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Agenda Item No 4

The Vale of Glamorgan Council

    

Environment and Regeneration Scrutiny Committee: 13th July 2017

 

Report of the Director of Environment and Housing

 

Closure of Accounts 2016/17

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 2016/17 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 make Members aware of the provisional financial position and actions that have been taken.

Background

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

Relevant Issues and Options

Revenue

  1. Council on the 2nd March 2016 (minute no.885) agreed the Authority's budget requirement for 2016/17.
  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.

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, including transfers to and from reserves, for this Committee. The final column shows the net transfers to reserves which have been included within the actual expenditure figures.

Service

Year - 2016/17

Original Revenue Budget

Amended Revenue Budget

Total Provisional Actual

Variance +Favourable () Adverse

Net Transfer to /(From) Reserve

 

       £000

       £000

       £000

       £000

 

Environment and Housing

         

Visible Services

15,724

16,069

16,160

(91)

 

Transportation

4,834

4,844

4,708

+136

 

Building Services

0

14

14

0

 

Regeneration

2,172

2,164

2,023

+141

 

Development Management

958

996

1,180

(184)

 

TOTAL

23,688

24,087

24,085

+2

+372

           
  1. The main reasons for the variances are set out in the following paragraphs.
  2. Visible Services and Transportation - Favourable variance of £45k

The favourable variance of £420k as detailed below has been offset by a transfer to the Visible Services reserve of £375k. Of this sum, £200k will be set aside for Waste Management, £15k for Tree Strategy, £50k for purchasing new parks machinery, play equipment and improvements to parks, £10k for bus infrastructure and £100k for highways infrastructure improvements.

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

There have been a number of adverse variances during the year totalling £109k. Employee costs had an adverse variance of £52k mainly due to the time taken to imbed the new waste collection rounds which started in August 2016 and on the Premises budget of £8k due to a small overspend on cesspit emptying costs. There was also an adverse variance of £49k on Supplies & Services and this was mainly due to the purchase of food waste bags to prepare for the delivery in April/May 17 and also a slight overspend on food waste disposal.

There have been a number of favourable variances during the year totalling £110k. Transport costs had a favourable variance of £34k, however, there are further savings to be made in 2017/18. Income budgets had a favourable variance of £76k, mainly due to the increase in tasks undertaken for other departments and an increase in income received for recharges made to the previous operator of the Household Waste Recycling Centre.

  1. Highways & Engineers - Favourable variance of £273k

There have been a number of adverse variances during the year totalling £250k. Due to the favourable variances within the service, there was a reduced requirement to draw down planned funding from reserves for potholes by £90k and winter maintenance by £160k thus creating an adverse variance against the transfer from reserves budget.

There have been a number of favourable variances during the year totalling £523k. £24k related to staffing budgets due to the level of vacant posts and £54k related to Transport costs however there are additional savings required from this area in 2017/18. There was also a favourable variance on income into the department of £360k mainly due to additional capital works being undertaken. Repairs budgets had a favourable variance of £85k mainly due to the reduction in spend on potholes.

There was a planned use of £976k from the Visible Services reserve to fund resurfacing works.

  1. Transportation - Favourable variance of £146k

There is a favourable variance on employee costs of £39k mainly due to vacant posts within School Crossing Patrols. There is a favourable variance of £73k in relation to the concessionary fares budget due to increased grant income received. The budget for supported buses also had a favourable variance of £23k, with expenditure on road safety being £11k under budget.

  1. Building Services - Breakeven

The Building Services trading unit had a turnover of £5.6m and made a surplus of £8k and the Building Cleaning & Security trading unit making a deficit of £17k. In addition the Courier Service made a surplus of £25k.

The Building Services Twin Hat function had an underspend of £49k which was made up of favourable variances of £16k on transport budgets due to the ongoing aim to reduce transport costs and £33k on general supplies and services.

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 £25k and a transfer to the Building Services reserve of £40k of which £10k will be used for CCTV improvements, £20k to provide ongoing training across building maintenance and £10k for new software

  1. Regeneration - Favourable variance of £141k

There was an adverse variance on the Cosmeston Country Park income budget as it was not possible to achieve the proposed £60k target for car parking fees.

There have been a number of favourable variances during the year totalling £288k. As a result of a focus on income generation opportunities, there were favourable variances on customer receipt income of £50k at Cosmeston and the Medieval Village, (including filming and special event fees)/ Porthkerry Park (including hire fees for the woodland lodge and educational visit charges) and at the Heritage Coast (sales/visit charges). There were favourable variances relating to staffing costs of £36k due in part to staff vacancies and Transportation costs of £21k. As the Employment Training Service (ETS) is nearing the end of its contract the cost of running the service was £4k less than budgeted as the service had been scaled down to reflect the substantial reduction in clients in the system. There was also a favourable variance on the ETS income which was £10k higher than had been anticipated as income is still being received for placements made earlier in the Programme, when numbers were higher. There was a favourable variance on workshop income at the Vale Enterprise Centre (VEC) of £25k as occupancy levels have increased, due in part to the refurbishment works currently ongoing which are making the units more attractive to prospective tenants. Service charge income at the BSC was £10k above target for the year as occupancy was high. In addition, the Major Project Managers exceeded their income target by £74k as a higher than anticipated level of their work was rechargeable and similarly, the Landscape Section recovered £16k more than had been budgeted as their rechargeable workload was higher during 2016/17. Costs of the new Economic Development/Community Capacity Project Team, established to assist community groups and new businesses, were £40k below budget due to delays in staff appointments. There were various other small favourable variances amounting to a net £2k within this service.

This position allowed transfers to the Regeneration and Planning reserve of £87k. £40k is to continue to fund the Community Development Project Team, £29k to cover thatch replacement and remedial works required at the Reeve Barn in Cosmeston's Medieval Village and £18k for essential property works at other Countryside buildings.

During the year there was a planned drawdown from the Regeneration and Planning reserve of £4k for final refurbishment works to Nightingale Cottage at Porthkerry Park and £4k for document scanning. £13k was drawndown from the Regeneration reserve as match funding for the Town Centre Partnership Grants 2016/17 and £12k for the Barry Regeneration Partnership. As in previous years the budget also included a planned drawdown from the Events reserve of £123k for Vale-wide events and £50k for Christmas events. The Regeneration and Planning Reserve was also increase by £27k in the year as the Council received monies from Cardiff and Vale College for Reparations costs relating to the IT Skills Centre.

  1. Development Management - Adverse variance of £184k

There have been a number of adverse variances during the year totalling £352k. Planning fee income has been low all year and had an adverse variance of £292k at year-end. It is considered that the lack of major planning applications submitted by developers has been due to uncertainty in the development industry, caused by the vote to leave the European Union as well as recent legislative changes to the planning system which have delayed submissions. A planned drawdown from reserves of £19k to cover Policy staffing costs on the Local Development Plan (LDP) was not made in order to maximise the sum available for the ongoing LDP process moving forward. There were various other small variances amounting to a net £41k adverse variance within this service.

There have been a number of favourable variances during the year totalling £168k. There was a favourable variance of £34k on Building Regulation fee income as applications have once again been high in 2016/17. Staff vacancies within the Division over the year resulted in a favourable variance of £74k and in order to mitigate the anticipated reduced income position, all non-urgent expenditure on supplies and services were held, resulting in a favourable variance of £60k.

There was a net transfer of £16k from the Building Control reserve for the year relating to the Trading Account. In addition, the £93k cost of the LDP provision in 2016/17 was drawn down from the LDP reserve.

Capital

  1. Council on the 2nd March 2016 (minute no.884) agreed the Authority's capital budget for 2016/17.
  2. Attached at Appendix 2 is a breakdown of the 2016/17 Capital Programme by scheme. The overall outturn for this Committee is a variance of £3.652m. The major variances are outlined below. Late grant approvals for Flood Risk Management of £45k, Coast Protection and Land Drainage of £26k and £9k for Active Travel were received from Welsh Government and have been included in the respective capital budgets shown in Appendix 2. The major variances are outlined below.
  3. Asset Renewal - Slippage of £374k

This budget is made up of several elements. The Highways Structures element has the largest underspend of £277k. Safety works proposed to be undertaken at the Leckwith viaduct and river bridge structure have not been progressed and further review/assessment is ongoing in 2017/18 to understand the extent of any necessary immediate works to ensure the continued safety and integrity of this structure, as well as ensuring any works implemented are appropriate and cost effective. The Council is also aware that there is the potential for the possible redevelopment of the site beneath the structure which would require the diversion of the Leckwith Road and construction of a new structure and have been liaising with developers to understand any future programme for development. It has therefore been requested that £277k is carried forward into 2017/18 for the Highways element of this scheme however the full £374k has been requested as slippage.

  1. Coldbrook Flood Risk Management - Slippage of £847k

This is a multi-million pound flood alleviation project aimed at protecting 200 residential properties and three schools in the eastern area of Barry from flooding, requiring a number of complex phases of construction. Works commenced in January 2016 with a 40 week programme for scheme delivery and due to a combination of a number of unforeseen circumstances, including ground conditions, uncharted services, diversion works and difficulties gaining access to key work areas, as well as the need to undertake additional hydraulic modelling to inform a re-design resulting from these unforeseen circumstances. Work has been continually ongoing in conjunction with the contractor to minimise the impact of the above events and to progress or re-profile the programme to complete the various phases of the works at the earliest opportunity.  Significant scheme elements are now nearing completion, including main storage area and works in the Cemetery Lane area with scheme completion now programmed for October 2017. It has therefore been requested that £847k is carried forward into 2017/18.

  1. Dimming of Street Lighting/Fitting of LED lanterns - Slippage of £544k

A rigorous tender assessment has been carried out for the LED luminaire supply contract with appointment of the successful supplier in April 2017. The Council now intends to carry out a limited trial of two variants of LED lanterns i.e. cool white or warm white light, to establish which is the most appropriate to install within the residential streets of the Vale. This trial is planned in the near future and the full implementation of residential LED should then commence later this summer with completion programmed for the end of the calendar year. It has therefore been requested that £544k is carried forward into 2017/18.

  1. Boverton Flooding - Slippage of £266k

Following a detailed procurement process during Autumn/Winter 2016, the works were successfully commenced on site with advanced ground investigations in January 2017 and main construction starting in February 2017. The planned construction period is 27 weeks and the works are therefore currently progressing and committed on site with a view to completion in late Summer/early Autumn, subject to no unforeseen conditions occurring on site. It has therefore been requested that £266k is carried forward into 2017/18.

  1. Cemetery Approach - Slippage of £214k

Agreement with Barry Town Council had to be concluded prior to the scheme being tendered however works on site have commenced and are due for completion in June 2017. It has therefore been requested that £214k is carried forward into 2017/18 to allow completion of the scheme.

  1. Barry Regeneration Partnership - Slippage of £259k

There has been a delay in the Forest Park Community Play Area scheme due to the need to redesign the play area resulting in a slippage requirement of £41k. The play area at Hunter Place has been delayed due to poor weather prior to year end and requires slippage of £44k. Main Street Area Improvements were delayed pending discussion with the land owner and £22k slippage is required. Western Shelter lighting was delayed due to the need to carry out preliminary works and therefore £37k slippage is required. These are the major elements of this scheme and in total slippage of £246k has been requested. £13k of the budget has been reclassified as revenue.

  1. Five Mile Lane - Slippage of £305k

The Archaeological works contract tendering process had to wait for the planning approval for the scheme which was granted in December 2016. This has resulted in the Archaeological works programme slipping and works will continue into 2017/18. Spending estimates had allowed for some possible spending in relation to land acquisition. The Compulsory Purchase Order and related Side Road Orders Public Inquiry was held in January 2017 but a decision is still awaited and so spend relating to land acquisition or land mitigation measures have been delayed. There has been an agreed re-profiling of spending with the Welsh Government. It has therefore been requested that £305k is carried forward into 2017/18.

  1. High Street/Broad Street Traffic Management - Slippage of £108k

Phase 1 work is complete and subject to snagging. The programme for Phase 2 construction work is expected to run up to the end of quarter 1 of 2017/18. It has therefore been requested that £108k is carried forward into 2017/18.

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. Cabinet on 20th February 2017 as part of the Final Revenue budget proposals for 2017/18 agreed to transfer £1m to the Visible Services reserve for Resurfacing and £500k to the Visible Service reserve for general purposes.
  4. Attached at Appendix 3 is a schedule showing reserves as at 31st March 2017 that relate to this Committee.
  5. The Council has currently committed funding for the Big Fill initiative until 31st March 2018. There is still further works to be carried out across the Vale and therefore £500k has been transferred into the Visible Services reserve to allow the initiative to continue into 2018/19 and will be part of the revenue budget.
  6. It was also proposed that £100k would be allocated to the Visible Service Fund to carry out works to the shelters at Barry Island costing £75k and to Penarth Pier with a contribution of £25k.
  7. There have been transfers into reserves for reimbursements from services for works where the initial cost was funded from that specific reserve e.g. Vehicle Repairs and Renewals and the Energy Management Fund.

Resource Implications (Financial and Employment)

                Revenue (Including Savings Targets)

  1. As part of the Final Revenue Budget Proposals for 2016/17, 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 2016/17.
  2. Visible Services - While progress has been made towards delivering the savings, there has been a delay in commencing some of the schemes and therefore the full year target has not been achieved this financial year. £1.2m has been included in the Capital Programme for the installation of LED lighting. The successful supplier was appointed in April 2017 however as detailed earlier in this report a small trial will take place prior to the full roll out of the scheme. Energy prices are due to increase therefore a further assessment of the level of savings to be achieved in 2017/18 will be required. Also as previously stated, waste collection rounds have been revised as detailed previously in this report. However savings from the reduction in vehicles will not be made until 2017/18. The £50k saving relating to Public Conveniences will not be achieved this year and options are currently being explored. Prosiect Gwyrdd made a higher saving than required and this has partly offset the shortfall on other savings. Where savings have not been achieved in year, services were able to cover the shortfall on a one off basis from other areas.
  3. Regeneration - The Vale Enterprise Centre workshops were difficult to let due to their poor condition. However, funding has been included in the Capital Programme to carry out improvement works, which have commenced and as a result there has been increased interest in the units.

Capital

  

  1. As a result of the capital underspend in 2016/17, Managing Director's Emergency Powers, have been used to approve slippage into 2017/18. 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 2017.

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, with the exception of the proposed increases to the Capital Programme, which will require Council approval. Slippage has been approved via the use of Managing Director's emergency powers.

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 Performance and Resources.

Background Papers

None

Contact Officer

Carys Lord

Officers Consulted

Corporate Management Team

Responsible Officer:

Miles Punter

Director of Environment and Housing