Agenda Item No
The Vale of Glamorgan Council
Scrutiny Committee (Housing and Public Protection): 15th July 2015
Report of the Director of Visible Services and Housing
Closure of Accounts 2014/15
Purpose of the Report
1. The accounts are complete and this report is to inform Scrutiny Committee of the provisional financial position for the Directorate for the 2014/15 financial year.
It is recommended that :-
1. Scrutiny Committee note the report and the financial measures taken and proposed.
Reason for the Recommendation
1. To approve the report and the financial measures taken and proposed.
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
3. The Council on the 5th March 2014 (minute no.884) agreed the Authority’s budget requirement for 2014/15.
4. Appendix 1 amends the revised budgets to take account of the following adjustments. There is no overall effect on the Authority.
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.
Recharges - These relate to movements in charges between internal Council services.
Carbon Reduction Commitment Scheme - The scheme requires the Authority to report on carbon dioxide emissions associated with the use of electricity and gas within its buildings. Payment is then made to the Environment Agency to cover the charge in respect of those emissions. The original budget to cover the estimated cost was included in Policy; however it has now been re distributed to the relevant services.
5. Set out below is a table comparing the amended budget and the actual expenditure for the Authority:
Year - 2014/15
Amended Revenue Budget
Total Provisional Actual
Variance +Favourable () Adverse
General Fund Housing
6. The main reasons for the variances are set out in the following paragraphs.
7. Youth Offending Service - Favourable variance of £3k
There were favourable variances of £34k on staff due to temporarily vacant posts and £22k on other grants and income. There were other adverse variances of £8k. A transfer of £45k has been made to the Grant Exit Strategy reserve to support redundancy costs should grant funding cease.
8. General Fund Housing - Favourable variance of £10k
There was an adverse variance of £7k due to a shortfall in income recovery on Cadoxton House.
There were favourable variances of £39k on staffing pending reorganisation, £18k on the Community Safety core budget, £3k on supplies and services within the Homelessness, Supporting People and Housing Strategy teams and £433k on temporary accommodation for the homeless. As highlighted during the year, it was unknown when the Universal Credit rollout would be introduced in the Vale and what impact it would have on the level of homelessness during 2014/15. It is now anticipated that Universal Credit will have a phased introduction, in the Vale, from February 2016.
There have been transfers to reserves of £72k for a Prison Leaver Support Worker, £72k for a Pre-tenancy Advisor, £72k for an Accommodation Solutions Co-ordinator all would be for a 2 year period, £100k towards support and interpretation services for asylum seekers and £160k towards the Reshaping Services Programme.
9. Public Protection - Adverse variance of £6k
There was an adverse variance on Agency staffing of £46k in the Pollution Team and £22k in the Trading Standards Team, who were required in order to maintain levels of core service delivery in these areas in the run up to collaboration. Three pest control vehicles were purchased outright at the end of their lease term at a cost of £20k, as it was decided not to commit to a further lease pending operational decisions on the future of the Shared Regulatory Service. Taxi Licensing income was £24k lower than estimated due to the reduction in the numbers of taxi drivers, private hire and hackney carriage vehicles in the Vale. This position was offset by a transfer of £50k from the Regulatory Improvements reserve.
There were favourable variances on customer receipts within the division, totalling £22k, the majority of which were due to increased pest control income due in part to a 37% increase in chargeable flea treatments. Some £7k was saved in Trading Standards by reducing their subscription costs and finding alternative methods for research information. In addition there was a favourable variance of £7k on the cost of sample analysis due to the on-going work with external service providers. There were various other small variances amounting to a net £20k favourable variance.
10. Private Sector Housing - Favourable variance of £14k
There was an adverse variance of £41k on Disabled Facilities Grant (DFG) staffing costs that were required in order to achieve the increased throughput and reduce average completion times on DFGs. There was also an adverse variance of £13k on Renewal Area grant agency fee income for administering the Renewal Area face-lifting project within Barry’s Castleland ward. In addition, payments to external Quantity Surveyors for the face-lifting works were higher than budgeted by £32k. This was because these were upfront costs and coupled with an initial lower than expected take-up of the commercial assistance available, this resulted in less than anticipated fees.
There were favourable variances of £91k on agency fee charges on DFGs as, once again, the number of grant applications processed has increased over previous years – 158 in 2014/15, compared to 134 in 2013/14 and 93 in 2012/13. There were other small variances amounting to a net £9k favourable variance.
There was also a planned budgeted transfer from reserves of £46k to fund an additional Occupational Therapist post assisting in the DFG Section.
11. Rent Allowances/Council Tax Benefits - Favourable variance of £3k
There were favourable variances of £215k on Discretionary Housing payments. Discretionary Housing payments are used to provide support to claimants adversely affected by some of the key welfare reforms. The saving is due to a lower take-up from claimants than anticipated, however, there remains uncertainty over future demand. There were also favourable variances of £267k from recovered overpayments and associated subsidy, £739k on Council Tax Reduction Scheme and £17k on Housing Benefit audit fee savings.
There have been transfers to reserves of £735k to the School Investment Strategy Reserve and £500k to the Social Services Buildings Fund.
Housing Revenue Account
12. The 2014/15 Housing Revenue Account (HRA) resulted in a deficit of £4.530m compared to the revised estimate deficit of £3.514m. A breakdown is shown in Appendix 2. The working balance opened at £6.406m and closed at £1.876m.
13. The net adverse HRA revenue budget variance of £1.016m is identified over the following areas.
14. Supervision & Management General – Favourable Variance £707k
There were favourable variances in Support and Central Management Costs of £465k, staffing through vacancies of £128k, software/hardware and other non-staffing costs related to Housing Teams of £41k, Tenant Participation of £40k, Homes 4U advertising and other running costs of £25k and staff travel costs of £8k.
15. Supervision and Management Special Services – Favourable Variance £8k
This budget is split into three areas, Ty Iolo Homeless hostel, Vale temporary accommodation and Vale Special Services. The term 'Special Services' relates to communal costs for all housing areas throughout the Vale of Glamorgan, including sheltered accommodation, such as grass cutting, rubbish removal, communal lighting, security, warden salaries and environmental improvements. The favourable variance of £8k is a combination of the following: A favourable variance of £52k at Ty Iolo which reflects the reduction in the use of agency staff and a reduction in other revenue expenditure such as security cover and furniture and fittings; £19k adverse variance on Temporary Accommodation mainly due to additional repair costs and an adverse variance of £25k on Special Services which is made up of adverse variances of £46k on ad hoc cleansing and ground maintenance works on the estates, this has been offset by a saving on Sewage Treatment Works of £21k.
16. Housing Repairs – Favourable Variance £372k
The favourable variance on this budget heading is largely due to a favourable variance of £162k on Fire Risk Assessment Works and £50k on repair call-outs, mainly as a consequence of the housing stock being brought up to Welsh Housing Quality Standard. In addition, expenditure on gas servicing, asbestos, and fencing have all reduced, compared to previous years.
17. Capital Financing Costs – Favourable Variance £18k
Interest charges were lower than anticipated.
18. Rents, Rates, Taxes and Other Charges – Favourable Variance £126k
This is largely due to a favourable council tax variance of £67k for void properties. Both the number of voids and the turnaround time have reduced during the year as a consequence the impact of council tax on those empty properties has fallen.
19. HRA Subsidy Payable – Favourable Variance £73k
The HRA negative subsidy payment for 2014/15 was slightly less than budgeted.
20. Increase in the Provision for Bad and Doubtful Debts – Favourable Variance £116k
It was anticipated that the bad debt provision would need to be increased by £116k. However, during the year £340k of former tenant arrears were written off, as these debts were previously provided for there has been a net decrease in the bad debt provision. This is explained in the relevant paragraph below.
21. Capital Expenditure from Revenue Account – Adverse Variance £2.313m
A higher contribution was required than budgeted towards the Housing Improvement Plan due to more work than originally forecast being completed.
22. Rent Collected on Dwellings – Adverse variance £287k
This adverse variance is largely due to the level of write-offs undertaken during the year of £340k.
23. Non Dwelling Rents – Adverse Variance £32k
Rents collected on garages were 10% less than budgeted.
24. Reduction in Provision for Bad & Doubtful Debts – Favourable Variance £240k
The write-off in bad debts described in the paragraph above of £340k has the effect of reducing the bad debt provision, however, there was a need to increase the provision further by £100k due to the in-year increase in former tenant arrears. The net impact on the Bad Debt Provision is a reduction of £240k.
25. Interest Received – Adverse Variance £1k
The average London Interbank Bid Rate (LIBID) for the year was lower than anticipated.
26. Charges for Services and Facilities – Adverse Variance £43k
The level of income received for services and facilities was less than anticipated by 7%.
27. The overall outturn for this Committee is a variance of £670k and the statement at Appendix 3 details the outturn by scheme.
28. Housing Improvement Programme - Expenditure brought forward of £809k
Works to deliver Welsh Housing Quality Standards are progressing well. Creditors of £766k were included in the 2014/15 accounts while the invoices were paid in April 2015. There is no overall effect on the scheme funding and the 2015/16 scheme will need to be re-profiled to take into account this transfer of expenditure between years.
29. 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.
30. 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.
31. Funds no longer required as reserves may be transferred to the Council Fund to be used for other purposes.
32. Attached at Appendix 4 is a schedule showing the Committee's reserves as at 31st March 2015.
Resource Implications (Financial and Employment)
33. As part of the Final Revenue Budget Proposals for 2014/15, a savings target of £470k was set for this Committee. 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 2014/15 and savings of £441k were achieved, resulting in a shortfall of £29k. Further work will be undertaken during 2015/16 to realise this shortfall.
34. As a result of the progress made ahead of schedule on the Housing capital programme, an allocation of £809k has been brought forward into 2014/15 as shown in Appendix 6 and has been approved via Managing Director's Emergency Powers on 16th June 2015.
35. 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 2014/15 was £2.76m. Works totalling £19.48m were spent on major improvements to the Council's housing stock, £2.76m of which was funded from the MRA, £897k from Housing capital receipts, £661k from WG grant and £10.608m from Housing revenue and reserves, as well as £4.554m of unsupported borrowing
Sustainability and Climate Change Implications
36. There are no Sustainability and Climate Change implications resulting from this report
Legal Implications (to Include Human Rights Implications)
37. The provisional out turn figures for the Council has 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, 2015
Crime and Disorder Implications
38. There are no crime and disorder implications resulting from this report
Equal Opportunities Implications (to include Welsh Language issues)
39. There are no equality implications resulting from this report
40. 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
41. This is a matter for Executive decision, with the exception of the proposed increases to the Capital Programme, which will require Council approval. Slippage has been approved via the use of Managing Director's emergency powers.
Consultation (including Ward Member Consultation)
42. The appropriate Chief Officers have been consulted on this report. This report does not require Ward Member consultation.
Relevant Scrutiny Committee
43. Corporate Resources.
Carolyn Michael (Operational Manager - Accountancy) (01446 709778)
Director of Visible Services and Housing