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Agenda Item No 5

The Vale of Glamorgan Council

    

Homes and Safe Communities Scrutiny Committee: 25th 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

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 Committee :

Service

Year - 2015/16

Amended Revenue Budget

Total Provisional Actual

Variance +Favourable () Adverse

 

       £'000

          £'000

             £'000

YOS

688

686

+2

Regulatory Services

2,103

2,107

(4)

Council Fund Housing

1,174

1,174

0

Private Housing

11,324

11,342

(18)

GRAND TOTAL

15,289

15,309

(20)

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

There is a favourable variance of £37k on staffing due to maternity and sickness. This has allowed a transfer to reserve of £35k to protect against future grant reductions.

  1. Regulatory Services - Adverse variance of £4k

On 1st May 2016, the Regulatory Service entered into a collaboration with Bridgend and Cardiff Councils and the Vale now acts as host for the shared service. There was a drawdown of £113k from the Regulatory Improvements reserve to cover the Vale Council's element of the implementation costs incurred which related to IT, project management and redundancy costs. There was a favourable variance of £66k against the Vale Council's contribution to the Shared Service, mainly as a result of staff underspend in the service. This allowed a £70k transfer to the Visible Services reserve. These figures relate to the Vale of Glamorgan Council's element of the shared service only and not the joint service as a whole which is reported to the Joint Committee.

  1. Council Fund Housing - Breakeven

There were favourable variances of £57k on staffing due to vacancies and £10k on supplies and services in the Housing Solutions Team. In addition there was a £228k favourable variance on temporary accommodation for the homeless and an £18k favourable variance relating to the Community Safety budget.

There has been a transfer to reserves of £313k to ease future pressures on the service.

  1. Private Sector Housing - Adverse variance of £27k

There was an adverse variance on Disabled Facility Grant (DFG) supplies and services as a revenue contribution to capital expenditure of £32k was required to fund additional capital monies spent on DFGs during the year. There was also an adverse variance in the Renewal Area's supplies budget whereby costs on survey fees and consultants exceeded the budget by some £23k. Though fee income did improve as the year progressed in the Renewal Area, it remained £18k short of the target at year-end as a result of capital works slipping into 2016/17. There were other small variances amounting to a net £31k adverse variance within this service.

There was a favourable variance of £77k on agency fee charges on DFGs as the number of grant applications processed has remained high during 2015/16.

  1. Rent Allowances/Council Tax Benefits - Favourable variance of £9k

There were favourable variances of £220k on Discretionary Housing payments. Discretionary Housing payments are used to provide support to claimants adversely affected by some of the key welfare reforms. The saving is due to a lower take-up from claimants than anticipated, however, there remains uncertainty over future demand. There were also favourable variances of £252k from recovered overpayments and associated subsidy and £637k on the Council Tax Reduction Scheme due to lower than anticipated take up.

There has been a transfer of £1.1m to the Visible Services Reserve.

Housing Revenue Account

  1. Council on the 4th March 2015 (minute no.939) agreed the Authority's 2015/16 Housing Revenue Account (HRA) budget.
  2. The 2015/16 HRA resulted in a deficit of £408k compared to the amended budget deficit of £1.265m. A breakdown is shown in Appendix 2.  The working balance opened at £1.876m and closed at £1.468m.
  3. The net favourable HRA revenue budget variance of £857k is identified over the following areas.
  4. Supervision & Management General - Favourable Variance £795k

There were favourable variances in Asset Management and Development of £116k on staffing and £181k on Supplies and Services and staff vacancies in the rest of the service accounted for £122k. A significant number of vacancies have now been filled through on-going recruitment. There were further favourable variances in Supplies and Services such as promotions, software/hardware and other non-staffing costs relating to Housing Management of £229k, Support and Central Management Costs of £70k, Incentive to Move Scheme £52k and Tenant Participation of £25k.

  1. Supervision and Management Special Services - Favourable Variance £250k

This budget is split into three areas, Ty Iolo Homeless Hostel, Vale temporary accommodation and Vale Special Services. The term 'Special Services' relates to communal costs for all housing areas throughout the Vale of Glamorgan, including sheltered accommodation, such as grass cutting, rubbish removal, communal lighting, security, warden salaries and environmental improvements. The favourable variance of £250k is a combination of a favourable variance of £26k at Ty Iolo mainly due to staffing; £19k favourable variance on Temporary Accommodation mainly due to low spend on furniture and fittings this financial year. There were favourable variances of £205k on Special Services which is made up of favourable variances of £70k on ad hoc cleansing and ground maintenance works and a saving on Sheltered Schemes of £135k.

  1. Housing Repairs - Favourable Variance £462k

The favourable variance on this budget heading is largely due to favourable variances of £212k on repair call-outs and £142k on Planned Maintenance mainly as a consequence of the housing stock being brought up to Welsh Housing Quality Standard.  In addition, expenditure on gas servicing, asbestos, and fencing have all reduced, compared to previous years.

  1. Capital Financing Costs - Favourable Variance £573k

Interest charges were lower than originally estimated due to a lower amount of borrowing required during the year to fund the Housing Investment Programme. In addition, the Council's loan pool rate was lower.

  1. Rents, Rates, Taxes and Other Charges - Favourable Variance £159k

This is largely due to a favourable variance of £112k for survey costs associated with feasibility work on new developments.  In addition, there have been underspends on Council Tax payable on long-term voids and audit fees.

  1. Increase in the Provision for Bad and Doubtful Debts - Adverse Variance £53k

It was anticipated that the bad debt provision would need to be increased by only £23k, however based on the current level of rent arrears, £76k is thought to be more prudent.  The impact of further welfare reforms has put added pressure on rent collection rates and additional staff have been appointed to help mitigate this.

  1. Capital Expenditure from Revenue Account - Adverse Variance £1.403m

Savings within the HRA as outlined above have made an increased contribution from revenue to capital expenditure possible. This has led to a decrease in the prudential borrowing requirement for the 2015/16 Housing Investment Programme.

  1. Rent Collected on Dwellings - Favourable variance £56k

This favourable variance is largely due to a lower level of voids and write-offs undertaken during the year.

  1. Non Dwelling Rents - Breakeven

Rents collected on garages were as budgeted.

  1. Interest Received - Favourable Variance £5k

The level of interest received on balances was slightly higher than expected due to the average HRA working balance being higher.

  1. Charges for Services and Facilities - Favourable Variance £13k

The level of income received for services and facilities was higher than anticipated by 2%.

Capital

  1. Council on the 4th March 2015 (minute no.940) agreed the Authority's capital budget for 2015/16.
  2. Attached at Appendix 3 is a breakdown of the 2015/16 capital programme by scheme. The overall outturn for this Committee is a variance of £4.4m. The major variances are outlined below.
  3. Housing Improvement Programme - Slippage of £3.814m

The main area of underspend relates to external work for roofing and wall insulation. This was delayed mainly due to weather conditions. Internal works for the WHQS programme are nearing completion and therefore while the majority of work has been completed, final accounts need to be agreed with the contractors. It has therefore been requested that £3.814m is carried forward into 2016/17 to allow for the completion of the schemes.

  1. Castleland Renewal Area - Slippage of £483k

The 2015/16 budget for the Castleland Renewal Area was intended to complete 4 phases of a residential facelifting programme on the upper section of Holton Road as well as commencing a scheme aimed at renewing the shop fronts to the commercial premises. Phases 1-3 were completed, however, Phase 4 turned out to be far more complex than normal due to the structural instability of the block and required a revision to the Housing Renewal Policy to allow for solid wall stabilisation works to be covered under Facelift Assistance. The time implications involved in obtaining structural engineers reports, revising the policy, applying for Building Regulation and Planning Permission as well as discussions with owners delayed the commencement of the scheme. In addition there was a limited response to the initial offer of 85% Commercial Improvement Grants for new shop fronts and in order to maximise take up, the Housing Renewal Policy was revised for a second time to increase the grant offer to 95%. A second consultation with owners was required to confirm their consent to the revised contribution before the necessary Building Regulation and Planning Consent could be sought. In addition the new policy of obtaining owners contributions prior to commencement of work proved difficult and affected the programme of work. The carry forward of £483k has been requested to continue works in 2016/17.

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. Attached at Appendix 4 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 5 to this report confirms the final status of these savings at the end of 2015/16.

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 6.
  2. Major Repairs Allowance - The Major Repairs Allowance (MRA) is a grant given to the Authority by the Welsh Government and can be used for capital expenditure on Housing Revenue Account (HRA) assets.  The Authority's MRA for 2015/16 was £2.769m. Works totalling £16.063m were spent on major improvements to the Council's housing stock, £2.769m of which was funded from the MRA, £906k from Housing capital receipts, £2.069m from WG grant and £6.7m from Housing revenue and reserves, as well as £3.619m of unsupported borrowing. 
  3. During 2015/16, the Council also borrowed £63.156m to fund the buy-out from the Housing Revenue Account Subsidy system.

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.

Background Papers

None

Contact Officer

Carolyn Michael (Operational Manager - Accountancy)

Officers Consulted

Director of Environment and Housing

Responsible Officer:

Miles Punter, Director of Environment and Housing

 

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