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Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Housing and Public Protection) 17th 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 services within its remit, for the 2012/13 financial year.

Recommendations

1.             That Scrutiny Committee are asked to note the slippage requests in Appendix 5 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 the services within their remit. 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 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

General Fund Housing

1,034

1,020

14

Public Protection

2,469

2,467

2

Private Housing

1,542

1,517

25

 

 

 

 

Total

5,045

5,004

41

 

 

 

 

9.             The main reasons for the variances are set out in the following paragraphs 10 to 14.

10.        General Fund Housing had a favourable variance of £14k after transferring £70k to a provision to fund a Housing Enabler Officer and undertake a traveller study. There were savings of £44k due to vacancies on the Homelessness team; additional Housing Benefit Income £34k; Temporary Accommodation Rent collected £6k; transport £2k; Support Costs £10k, software and licences £10k and other supplies and Services £15k. Set off against this was reduced supporting people commission £26k, and emergency homelessness bed and breakfast accommodation expenditure which exceeded the budget by £11k.

11.        Public Protection had a net favourable variance of £2k after transferring £91k to the Public Protection Reserve. Staff related savings were £107k arising from Licensing/Trading Standards £80k, Environmental Health Services £15k & other areas £12k. There were also savings resulting from additional income of £26k, arising mainly from prosecution costs. The underspend has been partly offset by an overspend of £17k on general running expenses and a deficit on the Coroners service of £23k. The deficit on the Coroners service is mainly in respect of increased costs on mortuary facilities and long inquest fees.

12.        Private Sector Housing/Housing Benefits had a net favourable variance is £25k after transferring £60k to the Public Protection Reserve, £320k to the Disabled Facilities provision and a contribution of £226k to the cost of VCAS Telecare upgrade. Other variances were attributable to the following:-

13.        Private Sector Housing – Additional income of £107k from grants agency and renewal area fees, partly offset by an overspend of £11k on staff related costs and £32k on general running expenses.

14.        Rent Allowances/Council Tax Benefits – An underspend of £245k on rent allowances and council tax benefit payments due to recovered overpayments and associated subsidy, audit fee savings of £22k and a saving of £300k on the payment of rent allowances/council tax benefit.

Housing Revenue Account

 

15.        The 2012/13 Housing Revenue Account (HRA) resulted in a deficit of £1.311M compared to the revised estimate deficit of £1.832M and is detailed in Appendix 2.  The working balance opened at £14.881M and closed at £13.570M.

16.        The net favourable HRA revenue budget variance of £521k is identified over the following areas:-

17.        Supervision and Management General – Favourable Variance £479k

        This variance is made up of favourable variances in Management Costs £89k, Incentive to Move Schemes £55k, Staff through vacancies £178k, Tenant Participation £42k, Homes 4U advertising £21k, Software/Hardware £49k, tenants removal (decant) £14k, other £31k.

18.        Supervision and Management Special Services – Favourable Variance £263k

        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.

19.        The favourable variance of £263k is a combination of the following :-

        Ty Iolo underspend of £91k which reflects the reduction in revenue expenditure required after the hostel was refurbished in 2011/12; Temporary Accommodation underspend of £21k down to furniture and fixtures and fittings; and special services favourable variance £151k which is made up of underspends on energy bills £52k, Security £35k, Wardens £16k, Cleaning £22k, Treatment Works £20k, fixtures £12k, Environmental Improvements £20k, other favourable £23k offset by adverse variances on grounds maintenance £28k and Rubbish Removal £21k.

20.        Housing Repairs – Adverse Variance £159k. 

         This 6% adverse variance is due to high demand in relation to emergency responsive repairs.

21.        Capital Financing Costs – favourable variance £8k

         Both principal and interest charges were lower than anticipated

22.        Rents, Rates, Taxes and Other Charges – favourable variance £186k

        This underspend is largely due to a favourable council tax variance of £91k for void properties. The historic budget included voids at Penarth heights which the Vale no longer needs to account for.  Favourable variances of £37k on Insurance, £42k on legal fees and other £16k contributed to the overall variance.

23.        HRA Subsidy Payable – favourable variance £6k

        The HRA negative subsidy payment for 2012/13 was less than budgeted.

24.        Increase in the Provision for bad and doubtful debts – favourable variance £9k

        The increase in the provision required to allow for current and former arrears was not as high as anticipated.

25.        Capital Expenditure from Revenue Account – adverse variance £155k

        A higher contribution was required than budgeted towards the Housing Improvement Plan, mainly due to lower usable capital receipts than estimated.

26.        Rent Collected on Dwellings and Non Dwellings – adverse variance £101k

Lower net rent collected than estimated. (represents 0.65% of actual).

27.        Interest Received – Adverse Variance £19k

        The average London Interbank Bid rate for the year was lower than anticipate

 

28.        Charges for Services and Facilities – favourable variance £4k

Capital

29.        The overall position on the revised 2012/13 Capital Programme for this Committee is a net underspend of £265k. The statement at Appendix 3 details the outturn by scheme.  The Housing Improvement Programme      underspent by £191k.  Several major housing improvement budgets were established in 2012/13, including replacement kitchen and bathrooms as well as rewiring and central heating installations, aimed at achieving the Welsh Housing Quality Standard for our council dwellings. The total under spend of £191k represents just 2% of the total £9M budget. It has been requested that the sum of £186k (net available Housing Services under spend) be slipped into 2013/14 to continue the works programme.

Reserves

30.        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.

31.        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.

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

33.        Attached at Appendix 4 is a schedule showing 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)

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

35.        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.

36.        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 2012/13 was £2.8M. Works totalling £9.039M were spent on major improvements to the Council's housing stock, £2.8M of which was funded from the MRA, £159k from Housing capital receipts and £5.520M from Housing revenue and reserves as well as £560K of supported borrowing.  A further Major Repairs Allowance of £2.800M has recently been awarded to the Authority for 2013/14.

Sustainability and Climate Change Implications

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

Legal Implications (to Include Human Rights Implications)

38.        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

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

41.        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

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

Consultation (including Ward Member Consultation)

43.        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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