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:
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.
Compared to the Business Plan 2011-12, our fee income was up by £11.0 million. This net increase included:
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:
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 key performance measures) 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:
2011-12 Cumulative Outturn savings against £100 million overal target (by 2015)
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.
Vehicle Excise Duty collected
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.
Vehicle Excise Duty Collected by Channel
The key transaction categories included in the VED Service Level Agreement accumulate to a total of 53.36 million transactions.
Transaction Volumes (millions)
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.
Unit Cost of VED Collection
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.
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.
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.
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.
Costs of VED Enforcement Actual Vs Inflated 2004-05 Baseline