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Agenda Item No. 5

 

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Housing and Public Protection): 16th July 2014

 

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

 

Closure of Accounts 2013/14

 

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 2013/14 financial year.

Recommendation

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

Reason for the Recommendation

1.         To note 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 6th March 2013 (minute no.943) agreed the Authority’s budget requirement for 2013/14.

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 each year due to an increase / decrease in the valuation of assets. The movements need to be incorporated into the accounts.

7.         Recharges - These relate to movements in charges between internal council services.

8.         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 anticipated cost was included in Policy; however it has now been re distributed to the relevant service.

9.         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

YOS

707

707

0

General Fund Housing

1,182

982

200

Public Protection

2,689

2,665

24

Private Housing

11,287

11,281

6

 

 

 

 

Total

15,865

15,635

230

 

 

 

 

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

11.      Youth Offending Service - Nil variance.

There were adverse variances of £25k on the upgrading of hardware and software and £45k to provide contributions towards remand costs.

There were favourable variances of £4k on energy and £66k on staff due to temporarily vacant posts.

12.      General Fund Housing -   Favourable variance of £200k. 

As advised through the in-year monitoring, there was a £200k favourable variance under this service heading.  There were adverse variances following a transfer to provisions of £65k for Housing Data Market Support and a transfer to reserves of £88k for Rural Housing Needs assessment and £266k for potential costs of the Welfare Reform Act.

There were favourable variances of £51k on staffing due to staff vacancies pending reorganisation, £17k on the Spend to Save Budgets, £21k on supplies and services within Supporting People and Housing Strategy Teams, £530k on temporary accommodation for homeless.  The Vale has very short supply of one bedroom accommodation. Previously single individuals, who presented as homeless, were housed in emergency accommodation at Bed and Breakfasts around the Vale.  This is very costly, as the Housing Benefit payable for such placements does not fully recover the room charge; the Council has previously picked up the net cost.  During 2013/14, the Homelessness Team sought co-operation from a number of local private landlords, to use some of their larger properties as 'Shared’ accommodation, and were able to place a number of 'single’ clients in one property as a temporary solution whilst clients await social housing via the Council’s Homes 4 U waiting list.  This has had a nil impact in terms of cost on the Council as the clients are able to claim HB for the costs of their room.  In addition to private landlords, the Homelessness Team have also used some Council house properties which have been traditionally hard-to-let to alleviate the pressure on the temporary accommodation budget.  There are currently 54 single homeless clients placed in these 'shared accommodation’ properties, at nil cost to the Council.  The net cost of placing these in Bed and Breakfast accommodation would be in excess of £400k.

13.      Public Protection - Favourable variance of £24k

There was an adverse variance of £201k for costs associated with the on-going issue of abandoned horses within the Vale, however, WG grant to the value of £127k was received to partly offset these costs.  There were also adverse variances of £15k on the Coroners service due to higher than anticipated costs of medical reports, mainly due to newly introduced charges for histo-pathology tests by the University Health Board and £7k relating to other costs.

There were favourable variances on staffing of £90k as part of bringing the current staffing structure in line with those identified to meet future savings targets and £30k on pollution control expenditure due to work with external service providers to reduce the cost of maintaining monitoring equipment and analysing samples.

14.      Private Sector Housing - Favourable variance of £3k

There was an adverse variance following a transfer of £118k to the Regeneration and Economic Development Fund.

There were favourable variances of £75k from additional grant agency fees achieved from staff recharges to capital for administering the Renewal Area face-lifting project within Barry’s Castleland ward, £65k from agency fee charges on Disabled Facility Grants as a higher number of grant applications were processed in comparison with the previous year (93 in 2012/13 and 134 in 2013/14). This increase in income was partly offset by additional expenditure of £34k on staffing due to the employment of an additional Occupational Therapist in order to achieve the higher number of grant approvals.  There were other small favourable variances of £15k.

15.      Rent Allowances/Council Tax Benefits - Favourable variance of £3k

There was an adverse variance of £860k following a transfer to the Regeneration and Economic Development Fund

There were favourable variances of £210k on discretionary housing payments. Discretionary Housing Payments are used to provide support to claimants adversely affected by some of the key welfare reforms and there was a lower take-up than anticipated, however, there remains uncertainty over future demand.  There were also favourable variances of £247k from recovered overpayments and associated subsidy, £388k on Council Tax Benefit and £18k on audit fee savings.  Some of these savings are being held over and will be used against future savings.  It should also be noted that there is also uncertainty surrounding the impact Universal Credit will have once implemented.

Housing Revenue Account

16.      The 2013/14 Housing Revenue Account resulted in a deficit of £7.164m compared to the revised estimate deficit of £8.129m.  A breakdown is shown in Appendix 2.  The working balance opened at £13.570m and closed at £6.406m.

17.      The net favourable HRA revenue budget variance of £965k is identified over the following areas :

18.      Supervision & Management General – Favourable Variance £1.014m.

          There were favourable variances in Support and Central Management Costs £662k, staffing through vacancies & pension pay out savings £67k, software/hardware and other non-staffing costs related to Housing Teams £58k, Incentive to Move Schemes £52k,Tenant Participation £49k, Homes 4U advertising £17k, Welfare Advice team £52k and other savings of £57k.

19.      Supervision and Management Special Services – Favourable Variance £460k.

          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. The favourable variance of £460k is a combination of the following: £116k Ty Iolo which reflects the reduction in the use of agency staff and a reduction in other revenue expenditure such as security cover and furniture and fittings; £20k Temporary Accommodation mainly due to savings in utility costs and furnishings; and £324k Special Services which is made up of £111k on energy bills, cleaning £31k, fixtures £27k, environmental improvements £72k, grounds maintenance £56k and other favourable variances of £27k.

20.      Housing Repairs – Favourable Variance £192k.

          A number of factors have affected the level of expenditure on repairs; previously some larger scale jobs would have been charged through the repairs budget but are now funded via the capital programme.  In addition, as a consequence of the majority of the housing stock being brought up to Welsh Housing Quality Standard, the number of repairs has reduced.

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 £33k.

          This is largely due to a favourable council tax variance of £32k for void properties. As the level of voids was high during the year, the budget for council tax on void properties was uplifted, but the level of voids towards the latter end of the year reduced.

23.      HRA Subsidy Payable – Favourable Variance £82k.

          The HRA negative subsidy payment for 2013/14 was less than budgeted.

24.      Increase in the Provision for Bad and Doubtful Debts – Favourable Variance £56k.

          It was anticipated that the level of bad debts would be high following the implementation of the under occupation charge on Council tenants as part of the Welfare Reform Act.  However, the increase in tenant arrears has been less than expected due to the hard work of housing staff and the use of Discretionary Housing Payments.

25.      Capital Expenditure from Revenue Account – Adverse Variance £934k.

          A higher contribution was required than budgeted towards the Housing Improvement Plan due to increase expenditure.

26.      Rent Collected on Dwellings and Non Dwellings – Favourable variance £97k.

Rents collected were 1% more than budgeted.

27.      Non Dwelling Rents – Adverse Variance £24k.

Rents collected on garages were 8% less than budgeted.

28.      Interest Received – Adverse Variance £20k.

The average LIBID rate for the year was lower than anticipated.

 

29.      Charges for Services and Facilities – Favourable Variance £1k.

Capital

30.      The overall outturn for this Committee is a variance of £926k as is detailed in Appendix 3.  The major variance was on the Housing Improvement Programme scheme where there was a variance of £1.035m, mainly due to expenditure being brought forward from 2014/15.  Works to deliver Welsh Housing Quality Standards are progressing well.  For the first time in 2013/14, large capital creditors have been included in the accounts.   A large creditor of £900k was included in 2013/14 accounts while the invoice was paid in April 2014.  There is no overall effect on the scheme funding and the 2014/15 scheme will need to be re-profiled to take into account this transfer of expenditure between years.

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

34.      Attached at Appendix 4 is a schedule showing reserves which fall within this Committee’s remit, as at 31st March 2014. The reserves have been reviewed and are currently considered adequate for reported uses.

Resource Implications (Financial and Employment)

35.      Capital slippage as outlined in Appendix 5 has been requested.  In order to avoid delays in progressing the schemes, the requests have been approved by the Managing Director exercising emergency powers.

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 2013/14 was £2.8m. Works totalling £17.83m were spent on major improvements to the Council's housing stock, £2.8m of which was funded from the MRA, £1.15m from Housing capital receipts and £13.6m from Housing revenue and reserves as well as £280k of supported borrowing.  A reduced Major Repairs Allowance of £2.76m has recently been awarded to the Authority for 2014/15.

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 2014.

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. Operational Manager – Accountancy 01446 709778

 

Officers Consulted

Not applicable

 

Responsible Officer:

Rob Thomas

Miles Punter

 

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