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Agenda Item No 7

The Vale of Glamorgan Council

    

Learning and Culture Scrutiny Committee: 18th July 2016

 

Report of the Director of Learning and Skills

 

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 Committee :

Service

Year - 2015/16

Amended Revenue Budget

Total Provisional Actual

Variance +Favourable () Adverse

 

       £'000

          £'000

             £'000

Learning and Skills

     

Education and Schools

94,692

94,692

0

Libraries

2,348

2,348

0

Adult Community Learning

270

270

0

Youth Services

1,038

1,038

0

Catering

1,854

1,854

0

Art Development

151

151

0

       

TOTAL

100,353

100,353

0

       
  1. The main reasons for the variances are set out in the following paragraphs.
  2. Education and Schools - Breakeven

          Details by service area are shown below.

  1. School Improvement and Inclusion - Adverse variance of £338k

          There was an adverse variance of £106k due to the costs of educational placements in independent schools and

          other authorities. There has been an increase in the number of pupils with significant learning needs which are

          unable to be met at Ysgol Y Deri. There has been a reduction in the amount of recoupment income the Authority

          receives from other local authorities which has resulted in an adverse variance of £415k. The recoupment income

          from other authorities has continued to decrease, as fewer placements in Ysgol Y Deri are available to be

          commissioned by other authorities due to increased demand for Vale of Glamorgan pupils. £4k has been transferred

          into the Additional Needs Fund.

 

          There is a favourable variance of £46k in the School Improvement section due to income generation of £14k and

          underspends on supplies and services of £32k. The Social Services and Education joint Looked After Children

          placement budget has underspent by £341k. A transfer of £34k (10%) has been made to Education in accordance

          with the original agreement on variance apportionment. Part year vacancies throughout the service have resulted in

          a favourable staffing variance of £63k. The Fairfield Resource Unit was closed when the final pupil left in July 2015,

          with a resulting saving of £44k being achieved on staffing costs.

  1. Strategy and Resources - Favourable variance of £253k

          There was an adverse variance of £352k relating to the Schools Long Terms Supply and Maternity Scheme as

          premiums charged to schools have not been sufficient to cover the cost of the sickness in schools. This overspend

          has been partially met by a transfer from the Schools Long Term Supply reserve of £288k. The scheme was

          reviewed in January 2016 by a Budget Forum focus group and changes to premiums, membership and conditions

          were implemented in April 2016 in order to ensure that the scheme is self-funding in 2016/17. A £180k transfer

          from the Early Retirement and Voluntary Redundancy (ERVR) reserve was required in order to meet the 2015/16

          redundancy and retirement costs in schools. The ERVR policy has been revised and all schools must meet full

          pension strain costs from April 2016. The schools non delegated budget out-turned with a £233k adverse variance

          due to amalgamation costs at Penarth Learning Community and Llantwit Learning Community totalling £131k, a one

          off payment to Ysgol Y Deri of £78k regarding a previous year placement cost, legal fees of £15k and capital

          professional fees of £9k. This overspend has been partly offset by a £138k transfer from the Rationalisation Reserve.

          £44k was transferred into the Schools Investment Strategy Reserve in respect of capital charges paid by other

          authorities for placements at Ysgol Y Deri. Other smaller adverse variances in this service totalled £4k.

 

          There was a favourable variance of £69k due to rates charges as school buildings were revaluated in 2015/16

          resulting in a back-dated rates refund amounting to £271k. This one-off saving has been used to fund the increased

          rates bills at St Cyres of £161k and Nant Talwg of £21k and other smaller rates increases amounting to £20k. Part

          year vacancies within the service have amounted to a favourable variance on salary costs of £37k. There has been a

          reduction in the number of non-maintained nursery settings and as a result there was a favourable variance of £27k

          on payments to private nursery settings. The education transport budget, which is managed within the Development

          Services directorate, has underspent by £295k. A favourable variance has occurred on union backfilling costs within

          schools of £20k and there was also a favourable variance of £12k on budgeted pension strain payments. There was

          an underspend on debt repayment of £252k which was transferred to the Schools Investment Strategy fund.

  1. Service Strategy and Regulation - Favourable variance of £25k

          There is a favourable variance of £25k due to a hold on non-essential expenditure within the Business Support

          section and savings from staff who are not at the top of the incremental scale as budgeted.

  1. Childrens and Young Peoples Partnership - Favourable variance of £60k

          There is a favourable variance of £60k due to part-year vacancies within the team amounting to £29k, savings on

          childcare settings and training totalling £9k and £6k respectively and underspends on other supplies and services

           including events amounting to £16k.

  1. Libraries - Breakeven

          During the year, one off costs in relation to the implementation of the Libraries review were incurred relating to

          redundancy payments, pension strain payments and legal fees which amounted to £313k. These costs were partly

          offset by a transfer from the Libraries Reserve of £63k.

 

          There were a number of favourable variances amounting to £250k that have partially offset this cost. A favourable

          variance occurred on library staff of £160k due to posts held vacant pending the Libraries Review. There were also

          savings on premises costs of £21k, supplies and services of £44k and transport of £4k. In addition, the service has

          increased income generation resulting in a further favourable variance of £21k.

  1. Adult Community Learning - Breakeven

         There was an adverse variance of £68k due to a reduction in funding from Welsh Government and Cardiff and Vale

         College, which resulted in redundancy and notice payments to staff. This position was offset by a transfer from the

         Adult Community Learning reserve of £68k.

  1. Youth Service - Breakeven

          There were favourable variances on staffing of £51k due to staffing savings from part-year vacancies, one off

          additional grant funding and a member of staff on a career break. This allowed a transfer into an employee provision

          of £51k.

  1. Catering - Breakeven

         There were adverse variances of £97k due to the final payment being required for the implementation of the cashless

         catering system and £129k for the conversion of dining centres into kitchens in four primary schools. This was partly

         offset by a transfer of £199k from the two Catering reserves and the 2015/16 Catering Trading Unit surplus of £27k.

  1. Art Development - Breakeven

         There was a favourable variance relating to income generation of £2k which was transferred to the Libraries Reserve.

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 £1.5m. The major variances are outlined below.               
  3. Penarth Learning Community - Slippage of £126k

         This variance is due to the financial implications of late instructions and orders placed directly by the school which are

         yet to be finalised. Retention and unexpended fees will be due to be paid in 2016/17. It has therefore been requested

         that £126k is carried forward into 2016/17.

  1. Llantwit Learning Community - Slippage of £309k

         The variance is due to a longer than envisaged procurement process which delayed the start of works on site. The

         contract is now back on programme and it has been requested that £309k is carried forward into 2016/17.

  1. Ysgol Bro Morgannwg Kitchen Roof Renewal - Slippage of £244k

          Finalising the scope of works delayed the start of the scheme, however, work is now progressing on site and is due

          for completion at the end of July 2016. It has therefore been requested that £244k is carried forward into 2016/17

          to allow for the completion of the scheme.

  1. Cowbridge Comprehensive Expand 6th Form - Slippage of £179k

          The work programme for this scheme has been managed by the school and is due for completion at the end of June

          2016. It has therefore been requested that £179k is carried forward into 2016/17 to allow for the completion of the

          scheme.

  1. School Loans Scheme - Favourable Variance of £281k

          An allocation of £200k is made available each year for schools to purchase IT equipment which is then financed

          through an internal loan with the Council. Similarly, an allocation of £300k is made available each year for schools to

          undertaken capital works. For 2015/16, requests totalling £31k were received for IT loans and £188k for capital

          loans. A new allocation is provided in 2016/17 and therefore a carry forward of budget is not required.

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. Work to several schools has been identified and it is considered necessary to transfer £1.2m into the Schools Investment Strategy reserve to finance the costs. It is proposed that the Director of Learning and Skills brings a further report to Cabinet which will outline the specific works to be undertaken. A sum of £500k has also been transferred into a new reserve for School Placements. As detailed earlier in this report, there were issues with the placement and recoupment budgets during 2015/16. Eventhough work is ongoing to address these issues and to achieve savings through the Reshaping Service programme, pressure on these budgets has continued into 2016/17. This sum has therefore been set aside as a one off contribution for 2016/17 to provide more time for the service review to be completed and implemented.
  4. 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. Within Education, during 2015/16, there has been pressure within the Inclusion Service in relation to inter authority recoupment and out of county placements and savings have not been achieved. This issue has been discussed earlier in this report with a resulting overspend against this service area. It should be noted that this is a volatile budget. There are savings targets approved for this area in 2016/17, however, £500k has been set aside in reserves and can be used in 2016/17 to provide the service with a longer period in which to review and implement its plans as part of the longer term Reshaping Services agenda.

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.

Background Papers

None

Contact Officer

Carolyn Michael (Operational Manager - Accountancy)

Officers Consulted

Director of Learning and Skills

Responsible Officer:

Jennifer Hill

Director of Learning and Skills

 

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