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Agenda Item No. 4

 

The Vale of Glamorgan Council

    

Environment and Regeneration Scrutiny Committee: 19th July 2016

 

Report of the Director of Environment and Housing

 

Closure of Accounts 2015/16

 

Purpose of the Report

  1. The accounts are complete and this report is to inform Scrutiny Committee of the provisional financial position for the Committee for the 2015/16 financial year.

Recommendation

It is recommended that :-

  1. Scrutiny Committee note the report and the financial measures taken and proposed.

Reason for the Recommendation

  1. To note the report and the financial measures taken and proposed.

Background

  1. Following the end of the financial year, Scrutiny Committee are provided with provisional outturn figures. The Statement of Accounts will be approved by Council before 30th September, which will normally follow the audit.

Relevant Issues and Options

Revenue

  1. Council on the 4th March 2015 (minute no. 941) agreed the Authority's revenue budget requirement for 2015/16.
  2. Appendix 1 amends the revised budgets to take account of the following adjustments. There is no overall effect on the Authority.

          IAS 19 Retirement Benefits -The purpose of this Standard is to ensure that the operating costs of providing retirement benefits to employees are recognised in the accounting period in which they are earned by the employees. Figures provided by the actuary differ from that estimated and the movements need to be incorporated into the accounts.

          Asset Rents - This charge can vary each year due to an increase / decrease in the valuation of assets. The movements need to be incorporated into the accounts.

          Recharges - These relate to movements in charges between internal Council services.

          Carbon Reduction Commitment Scheme - The scheme requires the Authority to report on carbon dioxide emissions associated with the use of electricity and gas within its buildings. Payment is then made to the Environment Agency to cover the charge in respect of those emissions. 

  1. The following table compares the amended budget and the actual expenditure for the Authority:

Service

Year - 2015/16

Amended Revenue Budget

Total Provisional Actual

Variance +Favourable () Adverse

 

       £'000

          £'000

             £'000

       

Environment and Housing

     

Visible Services

17,505

17,503

+2

Transport Services

5,191

5,190

+1

Building Services

25

17

+8

Regeneration

2,610

2,617

(7)

Development Management

1,116

1,082

+34

TOTAL

26,447

26,409

+38

       
  1. The main reasons for the variances are set out in the following paragraphs.
  2. Visible Services - Favourable variance of £2k

The favourable variance of £206k as detailed below has been offset by a transfer to the Visible Services reserve of £204k. Of this sum £50k will be set aside for Winter Maintenance, £60k for recycling, £50k for the widening of a footway to Boverton Road, £9k for litter awareness and education schemes and £35k towards the purchase of a vehicle wash at the Alps depot for which £50k was also set aside in 2014/15.

  1. Waste Management & Cleansing - Favourable variance of £293k

There is an adverse variance on employee costs of £84k mainly due to a delay in the roll out of savings relating to the double shifting of green waste. An adverse variance was created due to not actioning a budgeted transfer from reserves for £35k which was not required as a result of favourable variances in the service.

 

There is a favourable variance of £24k on the Premises budget due to an underspend on repairs and a large refund on a water bill. Transport costs also had a favourable variance of £27k, however, there are further savings to be made in 2016/17. There was also a net favourable variance of £198k on Supplies & Services and this was mainly due to the reduction in disposal costs due to the early commencement of Prosiect Gwyrdd. Income budgets had a favourable variance of £163k, mainly due to the increase in tasks undertaken for other departments and an increase in income received for commercial collections.

  1. Highways & Engineers - Adverse variance of £92k

There was a favourable variance of £90k on the staffing budget due to the level of vacant posts. There was also a favourable variance on income into the department of £1.121m due to additional works being undertaken however this created additional spend on supplies and services and technical salary costs for which there was an adverse variance of £653k and £61k respectively. This reduced the requirement to draw down planned funding from reserves for potholes by £300k, winter maintenance by £139k and for part night lighting by £150k.

 

A contribution to capital costs was required for resurfacing works of £518k, Street Light LED replacement of £100k and Traffic Management of £100k, however, this was matched by an equal contribution from reserves of £718k.

  1. Civil Protection Unit - Favourable variance of £7k

This was due to additional income being received by the section.

  1. Support - Adverse variance of £2k

There was a small overspend on supplies and services.

  1. Transportation - Favourable variance of £1k

The favourable variance of £136k as detailed below has been offset by a transfer to the Visible Services reserve of £125k and £10k to the Building Services Reserve. Of these amounts £10k is for training for frontline staff within Visible Services, £35k has been set aside for works required to offices to facilitate staff moves, £80k is for the purchase of a new Greenlinks vehicle which will replace another vehicle that has come to the end of its useful life and £10k is for the renewal of tools and machinery within Building Services.

 

There is a favourable variance of £71k in relation to transport expenditure, which is mainly due to a saving on Supported and Discretionary School transport. Savings on employee costs resulted in a favourable variance of £51k. Income increased by £7k and there was a net reduction of £7k over other areas of expenditure.

  1. Building Services - Favourable variance of £8k

The Building Services trading unit had a turnover of £5.8m and made a surplus of £5k. The Building Cleaning & Security trading unit had a turnover of £3.3m and made a surplus of £136k. In addition the Courier Service made a surplus of £19k. The Building Services Twin Hat function had an underspend of £27k which was made up of favourable variances of £14k on employee costs mainly due to vacant posts within Building Maintenance, £27k on transport budgets due to the ongoing project to reduce transport costs, £25k on general supplies and services and £17k on internal support charges. This was offset by an adverse variance on income of £56k due to a reduced recharge to the Building Maintenance trading account as a consequence of the vacant posts highlighted above.

 

All of the above were offset by a reduction in the recharge for maintenance repairs/Welsh Housing Quality Standards works from Building Services to the Housing Revenue Account of £49k and a transfer to the Building Services reserve of £130k. This transfer has set aside £60k for a Business Development Officer, £40k to employ apprentices for Building Maintenance, £10k for renewal of machinery and £20k for staff training.

  1. Regeneration - Adverse variance of £7k

There was a £53k adverse variance on premises budgets due to works relating to window replacement at the Heritage Coast Centre, thatching at the Medieval Village and boiler and extractor fans and alterations to reception at Cosmeston.

There were favourable variances on customer receipt income of £57k at Cosmeston and the Medieval Village including filming and special event fees, at Porthkerry Park from hire fees for the woodland lodge and educational visit charges and at the Heritage Coast from sales and visit charges. As the Employment Training Service (ETS) is nearing the end of its contract the cost of running the service was £21k less than budgeted as the number of clients has substantially reduced. There was also a favourable variance on the ETS income which was £34k higher than had been anticipated because income is still being received for placements made earlier in the Programme. Workshop income was £11k higher than anticipated as occupancy levels have increased. In addition, the Major Project Managers exceeded their income target by £42k as a higher than anticipated level of their work was rechargeable. Similarly, the Landscape Section recovered £16k more than had been budgeted as their rechargeable workload was higher. Vacant posts within the division meant that some operational budgets were not able to be spent, resulting in a favourable variance of £17k. There were various other small variances amounting to a net £32k favourable variance within this service.

 

This position was reduced by transfers to reserves of £62k for Community Development projects, £43k to cover additional building costs arising from Cardiff & Vale vacating the Heritage Skills Centre and the establishment of a 'Business Services Centre 2', £15k towards a review of the Rights of Way Improvement Plan as required by Statute and £39k as a reserve for potential future under-recovery of the Major Projects Officers. In addition, the sum of £25k was transferred to the Employment Training Reserve, awaiting potential costs at the end of contract.

 

During the year there were planned drawdown from reserves of £26k for work on converting Nightingale Cottage at Porthkerry Park into office space and £8k for refurbishment work to the former Tourist Information Centre building at Barry Island, including the installation of external electrical connector points at Barry Island to facilitate future events.

  1. Development Management - Favourable variance of £34k

There were adverse variances of £283k as planned transfers from reserves at year-end were not required as income within the division was higher than budgeted. This figure includes reserve funding for the Local Development Plan (LDP), funding for staff to progress the transition to the Community Infrastructure Levy and funding for the on-going scanning of historical planning files.

 

There were favourable variances of £133k on Building Control fee income and £67k on Planning fee income and in-year expenditure on the LDP were £102k lower than had been anticipated, due to profiling issues. These were to be funded from the LDP reserve. It is therefore anticipated that this will now be spent and drawn down from the reserve, during 2016/17. There were various other small variances amounting to a net £15k favourable variance within this service.

 

At year-end there has been a transfer to the Building Control reserve of £77k, representing the surplus for the year on the Building Control Trading Account.

 

Capital

  1. Council on the 4th March 2015 (minute no. 940) agreed the Authority's capital budget for 2015/16.
  2. Attached at Appendix 2 is a breakdown of the 2015/16 capital programme by scheme. The overall outturn for this Committee is a variance of £4.5m. The major variances are outlined below.
  3. Visible Services Highway Improvements Resurfacing - Slippage of £222k

This funding is committed to carry out the Council's 3 year resurfacing plan in order to ensure that the condition of the Council's highway asset can be adequately maintained. Due to contract programming with external contractors and weather issues, the full budget was unable to be spent last financial year and it has therefore been requested that these monies are carried forward into 2016/17 to continue the essential highway improvement works identified.

  1. Culverhouse Cross to St. Athan - Slippage of £355k

This scheme was carried out in several phases. There were traffic management issues that had to be resolved to ensure the smooth running of traffic across the route during each phase. It has therefore been requested that £355k is carried forward into 2016/17 to allow for the completion of the works.

  1. Ewenny Road Bridge - Slippage of £952k

Slippage has been requested for the full amount of £952k as this funding is committed as a payment to Network Rail for works at Ewenny Bridge. The final account has not yet been agreed with Network Rail as there are a few minor construction issues outstanding.

  1. Coldbrook Flood Risk Management - Slippage of £930k

Work has commenced on site however there have been delays due to ongoing site issues and unforeseen events. Work is being undertaken with the contractor to reprofile the programme.

  1. Vehicles Renewal Fund - Slippage of £208k

As part of the Reshaping Services Programme, one of the identified savings will come from a review of the Council's fleet. A review of waste collections is being carried out by WRAP on behalf of Welsh Government and procurement of vehicles has been delayed pending the outcome of this review. It has been requested that the variance is carried forward in order to progress the procurement of the appropriate vehicles as required.

  1. Penarth Heights Highways and Sustainable Transport Projects - Slippage of £167k

The service areas are currently undertaking feasibility studies and exploring options for implementation around the new development at Penarth Heights, including a scheme at the Plassey Street / Windsor Road roundabout. It has therefore been requested that £167k is carried forward to 2016/17.

  1. Causeway Improvement Scheme - Slippage of £238k

This scheme was made up of a 4 stage programme, each requiring completion before the next stage could commence. This resulted in a slight delay, however, the works are now complete. A carry forward of £238k has been requested to fund the completion of the works.

 

Reserves

  1. A reserve is an appropriation from a revenue account and does not constitute a cost of service until the expenditure is eventually incurred. A reserve does not cover a present obligation or liability and is a voluntary means of setting aside monies for future requirements either capital or revenue.
  2. A provision is a charge to revenue and is included as part of the cost of the relevant service at the point the provision is created. A provision covers a present obligation or liability that has occurred to a past event and is compulsory under accounting regulations.
  3. The Local Government Borrowing Initiative provided funding for highways resurfacing of £2.23m per annum for a 3 year period from 2012/13 to 2014/15. In addition, the Council has allocated funding for the Big Fill initiative until 31st March 2017. There is still further works to be carried out across the Vale and therefore £760k has been transferred into the Visible Services reserve. It is proposed that the sum of £260k is included in the Capital Programme, to be spent on highways resurfacing during 2016/17. The remaining £500k will be used for the Big Fill initiative in 2017/18, which will be part of the revenue budget.
  4. Waste Collection is a service area that has been allocated several savings targets over the past and future years. It is considered that the possibility of introducing a Waste Transfer Station within the Vale could lead to long term savings. In view of this, £1.5m has been transferred into the Visible Service reserve to allow the scheme to be implemented. It is proposed that a further report is brought to Cabinet by the Director of Environment and Housing to outline specific plans for this project.
  5. Attached at Appendix 3 is a schedule showing this Committee's reserves as at 31st  March 2016.

Resource Implications (Financial and Employment)

Revenue (Including Savings Targets)

  1. As part of the Final Revenue Budget Proposals for 2015/16, savings targets were set for this Committee. Progress on the achievement of these savings has been monitored and reported to Committee during the year. Appendix 4 to this report confirms the final status of these savings at the end of 2015/16.
  2. For Visible Services, the early implementation of the Prosiect Gwyrdd contract provided considerable savings for the waste disposal budget during the year, which was offset by a slight delay in the implementation of some of the other savings within Waste Management. As detailed in Appendix 4, some of the Visible Services savings not achieved in 2015/16 are being reviewed to determine whether they can be achieved in the long term as planned or whether alternative ways of saving will need to be identified. For completeness, the last section of the appendix shows Visible Services savings that were identified in previous years and have yet to be fully achieved. During the 2016/17 budget setting process, additional funding was provided in the base budget for Waste Recycling and car parking. Cabinet on 6th June 2016 approved the use of £1.2m in 2016/17 for investment in LED residential street lighting which will lead to the reduction in energy costs.

Capital

  1. As a result of the capital underspend in 2015/16, Managing Director's Emergency Powers have been used to approve slippage into 2016/17. This will fund the completion of schemes as shown in Appendix 5.

Sustainability and Climate Change Implications

  1. There are no sustainability and climate change implications resulting from this report.

Legal Implications (to Include Human Rights Implications)

  1. The provisional out turn figures for the Council has been used in the preparation of the Statements of Accounts, which under the Accounts and Audit Regulations, must be certified by the Section 151 Officer by the 30th June 2016.

Crime and Disorder Implications

  1. There are no crime and disorder implications resulting from this report.

Equal Opportunities Implications (to include Welsh Language issues)

  1. There are no equality implications resulting from this report.

Corporate/Service Objectives

  1. To provide sound financial and reliable advice in relation to all issues affecting the Council including the production of the statutory accounts.

Policy Framework and Budget

  1. This is a matter for Executive decision.

Consultation (including Ward Member Consultation)

  1. The appropriate Chief Officers have been consulted on this report. This report does not require Ward Member consultation.

Relevant Scrutiny Committee

  1. Corporate Resources.

Background Papers

None

Contact Officer

Carolyn Michael - Operational Manager - Accountancy

Officers Consulted

Director of Environment and Housing

Responsible Officer:

Miles Punter

 

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