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Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Housing and Public Protection): 18th July 2012

 

Report of the Director of Legal, Public Protection and Housing Services

 

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

Public Protection

2,363

2,361

2

Private Sector Housing / Community Safety

2,721

2,712

9

 

Grand Total

5,084

5,073

11

 

 

7.             The main reasons for the variances are set out in the following paragraphs 8 to 11.

8.             Public Protection - Net favourable variance of £2k after transferring £38k to the Public Protection Reserve. The overall favourable variance is £40k and is made up of staff related savings £53k arising from Licensing / Trading Standards / Environmental Services £37k and Emergency Planning £16k. The underspend has been offset by an overspending on the Coroner's service £13k attributable to increased costs on mortuary facilities.

9.             General Fund Housing - The net favourable variance is £9k after transferring £443k to reserves made up of £15k for a Prison Leavers Housing Advisor and Welfare Reform £428k. The overall favourable variance of £452k is attributable to:

10.        Housing Services - a favourable variance of £34k is attributable to net additional income of £47k from grants / agency fees. This has been offset by an overspend of £13k attributable to a greater number of homelessness being housed in bed and breakfast.

11.        Rent Allowances/ Council Tax Benefits - the favourable variance of £418k is attributable to an underspend of £231k on rent allowances and Council Tax benefit payments due to recovered overpayments and associated subsidy, audit fee savings £27k and a saving £160k on the payment of rent allowances / Council Tax benefit.

Housing Revenue Account

12.        The Housing Revenue Account for 2011/12 shows a surplus of £2,755k compared to the Revised Estimated surplus of £2,204k (Appendix 2). The working balance opened at £11,375k and was increased during the year by a transfer from the Repairs Reserve of £752K.  The working balance closed at £14,882k. The main reasons for the variances are as follows: -

·         Supervision & Management General – Favourable £410k. The favourable result came from Management Costs of £92k (lower employment costs) Adaptations Team (incentive to move scheme take up was not as high as anticipated) £23k, Tenant Participation (lower employment costs) £68k, Tenant groups £8k, Welsh Housing Quality Standards (WHQs) (software budget not fully used) £44k and Homes4U £22k. The remaining £153k favourable result came from Central Support and Operational Buildings Charges being lower than had been anticipated.

·         Supervision & Management Special – Favourable £95k – Housing Special services came in below budget by £119k due to lower energy costs, less furniture and fittings purchased in the year and a saving on the removal of rubbish. The savings were reduced by Ty lolo Hostel (formerly Treharne Hostel) being delayed in opening and additional costs being incurred.

·         Contribution to Repairs Fund – Adverse £293k – This overspend was mainly due to a greater number of responsive repairs being undertaken and the cost of those repairs being greater than budgeted.

·         Capital Financing Costs – Adverse Variance £33k.  The budget had been calculated on a lower principal amount, therefore the interest charged for the year was greater than budgeted.

·         Rents, Rates Taxes and Other Charges – Favourable £59k – the variance is largely due to savings on Council Tax for properties vacant for more than six months (Penarth Heights no longer included lowering these costs substantially) in addition Legal fees were lower as the budget was to cover post ballot costs that did not occur.

·         HRA Subsidy Payable – Favourable £54k – the estimated subsidy payable to Welsh Government for 11/12 was higher than is now expected.

·         Bad & Doubtful Debts – Adverse £2k, the increase in provision is slightly higher than expected.

·         Capital Expenditure from Revenue Account – Favourable £203k – Variance was due to the Usable Capital Receipts being greater than estimated enabling less contribution from the revenue account.

·         Rent collected on dwellings and garages - £8k and £3k favourable – a small favourable variance exists for Dwellings and non dwellings.

·         Interest received – Favourable £31k – the favourable variance is due to the surplus on HRA being greater than estimated allowing for greater interest to be received. 

·         Charges for Services and Facilities – Favourable £16k – mainly due to invoices raised on a newly leased property.

13.        The Housing Repairs Fund has existed for many years and for 2011/12 opened at £752k but to enable the repairs costs to be shown in one area it was agreed to transfer the full amount into the overall Housing Revenue Account rather than have a separate fund.  This took place in 2011/12 and as shown in Appendix 2 is now in the main Balance carried forward of £14,882.

14.        The overall result for housing is a favourable movement of £551k compared to budget, £493k being lower expenditure and £58k being greater income.

Capital

15.        The overall outturn for the Directorate of Legal, Public Protection and Housing is an underspend of £627,000. The major variances are outlined below and the statement at Appendix 3 details the outturn by scheme.

Window and Door Replacement                                                     Under spend £73,000

This budget has been increased twice during the year in order to maximise the level of improvements to our housing stock.  As with the central heating budget referred to above, all efforts were made to achieve full spend by year-end, though this was not quite achieved.  Slippage of £73,000 has been requested in order to complete these contracts in 2012/13.

 

Central Heating and Boiler Renewal           Under spend £94,000   

This key Housing Improvement Programme budget was increased during the year to £2,650,000. Though maximum effort was put in to achieve a full spend there was an element of work that could not be completed in time for the year-end. In order to continue these works in 2012/13, slippage of £94,000 has been requested.        

 

Harbour View lease re-purchase                            Under spend £79,000

The legal process of securing the buy-back of the lease on the remaining tenant at Penarth Heights is now complete.

 

Penarth Renewal Area                                                                     Under spend £91,000

A 2011/12 budget had been set aside for the release of retentions to contractors working on the group repair works at Penarth during 2010/11. Not all of these retentions have been released to date due to on-going issues with the works. In addition, a higher than budgeted level of owners' contributions on the scheme were received during 2011/12. Both factors account for an overall under spending on this budget. A request for £30,000 to be slipped into 2012/13 has been required in order to release these final retention payments.

 

Castleland Renewal Area                                        Under spend £202,000

This grants budget has under spent because works on phases 1c and 1d were delayed initially due to problems in obtaining homeowners' written agreement to the facelift scheme, due to the large number of let properties in the area. Further issues were then encountered with the performance of some contractors which further delayed progress. As well as £165,000 which was slipped earlier during the year, further slippage of £202,000 has been requested in order to complete these phases in 2012/13.           

Reserves

16.        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.

17.        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.

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

19.        Attached at Appendix 4 is a schedule showing the Directorates' reserves as at 31st March 2012.

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

20.        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 2011/12 was £2,700,000. Works totalling £5,704,378 were spent on major repairs of housing stock, £2,700,000 of which was funded from the MRA, £2,176,183 from Housing capital receipts and £828,195 from Housing revenue reserves.  A further Major Repairs Allowance of £2,800,000 has recently been awarded to the Authority for 2012/13.

21.        Capital slippage as outlined in Appendix 5 has been requested.

22.        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)

23.        The provisional outturn 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

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

26.        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

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

Consultation (including Ward Member Consultation)

28.        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 Legal, Public Protection and Housing Services

Responsible Officer:

Peter Evans

 

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