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Agenda Item No 7

 

The Vale of Glamorgan Council

   

Scrutiny Committee (Corporate Resources): 17th July 2014

 

Report of the Managing Director

 

Closure of Accounts 2013/14

 

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 2013/14 financial year.

Recommendation

That Scrutiny Committee note the report and the financial measures taken and proposed.

Reason for the Recommendation

For Committee to be advised of the report and the financial measures taken and proposed.

 

Background

2.         Following the end of the financial year, Scrutiny Committee is provided with provisional outturn figures for the Council. The Statement of Accounts will be approved by Council by the 30th September which will normally follow the audit.

Relevant Issues and Options

General Fund

3.         The Council on the 6th March 2013 (minute no.943) agreed the Authority’s budget requirement for 2013/14. This represented estimated net expenditure for Authority of £218.734m. Total expenditure was to be financed by Revenue Support Grant (£125.547m), National Non-Domestic Rates contribution (£38.832m), an additional grant for the Council Tax Reduction Scheme (£0.788m) and Council Taxpayers (£53.567m). The Standard Spending Assessment (SSA) for the year was £219.212m.

4.         The revenue estimates have been amended and approved by Cabinet during the financial year, however they are at the same overall net level as the original estimate £218.734m (after use of General Reserves of £1.5m). The actual expenditure against this for 2013/14 is £214.601M, which is £4.133M below the amended revenue estimate.

5.         Appendix 1 amends the revised estimates to take account of the following adjustments. There is no overall effect on the Authority.

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.

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.

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 estimate to cover the estimated cost was included in Policy; however it has now been re distributed to the relevant service.

6.         Set out below is a table comparing the amended estimate and the actual expenditure for the Authority

Service

Amended Revenue Estimate

Total Provisional Actual

Variance Favourable  () Adverse

 

       £’000

          £’000

             £’000

Learning and Skills

 

 

 

Education and Schools

94,959

94,959

0

Libraries

2,729

2,727

2

Lifelong Learning

203

205

(2)

Youth Services

1,112

1,109

3

Catering

1,780

1,777

3

 

 

 

 

Social Services

 

 

 

Children and Young People

15,083

15,138

(55)

Adult Services

36,967

36,911

56

Business Mgt & Innovation

298

294

4

YOS

707

707

0

 

 

 

 

Visible Services and Housing

 

 

 

Environment and Visible Services

18,813

18,758

55

Parks and Ground Maintenance

3,582

3,625

(43)

Building Services

70

78

(8)

General Fund Housing

1,182

982

200

 

 

 

 

Development Services

 

 

 

Public Protection

2,689

2,665

24

Private Housing

11,287

11,281

6

Planning and Transportation

5,506

5,448

58

Leisure

4,174

4,239

(65)

Economic Development

996

1,016

(20)

 

 

 

 

Managing Director

 

 

 

Resources

501

494

7

Corporate and Customer Services

378

378

0

General Policy

17,218

14,602

2,616

 

 

 

 

Total Net Budget

220,234

217,393

2,841

Council Tax Surplus

0

(2,792)

2,792

Use of Reserves

(1,500)

0

(1,500)

GRAND TOTAL

218,734

214,601

4,133

 

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

Learning and Skills

8.         Education and Schools - Nil variance as detailed below.

9.         School Improvement and Inclusion - Favourable variance of £60k.

There were adverse variances of £58k on statemented children Learning Support Assistants (LSA).  This is a volatile budget dependant on identification of pupils with additional needs which can occur throughout the academic year.  The Additional Needs budget has now been delegated to schools to ensure that budget management and decision making are aligned.  There was a £26k adverse variance on staffing costs of the Specialist Resource units and the sensory impairment provision as a result of an increase in pupils with significant needs and sensory impairments.  There is currently a review of all specialist resource units and sensory provision being undertaken as part of the Learning and Skills medium term budget planning. There were adverse variances of £21k on the Pupil Referral Unit due to backfilling costs of core teaching and LSA staff on long term sick and maternity and also £50k relating to the respite provision at Ysgol Erw’r Delyn, which is intended to be self-funding, therefore, charges have been reviewed and were increased from April 2014.

There is a favourable variance of £60k on recoupment school placement income from other authorities.  This budget is subject to future pressure as pupil support data suggests that more Out Of County (OOC) pupils leave Vale schools than join each year and other authorities, are where possible, finding alternative provision for new pupils.  Children's placements in independent schools and with other authorities have a favourable variance of £49k as a result of finding alternative provision for expensive placements as part of the ongoing OOC placement review. This budget can be volatile, as one high cost placement can cost £150k, however, the inclusion service are monitoring high risk pupils and trying where possible to keep pupils within Vale schools.  There were also favourable variances of £20k for Alternative Curriculum Placements due to the maximisation of the 14-19 grant project, £28k for the Behaviour Support service due to additional training income from other authorities and £58k on efficient use of grant income.

10.      Strategy and Resources – Favourable variance of £79k.

There was an adverse variance of £136k within the discretionary further education travel awards budget due to an increase in post 16 pupils requiring transport to their chosen further education course and the need to pay invoices that related to the previous year. There was also an adverse variance of £44k due to unplanned pension back payments for school staff, these payments relate to staff who had not been invited to join the pension scheme when they joined the authority.

There are favourable variances of £69k within the Education finance section due to long term sickness within the admin team not being backfilled and one off savings on disclosure and barring and a further £35k on the union budget used for backfilling teachers on union duties.  There were favourable variances of £37k on the mainstream transport budget, which is managed by Development Services, as a result of contract efficiencies created from linking mainstream schools transport routes with fare paying school routes and £14k on the additional needs home to school transport budget due to increased income.  A £21k favourable variance occurred within the school building planning and repairs budget which is a responsive emergency budget dependant on the urgent needs of the schools and this budget has been reduced as part of the 2014/15 targets.  There was a £16k variance due to efficient use of grant income.    As pressures became clear part way through the year, the Non-Delegated schools expenditure budget was de-committed in order to achieve a balanced budget; this resulted in a further favourable variance of £67k.  This non delegated budget has been reduced as part of the 2014/15 budget process and therefore this flexibility will not be available for future years. 

11.      Service Strategy and Regulation – Adverse variance of £139k.

There is an adverse variance due to redundancy payment and early pension access, offset by savings in the Business Support Unit from a reduction in non-essential expenditure. 

12.      Education Transfers to Reserves - A net transfer of £114k was transferred into the Invest to Save reserve as part of the Schools Voluntary Early Retirement and Redundancy Scheme. This transfer was in respect of payments from schools for teaching staff that had retired in previous years which had been funded centrally in the first instance.  Provision within the budget was made for a £612k transfer into the Schools Investment Strategy Reserve; a further £38k was contributed to this reserve from other authorities through a capital charge for out of county pupils who will make use of Ysgol Y Deri.

13.      Libraries -Favourable variance of £2k.

There was an adverse variance due to a £57k transfer to reserves to assist with grant match funding for Library refurbishment grants.

There were favourable variances on staffing of £40k mainly due to a vacant post, premises £4k and transport £4k, all of which are in anticipation of meeting the 2014/15 savings target. There was also a favourable variance on energy of £11k. 

14.      Lifelong Learning - Adverse variance of £2k.

There was an adverse variance following a transfer to provisions of £87k, mainly to assist with meeting potential shortfalls following reductions in the Welsh Government allocation and the implementation of service reconfiguration.

There were favourable variances on energy of £3k, £28k on a vacant post which has now been filled, £7k on creche costs and £47k due to delays in course commencement, take up and training. 

15.      Youth Service - Favourable variance of £3k.

There was an adverse variance of £52k due to a transfer to provisions for committed one-off repairs to premises, restructure relocation costs, youth training and activities, associated staffing costs and potential redundancy costs linked to grant funding.

There were favourable variances on energy of £18k, £8k on the Duke of Edinburgh Awards funding, £5k on grant income, £24k due to delayed training and youth activities/ projects due to insufficient participant numbers, supplier availability and associated staffing costs, however, these have been committed to take place during 2014/15.

16.      Catering - Favourable variance of £3k.

There is an adverse variance of £94k following the transfer to a reserve to provide for future Capital repayments in respect of the Cashless Catering System implementation.

There is a favourable variance of £97k due to the Trading Unit surplus consisting of £103k attributable to the Primary School provision resulting from efficiencies within staffing, additional trading days and limited school closures during the financial year offset by a £6k loss within other Catering Services as a result of providing staff cover during absences.

The Catering Client achieved a nil variance with adverse variances £40k following a  capital repayment for the Cashless Catering System of £40k into the Project Fund,  expenditure of £250k to assist funding of kitchen/dining area improvements and school kitchen maintenance and repairs in order to meet the requirements of the Food Hygiene Rating Scheme and the Hazard Analysis of Critical Points Regulations.  Favourable variances used to offset the above were £26k for energy, £22k use of reserves, £242k as there was not full breakfast club take-up by schools and the maintenance and running costs of the Cashless Catering System were not required as full implementation will not be complete until 2014/15.  

Social Services

17.      There was a £5k favourable variance as detailed below.  As part of the Social Services Budget Programme, £2.241M of the Social Services Fund had been approved for use in 2013/14, however, this funding was not required at year end.

18.      Children and Young Peoples Services – Adverse Variance of £55k.

There were adverse variances relating to the Children's Placement budget of £429k due to a number of high cost placements, however, this was reduced by a £40k contribution from Education.  There was a transfer to provisions of £210k to fund future high cost residential placements and a reduction in the use of approved funding from the Social Services Fund of £213k.

There was a favourable variance of £45k on alternative means of provision and accommodation costs required for the current cohort of children, £53k on staffing due to administrative vacancies and during the recruitment of the new Operational Managers, £100k on the legal budget, £209k additional adoption income and a reduction in adoption allowances, additional grant funding £99k, £24k additional income from Health and the Emergency Duty Team recharge from Cardiff Council was £25k less than anticipated.  There are further favourable variances of £105k as a result of the reduced recharge from the Business Management and Innovation Division and the savings achieved ahead of those required of £97k.

19.      Adult Services – Favourable Variance £56k. 

There was an adverse variance of £509k on community care packages but with an over recovery of £528k on income received under the Deferred Payment Scheme, the net position at year end was a favourable variance of £19k.  The £200k savings on residential services as a result of negotiations with Hafod were not achieved in 2013/14, however, this will be pursued during 2014/15.  There was a transfer to provisions of £126k to fund potential future increases in Care Home fees in excess of inflation provided in the budget and a transfer to reserves of £205k to contribute towards the cost implications of future legislative changes.  There was also a reduction in the use of approved funding from the Social Services Fund of £2,028k.

There were favourable variances of £235k following the closure of Bryneithin, £174k on staffing, £50k on Transport, £138k on Supplies & Services and £91k on additional grant income.  With the levels of savings required for 2014/15 and 2015/16, budgets were being re-examined during 2013/14 with a view to their possible realignment as part of the consideration of new models of service delivery required to delivery future savings targets. There was a £646k favourable variance due to the receipt of the First Steps grant from Welsh Government and £854k due to the allocation provided for other pressures through the budget setting process.  There are further favourable variances of £212k as a result of the reduced recharge from the Business Management and Innovation Division and the savings achieved ahead of those required of £196k. 

20.      Business Management and Innovation – Favourable of £4k

The majority of this budget is recharged to Children's and Adult Services.  The position before recharges to services is a favourable variance of £321k.  This is made up of £130k on staffing, due to staff vacancies being held under the Protection and Policy heading pending a review of service provision which is now complete, the part year vacancy of the Business Manager post and the Operational Manager Safeguarding and Performance post, £11k on transport, £97k from grant and other income and £83k from Energy.  The favourable variance has meant that there has been a reduced internal recharge to Children's and Adults Services of £317k.

21.      Youth Offending Service - Nil variance.

There were adverse variances of £25k on the upgrading of hardware and software and £45k to provide contributions towards remand costs.

There were favourable variances of £4k on energy, and £66k on staff due to temporarily vacant posts.

22.      The Social Services Fund was not utilised in 2013/14.  As part of the closing process the Social Services provisions were reviewed and £609k has been transferred into the Fund from other available provisions. This will increase the Social Services Fund to £6.224m as at 31st March 2014.  This, therefore, allows the savings targets identified as part of the Social Services Budget Programme to be re-profiled and this will be considered as part of the Medium Term Financial Plan.  £415k has also been transferred into a new provision to cover grant exit strategies. Grant funded schemes such as Flying Start and Families First only have approval for a set period.  WG advise that redundancy costs cannot be funded from the grant allocation.  If grant funding was to cease, the Council could find itself in a position where it would have to pay redundancy costs.  This provision has been set up to cover this eventuality. 

Visible and Housing Services

23.      Environment & Visible Services - Favourable variance of £55k as detailed below.

24.      Waste Management & Cleansing - Favourable variance of £210k.

There were adverse variances of £133k on the Supplies & Services budgets, mainly due to the contribution to Prosiect Gwyrdd procurement costs and the contribution to procurement costs for the Organic Waste partnership with Cardiff and £8k on technical salary costs from the Engineers section.

There was a favourable variance on staffing of £150k due to a cut back in the level of overtime undertaken by the section and also a reduction in the level of agency staff used in preparation for budget savings required in 2014/15.  There was also a favourable variance on Cleansing transport costs of £96k due to the fleet size being reduced and a reduction in the number of hires of short term vehicles, again this is in preparation for the planned savings in 2014/15.  Income from other departments into the Waste Management & Cleansing section was £105k higher than anticipated.

25.      Highways & Engineers - Adverse variance of £262k.

There were adverse variances of £382k on the Premises budget, which were primarily due to providing for the one-off historical Cesspit costs, £35k on Internal Support and £800k due to a transfer from the Visible Services reserve which was not taken. 

There were favourable variances on staffing of £195k due to several vacant posts not being filled pending the Highways & Engineers restructure and Street Lighting capital work being undertaken by subcontractors at a lower cost than agency staff, £20k on Transport due to a reduced use of one off hire of vehicles, £604k on energy and £136k as a result of undertaking additional capital works for other departments.

26.      Support - Favourable variance of £154k.

This budget is held for any pressures in Visible Services throughout the financial year but was not required.

27.      All of the above were offset by a transfer to the Visible Services reserve of £47k. This is to be set aside to offset any costs that may arise from disposing of vehicles before the end of their useful life. Due to the level of savings required from reducing the vehicle fleet this may become more frequent.

28.      Grounds Maintenance - Adverse variance of £43k.

There were adverse variances on premises of £101k mainly due to increased one off repair costs at Colcot Sports Centre and Jenner Park, £129k on supplies & services due to an increased spend on subcontractors undertaking additional work for other departments and a subcontractor employed for tree maintenance instead of directly employed staff.

There were favourable variances on staffing of £60k mainly due to vacant posts and a reduction in overtime, £16k on Vehicles due to a reduced number of vehicles being hired and £111k additional income.

29.      Building Services - Adverse variance of £8k.

The Building Services trading unit had a turnover of £9.2m and made a surplus of £77k. This was assisted by the increased level of work Building Services is undertaking on the Welsh Housing Quality Standard.  The Building Cleaning & Security trading unit had a turnover of £3.4m and made a surplus of £43k.  In addition the Courier Service made a surplus of £17k. The Building Services Twin Hat function had an adverse variance of £9k.  All of the above were offset by a reduction in the recharge for maintenance repairs/WHQS works from Building Services to the HRA of £136k.

30.      General Fund Housing -   Favourable variance of £200k. 

As advised through the in-year monitoring, there was a £200k favourable variance under this service heading.  There were adverse variances following a transfer to provisions of £65k for Housing Data Market Support and a transfer to reserves of £88k for Rural Housing Needs assessment and £266k for potential costs of the Welfare Reform Act.

There were favourable variances of £51k on staffing due to staff vacancies pending reorganisation, £17k on the Spend to Save Budgets, £21k on supplies and services within Supporting People and Housing Strategy Teams, £530k on temporary accommodation for homeless.  The Vale has very short supply of one bedroom accommodation. Previously single individuals, who presented as homeless, were housed in emergency accommodation at Bed and Breakfasts around the Vale.  This is very costly, as the Housing Benefit payable for such placements does not fully recover the room charge; the Council has previously picked up the net cost.  During 2013/14, the Homelessness Team sought co-operation from a number of local private landlords, to use some of their larger properties as 'Shared’ accommodation, and were able to place a number of 'single’ clients in one property as a temporary solution whilst clients await social housing via the Council’s Homes 4 U waiting list.  This has had a nil impact in terms of cost on the Council as the clients are able to claim HB for the costs of their room.  In addition to private landlords, the Homelessness Team have also used some Council house properties which have been traditionally hard-to-let to alleviate the pressure on the temporary accommodation budget.  There are currently 54 single homeless clients placed in these ‘shared accommodation’ properties, at nil cost to the Council.  The net cost of placing these in Bed and Breakfast accommodation would be in excess of £400k.

Development Services

31.      Public Protection - Favourable variance of £24k

There was an adverse variance of £201k for costs associated with the on-going issue of abandoned horses within the Vale, however, WG grant to the value of £127k was received to partly offset these costs.  There were also adverse variances of £15k on the Coroners service due to higher than anticipated costs of medical reports, mainly due to newly introduced charges for histo-pathology tests by the University Health Board and £7k relating to other costs.

There were favourable variances on staffing of £90k as part of bringing the current staffing structure in line with those identified to meet future savings targets and £30k on pollution control expenditure due to work with external service providers to reduce the cost of maintaining monitoring equipment and analysing samples.

32.      Private Sector Housing - Favourable variance of £3k

There was an adverse variance following a transfer of £118k to the Regeneration and Economic Development Fund.

There were favourable variances of £75k from additional grant agency fees achieved from staff recharges to capital for administering the Renewal Area face-lifting project within Barry’s Castleland ward, £65k from agency fee charges on Disabled Facility Grants as a higher number of grant applications were processed in comparison with the previous year (93 in 2012/13 and 134 in 2013/14). This increase in income was partly offset by additional expenditure of £34k on staffing due to the employment of an additional Occupational Therapist in order to achieve the higher number of grant approvals.  There were other small favourable variances of £15k.

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

There was an adverse variance of £860k following a transfer to the Regeneration and Economic Development Fund.  

There were favourable variances of £210k on discretionary housing payments. Discretionary Housing Payments are used to provide support to claimants adversely affected by some of the key welfare reforms and there was a lower take-up than anticipated, however, there remains uncertainty over future demand.  There were also favourable variances of £247k from recovered overpayments and associated subsidy, £388k on Council Tax Benefit and £18k on audit fee savings.  Some of these savings are being held over and will be used against future savings.  It should also be noted that there is also uncertainty surrounding the impact Universal Credit will have once implemented.

34.      Planning and Transportation - Favourable variance of £58k.

There were adverse variances following a transfer to provisions of £60k to cover the costs of potential redundancies within the division and £90k for the electronic scanning and storage of historical planning files, necessary as part of the Space Project at the Dock Office.

There were favourable variances of £35k in the Transportation Division from additional income received from neighbouring authorities as a contribution towards cross boundary bus services during the year and £46k from the School transport service due to linking fare paying school routes with mainstream school transport routes in an effort to reduce contract costs. There were favourable variances of £45k on additional planning receipts due to an increase in the number of major applications received, £62k on staffing due to temporarily vacant posts pending recruitment and a high level of maternity leave and £10k relating to various other small variances.  Provision had also been made within the Transportation budget for the purchase of a Greenlinks vehicle, which is part of the community bus service, however, delays in the manufacturing process meant that the vehicle was not received and a transfer has, therefore, been made to provisions to cover expenditure in 2014/15 but this was £10k less than budgeted.

There has been a transfer to the Building Control reserve of £66k representing the surplus for the year on the Building Control Trading Account.  

35.      Leisure - Adverse variance of £65k

There were adverse variances of £70k as a result of legal costs relating to access issues at one of the country parks and following the transfer of £30k to provisions to cover the costs of refurbishing Nightingale Cottage, Porthkerry, a £80k transfer to provisions for legal fees within the Division and a transfer of £296k to the Regeneration and Economic Development Fund.

There were favourable variances of £183k on Leisure Centres mainly due to energy, £15k on staffing in the Leisure and Tourism division mainly under the Tourism Section.  There were also favourable variances in the Countryside Division of £135k relating to the lease of Dyffryn Gardens to the National Trust, £40k on salary costs due to long-term sickness and posts being held vacant pending a review of the staffing structure, £15k additional income at Cosmeston Medieval Village, mostly from filming on site and £23k from other small variances.

There has been a transfer to the Heritage Coast reserve of £6k and to the Rural Development Plan reserve of £18k, both representing income received in the year.

36.      Economic Development  - Adverse variance of £20k

There was an adverse variance following the transfer to the Regeneration and Economic Development Fund of £183k.

There was a favourable variance of £63k on the Employment Training Service which is in contrast to the £66k adverse variance in the previous year, prior to its transfer to Development Services.  The £63k is was made up of £41k from additional income from the Work Programme, as higher numbers of applicants are completing placements and the service has restructured and streamlined its operating procedures, resulting in a reduction in the operational costs of running the service of £22k. There were also favourable variances of £22k from income received by the Business Support Centre (BSC) as occupancy was higher than previous years, £29k on Miscellaneous Properties due to reduced maintenance and electricity costs as some of these costs were recharged to tenants, £16k on staffing due to the part year vacancy of the Town Centre Manager post, £17k at the Vale Enterprise Centre due to reduced maintenance costs and £16k from other small variances.  

Managing Director

37.      Customer and Corporate Services - Adverse variance of £3k.

There were adverse variances on the employee budget of £29k mainly due to early retirement costs, £120k on the supplies and services budget due to ICT costs arising from the Content Management System project, however, this was offset by a £62k transfer from reserves.

There were favourable variances on the premises budget of £11k due to savings on utility costs in the Contact Centre, £43k from additional income arising mainly from the Contact Centre and £30k from the Corporate Partnership, mainly arising from a saving on supplies and services.

38.      Finance & ICT - Favourable variance of £3k.

There were adverse variances on general running expenses of £53k arising mainly from ICT, £21k in respect of Council Tax court income and a £204k transfer to provisions for Trainee Appointments.

There were favourable variances on staff of £205k arising from Business Improvement £20k, Audit £74k, Fraud £61k and Housing Benefits £50k.  The saving of £20k in Business Improvement is due to a vacant post that was subsequently filled. The staff savings relating to Audit and Housing Benefits are in respect of vacant posts held over for agreed and anticipated future savings. The saving of £61k in Fraud is attributable to the secondment of a member of staff to the Department of Work and Pensions. The Housing Benefit Fraud function is will be expected to transfer to the DWP during 2014/15.  There was a £76k favourable variance on the Council Tax Discount Scheme due to a lower take-up than anticipated; however, there remains uncertainty over future take-up of the scheme.

39.      Property & Office Accommodation - Favourable variance of £2k.

There were adverse variances on supplies and services of £65k and a £82k transfer to the Property Reserve and a £245k transfer to the Insurance Fund.

There were favourable variances on capital recharges of £192k, £12k from additional income, £77k on building repairs and maintenance, £42k due to lower rent being payable on Provincial House, £33k on utilities and £38k on building security. Savings associated with office accommodation have been made in anticipation of savings required for 2014/15. 

40.      Legal & Democratic- Favourable variance of £6k

There were adverse variances from transferring £50k to the Legal Services Reserve and £185k to the provision for Trainee Appointments.  This was offset by the favourable variance from Management/Legal Services and Democratic Services as detailed below.

41.      Management/Legal Services – Favourable variance of £158k.

There were favourable variances on staffing of £58k due to vacant posts and £16k on running expenses, mainly from reduced external legal costs. Both savings are in anticipation of savings required in 2014/15. There were also favourable variances from additional income of £59k mainly in relation to undertaking external work for Cardiff County Council which is anticipated to continue and £25k in Management Services as a result of over-estimating pension liabilities.

42.      Democratic Services - Favourable variance of £83k.

There were favourable variances on staffing of £36k due to vacant posts that were subsequently filled, £32k from additional income mainly in relation to Registrars and £15k from running expenses. The last two savings were made in anticipated of savings required in for 2014/15.

43.      General Policy -Favourable variance of £2.616M.

At the time the final budget proposals for 2014/15 were made, it was projected that this budget would have a favourable variance of £1,615k.

There were adverse variances due to a transfer to the School Investment Strategy reserve of £1,405k 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 a transfer of £175k to a provision in respect of Central South Education Consortium redundancy costs.

There were favourable variances of £91k on grants, £85k on Council Properties,  £470k  on supporting imbalances, £84k in respect of  Capital Charges (after a special principal repayment of £900k was made in order to reduce the burden of debt on revenue), £110k on Audit Fee, Corporate Governance of £504k, £114k general running costs and an additional £395k for interest received. The following estimated amounts were not required in the year, £1.034m for estimated costs of Single Status, £209k Housing Recharge and £100k Youth Initiative.  A provision of £1m previously set aside for potential legal costs in respect of single status liabilities is no longer required and has been returned to Policy.

There has been a budgeted transfer to reserves of £40k for election expenses.

44.      Council Tax - Favourable variance of £2.792m

Council Tax surplus has increased from the £2.5m reported to Cabinet in November 2013.   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.

45.      The Council's overall initial net favourable variance of £5.633m is reduced by £1.5m in respect of a transfer from the Council Fund reserve no longer required to be made. The final favourable variance of £4.133m is now included in the Council Fund reserve. The balance on the reserve at 31 March 2014 is £13.961m.  

Housing Revenue Account

46.      The 2013/14 Housing Revenue Account resulted in a deficit of £7.164m compared to the revised estimate deficit of £8.129m.  A breakdown is shown in Appendix 2.  The working balance opened at £13.570m and closed at £6.406m.

47.      The net favourable HRA revenue budget variance of £965k is identified over the following areas.

48.      Supervision & Management General – Favourable Variance £1.014m.

There were favourable variances in Support and Central Management Costs £662k, staffing through vacancies & pension pay out savings £67k, software/hardware and other non-staffing costs related to Housing Teams £58k, Incentive to Move Schemes £52k,Tenant Participation £49k, Homes 4U advertising £17k, Welfare Advice team £52k and other savings of £57k.

49.      Supervision and Management Special Services – Favourable Variance £460k.

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 £460k is a combination of the following: £116k 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; £20k Temporary Accommodation mainly due to savings in utility costs and furnishings; and £324k Special Services which is made up of £111k on energy bills, cleaning £31k, fixtures £27k, environmental improvements £72k, grounds maintenance £56k and other favourable variances of £27k.

50.      Housing Repairs – Favourable Variance £192k.

A number of factors have affected the level of expenditure on repairs; previously some larger scale jobs would have been charged through the repairs budget but are now funded via the capital programme.  In addition, as a consequence of the majority of the housing stock being brought up to the Welsh Housing Quality Standard, the number of repairs has reduced.

51.      Capital Financing Costs – Favourable Variance £8k.

Both principal and interest charges were lower than anticipated.

52.      Rents, Rates, Taxes and Other Charges – Favourable Variance £33k.

This is largely due to a favourable council tax variance of £32k for void properties. As the level of voids was high during the year, the budget for council tax on void properties was uplifted, but the level of voids towards the latter end of the year reduced.

53.      HRA Subsidy Payable – Favourable Variance £82k.

The HRA negative subsidy payment for 2013/14 was less than budgeted.

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

It was anticipated that the level of bad debts would be high following the implementation of the under occupation charge on Council tenants as part of the Welfare Reform Act.  However, the increase in tenant arrears has been less than expected due to the hard work of housing staff and the use of Discretionary Housing Payments.

55.      Capital Expenditure from Revenue Account – Adverse Variance £934k.

A higher contribution was required than budgeted towards the Housing Improvement Plan due to increase expenditure.

56.      Rent Collected on Dwellings and Non Dwellings – Favourable variance £97k.

Rents collected were 1% more than budgeted.

57.      Non Dwelling Rents – Adverse Variance £24k.

Rents collected on garages were 8% less than budgeted.

58.      Interest Received – Adverse Variance £20k.

The average LIBID rate for the year was lower than anticipated.

59.      Charges for Services and Facilities – Favourable Variance £1k. 

Insurance Fund

60.      The total Insurance Fund comprises of both a provision and reserve.  The provision represents potential liabilities on known claims and the reserve relates to claims not yet made.  A breakdown is shown below.

 

Provision

Reserve

Total

 

£000

£000

£000

Opening Balance

3,822

726

4,548

Deficit on Insurance Transactions

(403)

0

(403)

Transfers In/(Out)

437

(57)

380

Closing Balance

3,856

669

4,525

         

61.      Towards the end of 2013/14, a number of insurance claims were settled which left the overall Insurance Fund balance in a position which was considered to be too low.  It was felt prudent, to transfer £245k into the fund thus maintaining the closing balance at a similar level to the opening balance.  

Trading Operations

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

63.      The provisional figures for the Trading Services show an overall gross surplus of £217k (before repayment of £136k to the Housing Revenue Account). The details are below: 

 

Building Mtce

Building Cleaning

Caretaking and Security

Catering

Total

 

£,000               

£,000    

£,000

£,000

£,000

(Surplus)/ Deficit

(77)

(5)

(38)

(97)

(217)

 

 

 

 

 

 

 

                           

 

Less: Building Maintenance

 

136

                                                                                                                                       (81)

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

Capital

65.      The overall position on the revised 2013/14 Capital Programme was a variance of £4.7m. The statement at Appendix 3 details the outturn by scheme.

Learning and Skills                

66.      The overall outturn for the Directorate of Learning and Skills is a variance of £858K. The major variances are outlined below.

67.      Penarth Learning Community - Expenditure brought forward of £1.713m

This major school redevelopment is under construction and is proceeding well on site. For the first time in 2013/14, large capital creditors have been included in the accounts.  An invoice for this scheme of £2m was received and paid in April 2014 but has been included in the 2013/14 accounts, thus showing an additional expenditure increase against budget.  There is no overall effect on the scheme funding as it has been requested that the 2014/15 budget is reduced and is brought forward into 2013/14 to cover this position. 

68.      Capital Loans for Schools - Favourable variance of £255K 

This was a new initiative that was agreed by Cabinet on 29th July 2013.  It allows schools to receive a loan to undertake capital works and make repayments over a number of year thereby delivering projects in a shorter timescale than if they would have had to accumulate balances prior to work commencing.  There was only one scheme identified in 2013/14 which was at Gladstone School with a value of £45k.  A higher uptake has been received for the £300k funding in 2014/15.

69.      Demolition of St Cyres - Favourable variance of £132K

Work on this scheme is now complete but at a lower cost than the original budget. 

Social Services

70.      The overall outturn for the Directorate of Social Services is a variance of £198k. The major variance is outlined below.

71.      Southway and Cartref Porthceri Home Upgrade - Slippage of £149k

Assessment needed to be undertaken to find the best options for delivery of the works in a working residential home environment.  Works have commenced and will incorporate the fire precaution works planned for 2014/15. Completion is anticipated during July 2014.  Slippage of £149k has been requested. 

Visible and Housing Services 

 

72.      The overall outturn for the Directorate of Visible Services and Housing is a variance of £4.010m. This comprises a variance of £1.035m on the Housing Services and a variance of £5.045m on Visible Services.  The major variances are outlined below.

73.      Housing Improvement Programme  Expenditure brought forward of £1.035m

Works to deliver WHQ standards are progressing well.  A large creditor of £900k was included in 2013/14 accounts while the invoice was paid in April 2014.  There is no overall effect on the scheme funding and the 2014/15 scheme will need to be re-profiled to take into account this transfer of expenditure between years.

74.      Street Lighting Energy Reduction - Slippage of £157k

The start of this scheme was delayed due to the need to assess the various options to achieve the best way to delivery optimum energy efficiency.  This scheme will continue during 2014/15 and slippage of £157k has been requested.

75.      Coldbrook Flood Risk Management - Slippage of £464k

The construction phase of the scheme was delayed due to a remodelling and redesign exercise, following discuss with Natural Resources Wales.  Design is now substantially complete and discussions are ongoing with WG regarding changes in scheme costs and potential grant funding.  A report is being brought to Cabinet by the Director of Visible Services & Housing detailing progress on this scheme.  Construction will commence following agreement of grant funding with WG.  It has therefore been requested that slippage of £464k is carried forward to 2014/15.

76.      Llanmaes Flood Risk Management - Slippage of £1.050m

The construction phase of the scheme was again delayed due to a remodelling and redesign exercise, following discuss with Natural Resources Wales.  Remodelling is still being undertaken but will be completed shortly.  Discussions regarding the outcome will then take place with WG prior to work commencing.  It has, therefore, been requested that slippage of £1.050m is carried forward to 2014/15.

77.      Flood Risk Management - Slippage of £216k

There are four flood alleviation schemes which are outstanding as it was not possible to undertaken works and investigations due to environmental restrictions and staff resources.  Schemes are at varying stages of design, however, construction is anticipated during 2014/15 and slippage of £216k is requested.

78.      Cross Common Road Bridge - Slippage of £624k

Detailed design for a deck replacement has now been completed.  Further consultation is currently underway prior to delivering this scheme in 2014/15. It is, therefore, requested that slippage of £624k is carried forward to 2014/15.

 

79.      Gileston to Old Mill Highway Improvements - Slippage of £2.135m

Work has now commenced on site and is progressing well.  Slippage of £2.135m is required in order to complete the scheme.

 

Development Services

80.      The overall outturn for the Directorate of Development Services is a variance of £429k. The major variances are outlined below.

81.      Creative Rural Communities - Variance of £1.244m

Schemes include Pride in Our Farming Families, Cycleway and Village grants and Youth Heritage. A good take-up has been achieved so far. The large variance reflects the total expenditure on the grants which is funded from WG grants whereas the budget reflects purely Council match funding on the scheme. It is requested that Council match funding of £145k is carried forward to 2014/15.

82.      Barry Regeneration Area Partnership - Slippage of £228k

Welsh Government provided £3.3m of grant funding for the Barry Island Regeneration scheme in 2013/14.  Work on site was delayed due to severe weather conditions through the winter months and will continue into 2014/15.  WG could only provide the grant for 2013/14 expenditure.  It was agreed with WG that other works, already identified to be funded from Council monies, could be claimed against the grant and that the released Council funding would be set aside to be carried forward into 2014/15 to fund the completion of the works. It has therefore been requested that the Barry Regeneration budget for 2014/15 is increased by £779k to reflect capital slippage of £228k from the Barry Regeneration scheme, £175k from schemes elsewhere in the capital programme, £110k from revenue contributions to capital and a transfer of £216k from the Visible Services reserves, all released by expenditure claimed from the grant in 2013/14 and in addition a £50k contribution from Leisure  reserves.

83.      St Paul's Church - Slippage of £250K                 

A report to Cabinet on 24th March 2014, minute no. C2256 agreed that authority be granted to market an opportunity for the use of St Paul's Church, Penarth for community/recreational uses or as a mixed use scheme including community/recreational uses and other appropriate uses, subject to the relevant planning processes. 

84.      Leisure Centres Refurbishment - Slippage of £624k  

During the year, formal agreement was reached for the scope of condition survey works that were required.  Works were completed during May 2014, however, the final account is yet to be settled and, therefore, £624k slippage is required. £1.058m of the works undertaken in 2013/14 were funded from the Leisure Management Strategy reserve.

Resources

85.      The overall outturn for Resources is a variance £930K. The major variances are outlined below.

86.      Civic Offices Partial Roof Replacement - Slippage of £284K

Currently an alternative solution is being reviewed, in order to take account of changes in technology and alternative method delivery, thus providing value for money and the most optimum solution for the Council. It is, therefore, requested that slippage of £284k is carried forward into 2014/15 to complete the works.

87.      Regeneration Fund - Underspend of £150K

No schemes were identified during 2013/14 and therefore the revenue funding earmarked for this scheme has been transferred into the Project Fund.

88.      Space Project -  Slippage of £223K

There was progress on the Space Project during 2013/14 with the transfer of Children's Services staff from Haydock House to the Dock Office.  Slippage has been requested to progress the next phase of work during 2014/15.

Reserves

89.      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.

90.      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.

91.      As previously reported to Cabinet on the 24th February 2014, the Single Status Reserve has been identified as being no longer required, other than a small sum for contingencies. The reserves £2.162m has been disaggregated and it is proposed that the monies are used to fund the areas as shown below.  The Council has already invested in water front areas e.g. through the Barry Island Regeneration scheme and therefore funding is now required to ensure that these works can be maintained.  A report has been presented to Cabinet on potential improvements to Jenner Park and these proposals need to be supported by the necessary finance.  The remaining balance has been utilised for Schools as there is an ongoing need to fund works on ageing school buildings.

Provisions

Barry and Penarth Sea and Water Front - £900k

Jenner Park Improvements                      - £350k

Reserves

School Investment Strategy                    - £912k

92.      With regard to Jenner Park, in addition to the £350k in the previous paragraph, a sum of £445k has been transferred from the Visible Services Reserve to a provision to fund the Jenner Park Improvements, which therefore total £795k.

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

94.      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.

95.      Attached at Appendix 4 is a schedule showing the Council's reserves as at 31st March 2014. The reserves have been reviewed and are currently considered adequate for reported uses.

Resource Implications (Financial and Employment)

96.      The revenue under spending previously reported means that the General Reserve will increase from £9.828m to £13.961m.  When the budget was set for 2014/15, future years savings targets have meant that £2.5m of General Reserve were allocated for use in 2014/15, with a further assumed used of £4m in 2015/16 and 2016/17.

97.      The under spend on the revised capital programme in 2013/14 is £4.7m

98.      The table below shows how the capital programme has been financed in 2013/14.

 

Source of Funding

Outturn

(£000)

General Capital Funding

7,794

Capital Receipts – Housing

1,151

Capital Receipts – General Fund

0

WG/WEFO Grants

34,730

Revenue

1,557

Reserves - Schools Investment Strategy

2,436

                - Leisure

1,058

                - Misc Buildings

1,105

                - Vehicle Renewal Fund

884

                - Project Fund

424

                - Energy Fund

139

                - IT Fund

128

                - Schools Rationalisation

45

HRA Revenue

6,431

HRA Reserves

7,164

Other e.g. Section 106

331

 

 

TOTAL

65,377

 

99.      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. 

100.   Capital Receipts - The existing capital receipts balance as at 31st March 2014 was £14.78m, all relating to the General Fund.  The sum of £2.5m was received from the sale of assets and mortgage repayments during 2013/14, as follows:

                                                                                                                      £'000

                        Sale of Council Houses                                                            158*        

                        Sale of Land and Buildings                                                    2,279

                        Mortgage repayments on council house sales                           33    

                        Mortgage repayments on private homes                                   36  

 

*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’

           

101.   As a result of the capital under spend in 2013/14, an allocation of £5.549m is requested as slippage into 2014/15 and £60k into 2015/16.  This will fund the completion of schemes as shown in Appendix 5.  Of this figure, the sum of £1.126m will be funded from capital receipts and £4.483M will be provided from revenue, reserves or external sources.

102.   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 2013/14 was £2.8m. Works totalling £17.83m were spent on major improvements to the Council's housing stock, £2.8m of which was funded from the MRA, £1.15m from Housing capital receipts and £13.6m from Housing revenue and reserves as well as £280k of supported borrowing.  A reduced Major Repairs Allowance of £2.76m has recently been awarded to the Authority for 2014/15.

103.   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. As such, Directorates have once again been informed that whilst committed capital schemes would be allowed slippage, those which were not contractually committed could not be funded. This enables some of the under spend on the Programme to be retained and ploughed back into funding the future capital programme. 

Sustainability and Climate Change Implications

104.   There are no Sustainability and Climate Change implications resulting from this report

Legal Implications (to Include Human Rights Implications)

105.   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, 2014

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

107.   There are no equality implications resulting from this report

Corporate/Service Objectives

108.   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

109.   The Managing Director has requested approval of slippage via Managing Director's emergency powers.

Consultation (including Ward Member Consultation)

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

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)