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Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Economy and Environment): 16th July 2013

 

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

 

Closure of Accounts 2012/13

 

Purpose of the Report

1.             The accounts are complete and this report is to inform Scrutiny Committee of the provisional financial position for the services within its remit, for the 2012/13 financial year.

Recommendations

1.             That Scrutiny Committee are asked to note the slippage requests in Appendix 4 to this report. In order to avoid delays in progressing the schemes, the requests have been approved by the Managing Director exercising emergency powers.

2.             That the remainder of the report and the financial measures taken and proposed be noted.

Reasons for the Recommendations

1.             To note the amendments to the 2013/14 capital programme due to slippage from 2012/13.

2.             To note the remainder of the report and the financial measures taken and proposed.

Background

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

Revenue

3.             The Council on the 7th March 2012 (minute no.951) agreed the Authority’s budget requirement for 2012/13.

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

5.             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.

6.             Asset Rents. This charge can vary for a year due to an increase / decrease in the valuation of assets. The movements need to be incorporated into the accounts.

7.             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.

8.             Set out below is a table comparing the amended estimate and the actual expenditure for this Committee.

Service

Amended Revenue Estimate

Total Provisional Actual

Variance Favourable  () Adverse

 

       £’000

          £’000

             £’000

Visible Services

 

 

 

Environment and Visible Services

17,820

17,783

37

Parks and Ground Maintenance

3,319

3,344

(25)

Building Services

25

23

2

 

 

 

 

Development Services

 

 

 

Planning and Transportation

5,104

5,096

8

Leisure

4,989

4,831

158

Economic Development

874

874

0

 

 

 

 

Total

32,131

31,951

180

 

 

 

 

9.             The main reasons for the variances are set out in the following paragraphs 10 to 25.

Visible Services

 

10.        Environment and Visible Services favourable variance of £37k. This is made up as follows:

11.        Cleansing favourable variance of £31k. The employee budget was underspent by £50k due to vacant posts. Additional costs at Atlantic Trading Estate for asbestos removal and an annual service charge caused an overspend on the premises budget of £41k. Cleansing also had an overspend on transport costs of £86k due to the popularity of the green waste service and a dedicated fleet of vehicles being used. Supplies & Services budgets were also overspent by £106k mainly due to the contribution to Project Gwyrdd procurement costs. This would normally have been covered by a contribution from the Visible Services Reserve however it was not required. Internal support costs were £67k underspent and income into the cleansing section was also £147k higher than anticipated.

12.        Highways & Engineers had a favourable variance of £13k. Employee costs were over budget. £38k was due to an overspend on employee costs on the Winter Maintenance budget due to the cold winter and snow events in 2012/13. £49k was due to agency costs for which there was no budget, however the Highways & Engineers section had additional income of £112k from these agency staff booking their time to capital schemes. Premises budgets, mainly for resurfacing & potholes, were overspent by £638k. Provision had been made to cover this from reserves however it was not required. Internal support budgets were underspent by £651k, of which £598k was due to a reduction in the energy recharge. Highways & Engineers also were charged £35k for Capital schemes for which there was no budget. Supplies & Services were £363k over budget, however, this was largely due to carrying out additional work for other departments. To offset this, the Highways & Engineers section had additional income of £373k from these schemes.

13.        The Support budget for Visible Services had a favourable variance of £193k. This budget is held for any pressures in Visible services throughout the financial year but was not required.

14.        All of the above were offset by a transfer to the Visible Services reserve of £200k. £160k was set aside to offset a potential shortfall in car park income in 2013/14. £30k will be used in 2013/14 for Highways and Engineers feasibility studies and £10k is to be used to improve the overflow car park at Barry Island.

15.        Grounds Maintenance had an adverse variance of £25k. The employee budget was overspent by £73k mainly due to an overspend on agency costs. The premises budget was underspent by £40k mainly due to an underspend on the cost of Court Road Depot. Vehicles were under budget by £43k due to a lower spend than budgeted. The supplies & services budget was overspent by £80k. This was due to increased spend on Rhoose Point for which there is no budget, increased spend on machinery due to the need to replace more frequently due to hand arm vibration legislation and also a combination of various other smaller overspends. To offset this income was £19k more than budgeted. Internal support costs were also underspent by £26k.

16.        The Building Services department had a favourable variance of £2k. The breakdown is as follows:

17.        The Building Services trading unit made a surplus of £36k, the Building Cleaning & Security trading unit made a surplus of £7k and the Building Services Twin Hat function had an overspend of £1k.

18.        All of the above were offset by a transfer to the Miscellaneous Building Services Technology reserve of £40k.

Development Services

 

19.        Planning and Transportation had a favourable variance of £8k. The under spend is as a result of a £153k under spend on transport, additional customer receipts of £85k, a reduction in employee costs by £62k and a £1k saving on premises. This was offset by a £64k over spend on supplies on services.  A planned transfer from reserves of £119k to cover the shortfall in planning fee income was not required and there was a decrease in grant income of £9k and a net decrease in internal and support recharges of £1k. This is offset by a transfer of £100k to the Local Development Plan Provision.

20.        Leisure including Countryside had a favourable variance £158k.  The variance is due to the impact of the lease of Dyffryn Gardens to the National Trust during 2012/13.

21.        The Leisure Centres achieved a balanced budget. This is made up of increased employee costs of £95k, a £72k overspend on supplies and services and a £56k shortfall in customer receipts. This was offset by a £199k reduction in energy recharge and a net £24k saving on premises and third party payments.

22.        Economic Development achieved a balanced budget. Details of this is shown below:

23.        A general under spend of £56k came from a saving of £38k on premises costs, £17k on employee costs and £15k on supplies and services. Internal recharge income was down £13k as a result of reduced technical salary income and there was a £1k shortfall in customer receipts.

24.        This underspend was offset by an adverse variance in the Community Enterprise Centre of £2k and an adverse variance within Employment Training Service of £66k, less a favourable variance within the Communities First Management charges of £12k

25.        The variance within the Employment Training Service was primarily the result of income having not reached the original projected targets. A service restructure and relocation has been introduced to align future expenditure with income generated through the Work Programme during 2013/14.                  

Capital

Visible Services

26.        The overall outturn for Visible Services is an underspend of £339k. The statement at Appendix 2 details the outturn by scheme.  The major variances are outlined below.

27.        Five Mile Lane                                                                                    Under spend £47k

WG offered the sum of £1.411M grant funding for traffic management works at the Sycamore Cross junction of the Five Mile Lane. Final costs for the main scheme were lower than estimated as works on alignment along the Five Mile Lane and lining works at Waycock Cross did not progress as planned due to inclement weather conditions.

 

28.        Structural Repairs of Eastern Shelter, Barry Island                         Under spend £85k

 An inspection of the site has identified deterioration in the stonework at the Eastern Shelter. Waste Management officers commissioned a structural survey to be undertaken at the site, with a view to ascertaining what structural works need to be made.  The structural report has now been received and it estimates that over £200k will be needed to be spent on the shelter. The works to the shelter have been delayed in order to incorporate any proposed changes/improvements in the Barry Regeneration Programme (Public Realm). To enable the full works required to be undertaken, additional funding will be required. It has therefore been requested that the £85k capital budget be slipped into 2013/14 and used as matchfunding for potential WG grant income for the regeneration of Barry Island.

 

29.        Vehicle Replacement Programme                                                    Under spend £52k

There was, at year-end, a £52k under spend on the £1.982M budget (original budget was £2.376M less £394k previously slipped into 2013/14). £14k has been committed towards vehicles ordered before 31st March so it has been requested that this sum be slipped into 2013/14.

 

30.        Gileston to Old Mill Highway Improvements                         Under spend £115k

The 100% Welsh Government grant funded scheme for highway improvements (£250k approved) included, amongst other costs, estimates for Dwr Cymru/Welsh Water fees; advance works and material testing. The Dwr Cymru/Welsh Water fees came in at 50% of the estimate and the advance works and material testing was not required. It is now requested that the under spend of £115k be slipped into 2013/14 to form part of the next phase. WG have confirmed that they will continue to provide this funding in 2013/14.

 

Development Services

31.        The overall outturn for Development Services is £1.864M underspent. The statement at Appendix 2 details the outturn by scheme.  The major variances are outlined below.

32.        Rural Local Development Plan - Business Plan 2                             Over spend £703k

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. A large variance is shown as the budget for the scheme is for the Council's match funding (£60k) only; whereas the expenditure shown reflects not only the Council's costs but also payments by the Authority in respect of other organisations projects included in this Plan (circa £717k) which is funded by the receipt of external grants. Slippage of £14k on the budget of £60k is requested. 

 

33.        Barry Regeneration Partnership                                                       Under spend £108k                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 sum of £99k (net available figure after other overspends) be slipped into 2013/14 towards future regeneration projects. 

34.        Barry Island Footbridge                                                                        Under spend £53k

Works on this part Department for Transport grant funded scheme were substantially completed during 2012/13 and the bridge was formally opened in February 2013. There are outstanding snagging issues to be resolved before the final account can be agreed and it is requested that the remaining available budget of £53k be slipped into 2013/14 in order to cover these committed costs as well as the release of retention currently held on the contract.

 

35.        Dyffryn House Partial Restoration                                                      Under spend £123k

The initial capital budget for this part-heritage Lottery Fund grant aided scheme to restore a number of state rooms at Dyffryn House was established before the final dates on the National Trust (NT) transfer were confirmed. The under spend on this budget reflects that not all planned works were completed whilst the house was in the control of the Council. The outstanding works will be undertaken by NT and the Council will agree funding issues with them. It is requested that the sum of £20k be slipped into 2013/14 to accommodate the Authority's outstanding commitment to the scheme.

 

36.        Alexandra Gardens Community Centre                                              Under spend £63k

The scheme, to re-build the recently demolished community centre within the Buttrills ward of Barry, was part-grant funded from WG during 2012/13 (£261k). Works were still on-going at the end of the financial year but had progressed well enough that full WG grant could be claimed. Works were continued into 2013/14 and are now completed. The £243k previously slipped into 2013/14 on this budget is expected to be sufficient to cover final costs on the scheme so further slippage will not be necessary. 

 

37.        Leisure Centres Refurbishment                                                         Under spend £2.040M   This budget was established at £1.143M for improvement works, to include the new cafe and gym extension at Barry Leisure Centre, new gym and coffee shop at Penarth Leisure Centre and new gym and dance studio at Llantwit Major Leisure Centre, £146k for renewal of the central heating plant at Penarth as well as £2M for property condition survey works. All works were to be procured and progressed by Parkwood Leisure. Delays in Parkwood completing surveys/testing required to inform a prioritised backlog maintenance schedule has adversely affected the works completed to date.  It is requested that the sum of £2.040M be slipped into 2013/14 to continue with the programmed works.

Reserves

38.        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.

39.        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.

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

41.        Attached at Appendix 3 is a schedule showing the reserves which fall within this Committee’s remit as at 31st March 2013. The reserves have been reviewed and are currently considered adequate for reported uses.

Resource Implications (Financial and Employment)

42.        Capital slippage as outlined in Appendix 4 has been requested.

43.        Given anticipated on-going cuts in capital funding for future years, it is vital that the funding of 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

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

Legal Implications (to Include Human Rights Implications)

45.        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 Section 151 Officer by the 30th June, 2013.

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

48.        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

49.        The Managing Director has approved the slippage via Managing Director's emergency powers.

Consultation (including Ward Member Consultation)

50.        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

Not applicable

 

Responsible Officer:

Rob Thomas

Miles Punter

 

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