NATIONAL CENTRE FOR SOCIAL RESEARCH. A Company Limited by Guarantee REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

Transcription

1 NATIONAL CENTRE FOR SOCIAL RESEARCH A Company Limited by Guarantee REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 Charity Registration Number: Company Registration Number:

2 CONTENTS Legal And Administrative Details... 1 Report Of The Trustees... 2 Independent Auditors Report To The Trustees Of The National Centre For Social Research Statement Of Financial Activities Balance Sheet Cash Flow Statement Notes To The Cash Flow Statement Notes To The Financial Statements Page

3 NATIONAL CENTRE FOR SOCIAL RESEARCH LEGAL AND ADMINISTRATIVE DETAILS LEGAL STATUS The National Centre for Social Research (NatCen) was, from 1969, a registered charity governed by a Trust Deed. It became a new entity with effect from 1 st July 2002 as a company limited by guarantee with a new charity registration number. Company Registration Number: Charity Registration Number: Charity Registration Number of previous entity: Scottish Charity Registration Number SC REGISTERED OFFICE: TRUSTEES: 35 Northampton Square London EC1V 0AX Lynne Berry Sir Robert Culpin Janet Finch CBE Denise Lievesley David Walker Michael O Higgins Sally Ford-Hutchinson Professor Christine Hallett Stephen Egan Appointed 1 September 2007 CHIEF EXECUTIVE: Norman Glass ACTING CHIEF EXECUTIVE Simon Anderson Appointed 20 October 2008 COMPANY SECRETARY: Meriel Barclay AUDITORS: BANKERS: SOLICITORS: Kingston Smith LLP Chartered Accountants Devonshire House 60 Goswell Road London EC1M 7AD National Westminster Bank Plc Cavell House 2A Charing Cross Road London WC2H 0NN Bates, Wells and Braithwaite 2-6 Cannon Street London EC4M 6YH Page 1

4 NATIONAL CENTRE FOR SOCIAL RESEARCH REPORT OF THE TRUSTEES For the year ended 30 June 2008 The Trustees present their report with the audited financial statements for the year to 30 June PRINCIPAL ACTIVITY The principal activity during the period was the provision of education and research into all areas of social policy particularly health, employment, housing, travel, education and crime. Most of the projects undertaken included surveys carried out throughout Great Britain. A full review of the activities for the period will be published in early 2009 in the NatCen Annual Report TRUSTEES The Trustees, who are also directors of the company, during the period under review were: Lynne Berry Member of Audit Committee Resigned 15 December 2008 Sir Robert Culpin Member of Audit Committee Professor Janet Finch CBE Chair of Trustees Chair of Remuneration and Nominations Committees Professor Denise Lievesley Lord Moser KCB CBE FBA Retired 30 November 2007 David Walker Member of Remuneration Committee Michael O Higgins Member of Remuneration Committee Professor John Sizer Resigned 23 July 2007 Sally Ford-Hutchinson Member of Nominations Committee Professor Christine Hallett Member of Remuneration Committee Stephen Egan Appointed 1 September 2007 Chair of Audit Committee CONSTITUTION and GOVERNANCE NatCen is governed by its Memorandum and Articles of Association which came into effect on 1 July 2002 and were amended on 3 February The governance of the charity is the responsibility of the Board of Trustees who are the directors of the company as well as being the members. Their guarantees are limited to 1 each. NatCen has no share capital. Its objects are as follows: The Charity s objects are the advancement of education through research into the social, political and economic sciences, the dissemination to the public of the results of such research and for educational purposes incidental thereto. All NatCen staff are involved in the furtherance of our charitable activities. The procedure for the appointment of Trustees is set out in the Articles of Association. The Trustees are obliged to set up a nominations committee to seek candidates for appointment, establish procedures and develop a succession plan. On appointment each Trustee completes a register of interests which is updated annually. Page 2

5 At each annual general meeting one-third of the Trustees are obliged to retire, although they may seek re-election. The maximum time trustees can serve is nine years. In February 2008, Professor Janet Finch, Lynne Berry and Sir Robert Culpin retired and were unanimously re-elected. Nominations, Remuneration and Audit Committees, reporting to the Board of Trustees, exist. All the members are Trustees of NatCen, and the Board of Trustees has defined the role and responsibilities of these committees. The Trustees meet formally at least three times a year, with further meetings as and when required. They are kept well informed by the management at other times of significant issues affecting NatCen. The Trustees have the power to appoint a chief executive and to delegate the implementation of the day to day management of the affairs of the organisation to him. A clear distinction exists between the responsibilities of the Trustees and the delegated powers of the management. The chief executive is responsible for appointing senior managers who are collectively responsible for the management and operation of NatCen and for reporting to the Trustees on the financial position of the organisation at each formal Trustee meeting. Senior managers are also responsible for implementing the policies agreed by the Trustees and reporting to the Trustees on performance. The management committee meets monthly. New Trustees undergo a series of events to aid their induction and training. This includes attendance at NatCen seminars, both internal and external, the provision of literature on NatCen and its work, meetings with senior NatCen staff and other Trustees and the opportunity to observe our interviewing fieldforce at work. Activities and objectives The National Centre for Social Research (NatCen) is the UK s largest independent social research institute. Founded in 1969 (under the name Social Community and Planning Research) and incorporated as a company limited by guarantee in 2002, the organisation was established to conduct rigorous studies of relevance to social and public policy. NatCen became and remains the only non-commercial organisation in Britain outside government that is capable of designing, conducting and interpreting major social surveys. However, our work has long since expanded to encompass a wide range of other methodological approaches, including qualitative research, secondary analysis of existing studies, research synthesis and mixed method evaluation. We also provide guidance, support and training in research methods, promoting best practice in social and policy research both in Britain and abroad. NatCen is, in many respects, unique. As a not for profit institute, registered as a charity, we exist outside academia but continue to collaborate closely with many academic researchers. We are entirely independent of government, even though much of our work is government-funded. And we are outside the commercial world, enabling our research teams to initiate their own projects and to raise funds from research councils and foundations to carry them out. We believe that rigorous, innovative and independent social research - substantively informed, ethically conducted and effectively communicated - has a vital contribution to make to sound policy, practice and public debate. Our public benefit is achieved through conducting and promoting the cause of such research. Our purpose is: Informing society through high quality social research We have two main objectives: To generate reliable, useful and useable knowledge about society and social problems through the research we conduct To encourage and enable others to do and to use high quality social research Page 3

6 We aim to achieve this by: Carrying out important research studies in a robust, ethical and credible way Effectively communicating the results of our work to key audiences, including policy-makers and funding organisations, practitioners, politicians, the wider research community and the general public. Making our research widely available as the basis for further analysis and debate. This includes enabling our datasets to be used by others to extend their usefulness and influence. Improving the capacity of the social policy research community to understand, commission and carry out high quality social research. We do this in a variety of ways including the provision of training, presentations to funders and other audiences, participation in seminars and conferences, and publications of various kinds and through a variety of media. Undertaking work that is methodologically innovative and communicating these advancements to the wider research community. Working closely with the academic community to develop appropriate collaborations for the furtherance of specific projects and general intellectual engagement. Our funding and resources Our work is funded by a wide range of public and charitable bodies, including government departments and agencies, regulatory bodies, research councils, foundations, universities and charities. All of our funding is project related; we receive no core funding from any source. NatCen has four centres of research activity: the Quantitative Research Department (QRD); the Qualitative Research Unit (QRU); the Scottish Centre for Social Research (ScotCen); and the Survey Methods Unit (SMU). The Quantitative Research Department is by far the largest of these and consists of seven distinct research groups covering Health and Lifestyles, Employment and Crime, Education and Socio-legal, Social Attitudes and Housing, Families and Children, Longitudinal Studies and Transport, Disability and Incomes. External training is delivered through NatCen Learning. Quantitative surveys are supported by a specialist Project Computing group. The face-to face fieldwork and telephone interviewing are managed through our Operations Department in Brentwood and through Area Managers and their deputies in each of our 9 areas in Great Britain. The whole organisation is supported by our Corporate Services and Systems Computing departments. NatCen employed about 330 staff in 2007/08, of whom about 145 were researchers. In addition we worked with our freelance fieldforce of about 1,300 interviewers and 200 survey nurses across Great Britain. Our work in 2007/8 Conduct of high quality research At the core of our work and of our public benefit is the conduct of rigorous, independent research, using a variety of methodological approaches, across a wide range of policy domains. During the course of this year, we secured funding for 161 new projects, representing a success rate of 71%. A particular highlight was the successful bid to conduct the fieldwork for the UK Household Page 4

7 Longitudinal Study (now called Understanding Society 1 ) a key objective for the year. This is the largest social science project of its kind ever undertaken in the UK and will involve interviews at around 40,000 interviews per year. In terms of work actually conducted in 2007/8, NatCen continued to deliver projects across a wide range of policy areas, including health, crime, education, employment, travel, social attitudes and families. Our long-running British Social Attitudes 2 survey successfully completed its 23 rd year, while its companion survey, the Scottish Social Attitudes 3 survey, reached its eighth. The surveys, which are based on large random probability samples of the British and Scottish adult populations, carried modules focusing on a range of important policy issues, including attitudes towards cohabitation, division of labour within the home and homelessness. Both surveys also included questions on national identity and attitudes towards discrimination and prejudice. Other highlights of the year included our continued contribution to the English Longitudinal Survey of Ageing 4 (ELSA), one of NatCen s most prestigious and complex studies. This year saw us collect information from nearly 8,000 ELSA participants about important events that occurred earlier in their lives, using an innovative event history calendar. This decision was prompted by the fact that many aspects of early life appear to have a significant impact on people s health, economic circumstances and quality of life in later years. At the other end of the life course, the Growing Up in Scotland study 5 (GUS) a major birth cohort funded by the Scottish Executive and conducted by the Scottish Centre for Social Research published results from its first sweep and returned to collect additional data from participating families in its second year. These two projects form part of a wider commitment to and development of our expertise in the conduct of complex longitudinal research. NatCen s ability to engage with complex and difficult topics was also highlighted by the publication of results from a survey of elder abuse 6 the first of its kind ever conducted in the UK and jointly funded by Comic Relief and the Department of Health. We continued to develop our portfolio of projects based on secondary analysis and desk research. Our Children and Families Group, for example, undertook the Childcare Nation 7 project, funded by the Nuffield Foundation, which involved reanalysis of data from two of our own childcare survey series: the Parents Childcare Survey and the Childcare Providers Survey And our Qualitative Research Unit successfully expanded its work into new substantive areas, attracting funding from a wider range of sources and using an increasingly diverse array of methods. Highlights included an evaluation of the Partnership Fund 8, which has helped to highlight important ways of helping older people engage better with the benefits and services that can support them in later life, and a companion study to the National Survey of Elder Abuse which aimed to explore the nature of this form of abuse from the perspective of those who experience it. Methodological innovation We continue to identify and develop innovative new approaches to the conduct of social research, both as part of the conduct of individual projects and through the specific methodological activities of the Survey Methods Unit Page 5

8 An example of the former can be found in the development of the life events calendar as part of the latest sweep of the English Longitudinal Survey of Ageing. This type of calendar makes it possible for respondents to cross-reference certain life-events with what was going on in any one of the other key domains at that time (e.g. I had my first child when I was living in house B ; I started Job C when I moved back to Sheffield in 1967 ). By displaying a number of important external events, for instance when John F. Kennedy was assassinated, the calendar also employs a further technique to help respondents recall the timing of personal life events. Our experience suggests that this technique improves the level and accuracy of recall amongst respondents and we hope to incorporate a similar approach in other relevant studies in the future. The Survey Methods Unit began work on four important new projects as part of an ESRC initiative on survey design and measurement. These are concerned with two of the most urgent issues for survey research: the use of mixed modes of data collection; and strategies for improving response rates and reducing non-response bias. Other projects have examined the cost-effectiveness of using incentives to maximise response in face to face surveys and the scientific case for a new birth cohort study. Publicising our work While methodological rigour is a prerequisite of good social research, in itself, it is not enough and we are also committed to ensuring that our work is both useful and, indeed, used. Consequently, we made it a priority in 2007/8 to establish a Communications function on a sound footing within the organisation and to place a renewed emphasis on the impact of our work. During the course of this year, we appointed a full-time Communications Manager (and subsequently a communications assistant) to drive forward this agenda. This has enabled us to enhance our external communications with funders, the media, the research community and the public, and to place impact activities more squarely within the day-to-day work of the organisation. As always, the launch of the British and Social Attitudes surveys provided particular highlights, generating widespread interest from the media, academic and policy audiences. Other high profile studies which reported this year included the Elder Abuse Survey; British Gambling Prevalence Survey; the second sweep of the Growing Up in Scotland study; and the Childcare Nation study, which used secondary analysis to explore how far the take up and provision of childcare provision in England have improved since the launch of the National Childcare Strategy in We have continued to expand the range of our communications and impact activities to include public seminars, workshops for policy-makers and practitioners, and summary Research Findings documents which are available from our website. We have also sought to improve the way that we explain our studies to research participants for example, by investing significantly in the design of attractive and readable materials to support the launch of Understanding Society. Our work continues to be drawn on heavily in public and political debate. An example of our direct contribution to such debates is an invitation to provide evidence to the Justice Committee on public attitudes towards devolution. Overall, during the course of the year, NatCen staff published 85 reports and 17 journal articles; made presentations at 76 conferences and seminars; and made presentations to 18 audiences of policymakers and officials. To meet our objective of making the results of our research widely available to other researchers, many of NatCen s survey data sets are deposited in the ESRC Data Archive. Usage data shows that, of the datasets most accessed by researchers in 2007/8, NatCen surveys accounted for 6 out of the top 10 datasets. In all, there were 3,192 requests to access NatCen datasets by other researchers. Page 6

9 Ethical research practice NatCen continues to take its ethical responsibilities extremely seriously, both in terms of our dealings with individual research participants and our wider commitment to ensuring that the time and resources devoted to our studies are justified in terms of outputs and utility. For many years, NatCen has subscribed to the International Statistical Institute Declaration of Professional Ethics and the Social Research Association s Ethical Guidelines. We have also had long experience of external ethical scrutiny through, for example, the National Research Ethics Service, which covers work conducted within the NHS. However, we have long been conscious of the fact that the level of ethical scrutiny of individual projects can vary, depending on their substantive focus and the level of external scrutiny. In order to ensure consistency of approach, this year saw the launch of our own Research Ethics Committee, the aim of which is to encourage good ethical practice by providing a clear and practical framework to assist staff identify and address ethical issues within their research. During the course of the year, NatCen also completed two studies that looked at research participants views and experiences of the research process. The first, carried out on behalf of the Cabinet Office, followed up 50 adult participants in NatCen surveys, while the second, self-funded by NatCen, focused on children and young people. Taken together, these studies have generated important new insights about how questions of ethics are understood by research participants and what should constitute best ethical practice in survey research. Development of collaborative relationships Although in many areas of our work, we have both the necessary methodological and substantive expertise to conduct high quality studies, in others, we continue to partner with external organisations and individuals in order to add particular skills, capacity or knowledge. Examples of such relationships include the longstanding collaboration with University College London to deliver the English and Scottish Health Surveys; our partnership with the Institute for Social and Economic Research in relation to Understanding Society; with the Institute of Education in relation to the Millennium Cohort Study and earlier national birth cohort studies; and our close working relationship with the Centre for Families and Relationships at Edinburgh University in relation to the Growing Up in Scotland study. Other project-specific collaborations included an innovative qualitative study of problem gambling, conducted jointly with Dr Gerda Reith of Glasgow University and funded by the ESRC, the 2007 British Gambling Prevalence Survey, which was undertaken with academic specialists from various British universities; and the English Longitudinal Study of Ageing, which NatCen conducts jointly with University College London and the Institute of Fiscal Studies. At the level of the organisation as a whole, we have forged a hugely important association with the London School of Economics. During the course of the year, this has led to a successful joint seminar series, with events alternating between the two institutions. These have been open seminars with a particular focus on methodological issues, and speakers have been drawn from both organisations and externally. We have begun the process of planning for a joint two-day international conference, to be held in April 2009, on the theme of the relationship between social research and social policy. Page 7

10 Training and capacity building In 2006, NatCen Learning was created to support and develop NatCen s long-term commitment to raising the standards of research by encouraging high-quality practice across the research world. The last year saw us provide a variety of training and research support across a range of different sectors, including central and local government, the voluntary sector and the academic community. Over the last twelve months we have provided training to over 1200 people at 136 different training events. Our core training programme is open to people from all research sectors and comprises a number of different modules, ranging from applied training on core techniques for qualitative and quantitative research, to sessions aimed at equipping participants with a better understanding of how to make effective use of research evidence. In addition to our training activities, we engage in a number of other activities aimed at raising standards and supporting capacity building within the wider social research community. The Scottish Centre for Social Research, for example, has directly funded a PhD studentship at Stirling University, and has also successfully established a PhD Case Studentship, linked to the Growing Up in Scotland study. NatCen also hosted a number of placement students during the course of the year. The Qualitative Research Unit continued to develop a software version of its widely used Framework approach to qualitative analysis. When finished, this will represent an important new option for those seeking to use computer-based methods to analyse qualitative data. Organisational finances and process improvement After the disappointing financial results in 2006/7 we needed to improve our financial performance and reserves through better control of project costs. Our target of a surplus of 1m was achieved and accompanied by a significant growth in revenues. This has opened up greater possibilities for devoting resources to overtly educational activities such as seminars and publications, as well as allowing us to update important IT equipment and systems. We made it a priority for this year to improve our fieldwork performance, whilst maintaining high quality standards. We have successfully piloted a number of initiatives in this area most notably in relation to respondent incentives, which have now been introduced on a number of key studies. The external environment remains challenging, however, in fieldwork terms and we have also been pursuing methodological responses to the effective management of non-response bias within survey samples. We also sought to improve our processes for obtaining feedback on impact from funders of our work. We have held a series of meetings with key funders to discuss performance on major projects and how NatCen is viewed more generally. We have also initiated discussions with an external consultant about undertaking a more systematic review of our impact. Key Performance Indicators 2007/8 2006/7 Published Reports Journal articles Presentations at conferences, Seminars & workshops Page 8

11 Presentations to policy makers and officials Face to face fieldwork Issued addresses 289, ,000 Households interviewed 133, ,000 Contracts won % success rate on tenders submitted 71% 77% Numbers of Courses delivered by NatCen Learning Plans for 2008/9 In 2008, our Trustees agreed the basis of a new ten year strategy, the aim of which is to position NatCen as the UK s leading social research organisation the one which sets the standards for others in generating research findings and interpreting evidence for policy purposes. With this goal in mind, our priorities for 2008/9 include the following. To deepen our methodological capacity and profile. A key theme of our strategy is to position NatCen as the UK s leading resource for social research methods. This will involve the funding and development of innovative methodological approaches, a further expansion of our training and capacity-building activities, and a greater engagement with parallel agendas within government and academia. To build our capacity to interpret data across a range of substantive areas. Our strategy also seeks to position us as able to interpret data drawn from all relevant sources on specific policy topics. This will involve a development of our capacity for secondary analysis, a strengthening of our links to policy and research networks within specific areas and a wider engagement with methods of research review and synthesis. To further develop our communications and impact activities We aim to place communications and impact activities at the heart of what we do treating them as an integral to the research process and not simply as part of an additional dissemination phase. We will also put significant new emphasis into our internal communications through the development of a new intranet and use of interactive web technologies. To ensure the successful launch of the Understanding Society study and the continued ability to deliver high quality face-to-face fieldwork more generally. Understanding Society is the most ambitious study of its kind ever undertaken in the UK, will have a potentially enormous long-term impact on policy-making and academic debate, and will have a very high public profile. More generally, we will continue our efforts to maintain high response rates and the quality of our face-to-face fieldwork. To ensure the successful recruitment of a new Chief Executive to replace Norman Glass, who is due to retire in September Norman Glass retirement will coincide with the 40 th anniversary of the organisation and, following a period of rapid growth, the new Chief Executive will have the task of developing and articulating a clear and distinctive vision for NatCen in its fifth decade. Page 9

12 To maintain our improved financial performance in order to yield a surplus of at least 1m. By successfully increasing our revenues while controlling costs, we will generate a surplus that will allow us to be more methodologically innovative and to pursue a wider range of directly educational activities, such as training, public seminars and audience-specific publications. A healthy surplus will also allow us to pursue important strategic objectives, such as securing suitable accommodation for our London staff at the end of the current lease on our St John s Street building. To ensure the successful launch of the Framework software for qualitative analysis. It is clear that there is a very high level of interest in the software version of Framework. We will ensure that this is marketed and launched effectively, and that these activities are accompanied by a programme of appropriate training courses. EQUALITY AND DIVERSITY POLICY NatCen is an equal opportunities employer. We recognise that everyone should be treated with respect and dignity and that a working environment must be provided which is free of any form of discrimination, harassment, bullying or victimisation. NatCen will not condone any form of discrimination, whether engaged in by employees or by third parties who interact with the organisation. All employees have a personal responsibility not to engage in any acts that might constitute any form of discrimination, harassment or victimisation. NatCen is committed to the effective implementation of this policy. FINANCIAL REVIEW As predicted in last years report, we have enjoyed a much better trading year, and have reported an operating surplus of 1,137k compared to the previous year s deficit of 373k. This was largely due to the completion of a number of difficult projects which had adversely affected results in the previous year, and to an overall reduction in pension contributions due to the renegotiation of the pension scheme and introduction of a career average revalued earnings scheme. However, our pension deficit - which had been decreasing steadily over the past two years - has increased again to 7,713k and we will in due course review the additional top up contributions, which amount to 540k per annum, that NatCen is currently making to the pension fund to reduce the deficit. Our income from research and educational activities increased to 35,950k (up from 31,257k in 2007) - an increase of 15% - and margins on projects improved as a result of better cost control. Our total expenditure amounted to 35,109k, of which 33,523k was spent directly on research and education and the balance of 1,586k on dissemination of research results and governance. Our cash on hand increased by 558k to 5,073k, and non designated reserves before the pension deficit amounted to 6,270k. These reserves are required for the day to day working capital of the organisation and also to enable us to continue our charitable mission in the event of a downturn in funding or fall in liquidity. This is especially significant in light of the increasingly challenging situation in the wider economy. During the year we improved our capacity by investing 564k in computer software and hardware and 246k in research and educational facilities. In summary, the year was satisfactory from a trading point of view, but tempered by the increase in the pension deficit. Looking forward to next year we still have a strong order book, and expect to achieve a similar surplus. Page 10

13 RESERVES POLICY The Trustees are committed to ensuring that the level of reserves is sufficient to maintain the longterm financial stability of NatCen and considerable progress has already been made in this regard. The aim is to maintain Reserves (deemed as Net Current Assets) at a level that would enable operations to continue if necessary for up to four months, without immediate staff cuts, should income and consequently contribution to fixed costs fall by 25%. Currently reserves which stand at 5,163k are above the targeted level which amounted to 4,390k. REVALUATION POLICY It is the policy of the Trustees to revalue fixed properties every three years or if market conditions dictate that the current valuation has changed materially, then a new valuation will be undertaken more frequently. INVESTMENT POWERS The Memorandum and Articles of Association of NatCen authorise the Trustees to make and hold investments using the general funds of the charity. No such investments are presently held. RISK ASSESSMENT NatCen has a settled procedure of Risk Appraisal which involves all of the major departments and also looks at organisational risk. During the past year the largest risk to the functioning of the company was its pension deficit. This remains a significant issue as demonstrated by the increase of the deficit to 7.7m. However, the organisation will continue to pay and is able to pay the additional contributions as agreed with the pension trustees. A further risk is that we will not be able to recruit and retain sufficient high-quality interviewers to deliver the work that we have booked to the standard our clients demand. We are addressing this in a variety of ways ranging from more intensive recruitment to looking very closely at the way we use our interviewers using our new online activity information. There is a potential risk from a tightening of public expenditure and the impact of this on the demand for research from government. Given the amount of work we have booked this is not an immediate threat but we shall be working actively to expand our already large portfolio of customers and range of activies to ensure that the risk is spread. RESPONSIBILITIES OF THE TRUSTEES IN RELATION TO THE FINANCIAL STATEMENTS Company and charity law require the Trustees to prepare financial statements for each financial period which give a true and fair view of the state of affairs of NatCen and which report the surplus or deficit of NatCen for that period. In preparing these financial statements, the Trustees are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; prepare the financial statements on a going concern basis, provided that it is appropriate to assume that the charity will continue. The Trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of NatCen and to enable them to ensure that the financial statements comply with the Companies Act 1985 and the relevant Statement of Recommended Practice Accounting and Reporting by Charities. They are also responsible for safeguarding the assets of NatCen and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Page 11

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15 Independent Auditors Report to the Trustees of the NATIONAL CENTRE FOR SOCIAL RESEARCH We have audited the financial statements of the National Centre for Social Research for the year ended 30 June 2008 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and the related notes. These financial statements have been prepared in accordance with the accounting policies set out therein. This report is made solely to the charitable company's members, as a body, in accordance with Section 235 of the Companies Act Our audit work has been undertaken for no purpose other than to draw to the attention of the charitable company's members those matters which we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the charitable company and charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of Trustees and Auditors The trustees' (who are also the directors of the National Centre for Social Research for the purposes of company law) responsibilities for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Trustees' Responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act We also report to you if, in our opinion, the information given in the Directors' Report is consistent with the financial statements. In addition we report to you if, in our opinion, the charitable company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding trustees' remuneration and other transactions is not disclosed. We read the Trustees' Annual Report, which incorporates the Directors' Report required by the Companies Act 1985, and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of Audit Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the charitable company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Page 13

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17 NATIONAL CENTRE FOR SOCIAL RESEARCH STATEMENT OF FINANCIAL ACTIVITIES For the year ended 30 June 2008 INCOME AND EXPENDITURE ACCOUNT Notes Incoming Resources Incoming resources from Charitable Activities: Income from Research Studies 2 35,949,610 31,257,574 Incoming Resources from Generated Funds: Investment Income 177,232 95,071 Other Income 119,853 8,070 Total Incoming Resources 36,246,695 31,360,715 Resources Expended Charitable Activities 35,014,837 31,670,043 Governance of the charity 63,584 63,750 Total Resources Expended 3 35,078,421 31,733,793 Net Incoming Resources 1,168, ,078 Asset Revaluation -392, ,000 Actual gains/(losses) on defined benefit pension scheme -4,454,000 4,933,000 Net Movement in Funds -3,678,243 4,959,922 Reconciliation of Funds Fund Balances Brought Forward 6,031,215 1,071,293 Fund Balances Carried Forward 2,352,972 6,031,215 All amounts relate to continuing activities. Page 15

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19 NATIONAL CENTRE FOR SOCIAL RESEARCH CASH FLOW STATEMENT For the Period Ended 30 June Net Cash (Outflow)/Inflow from Operating Activities 1,194,039 2,268,391 Returns on Investments and Servicing of Finance Bank interest received 177,232 95,071 Bank interest paid -2,609-3,168 Hire purchase interest ,623 91,903 Net Cash (Outflow)/Inflow from Purchase/Sale of Fixed Assets Cost of purchasing tangible fixed assets -810, ,365 Proceeds from sale of tangible fixed assets - 490, , ,365 Net Cash (Outflow)/Inflow before Changes in Financing 558,249 1,957,930 Changes in Financing Repayments to hire purchase creditors - - Net (Decrease)/Increase in Cash and Cash Equivalents 558,249 1,957,930 Page 17

20 NATIONAL CENTRE FOR SOCIAL RESEARCH Notes to the Cash Flow Statement For the year ended 30 June 2008 Reconciliation of Operating Surplus to Net Cash Inflow from Operating Activities Operating surplus 1,168, ,078 Loss on disposal of Fixed Assets 37,611-94,300 Interest paid - Bank 2,609 3,168 Interest Received -177,232-95,071 Depreciation charges 851, ,987 Decrease/(increase) in debtors -1,997,204-1,309,334 Increase in creditors 1,308,775 3,305,019 1,194,039 2,268,391 Reconciliation of Net Cash Flow to Movement in Cash and Cash Equivalents Increase/(decrease) in cash in the year 558,249 1,957,930 Change in Cash and Cash Equivalents resulting from Cash Flows 558,249 1,957,930 Cash and Cash Equivalents at 1 July ,514,986 2,557,056 Cash and Cash Equivalents at 30 June ,073,235 4,514,986 Analysis of Changes in Cash and Cash Equivalents during the Year Net Cash At 1 July 07 Movements At 30 June 08 Cash at Bank and in Hand 4,514, ,249 5,073,235 Balance at 30 June ,514, ,249 5,073,235 Page 18

21 NATIONAL CENTRE FOR SOCIAL RESEARCH NOTES TO THE FINANCIAL STATEMENTS For the Period Ended 30 June Accounting Policies (a) (b) Basis of Accounting The financial statements have been prepared under the historical cost convention, modified for the revaluation of certain fixed assets and in compliance with the relevant Statement of Recommended Practice (SORP), Accounting and Reporting by Charities, the Companies Act 1985 and the Charities Act The Statement of Financial Activities discloses more analysis than is required under the provisions of the SORP but is necessary in order to give a true and fair view. All policies are consistent with prior year. Depreciation Depreciation of fixed assets has been provided for at the following rates which will, in the opinion of the Trustees, have the effect of writing the assets off over their useful life. This takes account of the date of the original acquisition of the assets which may have been by the previous entity. Freehold Property Leasehold Property Fixtures and Fittings Computers and Software 1.0% per annum on re-valued buildings Over the term of the relevant lease 10% or 33% per annum on cost 20% or 25% per annum on cost (c) (d) (e) (f) (g) (h) (i) Project Accrued Income Project Accrued Income represents the income due from work carried out on research projects in advance of invoicing funders. Income Income is accounted for on an accruals basis, with project income being spread over project lives to ensure matching with costs incurred in respect of those projects. Amounts billed in advance represent deferred income and are carried forward in the Balance Sheet. Administrative and Financial Overheads All administrative and financial overheads are charged against income as incurred. Input VAT Input VAT is subject to partial exemption rules and guidance from HM Revenue & Customs. The irrecoverable element applicable to administrative and financial overheads is not specifically allocated to expenditure headings. Foreign Exchange Receipts in foreign currencies are recorded in sterling at the rate of exchange applicable at the time of transaction. Any balances outstanding at the period end are translated at the closing rate. Pension contributions Contributions to the National Centre for Social Research Retirement Benefit Scheme, a defined benefits scheme, are charged to the income and expenditure account when incurred. Leases No assets are held under finance leases. Rental payments in respect of operating leases are charged to the income and expenditure account when they become due. Page 19

22 NATIONAL CENTRE FOR SOCIAL RESEARCH NOTES TO THE FINANCIAL STATEMENTS For the Period Ended 30 June 2008 (Continued) (j) Governance Costs The Statement of Financial Activities includes governance costs and these are defined as follows: Audit Fees Legal and professional costs relating to the charity and governance in general Ten percent of staff costs of three employees who are engaged in governance issues and a proportion of the overheads relevant to these staff costs. Trustee indemnity insurance Trustee expenses being travel costs for attending meetings. 2 Income from Research Studies Project income relates to research funding from which all specific project costs and other expenditure is financed. Other than the transfer of assets from the previous entity, NatCen receives no donations, payments in kind or core funding towards the general pursuit of its charitable aims. Included in Project income is an amount of 2,929,463 (2007-2,160,272) received on behalf of other institutions in respect of major collaborative projects. The corresponding payments are included in "Resources Expended" Research income arose from the following sources: UK Government 26,121,984 21,258,918 Research Councils and Foundations 657, ,286 European Union - - Universities and other 9,170,602 9,036,370 Total Income from Research Studies 35,949,610 31,257,574 3 Resources Expended Staff Other Costs Depreciation Costs Total Total Charitable Activities Carrying out research studies 11,450, ,538 21,090,405 33,365,098 30,273,484 Disseminating research results 759,622 26, ,127 1,522,417 1,303,517 Improving capacity of research community 77,234-50, ,323 93,042 Governance of the charity 17,855-45,729 63,584 63,750 Total Resources Expended 12,304, ,206 21,922,350 35,078,422 31,733,793 Auditors remuneration for the year was 15,000 (including a prior year under provision of 4,018 ( ,234) and no other fees were paid to the auditors. Page 20

23 NATIONAL CENTRE FOR SOCIAL RESEARCH NOTES TO THE FINANCIAL STATEMENTS For the Period Ended 30 June 2008 (Continued) 4 Staff Costs Salaries 9,770,756 8,974,434 Employer's National Insurance 830, ,534 Employer's Pension Contributions 1,193,484 1,692,384 Permanent Health Insurance Premiums 228, ,786 Other Staff Costs incl. Temporary and freelance staff 226, ,874 12,249,799 11,694,012 There appears to have been a considerable increase in the cost of our permanent health insurance premiums. However the increase is the result of staff increases plus a payment of 78,749, being an adjustment to reflect previous staff increases and a consequent underpayment in There was a small increase in the premium rate as a result of extending the cover to include employer's NIC The average number of employees during the year was as follows: (Full time equivalents) The number of higher paid employees was as follows: Taxable emoluments band 60,000-69, ,000-79, ,000-89, , , , , , , All these staff were accruing benefits under the National Centre for Social Research Retirement Benefits Scheme. 5 Trustee Expenses and Related Party Transactions Indemnity insurance has been taken out on behalf of the Trustees at an annual cost of 4,331 (2007-1,732). No Trustee received any remuneration in the period. Travel and accommodation expenditure incurred by the Trustees associated with attendance at Trustee Meetings was reimbursed where claimed. Total expenses reimbursed this year to seven Trustees amounted to 3,518 ( ) The Trustees of NatCen are involved in a variety of organisations, some of which are either suppliers to or funders of NatCen. The Trustees have not received any personal gain from transactions with these organisations nor do they have a controlling interest in either party. Page 21

24 NATIONAL CENTRE FOR SOCIAL RESEARCH NOTES TO THE FINANCIAL STATEMENTS For the Period Ended 30 June 2008 (Continued) 6 Tangible Fixed Assets Freehold Leasehold Fixtures Total Properties Property and (2008 Val) Equipment Cost or Valuation At 1 July ,088,178 1,747,579 3,452,772 8,288,529 Additions 4, , , ,412 Disposals Revaluation -498, , , ,156 At 30 June ,594,242 1,938,818 3,501,931 8,034,991 Depreciation At 1 July , ,742 2,390,063 2,915,444 Charge for the year 317, , ,206 Disposals -528, ,183 Transfer to Revaluation -105, ,639 At 30 June ,585 2,395,243 3,132,828 Net Book Value At 30 June ,594,242 1,201,233 1,106,688 4,902,163 At 30 June ,982,539 1,327,837 1,062,709 5,373,085 Freehold Properties All freehold properties are primarily functional. They are held to provide accommodation in which the research and administrative activities are carried out rather than as a source of income. None of the properties are held exclusively as an investment. Valuation of Freehold Premises The Trustees use the property index supplied by a professional body as an intermediate guide to valuation. They believe this gives the fairest value of the property in use as at the balance sheet date. Since June 2008 there has been a fall in the value of properties due to declining rental values and weakening yields. The Trustees will review the necessity for a full valuation at the next balance sheet date if they believe the fall has been material enough to warrant it. Charges over Freehold Properties At the balance sheet date, NatWest bank held legal charges as security over both of the freehold properties. Page 22

25 NATIONAL CENTRE FOR SOCIAL RESEARCH NOTES TO THE FINANCIAL STATEMENTS For the Period Ended 30 June 2008 (Continued) 7 Debtors and Prepayments Trade debtors 6,441,614 4,633,375 Project Accrued Income 4,488,615 4,348,992 Other debtors 353, ,113 Prepayments 367, ,397 11,651,080 9,653,877 Note Due to its magnitude and importance within these accounts, Project Accrued Income is separately identified above, representing income due for work completed on projects but which has not yet been invoiced to clients. 8 Creditors: Amounts falling due within one year Trade Creditors 158,612 1,204,807 Project Deferred Income 9,217,029 7,382,776 PAYE and NIC 483, ,027 Accruals 1,701,513 1,251,122 11,560,506 10,251,732 Note Project deferred income represents the amount invoiced to clients at the Balance Sheet date over and above that which is due for work done within the accounting period. 9 Funds Balance at Transfers, Balance at 01-Jul Incoming Outgoing Gains and 30-Jun 2007 Resources Resources Revaluations 2008 Unrestricted Funds General Fund 4,979,839 36,246,695-34,760, ,459 6,270,497 Designated Fund: 4,310, , ,058 3,795,475 Property Pension Reserve -3,259,000-4,454,000-7,713,000 6,031,215 36,246,695-35,078,421-4,846,517 2,352,972 Page 23