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Agenda Item No 4

The Vale of Glamorgan Council

 

Learning and Culture Scrutiny Committee: 17th July 2017

 

Report of the Director of Learning and Skills

 

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 of the Council 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

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. 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.

Leave Accrual Adjustment - An accrual is made for the cost of holiday entitlements earned by employees but not taken before year end. The movement for school staff changes between years depending on when the Easter holiday falls. It has been assumed that there is no movement between years for non-school staff.

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 transfer to reserves 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

 

Learning and Skills

         

Schools

-

81,008

81,008

0

 

Strategy, Culture, Community Learning & Resources

-

13,919

13,859

+60

 

Strategy and Regulation

-

250

207

+43

 

Achievement for All

-

3,574

3,769

(195)

 

School Improvement

-

1,241

1,149

+92

 

Prior to Reorganisation

99,359

       

Total

99,359

99,992

99,992

0

(478)

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

Schools have made a net withdrawn of £624k from school balances in order to outturn at the 2016/17 budget.

  1. Strategy, Culture, Community Learning & Resources - Favourable variance of £60k

There have been a number of adverse variances during the year totalling £543k. This includes an adverse variance of £241k due to school staff redundancies and early retirements. There have also been adverse variances of £90k due to the reimbursement to Ysgol Y Ddraig and Ysgol Y Deri for one off amalgamation costs, £87k on the Schools Long Term Supply and Maternity schemes. There is an adverse variance on the Libraries budget of £74k due to the implementation of Community Libraries, which included the legal costs in relation to the Rhws Community Library judicial review. There were other adverse variances due to urgent repair works required in schools of £34k and £17k on the Adult Community Learning budget due to a reduction in contract income from Cardiff and Vale Colleges for providing basic skills and English as a Second Language training and increased costs in relation to setting up the new Welsh for Adults.

There have been a number of favourable variances during the year totalling £921k. There are favourable variances relating to prudential borrowing repayments amounting to £222k and £213k for Catering due to an increase in meal uptake. There is a favourable variance relating to staffing of £174k due to vacant posts and early implementation of 2017/18 Reshaping Services savings. School building rates underspends and refunds amounted to a favourable variance of £107k and there where favourable variances on Education transport of £64k, on ICT income generated from schools of £51k and £45k from capital contributions from other authorities in respect of out of county pupils enrolled at Ysgol Y Deri. There were also favourable variances of £21k on payments to private non-maintained nursery schools, £16k on union backfilling costs and £8k from the reduction in subscriptions.

There has been a net transfer into reserves of £318k. £222k has been transferred into the Schools Investment Strategy reserve as a result of the favourable variance on the budget for 21st Century Schools Programme prudential borrowing loan repayments. £180k has been transferred into the Catering reserve to fund urgent gas works required in schools and catering profits due to be paid to secondary schools. The capital income recouped from other local authorities in respect of pupils at Ysgol Y Deri of £45k has been transferred into the Schools Investment Strategy reserve. £17k from the Adult Community Learning Reserve has been used to part fund the adverse variance on the Adult Community Learning budget. £74k has been transferred from the Libraries reserve to fund one off costs and £38k from the Schools Invest to Save reserve has been used towards the costs of redundancies in schools.

  1. Strategy and Regulation - Favourable variance of £43k

There is a favourable variance of £43k due to salary underspends and reductions in office expenses including stationery and furniture.

  1. Achievement for All - Adverse variance of £195k

There have been a number of adverse variances during the year totalling £1.023m. There was an adverse variance of £785k on the recoupment income budget. The recoupment income generated from other authority's pupils enrolled at Ysgol Y Deri has continued to reduce. Other authorities have now established their own provision and in addition, the demographic increase of pupils with complex needs within the Vale of Glamorgan has resulted in fewer placements being available for other authorities to purchase. There is an adverse variance on complex pupil placements of £182k. Occasionally the needs of pupils with higher levels of Additional Learning Needs (ALN) cannot be met within Vale of Glamorgan provision and alternative provision is commissioned in other authorities or independent schools. There is also an adverse variance on Alternative Curriculum and the Pupil Referral Unit of £56k due to an increase in demand.

There have been a number of favourable variances during the year totalling £250k. £85k relates to staffing due to vacant posts in the Complex Needs, Behaviour and ALN teams and £60k in the Youth Service. A favourable variance of £58k relating to the Children and Young Peoples Partnership is as a result of grant maximisation and a number of committed projects coming in below profile including training and events. There was also a £23k favourable variance due to the reduction in the Speech and Language contract with Health and a £24k favourable variance relating to the Pooled Looked After Children budget held within Social Services.

There has been a net transfer from reserves of £578k. £500k has been transferred from the School Placement reserve and £78k from the Adult Community Learning Reserve to contribute towards funding the shortfall on Recoupment Income. £56k has been used from the Excluded Pupil Reserve to fund the adverse variance on the Alternative Curriculum budget and £4k from the Additional Needs reserve has been used to balance the 2016/17 overspend on the schools pooled ALN budget. There has been a £60k transfer into the Youth Service reserve from the favourable variance on the Youth Service budget to fund essential engagement work with young people at risk of ending up Not in Education, Employment or Training (NEETs).

  1. School Improvement - Favourable variance of £92k

There is a favourable variance of £92k due to the senior management restructure and early implementation of savings scheduled for 2017/18.

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 for this Committee. The overall outturn for the Directorate of Learning and Skills is a variance of £1.831m against a capital budget of £17.141m. The major variances are outlined below.
  3. Llantwit Major Learning Community - Slippage of £355k

Works relating to demolition will be undertaken in 2017/18 and outstanding retention will be due for payment. It has therefore been requested that £355k is carried forward into 2017/18.

  1. Barry Comprehensive School Internal and External Refurbishment Works - Slippage of £508k

The variance is due to a reduced scope of works being implemented following discussions with the school and the need to complete some works during school holiday periods. The latest phase of works was completed during the Easter holidays with further works planned for the summer. It has therefore been requested that £508k is carried forward into 2017/18 with any funding that is not required on this scheme to be held within the general Schools Asset Renewal budget and the final use reported to Cabinet.

  1. St Brides Expansion - Slippage of £118k

The variance is due to a longer than envisaged procurement process which delayed the start of works on site. The scheme is due to complete during the summer holidays to allow the new nursery to open in September 2017. It has therefore been requested that £118k is carried forward into 2017/18.

  1. School Loans Scheme - Favourable Variance of £200k

An allocation was made available for schools to undertake capital works, however in 2016/17 no requests were received for capital loans and a carry forward of budget is not required.

  1. Penarth Learning Community - Slippage of £123k

This variance is due to the final elements of works requiring completion and the outstanding release of retention. It has therefore been requested that £123k 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. As part of the 2017/18 revenue budget setting process, each specific reserve had been reviewed and considered in light of the Council's priorities. It should be noted that there are considerable commitments which will require funding from reserves in the coming years, e.g. Band B 21st Century Schools Investment Programme.
  4. Attached at Appendix 3 is a schedule showing reserves as at 31st March 2017 relating to this Committee.
  5. There have been transfers into reserves for reimbursements from services for works where the initial cost was funded from that specific reserve e.g. Computer Renewal Fund, Schools Rationalisation.

Resource Implications (Financial and Employment)

                Revenue (Including Savings Targets)

  1. As part of the Final Revenue Budget Proposals for 2016/17, a savings target of £1.164m was 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. There was a saving target of £292k to be found from the Inclusion Service budget. This level of saving has been achieved during the year, however, there are further pressures on the budget which resulted in an overspend as detailed earlier in this report.

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:

Paula Ham

Director of Learning and Skills