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The Vale of Glamorgan Council

Cabinet Meeting 13th July 2015

Report of the Leader

Closure of Accounts 2014/15

Purpose of the Report

1.    The accounts are complete and this report is to inform Cabinet of the provisional financial position of the Council for the 2014/15 financial year.

Recommendations

It is recommended that :-

1.    The report and the financial measures taken and proposed be approved.

 

2.    Cabinet approve an increase in the Capital Programme of £600k for the Barry Regeneration Partnership scheme, which will cover a 2 year period commencing in 2015/16 and will be funded from the Capital Commitment reserve. Cabinet is requested to refer this matter to Council for approval. 

 

3.    Cabinet approve an increase in the Capital Programme of £1m for highways resurfacing and maintenance works, which will be carried out over a 2 year period commencing in 2015/16 and will be funded from the Visible Services reserve. Cabinet is requested to refer this matter to Council for approval. 

Reasons for the Recommendations

1.    To approve the report and the financial measures taken and proposed.

 

2.    To amend the Capital Programme and to seek Council approval.

 

3.    To amend the Capital Programme and to seek Council approval.

Background

2.    Following the end of the financial year, Cabinet 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.

 

3.    Separate reports have been taken to Scrutiny Committees.

Relevant Issues and Options

General Fund

4.    The Council on the 5th March 2014 (minute no.884) agreed the Authority’s budget requirement for 2014/15. This represented budgeted net expenditure for the Authority of £214.331m. Total expenditure was to be financed by Revenue Support Grant (£118.125m), National Non-Domestic Rates contribution (£39.516m) and Council Taxpayers (£56.69m). The Standard Spending Assessment (SSA) for the year was £215.041m.

 

5.    The revenue budgets have been amended and approved by Cabinet during the financial year, however, they are at the same overall net level as the original budget of £214.331m, which is after the planned use of £2.5m from the Council Fund.  The actual expenditure for 2014/15 is £214.331m, which is a breakeven position and follows a transfer of £1.419m from the Council Fund.

 

6.    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. The original budget to cover the estimated cost was included in Policy; however it has now been re distributed to the relevant services.

 

7.    Set out below is a table comparing the amended budget and the actual expenditure for the Authority:

Service

 

Year - 2014/15

Amended

Revenue

Budget

£’000

Total

Provisional

Actual

£’000

Variance

+Favourable

() Adverse

£’000
Learning and Skills



Education and Schools 93,026 93,036 (10)
Libraries 2,567 2,560 +7
Adult Community Learning 254 252 +2
Youth Services 1,076 1,063 +13
Catering 1,792 1,772 +20
Social Services


Children and Young People 14,358 14,343 +15
Adult Services 36,830 36,864 (34)
Business Mgt & Innovation 308 300 +8
YOS 672 669 +3
Visible Services and Housing



Environment and Visible Services 18,355 18,351 +4
Parks and Ground Maintenance 3,702 3,696 +6
Building Services 30 29 +1
General Fund Housing 1,446 1,436 +10
Development Services


Public Protection 2,525 2,531 (6)
Private Housing 11,106 11,089 +17
Planning and Transportation 5,225 5,213 +12
Leisure 3,589 3,591 (2)
Economic Development 864 878 (14)
Managing Director


Resources (12) (28) +16
Corporate and Customer Services 49 49 0
General Policy 19,069 20,246 (1,177)
Total Net Budget 216,831 217,940 (1,109)
Council Tax Surplus 0 (2,190) +2,190
Use of Reserves (2,500) (1,419) (1,081)
GRAND TOTAL 214,331 214,331 0

8.    The main reasons for the variances are set out in the following paragraphs. 

Learning and Skills

9.    Education and Schools - Adverse variance of £10k

The favourable variance of £455k as detailed below has been offset by a transfer to the Libraries reserve of £255k and a transfer to the Schools Rationalisation reserve of £210k.

 

10.    School Improvement and Inclusion - Favourable variance of £43k

There was an adverse variance of £30k on the Pupil Referral Unit and Alternative Curriculum Placement budget but this was offset by a transfer of £30k from the Excluded Pupils reserve.  There were also adverse variances of £22k relating to statements as a result of a number of pupils requiring additional support in mainstream schools and £50k on Inter Authority Recoupment.

 

There is a favourable variance on employee costs of £115k.

 

11.    Strategy and Resources – Favourable variance of £275k

There was an adverse variance of £72k on emergency school repairs due to St Cyres flood damage repairs not being covered by insurance, a replacement boiler being required at St Andrews Primary school, various health and safety works being undertaken in schools and other small adverse variances of £11k.  There was an adverse variance of £134k due to one off costs in relation to school reorganisations however this was fully offset by a transfer from the Schools Rationalisation Reserve.

 

There was a favourable variance on transport of £225k.  This resulted from a combination of a £159k underspend on the mainstream transport budget managed, within Development Services, following a tender exercise undertaken in June 2014, the optimisation of routes and unaccounted inset days and monies not paid to operators due to service failures, a £44k favourable variance on Post 16 discretionary travel awards due to a decrease in the charges passed on from the colleges and a £22k underspend on Special Educational Needs transport due to savings arising from the two week closure of Ysgol Y Deri.  There were other favourable variances resulting from Non Delegated School costs of £15k, employee costs of £62k due to temporary vacancies throughout the year and payments to private nurseries of £56k due to a reduction in registered providers.  There was an underspend on debt repayment of £322k which was transferred to the Schools Investment Strategy fund.

 

12.    Service Strategy and Regulation – Favourable variance of £17k

 

There is a favourable variance of £17k due to a planned reduction on expenditure in the Business Support Unit. 

 

13.    Childrens and Young Peoples Partnership - Favourable variance of £120k

 

There is a favourable variance of £120k as the required savings for 2015/16 have been implemented ahead of schedule, some projects have been withdrawn and there were temporary changes to the funding of childcare umbrella groups.

 

14.    Education Transfers to/from Reserves - There was a net transfer of £152k to the Schools Early Retirement and Voluntary Redundancy reserve in respect of repayments from schools for previous retirements, a transfer of £58k to the Schools Investment Strategy Reserve in respect of capital charges to other authorities for pupils at Ysgol Y Deri and a net transfer of £408k from the Schools Long Term Supply reserve in respect of the 2014/15 deficit on the long term supply scheme.

 

15.    Libraries - Favourable variance of £7k

 

There were favourable variances on staffing of £73k due to posts being held vacant pending the Libraries review, income generation of £14k, £7k on a reduced energy recharge and £8k on other supplies and services. There was a transfer into the Libraries reserve of £95k to fund future costs in relation to the implementation of the Libraries review.

 

16.    Adult Community Learning - Favourable variance of £2k

 

There was an adverse variance due to funding reductions from Welsh Government and Cardiff and Vale College which resulted in an overspend on the Adult Community Learning, Family Learning and Schedule 2 franchise of £10k.

 

There were favourable variances of £23k in respect of the underspend on the Cardiff University funded Welsh for Adults programme and £2k against the energy recharge budget.

 

There was a net transfer into the Adult Community Learning reserve of £13k, which will be used to fund future pilot projects and possible restructuring costs due to the new Welsh for Adults contract.

 

17.    Youth Service - Favourable variance of £13k

 

There were adverse variances of £54k relating to premises costs which included Area 41 dilapidation and relocation costs to achieve 2014/15 savings, £47k to assist with the implementation of the Youth Engagement and Progression Framework in schools and £18k on resources, teaching materials and ICT equipment.  As previously reported, this was partially offset by a transfer of £78k from the Youth reserve.

 

There were favourable variances on staffing of £51k due to the restructuring of the youth centres and delays in appointing new staff and temporary vacancies and a £3k underspend against the energy recharge.

 

18.    Catering - Favourable variance of £20k

 

The 2014/15 Trading Unit surplus was £57k which consisted of a £74k surplus attributable to the primary school provision and a deficit of £17k attributable to the non-school provision as a result of the closure of the Alps canteen. The £57k net trading unit surplus was used to contribute towards the capital repayment into the Project Fund for the Cashless Catering System.

 

The Catering Client service outturned with a £20k favourable variance, after transferring £31k from the Catering Improvements reserve to fund equipment to improve schools kitchen and dining facilities and the remainder of the costs were used to contribute towards the capital repayment into the Project Fund for the Cashless Catering System.  The total adverse variance on equipment was £153k which has been met partially from the reserve transfer and partially from other favourable variances within the service.  The favourable variances within the client budget are as follows; a £40k underspend on the breakfast club provision as not all schools have signed up to the breakfast club scheme yet, £37k underspend on revenue costs of the cashless catering system as the scheme is not yet fully rolled out, £15k on premises costs, £20k energy recharge, £20k on recharges paid to schools as one school opted out of the Vale Catering contract and £10k on supplies, services and transport. 

Social Services

19.    Children and Young Peoples Services – Favourable Variance of £15k

 

There was a favourable variance relating to the Joint Budget with Education for Children's Placement of £4k and an adverse variance of £24k for other Children’s Placements. 

 

There were favourable variances of £119k on staffing due to vacancies within the Social Work teams and Admin team budgets.  There were further favourable variances of £95k due to additional adoption income and £160k for alternative means of provision and accommodation costs required for the current cohort of children.  Underspends were achieved on transport of £35k and supplies and services of £96k.  Other favourable variances total £64k.

 

There have been transfers to reserves of £245k to fund future high cost residential placements and £289k towards the cost implications of legislative changes.

 

20.    Adult Services – Adverse Variance of £34k

 

There was an adverse variance of £340k on community care packages.  This includes £147k for the under recovery of income received under the Deferred Payment Scheme and the use of the Intermediate Care Fund grant to fund Community Care Packages via the Accommodation Solutions and Reablement work streams to the value of £305k.  There was an adverse variance of £36k in respect of the Deprivation of Liberty Safeguard team.

 

There were favourable variances of £58k on staffing due to vacancies and £54k on Transport, £115k on supplies and services.  There was an over-recovery of income from customers receipts resulting in a favourable variance of £63k and additional grant income of £144k.   

 

There was a transfer to reserves of £92k to contribute towards the cost implications of legislative changes.

 

21.    Business Management and Innovation – Favourable of £8k

 

The majority of this budget is recharged to Children's and Adult Services. The position before recharges to services is a favourable variance of £44k. This is made up of £18k on transport, £16k on receipt of income and £10k on other small variances.  £24k was transferred to reserves to contribute towards the cost implications of legislative changes.   The favourable variance has meant that there has been a reduced internal recharge to Children's and Adults Services of £12k.

 

22.    Youth Offending Service - Favourable variance of £3k
There were favourable variances of £34k on staff due to temporarily vacant posts and £22k on other grants and income.  There were other adverse variances of £8k.   A transfer of £45k has been made to the Grant Exit Strategy reserve to support redundancy costs should grant funding cease.

 

23.    As part of the Social Services Budget Programme, £2.031m was utilised in year from the Social Services provision and £168k was utilised from the Social Services Plan reserve.   The Social Services provision has now been fully utilised, with the balance on the Social Services Plan reserve, as at 31st March 2015, standing at £4.025m. 

Visible and Housing Services

24.    Environment & Visible Services - Favourable variance of £4k

 

25.    The favourable variance of £599k as detailed below has been offset by a transfer to the Visible Services reserve of £285k.  Of this sum, £80k will be set aside for resurfacing and highways improvements, £75k for the study being undertaken on car parks and any associated works required, £10k for minor repairs to the Eastern Shelter toilet block at Barry Island, £30k for an additional MOT bay within the Alps Garage, £40k for alterations to changing rooms at Maslin Park, and £50k to purchase a vehicle wash at the Alps Depot.  In addition, £310k has also been set aside to contribute to the required works at Jenner Park, as detailed in a Cabinet report approved on 11th May 2015 (min no. c2774).

 

26.    Waste Management & Cleansing - Favourable variance of £372k

 

There was an adverse variance on the premises budgets of £73k, mainly due to additional works being undertaken.  Improvements have been made at the waste treatment site at Pant-y-Lladron to allow the treatment of street sweepings which will reduce future waste disposal costs. Work was also undertaken to install a water meter at Penarth Pier and also the Section made a contribution towards additional works at the Alps depot.

 

There was a favourable variance on staffing budgets of £75k, mainly due to vacant posts within the service. Transport budgets also had a favourable variance of £30k as a result of the continued drive to reduce vehicle numbers and vehicle costs.  The supplies and services budgets had a favourable variance of £156k, mainly due to the early commencement of the contract with Viridor for disposal of residual waste. This delivers considerable savings compared to landfilling of waste.  Income from other departments into the Waste Management section was £184k higher than anticipated.

 

27.    Highways & Engineers - Favourable variance of £198k

 

There was an adverse variance on the premises budget of £405k, mainly due to overspending on repairing potholes and the street lighting energy budget which has been reported throughout the year. There was an adverse variance of £24k on transport budgets, mainly due to the higher costs of the newer gritting fleet. There was also an adverse variance of £359k due to revenue contributions to a number of capital schemes. 

 

There were favourable variances of £80k on staffing costs due to vacant posts held pending any future restructure, £460k on energy costs which again had been reported during the year, £229k from fees received for undertaking additional capital schemes and £217k due to additional income into the Highways and Engineers Department.

 

28.    Civil Protection Unit – Favourable variance of £7k

 

This was due to additional income being received by the section.

 

29.    Support - Favourable variance of £22k

 

This was mainly due to an underspend on staffing costs due to vacancies throughout the year.

 

30.    Grounds Maintenance - Favourable variance of £6k

 

There were adverse variances of £55k on premises budgets mainly due to clearance works undertaken at Cemetery Approach for which there was no allocation and a £63k adverse variance on the supplies & services budgets which was mainly due to additional costs in undertaking work for other Council departments.

 

These were offset by favourable variances of £3k on transport due to the ongoing review of vehicle costs, £21k on energy budgets and £100k on income from undertaking additional works mentioned above for other Council departments.

 

31.    Building Services - Favourable variance of £1k

 

The Building Services trading unit had a turnover of £8.4m and made a surplus of £11k. This was assisted by the ongoing work Building Services is undertaking on the Welsh Housing Quality Standard.  The Building Cleaning & Security trading unit had a turnover of £3.3m and made a deficit of £7k.  In addition the Courier Service made a surplus of £21k. The Building Services Twin Hat function had an underspend of £65k.  There was an adverse variance of £19k on employee costs mainly due to redundancy costs from the recent restructure within Building Maintenance.  This was offset by favourable variances on transport budgets of £12k due to the ongoing reduction in vehicle costs, £18k on general supplies and services throughout the department and £54k additional income from work completed for other departments.

 

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 £29k and a transfer to the Building Services reserve of £60k to fund a temporary post for business development.

 

32.    General Fund Housing -   Favourable variance of £10k

 

There was an adverse variance of £7k due to a shortfall in income recovery on Cadoxton House.

 

There were favourable variances of £39k on staffing pending reorganisation, £18k on the Community Safety core budget, £3k on supplies and services within the Homelessness, Supporting People and Housing Strategy teams and £433k on temporary accommodation for the homeless.  As highlighted during the year, it was unknown when the Universal Credit rollout would be introduced in the Vale and what impact it would have on the level of homelessness during 2014/15.  It is now anticipated that Universal Credit will have a phased introduction, in the Vale, from February 2016.

 

There have been transfers to reserves of £72k for a Prison Leaver Support Worker, £72k for a Pre-tenancy Advisor, £72k for an Accommodation Solutions Co-ordinator all would be for a 2 year period, £100k towards support and interpretation services for asylum seekers and £160k towards the Reshaping Services Programme.

Development Services

33.    Public Protection - Adverse variance of £6k
There was an adverse variance on Agency staffing of £46k in the Pollution Team and £22k in the Trading Standards Team, who were required in order to maintain levels of core service delivery in these areas in the run up to collaboration. Three pest control vehicles were purchased outright at the end of their lease term at a cost of £20k, as it was decided not to commit to a further lease pending operational decisions on the future of the Shared Regulatory Service.  Taxi Licensing income was £24k lower than estimated due to the reduction in the numbers of taxi drivers, private hire and hackney carriage vehicles in the Vale.  This position was offset by a transfer of £50k from the Regulatory Improvements reserve.

 

There were favourable variances on customer receipts within the division, totalling £22k, the majority of which were due to increased pest control income due in part to a 37% increase in chargeable flea treatments. Some £7k was saved in Trading Standards by reducing their subscription costs and finding alternative methods for research information.  In addition there was a favourable variance of £7k on the cost of sample analysis due to the on-going work with external service providers. There were various other small variances amounting to a net £20k favourable variance.

 

34.    Private Sector Housing - Favourable variance of £14k

 

There was an adverse variance of £41k on Disabled Facilities Grants (DFG) staffing costs that were required in order to achieve the increased throughput and reduce average completion times on DFGs. There was also an adverse variance of £13k on Renewal Area grant agency fee income for administering the Renewal Area face-lifting project within Barry’s Castleland ward. In addition, payments to external Quantity Surveyors for the face-lifting works were higher than budgeted by £32k.  This was because these were upfront costs and coupled with an initial lower than expected take-up of the commercial assistance available, this resulted in less than anticipated fees. 

 

There were favourable variances of £91k on agency fee charges on DFGs as, once again, the number of grant applications processed has increased over previous years – 158 in 2014/15, compared to 134 in 2013/14 and 93 in 2012/13. There were other small variances amounting to a net £9k favourable variance.

 

There was also a planned budgeted transfer from reserves of £46k to fund an additional Occupational Therapist post assisting in the DFG Section.

 

35.    Rent Allowances/Council Tax Benefits - Favourable variance of £3k

 

There were favourable variances of £215k 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 £267k from recovered overpayments and associated subsidy, £739k on the Council Tax Reduction Scheme and £17k on Housing Benefit audit fee savings.

 

There have been transfers to reserves of £735k to the School Investment Strategy Reserve and £500k to the Social Services Buildings Fund.

 

36.    Planning and Transportation - Favourable variance of £12k

 

There were adverse variances of £57k on redundancy costs which were offset by a transfer from reserves and as previously reported, a contribution to capital expenditure was made, in the sum of £285k. There were various other small variances amounting to a net £25k adverse variance.

 

There were favourable variances of £245k on Development Control fee income as well as additional income from s278 highways development fees which were £39k higher than anticipated. Building Control fee income also exceeded the target budget by £62k. Costs of Supported Bus Services were £56k below budget as costs were prudently pinned back in the event that cross-boundary income for services provided across the Authority’s borders was not received, however, the income was duly received. The costs for work on the Local Development Plan (LDP) were £40k lower than anticipated as actual expenditure has not followed the planned profiled spend for the LDP Programme. 

 

There were transfers to reserves of £40k in order to fund completion of the work on the Local Development Plan as referred to above, £10k towards potential future redundancy costs within the Directorate, £25k towards transportation feasibility studies and £45k to the Regeneration Fund for the temporary appointment of a Planner to aid the transition from s106 funding to the Community Infrastructure Levy system.

 

During the year, there was a planned draw down from reserves of £55k to fund expenditure on the scanning of historical planning files.

 

At year-end there has been a transfer to the Building Control reserve of £45k, representing the surplus for the year on the Building Control Trading Account.  

 

37.    Leisure - Adverse variance of £2k

 

There was a £122k favourable variance within Leisure Centres, due mainly to a £115k reduction in the energy recharge and other small variances of £7k.  There was a £59k favourable variance on the Leisure and Tourism division. The variance was due mainly to the underspend on Events grants of £10k, a reduction of £8k in pitch hire costs plus a further £8k favourable variance in the cost of play schemes. Various other variances within the division also amounted to a net £33k underspend. There was a favourable variance of £29k in the Countryside Division. There was a favourable variance of £9k on staffing costs as the appointment of the Authority’s new Commercial Opportunities Officer was made slightly later than budgeted. Favourable variances on customer receipt income of £16k were made at Cosmeston Medieval Village, (including filming and special event fees)/Porthkerry Park (including hire fees for the woodland lodge and educational visit charges) and the Heritage Coast (donations). Environmental sampling costs were £6k below budget at Cosmeston, whilst general repairs and maintenance costs were £9k below budget at Cosmeston and £8k at the Heritage Coast.  Multiple smaller variances within the Countryside service amounting to a net £10k under spend were also achieved. This was offset by a contribution to capital of £29k for major repair works being undertaken, including a partial road resurfacing at Porthkerry Park. 

 

This position was reduced by transfers to reserves of £60k for potential future redundancy costs within the Directorate, £50k into the Regeneration Fund to enable grant matchfunding thus maximising the Authority’s opportunities to attract additional external funding, £10k into the Regeneration Fund for the installation of external electrical connector points at Barry Island to facilitate future events, as well as external repairs to the former Barry Island TIC building. In addition, the sum of £92k was transferred to the Regeneration Fund for future use on regeneration schemes.
As in previous years the budget included a planned drawdown from reserves of £178k for Vale-wide events.

 

38.    Economic Development  - Adverse variance of £14k

 

There was an adverse variance of £42k on the repairs budget at the Vale Enterprise Centre (VEC) Workshops in Barry, as a result of essential health and safety works being carried out on the roof.  There was also an adverse variance of £10k on the Economic Development Unit, due mostly to the production costs of the regeneration promotional video, entitled ‘This is Barry’. A water leak at Barry Steam Rail Depot cost £9k and the Business Support Centre costs were £5k over budget due to high repair costs at the site. The Employment Training Service was £7k over budget due to a loss of income.

 

There was a favourable variance of £31k on repair budgets at the Community Enterprise Centre and the Major Project Managers exceeded their income target by £22k as a higher than anticipated level of their work was rechargeable. There were various other small variances amounting to a net £6k underspend.

Managing Director

39.    Finance & ICT - Favourable variance of £1k

 

There were favourable variances on staff of £440k made up of £56k from Systems Implementation, £19k from Business Improvement, £21k from Student Awards, £21k from Council Tax, £99k from Accountancy, £103k from Audit, £51k from Fraud, £40k from Management and £30k from ICT. There were favourable variances of £141k on income arising from Income Management £75k, Housing Benefit £36k and the Regional Collaboration Fund of £30k. A £47k favourable variance occurred within Audit on central support charges, there was a £20k favourable variance on the Council Tax discount scheme and there was a favourable of £105k resulting from additional one off funding from the Department for Work and Pensions.  There were other favourable variances of £75k.

 

There have been transfers to reserves of £360k into the Corporate Trainee Fund, £437k to the Reshaping Services Fund and £30k to the Regulatory Services Reserve.

 

40.    Property & Office Accommodation - Favourable variance of £9k

 

There was an adverse variance on agency costs of £65k.

 

There were favourable variances on capital recharges of £430k, £110k on building repairs and maintenance, £45k due to lower rent payable on Provincial House, £75k on utilities and £57k on building security.  This allowed the transfer of £243k to the Miscellaneous Building Fund and £400k to the Project Fund.

 

41.    Human Resources - Favourable Variance of £6k

 

There was an adverse variance on general running expenses of £15k and a transfer of £41k to the Reshaping Services Fund.

 

There was a favourable variance on staff of £42k. There were also favourable variances of £20k arising from additional income/recharges.

 

42.    Legal & Democratic- Breakeven position

 

This service had a breakeven position after a transfer of £118k into the Legal Services reserve resulting from the following variances.

 

43.    Management/Legal Services – Favourable variance of £124k

 

There were favourable staffing variances of £32k mainly due to vacant posts and £20k on running expenses. There was also a favourable variance from additional income of £72k mainly in relation to undertaking external work for Cardiff County Council. The arrangement to undertake external legal work on their behalf will continue.

 

44.    Democratic Services - Adverse variance of £6k

 

There were adverse variances in Democratic Services of £37k resulting from pension strain/redundancy costs and £5k on land charges income.

 

There was a favourable variance of £36k on Registrars resulting from staff related savings and additional income.

 

45.    Performance & Development - Breakeven position

 

There were adverse variances on the employee budget of £127k mainly due to the cost of graduate trainees and agency staff, £138k on the supplies and services budget mainly due to the purchase of Work Management Software and new servers for the Contact Centre. This was, however, offset by a £215k transfer from reserves.

 

There was a favourable variance of £50k from additional income arising mainly from the Contact Centre.

 

46.    General Policy - Adverse variance £1.177m

 

There were favourable variances relating to capital charges of £2.027m as a result of a prudent approach being required due to the uncertainty of interest rates, an increase in external interest receivable of £100k, the sum included in respect of a Catering deficit of £170k is not now required and the sum included to support recharge imbalances for capital of £300k is not needed as there was full recovery from capital schemes. In addition, there were further underspends of £100k against Youth Initiatives which were not utilised in year and £200k for housing recharges as the full budget is not required due to a lower recharge from Housing. There were also favourable variances of £126k on grants, £79k on Council Properties, £120k on Audit Fees, £194k on Corporate Governance, £251k on additional income, £308k on interest receivable, £561k on the provision for superannuation not required in year, £83k on a VAT refund, £91k on pensions, £240k on provisions that were no longer required, £36k on bank charges, £79k on elections and other minor variances of £12k.

 

There were adverse variances due to a transfer to the School Investment Strategy reserve of £1.485m to contribute towards work required as a result of the poor condition of school buildings and the investment required in the 21st Century Schools programme and revenue contributions to capital of £2.1m which will be funded by the Council Tax surplus as detailed below.  There has also been a transfer to reserves of £2.669m, made up of £300k for Events, a £600k revenue contribution to Capital, £132k for Legal claims, £45k to the Regeneration Fund to assist with the introduction of the Community Infrastructure Levy system, £92k for Reshaping Services and £1.5m to the Visible Services Fund for highways resurfacing and maintenance.

 

47.    Council Tax - Favourable variance of £2.19m

 

The Council Tax surplus has slightly increased from the £2.1m reported to Cabinet in November 2014.   The Council Tax Base is initially calculated in November of the preceding financial year.  The uncertainty of the impact of the Central Government's welfare reforms required a prudent view to be taken when considering the collection rate expected.

Housing Revenue Account

48.    The 2014/15 Housing Revenue Account (HRA) resulted in a deficit of £4.530m compared to the revised estimate deficit of £3.514m. A breakdown is shown in Appendix 2.  The working balance opened at £6.406m and closed at £1.876m.

 

49.    The net adverse HRA revenue budget variance of £1.016m is identified over the following areas.

 

50.    Supervision & Management General – Favourable Variance £707k
There were favourable variances in Support and Central Management Costs of £465k, staffing through vacancies of £128k, software/hardware and other non-staffing costs related to Housing Teams of £41k, Tenant Participation of £40k, Homes 4U advertising and other running costs of £25k and staff travel costs of £8k.

 

51.    Supervision and Management Special Services – Favourable Variance £8k

 

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 £8k is a combination of the following: A favourable variance of £52k at Ty Iolo which reflects the reduction in the use of agency staff and a reduction in other revenue expenditure such as security cover and furniture and fittings; £19k adverse variance on Temporary Accommodation mainly due to additional repair costs and an adverse variance of £25k on Special Services which is made up of adverse variances of £46k on ad hoc cleansing and ground maintenance works on the estates, this has been offset by a saving on Sewage Treatment Works of £21k.

 

52.    Housing Repairs – Favourable Variance £372k

 

The favourable variance on this budget heading is largely due to a favourable variance of £162k on Fire Risk Assessment Works and £50k on repair call-outs, 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.

 

53.    Capital Financing Costs – Favourable Variance £18k

 

Interest charges were lower than anticipated.

 

54.    Rents, Rates, Taxes and Other Charges – Favourable Variance £126k

 

This is largely due to a favourable council tax variance of £67k for void properties.  Both the number of voids and the turnaround time have reduced during the year as a consequence the impact of council tax on those empty properties has fallen.

 

55.    HRA Subsidy Payable – Favourable Variance £73k

 

The HRA negative subsidy payment for 2014/15 was slightly less than budgeted.

 

56.    Increase in the Provision for Bad and Doubtful Debts – Favourable Variance £116k

 

It was anticipated that the bad debt provision would need to be increased by £116k.  However, during the year £340k of former tenant arrears were written off, as these debts were previously provided for there has been a net decrease in the bad debt provision. This is explained in the relevant paragraph below.

 

57.    Capital Expenditure from Revenue Account – Adverse Variance £2.313m

 

A higher contribution was required than budgeted towards the Housing Improvement Plan due to more work than originally forecast being completed.

 

58.    Rent Collected on Dwellings – Adverse variance £287k

 

This adverse variance is largely due to the level of write-offs undertaken during the year of £340k.

 

59.    Non Dwelling Rents – Adverse Variance £32k

 

Rents collected on garages were 10% less than budgeted.

 

60.    Reduction in Provision for Bad & Doubtful Debts – Favourable Variance £240k

 

The write-off in bad debts described in the paragraph above of £340k has the effect of reducing the bad debt provision, however, there was a need to increase the provision further by £100k due to the in-year increase in former tenant arrears.  The net impact on the Bad Debt Provision is a reduction of £240k.

 

61.    Interest Received – Adverse Variance £1k

 

The average London Interbank Bid Rate (LIBID) for the year was lower than anticipated.

 

62.    Charges for Services and Facilities – Adverse Variance £43k

 

The level of income received for services and facilities was less than anticipated by 7%.

Insurance Fund

63.    The total Insurance Fund comprises of both a provision and a reserve.  The provision represents potential liabilities on known claims and the reserve relates to claims not yet made.  An assessment was made as to the level of known claims and it was considered that the level of the provision should be reduced and therefore £704k was transferred into the reserve to fund unknown potential claims in the future.  A breakdown is shown below.

 


Provision

£000

Reserve

£000

Total

£000
Opening Balance 3,856 669 4,525
Surplus on Insurance Transactions 80 0 80
Transfers In/(Out) (704) 704 0
Closing Balance 3,232 1,373 4,605

Trading Operations

64.    The Trading Organisations referred to in this section are made up of Building Maintenance, Caretaking & Security and Building Cleaning and Vale Catering Services.

 

65.    The provisional figures for the Trading Services show an overall gross surplus of £90k (before repayment of £29k to the Housing Revenue Account). The details are shown below:
 


Building Mtce

 

 

£,000

Building Cleaning

 

 

£,000

Caretaking

and

Security

£,000

Catering

 

 

£,000

Total

 

 

£,000
(Surplus)/ Deficit (40) 42 (35) (57) (90)



Less: Building Maintenance
29





(61)

66.    Explanations of the variances are shown earlier in the report.    

Capital

67.    The overall position on the revised 2014/15 Capital Programme was a variance of £4.9m. The statement at Appendix 3 details the outturn by scheme.  To allow project managers to have fully approved capital budgets, capital slippage from 2014/15 to 2015/16 was approved by Managing Director's Emergency Powers on 16th June 2015.

Learning and Skills       

68.    The overall outturn for the Directorate of Learning and Skills is a variance of £1.46m. The major variances are outlined below.

 

69.    Penarth Learning Community – Slippage of £535k 

 

Asbestos in the old St Cyres Comprehensive School building resulted in delays to the planned programme, therefore £535k has been carried forward to 2015/16.

 

70.    Overboarding Ceilings - Expenditure brought forward of £139k

 

Emergency works to schools have been undertaken as a matter of priority and as a result, the budget for 2014/15 has been exceeded by £204k.  This has been offset by an underspend on the Victorian Schools scheme of £65k.  There is a budget to continue these works in 2015/16 and therefore there is no overall effect on the  total scheme funding, as it has been requested that the 2015/16 Victorian School budget is reduced by £139k and the funding is brought forward into 2014/15 to cover these costs.

 

71.    Romilly/Llanfair Demountables – Slippage of £351k 

 

Both buildings were late additions to the 2014/15 Capital Programme. This presented a number of challenges during the planning, tendering and construction phases. Factors contributing to a delay in expenditure included a need for a negotiated tender process for superstructure works, restrictions on site, close proximity of high pressure gas and electrical mains and ground conditions. It has therefore been requested that £351k is carried forward into 2015/16 in order to complete the scheme.

 

72.    Evenlode New School Hall -  Slippage of £178k

 

This project was to be funded by receipts from the sale of land and issues were encountered during this process.   The resultant funding gap has been bridged by the allocation of £100k from the 2015/16 capital loan scheme.  Due to the above, it has been requested that £178k is carried forward into 2015/16.

 

73.    Cashless Catering and Management Information System – Favourable Variance of £146k

 

Initial project delays have resulted in a delayed roll out throughout the project.  The Cashless Catering Company has had restricted available dates to complete the work and it is anticipated that work will be completed in July 2015, with the exception of Oakfield School which will be completed in September 2015.  To allow the scheme to be completed £98k has been carried forward into 2015/16.

Social Services

74.    The overall outturn for the Directorate of Social Services is a variance of £274k. The major variance is outlined below.

 

75.    Flying Start Programme - Slippage of £203k

 

The main issue for the Ty Robin Goch scheme was that Action for Children continued to provide a full service to clients during the course of the building works and therefore restrictions were in place. The vulnerability of their clients resulted in this Service’s requirements of the building contractor evolving during the course of the works. These included the contractor being afforded limited hours during which they could work with a resultant knock-on effect on the planned programme. There was also a delay in obtaining planning approval.  For the Colcot scheme there were a number of planning applications required during the scheme development stage.  The initial solution of alterations to the existing school changed to a standalone building and objections were received from Welsh Water on proposals to address surface water issues. These adversely affected commencement of site works. Due to these delays, the works were procured under the same contractual arrangements as the Romilly/Llanfair Demountables, as detailed above.  Welsh Government has agreed that £203k of grant funding can be carried forward to 2015/16.

Visible and Housing Services

76.    The overall outturn for the Directorate of Visible Services and Housing is a variance of £2.009m. This comprises of £813k of expenditure ahead of target for Housing Services and a favourable variance of £2.822m for Visible Services.  The major variances are outlined below.

 

77.    Housing Improvement Programme - Expenditure brought forward of £809k

 

Works to deliver Welsh Housing Quality Standards are progressing well.  Creditors of £766k were included in the 2014/15 accounts while the invoices were paid in April 2015.  There is no overall effect on the scheme funding and the 2015/16 scheme will need to be re-profiled to take into account this transfer of expenditure between years.

 

78.    Coldbrook Flood Risk Management - Slippage of £253k

 

Following discussions with Natural Resources Wales, the construction phase of the scheme was initially delayed due to a remodelling and redesign exercise.  The scheme has subsequently incurred additional delays due to a formal representation regarding the environmental impact of the proposed scheme, raised under the Environmental Impact Assessment Regulations, which required Ministerial determination before the scheme could proceed.  The scheme design is now completed and a positive Ministerial determination regarding the environmental impact of the scheme was received on 14th May 2015. Construction will commence following agreement of grant funding with Welsh Government.  Slippage of £253k has therefore been carried forward to 2015/16.

 

79.    Llanmaes Flood Risk Management     - Slippage of £1.02m

 

The construction phase of the scheme was delayed due to a remodelling and redesign exercise, following liaison with Natural Resources Wales.  An addendum to the original Project Appraisal Report has been completed and a preferred option identified.  The estimated scheme costs have increased from £1.114m to £3.786m, including a 55% optimism bias allowance.  The cost increase is largely due to an increase in the scale of engineering works required, including the construction of storage areas not previously required and associated land acquisition costs.  Development of the revised scheme is now subject to Welsh Government funding approval.  It has been requested that the £1.02m of Welsh Government grant funding is carried forward to 2015/16.

 

80.    Flood Risk Management - Slippage of £122k

 

A flood alleviation scheme at Readers Way is outstanding as it was not possible to undertaken works and investigations due to environmental restrictions and staff resources.  The scheme is designed but a Great Crested Newt licence is required before construction can commence. Construction is anticipated during 2015/16 and slippage of £122k has been carried forward to 2015/16.

 

81.    Coastal Protection and Land Drainage – Slippage of £160k

 

Supplier delays resulted in late delivery of survey equipment, which was received in April 2015.  Delivery of various surveys and ground investigations has delayed the design of two schemes and progress with an overtopping assessment.  Delays in undertaking site inspections have delayed provision of overtopping / inlet monitoring equipment but delivery is anticipated within the next three months.  Delivery of all services is anticipated during 2015/16 and slippage of £160k has been carried forward to 2015/16.

 

82.    Asset Renewal – Slippage of £144k

 

Due to weather conditions, some projects under the Highways Structure heading had to be delayed, resulting in the requirement to carry forward £49k into 2015/16.  Under the Traffic Management heading, the A48 Cowbridge Bypass scheme was delayed due to a technical communication problem with signs and sensor equipment and therefore £49k is required for carry forward into 2015/16.  Two highway / land drainage schemes are outstanding as it was not possible to undertaken works and investigations due to environmental restrictions and staff resources.  One scheme in St Hilary is currently under construction and the other is programmed to commence once ecological restrictions are lifted from September onwards.  Construction of both schemes is anticipated during 2015/16 and slippage of £46k has been carried forward to 2015/16. 

 

83.    Visible Services Highways Improvements – Slippage of £180k

 

Some projects have been delayed due to timing issues, for example, for works to take place at Miskin Interchange, Welsh Government had to be given three months’ notice which resulted in this project being delayed.  Due to the above, £180k slippage has been carried forward to 2015/16.

 

84.    Gileston to Old Mill Highway Improvements - Slippage of £579k

 

It is anticipated that the scheme contingency and risk allowance will not be fully utilised and the scheme should eventually underspend.  This scheme is 100% Welsh Government grant funded.  £579k of slippage has been carried forward to 2015/16 in order to complete minor works and pay outstanding invoices.

 

85.    Vehicles Renewal Fund – Slippage of £234k

 

The vehicle programme was delayed so that a review of vehicle utilisation within departments could take place.  There were also manufacturer delays where vehicles ordered in 2014/15 were not delivered until 2015/16 and as a result of this £234k has been carried forward into 2015/16.

Development Services

86.    The overall outturn for the Directorate of Development Services is a variance of £577k. The major variances are outlined below.

 

87.    Various Play Areas Upgrade – Slippage of £107k

 

Due to the workload schedule and higher priority schemes, the play area upgrades will continue in 2015/16, therefore £107k has been carried forward into 2015/16.

 

88.    Penarth Heights Highways and Sustainable Transport Projects – Slippage of £221k

 

Due to the workload schedule and higher priority schemes, the Penarth Heights Highways and Sustainable Transport projects will continue in 2015/16, therefore £221k has been carried forward into 2015/16.

 

89.    Creative Rural Communities     - Variance of £837k

 

Schemes include Pride in Our Farming, Heritage, Villages and services grants. The large variance reflects the total expenditure on the grants which is funded from Welsh Government grants whereas the budget reflects purely Council match funding on the scheme. Council match funding of £12k has been carried forward to 2015/16.

 

90.    Leisure Centres Refurbishment - Slippage of £485k   

 

While work has been completed, there are outstanding invoices to be paid pending the submission of the required documentation from the Leisure Centre operators. It has therefore been requested that £485k is carried forward to 2015/16.

Resources

91.    The overall outturn for Resources is a variance £578k. The major variances are outlined below.

 

92.    Regeneration Fund - Underspend of £150K

 

No schemes were identified under this heading during 2014/15.

 

93.    Data Centre at Civic Offices -  Underspend of £140k

 

Scheme completed under budget.

Reserves

94.    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.

 

95.    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.

 

96.    As part of the 2015/16 revenue budget setting process, each specific reserve had been reviewed and considered in light of the Council's priorities.  It had been deemed necessary to move funding from lower priority areas to higher priority areas and as a result, £3.5m of specific reserves were unearmarked and transferred to the Schools Investment Strategy reserve to allow for the continued investment in school buildings and their development.  In addition, as part of the Final Revenue Budget Proposals for 2015/16, a transfer to the Schools Investment Strategy reserve of £1.485m was approved, which was to be funded by the projected revenue underspend in 2014/15.  It is now considered that a further £735k is required to fund future works and has therefore been transferred into the fund.  Education has also transferred £380k into the fund, partly as a reimbursement for capital charges.

 

97.    The Local Government Borrowing Initiative provided funding for highways resurfacing of £2.23m per annum for a 3 year period from 2012/13 to 2014/15. In addition, the Council has allocated funding for the Big Fill initiative until 31st March 2016. There is still further works to be carried out across the Vale and therefore £1.5m has been transferred into the Visible Services fund.  It is proposed that the sum of £1m is included in the Capital Programme, to be spent on highways resurfacing over a 2 year period commencing in 2015/16.  This increase in the Capital Programme will require Council approval.  The remaining £500k will be used for the Big Fill initiative in 2016/17, which will be part of the revenue budget.

 

98.    It is also proposed that a revenue contribution to capital of £600k is made into the Capital Commitments reserve to fund further regeneration schemes and that this sum is also included in the Capital Programme as part of the Barry Regeneration Partnership scheme over a 2 year period commencing in 2015/16.  The increase in the Capital Programme will require Council approval. 

 

99.    A report was approved by Cabinet on 11th May 2015 (min no. c2774) regarding the proposed new pitches at Jenner Park and Colcot Sports Centre.  As detailed earlier in the report, the sum of £310k has been transferred from Visible Services into the Jenner Park Improvements fund to contribute towards these works.

 

100.    New funds have been established and transfers in have been detailed in the report.  They cover the following areas :-

- Social Services Buildings (£500k) - To be used to update premises to meet the future demands of the service.
- Interpretation Services for Asylum Seeker (£100k) - To be used to provide support and interpretation services.
- Reshaping Services (£730k) - To fund one off costs that will be incurred during the implementation of the Council's Reshaping Services programme.

101.    Funds no longer required as reserves may be transferred to the Council Fund to be used for other purposes.

 

102.    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, Project Fund, Vehicle Repairs and Renewals, Schools Rationalisation Fund and the Energy Management Fund.

 

103.    Attached at Appendix 4 is a schedule showing the Council's reserves as at 31st March 2015. The reserves have been reviewed and are currently considered adequate for reported uses, subject to the adjustments detailed in this report.  The transfers detailed above have been included in the appendix.

Resource Implications (Financial and Employment)

104.    It was the intention that £2.5m of the Council Fund was to be used in 2014/15.  However, £1.419m was used to fund expenditure in the year and therefore the fund stands at £12.541m as at 31st March 2015.  When the budget was set for 2015/16, future years savings targets have meant that £2.5m of the Council Fund has been allocated for use in 2015/16, with a further assumed used of £1.5m in 2016/17.  This will result in a fund balance of £8.541m by 31st March 2017.

 

105.    As part of the Final Revenue Budget Proposals for 2014/15, a savings target of £7.391m was set for the authority.  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 2014/15.  While services have been able to find savings to the value of £7.391m, some of the savings have been achieved by a different means to that planned.  Against a savings target of £7.391m, savings of £6.721m were achieved in the year in the way planned, resulting in a shortfall of £670k.  The majority of this shortfall was made up of £585k in Visible Services.  Services will need to ensure that savings achieved through an alternative means in 2014/15, are reviewed to ensure that the saving will continue to be made on an ongoing basis and will continue to be realisable in future years.  For completeness, the last section of the appendix shows Visible Services savings that were identified in previous years and have yet to be fully achieved.  

 

106.    The underspend on the revised capital programme in 2014/15 is £4.9m

 

107.    The table below shows how the capital programme has been financed in 2014/15.

 

Source of Funding

Outturn

(£000)
General Capital Funding 5,528
Unsupported Borrowing 12,154
Capital Receipts – Housing 897
Capital Receipts – General Fund 2,004
WG/WEFO Grants 14,714
Revenue 4,002
Reserves - Schools Investment Strategy 1,229
- Capital Commitment 2,097
- Misc Buildings 721
- Vehicle Renewal Fund 801
- Project Fund 795
- Energy Fund 142
- IT Fund 402
- Schools Rationalisation 253
- Disabled Facilities Fund 220
- Development 50
- Library Fund 71
HRA Reserves 10,608
Other e.g. Section 106 1,300
TOTAL 57,988

108.    General Capital Funding - Capital expenditure in the year was sufficient to cover the General Capital Funding provided by the Welsh Government.  Where schemes originally planned to be financed from General Capital Funding have underspent, other schemes, planned to be funded from capital receipts or reserves, have been substituted in their place.

 

109.    Capital Receipts - The existing capital receipts balance as at 31st March 2015 was £16.5m, all relating to the General Fund.  The sum of £5m was received from the sale of assets and mortgage repayments during 2014/15, as follows:

 


£'000
Sale of Council Houses
*  549
Sale of Land and Buildings 4,533
Mortgage repayments *   10
 
*these receipts are gross and normally the Council only treats 25% as 'usable’ to finance Housing Revenue Account capital expenditure, as the Subsidy  Determination assumes the 75% is used to 'reduce loan debt’

 

110.    As a result of the capital underspend in 2014/15, an allocation of £4.93m has been approved via Managing Director's Emergency Powers, as slippage into 2015/16.  This will fund the completion of schemes as shown in Appendix 6.  Of this figure, the sum of £2.053m will be funded from capital receipts and £2.877m will be provided from revenue, reserves or external sources.

 

111.    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 2014/15 was £2.76m. Works totalling £19.48m were spent on major improvements to the Council's housing stock, £2.76m of which was funded from the MRA, £897k from Housing capital receipts, £661k from WG grant and £10.608m from Housing revenue and reserves, as well as £4.554m of unsupported borrowing. 

 

112.    Given anticipated on-going cuts in capital funding for future years it is vital that funding uncommitted capital expenditure be retained for future use on prioritised schemes.

Sustainability and Climate Change Implications

113.    There are no sustainability and climate change implications resulting from this report.

Legal Implications (to Include Human Rights Implications)

114.    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, 2015

Crime and Disorder Implications

115.    There are no crime and disorder implications resulting from this report

Equal Opportunities Implications (to include Welsh Language issues)

116.    There are no equality implications resulting from this report

Corporate/Service Objectives

117.    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

118.    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)

119.    The appropriate Chief Officers have been consulted on this report. This report does not require Ward Member consultation.

Relevant Scrutiny Committee

120.    Corporate Resources.

Background Papers

None

Contact Officer

Alan Jenkins

Head of Finance

Tel (01446 709254)

Officers Consulted

Not Applicable

Responsible Officer:

Alan Jenkins

Head of Finance (Section 151 Officer)

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