Agenda Item No 4

The Vale of Glamorgan Council

   

Learning and Culture Scrutiny Committee: 17th July 2018

 

Report of the Director of Learning and Skills

 

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

 

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

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

  1. 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 outturned 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 out-turned 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.

  1. 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.

  1. 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.

  1. 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.                                                                                                                     

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 £939k.  The major variances are outlined below.
  3. 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 been requested that £127k is carried forward into 2018/19.

  1. 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 it has been requested that £220k is carried forward into 2018/19.

  1. 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.

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. £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. 
  5. 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, Schools Rationalisation Fund and the Energy Management Fund.
  6. A transfer between reserves has been actioned.  Due to the transitional and one off costs associated with the setting up of Co-Education in Barry, there has been a transfer of £152k from the Libraries Fund into the Schools Rationalisation reserve.
  7. The transfers detailed above have been included in Appendix 3.

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 and all savings were achieved in full. 

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:

Paula Ham

Director of Learning and Skills