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Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Economy and Environment): 17th July 2012

 

Joint Report of the Director of Development Services and the Director of Visible Services and Housing

 

Closure of Accounts 2011/12

 

Purpose of the Report

1.             The accounts are complete and this report is to inform Scrutiny Committee of the provisional financial position for the 2011/12 financial year.

Recommendation

1.             That the Scrutiny Committee note the provisional financial position for the 2011/12 financial year. 

Reason for the Recommendation

1.             That Members are aware of the position with regard to the provisional financial position for the 2011/12 financial year relevant to this Scrutiny Committee.

Background

2.             Following the end of the financial year, Committee are 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.

General Fund

3.             The Council on the 28th February 2011 (minute no.957) agreed the Authority’s budget requirement for 2011/12.

4.             Certain accounting adjustments have been made to service budgets in respect of:

  • Depreciation of Assets. This charge can vary for a year due to an increase / decrease in the valuation of assets. These 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.
  • Single Status - the estimates have been amended as Policy has been charged with the estimated costs for 2011/12.
  • Energy - this estimate was not required for 2011/12 and has been transferred back to Policy from service committees.
  • Carbon Reduction Scheme. - The original estimate for this was included in Policy, however it has now been re distributed to the relevant service.

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

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

Directorate of Environmental and Economic Regeneration

Planning and Transportation

4,810

4,915

(105)

Economic Development and Leisure

6,096

6,193

(97)

Visible Services

20,535

20,331

204

 

Grand Total

31,441

31,439

2

 

 

7.             The main reasons for the variances are set out in the following paragraphs 8 to 17.

8.             Planning and Transportation –There is an adverse variance of £105k. This is due to Planning fee income being reduced by £144k due to the current economic climate. There was a net increase in Support, Internal Recharge expenditure and income of £38k due to the need to provide staff cover and a reduction in technical salary income. A £117k over spend on transport and third party costs is more than offset by an additional  £127k in other grant income contributions towards the provision of bus services. There was a £43k saving on employee costs across the division and an additional £24k in Government Grant income as a result of extra one off funding from the Planning Improvement Grant.

9.             Funding of the adverse variance has been met from savings within Visible Services.

10.        Economic Development and Leisure - There is a net adverse variance of £97k, after transferring £38k to a provision to cover staff restructuring costs.

11.        The net overspend of £59k was as a result of a £92k overspend on premises costs across the division. There was an overspend of £54k on employee costs and £20k on supplies and services. There was additional expenditure on revenue contributions to capital of £3k.

12.        This was offset by a net underspend on third party, internal recharge expenditure and income of £62k. Income increased by £30k across the division and there were savings on transport costs of £18k.

13.        Funding of the adverse variance and the transfer to the provision (in total £97k) has been met from savings within Visible Services.

14.        Visible Services - Net favourable variance of £204k. This is made up as follows –

15.        Cleansing favourable variance of £40k. The underspend was due to the employee budget being underspent by £58k due to vacant posts. As tonnages to landfill have also fallen this produced a saving of £125k. Cleansing also had an underspend on transport costs of £67k due to less vehicles being used for the residual collection service than budgeted for. Income into the cleansing section was also £19k higher than anticipated. These savings were offset by Project Gwyrdd procurement costs which were funded by cleansing at a cost of £229k.

16.        Grounds Maintenance had an adverse variance of £18k. The employee budget was underspent by £15k due to vacant posts. The premises budget was overspent by £7k mainly due to the increased cost of utility bills. Due to new legislation for Hand Arm Vibration the majority of hand tools within Grounds Maintenance at a cost of £15k for which there was no budget. The supplies and services budget was also overspent by £11k.

17.        Highways and Engineers had a favourable variance of £6k. Employee costs were over budget by £65k due to agency costs for which there was no budget, however the Highways and Engineers section had additional income of £51k from these agency staff booking their time to capital schemes. Supplies and Services were £1.280M over budget however this was largely due to doing additional work for other departments. The Highways and Engineers section had additional income of £1.300M from these schemes. In addition monies had been set aside within the Support budget of £176k which has been utilised to achieve a balanced Directorate budget.

Capital

18.        The overall outturn for the Directorate of Environmental and Economic Regeneration is £9,804,000 underspent. The major variances are outlined below and the statement at Appendix 2 details the outturn by scheme.

Visible Services Asset Renewal Under spend £109,000

The total allocation of £771,000 incorporates various projects within Highways, Parks and Waste Management Divisions. Although many projects were completed on time and within budget there are several that did not proceed, e.g. Friar's Point fencing (due to problems in gaining approval from the adjoining land owner) and Knap Gardens bridge repair (works no longer required), and several that were not contractually committed by year-end, e.g. Coastal Protection schemes and Highways Structures. The sum of £23,000 has been set aside from this budget to fund an over spend on the Road Safety Capital Grant 2011/12 budget in the Department's Planning Division. Slippage of £45,000 has been requested in order to contribute to a 2012/13 scheme for strengthening pier structures along the A48 as well as a total of £7,000 for release of retentions for works at Burton Bridge and Harbour Road bridge, both completed during 2011/12.

 

Vehicle Replacement Programme                                      Under spend £849,000

This budget, established for the on-going renewal of the Authority’s council vehicle fleet, has under spent through procurement and delivery delays during the year. Initial problems were encountered in procuring vehicles through the All Wales Public Sector Framework Agreement though that was resolved mid-year. The Fleet Manager has reported lengthy delays in build times from several manufacturers which meant late vehicle delivery and numerous vehicles not being received as anticipated by year-end. Slippage of £762,000 has been requested in order to fund the vehicles on order but not received by 31st March 2012.  

 

Dyffryn House National Trust Contribution                        Under spend £1,500,000

This budget, established as a contribution to the National Trust for investment and improvements at the property.  Though it had been anticipated that this agreement could be achieved by the end of March, unfortunately this was not possible and so slippage of this budget has been requested.

 

Dyffryn House Refurbishment                                            Under spend £6,900,000

The sum of £6,900,000 had been set aside for major remedial works at the Dyffryn Estate which were highlighted as being required following a survey of the estate. It was decided to hold off pursuing these works until agreement had been made with the National Trust.  This will be required during 2012/13 so slippage of this budget has been requested.

 

Rural Local Development Plan                                Under spend £420,000

This successful rural grants regime budget has now completed and been replaced by Business Plan 2 (see below). Various projects, to the value of some £6M (including external match funding) have been completed since 2007, including improved services for the rural economy and population, village renewal, tourism activities and conservation and upgrading of rural heritage in the Vale. The under spend does not reflect any reduction in activity, rather the final year budget was over estimated. 

 

Rural Local Development Plan - Business Plan 2                Over spend £557,000

The next generation of rural development grants, Business Plan 2 commenced during 2011/12, the first of a three year programme. Schemes involved include Pride in Our Villages, Pride in Our Heritage, encouraging home grown food and Pride in the Vale. A good take-up has been achieved so far. The large over spend reflects the total expenditure on the grants which is funded from WG grant. A separate budget is shown in Appendix 2 for the element of this scheme that is Council funded.

 

Barry Regeneration Partnership (BRP)                               Under spend £71,000

This budget comprises various smaller value projects, such as Nells Point Study and Thompson Street public art. Similar to the previous year, resources have been re-directed from this budget in order to ensure completion on WG's Barry Regeneration Area grants awarded in the year. As this budget is regarded as match funding for these grants, it has been requested that the under spend of £71,000 be slipped into 2012/13 towards future regeneration projects. 

 

Barry Regeneration Area (BRA) Grants                               Under spend £151,000

Some 7 projects were awarded BRA grants from WG during 2011/12 within this Directorate, e.g. Porthkerry Forest Lodge, Barry Island Adizone and Thompson Street Public Realm Improvements.  Works on all schemes have been completed within the year but, despite some retention figures still being payable in 2012/13, WG have been informed of the underspend and all final grant claims have been made. Slippage of £22,000 has been requested to cover retention figures.

 

Barry Waterfront Park & Ride                                              Over spend £17,000

The overspend is based on the approved budget as shown. However, additional late WG grant approvals were received which increased the scheme total to £742,000. The position would then show an underspend of £36,000. This sum is covered by WG grant and slippage of this sum has been requested.  A separate Cabinet report will be produced by the Project Manager to explain the scheme's issues.

 

Reserves

19.        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.

20.        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.

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

22.        Attached at Appendix 3 is a schedule showing the Directorates' reserves as at 31st March 2012.

Resource Implications (Financial and Employment and Climate Change, if appropriate)

23.        Capital slippage, as outlined in Appendix 4 has been requested.

24.        Given anticipated on-going cuts in capital funding for future years it is vital that all 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 underspend on the Programme to be retained and ploughed back into funding the future capital programme.

Legal Implications (to Include Human Rights Implications)

25.        The provisional out turn figures for the Council will be used in the preparation of the Statements of Accounts, which under the Accounts and Audit Regulations, must be certified by the Director of Finance ICT and Property by the 30th June 2012. 

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

27.        There are no equality implications resulting from this report.

Corporate/Service Objectives

28.        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

29.        The Chief Executive will be requested to approve the slippage via the Urgency Procedure.

Consultation (including Ward Member Consultation)

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

Background Papers

None

 

Contact Officer

Carolyn Michael (Senior Group Accountant) (01446 709778)

 

Officers Consulted

Director of Development Services

Director of Visible Services and Housing

 

Responsible Officer:

Rob Thomas

Miles Punter

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