These functions cover the audit of 20 sets of 2015/16 local government body accounts. These include the 11 individual councils plus seven joint committees, the Local Government Staff Commission, and the Northern Ireland Local Government Officers’ Superannuation Committee. All audit opinions were unqualified.
The LGAR also includes an assessment of the new councils’ performance improvement responsibilities for 2016/17. Specific emphasis is placed on the work carried out by each council to ensure that proper arrangements are in place to secure economy, efficiency and effectiveness in the use of resources and that public money is properly accounted for.
In the financial year 2015/16, councils received income of £864 million from rates, charges and grants. Council revenue expenditure in the same year amounted to almost £858 million. For 2014-15 the total income and expenditure figures for the 26 legacy councils were £833 million and £818 million respectively.
The majority of councils’ income, 66 per cent (65 per cent in 2014/15), was received from district rates. Income generated from services accounted for almost 22 per cent (23 per cent in 2014/15). These include building control, waste collection, planning and use of leisure facilities. General revenue funding and capital grants accounted for 6 per cent and 7 per cent of income respectively.
While £50.4 million of general revenue funding from the Department for Communities reflected an increase of £4.8 million over the total amount paid to the legacy councils in 2014/15, this increase was not repeated in 2016/17.
The largest single area of expenditure in 2015/16 related to recreation and sport, where councils spent £211 million (£198 million in legacy councils in 2014/15). This category, combined with that of waste collection and disposal which totalled £164 million (£165 million in legacy councils in 2014/15) and accounted for 44 per cent of all expenditure incurred on services by councils.
Other categories of service expenditure incurred by councils included environmental health (£51 million), tourism (£37 million), and economic development (£38 million). In the 2015/16 year, councils had responsibility for the first time for some local planning functions and off-street parking, following the transfer of these functions from central government to local government on 1 April 2015. Expenditure on these services was £12 million (local planning functions) and £7 million (off-street parking).
Loans outstanding at 31 March 2016 totalled £493.7 million and are shown. This represents a decrease of £5 million on the previous year.
Total capital expenditure in 2015/16 amounted to £155 million (£145 million in 2014/15). This represents an increase of 7 per cent from the final year of the legacy councils. Examples of capital projects included, Newry Leisure Centre and the office accommodation upgrade at Belfast City Council.
Councils’ financial statements disclose both the level of usable and unusable reserves. Unusable reserves consist of unrealised gains, for example, the revaluation reserve, or those relating to timing differences such as pension reserve and capital adjustment account.
The LGAR confirms that the overall level of usable reserves across the councils increased by approximately £1.9 million, a 1 per cent increase from the legacy councils’ usable reserves, in the financial year to 31 March 2016. Overall usable reserves stood at £197 million on March 31 2016, compared to £195 million in the prior year.
Regarding workforce changes, all staff from the 26 legacy councils plus over 400 staff from the Planning Service transferred to the new councils on 1 April 2015. Despite the impact of the planning staff transfers from the Northern Ireland Civil Service, for 2015-16 the overall net increase in full time equivalents (FTE) from 2014/15, was only 178, largely due to the impact of staff leaving under exit packages.
Staff costs represent approximately 41 per cent of gross revenue expenditure in councils, amounting to over £349 million in 2015/16, an increase of 6.4 per cent from 2014/15.
The average cost of staff increased from £33,490 in 2014/15 to £35,029 in 2015/16. Across councils, changes in average staff costs ranged from an increase of 18 per cent to a decrease of 8 per cent. There were also considerable variations in average staff costs across councils, with the lowest being in Fermanagh and Omagh (£32,478) and the highest being in Causeway Coast and Glens (£41,160).
These differences can be influenced by various factors, such as the timing of single status settlements, salaries for planning staff and exit packages.
The review of absence statistics revealed that as with last year, there was a slight increase in overall absenteeism to an average sickness rate of 13.93 days a year.
The potential for efficiency savings at council level is featured prominently with in the LGAR. In 2009 the Department of the Environment (now Department for Communities) published its “Local Government Service Delivery. This was an economic assessment of options for local government service delivery in its entirety.
The appraisal’s highest forecast savings option predicted £439 million of net present cost savings over 25 years, after taking account of one off costs of £127 million.
Councils had a number of reservations with this model including the potential for this level of savings to be achieved. As councils develop, the Local Government Auditor recommends that the Department for Communities monitors and reports on efficiency savings gained.
The Local Government Auditor made a number of recommendations to local government bodies. The report outlines some common themes in these recommendations. Many of the recommendations made in the councils are in respect of the realignment of procedures as councils merged in the new organisations.
Significantly, all councils met the statutory performance improvement responsibilities required of them for 2016/17. As this was the first year in which councils were required to implement the statutory performance improvement framework, their arrangements to deliver their improvement objectives were at an early stage of development and implementation. This was to be expected at this stage of the overall process.
Whilst each council had begun to establish arrangements to secure continuous improvement for 2016/17, it was too early for them to demonstrate the extent to which improvements were being made for the year in question.
Finally, the LRAG reinforces the continued need for good governance arrangements in local government.