DVLA Annual Report
& Accounts 2011 - 12
HC256
Driver & Vehicle Licensing Agency
Annual Report & Accounts 2011-12
Presented to Parliament pursuant to section 7 of the Government
Resources and Accounts Act 2000
Ordered by the House of Commons to be printed 27 June 2012
HC256 London: The Stationery Office £29.75
CONTENTS
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CONTENTS
Contents
Chief Executive’s message
5
Highlights for the year
6
Key performance measures 2011-12
9
1. Directors Report
1.1 Who we are and what we do..................................................................................... 12
1.2 Managing our organisation ....................................................................................... 13
1.3 Our strategy .............................................................................................................. 16
1.4 Our people ................................................................................................................ 16
1.5 Transforming customer service ................................................................................. 17
1.6 Wider government objectives .................................................................................... 18
2. Management Commentary
2.1 DVLA operations ...................................................................................................... 20
2.2 DVLA change portfolio .............................................................................................. 22
2.3 Procurement and contract management ................................................................... 25
2.4 Finances and efficiency ............................................................................................ 26
2.5 Sustainability report .................................................................................................. 34
3. Remuneration Report
36
4. Accounts for 2011-12
4.1 Summary of accounts 2011-12 ................................................................................ 42
4.2 Statement of the Agency and Accounting Officer‟s responsibilities .......................... 42
4.3 Governance statement ........................................................................................... 43
4.4 Comptroller and Auditor General Audit Certificate Business Accounts ................. 55
4.5 Business Accounts .................................................................................................. 57
4.6 Comptroller and Auditor General Audit Report Trust Statement ......................... 101
4.7 Trust Statement ..................................................................................................... 103
Appendix
A. Comptroller and Auditor General Section 2 Report ................................................ 115
B. Accounts Directions .............................................................................................. 122
C. Sustainable performance ...................................................................................... 128
Glossary of terms
132
CONTENTS
Chief Executive’s message
DVLA Annual Report & Accounts 2011-12 5
Over the past 12 months the Agency has met or
exceeded 13 out of 14 key performance
measures and sustained its commitment to
customer service by exceeding all 19 customer
service measures, as well as all 8 customer
promises. This is a remarkable achievement in
its own right but I am delighted to say that we
have also continued to make good progress
with our ambitious programme of change and in
our drive for greater efficiency. In this regard, 14
projects have been successfully delivered this
year. The highlight was the launch of
Continuous Insurance Enforcement which will
deliver significant benefits for road safety whilst
helping to drive down the cost to the economy
of those who choose to drive whilst uninsured.
As for our efficiency drive, in the second year of
our five year programme to take £100 million
out of our cost base (against a 2009-10
baseline) the running total has reached £32
million, £12 million ahead of where we expected
to be at this stage.
A core activity for the Agency is the collection of
Vehicle Excise Duty (VED) and we passed an
important milestone in the year with the
collection of £6 billion of VED for the first time
ever. As regards our annual roadside survey
suggested that those who choose to evade
payment of their duty represented only 0.7 per
cent of the total duty collected. This is the
second lowest rate ever recorded.
More and more customers are taking advantage
of our electronic services and this year 53.7 per
cent of customers chose to transact with us
electronically. In particular our award winning
Electronic Vehicle Licensing service passed the
milestone of 100 million transactions completed.
In 2011-12 we reduced our carbon emissions
from building and business travel by 5.3 per
cent against a 5 per cent target.
In December 2011 we opened a consultation
exercise that sought the views of the public and
our stakeholders on the future shape of the
services currently provided from our network of
local offices and enforcement centres. This
potentially involves a transformation and
centralisation of the services currently provided
by them into Swansea. Our desire is to
modernise these services in order to improve
customer service and deliver them in the most
cost efficient way. This transformation will be a
fundamental part of our change journey over the
next few years and will contribute significantly to
our pledge to deliver the £100 million efficiency
savings by 2015. As I write these words, in May
2012, the consultation has closed and we are
analysing the responses so that a report can be
submitted to the Secretary of State for a
decision to made. An announcement on the
outcome will be made as soon as it is known.
Another successful year, I believe, achieved
through the commitment and efforts of our staff
and managers to whom I extend my sincere
thanks. We are all focussed now on
maintaining these high standards and delivering
the targets set out in our 2012-13 Business
Plan.
Simon Tse
Accounting Officer and Chief Executive
DVLA
Chief Executive's message
CONTENTS
Highlights for the year
DVLA Annual Report & Accounts 2011-12 6
Customer service
Customer promises
We met all eight Department for Transport (DfT)
customer promises.
Customer service measures
We exceeded all 19 customer service
measures.
Customer Service Excellence
In 2011, we retained our Customer Service
Excellence (CSE) standard accreditation and
achieved our best results yet.
DVLA has held the CSE standard since 2008
and before that Charter Mark from 1993, 18
years of awards for our focus on customer
service.
Operational results
We met 13 out of 14 of our key performance
measures.
Financial results
The Agency achieved £2.9 million surplus (see
Business Accounts Note 2) compared to a
projected £8.1 million surplus.
To date and against our 2010-11 financial
baseline we have delivered a sustainable
efficiency gain of £32 million, exceeding our
target which was £20 million by the end of
2011-12. The efficiencies achieved to date put
us slightly ahead of our plans to realise £100
million of annual operating cost reductions by
2015.
Vehicle Excise Duty (VED) Collection
DVLA collected £6 billion in VED, the highest
figure ever achieved and over £38 million in fine
and penalty income.
Electronic services
Electronic Vehicle Licensing
DVLA‟s Electronic Vehicle Licensing (EVL)
service has exceeded one hundred million
transactions since it was launched in February
2004. More than half of all motorists now use
our online or telephone service to tax or declare
Statutory Off Road Notification (SORN).
Wider government objectives
Continuous Insurance Enforcement
Continuous Insurance Enforcement (CIE) is a
joint government and insurance industry
initiative to combat uninsured driving, reducing
the burden on the honest motorist. In June
2011, the Motor Insurance Bureau issued the
first advisory letters to potentially uninsured
drivers. DVLA started issuing enforcement
letters in July 2011. For more information see
page18.
New links to improve accuracy and
efficiency
Since June 2011, a new electronic link to the
Department of Work and Pensions database
provides DVLA the facility to check an
applicant‟s identity through the submitted
National Insurance number. As a result the
success rate for first applications for a driver
licence has trebled. For further information see
pages 18-19.
Our contribution to the Government's
Transparency Agenda
In 2011-12, the Agency produced its first
electronic Business Plan. The plan provides
monthly/quarterly updates on performance
against our business objectives. Our corporate
documents are now more transparent and
accessible for the reader. For more information
on DVLA‟s Transparency Agenda visit
www.dft.gov.uk/dvla/about/transparency.
CONTENTS
DVLA Annual Report & Accounts 2011-12 7
Awards and accreditation
Electronic services award
DVLA‟s Electronic services won the Public
Value Award at the Civil Service Awards in
London in November 2011. Now in their fifth
year the awards provide the opportunity to
recognise the outstanding achievements of Civil
Servants.
Carbon Trust Standard
In 2011, DVLA was awarded the Carbon Trust
Standard for the first time as recognition for its
achievements in carbon reduction and
commitment to environmental improvements.
Two Ticks
The Agency has been re-accredited with the
Two Ticks „Positive about Disabled People‟
symbol in recognition of its actions to support
disabled people in the workplace.
DVLA accredited customer global
standard award.
DVLA‟s Contact Centre has been accredited
with the Customer Contact Association Global
Standard 5. This accreditation provides
recognition for the excellent work of the staff in
the Contact Centre and is strong evidence of
best practice and comparison of our positive
performance against other best public and
private contact centres.
Successful audit review
The Agency successfully maintained its ISO
27001 Information Security Management
Systems certification from the auditor appointed
by British Standards Institute in April 2011.
Information Fair Trader Scheme
In 2011, the Agency successfully re-gained
accreditation to the Information Fair Trader
Scheme (IFTS). The IFTS sets out the
regulations for those wishing to re-use public
sector information. These regulations
encourage organisations in the public sector to
make information available to support the UK
information business. They are based on the
principles of fairness, transparency,
non-discrimination and consistency. The aim is
to open up the market place for information
supporting the Government Transparency
Agenda
Government diversity award
In 2011, DVLA staff and Customer Diversity
Team were presented with the a:gender
Meerkat award by the then Permanent
Secretary Lin Homer. a:gender is the Civil
Service Transgender staff networking support
group and the award recognises the Agency‟s
work towards transgender equality to improve
the quality of information available to customers
and staff.
CONTENTS
DVLA Annual Report & Accounts 2011-12 8
Things we could have done better
Sustainability
In 2011-12 we reduced carbon emissions by
5.3 per cent slightly more than the 5 per cent
reduction planned for the year. Following an
adjustment to the 2010-11 performance, our
cumulative reduction is 7.1 per cent against a
target of 10 per cent. By 2015 we are aiming for
a 25 per cent reduction and have revised plans
to achieve this.
Sick absence
In 2011-12, the Agency narrowly failed to
achieve no more than 7.2 average working days
lost through staff sick absence coming in at
7.5.(7.12 in 2010-11). The Agency has
however, made great strides in reducing sick
absence over the years. Since 2005, by making
it a consistent management priority to manage
attendance carefully and support the health and
well-being of staff, DVLA has halved the
average working days lost to sickness. This
work was included as a case study of good
practice in a government commissioned report
“Health at Work an independent review of
sickness” published by Dame Carol Black and
David Frost CBE in 2011.
In 2012-13, we aim to reduce our sick absence
to no more than 6.9 days lost through:
active and sensitive management of
lengthier absence
the delivery of a „Changing Minds‟
programme to raise awareness of and
provide guidance and support for
mental health issues.
CONTENTS
Key performance measures 2011-12
DVLA Annual Report & Accounts 2011-12 9
2011-12
2010-11
Change
1
Achieved
DVLA started issuing
enforcement letters to
uninsured drivers
in July 2011
Not achieved
The first Insurance
advisory letters were
issued 3 months late
as a result of
legislative delay
Collection of VED
2
Achieved
£6 billion
Achieved
£5.8 billion and
through enforcement
action collected
£109.5 million over 3
years
Service delivery
3
Exceeded
98.9%
Exceeded
97.8% of cases
4
all 8 achieved
all 8 achieved
5
Exceeded
54.9%
Exceeded
51 % (against a
target of 49%)
6
Exceeded
5.3%
Not achieved
1.8%
7
Exceeded
98.1%
Exceeded
97%
CONTENTS
DVLA Annual Report & Accounts 2011-12 10
2011-12
2010-11
8
Exceeded
99.3%
Exceeded
96.7%
9
Exceeded
99.5%
Exceeded
99.7%
10
Exceeded
98%
Exceeded
98.6%
11
Exceeded
95.2%
Exceeded
86.9%
Financial performance
12
Exceeded
£32 million
Exceeded*
£2.9 million surplus
Exceeded
£46 million
(against 3 year target)
Exceeded
£24 million surplus
13
Exceeded
5,469
Full Time
Equivalents
Achieved
5,561.3
Full Time Equivalents
14
Not achieved**
7.5 days
Exceeded
7.12 days
* The Business Plan forecast was £8.1 million as a result of a £659 million total inflow of funds, but with a formal target provided by
the DfT expectation of breakeven on fees.
** see „Things we could have done better‟
CONTENTS
DVLA Annual Report & Accounts 2011-12 11
Customer service measures
Target
2011-12
Result
Driving licences
To deliver a first driving licence within 8 working days
98%
To deliver a vocational licence within 8 working days
98%
To deliver an ordinary driving licence within 10 working days
97%
To deliver a digital tachograph renewal in 8 working days
98%
Medical investigations
To conclude a simple case within 15 working days
88%
To conclude a complex case (one that requires further medical investigating) within 90 working
days
85%
Vehicle registration document
To deliver a first registration document, excluding cherished transfers, within 14 days
95%
To deliver a change on a registration certificate within 14 working days
95%
To deliver a registration document from an application (notifying changes to the registration
certificate) within 30 working days
95%
Vehicle excise duty refunds
To deliver a refund due within 30 working days
95%
Customer service
To answer call demand
95%
To deliver quality of service in the Contact Centre
85%
To answer an email within 3 working days
95%
Keep average local office queuing time to no more than 15 minutes
15.00
To deliver a cherished transfer within 7 working days
95%
Customer complaints
To acknowledge a complaint within 1 working day
100%
To maintain or improve on last year‟s performance sending a substantive response within 10
working days
98%
MP correspondence
To acknowledge correspondence within 1 working day
100%
To maintain or improve on last year‟s performance sending a substantive response within 7
working days
98%
Overall
To achieve
17 of 19
Exceeded
19 of 19
CONTENTS
1. Directors’ Report
DVLA Annual Report & Accounts 2011-12 12
1.1 Who we are and what we do
DVLA is an Executive Agency of the
Department for Transport (DfT) and is part of
the Motoring Services Directorate. For more
information on where we fit in Government, see
our Business Plan 2012-13
Our main headquarters is located in Swansea,
with a network of 39 local offices across the
country. At the end of March 2012, the Agency
was employing 5,469 Full Time Equivalent
(FTE) staff.
Our main responsibilities are to:
maintain 44.8 million driver records and
36.5 million vehicle records
collect £6 billion a year in vehicle excise
duty (VED)
limit tax evasion to no more than 1 per
cent
support the police and intelligence
authorities in dealing with motoring
related crime.
Each year we handle around 200 million
interactions with customers, including over 120
million transactions that include:
18.5 million drivers transactions
90.1 million vehicle transactions.
We issue:
10.1 million driving licences
17.6 million vehicle registration
documents.
We receive:
22.1 million phone calls
252,000 emails.
DVLA is leading the way in government in
providing electronic services to its customers.
For more information visit
www.direct.gov.uk//Motoring
Our vision is to be:
a modern, highly efficient
organisation, providing complete,
accurate and up to date
information and services that fully
meet customer and stakeholder
requirements.
Our key purpose is to:
keep complete, accurate registers
of drivers and vehicles and 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
keep road users safe and ensure
that the law is respected and
observed; allow us to collect
vehicle excise duty effectively, and
can be used to deliver other
government initiatives such as
traffic management and reducing
carbon emissions.
The purpose of this document
This Annual Report and Accounts should be
read in conjunction with the DVLA Business
Plan 2011-12. The Annual Report and Accounts
sets out our performance and achievements for
2011-12.
Our corporate documents are now available to
view on internet pages. This new format
provides the reader with useful links for
additional information, easier navigation and
transparency.
For more information about DVLA visit
http://www.dft.gov.uk/dvla/
CONTENTS
DVLA Annual Report & Accounts 2011-12 13
1.2 Managing our organisation
The Agency‟s Chief Executive and Accounting
Officer chairs an Executive Board (EB) of six
Executive Directors and two Non-Executive
Board Members.
The EB meets formally each month to discuss
the strategic direction of the agency and to
monitor the achievement of business objectives,
including progress against the major change
programme for the agency.
The EB also deals with operational issues that
are escalated from functional groups that
support it. These groups are accountable to
the EB for the delivery of the agency:
operational key performance measures
change programme
procurement activities
financial performance and forecasts.
In addition, the Chief Executive and six
executive members meet formally three times a
year to review the detailed financial
performance and agree any changes to forecast
and budgets for the rest of the year.
Risk management
DVLA‟s Audit Committee supports the Chief
Executive with advice on matters of governance
and adequacy of controls in terms of operations
and risk management.
The EB reviews the corporate risks monthly and
provides guidance to managers on how to
respond to the risks they have identified. The
risk policy, generic risks and risk horizon
scanning is refreshed annually.
For more information, see our Governance
Statement on pages 43 to 54.
Meet our Executive Board
CONTENTS
DVLA Annual Report & Accounts 2011-12 14
Executive Board Members
Simon Tse
Simon joined the DVLA in 2008 as Chief
Operations Officer. In May 2011, he was
appointed Chief Executive Officer. Simon is a
business professional with a strong record of
accomplishment in modernisation, cost
efficiency, customer focus and quality of
service, gained in highly competitive private
sector markets.
Previous employment includes Managing
Director, Wales and West (1998) and Business
UK, Board Director (2001) both with Virgin
Media.
Simon is also actively involved in local initiatives
and current roles include a Non Executive
Director of the Hill Community Development
Trust, Swansea; and a Board Member for
Maggie‟s Cancer Caring Centre, Singleton
Hospital, Swansea. Previously Simon was
Senior Executive on the Board of Directors for
Clyne Energy Ltd, Advisory Board member for
the Business in the Community Wales; Chair of
West Wales Confederation of British Industry
(CBI), Founder Director of Wales North America
Business Council; Trustee Ty Hafan Children‟s
Hospice.
David L Evans
David joined DVLA in 2005 as Central
Operations Director. He then worked for three
years as Corporate Affairs Director. He took
over his current role as Transformation Director
in January 2012, responsible for the alignment
and co-ordination of change to achieve the
Agency‟s strategic direction by 2022. David has
over 20 years business delivery and change
management experience in the public sector
and has led business start up and merger
activities. He has a background in the Whitehall
and Brussels policy worlds.
Judith Whitaker
Judith joined DVLA in 2008 as HR and Estates
Director from the Audit Commission where she
was Area Performance Lead and joint inspector
with Office for Standards in Education.
In May 2011, she was appointed Chief
Operating Officer: her key responsibility is to
ensure the delivery of all the Agency‟s customer
facing transactions. Judith is also Senior
Responsible Owner (SRO) for the Efficiency
Programme. Judith brings to the Agency her
experience of multi-agency working including
health, local and central government and Non-
Departmental Public Bodies. She has been an
examiner for the Chartered Institute of
Personnel and Development (CIPD) and is
currently on the national CIPD Advisory Panel.
Phil Bushby
Phil joined DVLA in January 2012 as Director of
HR and Estates. Phil was previously HR and
Estates Director at Companies House. Prior to
his time at Companies House, Phil worked for
17 years within the logistics industry for Exel,
WH Smith News and Dalsey, Hillblom and Lynn
(DHL). He joined Exel originally as a Graduate
trainee where he undertook a range of general
management roles before moving into HR in
1994. During his time with Exel, he became a
member of the Chartered Institute of Personnel
and Development (CIPD), which he upgraded to
„Fellow‟ in 2009. Phil has a wide range of
experience across the HR disciplines and has
led a number of significant change programmes
over the past 10 years.
Hugh Evans
Since joining DVLA in 1976, Hugh has
successfully undertaken a wide range of roles
including operations and project management,
systems development and testing, efficiency
and process improvements and policy.
Prior to joining the Executive Board Hugh had
fulfilled the Head of Policy role for eight years.
During this period, he led the policy team
through periods of major change, ensuring the
agency‟s policies are in line with government
commitments and the necessary legislation is
changed or put in place to accommodate this.
Hugh also takes the lead for DVLA in helping to
maintain the productive working relationship
with the European Commission and with
CONTENTS
DVLA Annual Report & Accounts 2011-12 15
registration authorities based in other EU
Member States. He has great experience and
knowledge of the Agency‟s culture and
business, which he now brings to the Executive
Board.
Paul Evans
Paul was appointed as DVLA Chief Information
Officer (CIO) in 2009. He is responsible for all
DVLA IT services and development
programmes delivered through an internal team
and an outsourced contract with IBM.
He has a post graduate diploma in computing
and spent 12 Years as Head of IT UK and in
CIO Roles. Paul is also a member of the DfT
senior CIO team and is the DfT lead for
Government Data Centre, G-Cloud and Apps
store initiatives and is a member of the
Government CIO Council.
Ieuan Griffiths
Ieuan is both a Chartered and Public Finance
accountant, with nearly 20 years of experience
of leading public sector change and major
procurement negotiations. He has been in his
current post in DVLA since 2001 and has
authored the Agency‟s journey from paper to
electronic links and transactions.
He came into the public sector, initially as
Finance Director of a University Hospital Trust,
in 1994 having previously been a director in the
business and IT strategy consultancy of
Coopers & Lybrand. He has Cambridge and
Bristol degrees in mathematics and holds a
doctorate in Change Management. He was a
member of the UK Accounting Standards Board
Public Sector Committee for 10 years and more
recently member of the Treasury Financial
Reporting Advisory Board for five years.
Ieuan is a member of Companies House Audit
Committee and a Non-Executive member of the
Higher Education Funding Council for Wales.
Non-Executive Board Members
Jim Knox
Jim was previously a Senior Partner at PA
Consulting Group where he headed the
company‟s government consulting practice.
During his consulting career, Jim led a series of
complex procurement and change initiatives for
a variety of public sector organisations.
Jim was recruited as a DVLA Non-Executive
Board Member, partly on the basis of his
expertise in outsourcing and IT-enabled
business change. Jim is also a special advisor
to the National Audit Office on selected value
for money reviews. Jim has Chief Executive
Officer experience, formerly leading ProcServe,
a supplier of electronic commerce systems to
both private and public sector clients. Jim has a
MSc. in Operational Research (1990) from the
London School of Economics and a BA (Hons.)
in Politics, Philosophy and Economics (1985)
from Lincoln College, Oxford.
Michael Brooks
Michael was appointed as DVLA Non-Executive
Board Member and Audit Committee Chairman
in October 2009. He has managed a wide range
of finance activities in a number of different
environments including start-up situations and
established businesses. He has an MSc in
Accounting and Finance (1987) from the
London School of Economics and is a Fellow of
the Chartered Institute of Management
Accountants, the Association of Chartered
Certified Accountants and the Institute of
Directors. In addition to his role as Chair of the
DVLA Audit Committee, he has been appointed
by the Driver and Vehicle Agency in Northern
Ireland to chair its own Audit Committee, which
also includes two other independent members.
As DVLA Audit Chair, he also serves ex officio
as a member of the Department for Transport
Group Audit Committee.
CONTENTS
DVLA Annual Report & Accounts 2011-12 16
1.3 Our strategy
The Agency‟s overall aim is to improve road
safety while increasing efficiency and making
services easier and more secure for its
customers.
The government‟s modernisation agenda has
been underway for some time and DVLA are
working fully in line with the Governments Open
Public Service White Paper and the
Government ICT and Digital by Default
strategies. It has led the way in government
e-services and volume transaction handling.
In 2012, the Agency appointed a
Transformation Director to focus on the
continuity required to deliver our strategic
direction, including the £100 million per annum
savings (compared to the 2010-11 baseline) by
2014-15.
Our progress towards our strategic goals for the
year includes the following achievements:
The savings against our five year plan
to reduce operational expenditure by
£100 million a year (against our
2010-11 baseline) have reached £32
million at the end of 2011-12. This
saving is annual and not one off.
Major steps in restructuring our
operational structures, due for
completion in 2012. This will provide a
more efficient flow of customer
transactions.
An increased range of transactions
available online.
A success in working with our partners
across government as we:
- launched Continuous Insurance
Enforcement with the Motor
Insurance Bureau
- established an electronic link to the
Department of Work and Pensions
database.
A setting of firm foundations for the
contract let of our major ICT and Front
Office Counter Service contracts.
Red Tape Challenge
The Agency‟s Strategic Direction proposes a
number of changes to help reduce the burden
of regulation and support the Government
sponsored Red Tape Challenge simplifying and
reducing legislation and the burden on our
customers.
Transforming DVLA services
In December 2011 we opened a consultation
exercise that sought the views of the public and
our stakeholders on the future shape of the
services currently provided form our network of
local offices and enforcement centres. This
potentially involves a transformation and
centralisation of the services currently provided
by them into Swansea.
These proposals respond to changing customer
needs and expectations, making it easier for
customers to conduct their business with the
Agency, reducing costs for both customers and
the Agency. This will include increasing the
range of transactions that can be carried out
online or through trusted intermediaries. The
consultation has closed and responses are
being analysed and a report is to be submitted
to the Secretary of State. The result of the
consultation exercise is due later in 2012.
Next steps
For more information see our Business Plan
2012-13
1.4 Our people
During the year, the Agency‟s HR policy team
has supported the development and
implementation of DFT wide policies.
DVLA is committed to providing learning and
development opportunities for staff. During the
year we:
designed a Front Line Manager
programme of events for roll out in
2012-13
delivered two successful internal talent
programmes and completed a graduate
scheme
CONTENTS
DVLA Annual Report & Accounts 2011-12 17
provided opportunities for staff to
participate in vocational qualifications
and designed business specific
indicators for specialist areas.
In 2011-12, the Agency re-structured its
communications to improve engagement with
staff through a range of internal channels.
The Agency carried out two staff surveys during
the year:
Civil Service Survey 2011
Results showed:
- engagement increased from 54 per cent
to 55 per cent
- participation increased by 4.6 per cent
(13 per cent since 2009)
- the highest score: 88 per cent of staff
said they have the skills to do their job
DVLA People Survey 2012
Results showed:
- Over 3,000 took the time to complete
the survey
- DVLA‟s overall engagement index is 55
per cent up by 1 per cent on last year
During 2012-13, the Agency analysed the
results of the surveys and will continue working
with current initiatives, exploring new ways of
improving engagement and staff satisfaction.
DfT work placements
In 2011-12, the Agency hosted 122 work
placements. The programme will continue into
2012-13 to reach its target of 355. Job Centre
Plus reported that 70 out of the 122 participants
found work during and following these
placements.
Health and Safety
In 2011, DVLA renewed its Health and Safety
policy in line with the Occupational Health and
Safety management system standard (OHSAS
18001). A guide on Health and Safety
responsibilities was subsequently issued to all
our managers.
During the year, we delivered communication
campaigns to all staff on Health and Safety
issues including face to face communications
on policy and responsibilities.
There have been no improvement or prohibition
notices and the Agency remains compliant with
health and safety legislation. A representative
from the Health and Safety Executive visited the
Agency during the year, resulting in positive
feedback on how we are dealing with accidents
in the workplace.
Diversity
DVLA equality policies promote and support
diversity and equal opportunity in the
workplace. During 2011-12, the Agency
developed Diversity Arrangements for 2012-16.
For more information visit
http://www.dft.gov.uk/dvla/Diversity
In 2011-12 the Agency carried out its second
Staff Disability Survey. Early results show that
satisfaction levels have improved from the 2010
survey.
1.5 Transforming customer
service
In 2011-12, the Agency continued to work to
improve and transform its customer services.
What the customer wants
The Agency carried out a number of customer
surveys during the year. Evidence gained from
these surveys was analysed and used to
improve processes, services and customer
satisfaction.
In 2011, we carried out an electronic survey to
identify why some customers abandoned their
transaction when using the drivers online
facility. Using results from the survey, we are
working to help identify „hot spots‟ to improve
the customer journey and to encourage more
customers to transact online.
In 2012-13 we will continue to use current and
explore new methodology to improve customer
service. This will include the introduction of the
CONTENTS
DVLA Annual Report & Accounts 2011-12 18
„Voice of the Customer‟ a new interactive based
survey that occurs after a call to our contact
centre.
New channel for tachograph cards
In June 2011, the Agency responded to
customer requests to introduce a telephone
channel to renew tachograph cards. Over 50
per cent of customers now use this service, with
around 50,000 applications made to date.
First call resolution
DVLA‟s contact centre dealt with 966,554
transactional calls, a substantial increase on the
700,000 figure in 2010-11. This resulted in an
increase in first call resolution and increased
customer service reducing the number of paper
transactions received.
Improving accuracy of our records
DVLA‟s key purpose is to keep complete and
accurate registers of drivers and vehicles so
that they are as flexible and accessible to those
who have the rights to use them.
In 2011-12, we exceeded our objective to
improve the accuracy of the vehicle record.
98.9 per cent of keepers can now be traced
from the details held on our vehicle record
against a target of 95 per cent.
In 2012-13, we will develop an action plan to
deliver improvements in the accuracy of the
driver record.
Roll out of new red registration
certificates
In October 2011, DVLA started issuing a new
red Vehicle Registration Certificate (V5C) as
part of the accelerated roll out to customers.
This new version has been introduced to reduce
the risk of motorists buying a stolen or cloned
vehicle following the theft of a number of blank
blue certificates from the printers who supply
DVLA with the documents. An information
leaflet explaining this was provided with the new
documents.
We have now issued over 29 million new
certificates. Roll out is expected to continue
throughout 2012.
1.6 Wider government objectives
During the year and in response to the Cabinet
Office Digital by Default agenda, the Agency
worked closely with Government Digital
Services and others across government to seek
opportunities to reduce overall cost and improve
customer service.
Stay insured Stay legal
Uninsured vehicles on the road cost the
insurance industry £500 million a year. This
translates to an extra £30 per policy for the
innocent motorist. It is an offence to use a
vehicle on the public road without a valid
insurance certificate. For more information visit
directgov/stay insured
Each month DVLA compares its records with
the insurance database held by the Motor
Insurance Bureau. If a vehicle is not insured or
the keeper has not declared Statutory Off Road
Notification (SORN) then action is triggered.
In 2011-12, 330,000 insurance advisory letters
were issued and as a result over 120,000
enforcement cases were opened by DVLA. As
well as directly drawing vehicle keeper‟s
attention to their legal responsibility to maintain
continuous insurance cover, the Agency
collected £1.6 million of revenue for Treasury
from fine income.
Identity checks prove successful
Online driving licence applications now ask
customers to provide their National Insurance
number. In June 2011, a new electronic link to
the Department of Work and Pensions
database provided DVLA the facility to check
and applicant‟s identity. As a result of this, the
success rate of a first application for a driving
licence has trebled.
This new link is helping to improve accuracy,
deliver efficiency savings for DVLA, improve the
CONTENTS
DVLA Annual Report & Accounts 2011-12 19
customer online experience and results in a
reduction in calls to our contact centre. It also
helps to safeguard the identity of our customers
and helps prevent the hijacking of identities. For
more information on DVLA services visit
www.direct.gov.uk/Motoring
Tell us once
From September 2011, a notification of
bereavement sent to the Department of Work
and Pensions by Local Authority Registrars is
automatically sent to DVLA to update our Driver
record. This facility means that the next of kin is
not required to notify DVLA, reducing the
burden of completing additional paperwork.
Over 80 per cent of Local Authorities now
provide the „Tell Us Once‟ service and the
Agency currently receives an average of 1,200
notifications a week.
Customer diversity
In 2011-12 DVLA hosted its first customer
focused diversity conference, highlighting
customer issues and actions. A range of
specialist speakers attended the conference to
raise awareness of diverse customer
requirements and actions required to support
improved customer service. During 2012-13 the
Agency will take forward this work to implement
improvements.
Disclosure of information to auditors
The Accounting Officer (AO) is not aware of any
relevant information of which the auditors are
unaware and 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.
CONTENTS
2. Management Commentary
DVLA Annual Report & Accounts 2011-12 20
2.1 DVLA operations
This section of the report comments on transaction volume trends, agency workforce, our change
portfolio, efficiency, income and expenditure and sustainability.
Transaction volumes
First applications for a driving licence have continued to remain stable at just over one million a year.
Vehicle volumes have increased slightly with vehicle first registrations falling by 0.3 per cent when
compared with 2010-11(almost 20 per cent below the levels prior to 2007).
2010-11
Actual
2011-12
Actual
2012-13
Business Plan
Vehicle volumes
99,859,095
100,982,270
103,671,564
Driver volumes
15,393,658
15,609,638
16,890,684
Electronic take up target
49%
53%
54%
Electronic take up (actual)
51%
53.7%
n/a
In 2011-2, the Agency received 22,120,739 million customer enquiries to its contact centre, a drop of
1,369,555 (5.8 per cent) from the previous year. DVLA local offices dealt with 2,224,181 visits for its
counter services. The average queuing time within the local office was 10 minutes 34 seconds, an
increase of 40 seconds (6.46 per cent) compared to the previous year.
In addition to the high volume of routine calls and correspondence, the Agency has to reply promptly to
Members of Parliament or to complaints from customers. During the year our performance was:
2011-12
Parliamentary
Questions
MP
Correspondence
*
Official
correspondence
**
Freedom of
Information
Replies to
complaints
Target
85% within
due date
85% within 7
working days
80% within 20
working days
93% within
20 working
days
98% within
10 working
days
Total
received
139
1,597
820
501
2,894
Missed
1
7
16
6
10
* See Glossary of Terms
** DVLA target is to provide a response to DfT within 7 working days as part of the overall 20 working day target.
CONTENTS
DVLA Annual Report & Accounts 2011-12 21
Public Sector information
As a holder of some of Government‟s largest databases registers of vehicles and drivers - the Agency
charge for the release of information in line with guidance from HM Treasury and the Office of Public
Sector Information. In 2011-12 we carried out an annual review of our fees and charges. No changes
were made, although a consultation exercise on the subject is anticipated in 2012-13.
During 2011-12 there were nine low level data breaches involving individual personal records. None of
the breaches required the Information Commissioner‟s Office (ICO) to be informed, though we did so in
line with best practice. There is no suggestion that any of these information breaches could have been
used to facilitate financial fraud against customers or third parties.
Workforce
In 2011-12 the Agency continued to reduce the size of its workforce (92.3 FTE less than 2010-11),
mainly as a result of productivity, process automation and channel shift. We achieved a reduction in staff
numbers to 5,469 full time equivalents as at 31 March 2012 against the 2011-12 projection of 5,480.
CONTENTS
DVLA Annual Report & Accounts 2011-12 22
2.2 DVLA Change portfolio
As DVLA approaches the end of its current IS/IT support contract in 2015, it is making decisions about
the priority and sequencing of all work, to provide for a clean transition between existing and future
support arrangements. The Government‟s efficiency and digital agendas continue to drive the direction
and pace of Agency developments and are helping us to make the case that we must offer innovative
and effective services which are convenient for our customers.
Performance against change 2011-12
Milestone dates
Performance
2011-12
1.Efficiency Programme
Electronic Services and Intermediaries
Northern Ireland Vehicle Information System migration to
Vehicle System Software (VSS)*
Migration of Northern Ireland (NI) Vehicle Systems to VSS.
Incorporation of bar coding on all re-licensing for NI and
preparation for migration on NI Vehicle records
Full migration
complete
April 2013
June 2013
Driver licence renewal online
April 2011
Achieved
Courts update for driver records online
March 2012
Achieved
Tachonet renewal over the telephone
August 2011
Achieved
Tachonet sent to home address (if meets certain criteria)
March 2012
Achieved
Extension of Post Office® Driver services for Ten Year Renewals
March 2012
Achieved
Enhancement of online Fleet services
March 2012
November 2013
Change of keeper and vehicle details online: feasibility and
design
July 2013
July 2013
Process Re-engineering
Change processes to allow for centralisation of functions
Ongoing
Ongoing
Wheelclamping
April 2012
April 2013
Internal process review
Ongoing
Ongoing
Review and re-appraisal of refunds processes and Direct
Debits**
December 2012
Ongoing
Revised by HMT
Smart Forms
Intelligent forms for online usage
March 2011
Ongoing
Direct printing of forms at the Post Office®
April 2011
March 2013
Scanning improvements to extend automation
May 2011
Not going forward
following
feasibility study
Workforce Productivity
HR Next Generation HR restructuring and cross-DfT working
August 2011
Achieved
Management training to raise effectiveness
April 2012
Achieved
CONTENTS
DVLA Annual Report & Accounts 2011-12 23
Centralise and automate management information (My Stats)
July 2011
December 2012
Review of workforce capacity and capability
November 2011
Ongoing
Income Generation
Sale of previously issued registration numbers
June 2011
To be agreed
Driver Licence Check feasibility study for pilot roll-out
To be agreed
To be agreed
2. Mandatory Programme
EU Third Drivers Directive systems changes (excepting
RESPER)
Fully live January
2013
January 2013
Continuous Insurance Enforcement
Full capacity
December 2011
Achieved
Insurance Company enquiries to validate data for quotations
Fully live October
2013
June 2014
Accelerated roll-out of new V5C documents
October 2011
Ongoing
Implementation of Budget changes for 2011
April 2011
Achieved
Enquiry facilities for private enforcement of vehicles on private
land
March 2012
Achieved
3. Infrastructure Programme
Replacement of Current Photograph Store
Replacement of current „Natural Image‟ software to bring current
software into Fujitsu support
December 2011
December 2013
Payment Card Data Security (PCDS) standards
Joint project with DWP to ensure that the Agency‟s systems are
compliant with the Payment Card Industry Data Security
Standards (PCI-DSS) as mandated by the industry
December 2012
Achieved
DWP Link
Link DVLA with the DWP customer database (CISx) to validate
customer identity when establishing new driver records
June 2011
Achieved
Driver Medical: e-services
Feasibility study on options to introduce online services for
renewal of short period driver licences for medical reasons
March 2012
Ongoing
Weblogic Update
Move from the current version of the Weblogic software (which
underpins all DVLA e-transactions)
June 2011
Achieved
Desktop Update
Completion of the move from Windows 2000 and Novell
GroupWise to Windows Vista and MS Outlook. Rationalisation of
desktop build
June 2011
Ongoing
Data Centre Consolidation
Migration of remaining services to the new DVLA data centres
June 2012
December 2012
CONTENTS
DVLA Annual Report & Accounts 2011-12 24
from Salford scheduled for demolition
Migration from obsolete DVLA data facilities into new DVLA data
centres in Swansea
May 2012
October 2012
Technical ICT Equipment Refresh
Large scale refresh to update main vehicles systems equipment
to remain within support contracts
Ongoing
Ongoing
Hardware and software update for internal casework systems
November 2011
December 2012
Security Updates and Improvements
Identity and access management implementation of access
management systems to remedy weaknesses identified
September 2013
Ongoing
(restructured)
Technical vulnerability reduction restructuring of network and
application architecture to improve security controls and
compartmentalisation of systems
February 2011
Achieved June
2011
Security software updates, new security related installations and
work to address specific security issues identified by review
Ongoing through
year
Ongoing
4. ICT Contracts Procurement Programme
Engage with DfT family to confirm the policy and subsequent
strategy for initial programme structure and governance
April 2011
Achieved
Set up Core Team (circa 20 staff)
September 2011
Achieved
Procurement and engagement of specialist support
September 2011
July 2012
Legal review of contract and exit terms
December 2011
Achieved
Review and decision on future requisition and contract structure at
high level
February 2012
Achieved
Definition of scope of data centre consolidation for DVLA
March 2012
Achieved
Cross-Agency development plans for data centre consolidation
March 2012
June 2012
*Project re-aligned from Infrastructure to Efficiency Programme
**After joint consideration with HM Treasury, Direct Debits was not taken forward in 2012 and will be subject to a HMT review
following amendments in the April budget.
CONTENTS
DVLA Annual Report & Accounts 2011-12 25
2.3 Procurement and contract management
In 2011-12 DVLA awarded or extended 78 contracts valued at around £325 million. The Agency also
developed and increased its capability to manage key suppliers making the best use of their skills and
capabilities, actively contributing to the management and mitigation of the Agency‟s commercial risks.
During the year we:
Delivered projected savings of over £55 million from our contracts in year, around £10 million of
which represents a recurring annual contribution towards our £100 million efficiency target.
In line with the Cabinet Office measures for our commercial activity, ensured compliance with
the Government‟s Transparency Agenda in advertising contracts and publishing contract award
information.
Proactively engaged with Cabinet Office Crown Representatives on commercial activities,
including ICT, Mail, and SME contracting.
Acted as procurement lead for high value pan-Government contracts for polycarbonate cards
and for credit/debit card transaction services.
Led the negotiations on behalf of the DfT for supply contracts in the areas of printing, postage
and recruitment.
Awarded a new contract for wheelclamping which has been operational since November 2011.
The Contract includes provisions to enable action to be taken against uninsured vehicles, in
addition to its core purpose of acting against unlicensed vehicles, if and when required by the
Agency.
Contributed to the Government‟s Small and Medium Enterprises (SME) agenda by publication of
a DVLA SME strategy and by taking a proactive approach to engaging with small and medium
sized businesses through various events.
Prepared the ground of our major ICT and Front Office Counter Services contracts (the latter on
a pan-Government basis), comprehensively consulting with the market and key stakeholders in
government.
DVLA Estate
Following successful delivery of an Estates Transformation Programme, DVLA now has modern and
flexible accommodation that has helped reduce its running costs by over £20 million over 10 years.
The Agency has introduced initiatives that are considered best practice for space standards and
utilisation well ahead of Government Property Unit targets. The introduction of non-territorial working
across the Swansea campus sites has contributed to space standards now averaging at 8 square
metres per workstation with utilisation as low as 6 square metres per FTE in some locations. Over
11,600 square metres of accommodation has been vacated and returned to landlords. This is equivalent
to a 14 per cent reduction of the Swansea Headquarters accommodation.
During 2011-12:
DVLA actively promoted sharing of vacant space at a number of its local offices including HM
Revenue and Customs and the Crown Prosecution Service. As a result of this our running costs
have been reduced, helping other departments vacate their existing premises which in turn, has
reduced the overall size of the wider civil estate.
CONTENTS
DVLA Annual Report & Accounts 2011-12 26
Utilised our extensive meeting and conference facilities for other government departments.
Consolidated our joint working with the UK Border Agency and Identity and Passport Service,
who now operate a customer facing operation from our Swansea Estate.
We have continued to improve the environmental performance on our estate, for more
information see pages 34 to 35.
2.4 Finances and efficiency
Financial Performance
The Agency Accounts are made up of the Business Accounts and the Trust Statement.
The Trust Statement brings to account the revenue collected by the Agency that is due to the
Consolidated Fund. It incorporates the Licence Fees and Taxes from Vehicle Excise Duty and Fines and
Penalties from Enforcement.
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). These are funded from fees and cost recovery
charges.
Collection and enforcement of vehicle excise duty (VED), which is covered by Supply Funding
(parliamentary voted funds).
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.
The Agency is required to breakeven year on year. It is only the fee funded operations that can give rise
to a true surplus, although the Agency has a duty to achieve breakeven over a period of time. In setting
our annual budgets, we allow for a certain amount of unforeseen costs and unanticipated drops in
customer demand (leading to decreases in income) so that we can get as near to breakeven as
possible. Small percentages of change in either income, which is demand led, or of costs can lead to
swings in the bottom line that are significant, due to the scale of its income and expenditure.
Business accounts
In our Business Plan 2011-12 we estimated a small surplus of £8.1 million and this compares to the
actual outturn surplus of £2.9 million, (see Business Accounts - Note 2). The outturn surplus variance (of
0.8 per cent compared to income turnover for the year) is used by our Executive Board as one of the
measures of the effectiveness of our financial budgeting and control mechanisms.
We successfully delivered a result that was close to the Business Plan 2011-12 through increasing our
cost savings, even though we recognised £46.3 million for potential costs of transforming our services
(see page 27) for future organisational changes that was only partly offset by a £11 million increase in
income. These costs have been scored against the relevant expenditure categories (see also Business
Accounts - Note 13).
CONTENTS
DVLA Annual Report & Accounts 2011-12 27
Income
Compared to the Business Plan 2011-12, our fee income was up by £11.0 million. This net increase
included:
an increase in 'Other Income of £17.6 million, mainly accounted for by a demand led increase in
Cherished Transfer volumes over initially estimated amounts
a small increase in Vehicle First Registration income of £4.4 million, due to a small additional
recovery in new vehicle sales
a decrease in Drivers related income of £11.0 million, the majority of which was due to lower
volumes in First Applications, Exchanges and Renewals and the anticipated Vocational Fee
changes that did not reach expectations.
Expenditure
The total direct expenditure for the year of £586.2 million included exceptional cost recognition for the
organisational restructuring needed to transform DVLA services estimated at £46.3 million. The
remaining business as usual outturn of operational expenditure at £539.9 million was £16.5 million less
than our Business Plan 2011-12. This was mainly due to the re-prioritisation of our Strategic Agenda and
our continued drive towards reducing costs which included major reductions in accommodation, printing
and postage, and staff related 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 our website.
performance against our prompt payment target for payment of suppliers within five days was
95.2 per cent exceeding the target of 80 per cent.
Transforming DVLA services
A consultation paper on transforming DVLA‟s services through centralisation of services, supported by
the increased use of intermediaries and electronic channels was launched in December 2011 (see
pages 17 to 18). Millions of motorists are set to benefit from greater choice and flexibility in how they
deal with the DVLA under the proposals.
The Secretary of State will decide the way forward taking into account the many responses received, the
benefits foreseen and the overall Government drive to decrease its costs whilst safeguarding the quality
of services provided. If adopted, the proposals would change the shape of the Agency and provide
efficiency savings of around £28 million a year. The potential transitional costs of £46.3 million have
been provided for in the 2011-12 accounts (see Business Accounts Note 13).
CONTENTS
DVLA Annual Report & Accounts 2011-12 28
Efficiency
The Agency‟s current efficiency aim is to achieve £100 million in operating costs savings by 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 2011-12 was £20 million. The reported efficiency
delivered as at the end of March 2012 is £32 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 pages 9 to 11), suggests the Agency has achieved these savings without impacting
on its quality of service.
A new programme structure was established during the year aimed at driving efficiency and greater
technical resilience whilst still complying with mandated/legislative organisational change. The Agency
also started to prepare the ground for its IS/ICT contract let, the outsource service contract that critically
underpins its operations and comprises today of nearly one-third of its operational costs. This is an
ambitious programme aimed at enabling the Agency to best manage its development in IS/ICT, meeting
the Government ICT strategy and providing the necessary flexibility and value for money tools to drive
efficiencies in the future.
The efficiencies delivered are focussed on productivity. As time progresses, the proportion of major
transformational change based 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 and
realise channel shift efficiency has to be supported by a robust, rationalised IS/ICT infrastructure.
The efficiency achieved in 2011-12 was made by reducing the Agency‟s operational expenditure by:
Reviewing internal business as usual processes.
Channel shift from expensive, resource intensive manual routes to less expensive electronic
methods. From the baseline position in 2010-11, £2.3 million of efficiencies have been
generated through channel shift building on previous efficiency gains in this area.
Driving efficiencies through re-negotiation and re-tendering our contracts, for example we have
negotiated significant savings in our IS/ICT service provision (around £7.5 million that meet the
criteria for the current target). In addition the Agency Merchant Acquirer agreement was re-let
resulting in significant Agency and cross government price reductions (the full benefit of the
changes will not be apparent until 2012-13).
A more radical transformational change through our efficiency programme. For example a
consultation exercise was initiated in 2011-12 aimed at reviewing the way in which we can
transform our services (see page 16).
A review of our policies and procedures, for example by changing the policy on marketing to
low/no cost alternatives the Agency has generated savings (around £10 million) and by
minimising travel further reductions in operational expenditure have been made.
CONTENTS
DVLA Annual Report & Accounts 2011-12 29
Vehicle Excise Duty (VED) collection and enforcement collection
Gross VED receipts in 2011-12 amounted to over £6 billion for the first time ever, with refunds
amounting to £203 million. This is the largest net total ever collected by the Agency.
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2008-09
2009-10
2010-11
2011-12
£Million
Vehicle Excise Duty collected
Gross VED receipts
Refunds
Net VED receipts
Electronic Vehicle Licensing (EVL) transactions have increased to 57 per cent of all VED transactions
undertaken. Take up is based on the number of EVL transactions compared to the volume of reminders
issued. The Automated First Registration and Licensing transaction continues to be undertaken
(88.6 per cent of all new licensing) through our electronic channel.
CONTENTS
DVLA Annual Report & Accounts 2011-12 30
0
20
40
60
80
100
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Forecast
%
Vehicle Excise Duty Collected by Channel
AFRL
Tel Relicensing
EVL
Fleets
Post Office
Local Office
Transaction volumes
The key transaction categories included in the VED Service Level Agreement accumulate to a total of
53.36 million transactions.
CONTENTS
DVLA Annual Report & Accounts 2011-12 31
Cost of collection
In 2011-12, the costs of Vehicle Excise Duty (VED) collection was £127.8 million (against a budget of
£128.6 million), comprising of a direct revenue expenditure of £124.4 million and capital expenditure of
£3.4 million in respect of VED ICT system changes.
DVLA has continued to deliver significant cost reductions through channel migration for VED collection,
especially when the public sector deflator is taken into account. This has been possible through channel
shift to electronic services.
In terms of costs of collection (pence per £1 VED collected) bearing in mind that Statutory Off Road
Notification and refund costs are also included, as are costs of issuing „nil value‟ tax discs for exempted
categories of vehicle keepers (mainly disabled keepers or cars initially registered before 1973, see
accounts for details), the profile in cash terms without adjusting for inflation is shown in the Unit Cost of
VED Collection table below.
-
0.5
1.0
1.5
2.0
2.5
3.0
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Cost - Pence per £1 VED collected
Unit Cost of VED Collection
Enforcement
National statistics following the 2011 roadside survey estimated that VED compliance increased slightly
from 99.1 per cent in 2010-11 to 99.3 per cent in 2011-12, resulting in the second highest collection rate
the Agency has achieved. Operational data since the survey results suggests this rate is continuing to
improve and evasion continues to fall. It was estimated that only £40 million was lost through evasion in
2011-2012, compared with £46 million in 2010 2011. A proportion of this initially uncollected revenue
was subsequently recovered through DVLA enforcement activity. The survey continues to show a high
level of compliance and we continue to review and revise our enforcement strategy to keep evasion low.
DfT have decided to undertake the roadside survey every two years instead of annually, so the next
survey will be carried out in 2013.
Automated Number Plate Readers
The Agency‟s static Automatic Number Plate Reader cameras encourage compliance and relicensing by
issuing keepers of unlicensed vehicles a warning that their vehicle has been seen unlicensed on the
road. To date, almost 59,000 letters have been issued to keepers identified as untaxed and of those
55 per cent have relicensed their vehicles. Work is progressing to gain Home Office Type Approval to
enable prosecution activity to be undertaken.
CONTENTS
DVLA Annual Report & Accounts 2011-12 32
DVLA has also been working closely with the Cabinet Office Behavioural Insight Team which is tackling
cross government debt and efficiency opportunities. As part of that activity DVLA has trialled the use of
images on specific Automated Number Plate Readers (ANPR) letters dispatched which has
demonstrated a 33 per cent improvement on results. DVLA is also a member of the Cross Government
Debt working group sponsored by the Cabinet Office.
Wheelclamping
In 2011-2012 there were 61,677 vehicles wheelclamped as a result of non payment of the vehicle excise
duty (VED) by the registered keeper, in addition 16,773 enforced notices were placed on unlicensed
vehicles, a reduction from the previous year. This reflects the reduction in evasion, transition to a new
contractor and a change in policy, where vehicles are now clamped after two months of being
unlicensed, as opposed to previously one month.
Debt collection
DVLA‟s debt collection agents have continued to exceed their contractual targets for 2011-2012,
collecting £7.2 million gross in unpaid Continuous Registration (CR) penalties. Over 1.7 million unpaid
CR cases have been passed to debt collectors since the contract started in 2008, raising £34.3 million.
Continuous Insurance Enforcement
In 2011-12, over 330,000 Insurance Advisory letters were issued to registered keepers of vehicles who
were identified as potentially not insured. On receipt, almost two-thirds (64 per cent) of registered
keepers reacted immediately to make sure that their vehicles complied with the requirements of CIE. For
those that did not, DVLA created over 120,000 enforcement cases, which collected over £1.6 million in
revenue. For more information see page 18.
CONTENTS
DVLA Annual Report & Accounts 2011-12 33
Cost of Enforcement
The costs of enforcement for 2011-12 were £59.9 million against the plan of £69.3 million. Changes in
expenditure were due mainly to decrease in wheelclamping costs (investment costs and volume
related). Additional staff costs relating to CIE were subsumed into current staffing levels and other
general expenditure reductions. Compared to the deflation adjusted costs in 2004-05 the actual costs
each year are analysed in the table below showing a 36 per cent real reduction over five years.
CONTENTS
DVLA Annual Report & Accounts 2011-12 34
2.5 Sustainability Report
The Government has reduced its carbon
emissions by 13.9 per cent, exceeding the 10
per cent target set by the Prime Minister in May
2010. DVLA achieved a 10.3 per cent reduction
playing a big part in this by contributing to
around 70 per cent of DfT‟s savings.
In 2011-12, our Business Plan set out a number
of stretching objectives around sustainability.
During the year we:
were placed in the top three of the UK
Carbon Reduction Commitment
performance league
retained ISO14001 certification for the
11th year
were awarded a Gold level certificate
from South West Wales Integrated
Transport Consortium for DVLA‟s Travel
Plan
exceeded six out of seven Greening
Government Commitments
(see Appendix C).
Socially driven
We set out in our Business Plan 2011-12 how
we would continue our commitment to the
well-being of staff and our commitment to work
placements from the local area (see pages 16
to 17). During the year, the Agency has
facilitated workshops on environmental
management, including inviting local schools
into DVLA to see how we work. We actively
encourage key suppliers/providers to engage
with the local community who play a
fundamental role in assisting with links into the
community.
In 2011-12, the Agency‟s waste management
company held recycling campaigns to raise
money for local charities.
Economically sound
Value for money is still a key driver to ensure
our customers are getting the most out of public
services. The Agency has worked closely with
other government departments to share
accommodation. This has reduced duplication
of processes and the time taken for customers
to interact with government departments (see
pages 18 to 19).
DVLA considers its sustainability agenda to be
an integral part of ensuring value for money.
Linking environmental practice with economic
practice often provides the best benefit, for
example our initiative to make duplex printing
(printing on both sides of paper) as the default
setting on all of our printers has saved £68,000
a year and 31,000 reams of paper.
Environmentally responsible
DVLA‟s Environmental Management System is
well established, ensuring that we are in control
of our legislative compliance and continual
improvements.
In response to the Greening Government
Commitments, the Agency has developed plans
in four key areas. The plans define how we will
meet the reductions required by 2014-15 (from
the 2009-10 baseline). Monitoring against these
plans has already shown that we are doing well
in most areas.
The four key areas are to:
cut carbon from the estate and business
related travel
reduce the amount of waste generated
reduce water consumption
embed sustainable procurement
Carbon from the estate
In 2011-12 the Agency achieved a 5.3 per cent
reduction in carbon from its estate. We are,
however, behind on our target to reduce carbon
by 10 per cent from the 2009-10 baseline.
We have produced firm plans for achieving the
longer- term target of a 25 per cent reduction in
tCO2e (tonnes of Carbon Dioxide equivalent)
from our estate by 2014-15. These plans
include:
CONTENTS
DVLA Annual Report & Accounts 2011-12 35
Optimising the way we utilise our self-
generated electricity in our Swansea
site. This revision of the way the excess
heat is used from these generators will
provide a reduction in the amount of
tCO²e and the total cost of energy we
consume.
We will reduce the total number of
actual servers by using software which
will allow one physical server to host
many virtual servers.
Replacing our mains transformers with
modern more energy efficient units.
If the result of transforming DVLA
services consultation exercise (see
page 16) is to proceed with the
proposal, the rationalisation of the local
office network will also provide a
reduction in energy consumption.
Carbon from business related travel
In 2011-12, our Business Plan objectives were
to:
reduce emissions from road travel by
five per cent
reduce the number of hire cars we use
and change our pool cars to low
emission hybrid vehicles
focus on improvements to the amount
of air and rail travel undertaken.
We have achieved all targets resulting in a
43 per cent reduction (from the 2009-10
baseline), exceeding already the 2011-15 target
of a 25 per cent reduction. Further work will be
carried out over the next year to centralise
travel management allowing greater control and
scrutiny of travel.
Waste minimisation
In 2011-12, our Business Plan Objective was to:
reduce five per cent a year annually to
achieve a 25 per cent reduction of
waste.
We have reduced our waste again this year and
are now producing 13.7 per cent less waste than
in 2009-10.
In 2011-12 our Business Plan objective was to:
reduce paper consumption by 10 per
cent relative to 2009-10 levels.
We achieved 47.4 per cent against the 10 per
cent target.
Recycling
In 2011-12, we introduced a food composting
scheme for our main site resulting in 6.72 tonnes
of food waste. We are continuing to achieve an
80 per cent rate of recycling.
Water
The Government commitment was to reduce
water consumption to meet the best practice
guidelines. Our average for the whole estate is
now at 4m3 per Full Time Equivalent (FTE). This
is in line with the best practice guidelines. By the
end of 2014-15, we aim to improve on this and
achieve a consumption level of 3.32m3 per FTE.
Sustainable procurement
From a commercial perspective, DVLA has made
considerable progress in delivering against and
maintaining a programme of work that supports
sustainability. This has seen the introduction of
engagement with the market. All specifications
are reviewed for their compliance with the
sustainability agenda, prior to issue of tenders.
This element of the procurement cycle is
supplemented by the endorsement of the
specification by our sustainability manager.
The DVLA standard terms and conditions are
issued as part of the tender documentation. The
standards contain specific provision for suppliers
to abide by the Government Sustainability
Agenda. In addition, the evaluation process is
explicit that the assessment of bids must include
whole life costing, for example from
implementation to disposal of a product.
CONTENTS
3. Remuneration Report
DVLA Annual Report & Accounts 2011-12 36
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. The Review Body also advises the
Prime Minister from time to time on the pay and
pensions of Members of Parliament and their
allowances; on Peers' allowances; and on the
pay, pensions and allowances of Ministers and
others whose pay is determined by the
Ministerial and Other Salaries Act 1975.
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
http://www.ome.uk.com/.
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 38 to 41.
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 per cent of Senior
Civil Servant. They are made to reward in-year
performance in relation to agreed objectives, or
short-term personal contribution 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.
Civil Service pensions
Pension benefits are provided through the Civil
Service pension arrangements. From 1 October
CONTENTS
DVLA Annual Report & Accounts 2011-12 37
2002, 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 and
classic plus are increased annually in line with
changes in the Pension increase legislation.
New entrants after 1 October 2002 may choose
between membership of premium or joining a
good quality „money purchase‟ stakeholder
arrangement with a significant employer
contribution (partnership pension account).
Employee contributions are set at the rate of 1.5
per cent of pensionable earnings for classic and
3.5 per cent for premium and classic plus.
Benefits in classic accrue at the rate of 1/80th of
pensionable salary for each year of service. In
addition, a lump sum equivalent to three years'
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
(but members may give up (commute) some of
their pension to provide a lump sum). Classic
plus is essentially a variation of premium, but
with benefits in respect of service before
1 October 2002 calculated broadly in the same
way as in classic.
The partnership pension account is a
stakeholder pension arrangement. The
employer makes a basic contribution of
between 3 per cent and 12.5 per cent
(depending on the age of the member) into a
stakeholder pension product chosen by the
employee from a selection of approved
products. The employee does not have to
contribute but where they do contribute, the
employer will match these up to a limit of 3 per
cent of pensionable salary (in addition to the
employer's basic contribution). Employers also
contribute a further 0.8 per cent of pensionable
salary to cover the cost of centrally provided risk
benefit cover (death in service and ill health
retirement).
Cash equivalent transfer values
(CETV)
Cash Equivalent Transfer Value 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. The CETV figures,
and from 2003-04 the other pension details,
include the value of any pension benefit in
another scheme or arrangement which the
individual has transferred to the Civil Service
pension arrangements and for which the CS
Vote has received a transfer payment
commensurate with the additional pension
liabilities being assumed. They also include any
additional pension benefit accrued to the
member as a result of their purchasing
additional years of pension service in the
scheme at their own cost. CETVs are calculated
within the guidelines and framework prescribed
by the Institute and Faculty of Actuaries.
Real increase in CETV
This reflects the increase in CETV effectively
funded by the employer. It takes account of 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.
CONTENTS
DVLA Annual Report & Accounts 2011-12 38
Remuneration of the Executive Board Members - audited
Bonuses relate to those paid in 2011-12. The bonus to be paid in 2012-13 is yet to be determined. There
were no benefits in kind. None of the exit package costs disclosed in Business Accounts - Note 3 relate
to Executive Board members.
2011-12
2010-11
Salary
£000
Performance
Bonus
£000
Salary
£000
Performance
Bonus
£000
Chief Executive
Noel Shanahan (to May 2010)
-
-
10-15 (105-
110 full year
equivalent)
5-10
Simon Tse
(from May 2010)
95-100
-
90-95
5-10
Executive Board
Members
David L Evans
Transformation Director
(Corporate Affairs to
December 2011)
80-85
-
80-85
5-10
Hugh Evans Corporate
Affairs (from December 2011)
15-20
(65-70 full year
equivalent)
0-5
60-65
0-5
Paul Evans
Chief Information Officer
90-95
15-20
90-95
15-20
Ieuan Griffiths
Finance & Strategy
90-95
5-10
90-95
5-10
Judith Whitaker
Chief Operating Officer
(from May 2010); HR
&Estates (to May 2010)
80-85
-
80-85
0-5
Eddie March
HR and Estates
(from May 2010 to January
2012)
45-50
(60-65 full year
equivalent)
0-5
60-65
-
Phil Bushby - HR and Estates
(from January 2012)
15-20 (60 - 65
full year
equivalent)
-
-
-
CONTENTS
DVLA Annual Report & Accounts 2011-12 39
Remuneration of Chief Executive audited
2011-12
2010-11
Salary
£000
Performance
Bonus
£000
Salary
£000
Performance
Bonus
£000
Simon Tse (from
May 2010)
Salary
100
-
94
7
Pension
Contributions
36
-
34
-
136
-
128
7
Noel Shanahan
(to May 2010)
Salary
-
-
11
10
Pension
Contributions
-
-
3
-
-
-
14
10
CONTENTS
DVLA Annual Report & Accounts 2011-12 40
Remuneration of the Non-Executive Board Members - audited
Median staff pay multiples
From 2011-12 reporting bodies are required to disclose the relationship between the remuneration of the
highest paid director in their organisation and the median remuneration of the organisation's workforce
The banded remuneration of the most-highly paid Director in the Agency in the financial year 2011-2012
was £105,000 to £110,000. This was 5.37 times the median salary of the workforce, which was £20,030.
The banded remuneration of the most-highly paid Director in the Agency in the financial year 2010-2011
was £105,000 to £110,000. This was 5.40 times the median salary of the workforce, which was £19,900.
In 2011-12, two (2010-11: two) employees received remuneration in excess of the highest-paid director.
Remuneration ranged from £120,000 to £135,000 (2010-11: £120,000 to £135,000)
Total remuneration includes salary, non-consolidated performance related pay, benefits-in-kind as well
as severance payments. 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.
2011-12
2010-11
£000
£000
Michael Brooks
20-25
20-25
Jim Knox
15-20
20-25
CONTENTS
DVLA Annual Report & Accounts 2011-12 41
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
2011-12
£000
2011-12
£000
2011-12
£000
2010-11
£000
2011-12
£000
2011-12
£000
Noel Shanahan
-
-
-
129
-
-
Simon Tse
2.5-5.0
20-25
203
166
3
21
David L Evans
(0-2.5)
lump sum
(0-2.5)
20-25 plus
70-75 lump
sum
382
355
1
4
Paul Evans
2.5-5.0
5-10
72
42
3
24
Ieuan Griffiths
0-2.5
lump sum
(0-2.5)
40-45 plus
60-65 lump
sum
849
758
3
24
Judith Whitaker
0-2.5
40-45
283
254
3
7
Eddie March
0-2.5
5-10
70
56
2
8
Phil Bushby (i)
0-2.5
0-5
68
67
1
-
Hugh Evans
(0-2.5)
lump sum
(0-2.5)
30-35 plus
90-95 lump
sum
600
526
1
(11)
(i) The figure for 2010-11 relates to the CETV when Phil Bushby joined the Agency in 2011-12
Figures in brackets refer to decreases in value.
The actuarial factors used to calculate CETVs were changed in 2011-2012. The CETV figures at 31
March 2011 and 31 March 2012 have both been calculated using the new factors, for consistency. The
CETV at 31 March 2011 therefore differs from the corresponding figure in last year‟s report which was
calculated using the previous factors.
Simon Tse
Accounting Officer and Chief Executive DVLA
13 June 2012
CONTENTS
4. Accounts for 2011-12
DVLA Annual Report & Accounts 2011-12 42
4.1 Summary of accounts
The Agency accounts for 2011-12 are made up of
the Business Accounts and the Trust Statement.
The revocation of Trading Fund Status of the
Agency came into force on the 1 April 2011. It
remains an Executive Agency of the Department
for Transport. An impact of the revocation is that
the Agency no longer receives SLA funding for its
VED collection and enforcement activities, but in
its place receives supply funding voted by
Parliament in the Supply Estimate for the
Department for Transport (DfT). This funding is
brought into account in the Statement of changes
in taxpayers' equity.
Whilst the Agency recognised DfT funding as
SLA income in 2010-11, accounts for this period
have been re-stated to reflect the change in
status and the impact of supply funding on the
2010-11 result. Amounts previously recognised
as Government Grant have been transferred to
the General Fund in line with the change in
funding arrangements for the Agency.
The change has resulted in the Agency
recognising net comprehensive expenditure
position in its primary statement, produced to
ensure compliance with the HM Treasury
Accounts Direction and the FReM. However, in
order to manage the supply estimates
requirement of a nil DEL impact on its Fees
activities, the Agency has taken the decision to
continue to recognise the funding as income
within its internal reporting and as a result also for
segmental reporting purposes. The internal
reporting is reflected in Note 2 with the result for
the year of £2.9 million surplus reported to the
Executive Board (2010-11: £23.3 million).
The movement from Business Plan forecast to
outturn surplus (Business Accounts - Note 2) for
2011-12 has been discussed in the Management
Commentary.
4.2 Statement of the Agency 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; and
prepare the financial statements on a
going concern basis.
The Accounting Officer for the Agency is
appointed by the Permanent Secretary of the
Department for Transport. 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.
CONTENTS
DVLA Annual Report & Accounts 2011-12 43
Trust Statement
Under the Exchequer and Audit Departments Act
1921, HM Treasury has directed the Driver and
Vehicle Licensing Agency (DVLA) to prepare a
Trust Statement for each financial year detailing
the revenue and expenditure in respect of Vehicle
Excise Duty (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;
disclose and explain any material
departures in the Trust Statement.
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.
4.3 Governance Statement
1. Accounting Officer Introduction:
scope of responsibilities
Managing Public Money (MPM) summarises the
purpose of the Governance Statement (GS) as
being to record the stewardship of the
organisation to supplement the accounts,
providing a sense of how successfully it has
coped with the challenge it faces. As
Accounting Officer for the Driver & Vehicle
Licensing Agency (DVLA), I have responsibility
for maintaining a sound system of internal
control that supports the achievement of DVLA
policies, aims and objectives, whilst
safeguarding public funds and assets for which I
am personally responsible, in accordance with
the responsibilities assigned to me in MPM. As
Accounting Officer of an Executive Agency of
Department for Transport (DfT) I am
responsible through the Permanent Secretary to
the Secretary of State and onwards to
Parliament.
DVLA is sponsored through the Motoring
Services Directorate of DfT. Our sponsoring
directorate acts across Driving Standards
Agency, Vehicle & Operator Services Agency,
Vehicle Certification Agency and Government
Car & Despatch Agency in addition to DVLA, so
not only manages performance but also co-
ordinates our collective direction and strategy.
Our sponsor, the Managing Director of Motoring
Services, is supported in terms of advice and
management by the Motoring Services Board
upon which I sit together with four 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 vehicle
excise duty throughout the UK. Our sponsor
and I regularly meet ministers to discuss
progress, performance and key risks.
CONTENTS
DVLA Annual Report & Accounts 2011-12 44
Driver licensing in Northern Ireland is a
devolved power and is undertaken by a
separate executive agency, 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
vehicle excise duty in Northern Ireland lies
directly with the DfT Secretary of State functions
discharged by DVA, through DVLA managed
Service Level Agreements.
2. The DVLA Executive Board
I have appointed six Executive Directors of the
Agency and two independent Non-Executive
Board Members to an Executive Board (EB)
that I chair. The EB meets formally each month
to review and manage:
Service delivery: including the identification of
management actions to address the key
operational issues and monitor delivery of plans
for outputs, finance, headcount and resources.
Strategic direction and plans of the Agency:
including oversight of the Agency‟s change
agenda and progress against the Strategy and
Business Plan.
The six Executive Directors have specific areas
of functional responsibility:
Chief Operating Officer (COO): Judith Whitaker
(previously HR&E Director);
Finance & Strategy (F&S): Ieuan Griffiths;
Human Resources & Estates (HR&E): Phil
Bushby (previously HR Director at Companies
House);
Chief Information Officer (CIO): Paul Evans;
Corporate Affairs: Hugh Evans (acting)
(previously Head of Policy);
Transformation: David L Evans (previously CA
Director). This is a new post to reflect the scale
of the change agenda and co-ordinate
Programmes of work.
The EB bring a good mix of previous knowledge
and experience from a wide range of other
organisations both public and private sector,
equipping them well to work with both sectors
as an Executive Agency. With the exception of
our new HR&E Director, the team has worked
together for nearly four years and has a clear
corporate vision and focus. The EB works
entirely within the Civil Service definitions of
ethics and values. Short EB member
biographies are included in the Annual Report.
3. The DVLA 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.
4. How the Executive Board works
EB meetings consider reports provided and
issues escalated from a number of sub-boards,
each chaired by EB members:
Operations Board (COO)
Agency Change Board (fed by the four
Programme Boards, with their own Project
Boards) (Transformation)
Commercial Board (F&S)
Finance Committee (F&S).
CONTENTS
DVLA Annual Report & Accounts 2011-12 45
Our sponsor directorate helps ensure that
sufficient priority is afforded to operational
delivery, progress towards Business Plan
targets and management of risks to
achievement through monthly challenge
meetings with myself and the F&S Director.
There are formal quarterly sponsorship
meetings with the Managing Director of
Motoring Services myself and my F&S Director.
Also, there are 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.
We report monthly to our sponsor directorate on
progress against the Business Plan and to DfT
Finance on progress towards financial targets
and for cash forecasting. We contribute monthly
to DfT transparency reporting on 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 (ExCo) and Group
Audit Committee as appropriate.
I formally agree specific targets and success
criteria with each EB member at the start of
each year, directly from our published Business
Plan. I meet each member individually on a
monthly basis to assess progress against
objectives. During the last year we instituted
external feedback on corporate performance
within our EB meetings. I meet regularly with
the Non-Executive Board Members to review
their performance and ensure the Civil Service
Code is met but with a positive aim to ensure
that we gain greatest value from their external
perspectives and experience.
5. Risk Management
The Agency‟s system of internal control is
designed to manage risk to a reasonable level
rather than to eliminate all risk of failure to
achieve policies, aims and objectives. It can,
therefore, only provide reasonable and not
absolute assurance of effectiveness. The
system of internal control is based on a
continuing process designed to identify and
prioritise the risks to the achievement of DVLA
and DfT policies, aims and objectives, the
likelihood of those risks being realised and the
impact should they be realised, and to manage
them efficiently, effectively and economically.
We do not try to eliminate all error and fraud
CONTENTS
DVLA Annual Report & Accounts 2011-12 46
with certainty as this would not be a cost-
effective or even possible objective. The
balance achieved is kept under regular review
as circumstances change and new issues arise.
The EB provides guidance and leadership to
managers on how to respond to risks they have
identified by owning and managing key risks as
well as issuing an explicit DVLA risk appetite
profile to guide others. The Agency‟s risk
appetite is set by the EB according to the five
categories of risk:
- Reputation: Cautious (preference for
safe options that offer a low degree of
residual risk and may offer limited
reward).
- Operations: Open (willing to consider all
potential delivery options and choose
one most likely to result in success).
- Change Programmes: Open.
- Finance/value for money: Cautious.
- Legal/regulatory: Minimal (chose safe
option with low degree of inherent risk).
This is refreshed at least annually and is linked
to the appetite expressed by DfT Risk Officers
and Directors who meet monthly to discuss their
own individual Directorate risks, together with
monitoring the actions on risks escalated to the
DVLA Corporate Risk Register for which the
individual members are responsible. The EB
formally discuss high level corporate risks each
month, concentrating on progress with the
actions to avoid and mitigate the key risks. All
risks have mitigating plans in place with
responsibility for delivery clearly assigned. All
corporate risks are allocated to specific EB
members. Staff guidance on risk management
is available on the DVLA Intranet for comment,
contribution and information. Risk policies and
processes are supported and maintained by
Strategic Planning Group which is responsible
for advising on corporate risk management and
the escalation of risks from the risk and control
framework to the EB and, if relevant, to DfT.
This system of internal control has been in
place in the Agency for the year ended 31
March 2012 and up to the date of approval of
the Annual Report and Accounts, and accords
with HM Treasury guidance relating to corporate
governance and management of risk. DVLA
maintains risk registers at each level, including:
a) Programmes and Projects: All
programmes and projects are overseen by
Programme Boards and our Agency Change
Portfolio Office (ACPO). Processes and
registers conform to guidelines on the
Management of Risk set by the Cabinet
Office‟s Efficiency Review Group (ERG). All
Boards review their risk registers at each
meeting and escalate risks that need wider
handling.
b) Operational activities: Each Directorate
maintains a Directorate Risk Register. These
are all reviewed by the responsible Director
and their management teams and updated at
least monthly.
c) Corporate activities: The Corporate Risk
Register contains risks with an exposure
higher than defined by DVLA‟s risk appetite
profile. Risks include those escalated from
directorate and programme registers, those
added by EB members as a result of
individual concerns or following the horizon
scanning exercise which occurs twice each
year and those raised by any individual
directly with the Agency Risk Manager.
d) External Escalation: Risks with the
potential to impact on the other motoring
agencies or the wider DfT, because of scale
or nature, are escalated through our sponsor
directorate.
A formal self assessment process resulting in
individual management assurance statements is
required for all Directors and Senior Managers
in which they acknowledge their accountability
and assess the quality of risk management
under their span of control. This is consolidated
and provides input to the formal annual
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DVLA Annual Report & Accounts 2011-12 47
statement, assured by our Audit Committee that
I provide to DfT at year end.
Our contracts or agreements with organisations
for data sharing incorporate conditions for us to
carry out inspection and assurance activities or
visits in order to review controls in operation,
and for us to monitor their compliance with the
terms and conditions of supply.
We have significantly changed these contracts
and requirements during the last year and made
protocols and standards more robust. A large
number of organisations are able to access our
data through legislative means or through
common law and we have established new
controls and frameworks around these. Internal
Audit reviews the Agency‟s governance and risk
management policies and processes annually,
confirming compliance with departmental
requirements and drawing on external practices
to inform their assessment of their maturity and
effectiveness.
6. Audit Committee
The Audit Committee has formally agreed
Terms of Reference, reviewed on an annual
basis. The Committee provides advice and
support to me in delivering my role as
Accounting Officer for the Executive Agency.
The Chair of the Audit Committee has a dual
role, with membership of the DfT Group Audit
Committee that 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
sponsor directorate.
The DVLA Audit Committee comprises the two
Non-Executive Board Members, together with a
representative appointed by DfT, currently the
Commercial and Technical Services Director
(Kate Mingay). I, my F&S Director and Head of
Internal Audit attend as observers as do
representatives of DfT Finance (who also
represents the DfT Sponsor Directorate),
National Audit Office (NAO) and KPMG (as sub-
contracted auditors to NAO). 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 and considers all our
external financial and governance reporting
prior to advising me on accuracy and
appropriateness before release. The agendas
follow a cyclical pattern for external reporting,
but consider at each of their four meetings each
year: 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. It undertakes an annual self-
assessment of performance that includes me
and other stakeholders.
7. Remuneration
The remuneration processes and details are set
out in the appropriate section of the Annual
Report and Accounts. There are only seven
members of the Senior Civil Service within
DVLA and their remuneration and bonuses are
set by the appropriate DfT committee, after
considering submissions made by myself,
showing the link between their remuneration to
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.
For the wider staff, our staffing and grading
structures remain relatively standard within the
Civil Service and DfT. We have strict controls in
place internally to prevent ‟grade creep‟ and
adhere robustly to processes that determine the
grade of each individual post. The annual
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DVLA Annual Report & Accounts 2011-12 48
overall review of salary scales is agreed first by
DVLA EB, after recommendation by our HR
function, but is then challenged and finally
approved by both DfT and then HM Treasury.
Robust workforce plans and overall staff
expenditure controls are exercised through the
EB and their monthly management meetings,
supplemented by my one-to-ones with individual
Directors.
8. Change Controls
Progress monitoring and risk identification
within the change agenda are managed by the
Agency Change Portfolio Office (ACPO). EB
members are appointed with sponsorship
(Senior Responsible Officer) responsibility for
programmes/critical projects. They have
excellent project management experience and I
hold them personally responsible for delivery.
The current allocation within the four key
change programmes is Efficiency (COO);
Mandatory Policy and Legislative Changes
(Policy); ICT Infrastructure (CIO) and ICT
Contract Let (F&S). The new Transformation
Director role ensures that there is genuine
synergy and balance between the programmes.
The ACPO, who reports to him, ensure
standards are observed, dependencies
managed and resources deployed effectively.
All proposed projects are subjected to initial
review at a Business Change Board and, if
successful, are allocated to an operational area
(for business as usual change) or, if significant,
passed to the allocated programme for further
study and exploration. Stakeholder support is
sought, design principles established and an
outline business case developed if appropriate.
The business case is approved and funding
prioritised initially through the DVLA governance
process. During 2010-11 (the last financial year)
further steps were introduced at both DfT and
Cabinet Office levels to review all projects over
£5 million to ensure that all projects are
consistent with the Government‟s ICT strategy.
All significant projects, in both DVLA and DVA
(as DVLA‟s agent in delivering its Vehicles
responsibilities in Northern Ireland) are subject
to the prescribed ERG and HM Treasury risk
assessment process and scoring. They are
subject to an appropriate level of independent
ERG reviews by high/medium risk reviewers
appointed by the ERG at key decision points
throughout their project lifecycle. Smaller / low
risk projects are peer reviewed by internal
reviewers through a similar process.
9. Business and Investment
a) Financial controls: the systems of
management control established include the
DVLA Finance Committee. This has
delegated expenditure responsibilities and
provides advice on operational budgets and
project affordability to the EB. This is chaired
by the F&S Director and 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,
resource supply and a balancing process.
The results are reported monthly to the EB
for action and forward decisions. This is
supplemented quarterly by a full and robust
Director-led challenge and re-forecasting
process, formally reported to EB. During the
year DVLA undertook a full Managing the
Risk of Financial Loss assessment over its
business systems and concluded that the
controls were reasonable. This was reported
to DfT.
b) Commercial controls: these are overseen
by a quarterly Commercial Board chaired by
the F&S Director with attendance by the
COO and CIO to provide appraisal and
challenge in terms of support for the
business, and a Commercial Committee
chaired by the Head of Commercial Services
Group that meets in the intervening months
to monitor progress and approve the monthly
performance and issues report provided to
the EB at their monthly meetings. Any issues
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DVLA Annual Report & Accounts 2011-12 49
that require escalation from the Committee
to the Board and that require immediate
attention are considered by the F&S Director
and Chief Executive. The EB agrees
policies for procurement and customer
services, oversees major contract lets and
agrees the procurement strategies, reviews
progress against efficiency generation. The
F&S Director and Head of Commercial
Services Group attend the DfT Procurement
Board to provide updates, reports and
ensure collaborative progress against the
Government Strategy.
c) Investment Controls: proposed project-
based expenditures (IT and non-IT) have
their business cases assessed by the
Finance Committee which either rejects,
approves or makes recommendations to the
EB, depending on the expenditure level
involved.
d) VED 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
formally three times a year to agree the
budgets and objectives and monitor progress
against these.
Business cases comply with the DfT Investment
Appraisal Framework through compliance with
the „Green Book‟ and use of the best practice
five-case business model advocated by ERG
and HM Treasury. Early stage involvement of
Cabinet Office ERG through their review cycle
is observed in all cases.
The ACPO monitors and tracks programmes
through to closure providing EB, if significant
enough, with advice on project and business
decisions. This potentially includes cancellation
of individual projects if business case changes
or risk appraisals (both updated regularly)
indicate this to be appropriate. Such action has
only been required twice since 2000 (because
of changed external factors) but it is an
essential control to ensure value for money,
such actions are fully disclosed in the annual
accounts.
Tier one and two projects have their business
cases considered and budgets approved,
together with monthly progress reporting and
monitoring, by our sponsor directorate (via the
DfT Investment Appraisal Board) and if over
£100 million by DfT (the Business Investment
Case Committee as a sub-committee of DfT's
ExCo. During the year additional approvals
processes were put in place which mean that all
project investments over £5 million are
escalated through the DfT processes to the
Cabinet Office, with major or innovative
investments also considered by HM Treasury
before approval. Some of these projects (or
procurements) also have parallel approvals
processes for supporting activities such as legal
or consulting input.
The current ICT Let Programme is subject to
the whole of this governance structure from
DVLA through to DfT and then onwards to both
Cabinet Office and HM Treasury.
Where there are crown representatives in place
for contracts (as for our ICT expenditure: IBM,
Fujitsu and Oracle; and our front office counter
services: the Post Office®) then we also consult
with and seek approval from the representatives
to ensure that cross-Government procurement
is as effective as possible. We engage actively
with the Government Procurement Service to
ensure that where we are a majority purchaser
in Government we accommodate cross-
Government requirements in our contracts.
10. Shared Services Arrangements
Since April 2007 the DVLA Finance, Payroll and
HR transactional support functions have been
provided by the DfT Shared Service Centre
(SSC). Responsibility for the governance of the
centre and line responsibility for SSC
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DVLA Annual Report & Accounts 2011-12 50
management is directly to the DfT Corporate
Group Director General.
Each DfT organisation has its own control
responsibility and internal audit processes for
those internal elements of the transaction
streams that remain outside the SSC and each
Accounting Officer has individual responsibility
to ensure that the two sets of controls provide
an environment of overall appropriate control for
their own organisation.
The DfT Shared Services Director has provided
four Assurance Reports during the year on the
internal controls operating at the SSC, based
primarily on internal risk and control monitoring
activities and reporting processes but also upon
assurances provided by DfT Internal Audit and
other relevant risk/control reports and sources
of assurance. The conclusion of the Shared
Services Director is that the system of internal
control has delivered effective internal control
with a number of small exceptions which have
not impacted on the accuracy of transaction
handling or the production of financial
statements. Weaknesses remain in terms of
disaster recovery (this is in place but greater
testing is desirable) and lack of a system for
archiving/disposing of records (desirable but not
essential), but neither have resulted in impact
during the last year.
Throughout the year DVLA has continued to
ensure that its own controls and processes are
operating effectively, with manual checking of
data integrity and accuracy where necessary.
These factors, combined with SSC assurance
reports, ensure that the combination of controls
is appropriate and reasonable in terms of our
overall internal and assurance requirements.
The SSC provides monthly assessments of
service levels and issues, discussed with DVLA
at formal quarterly monitoring meetings. In
addition, there are monthly assessments of
controls provided to Information Asset Owners
as part of the control processes. Approval
processes in place for any changes proposed
by individual business units or SSC ensure that
objectives are still delivered and the control
implications assessed, agreed and managed.
11. Value for money
All business changes proposed are examined
through appropriate level business case
processes. There are benefits realisation plans
and monitoring built in to all such developments
and direct periodic reporting to EB for corporate
projects. All procurement and contract
management complies with UK and/or
European Union procurement regulations to
ensure full and fair competition amongst
prospective suppliers of goods and services.
All procurement and contract management
activities are managed in line with the Cabinet
Office transparency guidelines and approvals
processes, with supplier engagement compliant
with European Union and UK Government
procurement guidelines. The EB reviews the 12
month rolling procurement schedule and major
activities planned over a three year horizon as
part of its monthly reporting pack.
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 pro-
actively managed for all key contracts let by the
Agency to ensure that quality and service are
maintained for the duration of the contract.
The Agency participated in an extensive
programme of benchmarking reviews based on
Better Quality Services principles during
2010-11 to confirm that a range of the Agency
activities, principally its support functions, are
delivered cost effectively.
12. Data handling, security and
information risk
DVLA is critically focused on data security and
complies strictly with legislative release
provisions, Data Protection Act and Cabinet
Office guidelines as its core functions
encompass the management and maintenance
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DVLA Annual Report & Accounts 2011-12 51
of its significant driver and vehicle registers.
This means responsibility for secure handling
and maintenance of two of the largest
databases in government, including data
transmission and access control. It undertakes
over 120 million transactions each year in
respect of these databases.
As a result the CIO is one of the six Directors on
the EB and has functional responsibility for
operational delivery of all ICT services and the
infrastructure that underpins our two critical
databases. As discussed in previous
Statements of Internal Controls (SIC) and
subsequently confirmed through discussions at
Audit Committee, the CIO also holds the Senior
Information Risk Owner (SIRO) responsibility.
The Head of Information Security, who
manages the Information Assurance Group
(IAG), has a direct line to me as CEO in the
event of any conflict or concerns. Both the CIO
and Head of Information Security also report
separately to Audit Committee. I feel this is
sufficient to mitigate the risk of merged CIO and
SIRO functions and the current arrangement is
giving a high level of assurance.
DVLA has authority delegated from its parent
department DfT to accredit the Agency‟s
systems. All of our systems, including the DVLA
network, are subject to risk assessment and
independent review by the DVLA Government
Accreditor. Specific authorisation is required for
all new systems prior to going live and
thereafter all systems are subject to a rolling
programme of accreditation. This responsibility
lies within the IAG. A network of Information
Asset Owners (IAO) has the responsibility for
protecting the data sets allocated to them. The
data sets are recorded in an information asset
table along with the associated risks and the
IAOs have the responsibility for reviewing these
risks and how the data is used on a regular
basis. This is managed and enforced by IAG.
The training of IAOs and the central record of
information is the responsibility of IAG, along
with defining and monitoring compliance with
policies.
Our progress on securing and assuring the use
of our data is measured against the
Government Information Assurance Maturity
model. The 2009-10 assessment was made by
Communications and Electronic Security Group,
part of the Government communications
headquarters and has been used as a baseline
to measure progress against the Information
Assurance model. The DVLA Information
Assurance Strategy is to achieve level two of
this model throughout as this meets business
requirements, but aspire to reach level three.
Subsequent self-assessments show we
continue to make significant progress from the
basic acceptable level (1) towards both our
target level (2) and aspiration level (3). Results
for the last year for the six areas were:
Leadership & Governance: 3.00
Training & Awareness: 1.82
Risk Management: 3.00
Through-life IA: 1.83
Compliance: 1.80
Whilst the model itself has changed in terms of
assessment since the benchmark, we are on
track to meet the level 3 target in 2015. The
major improvement is the revision of our data
governance framework that has been presented
and agreed at EB. This has increased control
and improved our score against the 2010-11
assessment.
Work for the coming year will seek to focus on
assured information sharing. This will give the
EB an effective assurance on arrangements for
releasing information and its use.
We continue to move data transfers from
physical media to secure and encrypted
electronic channels through our Electronic Links
Implementation and Strategy Enablement
system and this channel migration will continue
until all transfers are electronic. Exchange of
personal data by means of encrypted CDs
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DVLA Annual Report & Accounts 2011-12 52
remains our only physical transfer media for a
decreasing number of external recipients.
Information may now only be downloaded onto
approved removable storage devices that are
encrypted and strictly controlled. These devices
are only issued on production of a business
case approved by the Head of Information
Security or myself.
All new services go through a comprehensive
risk assessment before live operation, needing
approval by the DVLA Government Accreditor.
As part of this approval process, risks to the
data being processed are formally evaluated
and recorded in a Risk Management Accredited
Document with the resulting risk assessment
having to meet pre-set criteria prior to going
live. The layered approach to physical security
on all sites holding core data sets (drivers and
vehicles) is fully operational, with hot spots
within the sites having specific security
measures to give the most cost effective
security according to the evaluated risk. Vehicle
entrance is now controlled through automated
number plate readers at our gates.
During 2011-12 there were nine low level data
breaches (7 in 2010-11) involving specific
individual records. None of the breaches
required the Information Commissioner‟s Office
(ICO) to be informed. There is no suggestion
that any of these information breaches could
have been used to facilitate financial fraud
against customers or other third parties. Whilst
we do not have to declare such low level
breaches to ICO, we do report all breaches in
compliance with best practice.
We have instituted comprehensive data
handling training and assessment for all staff,
who have to achieve a score of at least 80 per
cent in the end assessment to meet our
mandatory standards. The annual exercise was
again completed ahead of schedule in 2011-12
and contributes to the cultural shift to improve
further the control of our data and reduction in
security breaches.
13. How I assure myself that these
structures and processes are working
As Accounting Officer for DVLA I have
responsibility for reviewing the effectiveness of
the system of internal control. My review is
primarily informed by 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
I draw on to assist me in balancing the
evidence, positive and negative, provided by a
wide range of specific reviews and governance
activity. Twice a year we gather together and
review all facets of management assurance,
policy and practice applying a framework and
reporting standards set by DfT(C). The end of
2011-12 review asked heads of group to
provide performance commentary and evidence
on the application of 57 aspects of assurance.
Responses were reviewed by subject matter
experts, Internal Audit, Audit Committee, EB
and DfT (C). This exercise reinforces the
importance of assurance processes otherwise
promoted individually.
a) Audit Committee
The EB and Audit Committee assist in
developing and overseeing these 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 committee‟s
views on the effectiveness of internal control.
b) Internal Assurance
A single integrated structure has been
established as Corporate Assurance Services to
comprise carry out the core internal reviews.
This works very closely with a range of other
assurance providers including fraud unit
(internal and external), commercial services,
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DVLA Annual Report & Accounts 2011-12 53
finance and ACPO. DVLA Internal Audit
operates to prescribe Government Internal Audit
Standards and provides me with an
independent opinion on the adequacy and
effectiveness of the Agency‟s system of internal
control, together with recommendations for
improvement. The Agency‟s Head of Internal
Audit (HIA) has free access to the DVLA Audit
Committee chair and to me as Accounting
Officer, but also works closely with the DfT HIA
as part of the group operating model. Its audit
plan for the year encompasses all internal
controls including assurance over the security
and use of DVLA data, as well as assurance
against contractual commitments and data
protocols for those organisations that interact
with us.
c) Monitoring of Specific Control Issues
We always take remedial action when we
encounter control issues, but also closely
monitor progress to full resolution.
In the last two Annual Report and Accounts we
reported two control issues:
Theft of documents from Supplier:
During 2006, DVLA rejected a batch of Vehicle
Registration Documents (V5Cs) due to incorrect
colour printing. They were returned to our
suppliers as they believed they could overprint
to the correct quality. This proved impossible
and a number of V5C forms were stolen either
between the printers and their contracted
secure destruction company or at the latter. We
commenced legal action in 2010-11 to recover
the costs of reissuing all V5C forms in a new
format and we are currently continuing to
pursue our suppliers through legal processes.
Insolvency of Supplier:
We had one instance, in April 2010, of supplier
insolvency leading to potential loss as a result
of non-systemic failure to adhere to specified
DVLA processes. This was reported in the
2009-10 SIC. Negotiation with administrators
and new investors mitigated the losses down to
relatively low levels and DVLA received a final
distribution in April 2012 of £749,000, leaving
DVLA with a shortfall of £982,000.
Current year issue:
Immediately before the end of the financial year
DVLA became aware of a fraud in one of its
local offices. Police investigations have been
undertaken and an arrest has been made. It has
become apparent that a loss of £66,000 has
been incurred but we have acted to ensure that
controls have now been improved to prevent
any re-occurrence.
The nature of the fraud means that DVLA can
trace the tax disks and vehicles involved and
will pursue this with the police.
d) DVA Control Assurance and Vehicles
Responsibilities
DVA is subject to internal audit review by the
Department for Regional Development (DRD) in
Northern Ireland. I draw assurance from the
opinion the DRD HIA provides to the DVA
Agency Accounting Officer. This is overseen by
the DVA Audit Committee which is presided
over by the chairman 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.
e) Head of Internal Audit Opinion
The overall opinion I have received from my HIA
for 2011-12 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.
In the cases that Internal Audit identified the
need for control enhancements these 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
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DVLA Annual Report & Accounts 2011-12 54
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 ExCo.
Actions against weaknesses identified have
contributed to the overall assurance reported
within this Governance Statement.
Simon Tse
Accounting Officer and Chief Executive DVLA
13 June 2012
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DVLA Annual Report & Accounts 2011-12 55
4.4 The Certificate and Report of
the Comptroller and Auditor
General to Houses of Parliament
I certify that I have audited the financial
statements of the Driver and Vehicle Licensing
Agency for the year ended 31 March 2012
under the Government Resources and
Accounts Act 2000. The financial statements
comprise: the Statement of Comprehensive Net
Expenditure, the Statement of Financial
Position, the Statement of Cash Flows, the
Statement of 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
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 circumstances of the Driver and Vehicle
Licensing Agency 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.
Opinion on financial statements
In my opinion:
the financial statements give a true and fair
view of the state of affairs of the Driver and
Vehicle Licensing Agency as at 31 March
2012 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.
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DVLA Annual Report & Accounts 2011-12 56
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 Directors' 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
21 June 2012
CONTENTS
DVLA Annual Report & Accounts 2011-12 57
4.5 DVLA Business Account for 2011-12
Statement of comprehensive net expenditure for the year ended 31 March
2012
Re-stated
Note
2011-12
2011-12
2010-11
2010-11
£000
£000
£000
£000
Income
Income from the Public ( External revenue)
468,526
472,192
Finance income
5
14
319
Total income
2
468,540
472,511
Expenditure
Operating costs
2,4
(369,326)
(328,125)
Staff costs
2,3
(183,790)
(160,035)
Depreciation, amortisation & impairment
7
(30,344)
(27,186)
Finance costs
5
(2,789)
(1,851)
Dividend payable
6
-
(6,840)
Total expenditure
2
(586,249)
(524,037)
Net (Operating Cost)
2
(117,709)
(51,526)
Other comprehensive income
Net gain on revaluation of property,
plant and equipment
7
1,878
4,409
Net gain on revaluation of intangible assets
8
2,340
2,508
Other comprehensive income for the year
4,218
6,917
Total comprehensive (expenditure) for the
year
(113,491)
(44,609)
Restatement HM Treasury changed the status of the Agency on 1 April 2011 from a Trading Fund to a
Departmental (i.e. supply) financed Executive Agency. The key implication arising from this change is that
income received from the Department via the Vehicle Excise Duty Service Level Agreement (SLA) - £189.9
million (2010-11 £191.4 million) is now recognised as financing and therefore taken directly to the General
Fund. Whereas it would have been recognised as income prior to change in status. The comparatives in the
Statement of comprehensive net expenditure have been restated to reflect this change. See the Statement of
changes in taxpayers‟ equity for the year ended 31 March 2011 for details.
All income and expenditure are derived from continuing operations. Notes forming part of these accounts
appear on pages 62 to 100.
CONTENTS
DVLA Annual Report & Accounts 2011-12 58
Statement of financial position as at 31 March 2012
Re-stated
Note
31 March
2012
31 March
2011
1 April
2010
Non-current assets
£000
£000
£000
Property, plant and equipment
7
88,399
86,054
87,382
Intangible assets
8
91,962
95,319
95,203
Trade and other receivables due after more than one year
9
2,604
5,139
8,014
Total non-current assets
182,965
186,512
190,599
Current assets
Trade and other receivables
9
58,862
63,465
67,559
Cash and cash equivalents
10
103,373
65,676
60,687
Total current assets
162,235
129,141
128,246
Total assets
345,200
315,653
318,845
Current liabilities
Trade and other payables due within one year
11
(48,032)
(52,836)
(82,011)
Provisions for liabilities and charges
13
(3,739)
(2,733)
(3,223)
Total current liabilities
(51,771)
(55,569)
(85,234)
Total assets less current liabilities
293,429
260,084
233,611
Non-current liabilities
Trade and other payables due after more than one year
11
(46,326)
(49,280)
(33,793)
Provisions for liabilities and charges
13
(53,636)
(9,210)
(12,170)
Total non-current liabilities
(99,962)
(58,490)
(45,963)
Assets less liabilities
193,467
201,594
187,648
Taxpayers’ equity
General fund
149,019
161,364
135,287
Revaluation reserve
44,448
40,230
33,313
Public dividend capital
-
-
19,048
Total taxpayers’ equity
193,467
201,594
187,648
Restatement An element of the Service Level Agreement (SLA) income was recognised as deferred
income and government grant in 2010-11, £1.8 million and £6.2 million respectively. The 2010-11
comparatives have been restated to reflect the revocation of Trading Fund status and the recognition of
the SLA income as financing rather than income. See the Statement of changes in taxpayers‟ equity for
the year ended 31 March 2011 for details.
Notes forming part of the accounts appear on pages 62 to 100.
Simon Tse
Accounting Officer and Chief Executive DVLA
13 June 2012
CONTENTS
DVLA Annual Report & Accounts 2011-12 59
Statement of cash flows for the year ended 31 March 2012
Re-stated
Note
2011-12
2010-11
Cash flows from operating activities
£000
£000
Net operating cost
(117,709)
(51,526)
Adjustments for non cash items:
Loss on disposal, depreciation, amortisation & impairment
7
30,344
27,186
Net financing costs
5
2,775
1,532
Decrease in trade and other receivables
9
7,138
6,969
(Decrease) in trade payables
11
(6,854)
(38,692)
Auditors remuneration notional charges
4
120
30
Movement in provisions
13
45,134
(3,378)
Net cash outflow from operating activities
(39,052)
(57,879)
Cash flows from investing activities
Purchase of property, plant and equipment
7
(7,098)
(2,179)
Purchase of intangible assets
8
(17,236)
(14,450)
Finance income
5
14
319
Proceeds from sale of property, plant and equipment
8
5
Net cash outflow from investing activities
(24,312)
(16,305)
Cash flows from financing activities
Finance costs
5
(2,491)
(1,923)
Capital element of payments in respect of finance leases and on-
balance sheet PFI contracts
(1,734)
(2,177)
Loan from Department for Transport
-
19,048
Repayment of public Dividend Capital
-
(19,048)
DfT Supply funding received in year
190,900
193,278
Net cash used in financing activities
186,675
189,178
Payments of amounts due to the Consolidated Fund
(85,614)
(110,005)
Net increase in cash and cash equivalents in the period
37,697
4,989
Cash and cash equivalents at the beginning of the period
10
65,676
60,687
Cash and cash equivalents at the end of the period
10
103,373
65,676
Restatement The accounts for 2010-11 have been re-stated following the revocation of Trading Fund
status, to reflect the impact of supply funding in place of the SLA income on the 2010-11 result (see Note
22).
Notes forming part of these accounts appear on pages 62 to 100.
CONTENTS
DVLA Annual Report & Accounts 2011-12 60
Statement of changes in taxpayers’ equity for the year ended 31 March 2012
General
Fund
Revaluation
Reserve
Total Reserves
£000
£000
£000
(i)
(ii)
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
(84,650)
-
(84,650)
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
CONTENTS
DVLA Annual Report & Accounts 2011-12 61
Statement of changes in taxpayers’ equity for the year ended 31 March 2011
Re-stated
General Fund
(i)
Revaluation
Reserve (ii)
Government
Grant
Reserve
Public
Dividend
Capital (iii)
Total
Reserves
£000
£000
£000
£000
Balance at 31 March 2010 as
previously reported
110,098
33,313
25,189
19,048
187,648
Changes in funding regime
25,189
-
(25,189)
-
-
Restated balance at 1 April
2010
135,287
33,313
-
19,048
187,648
Net comprehensive
expenditure for the year 31
March 2011
(51,526)
-
-
-
(51,526)
Repayment of Public Dividend
Capital
-
-
-
(19,048)
(19,048)
Non cash charge auditor‟s
remuneration
30
-
-
-
30
Non cash charge auditor‟s
remuneration in prior year
26
-
-
-
26
NIVIS adjustment to reserves
2,703
-
-
-
2,703
DfT Supply funding
191,410
191,410
CFERs payable to the
Consolidated Fund
(116,566)
-
-
-
(116,566)
Other Comprehensive Income
Net gain on revaluation of
property, plant and
equipment
-
4,409
-
-
4,409
Net gain on revaluation of
intangible assets
-
2,508
-
-
2,508
Balance at 31 March 2011
161,364
40,230
-
-
201,594
Restatement The General Fund and Government Grant Reserves as at 1 April 2010 have been restated
to reflect the revocation of Agency‟s Trading Fund status, with £25.2 million of grant funding received in
prior periods being transferred to the General Fund. SLA income previously reported in 2010-11 as
government grant reserve additions of £6.2 million is now restated as supply funding and recognised in the
General Fund.
(i) In 2011-12 the notional audit fees have increased to £120,000 (2010-11: £30,000) as following the
revocation of Trading Fund status the audit fee for the Business Accounts is a notional charge.
(ii) 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 2012 is £13.2 million
(31 March 2011: £10.8 million).
(iii) The Public Dividend Capital represent deemed capital when the Agency was set up as a Trading Fund.
This was repaid in 2010-11 prior to the Agency‟s Trading Fund status being revoked. It was
subsequently replaced by loan from the Department for £19 million.
CONTENTS
DVLA Annual Report & Accounts 2011-12 62
Notes to the accounts
Note 1. Statement of accounting
policies
The financial statements have been prepared in
accordance with the 2011-12 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 2012, and have not been
applied in preparing these financial statements. The
following are those standards, amendments and
interpretations that may need to be adopted in
subsequent periods:
IFRS 9 Financial Instruments, which will replace IAS
39. IFRS 9 is expected to improve and simplify the
reporting of financial instruments. It simplifies the
classification of financial assets, which determines
how they are measured. Application of this standard
is required for reporting periods beginning on or after
1 January 2013. Earlier application is permitted. It is
expected that IFRS 9 will be applied initially in 2015
however, as it has not received EU endorsement, it is
difficult to predict the actual application date. The
impact of initial application of IFRS 9 is not expected
to be significant, as it seems that the measurement
approaches used by the Agency will continue to be
appropriate.
IFRS 12 covers disclosures of interests in other
entities, requiring particular disclosure of
arrangements where the reporting entity owns a
majority of shares but does not consolidate, and
arrangements where the reporting entity owns more
than 20 per cent of shares but does not equity
account, and vice versa. This standard should not
give rise to any accounting changes, but may result
in greater disclosures relating to Trading Funds and
Public Corporations, which may be wholly owned but
are not consolidated under the Clear Line of Sight
initiative. However, in accordance with the Financial
Reporting Manual (FReM) and related EU Directives,
the Agency already includes detailed disclosures of
material off-balance sheet arrangements.
IFRS 13 sets out an IFRS framework for measuring
fair value, which is required for arrangements such
as investment properties and financial instruments.
This standard has not received EU endorsement, so
the effective date remains uncertain. It seems likely
that the standard will increase the disclosures
required for non-financial items held at fair value,
such as property, plant and equipment, particularly
where there are few similar items that are not traded
in active markets. 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.
IFRS 7 -There are two amendments to due to come
into effect in 2012-13 and 2013-14 respectively. The
first deals with disclosures concerning transfers of
financial assets where the transferor retains some
continuing involvement with the asset and the
second deals with disclosures concerning netting
arrangements. The Agency considers that these
amendments to IFRS 7 will have no impact.
The International Public Sector Accounting
Standards Board (IPSASB) has released guidance
on grantor accounting for service concessions,
IPSAS 32. IPSASB pronouncements are not
regarded as definitive within central government, but
may provide a source of guidance on issues not
explicitly addressed by extant IASs and IFRSs.
IPSAS 32 is broadly consistent with previous FReM
guidance, but may require earlier recognition of a
CONTENTS
DVLA Annual Report & Accounts 2011-12 63
service concession asset under construction, where
the operator has the right to charge the public. The
Agency currently has no service concession
arrangements at that stage of development.
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.
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 consolidated accounts.
Other amendments to the FReM due to come into
effect after 2011-12 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 20 December 2011. They meet the
relevant requirements of the Companies Acts, and of
the Statements of Accounting 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.
Consolidation with Department of Transport
From 1 April 2011 the Agency falls under the
Accounting Boundary of the Department for
Transport and its accounts will be consolidated with
those of the department.
Funding
The Agency has been funded by supply since 1st
April 2011. Prior to this it received Service Level
Agreement funding from DfT(c) to fund the Vehicle
Excise Duty collection and enforcement activities.
The accounts for 2010-11 have been re-stated to
show the impact of supply funding on the figures
published in 2010-11.
The Agency has continued to recognise the funding
from the DfT(c) as income in its internal reporting to
the Executive Board, and is recognised as such in
Note 2 Segmental Reporting.
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.
The following major sources of income - DVLA
personalised registrations, sale of anonymised data
(Vehicle and Driver) and tachograph fees - all attract
output VAT. The majority of DVLA fee-earning
transactions are not subject to VAT.
Finance income and finance costs
Following revocation of Trading Fund status the
Agency no longer earns 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.
CONTENTS
DVLA Annual Report & Accounts 2011-12 64
Cash and cash equivalents
Cash and cash equivalents comprise cash balances
in non-interest bearing accounts. The Agency does
not have any bank overdrafts.
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. A full
valuation of the Agency‟s estate was undertaken on
31 March 2009 on an existing use valuation by
appointed chartered surveyors.
Office property (including PFI office property) was
revalued at 31 March 2012 using an index-linked
revaluation. The Department of Business Innovation
and Skills (BIS) Output Price Index, which measure
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 31March 2012 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 (MM17 - Price
Index Numbers for Current Cost Accounting). The
exception to this is the revaluation of the specialised
fit-out of buildings; this has been revalued for
2011-12 using Department of Business Innovation
and Skills (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 revalues its intangible assets
annually based on Depreciated Replacement Cost.
The value of the Driver and Vehicle databases,
including unallocated vehicle registration marks,
cannot be estimated. The DVLA personalised
registrations database 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, except for
computer equipment, which is provided for at the
date of purchase. Depreciation is provided on any
revaluation from the date of such revaluation, at rates
calculated to write off the cost or valuation (less any
estimated residual value) of each asset evenly over
its expected useful life. The estimated useful lives
from new of the main categories of non-current
assets are:
Years
Plant and machinery
3-10
IT equipment
3
Purchased software
up to 10
Office equipment
5 -10
CONTENTS
DVLA Annual Report & Accounts 2011-12 65
Software licences
3 -15
Fixtures and fittings
5 -10
Motor Vehicles
5 -10
The estimated remaining useful lives of buildings at
Morriston on 31 March 2012 are 26 years (A Block)
and 11 years (all others) with those at Swansea Vale
at 22 years.
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.
In 2011-12 the Agency entered into a wheelclamping
contract and in providing this service the contractor
has taken out a number of leases for recovery
vehicles all of which carry the DVLA livery.
In accordance with IFRIC 4 as the conditions for the
recognition of right of use have been met these
assets have been recognised by the Agency. In
accordance with IAS 17 these have been disclosed
as either Finance leases on the Statement of
financial position or as Operating Leases (see Note
14).
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 per cent 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 2.8
per cent (2010-11: 2.9 per cent).
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 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 effective to 31
March 2013.
CONTENTS
DVLA Annual Report & Accounts 2011-12 66
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 per cent.
Research and development
We consider our expenditure each year to determine
if any is considered as Research and Development.
We concluded that no intangible assets have arisen
as a result of research undertaken by the Agency in
the period of this report. 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 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.
As part of the contract, Telereal Trillium have
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 Private Finance
Initiative contract. The cabling is depreciated over its
expected useful life of five years.
A Private Finance Initiative (PFI) creditor 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.
CONTENTS
DVLA Annual Report & Accounts 2011-12 67
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 held-to-maturity. The Agency
initially recognises these assets on the date that they
are originated, and derecognises 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 Private Finance
Initiative contracts and a loan from the Department
for Transport. These are classified as held-to-
maturity. 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.
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.
Government Grant
Following revocation of Trading Fund status, the
Agency no longer receives government grant,
therefore, the 2010 - 11 accounts have been restated
taking the Government Grant Reserve to the General
Fund.
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
CONTENTS
DVLA Annual Report & Accounts 2011-12 68
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 14 Commitments under leases (PACT
contract alternative payment mechanism lease)
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 Department for Transport's Shared Service
Centre (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
the Department for Transport (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 (Centre).
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 on receipt, only after the recovery
of costs are amounts due to the Consolidated Fund.
The surplus Consolidated Fund extra Receipts are
brought to account in the Statement of Tax Payer‟s
Equity in compliance with the 2011-12 FReM.
CONTENTS
DVLA Annual Report & Accounts 2011-12 69
Note 2. Segmental reporting
(i) The anticipated funding represents the amounts of future supply funding required to fund the
transformation costs attributed to VED enforcement and collection. This is not yet recognised within the
accounts as supply funding cannot be accrued. It appears within this note because it is included in the
management information provided to the Executive Board.
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.
Income from the Public
Department for Transport
2011-12
Operating
Segments
Fees and
charges
DVLA
personalised
registrations
Vehicle Excise
Duty Collection
Vehicle Excise
Duty
Enforcement
Total
£000
£000
£000
£000
£000
External revenue
399,892
68,648
-
-
468,540
DfT supply funding
-
-
127,797
62,097
189,894
Anticipated funding for
transformation in future
years (i)
-
-
5,895
9,463
15,358
Operational Expenditure
(342,309)
(10,439)
(127,222)
(59,972)
(539,942)
Exceptional Costs for
Organisational
Restructuring (note 13)
(30,949)
-
(5,895)
(9,463)
(46,307)
CFERs due to the
Consolidated Fund
(26,441)
(58,209)
-
-
(84,650)
Surplus reported to
Executive Board
193
-
575
2,125
2,893
Reconciliation of surplus to net operating cost
Surplus reported to Executive Board
2,893
DfT supply funding
(189,894)
DfT anticipated supply funding for Transformation of DVLA services
(15,358)
Amounts payable to the Consolidated Fund
84,650
Net operating cost
(117,709)
CONTENTS
DVLA Annual Report & Accounts 2011-12 70
The segments used reflect how management information is provided to the Executive Board. An analysis of
assets and liabilities by segment is not regularly provided to the Chief Executive or Executive Board.
Since 1 April 2011 the Agency is funded by supply from the Department of Transport, however, the Agency
has continued to recognise the funding as income in its internal reporting to the Executive Board.
The segments used reflect how management information is provided to the Executive Board. An analysis of
assets and liabilities by segment is not regularly provided to the Chief Executive or Executive Board.
Re-stated
Income from the Public
Department for Transport
2010-11
Operating
Segments
Fees and
charges
DVLA
personalised
registrations
Vehicle Excise
Duty Collection
Vehicle Excise
Duty
Enforcement
Total
£000
£000
£000
£000
£000
Revenue
389,212
83,299
-
-
472,511
DfT supply funding
-
-
115,612
75,798
191,410
Expenditure
(323,466)
(12,894)
(113,602)
(74,075)
(524,037)
CFERs due to the
Consolidated Fund
(46,161)
(70,405)
(116,566)
Surplus reported to
Executive Board
19,585
-
2,010
1,723
23,318
Reconciliation of surplus to net operating cost
Surplus reported to Executive Board
23,318
DfT supply funding
(191,410)
Amounts payable to the Consolidated Fund
116,566
Net operating cost
(51,526)
CONTENTS
DVLA Annual Report & Accounts 2011-12 71
Note 3. Staff numbers and related costs
Staff costs, excluding staff managed by Department for Transport, consistent with the accounting policies,
comprise:
2011-12
Permanently
employed
staff
Short-term
employment
contract and
agency staff
Total
£000
£000
£000
Wages and salaries
123,220
2,641
125,860
Social security costs
8,067
140
8,207
Other pension costs
21,115
350
21,465
Voluntary early retirement (Note13)
522
-
522
Staff costs due to Transformation
27,735
-
27,735
Total
180,659
3,131
183,790
2010-11
Permanently
employed
staff
Short-term
employment
contract and
agency staff
Total
£000
£000
£000
Wages and salaries
123,362
6,773
130,135
Social security costs
8,324
204
8,528
Other pension costs
21,101
165
21,266
Voluntary early retirement (Note 13)
106
-
106
Total
152,893
7,142
160,035
CONTENTS
DVLA Annual Report & Accounts 2011-12 72
The staff costs of the permanently employed staff
include the non-consolidated pay award, which in
2011-12 amounted to £6,380,000 (2010-2011:
£6,304,000). 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.
DVLA staff working at the Shared Service Centre
(SSC) but managed by Department for Transport
(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 Holiday Pay accrual (Employee Benefits IAS
19) at 31 March 2012 is £3,377,000 (31 March
2011: £3,603,000).
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
2011. Details can be found in the resource
accounts of the Cabinet Office: Civil
Superannuation (www.civilservice-
pensions.gov.uk).
For 2011-12, employers‟ contributions of £22.3
million were payable to the PCSPS (2010-11:
£21.3 million) at one of four rates in the range 16.7
per cent to 24.3 per cent (2010-11: 16.7 per cent to
24.3 per cent) 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
2011-12 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, a stakeholder pension with an employer
contribution. Employers‟ contributions of £212,180
(2010-11: £220,797) 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 per cent to 12.5 per cent (2010-
11: 3.0 per cent to 12.5 per cent) of pensionable
pay. Employers also match employee contributions
up to 3.0 per cent of pensionable pay. In addition,
employer contributions of £14,941, 0.8 per cent
(2010-11: £15,689, 0.8 per cent) 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.
CONTENTS
DVLA Annual Report & Accounts 2011-12 73
Average number of persons employed
2011-12
Permanent
Staff
(FTEs)
Short-term
employment
contract and
agency staff
(FTEs)
Total
(FTEs)
Directly empl