collection has not been capitalised

1.11 Foreign exchange

Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction.

1.12 Pensions

Present and past employees of the House of Lords are covered by the provisions of the House of Lords Staff Pension Scheme (HOLSPS) described in note 7. The pension scheme is accounted for under the terms of IAS 19 Retirement Benefits. The annual accruing cost of providing for future benefits is charged to the Operating Cost Statement and is based upon rates determined by the Government Actuary and advised by HM Treasury. These rates were in the range of 16.7-24.3% of pensionable pay. A provision to meet the liability is included on the Statement of Financial Position. Actuarial gains and losses are recognised as an adjustment to the general fund in the year the gains/losses occur. The HOLSPS contains particular arrangements in respect of employees who retire early on medical or structural grounds. These costs are identified separately in the accounts where appropriate.

1.13 Leases

Operating lease rentals are charged to the Operating Cost Statement over the lease term. The House of Lords holds two properties on 999 year leases and two further leases on leases greater than 100 years. The land element has been treated as an operating lease, whereas the building element has been treated as a finance lease which is capitalised and depreciated over the useful life of the buildings.

NOTES TO THE RESOURCE ACCOUNTS - continued

1.14 Grants payable

The House of Lords made the following annual grant payments:

	2009-10 £	2008-09 £
History of Parliament Trust	581,000	352,000
The Commonwealth Parliamentary Association	584,000	567,300
The Inter-Parliamentary Union	391,000	452,700
The British-Irish Inter-Parliamentary Body	56,000	61,200
The British-American Parliamentary Group	33,000	31,800
	1,645,000	1,465,000

1.15 Financial Instruments

Financial instruments are initially recognised at fair value unless otherwise stated. Fair value is the amount at which such an instrument could be exchanged at an arm's length transaction between informed and willing parties.

Cash and cash equivalents include cash in hand and cash at bank. Trade and other debtors are carried at fair value, which is represented by their invoiced value less any subsequent reduction through the provision of bad and doubtful debts. Trade creditors and other liabilities are carried at fair value, based on the invoiced or expected invoice amounts.

1.16 Third-party assets

The House of Lords Security Fund Account held monies lodged as security on civil appeals to the House of Lords. Monies held in the account were transferred to the UK Supreme Court during October 2009.

The House of Lords Refreshment Department receives and pays gratuities on behalf of its staff; for 2009-10 the amount paid was £314,112 (2008-09 - £327,000). The balance held at the end of the financial year was £37,890 (2008-09 - £66,889).

1.17 Contingent Liabilities

Potential contingent liabilities are reviewed each year and disclosed in a note to the accounts (see note 22). In addition to contingent liabilities disclosed in accordance with IAS 37 Provisions, contingent liabilities and contingent assets, the House discloses for parliamentary reporting and accountability purposes certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, but which have been reported to Parliament in accordance with the requirements of Managing Public Money. Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 are stated at discounted amounts and the amount reported to Parliament separately noted. Contingent liabilities that are not required to be disclosed by IAS 37 are stated in the amounts reported to Parliament.

1.18 Value Added Tax

Most of the activities of the House of Lords are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

NOTES TO THE RESOURCE ACCOUNTS - continued

Detailed explanations of the variances are given in the Management Commentary.

NOTES TO THE RESOURCE ACCOUNTS - continued

5. Reconciliation of net resource outturn to net cash requirement

		NOTE	ESTIMATE £000	OUTTURN £000	NET TOTAL OUTTURN COMPARED WITH ESTIMATE: SAVING/(EXCESS) £000
Resource Outturn		3	118,345	111,655	6,690
Capital
	Acquisition of property, plant and equipment	10, 11	15,309	10,313	4,996
Accruals adjustments
	Non-cash items	8	(42,977)	(35,338)	(7,639)
	Changes in working capital other than cash		4,266	49	4,217
	Use of provision		3,125	(452)	3,577
NET CASH REQUIREMENT			98,068	86,227	11,841

NOTES TO THE RESOURCE ACCOUNTS - continued

7. STAFF NUMBERS AND RELATED COSTS

Staff costs comprise:

	2009-10 £000	2008-09 £000
Wages and salaries	17,008	16,852
Social security costs	1,317	1,308
Other pension costs	3,882	5,101
SUB TOTAL	22,207	23,261
Less recoveries in respect of outward secondments	(324)	(294)
TOTAL NET COSTS	21,883	22,967

The House of Lords Staff Pension Scheme (HOLSPS) is an unfunded defined benefit scheme which is operated 'by analogy' with the Principal Civil Service Pension Scheme. The House of Lords meets the costs of all benefits. A provision to meet the liability is included on the Statement of Financial Position. The Government Actuary's Department has devised a model to assist organisations with small 'by analogy' to the PCSPS schemes to value their liabilities. The amount in the financial statements has been calculated using this valuation method. The date of valuation is 31 March 2010.

For 2009-10, employers' contributions of £2,623,779 (2008-09 - £2,624,539) were accrued at rates in the range 16.7-24.3% (2008-09 - 17.1-25.5%) of pensionable pay, based on salary bands. The rates are reviewed every four years by the Government Actuary and advised by HM Treasury. The contribution rates reflect benefits as they are accrued, not when the costs are actually incurred.

Employees joining after 1 October 2002 can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers' contributions of £21,481 (2008-09 - £31,979) were paid to one or more of a panel of appointed stakeholder pension providers. Employer contributions are age-related and range from 3-12.5% (2008-09 - 3-12.5%) of pensionable pay. Contributions due to the partnership pension providers at the Statement of Financial Position date were £nil (2008-09 - £181). Contributions prepaid at that date were nil (2008-09 - nil).

The above amounts are only in respect of staff of the House of Lords. Other pension costs includes some costs of administering the House of Lords Staff Pension Scheme. By agreement between the House of Commons and the House of Lords, the whole of the pension provision for certain staff within shared services falls on the House by whom staff are formally employed, regardless of whether salary costs are shared.

AVERAGE NUMBER OF PERSONS EMPLOYED

The average number of whole-time equivalent (WTE) persons (including senior management) employed during the year was as follows:

2009-10		2008-09
House of Lords Administration	454	450

The above excludes certain shared services staff, whose salary costs are met in part by the House of Lords.

NOTES TO THE RESOURCE ACCOUNTS - continued

8. Expenditure

			NOTE	2009-10 £000		2008-09 £000
Rentals under operating leases				2,283		2,183
Non-cash items
	Depreciation		10	6,306		7,995
	Amortisation		11	317		319
	Loss on disposal of property, plant and equipment			78		5
	Loss on revaluation of property, plant and equipment			7,521		110
	Cost of Capital Charges			16,221		15,738
	Auditor's remuneration and expenses			100		103
	Interest cost on provisions		18	4,795		4,277
Total non-cash items				35,338		28,547
Members' Expenses				17,237		18,988
Security				10,123		9,774
Estates & Works expenditure				13,978		12,877
Printing and publications				4,035		4,040
IT costs				3,987		2,768
Other expenditure				9,205		8,364
Total					96,186	87,541

The auditor's remuneration is made up of £90,000 for the 2009-10 Resource Account audit (2008-09 - £95,000), plus £10,000 for review work in relation to the preparation of transferring the Resource Accounts to International Accounting Standards (2008-09 - £8,000).

Other expenditure includes grants, as detailed in note 1.14 of £1,645,000 (2008-09 £1,465,000).

Further information on Members' Expenses is available at www.parliament.uk

9. Income

	2009-10 £000		2008-09 £000
Refreshment Department sales		4,185	4,107
Pension contributions and transfers in		777	1,680
Judicial fees and taxation		175	516
Fees, charges and rental income		1,277	1,250
		6,414	7,553

The amount applied as appropriations in aid totalled £6,413,645.

NOTES TO THE RESOURCE ACCOUNTS - continued

10. Property, plant and equipment

	LAND & BUILDINGS EXCLUDING DWELLINGS	DWELLINGS	FIXTURES & FITTINGS	INFORMATION TECHNOLOGY	PLANT & MACHINERY	HERITAGE ASSETS	PAYMENTS ON ACCOUNT & ASSETS UNDER CONSTRUCTION	TOTAL
	£000	£000	£000	£000	£000	£000	£000	£000
COST OR VALUATION
At 1 April 2009	1,009,903	1,700	1,556	7,568	1,734	9,681	997	1,033,139
Additions	5,827	-	744	959	-	43	2,630	10,203
Disposals	-	-	(35)	(365)	-	-	-	(400)
Reclassifications	(25,435)	-	-	-	-	-	25,435	-
Revaluations	(286,404)	(199)	4	-	-	4,506	-	(282,093)
AT 31 MARCH 2010	703,891	1,501	2,269	8,162	1,734	14,230	29,062	760,849
DEPRECIATION
At 1 April 2009	468,557	120	926	5,038	96	-	-	474,737
Charged in year	4,968	79	212	959	88	-	-	6,306
Disposals	-	-	(35)	(287)	-	-	-	(322)
Reclassifications	(3,443)	-	-	-	-	-	3,443	-
Revaluations	(133,086)	(120)	-	-	-	-	-	(133,206)
AT 31 MARCH 2010	336,996	79	1,103	5,710	184	-	3,443	347,515
NET BOOK VALUE AT 31 MARCH 2010	366,895	1,422	1,166	2,452	1,550	14,230	25,619	413,334
Net book value at 31 March 2009	541,346	1,580	630	2,530	1,638	9,681	997	558,402

ANALYSIS OF LAND AND BUILDINGS	LAND				BUILDINGS
	FREEHOLD		FREEHOLD	LONG LEASEHOLD		IMPROVEMENTS	TOTAL
	£000		£000	£000		£000	£000
COST OR VALUATION
At 1 April 2009	69,049		898,185	42,669		-	1,009,903
Additions	-		3,354	-		2,473	5,827
Disposals	-		-	-		-	-
Reclassifications	-		-	(25,972)		537	(25,435)
Revaluations	(28,474)		(253,466)	(4,464)		-	(286,404)
AT 31 MARCH 2010	40,575		648,073	12,233		3,010	703,891
DEPRECIATION
At 1 April 2009	-		464,259	4,298		-	468,557
Charged in year	-		3,800	959		209	4,968
Disposals	-		-	-		-	-
Reclassifications	-		-	(3,443)		-	(3,443)
Revaluations	-		(131,888)	(1,198)		-	(133,086)
AT 31 MARCH 2010	-		336,171	616		209	336,996
NET BOOK VALUE AT 31 MARCH 2010	40,575		311,902	11,617		2,801	366,895
Net book value at 31 March 2009	69,049		433,926	38,371		-	541,346

NOTES TO THE RESOURCE ACCOUNTS - continued

	LAND & BUILDINGS EXCLUDING DWELLINGS	DWELLINGS	FIXTURES & FITTINGS	INFORMATION TECHNOLOGY	PLANT & MACHINERY	HERITAGE ASSETS	PAYMENTS ON ACCOUNT & ASSETS UNDER CONSTRUCTION	TOTAL
	£000	£000	£000	£000	£000	£000	£000	£000
COST OR VALUATION
At 1 April 2008	950,781	1,689	1,477	7,539	1,734	9,656	58	972,934
Additions	812	-	79	691	-	25	997	2,604
Disposals	-	-	-	(720)	-	-	-	(720)
Reclassifications	-	-	-	58	-	-	(58)	-
Revaluations	58,310	11	-	-	-	-	-	58,321
AT 31 MaRCH 2009	1,009,903	1,700	1,556	7,568	1,734	9,681	997	1,033,139
DEPRECIATION
At 1 April 2008	432,502	39	796	4,826	7	-	-	438,170
Charged in year	6,775	79	130	922	89	-	-	7,995
Disposals	-		-	(715)	-	-	-	(715)
Reclassifications	-		-	-	-	-	-	-
Revaluations	29,280	2	-	5	-	-	-	29,287
AT 31 MARCH 2009	468,557	120	926	5,038	96	-	-	474,737
NET BOOK VALUE AT 31 MARCH 2009	541,346	1,580	630	2,530	1,638	9,681	997	558,402
Net book value at 31 March 2008	518,279	1,650	681	2,713	1,727	9,656	58	534,764

ANALYSIS OF LAND AND BUILDINGS	LAND		BUILDINGS
	FREEHOLD	FREEHOLD		LONG LEASEHOLD	TOTAL
	£000	£000		£000	£000
COST OR VALUATION
At 1 April 2008	65,320	843,051		42,410	950,781
Additions	-	812		-	812
Disposals	-	-		-	-
Reclassifications	-	-		-	-
Revaluations	3,729	54,322		259	58,310
AT 31 MARCH 2009	69,049	898,185		42,669	1,009,903
DEPRECIATION
At 1 April 2008	-	429,891		2,611	432,502
Charged in year	-	5,148		1,627	6,775
Disposals	-	-		-	-
Reclassifications	-	-		-	-
Revaluations	-	29,220		60	29,280
AT 31 MARCH 2009	-	464,259		4,298	468,557
NET BOOK VALUE AT 31 MARCH 2009	69,049	433,926		38,371	541,346
Net book value at 31 March 2008	65,320	413,160		39,799	518,279

NOTES TO THE RESOURCE ACCOUNTS - continued

Land and buildings

The Parliamentary Estate was re-valued during 2009-10 by the Valuation Office Agency on the basis of Depreciated Replacement Cost for the Palace of Westminster and Existing Use for the remainder of the Parliamentary Estate.

The valuation date was 31 March 2010. The total value of the Palace as at 31 March 2010 was £864,543,727 (House of Lords share £345,817,490).

Assets Under Construction

The Assets Under Construction consists of two buildings; 1 Millbank and 2 Millbank. The two buildings are undergoing major renovation over a period of two years in order to transform the two buildings in to a single building by the autumn 2011. The assets were transferred at their current NBV as at 1 September 2009.

The assets under construction did not form part of the VOA's valuation of the Parliamentary Estate as at 31 March 2010. The renovated building (formally 1 and 2 Millbank) will be revalued by the VAO once the building is back in occupational use.

Assets under construction additions have been capitalised at cost.

Fixtures and Fittings

Fixtures & Fittings comprises all office and light equipment, including that of the Refreshment Department.

Plant and Machinery

The clock mechanism, popularly known as 'Big Ben', was last valued as at 31 March 2006. The total value was £3,234,000 (House of Lords share £1,293,000).

Works of Art

Works of Art acquired prior to 1 April 2000 are not included on the statement of financial position. The collection held by Parliament, either solely or jointly with the House of Commons, prior to 1 April 2000 can be classified as;

Purchased Works of Art numbering:		And Donated works of art numbering:
Paintings and Prints	4,796	Paintings and Prints	1,534
Busts	170	Busts and Statues	49
Medieval Statuary	6	Murals and mosaics	17
Murals and mosaics	122	Tapestries	1
Tapestries	9

Additions purchased since 1 April 2000 are capitalised and included in Heritage Assets. The value of Works of Art as at 31 March 2010 was £462,263 (2008-09 - £403,492). Details of the Works of Art Collection Fund are in note 27.

NOTES TO THE RESOURCE ACCOUNTS - continued

11. INTANGIBLE NON CURRENT ASSETS

The House's intangible non current assets comprise purchased software licences and other software.

	INFORMATION TECHNOLOGY	SOFTWARE LICENCES	TOTAL
	£000	£000	£000
COST OR VALUATION
At 1 April 2009	14	2,231	2,245
Additions	-	110	110
Reclassifications	-	-	-
Disposals	-	(32)	(32)
Revaluation	-	-	-
AT 31 MARCH 2010	14	2,309	2.323
AMORTISATION
At 1 April 2009	14	1,897	1,911
Charged in year	-	317	317
Disposals	-	(32)	(32)
Revaluation	-	-	-
AT 31 MARCH 2010	14	2,182	2,196
NET BOOK VALUE AT 31 MARCH 2010	-	127	127
Net book value at 1 April 2009	-	334	334

NOTES TO THE RESOURCE ACCOUNTS - continued

	INFORMATION TECHNOLOGY	SOFTWARE LICENCES	TOTAL
	£000	£000	£000
COST OR VALUATION
At 1 April 2008	14	2,213	2,227
Additions	-	18	18
Reclassifications	-	-	-
Disposals	-	-	-
Revaluation	-	-	-
AT 31 MARCH 2009	14	2,231	2,245
AMORTISATION
At 1 April 2008	14	1,578	1,592
Charged in year	-	319	319
Disposals	-	-	-
Revaluation	-	-	-
AT 31 MARCH 2009	14	1,897	1,911
NET BOOK VALUE AT 31 MARCH 2009	-	334	334
Net book value at 1 April 2008	-	635	635

12. FINANCIAL INSTRUMENTS

Because of the largely non-trading nature of its activities and the way in which Parliament is financed, financial instruments play a more limited role in creating risk than would apply to a business entity of a similar size. The majority of financial instruments relate to contracts to buy non-financial items in line with the House of Lords expected purchase and usage requirements and the House of Lords is therefore exposed to little credit, liquidity or market risk.

Liquidity Risk

The House of Lords is financed by supply voted annually by Parliament for the House of Lords Members' expenses and administration etc. expenditure. As such it is not exposed to significant liquidity risks.

Interest rate risk

All of the House of Lords financial assets and liabilities carry nil or fixed rates of interest. The House of Lords is not therefore exposed to significant interest rate risk.

Foreign currency risk

Foreign currency would not normally form part of the House of Lords assets and liabilities, and as such it is not exposed to any significant foreign currency risks.

Fair Value

Trade receivables and other current assets are carried at fair value, which is represented by their invoiced value less any subsequent reduction through the provision of bad debts. Trade payables and other current liabilities are carried at fair value, based on their invoiced or expected invoice amounts.

NOTES TO THE RESOURCE ACCOUNTS - continued

Financial assets and liabilities by category

		31 MARCH 2010		31 MARCH 2009
	Loans and receivables	Other financial liabilities	Loans and receivables	Other financial liabilities
	£000	£000	£000	£000
ASSETS
Trade and other receivables	1,951	-	921	-
Cash and cash equivalents	934	-	692	-
LIABILITIES
Trade and other payables		5,712	-	4,347

13. REVALUATION OF THE ESTATE

The revaluation exercise carried out of the property, plant and equipment during the year resulted in:

£141,366,091 of the revaluation loss has been charged to the revaluation reserve (2008-09 £nil), the remaining loss of £7,521,114 was charged to the operating cost statement (2008-009 £110,000).

14. Inventories

			31 MARCH 2010 £000	31 MARCH 2009 £000	1 APRIL 2008 £000
Inventories			161	190	199
			161	190	199

15. Trade receivables and other current assets

		31 MARCH 2010 £000	31 MARCH 2009 £000	1 APRIL 2008 £000
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade receivables		1,602	787	581
Deposits and advances		349	134	75
Prepayments and accrued income		642	229	309
		2,593	1,150	965
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Other receivables, deposits and accrued income		-	-	-
		2,593	1,150	965

NOTES TO THE RESOURCE ACCOUNTS - continued

16. Cash and cash equivalents

				£000
Balance at 1 April 2008				479
Net change in cash and cash equivalent balances				213
Balance at 31 March 2009				692
Net change in cash and cash equivalent balances				242
BALANCE AT 31 MARCH 2010				934
		31 MARCH 2010 £000	31 MARCH 2009 £000	1 APRIL 2008 £000
The following balances at 31 March were held at:
Government Banking Service (prior years: Office of HM Paymaster General)		654	177	93
Commercial banks and cash in hand		280	515	386
BALANCE AT 31 MARCH		934	692	479

17. Trade and other payables

		31 MARCH 2010 £000		31 MARCH 2009 £000	1 APRIL 2008 £000
AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade payables		1,646		863	645
Other payables			1,964	1,833	1,665
VAT			61	64	47
Accruals and deferred income		2,041		1,587	1,745
Amounts issued from the Consolidated Fund for supply but not spent at year end		934		692	479
Consolidated Fund extra receipts due to be paid to the Consolidated Fund - Received		-		-	-
			6,646	5,039	4,581
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Other payables, accruals and deferred income			-	-	-
			6,646	5,039	4,581

NOTES TO THE RESOURCE ACCOUNTS - continued

18. PROVISIONS FOR LIABILITIES AND CHARGES: PENSION LIABILITY

The House of Lords Staff Pension Scheme is an unfunded defined benefit scheme 'by analogy' to the Principal Civil Service Pension Scheme. A full valuation was carried out at 31 March 2010 by the Government Actuary's Department in accordance with the Financial Reporting Manual (FreM). The major assumptions used by the Actuary were:

PRESENT VALUE OF THE SCHEME LIABILITIES	2009-10 £000	2008-09 £000	2007-08 £000	2006-07 £000	2005-06 £000
Liabilities in respect of:
Active members	60,714	39,288	40,534	43,627	30,300
Deferred Pensioners	10,341	6,353	6,345	7,018	5,435
Current Pensioners	40,847	33,493	32,545	27,890	23,935
Total present value of the scheme liabilities	111,902	79,134	79,424	78,535	59,670

FINANCIAL ASSUMPTIONS	31 MARCH 2010 %		31 MARCH 2009 %
The inflation assumption	2.75		2.75
The rate of increase in salaries	4.30		4.30
The rate of increase for pensions in payment and deferred pensions	2.75		2.75
The rate used to discount scheme liabilities	4.60		6.04

Analysis of movement in scheme liability

	2009-10 £000		2008-09 £000
Value of liabilities at 1 April	79,134		79,424
Current service cost	2,830		3,059
Employee contributions	500		458
Interest on scheme liability	4,795		4,277
Curtailments	(52)		-
Pension transfers in	231		1,175
Benefits payable	(2,630)		(2,561)
Pension payments to and on account of leavers	(427)		(182)
Actuarial (gain)/loss	27,521		(6,516)
BALANCE AT 31 MARCH	111,902		79,134

Analysis of actuarial (gain)/loss

	2009-10 £000		2008-09 £000
Experience (gains)/losses arising on scheme liabilities	16		787
Changes in assumptions underlying the present value of the scheme liabilities	27,505		(7,303)
	27,521		(6,516)
Cumulative total actuarial loss/(gain)	42,036		14,515

Expenses recognised in the Operating Cost Statement

	2009-10 £000		2008-09 £000
Current services costs*	2,830		3,059
Interest costs (note 8)	4,795		4,277
Curtailments*	(52)		-
	7,573		7,336

* Included within "other pension costs" within note 7.

NOTES TO THE RESOURCE ACCOUNTS - continued

History of (gains) and losses

	2009-10 £000	2008-09 £000	2007-08 £000	2006-07 £000	2005-06 £000
Experience (gains)/losses on liabilities
Amount	16	787	1,062	104	(69)
Percentage of the present value of the scheme liabilities	0.0%	1.0%	1.3%	0.1%	(0.1)%

Estimate of contributions expected to be paid into the scheme over the year 1April 2010 to 31 March 2011

	£000
Employer contributions	3,087
Employee contributions	517
	3,604

19. NOTE TO THE STATEMENT OF OPERATING COSTS BY AIM AND CORE TASKS

The House of Lords capital is employed exclusively to enable the House of Lords to meet its core objectives.

20. Capital commitments

		31 MARCH 2010 £000	31 MARCH 2009 £000	1 APRIL 2008 £000
Contracted capital commitments at 31 March not otherwise included in these financial statements:
Property, plant and equipment		127	2,411	2,852

21. COMMITMENTS UNDER LEASES

Operating leases

Total future minimum lease payments under operating leases are given in the table below for each of the following periods:

			31 MARCH 2010	31 MARCH 2009	1 APRIL 2008
OBLIGATIONS UNDER OPERATING LEASES COMPRISE:			£000	£000	£000
Land:
No later than one year			12	12	12
Later than one year and not later than five years			46	46	46
Later than five years			219	230	242
			277	288	300
Buildings:
No later than one year			2,087	2,247	628
Later than one year and not later than five years			8,327	8,334	1,977
Later than five years			16,404	18,484	5,993
			26,818	29,065	8,598

NOTES TO THE RESOURCE ACCOUNTS - continued

Other:
No later than one year		46	12	4
Later than one year and not later than five years		263	28	47
Later than five years		-	-	-
		309	40	51

The House of Lords owns property leases for which the annual commitment is £1.

22. CONTINGENT LIABILITIES DISCLOSED UNDER IAS 37

The House has entered into the following quantifiable contingent liabilities by offering guarantees, indemnities or by giving letters of comfort.

	AT 1 APRIL 2009	INCREASE IN YEAR	LIABILITIES CRYSTALLISED IN YEAR	OBLIGATION EXPIRED IN YEAR	AT 31 MARCH 2010
	£000	£000	£000	£000	£000
Works of Art on loan from various collections	2,221	1,000	-	621	2,600

23. LOSSES AND SPECIAL PAYMENTS

There were no exceptional kinds of expenditure such as losses and special payments that require separate disclosure because of their nature or amount (2008-09 - nil).

24. RELATED-PARTY TRANSACTIONS

The House of Lords and the House of Commons share some buildings and services. These include the Palace of Westminster, the Parliamentary Estates Directorate, the Parliamentary Archives and the Parliamentary ICT Service.

These joint arrangements are charged between the two Houses on an agreed percentage basis of underlying costs for each service (certain accommodation and overhead costs are excluded). Each House includes their share of the relevant asset base and/or service cost in their Resource Accounts. The percentage for each House for the key areas is as follows:

SERVICE	HOUSE OF LORDS	HOUSE OF COMMONS
Estates and Works services	40%	60%
Information and communications technology services	20%	80%
Parliamentary archives	60%	40%
Visitor Tours	30%	70%
Broadcasting services	40%	60%

The House of Commons incurred expenditure of £34,811,000 (2008-09 - £23,778,000) on behalf of the House of Lords during 2009-10. The balance relating to accommodation, works and other shared services owed by the House of Lords to the House of Commons was £547,000 (2008-09 £722,000). The House of Lords incurred expenditure of £501,000 (2008-09 - £421,000) on behalf of the House of Commons during 2009-10. The balance owed to the House of Lords by the House of Commons was £35,000 (2008-09 - £15,000).

No Management Board member has undertaken any material related party transactions with the House of Lords during the year.

NOTES TO THE RESOURCE ACCOUNTS - continued

25. THE HOUSE OF LORDS SECURITY FUND ACCOUNT

Prior to 1 October 2009, in all civil cases where an Appeal was laid to the House of Lords under the provisions of the Appellate Jurisdiction Act 1876, Appellants had to provide security for the costs of such Appeals. The House of Lords Security Fund Account recorded the receipt, payment and disposition of the lodgements for each financial year. The sum to be lodged by the Appellants was authorised from time to time by the House Committee. The final revision was in October 2000 when it was increased from £18,000 to £25,000. No other receipts and payments were entered on the account; interest was not paid on the lodgements, nor were any fees deducted. Security Fund monies were payable to the relevant party, usually on issue of the Final Judgement or Taxation of the Bill of Costs.

The House of Lords Security Fund Account was passed over to the UK Supreme Court on 1 October 2009. The amount transferred to the UK Supreme Court was made up of 27 deposits of £25,000.

	2009-10 £000	2008-09 £000
Opening balance of Fund at 1st April	1,249	1,652
Add: receipts - Lodgements by Appellants	175	535
Less: repayments to Appellants/Respondents	(749)	(938)
Less: amounts paid over to UK Supreme Court	(675)	-
CLOSING BALANCE OF FUND AT 31ST MARCH	-	1,249

26. HOUSE OF LORDS REFRESHMENT DEPARTMENT TRADING ACTIVITIES

The House of Lords Refreshment Department provides a wide range of catering facilities to Members and House of Lords staff. Members may sponsor private functions, and this type of service accounted for 56.8% of sales in 2009-10 (2008-09 - 54.3%).

The Refreshment Department operates under a policy first agreed between the House of Lords and HM Treasury in 1981. In accordance with this policy, the department is required to trade on the basis of 50% gross profit on all turnover. Sales of confectionery and goods to be consumed or used outside the department, together with the cost of services at functions, are excluded from the turnover figure against which gross profit is measured for the purpose of this target.

Total trading sales for 2009-10 amounted to £4,171,157 (2008-09 - £4,090,839). Gross profit on sales calculated according to the formula above was 80.3% (2008-09 73.6%) and gross profit on all sales was £2,562,971 (2008-09 - £2,418,607).

Further performance targets for trading in individual outlets of the department have been agreed, and are reviewed annually, by the Refreshment Committee.

NOTES TO THE RESOURCE ACCOUNTS - continued

27. THE HOUSE OF LORDS WORKS OF ART COLLECTION FUND

The Works of Art Collection Fund was established for the purpose of acquiring works of art for the House of Lords. Prior to 1 April 1992, it was funded by grant from the Department of the Environment. For the financial years 1992-93 and 1993-94, provision was made to meet expenditure from the House of Lords Works Services Vote. With effect from 1994-95 an annual grant is made to the Works of Art Collection Fund. The annual grant was increased to £50,000 in April 2004 and unspent balances of up to a maximum of £150,000 may be carried forward. The Fund is regulated by a scheme of delegation agreed by the Works of Art Committee in October 2003.

	2009-10		2008-09
	£000		£000
Opening balance of Fund at 1 April	97		83
Add receipts:
Grant from RfR	50		50
	147		133
Less: Purchases during the year (see below)	84		36
Closing Balance of Fund as at 31 March	63		97

Purchases during the year (which are included within additions in property, plant and equipment, note 10):

               

Description	£
View of Black Rod's Garden	215
Pen, ink and wash drawing by Charles Brooker, 1971
Ancient...ceremony...proceeding towards Christmas	1,056
Watercolour drawing by Ronald Searle
The Palace of Westminster, circa 1857	35,000
Oil on canvas by Henry Pether
Group Portrait Commission of the Law Lords	45,000
Oil on canvas by Sergei Pavlenko
Sir John Soane's Royal Gallery	2,500
Watercolour by Joseph Michael Gandy
TOTAL	83,771

28. EVENTS AFTER THE REPORTING PERIOD

In accordance with the requirements of IAS 10 Events after the reporting period, are considered up to the date on which the accounts are authorised for issue. This is interpreted as the date of the Certificate and Report of the Comptroller and Auditor General.

Non-adjusting events after the reporting period

It was announced in the Budget on 22 June 2010 that the Government intends to adopt the Consumer Price Index (CPI) for the indexation of public service pensions from April 2011. This will have an impact upon the future operation of the pension scheme that the House of Lords provides to employees. In the Accounting Officer's opinion there have been no other events since 31 March 2010 that would affect the financial statements.