Agenda Item No. 5
The Vale of Glamorgan Council
Homes and Safe Communities Scrutiny Committee: 11th July 2018
Report of the Director of Environment and Housing
Closure of Accounts 2017/18
Purpose of the Report
- 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
- That Scrutiny Committee note the report and the financial measures taken and proposed.
Reason for the Recommendation
- To make Members aware of the provisional financial position and actions that have been taken.
Background
- 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
Council Fund
- Council on the 1st March 2017 (minute no.864) agreed the Authority's budget requirement for 2017/18.
- 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.
- 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 this Committee which has 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
|
£000
|
|
Youth Offending Service
|
701
|
709
|
544
|
+165
|
0
|
|
Regulatory Services
|
2,166
|
2,169
|
2,166
|
+3
|
+330
|
|
Council Fund Housing
|
1,126
|
1,294
|
1,294
|
0
|
+49
|
|
Private Housing
|
11,003
|
11,062
|
11,073
|
(11)
|
+983
|
|
TOTAL
|
14,996
|
15,234
|
15,077
|
+157
|
+1,362
|
- The main reasons for the variances are set out in the following paragraphs.
- 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.
- 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 May 1st 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.
- 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.
- 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.
- 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.
Housing Revenue Account
- Council on 1st March 2017 (minute no.862) agreed the Authority's 2017/18 Housing Revenue Account (HRA) budget.
- 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.
- The net adverse variance of £56k is identified over the following areas.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Dwellings Rents - Adverse variance £62k
Dwelling rents collected were slightly less than budgeted.
- Non Dwelling Rents - Adverse Variance £3k
Rents collected on garages were slightly less than budgeted.
- Interest Received - Breakeven
Interest received was in line with budget.
- Charges for Services and Facilities - Favourable Variance £18k
The level of income received for services and facilities was higher than anticipated.
Capital
- Council on the 1st March 2017 (minute no.863) agreed the Authority's capital budget for 2017/18.
- Attached at Appendix 3 is a breakdown of the 2017/18 Capital Programme by scheme. The overall outturn for this Committee is a variance of £2.333m. The major variances are outlined below.
- 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 on-going works for aids and adaptations so it has been requested that £88k is carried forward to 2018/19.
- 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 were not completed and will be finished during early 2018/19. It has therefore been requested that £186k is carried forward into 2018/19.
Reserves
- 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.
- 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.
- Attached at Appendix 4 is a schedule showing the Committee's reserves as at 31st March 2018.
Resource Implications (Financial and Employment)
Revenue (Including Savings Targets)
- As part of the Final Revenue Budget Proposals for 2017/18, a savings target of £4m was set for the Authority. No savings targets had been allocated to services that fall under this Committee's remit for the year.
Capital
- 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.
- 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
- There are no sustainability and climate change implications resulting from this report.
Legal Implications (to Include Human Rights Implications)
- 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
- There are no crime and disorder implications resulting from this report.
Equal Opportunities Implications (to include Welsh Language issues)
- There are no equality implications resulting from this report.
Corporate/Service Objectives
- 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
- 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)
- The appropriate Chief Officers have been consulted on this report. This report does not require Ward Member consultation.
Relevant Scrutiny Committee
- Corporate Performance and Resources.
Background Papers
None
Contact Officer
Carys Lord
Officers Consulted
Corporate Management Team
Responsible Officer:
Miles Punter,
Director of Environment and Housing