Agenda Item No 6

The Vale of Glamorgan Council

   

Healthy Living and Social Care Scrutiny Committee : 10th July 2018

 

Report of the Director of Social Services

 

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 of 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 make Members aware of the provisional financial position and actions that have been taken.

Background

  1. Following the end of the financial year, Scrutiny Committee are provided with provisional outturn figures for the Council. The Statement of Accounts will be approved by Council before 30th September, which will normally follow the audit by Wales Audit Office.

Relevant Issues and Options

Revenue

  1. Council on the 1st March 2017 (minute no.864) agreed the Authority's budget requirement for 2017/18.
  2. 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.

  1. The following table compares the amended budget and the actual expenditure, including transfers to and from reserves, for this Committee.  The final column shows the net transfers to reserves for the Committee which have been included within the actual expenditure figures. 

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

 

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

 

Total

57,301

57,893

58,048

(155)

+1,697

Leisure Services

4,400

4,685

4,628

+57

+42

TOTAL

61,701

62,578

62,676

(98)

+1,739

  1. The main reasons for the variances are set out in the following paragraphs.
  2. 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. 

  1. 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 Adult 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.

  1. 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.

  1. 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. Employee's 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.

Capital

  1. Council on the 1st March 2017 (minute no.863) agreed the Authority's capital budget for 2017/18.
  2. Attached at Appendix 2 is a breakdown of the 2017/18 capital programme by scheme.  The overall outturn for this Committee is a variance of £313k.  Slippage of £357k is required.

Reserves

  1. 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.
  2. 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.
  3. Attached at Appendix 3 is a schedule showing the Committee's reserves as at 31st March 2018.
  4. There have been transfers into reserves for reimbursements from services for works where the initial cost was funded from that specific reserve e.g. the Energy Management Fund.

Resource Implications (Financial and Employment)

           Revenue (Including Savings Targets)

  1. As part of the Final Revenue Budget Proposals for 2017/18, savings targets were set for this Committee.  Progress on the achievement of these savings has been monitored and reported to Committee during the year.  Appendix 4 to this report confirms the final status of these savings at the end of 2017/18.  The services have been able to find savings to the value of £325k which is 97% of the required target.     
  2. 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.

Capital

  1. As a result of the capital underspend in 2017/18, Managing Director's Emergency Powers, have been used to approve slippage into 2018/19.  This will fund the completion of schemes as shown in Appendix 5

Sustainability and Climate Change Implications

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

Legal Implications (to Include Human Rights Implications)

  1. 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

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

Equal Opportunities Implications (to include Welsh Language issues)

  1. There are no equality implications resulting from this report

Corporate/Service Objectives

  1. 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

  1. 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)

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

Relevant Scrutiny Committee

  1. Corporate Performance and Resources.

Background Papers

None

Contact Officer

Carys Lord

Officers Consulted

Corporate Management Team

Responsible Officer:

Lance Carver, Director of Social Services