Driver & Vehicle
Licensing Agency
Annual Report & Accounts 2012 - 13
HC206
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DVLA Annual Report & Accounts 2012-13
Driver and Vehicle Licensing Agency
Annual Report and Accounts 2012-13
Presented to the House of Commons pursuant to section 7 of the Government
Resources and Accounts Act 2000
Ordered by the House of Commons to be printed 27 June 2013
HC206 London: The Stationery Office £30.00
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DVLA Annual Report & Accounts 2012-13
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Contents
DVLA Annual Report & Accounts 2012-13
Highlights for the year
5
Chief Executive’s message
7
Annual Report
1. Directors’ Report
1.1 Who we are and what we do
8
1.2 Transformation and change agenda
9
1.3 Service delivery
11
1.4 Policy development
14
1.5 DVLA people
15
1.6 Looking to the future
16
1.7 Performance summary 2012-13
17
2. Management Commentary
2.1 Financial performance review
20
2.2 Efficiency
21
2.3 VED Collection
23
2.4 VED Enforcement
23
2.5 Sustainability
24
2.6 Disclosure of information to auditors
26
3. Remuneration Report
27
Accounts
4. Accounts for 2012-13
4.1 Statement of the Agency and Accounting Officer‟s responsibilities
34
4.2 Governance statement
35
4.3 Certificate and Report of the Comptroller and Auditor General - Business
Accounts
50
4.4 Summary of accounts 2012-13
52
4.5 Business Accounts
53
4.6 Audit Report of the Comptroller and Auditor General - Trust Statement
94
4.7 Trust Statement
96
Appendix
A. Comptroller and Auditor General Section 2 Report
109
B. Accounts Directions
112
C. Sustainable performance
118
Glossary of terms
122
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Highlights for the year
DVLA Annual Report & Accounts 2012-13 5
Operational results
We exceeded or met 18 of 20 performance
measures.
Customer service measures
We exceeded or met 19 out of 20 of our
customer service measures.
Customer Service Excellence
DVLA has retained its accreditation to the
Customer Service Excellence standard for a
further year, achieving its best result ever,
including awards in twenty areas of „best
practice‟.
Digital services
In October 2012 the Government launched
GOV.UK bringing all government websites
under a single, centrally-run domain. DVLA
customer services were successfully transferred
to the new site. For more information visit
GOV.UK.
In 2012-13, DVLA‟s electronic vehicle licensing
(EVL) service achieved its highest ever digital
take up. By March 2013 this take up percentage
had risen to 55.7% of licensing transactions.
Best event in government 2012
Digital Unite, organisers of the spring online
events across the UK, awarded DVLA a special
„Best Event in Government 2012‟
commendation for its Silver Surfer event held in
April 2012.
The Silver Surfer event proved a great
opportunity for DVLA to make a positive
contribution to the local community and in doing
so, create an awareness of DVLA online
services.
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DVLA Annual Report & Accounts 2012-13 6
DVLA personalised registrations
In 2012, to celebrate the London 2012
Olympics, DVLA released Olympic themed
registration. The Agency was granted official
licensee status for the 2012 Olympic Games
and a three day auction, which included 1,750
registrations, was held at City Hall, London,
raising a total of £4.7 million.
Contact Centre Association
In 2012, DVLA‟s contact centre was crowned
„Best Overall Contact Centre of the Year‟ by the
Customer Contact Association (CCA).
Our contact centre also won the award for the
„Most Effective Training Programme‟ category.
CCA is the leading independent authority on
customer contact strategies and operations,
particularly for the contact centre industry. The
CCA Global Standard© and the CCA
Excellence Awards programme brings together
all of the elements needed for quality contact
centre operation.
Financial result
DVLA raised £401 million through fees and
charges income, an increase of £13 million
against the Business Plan 2012-13 forecast of
£388 million. A fees surplus of £10.9 million was
achieved against a forecast breakeven outturn
in our Business Plan 2012-13.
The Agency has delivered a sustainable
efficiency gain of £40.6 million exceeding our
target of £33.25 million.
Two ticks
DVLA has been re-accredited with the Two
Ticks „Positive about Disabled People‟ symbol
in recognition of its actions to support disabled
people in the Agency.
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Chief Executive's message
DVLA Annual Report & Accounts 2012-13 7
This last year has
been a
challenging one
for DVLA and its
people. Good
progress has
been made on the
modernisation of
our network
services and we
remain on track to meet our efficiency goal of saving
£100 million in annual running costs by 2014-15.
We have begun work with the Government Digital
Service on developing our new digital exemplar
services, whilst at the same time achieving our
highest ever level of digital take-up for our
established Electronic Vehicle Licensing (EVL)
service and a gradual increase in our Driver
Licensing online service The EVL service is
complemented by our new contract with the Post
Office® for front office counter services which will
ensure a reduced cost for transactions through this
channel and mean that, overall, 97% of vehicle
licences are received electronically, either directly or
through the Post Office®.
In my short time with the Agency, I have been
impressed by the clear commitment of people at all
levels in the organisation to provide a high quality
service to the public and to our business customers.
This is reflected in our operational performance,
which continues to be of a very high standard. We
have achieved or exceeded 18 out of 20 performance
measures and 19 out of 20 customer service
measures. We have also retained our accreditation to
the Customer Service Excellence standard, achieving
our best result ever, whilst our contact centre was
chosen as the best overall contact centre of the year
by the Customer Contact Association.
Nevertheless, there have been difficulties. We did not
make the progress we needed to in preparing for the
procurement of a new supply chain for our IT
systems support and development. This is a critical
enabler for the changes we need to make to our IT
architecture and to digitise and transform the
remainder of our high volume services. However,
good work is under way to get the programme back
on track and to ensure we are able to deliver a
successful outcome. Equally, whilst there was record
take-up of EVL, overall take-up of our digital services
did not rise as expected due to the complex nature of
the transactions. This reinforces the need for us to
rapidly develop new digital services that are designed
around the needs of the customer and to look for
opportunities to enhance existing digital services to
make them more attractive for users.
There are a number of policy developments under
way which could, in time, have a significant impact on
the Agency and the services we provide. Many of
these developments will deliver real benefits for our
customers and make it easier for them to do business
with us However, the challenge is to ensure that the
wide range of current and potential future changes in
the pipeline are managed coherently and effectively
and deliver good value for money. The work
completed in the final part of the year on agreeing a
new vision and business strategy for DVLA is an
important step towards providing a framework within
which to manage this change. More work is needed
in the next few months to turn this high level strategy
into a meaningful plan that will support the successful
transformation of DVLA into a digital business. But I
am confident that, with the commitment of our
people, a clear focus on our customers and the
engagement of stakeholders, we can make good
progress over the coming year towards realising our
vision, whilst ensuring we meet our immediate
business objectives.
Malcolm Dawson OBE
Accounting Officer and Interim Chief Executive DVLA
20 June 2013
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1. Directors' Report
DVLA Annual Report & Accounts 2012-13 8
1.1 Who we are and what we do
DVLA is an Executive Agency of the
Department for Transport (DfT), responsible for
maintaining over 44 million driver records and
almost 37 million vehicle records.
Our purpose
Our purpose is to ensure that complete and
accurate registers of drivers and vehicles are
held and we make them as accessible and as
flexible as possible, to those who have the right
to use them.
These registers underpin action by DVLA, the
police and others to maintain the high levels of
road safety experienced in the UK and the
effective collection of Vehicle Excise Duty
(VED). DVLA registers are used to deliver other
departmental and government initiatives such
as traffic management and reducing carbon
emissions.
Digital services
Since 2002, DVLA has consistently developed
new digital services making it easier for
customers to transact with us. In 2013 DVLA
EVL service reached its highest ever digital
Compliance and enforcement
The Agency collects around £6 billion a year in
VED and is responsible for limiting tax evasion
to no more than 1% per year.
We operate continuous insurance enforcement,
a joint government and insurance industry
initiative to combat uninsured driving.
DVLA also supports the police and intelligence
authorities in dealing with vehicle related crime.
DVLA personalised registrations
DVLA personalised registrations offer a range
of unissued registration numbers for customers
to buy online or at auction. Since its launch in
1989, the Agency has collected over
£1.68 billion on behalf of the Treasury.
Managing our organisation
The Agency's Chief Executive and Accounting
Officer chairs an Executive Board (EB) of six
executive and two non-executive directors.
For more information about how we manage
our organisation see our Governance
Statement (section 4.2) or visit our website.
The purpose of this document
The Annual Report and Accounts should be
read in conjunction with the DVLA Business
Plan 2012-13 and sets out our performance and
achievements for the year.
For more information about DVLA, visit our
website.
take up.
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DVLA Annual Report & Accounts 2012-13 9
1.2 Transformation and change agenda
Modernisation of DVLA services
The centralisation of transactions traditionally processed in the local services network is well underway.
The enforcement centres were closed on 31 March 2013 and enforcement work centralised to Swansea.
Work is on schedule for the centralisation of all other transactions that will support the Agency in closing
the local offices by December 2013.
Digital exemplars
Some of the transactions that will be centralised are progressing as part of the work that we are doing
with Government Digital Services (GDS) to provide these services digitally. These include:
personalised registrations
change of keeper and vehicle details.
Work is being taken forward on the above to ensure developments align to the Government‟s ICT
Strategy. These initiatives will be reviewed as part of a GDS „Discovery‟ workshop at the start of 2013-
2014 to inform the delivery plan for these services.
DVLA ICT systems
During 2012-13, we continued discussions about our future data structures, application and technology
architectures with GDS and stakeholders. Our direction and the first building blocks for the new
approach are now being laid. High level plans are being developed, which will allow us to continue the
journey on increasing the agility and flexibility of our ICT estate.
We have started the move away from a reliance on proprietary, closed platform, closed standard
products and have started to make increased use of open source or open standard products wherever
possible, as guided by the Government ICT Strategy.
The Contract Let Procurement Programme is driving this work forward by developing an IT
transformation plan to inform the move away from our current architecture.
IT Contract let
The programme did not progress at the rate envisaged in 2012-13 due to a number of factors and in
February 2013 DVLA received approval to enter in to a 6 month contract with an Engagement Partner.
The Engagement Partner was appointed on 19 March 2013 following a competitive procurement
process. The programme is now working to deliver an outline business case for approval in September
2013.
EU Third Directive
The national legislation for the European Third Directive legislation for driver licences was laid in March
2012. DVLA systems and process were implemented by the legislative date of 19 January 2013.
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DVLA Annual Report & Accounts 2012-13 10
Development of motor insurance industry enquiry facilities digital exemplar
We have continued work on our project to provide access for the motor insurance industry to check
driver records at the point of quotation. Working closely with GDS we have introduced an agile
approach to the development and using the new Government Sprint II Framework, the project appointed
Kainos to work with IBM to integrate the new build with current systems. Cabinet Office has labelled this
work as a „digital exemplar‟ as part of the wider government digital services agenda.
The inception phase and the first four sprints were completed during the year with a planned
implementation date of the first quarter of 2014.
Migration of Northern Ireland Vehicle Systems to Vehicles System Software
We are continuing our work towards the introduction of e-services in Northern Ireland and to bring these
services up to the standard of the rest of the UK.
Future card production
In April 2012 DVLA awarded the contract for the provision of card products (including driving licence) to
Gemalto (UK), following the completion of competitive dialogue procurement. The new contract will run
for a term of six years with the possibility of a further extension of two years. Tachograph cards will be
the first products to be issued in June 2013 with the introduction of the driving licence planned for
January 2014. The new card contract will provide the UK taxpayer savings of more than £35 million over
the next six to eight years.
Front office counter services
In December 2012, after a successful procurement process, our front office counter services contract
was awarded to the Post Office®. The new contract started from April 2013 and runs for a period of
seven years. The contract is a cross government framework that will allow other departments to call off
face to face services without going through an extensive procurement exercise.
We have managed to secure significant cost reduction through the new contract with forecast saving of
around £19 million per year while gaining improvements to the services offered.
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DVLA Annual Report & Accounts 2012-13 11
1.3 Service Delivery
Transaction volumes
2012-13
2011-12
Business
Plan
Actual
Business
Plan
Actual
Vehicle volumes
103,672,000
97,424,000
101,193,790
100,982,000
Driver volumes
16,891,000
15,197,000
17,174,984
15,610,000
Electronic take-up
target
54%
-
53%
-
Electronic take-up
(actual)
-
50.3%
-
53.7%
Actual and business plan volumes in the table above show driver and vehicle transactions only. It
excludes items that are not driver or vehicle specific e.g. volume of sale of marks. It also excludes
telephone enquiries.
Driver transactions
First applications for a driving licence are at around one million transactions a year; there has been a
decline in 2012-13 from 2011-12 of around 5%, which reflects the continued economic downturn. The
total driver transactions have reduced by 2% against 2011-12.
Vehicle transactions
Vehicle volumes have decreased in 2012-13 against 2011-12 by 3% overall. Vehicle first registrations
have increased by around 100,000 compared to 2011-12 reflecting predictions made by the motor
industry during 2012-13. Volume reductions have been experienced across a wide range of vehicle
transactions most noticeably relating to vehicle licensing and changes to vehicle registration documents.
DVLA digital services
In the ten years since DVLA‟s first electronic transaction was introduced, the demand from our
customers for digital services continues to grow. In 2012-13 we processed 23.5 million EVL transactions
and 2.3 million driver licence transactions.
Electronic Vehicle Licensing
By March of 2013 EVL take up rate had risen to 55.7%. DVLA continues to examine improvements to its
online licensing service and is working with the Government Digital Service on a redesign of EVL that
will further improve the customer experience, encouraging further growth in digital take up. DVLA‟s
target for 2013-14 is to achieve take up of 58.0% by March 2014.
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DVLA Annual Report & Accounts 2012-13 12
Electronic take up for drivers and vehicles
During 2011-12, 53.7% of all transactions processed by DVLA were handled digitally. It was our
intention to continue to grow the digital channel and we projected a modest increase by March 2013 to
54%.
Vehicles - In 2012-13, DVLA‟s online vehicle enquiries were 2.3 million lower than the original forecast.
These transactions are very difficult to forecast, as there is no discernable pattern to the volumes, the
monthly figures vary from just under 1 million to over 3.5 million with no explanation or seasonal pattern.
Drivers - In 2012-13 there was a decrease in driver online enquiries with them totalling around1.5 million
(or a further 1% reduction in what are 100% digital transactions against our plan).
Drivers electronic fixed penalty updates decreased by 500,000. This in itself is positive, as we are
receiving less fixed penalty updates, showing a reduction in offences by drivers.
DVLA‟s driver verification service volumes reduced by almost 350,000 compared to 2011-12. There are
a few potential reasons for this reduction. The customer auditing and monitoring procedures have been
tightened and the organisation no longer actively promotes the service to potential new customers. In
summary the reduction accounted for a 0.2% reduction.
As a result of the above volume reductions the target for 2012-13 was not achieved.
In 2012-13 we held a successful „Silver Surfer event to help our customers use the internet. We also
started to promote our online services through the social media channel Twitter.
Working with Government Digital Services
During the year DVLA worked closely with Government Digital Services (GDS) on a number of initiatives
specifically the re-design of our EVL online service to improve take up and reduce the calls to our
contact centre. This work is ongoing.
Work continues with GDS to understand DVLA requirements in line with the Identity Assurance agenda.
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DVLA Annual Report & Accounts 2012-13 13
Drivers medical
In 2012-13 the Agency introduced an automated email response solution for customers needing to make
medical related enquiries. This has resulted in over 44% automated responses being produced since
September 2012.
Routine assurance of the drivers medical Customer Service Measures identified errors in the automated
management information (MI) systems and the 2012-13 reported figures have been corrected for this.
The corrected figure for 2012-13 showed 78.5% of simple cases were concluded within 15 working days.
The figure prior to correction was 87.4% against a target of 90%. The target was missed due to an
unexpected fluctuation in volumes. Action was taken in the latter part of the year which has improved
the position.
In addition the investigation highlighted that the approach, which defined cases as simple or complex,
was no longer providing a meaningful measure for customers. This has resulted in the Customer Service
Measure for medical customers being altered for 2013-14.
Diversity and the customer
DVLA continues to promote and support diversity and equality principles for both staff and customers in
line with the Government's Digital Agenda. During the year, the Agency held a successful „Going digital
and the customer‟ conference, which included a presentation by the Permanent Secretary Philip Rutnam
and was attended by Sir Paul Jenkins (Civil Service Diversity Champion) as a keynote speaker.
Customer interaction continues with diverse groups participating and providing feedback on DVLA digital
services, forms and leaflets. For more information about DVLA and diversity visit our website.
Automated First Registration and Licensing
In 2012-13 DVLA continued to promote take-up of Automated First Registration and Licensing (AFRL)
with vehicle manufacturers not currently using the system. During the year 300 new dealers joined the
system. There are approximately two million AFRL transactions each year with 90% of dealers now
using the system.
DVLA Personalised Registrations
DVLA‟s Personalised Registrations online service allows customers to purchase registration numbers
outside of auction events. The service also offers follow up transactions, which allow customers to
amend details of registrations held.
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DVLA Annual Report & Accounts 2012-13 14
1.4 Policy development
Driving licence counterpart
As part of the Red Tape Challenge, we have announced our intention to abolish the paper counterpart to
the driving licence. The Motoring Services Strategy Consultation recently launched by DfT reinforced
this commitment. Subject to a commencement order, legislative powers already exist to abolish the
counterpart. This measure is expected to reduce burdens and deliver efficiency savings for customers
and DVLA. A final decision will be taken during 2013-14.
Road safety
DVLA has introduced a fast track process for revocation of driving entitlement to drivers failing police
roadside eyesight checks. This means that licences are revoked in a matter of hours rather than days.
Data sharing
Work is continuing to introduce an automated checking service with DVLA and the UK Border Agency.
This service will enable DVLA to quickly verify the residency status of foreign driving licence applicants.
Statutory off Road Notification
DVLA has secured a legislative slot through the Finance Bill 2013 to amend primary legislation to deliver
indefinite Statutory off Road Notification (SORN), the requirement to SORN only once. Work is
progressing to plan, with an impact assessment undergoing peer review within DfT and will be published
alongside the new legislation.
Road user charging
The Government has introduced a system of HGV road user charging. This will ensure a fairer
arrangement for UK hauliers.
The charge applies to vehicles in the HGV tax class weighing 12 tonnes or more. From April 2014,
drivers taking out HGV VED will pay the new combined vehicle tax and road user charge.
The initiative will see a fairer arrangement for UK hauliers in line with current practices across EU
Member States.
Fleet operators
Work continues with DfT to make the legal changes to allow fleet companies to request the suppression
of vehicle registration certificates. A high level impact assessment has been reviewed by DfT. This will
reduce the burden on fleet companies in having to manage and store large amounts of certificates.
Removal of insurance check
A public consultation began in October 2012 for the removal of insurance checks when taxing a vehicle.
The Impact Assessment is currently undergoing review at DfT and once agreed it will be published with
the amended legislation. This proposal remains on target to be delivered towards the end of 2013. The
proposal will result in time savings of around 10 to 25 minutes for the public and businesses and
£1.1 million for the government due mainly to fewer transactions failing when taxing online.
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DVLA Annual Report & Accounts 2012-13 15
1.5 DVLA people
During 2012-13 DVLA has been preparing for the closure of the local services network and the
centralisation of its activity in Swansea. This will result in a temporary increase in Full Time Equivalents
from 5,469 at the end of March 2012 to 5,644 at the end of March 2013. This increase is as a result of
the recruitment of staff into Swansea in advance of the network closure. This increase will be more than
offset when the local offices close later this year. The figures excluding DfT HR staff employed on the
Next Generation HR Group model at 31 March 2013 were 5,612.
DVLA operates under the DfT Group HR model and has adopted common DfT and Civil Service
Employee Policy such as attendance management. The setting up of centralised DfT HR Advice and
casework teams has ensured the provision of consistent, expert advice and guidance for managers.
The Agency sick absence rates in 2012-13 reduced from an average of 7.6 days per person to 6.7 days.
During this period, we delivered a programme of work entitled „Changing Minds‟ to address mental
health issues, which is the top reason for absence. This work included:
Delivery of master-classes to managers
e-learning for all staff
an intranet site outlining advice and sources of support
a corporate challenge to build mental resilience
As a result of the Civil Service People Survey 2012, work was carried out around the areas identified in
need of improvement. Leadership and managing change were identified as the key driver of
engagement in the Agency and during the year, managers have been engaging with staff to make
improvements, work continues.
DVLA are working with DfT to promote the good people management model, which is designed to
underline the importance of a good working relationship between the line manager and their staff.
In 2012-13 we successfully launched the use of Civil Service Learning with every member of staff
registering and participating in both e-learning and classroom activity.
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DVLA Annual Report & Accounts 2012-13 16
1.6 Looking to the future
Towards the end of the financial year and to reflect the increasing emphasis on the customer‟s needs
and the digital by default agenda, the Agency recast its vision.
Our vision:
Customers are at the heart of our business and drive everything we do. Our
digital services and our people exceed our customers’ expectations.
To achieve this, the Agency needs to be an organisation that is digital by default, with services so good
that people want to use the digital one first. We will ensure that DVLA keeps in-step with the wider
Civil Service Reform Plan, the Government Digital Strategy and The Red Tape Challenge as we:
ensure we meet our customer service targets for accuracy and timeliness
ensure personal data is held safely, increasing accuracy and continuing to achieve high levels
of motoring tax compliance
redesign our business and processes around customer needs to cater for the digital world that
we all now live in and keep up with future technology changes
develop our staff and managers so that we have the skills to deliver, know what we are working
to achieve and can all apply this strategy in our day to day work
change our culture to become a responsive, agile and empowered organisation.
The revised strategy will be used to prioritise the work going forward and to develop route maps in order
to achieve our goals over the next 3-5 years.
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DVLA Annual Report & Accounts 2012-13 17
1.7 Performance Summary 2012-13
Measure 2012-13
Met
Result
Change
1
Continuous Insurance Enforcement
Reduce the number of uninsured vehicles on the road to 2.65% (860,000
vehicles) by March 2013
2.20%
(709,906 vehicles)
2
EU 3
rd
Directive
DVLA and Third Party Systems updated and testing by March 2013
Systems and process
were implemented by
the legislative date of
19 January 2013
3
ICT Contract Let
Appoint technical delivery partner(s), agree contract requirements and
procurement strategy, define and agree technical solutions by March
2013
x
The contract let
programme did not
progress at the rate
envisaged. An outline
business case will be
delivered in September
2013
4
Digital services
Improve take-up of EVL by March 2013 to 55%
55.7%
5
Digital services
Improve overall electronic take- up (drivers and vehicles) by March 2013
to 54%
x
50.3 %
6
Sustainability
Cut 25% carbon emissions from Agency buildings and business use of
vehicles by 2014-15 against a 2009-10 baseline cap increase at 10%
2% reduction in carbon
emissions
Service delivery
7
Collect vehicle tax for the government
Collect a high proportion of the £6 billion tax forecast (over 99%).
£6 billion
8
Accuracy
Vehicles maintain accuracy so the registered vehicle keeper can be
traced from details held on our record in 95% of cases.
98.9%
9
Accuracy
Drivers - provide the Department with a plan by March 2013 to deliver
improvements in the accuracy of driver record
A report has been
provided to DfT
outlining a plan of
activity for 2013-14
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DVLA Annual Report & Accounts 2012-13 18
* DfT approval to revise DVLA's workforce target from 5,307 to 5,635 as a result of the transformation and modernisation of DVLA
network services.
Measure 2012-13
Met
Result
Service delivery
10
Customer service
Achieve 18 out of 20 customer service measures (see page 19)
19 out of 20
1
Customer satisfaction
Maintain or improve the satisfaction of our customers for our services
(85%)
91.3%
12
Freedom of Information
Provide a 93% response within 20 working days
100%
13
Parliamentary Questions
Provide a 85% response within due date
100%
14
Member of Parliament correspondence
Provide a 85% response within 7 working days
99.5%
15
Official correspondence
Provide a 80% response within 20 working days
100%
16
Prompt payment
Pay 80% supplier invoices within 5 working days
96.0%
Financial performance
17
Finance
Annually make progress towards the ultimate goal of a sustainable
£100 million a year reduction in operating costs by the end of 2014-
15. Deliver an in-year addition of £5.75 million of sustainable savings
(substantiated by Audit) compared on a consistent basis with the
2010 baseline - £33.25 million (accumulated run rate reduction)
£40.6 million
18
Efficiency
Deliver financial performance in line with formal DfT breakeven
expectation
£10.9 million fees
surplus
19
Workforce
By March 31 agency workforce will number 5,635 full time equivalents
(excluding DfT HR staff employed on the Next Generation HR Group
model )*
5,612 full time
equivalents
20
Sickness Absence
Ensure the average number of working days lost due to sickness is
no more than 6.9 days (per full time equivalent)
6.7 days
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DVLA Annual Report & Accounts 2012-13 19
** see Drivers medical in section 1.3 Service Delivery
Customer Service Measures
Met
Measure
2012-13
Result
Customer Service Excellence Standard
Retain accreditation of the CSE Standard
Customer Contact Association Standard
Retain accreditation of the CCA Standard
Driving Licences
To deliver a first driving licence within 8 working days
98%
98.2%
To deliver a vocational licence within 8 working days
98%
99.5%
To deliver an ordinary driving licence within 10 working days
98%
98.8%
To deliver a digital tachograph renewal in 8 working days
98%
99.1%
Medical investigations
To conclude a simple case within 15 working days
x
90%
**78.5%
To conclude a complex case (one that requires further medical investigating) within 90 working days
88%
88%
Vehicle registration document
To deliver a first registration document, excluding cherished transfers, within 14 working days
95%
99.7%
To deliver a change on a registration certificate within 14 working days
95%
98%
To deliver a registration document from an application (notifying changes to the registration
certificate) within 30 working days
95%
98.7%
VED refunds
To deliver a refund due within 30 working days
95%
99.5%
Customer service
To answer calls queued to advisor
95%
98.9%
To deliver a recognised quality of service standard in the Contact Centre
85%
86.8%
To answer an email within 3 working days
95%
100%
Keep average local office queuing time to no more than 15 minutes
15:00
11:06
To deliver a cherished transfer within 7 working days
95%
98.3%
Customer complaints
To acknowledge a complaint within 1 working day
100%
100%
To maintain or improve on last year‟s performance sending a substantive response within 10
working days
98%
99.6%
MP correspondence
To acknowledge correspondence within 1 working day
100%
100%
Overall
18 of 20
19 of 20
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2. Management Commentary
DVLA Annual Report & Accounts 2012-13 20
2.1 Financial performance review
The Agency Accounts are made up of the Business Accounts and the Trust Statement.
Trust statement
The Trust Statement brings to account the taxation and fine revenue collected by the Agency that is due
to the Consolidated Fund. It incorporates the licence fees and taxes from VED and fines and penalties
from enforcement. Net revenue for the consolidated fund amounted to over £6 billion in 2012-13 (see
Trust Statement- Note 2).
Business accounts
DVLA‟s business is segmented (see Business Accounts - Note 2) between:
maintenance of our driver and vehicle databases and services, which include the release of
information from DVLA‟s registers under the reasonable cause provision and services to other
public bodies (more widely across government)
collection and enforcement of VED
sale of personalised registrations, which represents commercial income directly from the public.
We retain only sufficient funds to cover our costs with all excess income being paid over directly
to HM Treasury as Consolidated Fund Extra Receipts (CFER's).
The Agency is funded by a combination of fees, cost recovery charges and supply funding from DfT. The
Agency‟s target is to break even year on year on its fees and cost recovery activities. Small percentages
of change in either fee income, which is demand led, or in costs can give rise to a surplus or deficit that
may be significant, due to the scale of its income and expenditure.
Financial results
The financial results for 2012-13 show a net fees surplus of £10.9 million against a target to break even.
This surplus has been generated through a combination of additional fee income mainly from vehicle first
registration and a reduction in operational expenditure against plan.
There are no plans to further adjust the fee structures in 2013-14, although it is the Agency‟s intention to
carry out a full review of the suitability of the existing fee structure during the coming financial year in
conjunction with the changing strategy of the Agency towards digital service.
Our aim to achieve £100 million savings in operating costs by 2014-15 is on track. Efficiency delivered
by the end of 2012-13 is £40.6 million compared to a target of £33.25 million.
In 2012-13 we spent £538 million of which £349 million related to fees and charges activities, £10.7
million to DVLA personalised registrations with the remainder relating to VED collection and enforcement
(see Business Accounts - Note 2). During 2012-13, £158 million was spent on staff costs and £380
million on other costs, including the purchase of goods and services, resulting in a net operating cost of
£65.1 million.
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DVLA Annual Report & Accounts 2012-13 21
Fees and charges income
We raised £401 million through fees and charges income, an increase of £13 million against the
Business Plan forecast of £388 million. This net increase includes:
an increase in vehicle first registration income of £10 million. Despite ongoing economic
concerns, the UK car market consistently outperformed expectations
an increase in 'other income‟ of £6 million, mainly accounted for by a demand led increase in
cherished transfer volumes over initially estimated amounts
a decrease in drivers related income of £3 million, the majority of which was due to lower
volumes in first applications.
Expenditure
The total direct expenditure for the year is £538 million against the Business Plan forecast of
£555million. The decrease is mainly due to a slowdown in the rate of project expenditure as the Agency
reviewed its strategy and our continued drive towards reducing costs.
Key points to note on spending during the year were:
as part of the government‟s transparency agenda, all individual cost items over £500 are
itemised on Data.Gov.UK
performance against our prompt payment target for payment of suppliers within five days was
96% exceeding the target of 80%.
2.2 Efficiency
The Agency‟s current efficiency aim is to achieve £100 million per annum in operating cost savings by
the end of 2014-15 (as measured against the Business Plan 2010-11 baseline). This performance
measure builds on efficiency objectives exceeded in previous years. Achievement of the latest target will
continue to promote the Agency‟s reputation for delivering value for money, as it has delivered on every
efficiency target it has been set since 2001.
The efficiency measure in the Business Plan for 2012-13 was £33.25 million. The reported efficiency
delivered as at the end of March 2013 is £40.6 million. This represents a sustainable annual saving
against operational expenditure and significant progress in moving towards our strategic efficiency plans.
The achievement of its service targets and in many cases improvement against previous year
performance (see section 1.7), suggests the Agency has achieved these savings without impacting on
its quality of service.
The efficiencies delivered are focussed on productivity. As time progresses, the proportion of major
transformational change related efficiencies will increase. The Agency strategy will enable further
savings to be made, particularly in respect of the Agency‟s vision to move to a digital by default
environment supported by a robust, rationalised IS/ICT infrastructure.
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DVLA Annual Report & Accounts 2012-13 22
Total cumulative efficiencies achieved by the end of 2012-13 were made by reducing the Agency‟s
operational expenditure by:
reviewing internal business as usual processes, including applying stricter rules on travel and
subsistence, movement to second class postage and using no/low cost marketing, has resulted
in sustainable savings of £21.3 million
procurement based activities have resulted in savings in excess of £15 million
channel shift from expensive, resource intensive manual routes to less expensive electronic
methods has resulted in £4.3 million savings.
Plans for 2013-14 include:
driving efficiencies through re-negotiation and re-tendering our contracts, for example we have
negotiated significant savings in our front office counters services contract forecast to deliver
around £19 million per year from April 2013
centralising or using intermediaries and electronic channels to deliver services currently
provided by the local office and enforcement centre network. This is part of the transformation
and modernisation of network services and will deliver annual savings of £24 million.
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DVLA Annual Report & Accounts 2012-13 23
2.3 VED collection
Gross VED receipts in 2012-13 amounted to over £6 billion with refunds amounting to £194 million.
During 2012-13 the Agency has moved from using the volume of reminders issued as a baseline for
measuring take up to using total number of VED transactions (including SORN).
The cost of VED collection was £118 million revenue expenditure, along with £5.1 million in capital
expenditure in respect of VED ICT system changes. This total spend of £123.1 million was £4 million
lower than budgeted for in the Business Plan (£127.1 million) and this partly reflects a reduction in
vehicle volumes and the effects of the efficiencies generated within DVLA. The funding requirement for
VED collection in 2013-14 and estimates for future years reflects the continuing drive to reduce overall
Agency operating expenditure.
2.4 VED enforcement
The overall cost of enforcement activity in 2012-13 was £59.8 million. The net position for the year, after
retention of court cost income of £4.1m, was £55.7 million against the business plan 2012-13 of £56.9
million. This decrease in funding requirement is a reflection of the efficiency savings generated by the
Agency.
The last roadside survey was carried out by the DfT in 2011 with the next survey due in 2013. The 2011
survey reported a VED compliance rate of 99.3% for 2011-12. Using this compliance rate would suggest
a total of around £40 million VED revenue lost through evasion. As with prior periods a proportion of this
initially uncollected revenue was subsequently recovered through DVLA enforcement activity.
Automatic number plate readers
The Agency‟s static automatic number plate reader cameras encourage compliance and relicensing by
issuing keepers of unlicensed vehicles with a warning that their vehicle has been seen unlicensed on the
road. In 2012-13, almost 46,000 letters have been issued to keepers identified as untaxed and of those,
50% have relicensed their vehicles. Work is progressing to gain Home Office type approval to enable
prosecution activity to be undertaken.
Wheelclamping
In 2012-13 there were 57,287 vehicles wheel-clamped as a result of non payment of VED by the
registered keeper. In addition 7,936 enforcement notices were placed on unlicensed vehicles, a
reduction of 8,837 from the previous year. Vehicles are now clamped after two months of being
unlicensed, as opposed to the previous position of one month.
Debt Collection
DVLA‟s debt collection agents have received almost 500,000 unpaid continuous registration cases for
2012-13, collecting £11.2 million gross in unpaid continuous registration penalties. Over 2 million unpaid
continuous registration cases have been passed to debt collectors since the contract started in 2008,
raising £41 million.
Continuous insurance enforcement
In 2012-13, over 550,000 insurance advisory letters were issued by the Motor Insurers‟ Bureau (MIB) to
the registered keepers of vehicles who were identified as potentially not insured. On receipt, 65%
reacted to make sure that their vehicles complied with the requirements of CIE. For those that did not,
DVLA issued 179,000 fixed penalty notices, which collected over £3 million in penalty and fine revenue.
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DVLA Annual Report & Accounts 2012-13 24
2.5 Sustainability
As an executive agency of DfT, DVLA must demonstrate leadership on sustainability to the public and
private sector, our customers, stakeholders and the wider public. The Agency‟s overall strategy is
aligned with the principles of sustainable development with a close relationship between increased
efficiency resulting in reduced costs.
This report details our contribution to government-wide sustainability targets, the Greening Government
Commitments. Our targets include achieving a significant reduction in our impact on the environment
through:
Green house gas emissions
In 2012-13 we recorded a 2% reduction in carbon emissions from agency buildings and business travel.
This reduction from last year was achieved in spite of a forecasted increase in energy consumption and
business travel associated with the preparation of the closure of DVLAs local service network.
We have implemented a number of energy saving measures which has helped us to offset these
increases and maintain 2011-12 levels, including:
installation of LED lighting in areas to increase efficiency of energy use
removal of various excess or seldom used lights to reduce wastage
replacement of standard water pumps with variable speed drive pumps to reduce energy
consumption
substitution of steam humidifiers with low energy equivalents
increased stringency of control of air conditioning units
plans and proposals for the coming year and beyond which will assist in the successful
achievement of the 2014-15 25% reduction target include:
o further installation of LED lighting throughout the sites
o transformation and change agenda see page 9.
By the end of 2013 this centralisation initiative will reduce the number of agency sites to three, resulting
in a reduction in greenhouse gas emissions from energy use in business operations and travel.
Waste minimisation and management
We are on course to exceed our waste minimisation targets by 2014-15 with a 15% reduction in total
waste achieved to date from the 2009-10 baseline. In October 2012, the Agency entered into a cross
government contract for closed-loop paper supply. This move ensures our waste paper is recycled and
returned for re-use. The process can be repeated time and time again, negating the need for new raw
material to be sourced. Plastic recycling has also been introduced this year on site, in the form of plastic
drinks bottles.
Finite resource consumption-water use
Through the Greening Government Commitments, the Agency has pledged to reduce its water
consumption. Often energy saving measures can result in an increase in water consumption e.g. the
replacement of humidifiers for low energy equivalents in our data centres use more water, however good
practice guidelines are still currently being met (between 4-6m³ per FTE).
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DVLA Annual Report & Accounts 2012-13 25
Finite resource consumption-administrative paper
A one-off target was set across government to reduce administrative paper consumption in 2010-11 by
10% from 2009-10 levels. The Agency achieved a 47% reduction in 2011-12. Our consumption in this
area has continued to fall with a 54% reduction estimated this 2013-14.
Changes to operational practices including reducing the size of customer acknowledgement slips and
using plain rather than coloured paper have produced efficiency savings of approximately 80,000kg of
paper. The Greening Government Commitments also include demonstrating transparency in related
matters.
Sustainable procurement
The Government‟s sustainability agenda principles are included as a provision in all standard tendering
documents issued by DVLA. The Agency‟s sustainability manager currently views each contract before it
is finalised to ensure compliance with government buying standards. There will be a review on the
present system and an education programme introduced to increase procurement officers responsibility
for ensuring sustainable tendering.
Climate change adaptation
A previously completed climate change risk assessment identified the main and only notable concern to
be a possible flood risk at our Swansea Vale site. In response to this, a continuity action plan is in place
to ensure our resilience against this possible impact.
Bio-diversity and natural environment
During the financial year the Agency‟s first bio-diversity action plan was drafted and is due to be
published in April 2013.
As an Agency we have a legal and government requirement under the Greening Government
Commitments to report on and have regard to biodiversity.
Encouraging and enhancing biodiversity not only has a positive impact on the natural environment, but
also on DVLA employees and our surrounding neighbours‟ quality of life through aspects including
health and well-being.
Food and catering services
DVLA‟s Private Finance Initiative (PFI) contract with Telereal Trillium for food and catering services is
sub contracted to Elior UK. Elior UK has strict quality (Red Tractor Assurance) and sustainability
standards that ensure that they and their suppliers meet through regular audits. Negative environmental
impacts seek to be limited through e.g., sourcing food locally wherever possible and the delivery and
distribution of their products.
They promote healthy eating within the Agency with their balance programme‟ developed in line with
Food Standards Agency guidelines, with the aim of reducing sugar, saturated fat and salt in the food
supplied.
Sustainable construction
We have not engaged in any significant construction work during the last financial year. All minor
projects have required waste to be recycled wherever possible and ensured the use of legal and
sustainable timber through a certified scheme.
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DVLA Annual Report & Accounts 2012-13 26
People
At DVLA we understand that we have a responsibility to support the people that work with us and the
communities in which we work. We are committed to being a socially responsible employer. For more
information see page 15.
2.6 Disclosure of information to auditors
The Accounting Officer (AO) is not aware of any relevant information of which the auditors are unaware.
The AO has taken all steps that he ought to have taken to make himself aware of any relevant audit
information and to establish that the Agency auditors are aware of this information.
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3. Remuneration Report
DVLA Annual Report & Accounts 2012-13 27
3. Remuneration policy
The remuneration of senior civil servants is set
by the Prime Minister following independent
advice from the Review Body on Senior
Salaries.
In reaching its recommendations, the Review
Body has regard to the following considerations:
the need to recruit, retain and motivate
suitably able and qualified people to
exercise their different responsibilities
regional/local variations in labour markets
and their effects on the recruitment and
retention of staff
government policies for improving the public
services including the requirement on
departments to meet the output targets for
the delivery of departmental services
the funds available to departments as set
out in the Government's departmental
expenditure limits
the Government's inflation target.
The review body takes account of the evidence
it receives about wider economic considerations
and the affordability of its recommendations.
Further information about the work of the
Review Body can be found at
Office of Manpower Economics
Service contracts
Civil service appointments are made in
accordance with the Civil Service
Commissioners' Recruitment Code, which
requires appointments to be based on fair and
open competition but also includes the
circumstances when appointments may
otherwise be made. Unless otherwise stated
below, the officials covered by this report hold
appointments, which are open-ended until they
reach the normal retiring age of 60. Early
termination, other than for misconduct, would
result in the individual receiving compensation
as set out in the Civil Service Compensation
Scheme. The standard period of notice to be
given by directors is three months.
Salary and pension entitlements
The remuneration and pension interests of the
Chief Executive and Directors are set out on
pages 30 to 33.
The senior civil servant annual pay award is
determined by performance, with no award
made to unsatisfactory performers. Bonuses are
awarded to no more than 25% of senior civil
servants. They are made to reward in-year
performance in relation to agreed objectives, or
short-term personal contributions to wider
organisational objectives.
Salary
Salary includes gross salary; overtime; reserved
rights to London weighting or London
allowances; recruitment and retention
allowances and any other allowance to the
extent that it is subject to UK taxation. This
report is based on payments made by the
Agency and recorded in these accounts.
Performance bonus
Performance is assessed annually for Directors
through the appraisal processes stipulated by
DfT and entitlement to performance
enhancements or bonuses established in
comparison across the DfT family through the
departmental evaluation committee, chaired by
the Permanent Secretary. The Directors did not
receive any non-cash benefits during the
current or prior year.
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DVLA Annual Report & Accounts 2012-13 28
Civil Service pensions
Pension benefits are provided through the civil
service pension arrangements. From 30 July
2007, civil servants may be in one of four
defined benefit schemes; either a final salary
scheme (classic, premium and classic plus) or a
whole career scheme (nuvos). The schemes
are unfunded with the cost of benefits met by
monies voted by Parliament each year.
Pensions payable under classic, premium,
classic plus and nuvos are increased annually
in line with changes in Pension Increase Act
1971. Members joining from October 2002 may
opt for either the appropriate defined benefit
arrangement or a „money purchase‟ stakeholder
pension with an employer contribution
(partnership pension account). Employee
contributions are salary related and range
between 1.5% and 3.9% of pensionable
earnings for classic and 3.5% and 5.9% for
premium, classic plus and nuvos. Increases to
employee contributions will apply from 1 April
2013. Benefits in classic accrue at the rate of
1/80th of final pensionable earnings for each
year of service. In addition, a lump sum
equivalent to three years' initial pension is
payable on retirement. For premium, benefits
accrue at the rate of 1/60th of final pensionable
earnings for each year of service. Unlike
classic, there is no automatic lump sum.
Classic plus is essentially a hybrid with benefits
for service before 1 October 2002 calculated
broadly as per classic and benefits for service
from October 2002 worked out as in premium.
In nuvos a member builds up a pension based
on his pensionable earnings during their period
of scheme membership. At the end of the
scheme year (31 March) the member‟s earned
pension account is credited with 2.3% of their
pensionable earnings in that scheme year and
the accrued pension is uprated in line with
Pensions Increase Act 1971. In all cases
members may opt to give up (commute)
pension for a lump sum up to the limits set by
the Finance Act 2004.
The partnership pension account is a
stakeholder pension arrangement. The
employer makes a basic contribution of
between 3% and 12.5% (depending on the age
of the member) into a stakeholder pension
product chosen by the employee from a panel
of three providers.
The employee does not have to contribute but
where they do make contributions, the employer
will match these up to a limit of 3% of
pensionable salary (in addition to the employer's
basic contribution). Employers also contribute a
further 0.8% of pensionable salary to cover the
cost of centrally provided risk benefit cover
(death in service and ill health retirement).
The accrued pension quoted is the pension the
member is entitled to receive when they reach
pension age, or immediately on ceasing to be
an active member of the scheme if they are
already at or over pension age. Pension age is
60 for members of classic, premium and classic
plus and 65 for members of nuvos.
Further details about the civil service pension
arrangements can be found at the civil service
web site.
Cash equivalent transfer values
A Cash Equivalent Transfer Value (CETV) is the
actuarially assessed capitalised value of the
pension scheme benefits accrued by a member
at a particular point in time. The benefits valued
are the member's accrued benefits and any
contingent spouse's pension payable from the
scheme. A CETV is a payment made by a
pension scheme or arrangement to secure
pension benefits in another pension scheme or
arrangement when the member leaves a
scheme and chooses to transfer the benefits
accrued in their former scheme. The pension
figures shown relate to the benefits that the
individual has accrued as a consequence of
their total membership of the pension scheme,
not just their service in a senior capacity to
which disclosure applies.
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DVLA Annual Report & Accounts 2012-13 29
The figures include the value of any pension
benefit in another scheme or arrangement
which the member has transferred to the civil
service pension arrangements. They also
include any additional pension benefit accrued
to the member as a result of their buying
additional pension benefits at their own cost.
CETVs are worked out in accordance with The
Occupational Pension Schemes (Transfer
Values) (Amendment) Regulations 2008 and do
not take account of any actual or potential
reduction to benefits resulting from Lifetime
Allowance Tax which may be due when pension
benefits are taken.
Real increase in CETV
This reflects the increase in CETV that is
funded by the employer. It does not include the
increase in accrued pension due to inflation,
contributions paid by the employee (including
the value of any benefits transferred from
another pension scheme or arrangement) and
uses common market valuation factors for the
start and end of the period.
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DVLA Annual Report & Accounts 2012-13 30
Remuneration of the Executive Board Members - audited
Ieuan Griffiths (Finance and Strategy Director) left under voluntary exit terms on 31 December 2012.
DVLA made a payment of £128,137 under the terms of the Civil Service Compensation Scheme
(disclosed in note 3.2). *The above salary also includes an ex gratia payment of £15,297, and
compensation in lieu of notice of £27,970.
Bonuses relate to those paid in 2012-13. The bonus to be paid in 2013-14 is yet to be determined. There
were no benefits in kind.
2012-13
2011-12
Salary
£000
Performance
Bonus
£000
Salary
£000
Performance
Bonus
£000
Chief Executive
Simon Tse
( to 31 March 2013)
95-100
-
95-100
-
Executive Board Members
David L Evans
Transformation Director
80-85
-
80-85
-
Hugh Evans
Corporate Affairs Director
(from December 2011)
65-70
0-5
15-20
(65-70 full year
equivalent)
0-5
Paul Evans
Chief Information Officer
95-100
15-20
90-95
15-20
Ieuan Griffiths
Finance and Strategy Director
( to December 2012)
110-115*
-
90-95
5-10
Rachael Cunningham
Acting Finance and
Commercial Director
(from January 2013)
15-20
(65-70 full year
equivalent)
0-5
-
-
Judith Whitaker
Chief Operating Officer
80-85
-
80-85
-
Eddie March
HR and Estates Director (from
May 2010 to January 2012)
-
-
45-50
(60-65 full year
equivalent)
0-5
Phil Bushby
HR and Estates Director (from
January 2012)
65-70
0-5
15-20
(60-65 full year
equivalent)
-
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DVLA Annual Report & Accounts 2012-13 31
Remuneration of Chief Executive audited
Judith Whitaker was appointed as Interim Chief Executive and Accounting office for the period 1 April
2013 to 2 June 2013, replacing Simon Tse. Effective from 3 June 2013 Malcolm Dawson OBE has been
appointed as Interim Chief Executive and Accounting Officer.
2012-13
2011-12
Salary
£000
Performance
Bonus
£000
Salary
£000
Performance
Bonus
£000
Simon Tse
Salary
100
-
100
-
Pension
Contributions
36
-
36
-
136
-
136
-
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DVLA Annual Report & Accounts 2012-13 32
Remuneration of the Non-Executive Board Members - audited
(i) Includes in 2012-13 remuneration in respect of DfT activities.
Median staff pay multiples
Total remuneration includes salary, non-consolidated performance related pay and benefits-in-kind. It
does not include employer pension contributions and the cash equivalent transfer value of pensions.
The ratios above are a reflection of the composition, by grade, of individuals employed at the Agency.
Due to the nature of the work undertaken we have a higher proportion of staff at lower grades and as a
result the median falls within the lower salary range. The increase in the ratio from 5.37 in 2011-12 to
5.96 in 2012-13 is a reflection of the change in composition of grades within the Agency, with there being
an increase in lower grade staff. This increase is as a result of the recruitment of staff into Swansea in
advance of the network closure.
The employees receiving remuneration in excess of the highest paid director during both financial years
have been senior drivers medical staff.
2012-13
2011-12
£000
£000
Michael Brooks (i)
30-35
20-25
Jim Knox
15-20
15-20
2012-13
2011-12
Band of highest paid director's total Remuneration (£000)
115-120
105-110
Median total remuneration (£)
19,713
20,030
Ratios
5.96
5.37
Number of employees receiving remuneration in excess of highest
paid Director
3
2
Remuneration range for highest paid employee (£000)
115-125
120-135
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DVLA Annual Report & Accounts 2012-13 33
Pension Benefits of the Executive Board Members - audited
Real
increase in
pension and
related lump
sum at age
60 during
year
Total
accrued
pension at
age 60 and
lump sum
(LS)
Cash Equivalent
Transfer Values
(CETV)
Employee
contributions
and transfers
in during year
Real
increase
in CETV
as funded
by
employer
in year
2012-13
£000
2012-13
£000
2012-13
£000
*2011-12
£000
2012-13
£000
2012-13
£000
Simon Tse
0-2.5
25-30
325
282
6
(40)
David L Evans
0-2.5
lump sum
0-2.5
20-25
lump sum
70-75
410
382
4
4
Hugh Evans
0-2.5
lump sum
5.0-7.5
30-35
lump sum
100-105
628
560
6
32
Paul Evans
0-2.5
5-10
128
92
6
23
Ieuan Griffiths
0-2.5
lump sum
(0-2.5)
45-50
lump sum
60-65
925
865
12
7
Rachael
Cunningham
0-2.5
5-10
110
106
3
5
Judith Whitaker
0-2.5
40-45
464
415
5
11
Eddie March
-
-
-
70
-
-
Phil Bushby
5.0-7.5
5-10
92
68
4
87
The new factors have been used in the calculator for the CETV values at the start and end of period.
This means that the CETV value shown for the start of the period will not match the CETV value for the
end of the period in last year‟s disclosure exercise.
*or at date of appointment as director, if later.
Malcolm Dawson OBE
Accounting Officer and Interim Chief Executive DVLA
20 June 2013
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4. Accounts for 2012-13
DVLA Annual Report & Accounts 2012-13 34
4.1 Statement of the Agency's
and Accounting Officer’s
responsibilities
Business Accounts
Under the Government Resources and
Accounts Act 2000, HM Treasury has directed
the Driver and Vehicle Licensing Agency
(DVLA) to prepare for each financial year a
statement of accounts in the form and on the
basis set out in the Accounts Direction. The
accounts are prepared on an accruals basis
and must give a true and fair view of the
Agency‟s state of affairs at the year-end and of
its Statement of comprehensive net
expenditure, Statement of financial position,
Statement of cash flows and Statement of
changes in taxpayers‟ equity, for the financial
year.
In preparing the Business Accounts, the
Accounting Officer is required to comply with
the requirements of the Government Financial
Reporting Manual (FReM) and in particular to:
observe the Accounts Direction issued by
HM Treasury, including the relevant
accounting and disclosure requirements
and apply suitable accounting policies on
a consistent basis
make judgements and estimates on a
reasonable basis
state whether applicable accounting
standards as set out in the FReM have
been followed and disclose and explain
any material departures in the financial
statements
prepare the financial statements on a
going concern basis.
The Accounting Officer for the Agency is
appointed by the Permanent Secretary of DfT.
The responsibilities of an Accounting Officer,
including responsibility for the propriety and
regularity of the public finances for which the
Accounting Officer is answerable, for keeping
proper records and for safeguarding the DVLA‟s
assets, are set out in Managing Public Money.
Trust Statement
Under the Exchequer and Audit Departments Act
1921, HM Treasury has directed the DVLA to
prepare a Trust Statement for each financial year
detailing the revenue and expenditure in respect
of VED, fines and penalties falling outside of the
boundary of the Agency‟s Business Accounts.
The Trust Statement is prepared on an accruals
basis and must give a true and fair view of the
collection and allocation of VED, fines and
penalties, including a Statement of revenue and
expenditure, a Statement of financial position, and
a Statement of cash flows. Whilst DVLA is
concerned with compliance, the Trust Statement
does not estimate the duty foregone because of
non-compliance with the VED regime.
In preparing the Trust Statement, the Accounting
Officer is required to comply with the
requirements of the FReM and in particular to:
observe the Accounts Direction issued by
HM Treasury, including the relevant
accounting and disclosure requirements, and
apply suitable accounting policies on a
consistent basis
make judgements and estimates on a
reasonable basis
state whether applicable accounting
standards have been followed and disclose
and explain any material departures in the
Trust Statement
prepare the financial statements on a going
concern basis.
The HM Treasury appointed Accounting Officer is
also responsible for the fair and efficient
administration of the VED regime including the
assessment, collection and proper allocation of
VED revenue.
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4.2 Governance Statement
1. Introduction
Managing Public Money requires the Accounting Officer to provide a statement on how they have
discharged their responsibility for stewardship of the resources within the organisation‟s control.
Simon Tse was the Driver and Vehicle Licensing Agency‟s (DVLA) Accounting Officer and Chief
Executive Officer (CEO) throughout the period covered by this Governance Statement. Mr Tse
transferred to the Department of Work and Pensions on 1 April 2013 and Judith Whitaker, DVLA Chief
Operating Officer, was appointed as DVLA Accounting Officer with effect from that date and served in
that capacity until 2 June 2013. With effect from 3 June 2013 Mr Malcolm Dawson OBE was appointed
as DVLA Accounting Officer. Mr Tse and Mrs Whitaker have each provided a Letter of Assurance to
their successor confirming that they have reviewed the effectiveness of the Agency‟s system of internal
control and that the Governance Statement disclosures are in accordance with HM Treasury guidance.
Mr Tse has also given assurance that as CEO, he is not aware of any matter other than those Mrs
Whitaker would have been aware of as Executive Board (EB) Member that would need to be highlighted
in the Governance Statement.
DVLA is sponsored through DfT‟s Motoring Services Directorate which is also sponsor to the Driving
Standards Agency (DSA), Vehicle and Operator Services Agency (VOSA) and Vehicle Certification
Agency (VCA). The Motoring Services Directorate manages performance and co-ordinates the
Agencies‟ collective direction and strategy. The Directorate is supported in terms of advice and
management by the Motoring Services Board upon which DVLA‟s CEO sits together with the three other
Agency Chief Executives and sponsor representatives.
DVLA is responsible for providing driver licensing services in Great Britain and the registration of
vehicles and collection of VED throughout the United Kingdom. Regular meetings are held with Ministers
to discuss the Agency's current issues and general progress. These are attended by DVLA's sponsor
and / or the CEO.
Driver licensing in Northern Ireland is a devolved power and is undertaken by the Driver and Vehicle
Agency (DVA), sponsored by the Department of the Environment in Northern Ireland. However
responsibility for licensing and registering of vehicles and collection of VED in Northern Ireland lies
directly with the DfT Secretary of State functions discharged by DVA, through DVLA managed service
level agreements.
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2. DVLA Governance Framework
The CEO has ensured that the Agency‟s governance framework is designed to comply with the good
practice guidance laid down in HM Treasury Corporate Governance in Central Government
Departments: Code of Good Practice 2011.
Executive Board
The Agency‟s EB meets formally each month to consider:
Strategic direction and plans of the Agency: including oversight of the Agency‟s change agenda
and progress against the Business Plan
Key issues and risks: including the identification of management actions to address the main
risks to successful delivery of Agency plans
Service delivery: including the monitoring of delivery for outputs, finance, headcount and
resources.
The EB is comprised of six Executive Directors and two independent Non-Executive Board Members
and is chaired by the CEO. The Executive Directors have specific areas of functional responsibility and
accountability:
Chief Operating Officer: Judith Whitaker
Human Resources and Estates: Phil Bushby
Chief Information Officer: Paul Evans
Corporate Affairs: Hugh Evans (Acting Director)
Transformation: David L Evans
Finance and Strategy: Ieuan Griffiths - to 31 December 2012
Finance and Commercial: Rachael Cunningham (Acting Director) - from 1 January 2013.
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NB: to more accurately reflect the Directorate‟s core business, Finance and Strategy Directorate was
renamed Finance and Commercial Directorate (FCD) with effect from 1 February 2013.
The EB brings a good mix of knowledge and experience from a wide range of organisations both public
and private sector, equipping them well to work with both sectors as an Executive Agency. The team has
a clear corporate vision and focus and the EB works entirely within the Civil Service definitions of ethics
and values. For EB member biographies visit the Agency‟s website.
Non-Executive Board Members
The two Non-Executive Board Members exert their influence both directly at the monthly EB meetings
and through the Audit Committee. They both have private sector backgrounds: Mike Brooks in Finance
and Jim Knox in ICT and Business Consultancy. Due to a change in circumstances, Jim Knox stepped
down from the EB in August 2012 and used his expertise to support the Agency‟s Contract Let
Procurement Programme until his formal resignation as Non-Executive Director on 31 March 2013.
DVLA and DfT are currently in the process of recruiting two new Non-Executive Directors: one for Jim
Knox‟s vacant position and another to strengthen the Audit Committee. This latter recruitment
discharges a recommendation from a review of the Audit Committee‟s effectiveness and follows
Treasury best practice guidance: Sarah Scullion has been appointed to the Audit Committee with effect
from 3 June 2013. Also Paul Rodgers replaced Kate Mingay on the Audit Committee with effect from 23
October 2012.
Executive Board responsibilities
Day to day accountability for compliance with the Corporate Governance in Central Government
Departments: Code of Good Practice 2011 lies with the Secretary to the EB who also acts as the
Secretary to the Audit Committee and who has direct access to the CEO and to the Chair of Audit
Committee.
The CEO formally agrees specific targets and success criteria with each EB member at the start of each
year, directly from the Agency‟s published Business Plan. In 2012-13 the CEO met individual EB
members monthly to assess progress against objectives. He meets regularly with the Non-Executive
Board Members to review their performance and ensure the Civil Service Code is met and that the
Agency gains greatest value from their external perspectives and experience.
The EB gives assurance to the Secretary of State on the quality with which the Agency is run and the
effectiveness with which it is meeting its objectives. Key items considered this year were issues of
strategic impact to the Agency, the Corporate Risk Register and other reports and issues escalated from
subordinate boards, each chaired by EB members:
Operations Board: Chief Operating Officer
Agency Change Board: Transformation Director
Commercial Board: Finance and Commercial Director
Finance Committee: Finance and Commercial Director.
The EB also meets informally once a month to discuss a wide range of issues, from the Agency‟s future
strategic direction to its own performance as a Board.
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Board and Committee attendance
Figures denote meetings attended (meetings available to attend) between 1 April 2012 and 31 March
2013
Name
Executive Board
Audit Committee
Simon Tse (Chief Executive)
14 (14)
-
Judith Whitaker
13 (14)
-
Phil Bushby
13 (14)
-
Paul Evans
13 (14)
-
Hugh Evans
11 (14)
-
David L Evans
12 (14)
-
Ieuan Griffiths (to 31.12.12)
10 (11)
-
Rachael Cunningham (from 01.01.13)
3 (3)
-
Mike Brooks (Non Executive Member)
14 (14)
4 (4)
Jim Knox (Non Executive Member)
4 (5)
3 (4)
Kate Mingay (to 12.06.12)
-
2 (2)
Paul Rodgers (DfT Non Executive Member)
(from 23 10.12)
-
2 (2)
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Executive Board key decisions
In July 2012 and following extensive consultation, Justine Greening Secretary of State for
Transport agreed the EB recommendation for the centralisation of enforcement operations into
Swansea and the closure of the local office network.
The work to centralise enforcement has been completed on time and the local office closure
programme is on track to complete by the December 2013 target date.
In October 2012 the EB instigated an end-to-end review of the Agency‟s procurement and
investment approvals process to ensure alignment and compliance with evolving Cabinet Office
and HM Treasury requirements. This was as a result of the new Cabinet Office Guidance V3.1
not having been implemented in a timely manner and therefore resulted in a delay in some
Cabinet Office approvals being sought. That review has completed and where necessary, any
secondary approvals requiring higher authority have been obtained.
In November 2012 and following a complex, competitive procurement exercise, the Agency
awarded a framework contract for the provision of Front Office Counter Services to the Post
Office®. Prior to award the recommendation was endorsed by the DfT Board Investment and
Commercial Sub-Committee (BICC) and the DfT Contracts Award Committee (CAC). Transition
to the new contract arrangements went live on 1 April 2013.
In December 2012 the EB commissioned a review of the Agency‟s current strategic statements,
its alignment with wider Government strategy and the expectations of DVLA held by
stakeholders, including that of becoming a model digital delivery organisation. That review has
concluded and work to translate its recommendations into reality is underway.
Executive Board effectiveness
The EB reviews its effectiveness by drawing upon a range of review indicators including direct
feedback from the Agency‟s Minister, DfT sponsoring directorate and staff in the latter case
collected through annual staff engagement surveys and formal 180
O
feedback from EB direct
reports.
An assessment of individual director performance as a board member is included in the CEO‟s
normal line management responsibilities and formal performance appraisal reports. The CEO
also seeks views on performance as CEO and Chair of the EB from external and internal
stakeholders, Ministers, the Motoring Services Board and other direct reports. The Chair of the
Audit Committee similarly conducts assessments of the Audit Committee‟s performance: in
2013-14 the assessment will be of individual committee member performance and overall Audit
Committee effectiveness.
At EB meetings each board member gives a synopsis of their individual Directorate‟s
performance which includes monthly and year to date performance. This is measured against
performance indicators that are set out annually in the Agency‟s Business Plan, agreed by the
sponsor Directorate. The EB statement report is used to form the basis of this review and
challenge is welcomed from other EB members as and when measures are not being met.
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The EB statement includes key management information, data and statistics of all the business
and support areas. Its aim is to give a clear, concise and accurate view of monthly performance.
During the year the EB statement has been refined and improved using feedback from board
members, non-executive board members and other senior managers.
In addition to the monthly review of the corporate risk register, in December 2012 the EB
undertook a horizon scanning exercise to log potential risks. In addition the EB has undergone
exercises to assess the impact of some of these risks if they subsequently materialised as
issues.
Remuneration
The Agency‟s remuneration processes and details are set out in the Annual Report and Accounts.
Remuneration and bonuses for the Agency‟s six members of the senior civil service is set by the
appropriate DfT committee. The committee considers submissions made by the CEO showing the link
between their remuneration and their roles and responsibilities within the Agency and the other Agency
Chief Executives alongside the DfT Directors General. General increases are set by DfT with Cabinet
Office / HM Treasury approval.
The Agency‟s wider staffing and grading structures remain relatively standard within the Civil Service
and DfT. The Agency has strict controls in place to prevent grade creep and to ensure robust adherence
to processes that determine the grade of each individual post. The annual overall review of salary scales
is agreed first by EB after recommendation by the HR function, but is then challenged and finally
approved by both DfT and HM Treasury.
Robust workforce plans and overall staff expenditure controls are exercised monthly through the EB
management meetings, supplemented by CEO one-to-ones with individual Directors and monthly
workforce review meetings.
Audit Committee
The DVLA Audit Committee has formally agreed terms of reference, reviewed on an annual basis. The
Committee provides advice and support to the CEO in delivering the Accounting Officer role for the
Agency. The Chair of the Audit Committee is also a member of the DfT Group Audit Committee. This
ensures line of sight for the Permanent Secretary as Principal Accounting Officer to supplement the
formal risk and issues reporting mechanisms in place through the DfT sponsoring directorate.
The Audit Committee comprises of two non-executive board members, together with a representative
appointed by DfT. During the year Kate Mingay the Commercial and Technical Services Director was
replaced by Paul Rodgers, Director Rail Commercial as the DfT representative. The CEO attends along
with the Finance and Commercial Director and Head of Internal Audit as observers, as do
representatives of DfT Finance (who also represents the DfT sponsor Directorate), National Audit Office
and KPMG (as sub-contracted auditors to National Audit Office). Other EB members attend as observers
on a cyclical basis.
The Audit Committee has access to all internal audit reports, major project assurance reports, external
reviews, risk registers, and management reports. The agendas follow a cyclical pattern for external
reporting but consider at each of their four meetings each year:
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progress against assurance plans
adequacy of response to the risk register
management responses and action progress against assurance reviews (internal and
external)
response to fraud and bribery threats
ICT security and any breaches reported.
The Audit Committee considers and approves before submission to DfT, the EB Management
Assurance Statement, the Governance Statement and the Annual Report and Accounts.
Wider governance
The DfT Motoring Services Directorate helps ensure sufficient priority is afforded to operational delivery,
progress towards Business Plan performance measures and the management of risk through monthly
challenge meetings with the CEO and FCD.
There are also monthly meetings with DfT through the Policy Forum, Commercial Board, Finance
Management Team and HR Directors Forum in which current issues are explored and updates provided.
The Agency contributes monthly to DfT transparency reporting on progress towards financial targets and
cash forecasting, expenditure and contracts in respect of our own activities. The DVLA reports, together
with emerging escalated risks and issues, are aggregated with those of other agencies and considered
at the DfT Executive Committee and Group Audit Committee as appropriate.
3. Risk Management
At least once every 12 months EB reviews and updates its risk policy and a review took place in April
2012. Alongside this wider risk policy review, EB reassesses risk appetite and following an initial review
in April 2012, the EB conducted a fuller review of appetite in July 2012 making one revision. The risk
appetite is set out in a published policy, available with guidance to all managers and staff on the
Agency‟s intranet site. The Agency will review the risk appetite and policy in 2013.
Part of the risk management team responsibilities is to establish and promote a framework within which
business managers regularly identify and plan how best to mitigate risks. Both new and existing risks are
reviewed at least monthly through risk registers. Risk registers are managed at different levels in the
Agency with risks escalated between levels when necessary. Each month the EB individually and
collectively reviews risks including the Corporate Risk Register. The EB review includes:
current risks and risk ratings
agreeing and assigning mitigating actions
discussing potential new risks for escalation to the Corporate Register.
The corporate risk register is also shared every month with the DfT sponsoring directorate.
The main risks to the Agency in 2012-13 have been from the change agenda e.g. ICT Contract Let
Procurement Programme (CLPP), Transformation and Modernisation of Network Services and more
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recently, the lack of an agreed Technical Refresh roadmap. The CLPP Strategic Outline Case was not
approved by Cabinet Office during the 2012-13 financial year pending a review of Agency business
strategy. As a result a March 2013 performance measure was not met. An Engagement Partner
(Deloitte) has been procured to support the Agency in the development and subsequent approval of an
Outline Business Case by the end of September 2013 and work has commenced to develop options
including an IT operating model, supply chain design and to-be ICT architecture.
The Agency has a well defined risk management process and has recently invested extra resources in
the Risk Management team. DVLA plays an active role in the development of a common approach to
risk management across the whole of DfT.
The effectiveness of the Agency‟s management of risk has been reviewed during 2012-13 by:
senior managers: on two occasions as part of the Management Assurance Statement
exercise and report to DfT
a VOSA risk manager: through a maturity assessment against a HM Treasury template
internal audit: an assessment through a DfT template.
The review was conducted by Corporate Assurance Services (CAS) as part of a wider DfT Internal Audit
approach to risk management. Risk management was judged to be getting better across the Agency and
CAS could provide reasonable and improving assurance to the Accounting Officer. A series of
management actions were agreed with management to further enhance the current risk management
framework.
4. Change controls
The Agency has a challenging Change portfolio. In particular 2012-13 has delivered the implementation
of EU Third Directives system changes and also has a number of key in flight‟ projects such as the
transformation and modernisation of the local office network, Northern Ireland Electronic Vehicle
Services, Insurance Industry Access to Data and the ICT contract let programme.
In order to deliver this Change portfolio the Agency has four change programmes, each of which has a
Board Member assigned as Senior Responsible Officer. The current allocation within the change
programmes is:
efficiency: Chief Operating Officer
mandatory Policy and Legislative Changes: Corporate Affairs Director
ICT Infrastructure: Chief Information Officer
ICT Contract Let: Brian Etheridge, Managing Director Motoring Services and DfT Digital Leader.
The Transformation Director role ensures that there is genuine synergy and balance between the
programmes. This is achieved through the Agency Change Portfolio Office (ACPO) which reports to the
Transformation Director.
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Agency Change Portfolio Office
ACPO is ultimately responsible for:
Management of the change initiation process
Ensuring all change is aligned to strategy
Implementation and management of change governance standards
Assurance of projects
Progress monitoring (at portfolio level)
Effective resource management
Adherence with Cabinet Office spend controls.
ACPO reports progress monthly to the Agency Change Board at programme and overall portfolio level
through a scorecard approach.
During 2012-13 the main change to governance and controls has been in relation to the Cabinet Office
spend controls (version 3.1). In summer 2012 it emerged that some “in flight” projects did not have
approval in relation to the Cabinet Office spend controls. The Agency worked quickly with DfT and
Cabinet Office to rectify the position: where necessary secondary approval was received and where we
have not been able to obtain approval, a way forward has been agreed. The Agency has subsequently
encountered issues in relation to the fact that there is an apparent lack of context and strategic direction
to some of the investment decisions being made. The Agency in particular has been unable to
demonstrate that it has a cohesive plan to replace its legacy systems and move to Greenfield
architecture (in line with government strategy). In the latter part of the financial year the Agency has
worked closely with DfT to aggregate, collate and refresh the strategy and articulate it more clearly to
stakeholders. This will help in creating the context in which some of these spend decisions are being
made.
All proposed changes are subjected to initial review by ACPO to assess alignment to strategy (Agency,
DfT and Wider Government). ACPO has introduced discussion with DfT and Cabinet Office ensuring
early visibility, engagement and adherence to Cabinet Office/ICT spend approvals and processes.
When a change is approved to proceed, a Preliminary Business Case is drafted and all relevant spend
approvals instigated via ACPO, with DVLA CIO, DfT or Cabinet Office depending on the value of the
project/contract.
Business cases
All business changes proposed are examined through appropriate business case processes. Benefit
realisation plans and monitoring is built in to all such developments with direct periodic reporting to the
EB for corporate projects.
Aligned with this is work being performed to improve the way in which business cases are written to
ensure that the strategic argument is cohesive. Much work has been done to improve skills and
knowledge gaps in relation to business case writing, sharing best practice and improving the way in
which the review process is carried out. This will present further challenges as the Agency moves to an
Agile way of delivering projects. This is currently being considered and reviewed to ensure that
investment decisions can still be made with appropriate rigour but in a more streamlined way.
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Business cases comply with the DfT Investment Appraisal Framework through compliance with the HM
Treasury Green Book and use of the best practice five-case business model advocated by the Cabinet
Office Efficiency Reform Group and HM Treasury. Early stage involvement of the Efficiency Reform
Group through their review cycle is observed in all cases.
Agency Change Board
The monthly agency change board is chaired by the Transformation Director. Members include the CEO,
EB members, non-executive board members, the head of agency change and the head of
communications. The EB has delegated the agency change board with responsibility for approval of
project business cases, review of progress in delivering the Agency‟s transformation agenda and
identifying cross-Agency impacts of changes proposed.
Analytical modelling
The Agency has a strategic modelling function which supports the development of business cases,
procurement activity and cost modelling. Due to the nature and importance of the outputs concerned, the
Agency takes very seriously the assurance of such models. Following recent reviews (Laidlaw and
Macpherson) the Agency has reviewed its approach to this assurance and has refined its quality
assurance methodology to ensure alignment with review recommendations. Each model will have its
own Senior Responsible Officer and the Acting FCD will be the Agency Quality Assurance Champion.
There is still work to be done to ensure that this is implemented across all business and financial models
used in decision making across the Agency.
5. Business and investment
Financial controls
The DVLA Finance Committee has delegated expenditure responsibilities and provides EB with advice
on operational budgets and project affordability. The Finance Committee is chaired by the FCD and is
quorate when attended by a second EB member. Budgetary controls are supported by a robust and
formal full monthly planning and re-forecasting cycle, monitoring volume and change demand. The
results are reported monthly to the EB for action and forward decisions and is supplemented by a
quarterly full and robust Director-led challenge and re-forecasting process, formally reported as the EB
financial review meeting.
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Commercial controls
The Agency‟s Commercial governance framework is shown in the following diagram:
All procurement and contract management activities are controlled by Commercial Services Group
(CSG). They ensure:
activities are managed in line with the Cabinet Office transparency guidelines and approvals
processes
activities are compliant with the Agency‟s obligations under European Public Procurement rules
and United Kingdom Law to ensure full and fair competition amongst prospective suppliers of
goods and services
Government policy on procurement is applied across the organisation.
This control is supported by the Agency‟s Commercial Policy and Procedures which encompass the core
guidance provided by DfT and the Cabinet Office. The Procedures cover the commercial roles and
procedures operating at DVLA and clearly sets out individual responsibilities. To support these roles,
CSG has developed a suite of commercial training which provides role holders with an understanding of
their commercial obligations. Contractual and financial authority is delegated to a limited amount of
named individuals in line with their specific posts/roles.
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As part of the selection process for new contracts, tender evaluation incorporates whole life costing to
ensure that value for money is considered throughout the life of the product/ service contract. Supplier
performance is proactively managed for all key contracts let by the Agency to ensure that quality and
service are maintained for the duration of the contract.
To further enhance commercial controls, CSG has developed a Commercial Assurance Model. The
Model will allow CSG to carry out tier 2 commercial assurance reviews on contract management activity
within the Agency. Outputs from the reviews are fed into the Commercial Board. CSG is also working
closely with DfT to develop an assurance model which will provide specific assurances during the key
phases of the procurement cycle. This will provide positive input into a review of DfT Family governance
and control that has been initiated following recommendations falling out of the Laidlaw report on the
West Coast Rail procurement incident.
While awaiting specific guidance around the Public Services (Social Value) Act the impacts of the Act
are considered as a pre-cursor to any commercial engagement at DVLA.
Vehicle Excise Duty collection and enforcement
The targets and operations relating to these activities are set and monitored through the VED
Governance Committee, a tripartite arrangement comprising DVLA, DfT and HM Treasury. This is
chaired by DfT and meets during the year to agree the budgets and objectives and monitor progress
against these. The full year Service Level Agreement financial position is reported as part of the routine
monthly and quarterly DfT Motoring Services Directorate reporting and challenge cycle.
6. Shared Services
The Agency is party to a group arrangement with the DfT Shared Service Centre (SSC) for the provision
of finance, HR and associated services governed by a service level agreement and managed through
the single client function within DfT.
The Agency receives a quarterly management assurance report that is based primarily on Shared
Services management risk and control monitoring activities and reporting processes. This assurance
also draws upon Internal Audit reports and other relevant risk/control reports and sources of assurance.
Through this, Shared Services has reported to the Agency that its system of internal control met the
criteria for effective internal control, although a small number of exceptions remain in relation to controls
that do not directly impact the financial statements.
DfT has signed a contract to divest itself of the SSC with final handover having taken place in June
2013. The Agency has supported DfT in designing the post-divestment services and has received
regular assurance updates from DfT as the divestment has progressed.
Throughout the year the Agency has continued to take responsibility for ensuring that controls and
processes are operating effectively. These factors, combined with the quarterly reports from Shared
Services, ensure that the combination of controls is appropriate and adequate in terms of our overall
internal and assurance requirements.
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7. Data Controls
DVLA handles a large quantity of personal data and has to comply with the appropriate legislative
frameworks and government policy on protecting and releasing this information.
Responsibility for the security of personal information is with the Chief Information Officer as Senior
Information Risk Owner and the Head of Information Security who heads up the Information Assurance
Group (IAG). The Head of IAG reports to the Chief Information Officer but also has direct access to the
CEO as required.
The Agency has DfT delegated authority to accredit its systems on a rolling annual programme. All
systems are reviewed internally but supported by external health checks to ensure measures comply
with government security standards. New systems are not permitted to go live unless they have been
signed off by the Head of Information Security who is also the DVLA Accreditor.
The Agency has a network of Information asset owners who are accountable for specific information.
These are supported and trained by the IAG. They are responsible for the release and use of the data
sets allocated to them.
2012-13 Main Activities
Following EB approval a data governance framework was implemented in May 2011. A board formally
reviews and agrees data release standards to ensure a consistent approach and a data release panel
will look at new requests/proposals to access DVLA data. These controls will give data management a
focal point for escalation. Third party data sharing activities have been centralised and re-organised into
one team. Those who abuse their access to data have their access suspended. All companies in the
supply chain were re-registered and checked this year and this will continue on an annual basis. In
addition to planned audit visits, targeted audit visits have been carried out where information or
complaints have raised awareness of possible issues. Specific guidance is now produced for different
vehicle customer types, for example public sector, National Anti Fraud Network, Motor Insurance Bureau
and new guidance for driver enquiry customers. A new standard keeper enquiry contract has been
issued that captures the changes and new assurance requirements.
Tier 2 assurance checks on all drivers‟ customers have been completed. In January 2013 a programme
of tier 2 assurance checks on vehicle keeper enquiry customers commenced.
The mandatory annual information security training programme was conducted. All staff are required to
pass this assessment with a minimum pass mark of 80% and it is seen as a key education exercise to
keep personal information supplied to DVLA secure.
A test on the Agency‟s physical security was carried out. External specialists were commissioned to try
and access HQ buildings. This was an unannounced exercise and the Agency‟s defences held up with
staff taking appropriate action when approached. A lessons learned report has been prepared and the
Agency is taking forward recommendations.
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Data controls: key issues and risks
Requests to access the Agency‟s data and services are increasing, as is the way people want to use this
data. This is putting increasing pressure on to Information Assurance Group in terms of meeting its
longer term strategy. There has been an increase in low level data breaches, from 12 in 2011-12 to 30 in
2012-13. The majority of these involved individual cases and would be classed as low impact, the
primary cause being human error. Senior management is looking at ways of increasing IAG‟s capability
and capacity to reverse this trend.
There has been a significant organisational change which resulted in the loss of several information
asset owners to other roles within the Agency. This has weakened the information asset owner
framework and there is a need to find new information asset owners and train them appropriately. In the
meantime, the gaps in the framework to manage and protect the assets and conduct risk assessments
when required have been dealt with by IAG.
Two systems have failed accreditation. Whilst these failures have to be addressed they are both held on
an accredited network offering sufficient security for an interim period. This risk is under active
management.
8. CEO assurance
As Accounting Officer for DVLA, the CEO has responsibility for reviewing the effectiveness of the
systems of internal control. The review is primarily informed by the Agency‟s Internal Audit and the work
and management assurance reporting of the executive managers within the Agency who are responsible
for the development and maintenance of the internal control framework. The Agency has adopted a
three tier integrated assurance framework for internal controls which the CEO draws on to assist in
balancing the evidence, positive and negative, provided by a wide range of specific reviews and
governance activity.
Twice a year, a Management Assurance Statement review is undertaken to gather together and review
all facets of management assurance, policy and practice applying a framework and reporting standards
set by DfT. The end of 2012-13 Management Assurance Statement review asked Agency senior
managers to provide performance commentary and evidence on the application of 60 aspects of
assurance. Responses were reviewed by subject matter experts, Internal Audit, Audit Committee, EB
and DfT.
This exercise reinforces the importance of assurance processes otherwise promoted individually.
Audit Committee
The EB and Audit Committee assist in developing and overseeing governance assurance processes and
the plans to address weaknesses, ensuring continual improvement of the systems remains a priority.
These processes apply to all Agency activities and transactions in the DVLA business and VED
accounts. The Chair of the Audit Committee reports regularly to the EB on the Audit Committee‟s views
on the effectiveness of internal control.
Internal Assurance
A single integrated structure has been established as Corporate Assurance Services to carry out the
core internal reviews. This works very closely with a range of other assurance providers including the
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DVLA Annual Report & Accounts 2012-13 49
Agency‟s Fraud Unit, CSG, Financial Services Group and ACPO. DVLA Internal Audit operates to
prescribed Government Internal Audit Standards and provides the CEO with an independent opinion on
the adequacy and effectiveness of the Agency‟s system of internal control, together with
recommendations for improvement. The Head of Internal Audit has free access to the Chair of the Audit
Committee and to the CEO as Accounting Officer, but also works closely with the DfT Head of Internal
Audit as part of the group operating model. Its audit plan for the year is informed by the main risks to the
Agency‟s business and encompasses a broad range of internal controls. This includes assurance over
the security and use of DVLA data, as well as contractual commitments and data protocols for those
organisations that interact with us.
Monitoring of Specific Control Issues
Remedial action is always taken when a control issue is identified and progress is closely monitored to
full resolution. In the 2011-12 Annual Report and Accounts the Agency reported the following issue for
which resolution was ongoing in 2012-13:
DVA Control Assurance and Vehicles Responsibilities
DVA is subject to internal audit review by the Department for Regional Development in Northern Ireland.
The CEO draws assurance from the opinion the Department for Regional Development Head of Internal
Audit provides to the DVA Agency Accounting Officer. This is overseen by the DVA Audit Committee
which is chaired by Mike Brooks the Chair of the DVLA Audit Committee. With the Northern Ireland
vehicles systems now physically relocated to Swansea and operating from DVLA data centres, the
systems operations projects are now largely working directly within the DVLA processes and controls.
Head of Internal Audit Opinion
The overall opinion the CEO received from the Head of Internal Audit for 2012-13 is that reasonable
assurance can be provided that the DVLA governance, risk management and control arrangements are
appropriately defined and found to be working effectively.
The cases where Internal Audit identified the need for control enhancements were not deemed
significant in the context of the overall control environment. Where enhancements were proposed,
corrective action has been agreed and subsequent delivery is monitored closely both within DVLA by
individual Directors, monthly reporting on outstanding issues at EB meetings and the DVLA Audit
Committee, but also reported directly to DfT Executive Committee.
Actions against weaknesses identified have contributed to the overall assurance reported within this
Governance Statement.
Malcolm Dawson OBE
Accounting Officer and Interim Chief Executive DVLA
20 June 2013
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DVLA Annual Report & Accounts 2012-13 50
4.3 The Certificate and Report of the Comptroller and Auditor General to
the House of Commons
I certify that I have audited the financial statements of Driver and Vehicle Licensing Agency for the year
ended 31 March 2013 under the Government Resources and Accounts Act 2000. The financial
statements comprise: the Statements of Comprehensive Net Expenditure, Financial Position, Cash
Flows, Changes in Taxpayers‟ Equity; and the related notes. These financial statements have been
prepared under the accounting policies set out within them. I have also audited the information in the
Remuneration Report that is described in that report as having been audited.
Respective responsibilities of the Accounting Officer and auditor
As explained more fully in the Statement of the Agency‟s and Accounting Officer‟s Responsibilities, the
Chief Executive as Accounting Officer is responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. My responsibility is to audit, certify and report on
the financial statements in accordance with the Government Resources and Accounts Act 2000. I
conducted my audit in accordance with International Standards on Auditing (UK and Ireland). Those
standards require me and my staff to comply with the Auditing Practices Board‟s Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Driver and Vehicle Licensing Agency‟s circumstances and
have been consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the Accounting Officer; and the overall presentation of the financial statements. In
addition I read all the financial and non-financial information in the Annual Report to identify material
inconsistencies with the audited financial statements. If I become aware of any apparent material
misstatements or inconsistencies I consider the implications for my certificate.
I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and
income recorded in the financial statements have been applied to the purposes intended by Parliament
and the financial transactions recorded in the financial statements conform to the authorities which
govern them.
Opinion on regularity
In my opinion, in all material respects the expenditure and income recorded in the financial statements
have been applied to the purposes intended by Parliament and the financial transactions recorded in the
financial statements conform to the authorities which govern them.
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DVLA Annual Report & Accounts 2012-13 51
Opinion on financial statements
In my opinion:
the financial statements give a true and fair view of the state of Driver and Vehicle Licensing
Agency‟s affairs as at 31 March 2013 and of the net operating cost for the year then ended; and
the financial statements have been properly prepared in accordance with the Government
Resources and Accounts Act 2000 and HM Treasury directions issued thereunder.
Opinion on other matters
In my opinion:
the part of the Remuneration Report to be audited has been properly prepared in accordance
with HM Treasury directions made under the Government Resources and Accounts Act 2000;
and
the information given in the Annual Report and the Management Commentary included within
the Annual Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which I report by exception
I have nothing to report in respect of the following matters which I report to you if, in my opinion:
adequate accounting records have not been kept or returns adequate for my audit have not
been received from branches not visited by my staff; or
the financial statements and the part of the Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
I have not received all of the information and explanations I require for my audit; or
the Governance Statement does not reflect compliance with HM Treasury‟s guidance.
Report
I have no observations to make on these financial statements.
Amyas C E Morse
Comptroller and Auditor General
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP
24 June 2013
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DVLA Annual Report & Accounts 2012-13 52
4.4 Summary of accounts
The Agency accounts for 2012-13 are made up of the Business Accounts and the Trust Statement.
The net operating costs in the Agency Business Accounts were £65.1 million (2011-12: £117.7 million)
within which the fee surplus for the year was £10.9 million (2011-12: £0.2 million) Total cost of VED
collection and enforcement was £178.3 million (2011-12: £191.0 million) and £100.2 million (2011-12:
£84.6 million) was payable directly to HM Treasury (CFERs) representing the excess income following
retention of funds to cover costs on the sale of personalised registrations and cherished transfers. In Note
2 the Business segments are disclosed to enable disclosure of net operating costs on fees and charges,
DVLA personalised registrations and VED collection and enforcement. The element of CFER's due to the
Consolidated Fund in respect of Cherished Transfers is separately identified, to enable the reporting of the
fees surplus position to the EB.
In 2012-13 HM Treasury directed that excess cash reserves acquired whilst a Trading Fund prior to April
2011, and also during its first year as an Executive Agency in 2011-12, should be surrendered to the
Consolidated Fund. A total of £61.8 million was paid to HM Treasury in 2012-13.
In 2012-13 some elements of the provision recognised in 2011-12 relating to the transformation and
modernisation of DVLA's network services have been reclassified as an accrual due to the value and time
of payments being more certain.
The movement from Business Plan forecast to outturn fees surplus of £10.9 million as reported in the
Business Accounts Note 2 has been discussed in the Management Commentary.
The net revenue for the Consolidated Fund from VED and fines and penalties brought to account in the
Trust Statement is £6 billion (2011-12 £5.9 billion).
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DVLA Annual Report & Accounts 2012-13 53
4.5 DVLA Business Account for 2012-13
Statement of comprehensive net expenditure for the year ended 31 March
2013
Note
2012-13
2012-13
2011-12
2011-12
£000
£000
£000
£000
Income
Re-stated
Re-stated
External revenue
472,502
468,526
Finance income
5
-
14
Total income
2
472,502
468,540
Expenditure
Operating costs
4
(346,115)
(397,583)
Staff costs
3
(157,990)
(155,533)
Depreciation, amortisation and
impairment
6
(31,411)
(30,344)
Finance costs
5
(2,067)
(2,789)
Total expenditure
2
(537,583)
(586,249)
Net operating cost
2
(65,081)
(117,709)
Other comprehensive income
Net gain on revaluation of property,
plant and equipment
6
2,479
1,878
Net gain on revaluation of intangible
assets
7
1,569
2,340
Other comprehensive income for the
year
4,048
4,218
Total comprehensive expenditure for
the year
(61,033)
(113,491)
Re-statement: The Operating costs and Staff costs categories for 2011-12 have been re-stated - see
Notes 3 and 4
All income and expenditure are derived from continuing operations. Notes forming part of these accounts
appear on pages 58 to 93.
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DVLA Annual Report & Accounts 2012-13 54
Statement of financial position as at 31 March 2013
Note
31 March
2013
31 March
2012
Non-current assets
£000
£000
Property, plant and equipment
6
83,915
88,399
Intangible assets
7
92,197
91,962
Trade and other receivables due after more than one year
8
1,686
2,604
Total non-current assets
177,798
182,965
Current assets
Trade and other receivables
8
43,271
58,862
Cash and cash equivalents
9
62,293
103,373
Total current assets
105,564
162,235
Total assets
283,362
345,200
Current liabilities
Trade and other payables due within one year
10
(84,419)
(48,032)
Provisions for liabilities and charges
12
(28,458)
(3,739)
Total current liabilities
(112,877)
(51,771)
Total assets less current liabilities
170,485
293,429
Non-current liabilities
Trade and other payables due after more than one year
10
(29,535)
(46,326)
Provisions for liabilities and charges
12
(27,871)
(53,636)
Total non-current liabilities
(57,406)
(99,962)
Assets less liabilities
113,079
193,467
Taxpayers’ equity
General fund
64,583
149,019
Revaluation reserve
48,496
44,448
Total taxpayers’ equity
113,079
193,467
Notes forming part of the accounts appear on pages 58 to 93.
Malcolm Dawson OBE
Accounting Officer and Interim Chief Executive DVLA
20 June 2013
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DVLA Annual Report & Accounts 2012-13 55
Statement of cash flows for the year ended 31 March 2013
Note
2012-13
2011-12
Cash flows from operating activities
£000
£000
Net operating cost
(65,081)
(117,709)
Adjustments for non cash items:
Loss on disposal, depreciation, amortisation and impairment
6
31,411
30,344
Net financing costs
5
2,067
2,775
Decrease in trade and other receivables
8
16,509
7,138
Increase/(Decrease) in trade payables
10
810
(6,854)
Auditors remuneration notional charges
122
120
(Decrease)/Increase in provisions
12
(1,388)
45,134
Net cash outflow from operating activities
(15,550)
(39,052)
Cash flows from investing activities
Purchase of property, plant and equipment
6
(1,465)
(7,098)
Purchase of intangible assets
7
(21,760)
(17,236)
Finance income
5
-
14
Proceeds from sale of property, plant and equipment
79
8
Net cash outflow from investing activities
(23,146)
(24,312)
Cash flows from financing activities
Finance costs
5
(1,725)
(2,491)
Capital element of payments in respect of finance leases and
on-balance sheet PFI contracts
(1,937)
(1,734)
DfT Supply funding received in year
158,997
190,900
Net cash used in financing activities
155,335
186,675
Payments of amounts due to the Consolidated Fund
(95,922)
(85,614)
Payment of excess cash reserves to HM Treasury
(61,797)
-
Net (decrease) / increase in cash and cash equivalents in
the period
(41,080)
37,697
Cash and cash equivalents at the beginning of the period
9
103,373
65,676
Cash and cash equivalents at the end of the period
9
62,293
103,373
Notes forming part of these accounts appear on pages 58 to 93.
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DVLA Annual Report & Accounts 2012-13 56
Statement of changes in taxpayers’ equity for the year ended 31 March
2013
General
Fund
Revaluation
Reserve (i)
Total Reserves
£000
£000
£000
Balance at 31 March 2012
149,019
44,448
193,467
Net comprehensive expenditure for the year to
31 March 2013
(65,081)
-
(65,081)
Non cash charge auditor‟s remuneration
122
-
122
DfT Supply funding
142,567
-
142,567
Payment of excess cash reserves to
HM Treasury (ii)
(61,797)
-
(61,797)
CFERs payable to the Consolidated Fund:
Cherished Transfers
(43,163)
-
(43,163)
Personalised Registrations
(57,084)
-
(57,084)
Other Comprehensive Income
Net gain on revaluation of property, plant and
equipment
-
2,479
2,479
Net gain on revaluation of intangible assets
-
1,569
1,569
Balance at 31 March 2013
64,583
48,496
113,079
(i) The Revaluation Reserve reflects the accumulated revaluation gains relating to non-current assets.
The amount of the revaluation reserve that relates to intangible assets at 31 March 2013 is £14.7
million (31 March 2012: £13.2 million).
(ii) Following revocation of Trading Fund status on 1 April 2011 the Agency became a supply funded
Agency. This has resulted in HM Treasury directing in 2012-13 that excess cash acquired whilst a
Trading Fund and in 2011-12 should be surrendered to the Consolidated Fund. A total of £61.8
million was paid to HM Treasury in 2012-13.
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DVLA Annual Report & Accounts 2012-13 57
Statement of changes in taxpayers’ equity for the year ended 31 March
2012
General
Fund
Revaluation
Reserve (i)
Total Reserves
£000
£000
£000
Balance at 31 March 2011
161,364
40,230
201,594
Net comprehensive expenditure for the year to
31 March 2012
(117,709)
-
(117,709)
Non cash charge auditor‟s remuneration
120
-
120
DfT Supply funding
189,894
-
189,894
CFERs payable to the Consolidated Fund:
Cherished Transfers
(26,441)
-
(26,441)
Personalised Registrations
(58,209)
-
(58,209)
Other Comprehensive Income
Net gain on revaluation of property, plant and
equipment
-
1,878
1,878
Net gain on revaluation of intangible assets
-
2,340
2,340
Balance at 31 March 2012
149,019
44,448
193,467
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DVLA Annual Report & Accounts 2012-13 58
Notes to the accounts
Note 1. Statement of accounting
policies
The financial statements have been prepared in
accordance with the 2012-13 Government
Financial Reporting Manual (FReM) issued by HM
Treasury. The accounting policies contained in the
FReM apply International Financial Reporting
Standards (IFRS) as adapted or interpreted for the
public sector context. Where the FReM permits a
choice of accounting policy, the accounting policy
which has been judged to be the most appropriate
to the particular circumstances of the Agency‟s
Business Accounts for the purpose of giving a true
and fair view has been selected. The particular
policies adopted by the Agency are described
below. They have been applied consistently in
dealing with items that are considered material to
the accounts.
New standards and interpretations
adopted early
None
New standards and interpretations not
yet adopted
A number of new standards, amendments to
standards and interpretations are not yet
effective for the year ended 31 March 2013 and
have not been applied in preparing these
financial statements. The following are those
standards, amendments and interpretations that
may be adopted in subsequent periods:
IAS 1 Presentation of financial statements
(Other Comprehensive Income) - This
amendment , effective in 2013-14, requires
items of Other Comprehensive Income to be
grouped on the basis of whether they might at
some point be reclassified („recycled‟) from
Other Comprehensive Income to profit (e.g.
cash flow hedges) or where they will not (e.g.
gains on property revaluation). This will have a
presentational impact only on the Statement of
Comprehensive Net Expenditure.
Phases 1 and 2 of IFRS 9 Financial
Instruments, which will replace parts of IAS 39,
deal with the classification and measurement of
financial assets and financial liabilities. IFRS 9
is intended to improve and simplify the reporting
of financial instruments. The completed phases
require financial assets and liabilities to be
measured according to their classification, and
simplify the classification structure. According to
the IASB, application of this standard is required
for reporting periods beginning on or after 1
January 2015, though earlier application is
permitted. However, it is yet to receive EU
endorsement so it is difficult to predict the actual
application date. The impact of initial application
of IFRS 9 is not expected to be significant; the
classification of financial assets and liabilities
will change, but it seems that existing
measurement approaches will continue to be
appropriate.
IFRS 13 - provides guidance on establishing fair
values of assets and liabilities and sets out
disclosure requirements, where other standards
require the fair value to be used or disclosed.
HM Treasury have issued an exposure draft of
proposed changes to the FReM, to take effect
from 1 April 2013. The exposure draft interprets
the IFRS to permit the use of alternative
valuation methods for some public service
assets, but retains the disclosure requirements
of the IFRS. As the agency's most material
category of arrangements held at fair value is
financial instruments, and as the guidance on
fair value measurement for such arrangements
is already clearly defined, it is considered
unlikely that IFRS 13 will have a material impact
for DVLA.
IFRS 7 - An amendment will come into effect in
201314 dealing with disclosures concerning
netting arrangements. The Agency considers
that these amendments to IFRS 7 will have no
impact, as it has no netting arrangements.
The FReM has been amended to reflect
guidance on grantor accounting for service
concessions contained in the International
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DVLA Annual Report & Accounts 2012-13 59
Public Sector Accounting Standards Board
(IPSASB) statement IPSAS 32. It clarifies that
service concession assets should be
recognised under the normal criteria for asset
recognition (the asset provides future economic
benefits controllable by the entity, and its cost or
fair value can be measured reliably), which may
occur before the asset is complete. It also
clarifies the treatment of service concessions
where the operator has the right to charge the
public. This change is likely to impact on the
timing of recognition of any future assets
constructed under the PFI scheme.
IAS 32 an amendment will come into effect for
periods starting on or after 1 January 2014,
which provides additional guidance on the
criteria for offsetting financial assets and
financial liabilities. As the Agency currently does
not offset any financial assets and liabilities, it is
considered that this will have no impact.
The International Accounting Standards Board
(IASB) is currently developing a replacement to
the existing leasing standard, which is expected
to eliminate off-balance sheet leasing
arrangements, and require recognition of a
single right-of-use asset, measured at the
present value of lease payments. This is likely
to have an effect on the statement of financial
position following the Agency transformation
and modernisation of its network services.
The IASB is currently developing a replacement
to the existing standards on revenue recognition
and construction contracts, so that revenue can
be recognised only when the associated
performance obligations are met. This is not
expected to have a material effect on the
Agency accounts.
Other changes due to come into effect after
201213 are considered to have no impact on
the Agency.
Accounting convention
These financial statements have been prepared
under the historical cost convention, modified to
account for the revaluation of property, plant
and equipment and intangible assets. The
financial statements have been prepared in
accordance with the revised accounting
direction issued by HM Treasury on 17
December 2012. They meet the relevant
requirements of the Companies Act, and of the
International Financial Reporting Standards
issued and approved by the International
Accounting Standards Board. We are not aware
of any disclosures or circumstances where
these are inappropriate. The financial
statements have been prepared on the going
concern basis.
Income
Income from the sale of registration marks is
recognised on receipt of payment for fixed price
sales and on the fall of the auctioneer's hammer
for sales at auction. Uncompleted sales are
provided for after 90 days and are written out of
sales after twelve months, with the related
marks becoming available for resale. Fee
income from the assignment, transfer and
retention of cherished registration marks is
recognised on receipt, when the transaction is
processed, as is that from fee-bearing statutory
services. All other income is recognised when
the services and goods are issued.
Finance income and finance costs
As an Executive Agency DVLA does not earn
interest on funds invested.
Finance costs comprise interest expense on
borrowings and unwinding of the discount on
provisions. Borrowing costs are recognised in
profit or loss using the effective interest method.
Taxation
The Agency is not liable to pay Corporation Tax.
Expenditure is shown net of recoverable VAT.
Irrecoverable VAT is charged to the appropriate
expenditure heading, or capitalised if it relates
to an asset.
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DVLA Annual Report & Accounts 2012-13 60
Cash and cash equivalents
Cash and cash equivalents comprise cash
balances in non-interest bearing accounts. The
Agency does not have any bank overdrafts.
Following revocation of Trading Fund status on
1 April 2011 the Agency became a supply
funded Agency. This has resulted in HM
Treasury directing in 2012-13 that excess cash
acquired whilst a Trading Fund and in 2011-12
should be surrendered to the Consolidated
Fund. A total of £61.8 million was paid to HM
Treasury in 2012-13.Non-current assets:
property, plant and equipment
Non-current assets: property, plant and
equipment
The Agency revalues its non-current asset
portfolio annually at 31 March each financial
year in accordance with the requirements of the
FReM, with a full valuation every 5 years
supplemented by annual indexation. A full
valuation of the Agency‟s estate was
undertaken on 31 March 2009 on an existing
use valuation by Joseph M L Funtek BSc
(Hons) MRICS of Gerald Eve LLP.
Office property (including PFI office property)
was revalued at 31 March 2013 using an index-
linked revaluation. The Department of Business
Innovation and Skills (BIS) Output Price Index,
which measures changes in construction prices
for completed works, was used to revalue the
PFI assets and also specific fixture and fittings
assets, which relate to the specialised fit-out of
the Richard Ley Development Centre and the
contact centre. Freehold land was not revalued
at 31 March 2013 as the impact is considered
immaterial.
Plant and machinery, fixtures and fittings,
computer equipment, motor vehicles and office
equipment are revalued in accordance with
price indices published by the Office of National
Statistics (MM22 Producer Price Indices). The
exception to this is the revaluation of the
specialised fit-out of buildings; this has been
revalued for 2012-13 using BIS Output Price
Index which measure changes in construction
prices for completed works. Surpluses and
deficits arising on revaluation are taken to the
Revaluation Reserve. Where it is not possible
for any such deficit to be offset by previous
surpluses in the Revaluation Reserve it is
charged to revenue as are permanent
diminutions in the value of fixed assets.
Ownership of the Agency's assets is vested in
the Secretary of State.
The Agency's assets are grouped together for
the purposes of capitalisation when there is an
interdependency of the assets. The minimum
level for capitalisation as an individual non-
grouped asset is £5,000.
Non-current assets: intangible assets
The value of licences to operate the Driver and
Vehicle systems is capitalised. Software
development costs are capitalised, excluding
any costs incurred in the planning and design
stages of the project, which are clearly defined
and separate from the build phase of a project.
New expenditure on IT systems development is
written off in the period in which it is incurred,
unless a beneficial relationship to a future
period can be established with reasonable
certainty, in which case the charge is
capitalised. The Agency reviews its projects and
operational software for impairment and
revalue's its intangible assets annually based on
Depreciated Replacement Cost.
The value of the driver and vehicle databases,
cannot be estimated. The DVLA personalised
registrations database, including unallocated
vehicle registration marks, is a very large store
of possible combinations of alpha-numeric digits
and is affected by changes in opinion, taste and
judgement. As a result, the potential future
sales value is not recognised in the Agency's
Statement of financial position, as it cannot be
reasonably estimated.
Depreciation and amortisation
Depreciation is provided on intangible and
tangible non-current assets from the date they
are commissioned into operational service,
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DVLA Annual Report & Accounts 2012-13 61
except for computer equipment, which is
provided for at the date of purchase. When
assets are revalued the depreciation continues
on the revised value over the remaining useful
life of the relevant asset. The estimated useful
lives from new of the main categories of non-
current assets are:
Years
Plant and machinery
3-10
IT equipment
3-5
Purchased software
up to 10
Office equipment
5 -10
Software licences
3 -15
Fixtures and fittings
5 -10
Motor Vehicles
5 -10
The estimated remaining useful lives of
buildings on 31 March 2013 are
36 years Morriston site (excluding J and E
blocks)
32 years Richard Ley Development Centre at
Swansea Vale
21 years J and E blocks (Morriston site)
The estimated useful lives of assets are
reviewed regularly and, when necessary,
revised. Land (freehold and leasehold) is not
depreciated.
Leases
The Agency incurs operating lease rentals
which are charged to the Statement of
comprehensive net expenditure on a straight-
line basis over the lease term.
Leases in terms of which the Agency assumes
substantially all the risks and rewards of
ownership are classified as finance leases.
Upon initial recognition the leased asset is
measured at an amount equal to the lower of its
fair value and the present value of the minimum
lease payments. Subsequent to initial
recognition, the asset is accounted for in
accordance with the accounting policy
applicable to that asset. Minimum lease
payments made under finance leases are
apportioned between the finance expense and
the reduction of the outstanding liability. The
finance expense is allocated to each period
during the lease term so as to produce a
constant periodic rate of interest on the
remaining balance of the liability.
Early departure costs
The Agency provides for future annual
compensation payments to certain former
employees who have taken early retirement.
Compensation is payable from the date of
retirement until age 60.
The Agency is responsible for 20% of the
liability to former employees that took early
retirement between 1 October 1994 and 31
March 1996 and met certain criteria. This
liability is provided for within the early departure
provision. The remaining liability is met centrally
by the Civil Superannuation Vote. For
departures between April 1996 and March
1997, HM Treasury introduced capping
arrangements that limit the central contribution
for these departures to a maximum of £99,000
per annum.
The Agency announced a Voluntary Early
Retirement (VER) scheme in 2005-06 and a
Flexible Early Retirement (FER) scheme in
2009-10. The Agency is responsible in full for
the liability to former employees who take early
retirement under the VER and FER schemes
and provides for the liability within the Early
Departure Costs provision.
Future payments to be made under the Early
Departure and Voluntary Retirement schemes
are discounted at the HM Treasury advised rate
of 2.35% (2011-12: 2.8%).
Tax officers’ pensions and
compensation payments
The Agency makes payments in relation to
costs of former taxation officers employed by
local authorities prior to the creation of the
Driver and Vehicle Licensing Centre in 1972.
Certain individuals remained within the Local
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DVLA Annual Report & Accounts 2012-13 62
Government Pension Scheme. The Agency
contributes to the local authorities concerned
towards the annual cost of these pensions. The
Agency also makes compensation payments to
a number other individuals in respect of loss of
emoluments when the Local Taxation Offices
closed. A provision has been made for future
costs. An actuarial valuation is carried out every
three years to determine future liabilities, with
the latest valuation being carried out 31 March
2013.
Pensions
Present and past employees are covered by the
provisions of the Principal Civil Service Pension
Scheme (PCSPS). The defined benefit
schemes are unfunded and are non-contributory
except in respect of dependants‟ benefits. The
Agency recognises the expected cost of
providing pensions on a systematic and rational
basis over the period during which it benefits
from employees' services by payment to the
PCSPS of amounts calculated on an accruing
basis. Liability for payment of future benefits is a
charge on the PCSPS. In respect of the defined
contribution schemes, the Agency recognises
the contributions payable for the year.
Accounting for strategic IT outsourced
costs
The strategic IT contractor (IBM) supplies an
end-to-end outsourced IT service to DVLA,
including the provision of the physical IT
equipment. The risks and rewards of ownership
of that equipment remain with the contractor
and are therefore not capitalised on the DVLA's
Statement of financial position. Strategic
outsourced costs relating to the equipment are
charged to the Statement of comprehensive net
expenditure in line with the delivery of the
service. The financing arrangements mean that
a prepayment is set up and discounted over
time by 3.5%.
Research and development
We consider our expenditure each year to
determine if any is considered as Research and
Development. Expenditure on research is not
capitalised, we concluded that no intangible
assets have arisen as a result of development
undertaken by the Agency in the period of this
report or the prior year. Should the Agency incur
such costs our accounting policy would be as
described.
Expenditure incurred on pure and applied
research is treated as an operating charge in
the year in which it is incurred. Development
expenditure is for the development of specific
business systems. Expenditure which does not
meet the criteria for capitalisation is treated as
an operating cost in the year in which it is
incurred. Development costs meeting the
criteria for capitalisation are treated as
intangible fixed assets and amortised as
explained in the intangible non-current asset
note. Non-current assets acquired for use in
development are depreciated over the expected
useful life of the underlying system.
Private Finance Initiative (PFI) contract
for estates
On the 4 April 2005, DVLA entered into a 20-
year service concession agreement with
Telereal Trillium (formerly Land Securities
Trillium). This agreement falls within the scope
of IFRIC 12 Service Concession Arrangements
and has been set up to provide the following
property outsourcing solutions:
building maintenance
office moves
cleaning
catering and vending
furniture repair
furniture replacement
grounds maintenance
waste management and pest control.
DVLA are invoiced on a monthly basis and this
revenue expenditure is recorded as a service
charge in the Statement of comprehensive net
expenditure.
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As part of the contract, Telereal Trillium has
undertaken a refurbishment of the Swansea HQ
site. Where the work is capital in nature (air
conditioning, double-glazing, lifts and specialist
cabling), the costs have been capitalised on
Independent Assessors' sign off for each floor
as complete and ready for use. The air
conditioning, double-glazing and lifts are
depreciated over the length of the PFI contract.
The cabling is depreciated over its expected
useful life of ten years.
A PFI liability has been created to reflect the
liabilities relating to property, plant and
equipment paid for under the PFI unitary
charge. This creditor is reduced over the life of
the contract as payments are made. In
accordance with Government Financial
Reporting Manual requirements, the interest
element of the unitary charge relating to the
assets capitalised has been calculated using
the actuarial method.
Financial instruments
Financial instruments are contractual
arrangements that give rise to a financial asset
of one entity and a financial liability or equity
instrument of another entity. Financial assets
are typically cash or rights to receive cash or
equity instruments in another entity. Financial
liabilities are typically obligations to transfer
cash. A contractual right to exchange financial
assets or financial liabilities with other entities
will also be a financial asset or liability,
depending on whether the conditions are
potentially favourable or adverse to the
reporting entity.
Non-derivative financial assets comprise trade
and other receivables and cash and cash
equivalents. These are classified as loans and
receivables. The Agency initially recognises
these assets on the date that they are
originated, and derecognises them when the
contractual rights to the cash flows from the
asset expire.
Trade and other receivables are recognised
initially at fair value on the date that they
originated. Fair value is usually at the original
invoiced amount. Subsequent to initial
recognition they are measured at amortised
cost using the effective interest method, less
any impairment losses.
Non-derivative financial liabilities comprise trade
and other payables, obligations under finance
leases, obligations under on-balance sheet PFI
contracts and a loan from DfT. The Agency
recognises these liabilities initially on the trade
date at which the Agency becomes a party to
the contractual provisions of the instrument, and
derecognises when its contractual obligations
are discharged or cancelled or expired. Trade
and other payables are recognised initially at
fair value. Fair value is usually at the original
invoiced amount. Subsequent to initial
recognition they are measured at amortised
cost.
Impairment of financial assets
The Agency assesses at each balance sheet
date whether there is objective evidence that
financial assets are impaired as a result of one
or more loss events that occurred after the initial
recognition of the asset and prior to the balance
sheet date, and the loss event or events has
had an impact on the estimated future cash
flows of the financial asset or the portfolio that
can be reliably estimated.
The amount of the impairment loss is measured
as the difference between the assets' carrying
amount and the present value of estimated
future cash flows. The methodology and
assumptions used for estimating future cash
flows are reviewed regularly to reduce any
differences between loss estimates and actual
loss experience.
The Agency does not hold any derivative
financial instruments.
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DVLA Annual Report & Accounts 2012-13 64
Contingent liabilities
In addition to contingent liabilities disclosed in
accordance with IAS 37, the Agency discloses
for Parliamentary reporting and accountability
purposes certain statutory and non-statutory
contingent liabilities where the likelihood of a
transfer of economic benefit is remote, but
which have been reported to Parliament in
accordance with the requirements of Managing
Public Money.
Where the time value of money is material,
contingent liabilities which are required to be
disclosed under IAS 37 are stated at discounted
amounts and the amount reported to Parliament
separately noted. Contingent liabilities that are
not required to be disclosed by IAS 37 are
stated at the amounts reported to Parliament.
Use of estimates and judgements
The preparation of the financial statements in
conformity with International Financial Reporting
Standards requires management to make
judgements, estimates and assumptions that
affect the application of accounting policies and
the reported amounts of assets, liabilities,
income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimates are revised and in
any future periods affected.
Information about critical judgements in
applying accounting policies that have the most
significant effect on the amounts recognised in
the financial statements is included in the
following notes:
Note 12 - Provisions for liabilities and charges
Note 13 Commitments under leases
The critical assumptions and estimation
uncertainties that have a significant risk of
resulting in a material adjustment within the next
financial year relate to the estimated useful
economic life of intangible assets. These are
based on management‟s judgement of assets of
a similar nature and historical trends and are
revised where appropriate.
Shared Service Centre
The DfT SSC is based in one of DVLA‟s leased
buildings at Swansea Vale. The centre provides
a mix of human resources, finance,
procurement and payroll services to a number
of Business Units within DfT and became
operational in April 2007.
DVLA recharges DfT for the costs incurred on
its behalf in terms of staff, IT services and
accommodation, netting these costs in the
DVLA accounts to only show the DVLA
operational expenditure and separately
disclosing the full recharge from the SSC for the
services DVLA receives as a customer within
operating costs. Staff working at the SSC
remain on DVLA contracts of employment but
governance arrangements and line
management comes under DfT (Central).
Consolidated Fund Extra Receipts
Payments due to the Consolidated Fund from
the Business Accounts represent amounts in
excess of costs for DVLA personalised
registration/Cherished Transfer transactions.
The income from these transactions is only
deemed as due to the Consolidated Fund after
the recovery of these costs. The surplus
Consolidated Fund Extra Receipts are
recognised in the Statement of Taxpayers
Equity in compliance with the 2012-13 FReM.
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DVLA Annual Report & Accounts 2012-13 65
Note 2.Segmental reporting
(i) The element of CFERs due to the Consolidated Fund in respect of Cherished Transfers is
separately identified, to enable the reporting of the fees surplus position to the EB.
(ii) The increase in the provision for the transformation and modernisation of network costs in 2012-13
pertaining to Cherished Transfers is included in operating expenditure. In order to disclose the fees
surplus, as reported to the EB, this item has been deducted in this note as no income has been
retained this year. Income will be retained in relation to this provision increase in future years as the
provision is utilised.
DVLA complies with the cost allocation and charging requirements set out in the HM Treasury Fees and
Charges guide. The Agency's financial objective is to recover the full cost of keeping the vehicle and
driver registers, and fees (where applicable) are set to cover these costs. For fee setting purposes we
have a Section 102 order that allows us to pool these fees and costs; the total fees and costs are
disclosed in the Fees and Charges segment above.
The segments used reflect how management information is provided to the EB. An analysis of assets
and liabilities by segment is not regularly provided to the Chief Executive or EB.
2012-13
Operating
Segments
Fees and
charges
DVLA
personalised
registrations
VED Collection
VED
Enforcement
Total
£000
£000
£000
£000
£000
External revenue
400,622
67,760
-
4,120
472,502
Operational
Expenditure
(348,628)
(10,676)
(118,447)
(59,832)
(537,583)
Net operating cost
51,994
57,084
(118,447)
(55,712)
(65,081)
Memorandum items to monitor break even in fees and charges
Cherished Transfer
CFERs due to the
Consolidated Fund (i)
(43,163)
Increase in provision
(ii)
2,104
Fees surplus reported
to EB
10,935
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DVLA Annual Report & Accounts 2012-13 66
Restatement: DVLA now retains court costs awarded relating to enforcement cases. Previously this
income was paid over to HM Treasury, the new treatment allows closer alignment between costs and
income.
2011-12
Operating
Segments
(Re-stated)
Fees and
charges
DVLA
personalised
registrations
VED Collection
(Re-stated)
VED
Enforcement
Total
£000
£000
£000
£000
£000
External Revenue
396,066
68,648
-
3,826
468,540
Operational
Expenditure
(338,483)
(10,439)
(127,222)
(63,798)
(539,942)
Exceptional Costs for
Organisational
Restructuring (note 20)
(30,949)
-
(5,895)
(9,463)
(46,307)
Net operating cost
26,634
58,209
(133,117)
(69,435)
(117,709)
Memorandum items to monitor break even in fees and charges
Cherished Transfer
CFERs due to the
Consolidated Fund
(26,441)
Fees surplus reported
to EB
193
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DVLA Annual Report & Accounts 2012-13 67
Note 3. Staff numbers and related costs
Staff costs, excluding staff managed by DfT, comprise:
2012-13
Permanently
employed
staff
Short-term
employment
contract and
agency staff
Total
£000
£000
£000
Wages and salaries
125,681
2,370
128,051
Social security costs
8,203
83
8,286
Other pension costs
21,524
129
21,653
Total
155,408
2,582
157,990
2011-12
Permanently
employed
staff
Short-term
employment
contract and
agency staff
Total
Re-stated
Re-stated
£000
£000
£000
Wages and salaries
123,220
2,641
125,861
Social security costs
8,067
140
8,207
Other pension costs
21,115
350
21,465
Total
152,402
3,131
155,533
Re-statement: costs in relation to transformation and modernisation of network services of £24.5 million
(2011-12 : £27.7 million) and Voluntary Early Retirement of £0.8 million (2011-12 : £0.5 million)
previously classified as staff costs in Note 3 are now classified as Operating Costs and recognised in
Note 4 within net (decrease) / increase in provision required in year, and also in Note 12. This is to
ensure consistency on consolidation with DfT's accounts.
The staff costs of the permanently employed staff include the non-consolidated pay award, which in
2012-13 amounted to £6,130,642 (2011-12: £6,380,000). The non-consolidated pay is an integral part of
the Agency‟s reward structure. It is used to drive performance - it is not paid to staff who do not achieve
satisfactory levels of performance and has to be re-earned each year. The non-consolidated
performance pay quantum in total has been built up over a number of years by withholding an element of
the pay award agreed with HM Treasury to support the Agency‟s move to non-consolidated performance
payments to individuals. These payments are contractual and pensionable.
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DVLA Annual Report & Accounts 2012-13 68
DVLA staff working at the SSC but managed by
DfT are not included in the above costs for
either year as the recharges to DfT for their
salaries are excluded from the DVLA Statement
of comprehensive net expenditure and their
costs included directly in the DfT accounts.
The annual leave accrual at 31 March 2013 is
£3,787,000 (31 March 2012: £3,377,000).
The Principal Civil Service Pension Scheme
(PCSPS) is an unfunded multi-employer defined
benefit scheme but DVLA is unable to identify
its share of the underlying assets and liabilities.
The scheme actuary valued the scheme as at
31 March 2007. Consequently, a formal
actuarial valuation would have been due by 31
March 2011. However, formal actuarial
valuations for unfunded public service pension
schemes have been suspended by HM
Treasury on value for money grounds while
consideration is given to recent changes to
public service pensions and while future
scheme terms are developed as part of the
reforms to public service pension provision. The
primary purpose of the formal actuarial
valuations is to set employer and employee
contribution rates, and these are currently being
determined under the new scheme design.
Details can be found in the resource accounts
of the Cabinet Office: Civil Superannuation
For 2012-13, employers‟ contributions of £22.2
million were payable to the PCSPS (2011-12:
£22.3 million) at one of four rates in the range
16.7% to 24.3% (2011-12: 16.7% to 24.3%) of
pensionable pay, based on salary bands. The
scheme‟s Actuary reviews employer
contributions usually every four years following
a full scheme valuation. The contribution rates
are set to meet the cost of the benefits accruing
during 2012-13 to be paid when the member
retires and not the benefits paid during this
period to existing pensioners.
Employees can opt to open a partnership
pension account, which is a stakeholder
pension with an employer contribution.
Employers‟ contributions of £207,200 (2011-12:
£212,180) were paid to one or more of a panel
of three appointed stakeholder pension
providers. Employer contributions are age-
related and range from 3.0% to 12.5% (2011-
12: 3.0% to 12.5%) of pensionable pay.
Employers also match employee contributions
up to 3.0 % of pensionable pay. In addition,
employer contributions of £14,025, 0.8% (2011-
12: £14,941, 0.8%) of pensionable pay, were
payable to the PCSPS to cover the cost of the
future provision of lump sum benefits on death
in service and ill health retirement of these
employees. Contributions due to the partnership
pension providers at the reporting period date
were £Nil. Contributions prepaid at that date
were £Nil.
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DVLA Annual Report & Accounts 2012-13 69
3.1 Average number of persons employed
2012-13
Permanent
Staff
(FTEs)
Short-term
employment
contract and
agency staff
(FTEs)
Total
(FTEs)
Directly employed
5,425
99
5,524
Staff managed by DfT (SSC)
211
18
229
Total
5,636
117
5,753
2011-12
Permanent
Staff
(FTEs)
Short-term
employment
contract and
agency staff
(FTEs)
Total
(FTEs)
Directly employed
5,386
142
5,528
Staff managed by DfT (SSC)
231
7
238
Total
5,617
149
5,766
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DVLA Annual Report & Accounts 2012-13 70
3.2 Civil Service and other compensation schemes exit packages
2012-13
Exit package cost band (£)
Number of
compulsory
redundancies
agreed
Number of other
departures agreed
Total number
of exit
packages by
cost band
(Total cost)
<10,000
17
5
22
10,000 25,000
112
15
127
25,000 50,000
2
46
48
50,000 100,000
-
6
6
100,000 150,000
-
2
2
Total number of exit packages by type
131
74
205
Total resource cost (£)
1,951,362
2,593,352
4,544,714
Redundancy and other departure costs have been agreed in accordance with the provisions of the Civil
Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit
costs are accounted for in full in the year of departure. Where the department has agreed early
retirements, the additional costs are met by the department and not by the Civil Service pension
scheme. Ill-health retirement costs are met by the pension scheme and are not included in the table.
During the financial year 2012-13, three payments were made which were not covered by the Civil
Service Compensation Scheme. These ex-gratia payments were approved by HM Treasury, two less
than £10,000 and one between £10,000 to £25,000.
2011-12
Exit package cost band (£)
Number of
compulsory
redundancies
agreed
Number of other
departures agreed
Total number
of exit
packages by
cost band
(Total cost)
<10,000
-
8
8
10,000 25,000
-
4
4
25,000 50,000
-
1
1
Total number of exit packages by type
-
13
13
Total resource cost (£)
-
124,753
124,753
During the financial year 2011-12, 5 payments were made which were not covered by the Civil Service
Compensation Scheme. These ex-gratia payments, 4 between £10,000 and £25,000 and one between
£50,000 and £100,000 all for termination of employment, were agreed with HM Treasury.
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DVLA Annual Report & Accounts 2012-13 71
Note 4. Operating costs
2012-13
2012-13
2011-12
2011-12
£000
£000
£000
£000
Outsourced services
Re-stated
Re-stated
ICT Services
116,934
131,807
Post Office®
45,943
46,772
Wheelclamping
7,735
12,990
PFI Estates unitary charge
19,814
18,661
DVA (i)
11,810
11,560
Medical practitioners
13,504
10,651
Shared Services (ii)
6,752
6,117
222,492
238,558
Service delivery
Postal related expenses
33,292
31,232
Publicity and marketing
553
128
Non outsourced ICT
17,160
14,073
Stationery and printing
11,451
11,604
Blank cards
13,318
15,576
Credit Card Charges
12,759
12,446
Maintenance of machinery and vehicles
4,555
4,360
Consultancy
652
475
Professional Services
1,288
2,154
95,028
92,048
Accommodation
14,454
13,387
Staff related
4,376
3,561
Auditors remuneration
122
120
Other (iii)
1,844
1,734
Net increase in provisions (iv)
7,799
48,175
Total Operating costs
346,115
397,583
(i) These costs are provided in full detail in the DVA accounts, which can be obtained from DVA
Finance, County Hall, Castlerock Road, Coleraine BT51 3HS. The agreement is for DVLA to cover
the cost of the provision of services in Northern Ireland for the licensing and registration of vehicles
and collection of VED. This includes the enforcement of non-payment of VED, registration of new
and used vehicles, provision of a vehicles enquiry line and sale and transfer of personalised
registration marks.
(ii) DfT accounts for all SSC income and costs. Accommodation and IT services remain delivered
through DVLA contracts, and DVLA staff working at the SSC, managed by DfT remain on DVLA
contracts of employment (see Note 3). DVLA nets off the recharges to DfT prior to disclosure in its
accounts so that it presents only its own operating expenditure, showing then the full cost of the
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DVLA Annual Report & Accounts 2012-13 72
invoiced service it receives from the DfT SSC as part of its functional expenditure. DfT has signed a
contract to divest itself of the SSC with final handover scheduled for June 2013. From that date the
SSC will be managed by Arvato and the accounting treatment will change with the only element
impacting on DVLA being the charges from Arvato.
(iii) As an Executive Agency the auditor‟s remuneration is a notional fee for the DVLA Business
Accounts of £90,550 (2011-12: £89,200) along with a notional fee for the statutory audit of the Trust
Statement of £31,060 (2011-12: £30,600).
(iv) Includes amounts provided for the potential costs relating to the transformation and modernisation
of DVLA network services as detailed in Note 12 and Note 20. These were not previously
separately identified within this note but now are to ensure consistency on consolidation with DfT's
accounts. For comparability the figures for 2011-12 have been restated.
Note 5. Finance income/(costs)
2012-13
2011-12
£000
£000
Finance Income
Bank interest prior to revocation of Trading Fund status.
(related to 2010-11 brought to account in 2011-12)
-
14
Total finance income
-
14
Finance Costs
Interest on imputed finance lease element of on balance sheet
PFI contracts
(1,703)
(1,795)
Interest on finance lease liabilities
(22)
(11)
Interest on loan from DfT
-
(685)
Unwinding of discount and impact of changes in discount rate
on provisions
(342)
(298)
Total finance costs
(2,067)
(2,789)
Net finance costs
(2,067)
(2,775)
Following discussions with DfT and HM Treasury on the repayment of excess cash reserves, DfT waived
the interest payment of £0.6 million and agreed to the early settlement of the loan in 2013-14.
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DVLA Annual Report & Accounts 2012-13 73
Note 6. Property, plant and equipment
*AUC relates to Assets Under Construction
**IT relates to Information Technology
2012-13
Land
Buildings
(excl PFI
fit out)
**IT
Plant and
Machinery
Furniture
and
Fittings
(incl PFI fit
out)
Motor
Vehicles
*AUC
Total
£000
£000
£000
£000
£000
£000
£000
£000
Cost or valuation
At 1 April 2012
4,623
63,772
4,649
11,751
38,401
1,025
148
124,369
Additions
-
85
32
610
645
48
13
1,433
Disposals
-
-
-
(10)
(2,352)
-
-
(2,362)
Transfer
-
90
-
58
-
-
(148)
-
Revaluations
-
1,423
637
595
491
22
-
3,168
At 31 March 2013
4,623
65,370
5,318
13,004
37,185
1,095
13
126,608
Depreciation
At 1 April 2012
-
7,516
2,620
3,508
22,201
125
-
35,970
Charged in year
-
1,736
443
2,060
3,931
226
-
8,396
Disposals
-
-
-
(10)
(2,352)
-
-
(2,362)
Revaluations
-
-
359
147
180
3
-
689
At 31 March 2013
-
9,252
3,422
5,705
23,960
354
-
42,693
Net book value at
31 March 2012
4,623
56,256
2,029
8,243
16,200
900
148
88,399
Net book value at
31 March 2013
4,623
56,118
1,896
7,299
13,225
741
13
83,915
Asset financing
Owned
4,192
31,395
1,896
7,299
6,334
40
13
51,169
Finance Lease
-
-
-
-
-
701
-
701
On-balance sheet
PFI contracts
431
24,723
-
-
6,891
-
-
32,045
Net book value at
31 March 2013
4,623
56,118
1,896
7,299
13,225
741<