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Agenda Item No. 4

 

The Vale of Glamorgan Council

   

Scrutiny Committee (Economy and Environment): 14th July 2015

 

Report of the Director of Visible Services and Housing

 

Closure of Accounts 2014/15

 

Purpose of the Report

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

Recommendation

It is recommended that :-

 

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

Reason for the Recommendation

1.         To approve 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. The Statement of Accounts will be approved by Council before 30th September, which will normally follow the audit.

Relevant Issues and Options

General Fund

3.         The Council on the 5th March 2014 (minute no.884) agreed the Authority’s budget requirement for 2014/15.

4.         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.

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

Service

 

Year - 2014/15

Amended Revenue Budget

Total Provisional Actual

Variance +Favourable  () Adverse

 

       £’000

          £’000

             £’000

 

 

 

 

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

 

 

 

 

Development Services

 

 

 

Planning and Transportation

5,225

5,213

+12

Leisure

3,589

3,591

(2)

Economic Development

864

878

(14)

 

 

 

 

TOTAL

31,765

31,758

+7

 

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

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

8.         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).

9.         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.

10.      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.

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

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

12.      Support - Favourable variance of £22k

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

13.      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.

14.      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.

15.      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.   

16.      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.

17.      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.  

Capital

18.      The overall outturn for this Committee is a variance of £3.256m. The statement at Appendix 2 details the outturn by scheme. 

19.      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.

20.      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.

21.      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.

22.      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.

23.      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. 

24.      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.

25.      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.

26.      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.

27.      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.

28.      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.

29.      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.

30.      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.

Reserves

31.      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.

32.      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.

33.      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 to cover these works over a 2 year period commencing in 2015/16.

34.      A revenue contribution to capital of £600k has also been made into the Capital Commitments reserve to fund further regeneration schemes.  It has been proposed that this sum is included in the Capital Programme as part of the Barry Regeneration Partnership scheme over a 2 year period commencing in 2015/16.   

35.      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.

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

37.      Attached at Appendix 3 is a schedule showing the Committee's reserves as at 31st March 2015.

Resource Implications (Financial and Employment)

38.      As part of the Final Revenue Budget Proposals for 2014/15, a savings target of £2.019m was set for this Committee.  Progress on the achievement of these savings has been monitored and reported to Committee during the year.  Appendix 4 to this report confirms the final status of these savings at the end of 2014/15.  While the service has been able to find savings to the full value, some of the savings have been achieved by a different means to that planned.  Against a savings target of £2.019m, savings of £1.431m were achieved in the year in the way planned, resulting in a shortfall of £588k.  The service will need to ensure that savings achieved through an alternative means in 2014/15, are reviewed so that the savings 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.     

39.      As a result of the capital underspend in 2014/15, an allocation of £3.985m 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 5

Sustainability and Climate Change Implications

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

Legal Implications (to Include Human Rights Implications)

41.      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

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

Equal Opportunities Implications (to include Welsh Language issues)

43.      There are no equality implications resulting from this report

Corporate/Service Objectives

44.      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

45.      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)

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

Relevant Scrutiny Committee

47.      Corporate Resources.

Background Papers

None

 

Contact Officer

Carolyn Michael (Operational Manager - Accountancy) (01446 709778)

 

Officers Consulted

Not Applicable

 

Responsible Officer:

Miles Punter