Agenda Item No 7

The Vale of Glamorgan Council

   

Corporate Performance and Resources Scrutiny Committee: 19th July 2018

 

Report of the Managing Director

 

Closure of Accounts 2017/18

 

Purpose of the Report

1. The accounts are complete and this report is to inform Scrutiny Committee of the provisional financial position for the Council for the 2017/18 financial year.

Recommendation

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

Reason for the Recommendation

1. To consider 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

Council Fund

3. Council on the 1st March 2017 (minute no. 864) agreed the Authority's budget requirement for 2017/18. This represented budgeted net expenditure for the Authority of £215.720m. Total expenditure was to be financed by Revenue Support Grant (£108.578m), National Non-Domestic Rates contribution (£40.976m) and Council Taxpayers (£66.166m). The Standard Spending Assessment (SSA) for the year was £216.807m.
4. The revenue budgets have been amended and approved by Cabinet during the financial year, however, they are at the same overall net level as the original budget of £215.720m, which is after the planned use of £700k from the Council Fund.  The actual expenditure for 2017/18 is £215.720m, which is a breakeven position and follows a transfer of £675k from the Council Fund.
5. Appendix 1 amends the revised budgets to take account of the following adjustments. These adjustments have no overall effect on the net budget of the Council and are accounting adjustments largely outside the control of services.

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.

Leave Accrual Adjustment - An accrual is made for the cost of holiday entitlements earned by employees but not taken before year end.  The movement for school staff changes between years depending on when the Easter holiday falls.  It has been assumed that there is no movement between years for non-school staff.

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. 

Recharges - These represent changes to inter-service recharges and transfers.

6. The following table compares the amended budget and the actual expenditure, including transfers to and from reserves, for the Authority.  The final column shows the net transfers to reserves for each Directorate which has been included within the actual expenditure figures. The Council Fund balance increased in year by £325k, which left a year end balance of £9.634m.  On 20th November 2017, as part of the 2018/19 Initial Revenue Budget Proposals report, Cabinet approved the transfer of a projected £4m underspend into reserves, with £2m being allocated to the Schools Investment Strategy reserve and £2m being set aside in the Council Fund.  On 19th February 2018 as part of the 2018/19 Final Revenue Budget Proposals report, it was agreed that £500k would be transferred from the Council Fund to the Visible Services reserve and £500k would be transferred to the City Deal reserve.  There was also a drawdown of £675k in 2017/18 from the Council Fund to offset revenue expenditure. 

 

Service Year - 2017/18	Original Revenue Budget	Amended Revenue Budget	Total Provisional Actual	Variance +Favourable  () Adverse	Net Transfer to /(From) Reserve
	£000	£000	£000	£000
Learning and Skills
Schools	82,957	82,957	82,957	0
Strategy, Culture, Community Learning & Resources	11,735	12,292	12,181	+111
Directors Office	235	235	195	+40
Achievement for All	3,841	3,851	4,056	(205)
School Improvement	1,121	1,102	1,048	+54
Total	99,889	100,437	100,437	0	+72
Social Services
Children and Young People	15,124	15,301	15,438	(137)
Adult Services	41,910	42,322	42,344	(22)
Resource Mgt & Safeguarding	267	270	266	+4
Youth Offending Service	701	709	544	+165
Total	58,002	58,602	58,592	+10	+1,697
Environment and Housing
Visible Services	19,914	20,382	20,455	(73)
Transportation	4,841	4,870	4,793	+77
Building Services	0	37	37	0
Regulatory Services	2,166	2,169	2,166	+3
Council Fund Housing	1,126	1,294	1,294	0
Total	28,047	28,752	28,745	+7	(503)
Managing Director and Resources
Resources	728	1,843	1,825	+18
Regeneration	2,091	2,124	2,113	+11
Development Management	968	1,084	1,084	0
Private Housing	11,003	11,062	11,073	(11)
Total	14,790	16,113	16,095	+18	+1,381
General Policy	15,692	12,516	12,526	(10)	+3,193
Total Net Budget	216,420	216,420	216,395	25
Council Tax Surplus*	0	0	0	0	+1,545
Use of Reserves	(700)	(700)	(675)	(25)	(675)
TOTAL	215,720	215,720	215,720	0	+6,710

*The 2018/19 Initial Revenue Budget Proposals report to Cabinet in November 2017 approved the transfer of the Council Tax surplus into reserves.

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

Learning and Skills

8. Schools - Breakeven

Schools are permitted to carry forward any revenue variances through school balances.  School balances increased by a net £302k in the financial year.  This was as a result of a late and unforeseen Welsh Government grant of £610k being awarded to schools in March 2018 which allowed Schools to offset existing expenditure against the grant. 

9. Strategy, Culture, Community Learning & Resources - Favourable variance of £111k

There have been a number of adverse variances during the year totalling £664k.  The schools long term supply and maternity schemes made a net loss of £217k and as a result school premiums have been increased from April 2018 to ensure the schemes are sustainable in the future.  The cost of redundancies in schools exceeded the budget by £134k and it is a statutory requirement that redundancy costs are funded centrally.  There have been one off revenue costs of £115k and £14k respectively in relation to the transformation of the Barry secondary schools and amalgamation costs at St Helen's Primary School. The catering service needed to pass £67k relating to the 2016/17 profits back to secondary schools in line with the profit sharing model.  The cost of the Apprenticeship Levy was £40k higher than budgeted.  Welsh Immersion costs for primary pupils transferring from English medium to Welsh medium schools amounted to £31k.  Rates revaluations in schools resulted in an overspend of £22k.  The third and final year of salary protection at the Penarth Learning Community has been funded centrally amounting to a variance of £22k.  The Adult Community Learning service had an adverse variance of £2k as it maintained the service following a reduction in funding from Cardiff and Vale Colleges.

There have been a number of favourable variances during the year totalling £579k.  The Library service has out-turned at a favourable variance of £116k partly due to staffing underspends amounting to £76k as a result of vacant posts, a phased retirement and secondments to grant funded projects and a £40k underspend on resources.  A number of vacancies within the Strategy and Resources section have contributed to a staffing underspend of £102k.  The capital investment budget has out-turned at a favourable variance of £70k due to an underspend on prudential borrowing payments and capital charges to other Authorities for pupils enrolled at Ysgol Y Deri.  The Education transport budget is managed by the Environment and Housing Directorate but any variance at year end is transferred to the Learning and Skills Directorate.  The 2017/18 underspend amounted to £54k.  There has been a reduction in the number of supported non-maintained nursery settings and as a result this budget has outturned with a favourable variance of £52k. There has been an increase in the take-up of the schools ICT SLA which has generated £46k in excess of the budget.  Pension payments for previously retired employees have reduced resulting in a £42k underspend.  The revenue budget for urgent school repairs was not fully utilised and outturned with an underspend of £34k.  The delegated schools breakfast club pooled fund has outturned at a favourable variance of £21k.  The budget to reimburse schools for the backfilling of teacher time spent on official union duties was not fully utilised resulting in an underspend of £19k.  Broadband charges were £15k lower than budgeted.  There are other small variances of £8k.

There has been a net transfer from reserves of £196k.  £70k has been transferred into the Schools Investment Strategy reserve as a result of the favourable variance on the budget for 21st Century Schools Programme prudential borrowing loan repayments and capital charges to other Authorities for pupils enrolled at Ysgol Y Deri.  £21k has been transferred into the Breakfast Club reserve to be used towards projected increases in 2018/19 salary costs. £89k of the Schools Invest to Save reserve has been used towards the costs of redundancies in schools.  £115k and £14k has been utilised from the Rationalisation reserve respectively to cover one off cost for the transformation of the Barry Secondary schools and St. Helen's School.  £67k was drawn down from the Catering reserve.  £2k was transferred from the Adult Community Learning service reserve to cover the small overspend.

10. Directors Office - Favourable variance of £40k

There is a favourable variance of £40k on supplies and services and the non-replacement of one post which has been held vacant in order to partially mitigate overspends elsewhere in the Directorate.

11. Achievement for All - Adverse variance of £205k

There have been a number of adverse variances during the year totalling £699k.  There was an adverse variance of £385k on the recoupment income budget.  The recoupment income generated from other Authorities' pupils enrolled at Ysgol Y Deri has continued to reduce.  Other Authorities have now established their own provision and in addition, the demographic increase of pupils with complex needs within the Vale of Glamorgan has resulted in fewer placements being available for other Authorities to purchase.  There is an adverse variance on complex pupil placements of £266k.  Occasionally the needs of pupils with higher levels of Additional Learning Needs (ALN) cannot be met within Vale of Glamorgan provision and alternative provision is commissioned in other Authorities or independent schools and typically the unit costs for these types of placements are very high.  There has been a significant increase in the number of pupils with social and emotional behavioural issues at Key Stage 3 and 4 whose needs cannot be met within our schools or the Pupil Referral Unit and as a result the Directorate has found no alternative but to place these pupils with external providers.  There were also adverse variances on the Out of School Tuition and Alternative Curriculum budgets which overspent by £29k and £19k respectively due to an increased demand for the service.      

There have been a number of favourable variances during the year totalling £276k.  Staffing underspends within ALN, Complex Needs and Behaviour Management Teams resulted in an underspend of £134k, mainly due to posts being held vacant to partly mitigate overspends elsewhere in the Directorate.  There was a £13k saving on resources.  The Children and Young Peoples Partnership outturned with a favourable variance of £87k as salary costs have been displaced into the grant in recognition of work carried out that meets grant terms and conditions.  The Youth service has outturned at a favourable variance of £23k due to part year vacancies.  The schools additional needs fund has outturned with an underspend of £19k.

There has been a net transfer from reserves of £218k.  £200k has been transferred from the School Placement reserve.  The overspend on the placement budget will be partially offset by a transfer from the Excluded Pupil reserve of £37k.  There has been a transfer into the Additional Needs Fund reserve of £19k from the favourable variance on the schools additional needs budget.

12. School Improvement - Favourable variance of £54k

There is a favourable variance of £54k due to the non-replacement of a senior post which was held vacant in order to partially mitigate the overspends elsewhere in the Directorate.

Social Services

13. Children and Young People Services - Adverse Variance of £137k

There was an adverse variance of £512k relating to the Children's External Placements budget.  This is due to rising demand and the challenges associated with placement availability increasing reliance on the external placement market, alongside the increasing complexities of a small cohort of the children currently being supported, which results in their placement in very high cost provision.  Work continues to ensure that children are placed in the most appropriate and cost effective placements. 

There have been a number of favourable variances during the year totalling £375k. A favourable variance of £64k, is as a result of the introduction of the Vale, Valleys and Cardiff Adoption Collaborative which allowed the cohort of children placed for adoption within the financial year to be placed with adopters assessed within the Collaborative, which does not incur a charge.  A favourable variance of £69k has been achieved through utilisation of grant income and £207k has been achieved by alternative means of provision and accommodation costs required for the current cohort of children, which is as a result of ongoing work to ensure that children are placed in the most appropriate and cost effective placements.  A favourable variance in Resource Management and Safeguarding has meant that there has been a reduced internal recharge of £35k to Children and Young People Services. 

14. Adult Services -Adverse Variance of £22k

There were favourable variances in the year totalling £2.083m. There was a favourable variance of £774k relating to community care packages.  While there was pressure on the budget during the year, additional grant income of £1.071m was received from Welsh Government, of which £369k was not advised until February 2018.  A higher level of Continuing Health Care (CHC) income from Health was received than had been expected and additional funding was received from Welsh Government for respite care.  During the year, there has been service remodelling, focusing on services which deliver reablement and support people back into independence.  Additional work has been carried out to mitigate increases such as schemes funded through the Intermediate Care Fund (ICF) and the year-end position was more favourable than projected. 

Funding was also received from the Welsh Independent Living Fund.  Welsh Government confirmed that any underspend against this grant was not required to be repaid and therefore resulted in a £179k favourable variance.  This position has arisen as cases have transferred to the Council's responsibility as the scheme moves to closure.  There were favourable variances of £387k on staffing and £66k on supplies and services as, where possible, there was early implementation of future Reshaping Services savings.  There had also been difficulty in recruiting to some posts which had been assumed would be filled in the months prior to year end.  There was an over-recovery of income from customer receipts resulting in a favourable variance of £273k due to self-funding clients in Council run residential   homes.  Additional grant income was received of £100k which was awarded late in the financial year and utilisation of grant income resulted in an underspend of £229k.  This grant income has to be assumed to be a one off benefit to the Council as it cannot be guaranteed in future years.  The favourable variance in Resource Management and Safeguarding has meant that there has been a reduced internal recharge of £75k to Adults Services.  

The planned drawdown from reserves of £650k was not required however there has been a transfer to reserves of £1.455m, of which £1.285m has been set aside in the Social Services Legislative Changes reserve.  If Welsh Government cease grant funded initiatives, under the terms and conditions any redundancy costs cannot be claimed against the grant and would need to be funded by the Authority, therefore, a Grant Exit Strategy reserve was established a number of years ago.  The level of funding is reviewed for sufficiency annually and it is considered necessary to increase the level of the reserve by £170k. A transfer of £166k has been made into the Telecare Reserve which is an annual planned transfer in order to set funding aside for future years to replace the equipment and to cover any additional staffing costs.

15. Resource Management and Safeguarding - Favourable Variance of £4k

The majority of this budget is recharged to Children's and Adult Services.  The position before recharges to services is a favourable variance of £233k.  £106k has been achieved through the utilisation of grant income, £89k relates to staffing and £38k due to a reduced recharge from the SWIFT consortium as a result of the implementation of the Welsh Community Care Information System (WCCIS).

There was an adverse variance on Deprivation of Liberty Safeguards (DOLS) of £58k.  The favourable variance has meant that there has been a reduced internal recharge to Children's and Adult Services of £101k.

This has allowed a transfer of £70k to the Social Services Legislative Changes reserve.

16. Youth Offending Service - Favourable variance of £165k 

There is a favourable variance of £125k on staffing linked to vacancies and £40k on supplies and services. 

Environment and Housing 

17. Visible Services and Transportation - Favourable variance of £4k  

In 2017/18 there was a savings target of £525k allocated to Visible Services from the Reshaping Services programme.  The proposed means of achieving this saving was approved by Cabinet on 24th April 2017 and was through the introduction of a new target operating model for the service.  This savings target had been held centrally within Visible Services.  Staff consultation ended on 31st July 2017 and a number of changes were considered as a result of the consultation.  It was originally anticipated that the structure would start to be populated from late September 2017, however due to the scale of the transformation, the restructure did not take effect fully until April 2018. This shortfall in the savings of £525k for 2017/18 was met from the Visible Services Reserve.

The favourable variance of £349k as detailed below has been offset by a transfer to reserves of £345k. Of this sum, £125k will be set aside in the Winter Maintenance reserve and £220k has been set aside in the Visible Services reserve, of which £40k is to complete works at Sully Moor Roundabout, £100k for schemes within Highways, £70k to undertake further work on the WELTAG studies for Dinas Powys and Junction 34 and £10k to replace equipment for the Leisure & Play team.

18. Waste Management & Cleansing - Adverse variance of £35k

There have been a number of adverse variances during the year totalling £554k.  Employee costs had an adverse variance of £164k mainly due to the level of waste collection resources not decreasing as previously intended. Transport costs also have an adverse variance of £318k for the same reason. The waste collection service currently has a large amount of downtime in travelling to the waste disposal points which are situated within Cardiff. Officers are currently working with Welsh Government with a view to funding a waste transfer station within the Vale of Glamorgan to reduce this level of downtime. The income budget for waste management also has an adverse variance of £72k which is mainly due to the high level of concessions given for the Bulky Waste service, which limits the paid income received for this service.

There have been a number of favourable variances during the year totalling £362k. Supplies & Services budgets had a favourable variance of £228k which is mainly due to lower than budgeted costs for the disposal of waste. Additional grants/income of £134k was also received during the year. This contributed to costs of food waste disposal and also income from the transfer of the contract for organic waste disposal to Dwr Cymru.

There was a transfer from the Visible Services reserve of £157k to cover the shortfall.  In addition there was a planned transfer from the Visible Services reserve of £32k.

19. Highways & Engineers - Favourable variance of £235k

There have been a number of adverse variances during the year totalling £1.569m.  Transport costs have an adverse variance of £90k mainly due to the higher than budgeted cost of the winter maintenance vehicles. Supplies and Services budgets have an adverse variance of £1.348m.  Around £1m of this is due to work on one off Highways Capital projects for which additional income is also received. The remainder is mainly due to expenditure on Winter Maintenance costs and also Coastal Surveys for which grant income was obtained from the Welsh Government. Internal recharges from other departments also had an adverse variance of £131k.

There have been a number of favourable variances during the year totalling £1.470m.  Employee costs have a favourable variance of £465k due to the level of vacant posts within the service. There was a favourable variance of £299k for government grants from Welsh Government, mainly for Winter Maintenance costs and the Coastal monitoring surveys mentioned previously.  There was a favourable variance of £706k for income received for capital schemes.

To offset some of the adverse variances above, an additional £334k was drawn down from reserves, of which £303k was from the Winter Maintenance reserve and £31k from the Visible Services reserve.

There were planned transfers from the Visible Services reserve for the Big Fill initiative of £546k, £300k for Patching and £70k for other highways initiatives.

20. Civil Protection Unit - Favourable variance of £15k

This favourable variance was mainly due to lower than budgeted expenditure on standby/call out payments.

21. Leisure - Favourable variance of £57k

There have been a number of adverse variances throughout the year totalling £365k. Supplies & Services budgets had an adverse variance of £342k mainly due to additional works undertaken for other departments plus additional schemes covered by grant funding within the Leisure and Play department. Transport budgets had an adverse variance of £23k.

These have been offset by favourable variances totalling £422k. Employees' budgets had a favourable variance of £69k due to vacant posts within the service. Income from other departments had a favourable variance of £246k which offsets the adverse variance on supplies and services above. There was also a favourable variance of £107k from additional government grants received during the financial year.

There was a planned transfer of £15k from the Council Building Fund for works to Leisure Centres.

22. Transportation - Favourable variance of £77k

There is a favourable variance on employee costs of £55k mainly due to vacant posts. There is a small favourable variance of £6k on Supplies & Services and £16k for additional income into the service. 

There was a planned transfer from the Visible Services reserve of £20k to purchase a new Greenlinks vehicle.

23. Building Services - Breakeven

The Building Services trading unit had a turnover of £5.6m and made a surplus of £3k. The Building Cleaning & Security trading unit had a turnover of £2.6m making a surplus of £67k.  In addition the Courier Service made a surplus of £6k. 

The Building Services Twin Hat function had a favourable variance of £15k at year end. This was mainly due to underspends against transport budgets and general supplies and services budgets.

All of the above were offset by a reduction of £47k in the recharge for maintenance repairs works from Building Services to the Housing Revenue account and a transfer of £44k to the Building Services Reserve to fund the future costs of apprentices within the area.  This was after a planned transfer from reserves of £99k towards the costs of the Public Building Compliance team.

24. Regulatory Services - Favourable variance of £3k

The Regulatory Service has entered into a collaboration with Bridgend and Cardiff Councils.  The Vale of Glamorgan Council has acted as host for a Shared Regulatory Service (SRS) since 1st May 2015.  There was a favourable variance of £333k on the Regulatory Services base budget held by the Vale of Glamorgan Council for its own share of the service. Included within this figure is £152k which relates to the repayment to the Vale of Glamorgan of its apportionment of the underspend from the SRS during 2016/17, which was allocated following approval by the Joint Committee in September 2017.

This underspend has allowed a £330k transfer to the Visible Services reserve, of which £230k will be used to implement changes to the waste collection service and £100k will be used for additional resurfacing in 2019/20.

25. Council Fund Housing -   Breakeven

There was an adverse variance of £42k on Temporary Accommodation for the Homeless.

There were favourable variances totalling £125k with £109k relating to the Homelessness team, largely due to expenditure being offset against additional Transitional grant funding and £16k relating to the Housing Strategy team due to vacant posts.

This underspend has allowed a transfer of £85k to the Homelessness reserve.  The Community Safety budget out turned on target after transferring £2k from the Community Safety reserve to fund overspends within the service.  There were other planned transfers from reserve to cover specific staff posts, with £25k being drawn down from the Homelessness Reserve and £8k from the Rural Housing Needs reserve. 

Managing Director and Resources

26. Resources - Favourable variance of £18k.

Details by service area are shown below.

27. Finance & ICT - Favourable variance of £18k

There were adverse variances on general running expenses in ICT of £212k due to the cost of ICT related expenditure and training expenses.  The savings target set for the year was not fully achieved.

There have been a number of favourable variances during the year totalling £968k. There were favourable variances on staff of £442k, some relate to vacant posts held pending future year savings. The variances were in Management £28k, Systems Implementation £4k, Housing Benefits/Council Tax £60k, Exchequer £2k, Accountancy £121k, Audit £139k, Fraud £69k and ICT £19k. There were favourable variances on general running expenses of £70k, £23k of which arose from Housing Benefit/Council Tax, Audit £7k and savings on bank charges of £40k. There were favourable variances of £93k on income which included £73k from Housing Benefit/Council Tax, Fraud £7k and ICT £13k. There was also a £363k favourable variance on the Council Tax discount scheme.

This has enabled transfers to reserves of £600k to the Computer Fund and £138k to the Events Budget.

28. Property & Office Accommodation - Breakeven

There have been a number of adverse variances totalling £445k.  There were adverse variances of £356k on recharges to capital, £34k on the cost of security, £23k on Non Domestic Rates and £32k on general running expenses.

There have been a number of favourable variances during the year totalling £548k. There were favourable variances on staffing of £305k due to vacancies, £43k on building repairs and maintenance, £51k on cleaning, waste collection/recycling, £72k on utilities, £70k on rents and additional income of £7k.

This has enabled a transfer to the Council Buildings Fund of £103k.

29. Human Resources - Breakeven position

There have been a number of adverse variances totalling £103k. There was an adverse variance on general running expenses of £88k mainly attributable to ICT related costs.  There was also an adverse variance of £15k on income. 

There was a favourable variance on staff of £47k due to vacancies.

This adverse position was offset by a £56k transfer from the Human Resources reserve.

30. Performance and Development - Breakeven

There have been a number of adverse variances totalling £207k.  There were adverse variances on the employee budget of £160k mainly due to the cost of graduate trainees, temporary appointments and agency staff and £47k on general running expenses mainly attributable to ICT related costs.

There was a favourable variance of £6k on departmental income.

This adverse position was offset by a £60k transfer from the Performance and Development reserve, £41k from the Trainee Appointments Reserve and £100k from the Reshaping Reserve.

31. Management/Legal Services/Elections - Breakeven

There was an adverse variance of £38k in Legal Services made up of £13k on staff and £25k on supplies and services.

There was a favourable variance of £87k made up of £38k relating to undertaking external work for Cardiff County Council. The arrangement to undertake external legal work will continue. There was also a favourable variance of £49k on Elections.

The underspend of £49k on Elections has been transferred to the Elections Reserve.  There were also planned transfers from the Legal Reserve of £70k for staffing and £201k from the Elections reserve in respect of local election.

32. Democratic Services - Breakeven

There was an adverse variance of £17k on the Joint Coroner service due to a higher number of forensic/toxicology reports and a higher number of long jury inquests.

There were favourable variances of £32k arising from staff related savings of £20k, £6k on supplies and services and £6k additional income mainly from the Registrars service.

This has enabled a transfer to the Events Reserve of £15k.

33. Regeneration  - Favourable variance of £11k

There have been a number of adverse variances of £86k.  £60k relates to the Cosmeston Country Park income budget as it was not possible to achieve the proposed target for car parking fees.  Costs within the workshop facilities managed by the Division exceeded the budget by £13k mainly as a planned drawdown from reserves for the BSC 2 did not take place. Premises costs also exceeded their target by £13k due to essential repairs being required.

There have been a number of favourable variances during the year totalling £100k.  Staffing costs were £32k lower than anticipated, due mostly to staff vacancies. The Major Project Managers exceeded their income target by £68k as a higher than anticipated level of their work was rechargeable. 

This position allowed a transfer of £3k to the Regeneration and Planning reserve. 

During the year, there were planned drawdowns of £85k from the Regeneration and Planning reserves with £6k for refurbishing the workshop at Porthkerry, £25k for Rural Development Programme matchfunding and £54k planned drawdown to cover the Economic Development Team. As in previous years, the budget also included a planned drawdown from reserves of £228k for Vale-wide events, including Christmas 2017.

34. Development Management - Breakeven

There was an adverse variance of £102k relating to Development Control income. Though workload remains high, some of the application types received did not generate the expected fees.

There have been a number of favourable variances during the year totalling £146k.  There was a favourable variance of £58k relating to Building Regulation fee income as applications have once again been high in 2017/18.  A slowdown in the workload on the Local Development Plan (LDP) during 2017/18 resulted in a £23k favourable variance. Staff vacancies/secondment income during the year resulted in a favourable variance of £30k.  High income within the Building Control Section meant that they had a favourable variance of £26k. There were also other small favourable variances of £9k.

This favourable position allowed the £23k underspend on the LDP to be transferred into the LDP reserve and a further £21k to be transferred into the Regeneration and Planning reserve to support the Planning function.

A net transfer of £121k was made into the Building Control reserve for the year relating to the Trading Account.

35. Private Sector Housing - Adverse variance of £11k

There was an adverse variance of £23k, with £5k relating to staff costs and £18k relating to supplies and services, mostly due to quantity surveying services on the Holton Road Commercial Face-Lifting scheme. 

There was a favourable variance of £12k as income within the Division was higher than budgeted, some £8k of which related to the Renewal Area Team's fee income which had been slow earlier in the year but improved by year-end, reflecting the payment profile on the capital works budget.

There were planned drawdowns from reserves of £65k of which £49k from the Disabled Facilities Reserve was used to fund the costs of an Occupational Therapist and £16k was used from the Temporary Empty Homes Officer Reserve.

36. Rent Allowances/Council Tax Benefits - Breakeven

There have been a number of favourable variances during the year totalling £1.048m.  There was a favourable variance of £221k on discretionary housing payments. Discretionary Housing Payments are used to provide support to claimants adversely affected by some of the key welfare reforms. The grant allocation received from the Department for Work and Pensions has been fully spent.  The saving is due to a lower take-up from claimants than anticipated from the top up allocation provided by the Council from its own funds.  There were also favourable variances of £229k from recovered overpayments and associated subsidy on rent allowances and £598k on the Council Tax Reduction Scheme due to a lower than anticipated take-up.

This enabled the following transfers to reserves totalling £1.048m.  A transfer of £570k to the Council Fund had been approved as part of the Initial Revenue Budget proposal in November 2017 based on the projected underspend on the Council Tax Reduction Scheme at that time.  An additional £300k has been set aside in the Visible Services reserve for resurfacing in 2019/20 and £178k has been added to the City Deal reserve.

37. General Policy - Adverse Variance £10k

There have been a number of favourable variances during the year totalling £3.250m.  There were favourable variances relating to capital charges of £3.144m as a result of a prudent approach being required due to the uncertainty of interest rates and also a favourable variances of £106k on grants.

This has allowed the transfer of £3.260m into reserves.  A transfer of £1.885m into reserves was approved by Cabinet on 20th November 2017 as part of the Initial Revenue budget proposals with £455k going to the Schools Investment Strategy reserve and £1.43m going to the Council Fund. There were further transfers into reserves of £252k to the Schools Deferred Pension Reserve and £148k to the Schools Deferred Pension Provision, £47k to Events, £122k to City Deal and £106k has also been transferred to the Stronger Communities Fund.  It is also possible to allocate a further £700k to the Visible Service reserve with £500k being set aside for Big Fill in 2019/20 and £200k to be used as additional funding in 2018/19 to repair pot holes.

38. Council Tax - Breakeven

The Council Tax surplus is £1.545m which is in line with the £1.6m reported to Cabinet on 20th November 2017.   The Council Tax Base is initially calculated in November of the preceding financial year.  The uncertainty of the impact of the Central Government's welfare reforms required a prudent view to be taken when considering the collection rate expected.  Cabinet on 20th November 2017 as part of the Initial Revenue budget proposals for 2018/19 approved the transfer of this underspend to the School Investment Strategy reserve.

Housing Revenue Account

39. Council on 1st March 2017 (minute no.862) agreed the Authority's 2017/18 Housing Revenue Account (HRA) budget.
40. In 2017/18 the Housing Revenue Account outturned with an in year deficit of £183k, compared to the amended budget which was a planned deficit of £127k.  A breakdown is shown in Appendix 2.  The HRA reserve opened at £958k and the in year deficit resulted in the reserve closing at 31st March 2018 with a balance of £775k.  This level is in line with the current Housing Business Plan.
41. The net adverse variance of £56k is identified over the following areas.
42. Supervision & Management General - Favourable Variance £231k

There were adverse variances totalling £21k.  £3k related to premises and £6k related to supplies and services in the Asset Management Team and in Housing Management, £7k related to supplies and services such as promotions, software/ hardware and other non-staffing costs and £5k related to transport.

There have been a number of favourable variances totalling £252k.  There were favourable variances in Asset Management and Development with £21k relating to Staffing and £2k to Transport.  Favourable staffing variances in the rest of the service were £49k. There were further favourable variances in support and central management costs of £76k, tenant participation of £22k and premises of £82k.

43. Supervision and Management Special Services - Favourable Variance £11k

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.

There was an adverse variance of £28k on Special Services supplies and services.

Favourable variances totalled £39k.  A favourable variance of £19k at Ty Iolo was mainly due to staffing, there was a favourable variance of £7k relating to Temporary Accommodation and Special Services had favourable variances of £2k on premises and a saving on Sheltered Schemes of £11k. 

44. Housing Repairs - Favourable Variance £279k

There was a favourable variance of £296k on responsive repair call-outs mainly as a consequence of the housing stock being brought up to Welsh Housing Quality Standard.  Expenditure on gas servicing, asbestos, electrical servicing and other cyclical charges are less than budget resulting in a favourable variance of £226k. These favourable variances were offset by an adverse variance of £243k relating to works to void properties.

45. Capital Financing Costs - Favourable Variance £229k

Interest and debt management charges were lower than originally estimated due to a lower amount of borrowing required during the year to fund the Housing Investment Programme.

46. Rents, Rates, Taxes and Other Charges - Favourable Variance £31k

This is due to a reduction in legal expenses and Council Tax payable on long-term void properties.

47. Increase in the Provision for Bad and Doubtful Debts - Adverse Variance £55k

It was anticipated that the bad debt provision would need to be increased by £90k. The outturn was higher than this at £145k. This may be expected going forward as the impact of further welfare reforms will put added pressure on rent collection rates in the future.

48. Capital Expenditure from Revenue Account - Adverse Variance £735k

Savings within the HRA, as outlined above, have made it possible to increase the contribution from revenue to capital expenditure.  This has led to a reduced balance on the HRA reserve but also a decrease in the prudential borrowing requirement for the 2017/18 Housing Investment Programme and in turn borrowing costs going forward.

49. Dwellings Rents - Adverse variance £62k

Dwelling rents collected were slightly less than budgeted.

50. Non Dwelling Rents - Adverse Variance £3k

Rents collected on garages were slightly less than budgeted.

51. Interest Received - Breakeven

Interest received was in line with budget.

52. Charges for Services and Facilities - Favourable Variance £18k

The level of income received for services and facilities was higher than anticipated.

Insurance Fund

53. The total Insurance Fund comprises of both a provision and a reserve.  The provision represents potential liabilities on known claims and the reserve relates to claims not yet made.  An assessment was made as to the level of known claims and it was considered that the level of the provision should be reduced and therefore £334k was transferred into the reserve to fund unknown potential claims in the future.  A breakdown is shown in the following table.

	Provision	Reserve	Total
	£000	£000	£000
Opening Balance	2,636	2,545	5,181
Surplus on Insurance Transactions	0	573	573
Transfers In/(Out)	(334)	334	0
Closing Balance	2,302	3,452	5,754

         

Trading Operations

54. The Trading Organisations referred to in this section are made up of Building Maintenance, Caretaking & Security and Building Cleaning and Courier.
55. The provisional figures for the Trading Services show an overall gross surplus of £91k (before repayment of £47k to the Housing Revenue Account). The details are shown below:

 

	Building Mtce	Building Cleaning	Caretaking and Security	Courier	Total
	£000	£000	£000	£000	£000
(Surplus)/ Deficit	(3)	29	(96)	(6)	(76)
			Plus: Building Maintenance Twin Hat		(15)
			SURPLUS		(91)

                                                                                                                                    

56.      Explanations of the variances are shown earlier in the report. 

Capital

57. Council on the 1st March 2017 (minute no.863) agreed the Authority's capital budget for 2017/18.
58. The overall position for the revised 2017/18 Capital Programme was a variance of £7.071m. The statement at Appendix 3 details the outturn by scheme.  To allow project managers to have fully approved capital budgets, capital slippage from 2017/18 to 2018/19 has been approved via Managing Director's Emergency Powers.

Learning and Skills                

59. The overall outturn for the Directorate of Learning and Skills is a variance of £939k. The major variances are outlined below.
60. Band A Romilly Primary - Slippage of £127k

There has been a delay to the start of the works on site as a result of a value engineering exercise to agree a reduction to the lowest tender to bring it within the available budget.  It has therefore been requested that £127k is carried forward into 2018/19.

61. Education Contingency Budget - Favourable variance of £235k with slippage of £220k 

The budget is a contingency budget for unexpected works which Education allocate through delegated authority or Cabinet Report as and when required.  Part of the contingency budget is covering overspends on other schemes in 2017/18 and therefore it has been requested that £220k is carried forward into 2018/19.

62. School IT Loans - Favourable Variance of £198k

A £200k allocation was made available for schools to undertake capital loans for ICT, however in 2017/18, only one request was received and a carry forward of budget is not required as there is an allocation already included in the 2018/19 Capital Programme.

Social Services

63. The overall outturn for the Directorate of Social Services is a variance of £115k.  Slippage of £121k is required.

Environment and Housing 

64. The overall outturn for the Directorate of Environment and Housing is a variance of £3.392m. This comprises £2.041m for Housing Services and £1.351m for Visible Services.  The major variances are outlined below.
65. Housing Improvement Programme - Favourable variance of £2.041m with slippage of £1.372m.

WHQS External Works - Accounts are currently being finalised with contractors and further works will need to be undertaken to maintenance WHQS. This work will continue into 2018/19 and it has therefore been requested that £896k is carried forward.

Jenner Road - Structural issues have been identified at Jenner Road that will require additional work in 2018/19. It has therefore been requested that £51k is carried forward into 2018/19.

Williams Crescent - The final account is currently being agreed with the contractor and it has been requested that £98k is carried forward into 2018/19.

Common Parts - Delays with tenders and contractor capacity issues have resulted in work being pushed back into 2018/19. It has been requested that £98k is carried forward into 2018/19.

Emergency Works - Emergency works at Camrose Court are on-going. It has therefore been requested that £78k is carried forward into 2018/19.

Environmental Works - There are on-going environmental works on the Buttrills Scheme that will continue into 2018/19. It has therefore been requested that £63k is carried forward.

Aids and Adaptations - There are ongoing works for aids and adaptations so it has been requested that £88k is carried forward to 2018/19.

66. Visible Services Highway Improvements - Slippage of £106k

Resurfacing works planned towards the end of last financial year, to conclude the highway maintenance 3 year plan, were unable to proceed due to the poor weather conditions experienced during March.  The outstanding work has now been completed in the new financial year and therefore it has been requested that £106k is carried forward into 2018/19.

67. Dimming of Street Lighting/Fitting of LED lanterns - Slippage of £131k

The procurement process for the installation of the new LED lanterns was completed in January 2018.  Arrangements for legal exchange of contracts and the development of a detailed programme for installation followed, resulting in the works for the conversion of standard LED lantern units in residential street subsequently being commenced. The overall programme requires some 14 weeks for completion, which is estimated to be late June / early July 2018.  It has therefore been requested that £131k is carried forward into 2018/19 to fund these works.

68. Boverton Flooding - Slippage of £187k

The construction phase of the scheme had been delayed due to the ongoing technical nature of the works, various site constraints and limited area of working, resulting in a significant overrun on the contract and a completion date in 2018/19.  The completion of the construction phase has recently been certified as Friday 18th May 2018 and it has therefore been requested that £187k is carried forward to finalise the account.

69. Vehicle Replacement Programme - Slippage of £334k

Following the Visible Services Reshaping Programme and the creation of the Neighbourhood Services and Transport model, a number of areas have been streamlined and operation functions changed.  To co-ordinate with this, the Vehicle Replacement Programme has been delayed. With the new areas becoming operation from April 2018, the replacement programme will now recommence and it has therefore been requested that £334k is carried forward into 2018/19.

Managing Director and Resources

70. The overall outturn for the Managing Director and Resources is a variance of £2.625m. The major variances are outlined below.
71. Five Mile Lane - Slippage of £794k

This variance is due to some slippage in the commencement of the main works and the slow draw down on the land payments elements.  Overall the profile should catch up over the next few months.  It has therefore been requested that £794k is carried forward into 2018/19.

72. RCDF Go Wild - Slippage of £101k

This variance is due to the first round of returned tenders received being higher than the allocated budget.  This scheme has since been re-tendered with a closing date of the 6th June. It has therefore been requested that £101k is carried forward into 2018/19.

73. Disabled Facilities Grant - Slippage of £186k

The referrals for disabled facilities grants dropped during November 2017 but picked up again in January 2018.  As a consequence, the budget for 2017/18 was committed during the financial year, but the building works did not complete and will be completed during early 2018/19.  It has therefore been requested that £186k is carried forward into 2018/19.

74. LiDW2 Grant for Schools and Council Network-  Slippage of £702k

Works under this scheme are being procured by Welsh Government.  Due to the complexity of the procurement arrangements this scheme was unable to be implemented by 31st March 2018 and it has therefore been requested that £702k is carried forward into 2018/19 to allow the works to be undertaken.

Reserves

75. 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.
76. 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.
77. As part of the 2018/19 revenue budget setting process, each specific reserve had been reviewed and considered in light of the Council's priorities.  It should be noted that there are considerable commitments which will require funding from reserves in the coming years, e.g. Band B 21st Century Schools Investment Programme.
78. Attached at Appendix 4 is a schedule showing the Council's reserves as at 31st March 2018.  The table below shows the net movements in reserves for 2017/18 relating to the Council Fund and for specific reserves.  The table excludes the HRA reserve as this is shown in Appendix 2 and the Insurance Fund where the movement has been detailed elsewhere in this report. The value of transfers out of reserves to fund capital expenditure is £5.377m with a net transfer into reserves from revenue of £6.710m.  Transfers into reserves can be used to fund future revenue or capital expenditure.

Net Movement on Reserves Excluding HRA & Insurance	Balance as at 31st March 2017 £000	Balance as at 31st March 2018 £000	Net Movement £000
Council Fund	9,309	9,634	+325
Specific Reserves	64,664	66,237	+1,573
School Balances	2,322	2,664	+342
Reverse out Insurance Fund	(2,545)	(3,452)	(907)
Total Movement	73,750	75,083	+1,333

Of which: -	£000
Reduction in reserves for Capital expenditure	(5,377)
Transfers into reserves from Revenue	+6,710
Net Movement	+1,333

79. The Cardiff Capital Region City Deal, brings together ten Local Authorities and financial support from Welsh and UK Governments to generate significant economic growth and to improve transport and other infrastructure within the Cardiff Capital Region over the next 20 years.  The contribution to be made by the Council will be substantial over the coming years.  It is anticipated that the Council will need to carry out unsupported borrowing which will require revenue funding to be identified to support these loans.  It has been considered prudent that funding is set aside to support potential financial commitments and therefore a City Deal fund has been set up with an allocation of £1.250m as at 1st April 2017. Additional funding of £800k has been transferred into this reserve during 2017/18 from revenue underspends, with £500k being approved as part of the Final Revenue Budget Proposals in February 2018 and a further £300k as part of this report.  Expenditure of £2.052m has been incurred during 2017/18 and these costs were funded from borrowing which will be financed by the Council. 
80. The condition of the roads in the Vale of Glamorgan is an important issue to the Council.  £500k was set aside in the Visible Services reserve for additional road and pavement resurfacing works in 2018/19 as part of the Final Revenue Budget Proposals report in February 2018.  The Council had committed funding for the Big Fill initiative until 31st March 2019. There is still further works to be carried out across the Vale and therefore £500k has been transferred into the Visible Services reserve to allow the Big Fill initiative to continue into 2019/20 and this will be part of the revenue budget.  As part of this report, an additional £400k has also been transferred into the Visible Service reserve to fund further resurfacing works in 2019/20.
81. The Events reserve has also been increased by £200k. 
82. £400k has been set aside to set up a Schools Deferred Pension scheme, via both a reserve and a provision.  This will allow the Council to make up front payments to the Teachers Pension scheme centrally on behalf of schools, which can be repaid by Schools over a number of years. 
83. There have also been transfers into reserves for reimbursements from services for works where the initial cost was funded from that specific reserve e.g. Computer Renewal Fund, Project Fund, Vehicle Repairs and Renewals, Schools Rationalisation Fund and the Energy Management Fund.
84. Funds no longer required as specific reserves may be transferred to the Council Fund to be used for other purposes.  The reserves have been reviewed and are currently considered adequate for reported uses, subject to the adjustments detailed in this report, however, a further transfer between reserves is being proposed.  Due to the transitional and one off costs associated with the setting up of Co-Education in Barry, a transfer of £152k is requested from the Libraries Fund into the Schools Rationalisation reserve.
85. The transfers detailed above have been included in Appendix 4.

Resource Implications (Financial and Employment)

           Revenue (Including Savings Targets)

86. It was the intention that £700k of the Council Fund was to be used in 2017/18  to support the revenue budget and as part of the revenue monitoring report to Cabinet on 22nd January 2018, minute number C193, it was agreed that £258k of the projected Learning and Skills overspend would also be funded from the Council Fund.  The drawdown for Learning and Skills was not required at year end and therefore £675k was actually used to fund expenditure in the year and therefore the fund stands at £9.635m as at 31st March 2018.  When the budget was set for 2018/19, no further drawdown from the fund was approved.
87. As part of the Final Revenue Budget Proposals for 2017/18, a savings target of £4m was set for the Authority.  Progress on the achievement of these savings has been monitored and reported to Committee during the year.  Appendix 5 to this report confirms the final status of these savings at the end of 2017/18.  The services have been able to find savings to the value of £2.998m which is 75% of the required target.  Some of the savings have been achieved by a different means to that planned.   
88. Learning and Skills - All target savings were achieved in the year.
89. Social Services - With regard to the savings targets which relate to the Care Package Budget reductions, schemes have been put in place to deliver savings in this area by transferring domiciliary care clients to direct payments and by establishing a review team.  The only saving not to be achieved was the £10k Physical Disabilities Day Service saving which is anticipated to be achieved during 2018/19.
90. Environment and Housing - Visible Services had a savings target of £525k under the Reshaping Services programme which was to be achieved by the introduction of a new target operating model.  As stated earlier in this report the structure was not fully populated until April 2018 and therefore the shortfall of £525k was met from the Visible Services Reserve.  It is anticipated that the savings target will be achieved in full in 2018/19.  The £244k Transport Review saving was allocated to Waste Management however it was not achieved this year and funding had been ringfenced in the Visible Service Fund to cover part of the shortfall for this year.
91. Managing Director and Resources - ICT did not achieve £200k of its £400k saving target.   There are underspends elsewhere in the Finance division from staff vacancies and supplies and services which offset this position.

Capital

92. The underspend on the revised Capital Programme in 2017/18 is £7.071m against a budget of £51.432m.
93. The following table shows how the Capital Programme has been financed in 2017/18.

Source of Funding		Outturn (£000)
General Capital Funding		5,405
Local Government Borrowing Initiative (LGBI)		1,500
Unsupported Borrowing		4,252
Capital Receipts - Housing		3,201
Capital Receipts - Council Fund		24
WG/WEFO Grants		12,912
Revenue		8,077
Reserves - Schools Investment Strategy	432
- Council Buildings	815
- Vehicle Renewal Fund	663
- Project Fund	411
- Energy Fund	152
- Disabled Facilities Grant	450
- IT Fund	1,037
- Regeneration	149
- Visible Services/Winter Maint*	543
- Capital Fund	146
- Jenner Park	335
- Coastal	110
- Capital Scheme Commitments	81
- School Rationalisation	53	5,377
Other e.g. Section 106		3,613
TOTAL		44,361

*This is a net transfer from reserves.  The revenue budget provided temporary funding for capital during 2016/17 which was reimbursed by Welsh Government grant in 2017/18 (£797k).

94. General Capital Funding - Capital expenditure in the year was sufficient to cover the General Capital Funding provided by the Welsh Government.  Where schemes originally planned to be financed from General Capital Funding have underspent, other schemes, planned to be funded from capital receipts or reserves, have been substituted in their place. 
95. Capital Receipts - The Council Fund capital receipts balance as at 31st March 2018 was £11.286m.  This is split £8.639m for general use, £1.339m ringfenced for Social Services and £1.308m ringfenced for Education.  The sum of £4.687m was received in 2017/18 as a result of the sale of assets and mortgage repayments as follows: 

                                                                                                              £'000

                      Council Houses                                                                  776     

                      Land and Buildings                                                           3,910

                      Mortgage repayments                                                            1      

                                                            

96. As a result of the capital underspend in 2017/18, an allocation of £5.75m has been approved via Managing Director's Emergency Powers, as slippage into 2018/19.  This will fund the completion of schemes as shown in Appendix 6.  Of this figure, the sum of £1.388m will be funded from capital receipts and £4.362m will be provided from revenue, reserves or external sources.
97. 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 2017/18 was £2.779m.  £14.358m was spent on major improvements to the Council's housing stock during 2017/18, £2.779m of which was funded from the MRA, £3.201m from Housing capital receipts, £162k from WG and European grants and £7.216m from Housing revenue and reserves, as well as £1.0m of unsupported borrowing. 

Sustainability and Climate Change Implications

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

Legal Implications (to Include Human Rights Implications)

99. The provisional outturn figures for the Council have 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 2018.

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

102. 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

103. This is a matter for Executive decision by Cabinet.  Slippage has been approved via the use of Managing Director's emergency powers.

Consultation (including Ward Member Consultation)

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

Relevant Scrutiny Committee

105. Corporate Performance and Resources.

Background Papers

None

Contact Officer

Carys Lord

Officers Consulted

Corporate Management Team

Responsible Officer:

Rob Thomas

Managing Director