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Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Homes and Safe Communities Scrutiny Committee: 12th 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.

  1. The following table compares the amended budget and the actual expenditure, including transfers to and from reserves, for the Authority. The final column shows the net transfers to reserves for each directorate which has 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

 

Youth Offending Service

696

707

704

+3

 

Regulatory Services

2,056

2,221

2,221

0

 

Council Fund Housing

744

1,011

1,011

0

 

Private Housing

11,262

11,033

10,979

+54

 

TOTAL

14,758

14,972

14,915

+57

+1,080

  1. The main reasons for the variances are set out in the following paragraphs.
  2. Youth Offending Service - Favourable variance of £3k

There is a favourable variance of £67k on staffing due to vacancies and sickness. This has allowed a transfer to reserve of £64k which will be used to fund CCTV equipment and an upgrade to the heating system at Salisbury Road and to offset reductions in future grant funding.

  1. Regulatory Services - Breakeven

The Regulatory Service has entered into a collaboration with Bridgend and Cardiff Councils. The Vale of Glamorgan Council has acted as host for a Shared Regulatory Service since May 1st 2015. Following a drawdown of £69k from the Visible Services Reserve to cover the Vale of Glamorgan Council's contribution towards implementation costs incurred by the Shared Service during 2016/17 (covering costs of IT), there was a favourable variance of £140k on the available Regulatory Services base budget held by the Vale of Glamorgan Council. This underspend has been transferred into the Regulatory Improvements reserve and will be used towards future unexpected costs not borne by the Shared Service. These figures relate to the Vale of Glamorgan Council's element of the Shared Service only and not the service as a whole which is reported separately to the Joint Committee.

  1. Council Fund Housing - Breakeven

There was an adverse variance of £51k on temporary accommodation for the Homeless.

 

There was a favourable variance of £43k of which £22k related to the Homelessness team as the Council was able to claim additional Transitional grant funding from Welsh Government and £21k related to the Community Safety team.

There was a net transfer from reserves of £8k. There was a planned transfer from the Homelessness and Housing reserve of £29k. The Community Safety budget transferred £21k into the reserve which will be used in future to purchase Target Hardening kit.

 

There was also a planned transfer from the Rural Housing Needs reserve of £14k to part fund the Rural Enabler post which is also partially funded by Welsh Government grant and contributions from Housing Associations.

  1. Private Sector Housing - Favourable variance of £47k

There is a £13k adverse variance as the Renewal Area's supplies budget, ie.costs of survey fees, consultants and legal fees, exceeded the budget.

 

There is a favourable variance of £60k. There was a favourable variance of £46k on Disabled Facilities Grant agency fees as the number of grant applications processed has remained high during 2016/17. Though the Renewal Area Team's fee income had been slow earlier in the year, the position improved by year-end, reflecting the higher volumes of capital works carried out towards the end of the year and was £14k ahead of the target at year-end.

 

There were planned drawdowns from reserves of £75k, £46k for the costs of an Occupational Therapist from the Disabled Facilities Reserve and £29k from the Temporary Empty Homes Officer Reserve.

  1. Rent Allowances/Council Tax Benefits - Favourable variance of £7k

There is a favourable variance of £907k. £193k related to Discretionary Housing payments, which 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 £167k from recovered overpayments and associated subsidy and £547k on the Council Tax Reduction Scheme due to lower than anticipated take up.

 

This enabled transfers to reserves of £900k with £500k allocated to the Council Buildings Fund and £400k to the Visible Services Reserve for Big Fill.

Housing Revenue Account

  1. Council on 2nd March 2016 (minute no.883) agreed the Authority's 2016/17 Housing Revenue Account (HRA) budget.
  2. The 2016/17 HRA budget resulted in a deficit of £510k compared to the amended budget deficit of £768k. A breakdown is shown in Appendix 2.  The HRA reserve opened at £1.468m and closed at £958k.
  3. The net favourable HRA revenue budget variance of £258k is identified over the following areas.
  4. Supervision & Management General - Favourable Variance £441k

There were favourable variances in Asset Management and Development of £98k on staffing, £15k on Supplies and Services and £6k on Transport. Favourable staffing variances in the rest of the service were £142k. There were further favourable variances in Supplies and Services such as promotions, software/hardware and other non-staffing costs relating to Housing Management of £84k, Support and Central Management Costs of £39k, Incentive to Move Scheme £30k and Tenant Participation of £27k.

  1. Supervision and Management Special Services - Favourable Variance £239k

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 is the result of a favourable variance of £25k at Ty Iolo mainly due to staffing and an adverse variance £3k on Temporary Accommodation. There was a favourable variance of £217k on Special Services, which is made up of £84k relating to Premises and a saving on Sheltered Schemes of £133k.

  1. Housing Repairs - Favourable Variance £78k

There were favourable variances of £308k on responsive repair call-outs and £47k on planned maintenance, mainly as a consequence of the housing stock being brought up to Welsh Housing Quality Standard.  Expenditure on gas servicing, asbestos, fencing and other cyclical charges have all reduced compared to previous years, resulting in a favourable variance of £144k. These favourable variances were offset by an adverse variance of £421k on void costs.

  1. Capital Financing Costs - Favourable Variance £213k

Interest charges were less than originally estimated due to a lower borrowing requirement during the year as a result of a larger revenue contribution to capital and in addition, the council's loan pool rate was lower.

  1. Rents, Rates, Taxes and Other Charges - Favourable Variance £15k

This is due to an underspend on Council Tax payable on long-term voids.

  1. Increase in the Provision for Bad and Doubtful Debts - Favourable Variance £5k

It was anticipated that the bad debt provision would need to be increased by £75k. The outturn was mainly in line with this at £70k. However, the impact of further welfare reforms will put added pressure on rent collection rates in the future.

  1. Capital Expenditure from Revenue Account - Adverse Variance £798k

Savings within the HRA as outlined above, have made it possible to increase the contribution made from revenue to capital expenditure. This has led to a decrease in the prudential borrowing requirement for the 2016/17 Housing Investment Programme.

  1. Rent Collected on Dwellings - Favourable variance £41k

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 - Breakeven

Interest received was as budgeted.

  1. Charges for Services and Facilities - Favourable Variance £24k

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

Capital

  1. Council on the 2nd March 2016 (minute no.884) agreed the Authority's capital budget for 2016/17.
  2. Attached at Appendix 3 is a breakdown of the 2016/17 Capital Programme by scheme. The overall outturn for this Committee is a variance of £2.9m. The major variances are outlined below.
  3. WHQS External Works - Expenditure brought forward of £488k

There was £737k of expenditure on the walls, roof and windows elements of this scheme which were undertaken ahead of plan. There were however contractor delays in undertaking external work to the Hawksley and Airey properties and it is anticipated this work will be completed this financial year. It has therefore been requested that £249k be carried forward into 2017/18 to enable completion.

  1. Jenner Road - Slippage £215k

The roofing element of this scheme is complete while there is outstanding work on the walls element. There have been delays in the scheme due to difficulties in gaining access to properties and weather issues earlier in the year. It has therefore been requested that £215k is carried forward into 2017/18 to allow for completion of these schemes.

  1. St Lukes - Favourable variance £204k

This scheme is complete with payment of the final account and retention outstanding. Slippage of £81k is requested due to a revised specification which resulted in improved rates for the contract.

  1. Williams Crescent - Favourable variance of £777k

The roofing and walls elements of this scheme are complete with the settlement of the final account outstanding. The communal element of the works will be undertaken in 2017/18 and therefore slippage of £277k has been requested.

  1. Emergency Works - Favourable variance of £409k

There were various emergency works carried out in 2016/17 for which final accounts have yet to be settled. It has therefore been requested that £51k is carried forward to 2017/18. A new budget has been included in the 2017/18 Capital Programme.

  1. Aids and Adaptations - Favourable variance £210k

Welsh Government Enable grant funding of £44k was received in 2016/17 thus reducing the expenditure against this budget. There is a new budget already included in the Capital Programme for 2017/18 therefore no slippage is required.

  1. Regeneration - Slippage £196k

The demolition works at Brecon Court are nearing completion and it has been requested that £196k is carried over to 2017/18.

  1. Common Parts - Slippage of £234k

There had been a delay in undertaking these works as the start of works were reliant upon external works being completed. Work has commenced and will be ongoing and therefore it has been requested that £234k is carried forward into 2017/18.

  1. Environmental Works - £245k slippage

There are ongoing environmental works, including works to garages, highways and the Buttrills Scheme. It has therefore been requested that £245k is carried forward to 2017/18.

  1. New Build - Variance of £280k

Work has commenced on site at Francis Road, Barry to build 3 new bungalows and they are due for completion in August 2017. A budget for this scheme has already been included in 2017/18 Capital Programme therefore no slippage is required.

  1. ICF Longmeadow Court - Slippage of £141k

This scheme is funded by ICF grant. Works started on site in February 2017 and are nearing completion. It has been requested that £141k is carried forward.

  1. Castleland Renewal Area - Slippage of £171k

The slippage is mainly required due to the delay in works to Gladstone Park of £66k where redesign took place in order to maximum works that could be undetaken from available resources and £60k at Coigne Terrace as no tenders were initially received when originally tender and therefore the scheme had to be retendered.

  1. Penarth Renewal Area - Slippage of £161k

Works started in Autumn 2016 to complete remedial works.  Due to difficulties with neighbours agreeing access for scaffold to be erected in their gardens, the work was delayed while this issue was resolved.  Work began again in March 2017 and is now progressing. The carry forward of £161k has been requested to continue works in 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. Attached at Appendix 4 is a schedule showing the Committee's reserves as at 31st  March 2017.

Resource Implications (Financial and Employment)

         Revenue (Including Savings Targets)

  1. As part of the Final Revenue Budget Proposals for 2016/17, a savings target was set for the 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 2016/17. The services have been able to find all its savings in year.

          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 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 2016/17 was £2.77m. Works totalling £15.533m were spent on major improvements to the Council's housing stock, £2.77m of which was funded from the MRA, £268k from Housing capital receipts, £78k from WG grant and £7.017m from Housing revenue and reserves, as well as £5.4m of unsupported borrowing. 

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 outturn 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

 

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