Corporate report

DVLA's annual report 2013 to 2014

Published 25 June 2014

1. Chief Executive’s message

I joined DVLA in November 2013 at what I believe to be some of the most exciting and challenging times in its history. I strongly believe that we have the potential to be one of the best consumer facing businesses in the country. Our goal is clear – we want to get the right drivers and vehicles taxed and on the road, as simply, safely and efficiently for the public as possible.

This last reporting year has presented significant challenges, not least the closure of our regional offices. Of course, as with any organisation that goes through such large scale changes, those challenges can be frustrating and I would like to thank our customers, stakeholders and staff for their patience during what has been a significant period of change.

Reflecting on the year, I am pleased to report that overall we have performed well delivering against the vast majority of the commitments DVLA made at the outset of the reporting year. In terms of successes we have delivered major projects and made real changes which will benefit customers and reduce DVLA’s running costs – all done whilst continuing to meet operational targets. We have also stayed within our expenditure limits and have made further sizeable efficiency savings.

But we know more can be done. I have set out how we intend to achieve our longer term goals in the Strategic Plan. The next financial year will see DVLA move forward at a pace. Some of our efficiencies made to date will be re-distributed to our customers through reductions in fees. We will make changes to ensure we provide simpler, better services for everyone who uses them. This will be facilitated by a complete change in the mechanisms, methodologies and principles by which change is delivered. This will form a solid basis for the organisation going forward as supported by the strategic plan. Excellent customer service and ability to deliver significant policy changes underpinned by sound financial planning will allow us to realise the strategy.

Our plans are ambitious but achievable.

Oliver Morley

Accounting Officer and Chief Executive DVLA

11 June 2014

2. Highlights for the Year

2.1 Operations

Key performance measures as set out in our Business Plan 2013-14 are shown at 3.2.

We have:

• met or exceeded 18 out of 19 of our customer services measures
• delivered an additional £29.4 million in sustainable efficiencies in year
• for the first time sustained a 60% plus take-up level for electronic vehicle licensing (January to March 2014)

We completed the centralisation of services at Swansea that were previously carried out at our network of regional offices across Great Britain. This resulted in the closure of the network which will deliver significant cost savings. As with any operational change of such significant proportions, centralisation impacted on some customers, leading to longer processing times for some transactions than we would have liked; this led to some dissatisfaction from key customer groups. We have listened to customers and will make sure that we take the lessons we have learned into our ongoing change programme.

Our new Front Office Counter Services contract with the Post Office reduced transaction costs significantly in the period and provides an increasingly important and popular channel for customers who prefer to transact ‘face to face’.

We have made significant changes by making it easier for customers by cutting red tape – all done ahead of schedule. We have removed the:

• insurance check requirement at the time of licensing in Great Britain, although Continuous Insurance Enforcement ensures regular insurance checks
• need to annually declare that a vehicle is ‘off the road’ as an alternative to taxation

Customers now only need to declare the vehicle off the road once.

2.2 Finance and efficiency

We ended the financial year having delivered over £70 million in sustainable operating expenditure efficiencies from a baseline position in 2010-11.

Taxation revenues paid to HM Treasury once again exceeded £6 billion while tax evasion measured by the Department for Transport (DfT) Roadside survey reduced to 0.6%.

2.3 Digital services

We are leading the way in government digital services, changing rapidly from a paper based organisation to a digital organisation fit for the future. Our online services continue to grow as we have seen a record number of motorists using GOV.UK to tax their vehicles. By March 2014 over 60% of customers used the service – more than 30 million transactions in the year.

During 2013 we successfully moved our corporate website to GOV.UK. This aligns with the wider government strategy to bring together all government services and information.

Our digital communication capability has expanded in the year with the launch of our digital services blog, using web chats to engage with internal and external audiences and video blogs to deliver corporate messages. DVLA also lifted restrictions on staff access to social media sites on our IT infrastructure which has allowed staff to trial Yammer and maximise online resources to improve business practices. Our corporate Twitter account now has over 10,000 followers and videos on our YouTube account have surpassed 350,000 views. During the year we also introduced corporate accounts on Facebook, LinkedIn and conducted a trial in migrating responsibility for answering customer enquiries received via Twitter to our Contact Centre.

2.4 Abolition of the tax disc

As part of the Autumn Statement the government announced that from 1 October 2014 tax discs will no longer be issued. This will remove an administrative inconvenience for millions of motorists and also save taxpayers around £10 million a year as DVLA will no longer produce, issue and post the tax disc.

2.5 Direct Debit for vehicle tax

To coincide with the abolition of the tax disc, we will introduce a direct debit scheme to help customers spread the payment of vehicle tax across the year.

2.6 Reilly Review of DVLA

A Review of DVLA was carried out in 2013 with the recommendations to improve organisational efficiency and increase the quality and scope of digital services. The review identified 4 key areas for DVLA to focus on to improve its service offering. We set out how we intend to meet those challenges in our Strategic Plan.

2.7 Northern Ireland vehicle registration and licensing

Motorists in Northern Ireland (NI) will benefit from better, quicker services as a result of changes announced by Roads Minister Stephen Hammond in March 2014. The changes, following a full and public consultation, will mean that from July 2014 all NI motorists will benefit from the same services as motorists in the rest of the UK. This includes being able to tax vehicles online or by phone and greater access to more face-to-face vehicle registration and licensing services than ever before at around 175 Post Office branches across NI.

As well as improving services for NI motorists and businesses, the reforms will result in an estimated £12 million year on year saving but lead to the closure of the local office presence in NI.

DVLA retained its Customer Service Excellence and ‘Two Ticks – Positive about Disabled People accreditations. DVLA’s contact centre achieved re-accreditation from the Contact Centre Association. The agency hosted 356 work experience placements as part of the wider government Get Britain Working Programme. DVLA received a commendation in the Digital Unite Spring Online Best Event Awards 2013.

3. Strategic Report

3.1 Who we are and what we do

DVLA is an Executive Agency of the Department for Transport (DfT). Since 1969 DVLA has been getting safe drivers and vehicles on the road as simply and as easily as possible. DVLA has a track record of developing easy to use digital services for customers and leads the way in government in processing high volume electronic transactions. DVLA holds millions of accurate driver and vehicle records which are essential in providing the police, courts and other government organisations with the information they need to enforce against vehicle and driver related crime.

We are responsible for collecting vehicle tax and limiting vehicle tax evasion. We work closely with local authorities and the insurance industry to enforce against vehicle tax and insurance evasion.

We generate significant additional revenue for government through the sale of personalised registrations. Since the introduction of the service in 1989 DVLA has raised over £1.8 billion. For more information about personalised registrations visit our website via GOV.UK.

The purpose of this document

This Annual Report and Accounts should be read in conjunction with our Business Plan 2013-14 and sets out our performance and achievements for the year. The document presents a view of the organisation at the end of the financial year together with a strategic view of the organisation going forward.

3.2 Performance measures

Reform

Measure	Target	Result
1. Modernising DVLA services: Centralise operations and close local services network by	28 February 2014	All DVLA Local offices were closed to the public by 13 December 2013.
2. Digital services: Improve electronic take-up by March 2014 Electronic vehicle licensing to	58%	60.9%
3. Overall take-up (drivers and vehicles) to	54%	52.9%
4. Shared Services migration: Complete business readiness for migration to a new shared services platform, including substantial progress of business rule configuration and interface development by	March 2014	Arvato took over ownership of DVLA Shared Services and employment of its staff on 1 June 2013. In readiness for migration: 1) Data cleansing activities are under way 2) Integration overview document has been produced and reviewed

Operational

Measure	Target	Result
5. Suppress vehicle registration certificates to fleet owners: Complete initial delivery of systems that issue vehicle registration certificates to fleet operators only on request by	February 2014	DVLA took a strategic and cost effective decision not to build separate functionality on current legacy systems. This facility will be available as part of the new online services to be delivered in 2014-15.
6. Indefinite Statutory Off Road Notification: Deliver systems that stop the need for repeat Statutory Off Road Notification once declared off the road for the first time by	February 2014	Systems were successfully implemented in December 2013.
7. Heavy goods vehicle road user levy: DVLA will collect VED and levy a single payment for HGV vehicles over 12 tonnes from	March 2014	Systems were delivered in February 2014.
8. Customer service: Customer service measures	Deliver 17 out of 19	Met 18 out of 19 customer service measures
9. Accuracy: Vehicles – to maintain accuracy so the registered vehicle keeper can be traced from details held on our record	in 95% of cases	Results are not due until end of June 2014
10. Freedom of Information: Provide 93% response within 20 working days	93%	100%
11. Parliamentary Questions: Provide response within due date	100%	100%
12. Ministerial correspondence: Provide response within 7 working days	100%	99.6% (Out of 694 cases 3 failed to meet the required response time. These cases are now being monitored)
13. Official correspondence: Provide response within 20 working days	80%	100%
14. Prompt payment: Pay supplier invoices within 5 working days	80%	94.5%
15. Customer complaints: Reduce the number of complaints not resolved at first contact (compared with 2012-13) by 10%	12.7%	12.7%

*Whilst the target of 54% digital transactions was missed, the launch of the View Driver Record on-line enquiry service will see the overall percentage of digital transactions and enquiries increase further during 2014-15.

Finance and efficiency

Measure	Target	Result
16. Agency finance: Make progress towards £100 million a year reduction in operating costs by the end of 2014-15 against a 2010-11 baseline	£60 million	£73.5 million efficiency achieved
17. Deliver financial performance in live with the Business Plan 2013-14	Breakeven	£38 million surplus
18. Workforce: By 31 March agency workforce (full time equivalent) will number	4,950	Reduced to 4,985 full time equivalents
19. Sickness absence: Ensure the average number of working days lost (full time equivalent) due to sickness is significantly less than the DfT standard	7.5 days	Reduced to 7.16 days
20. Protecting the environment: Cut carbon emissions from agency activities by 31 March 2014 when compared with a 2009-10 baseline by	20%	15.25% reduction in carbon emissions compared to 2009-10 baseline

3.3 Customer service results

Customer service measures	Target 2013-14	Result
Retain accreditation of the CSE Standard		Retained
Retain accreditation of the CCA Standard		Retained
To deliver a first driving licence within 8 working days	98%	98.4%
To deliver a vocational licence within 8 working days	98%	98.6%
To deliver an ordinary driving licence within 10 working days	98%	99%
To deliver a digital tachograph renewal in 8 working days	98%	99.9%
To conclude all cases and deliver a licensing decision within 90 working days	90%	92%
To deliver a first registration document, excluding cherished transfers, within 14 working days	95%	99.7%
To deliver a change on a registration certificate within 14 working days	95%	97.5%
To deliver a registration document from an application (notifying changes to the registration certificate) within 30 working days	95%	98.8%
To deliver a refund due within 30 working days	95%	99.2%
To answer calls queued to advisor	95%	98.6%
To deliver a recognised quality of service standard in the Contact Centre	85%	88.8%
To answer an email within 3 working days	95%	100%
Keep average local office queuing time to no more than 15 minutes*	15.00	*
To deliver a cherished transfer within 7 working days**	95%	**
To acknowledge a complaint within 1 working day	100%	100%
To maintain or improve on last year’s performance sending a substantive response within 10 working days	98%	99.1%
To acknowledge correspondence within 1 working day	100%	100%
Overall	17 of 19	18 of 19

*DVLA stopped most over the counter services at all local offices from July 2013. This significantly reduced the number of customers going to local offices, negating the need for any queue management; therefore the collation of statistics on queue times was stopped as at 30 April 2013. The result above reflects the performance up until that date.

**In 2013 the local office work was centralised and as a result of the transition, customers experienced delays in the processing of cherished transfer applications. The average processing time for transactions between April -September 2013 was 9.8 days, not meeting the target during this period. Since October 2013 DVLA has consistently met the 95% of cherished transfer transactions processed within 7 working days.

3.4 Our Strategic Plan

Simpler

Better

Safer

Our goal is to get the right drivers and vehicles taxed and on the road, as simply, safely and efficiently for the public as possible.

The Reilly Review of DVLA services

A review of DVLA services was undertaken in 2013 and recommendations to improve the efficiency of the organisation to deliver a more modern and cost effective service were published in February 2014.

The recommendations and proposals for further action are:

• DVLA must accelerate and expand its digital transformation
• DVLA must reduce the burden of its requirements on consumers and businesses and open up the way for others outside of government to deliver some of its services
• DVLA must have a governance and management structure fit for the new world in which it will operate
• DVLA’s value as a service provider of government should be optimised

Our Strategic Plan

Our Strategic Plan outlines our goals and direction for the next 3 years and is intended to be as consistent as possible for this period. The plan responds to the Reilly Review recommendations and provides us with a clear vision, objectives and agenda for change.

Simpler licensing

Getting our customers online, whether drivers, vehicle owners, or the businesses that use our services, depends on how simply we can make the experience. Starting with the removal of the tax disc, we want to continue cutting the red tape that often surrounds motoring while retaining the quality of identity information and high levels of compliance achieved.

Excellent services

DVLA must provide customers with excellent multi-channel services that meet their needs. While we fully intend to significantly increase digital take-up, we will not do so by providing poor quality contact through our other channels. We intend to provide good service across the board at the right cost to the tax and fee-payer and remove those obstacles that block the public from going online.

New opportunities

DVLA holds numerous assets which could be exploited by government for the benefit of the tax payer:

• a state-of-the-art printing facility is able to provide premium quality identity assurance
• continuously maintained databases of vehicles and drivers which is much used by the police and other stakeholders to assure identity and prevent crime
• a significant digital business engaged in the sale of personal registrations
• an experienced and cost-efficient workforce with a wide mix of skills

The best of DVLA

Some of the capabilities that DVLA needs for the future are already in place. Some will need to be built both internally and with partners locally and regionally. At its heart, DVLA is already a leader in the management of physical transactions and some digital transactions. We believe that a track record of high performance and efficiency and a reputation for excellence should be our aspiration and that the culture and values of this organisation should reflect this.

Safer

DVLA records driver competence, entitlement and medical fitness. These records underpin road safety and the information is shared lawfully for use on a daily basis by a range of law enforcement bodies, as well as employers and the vehicle hire trade. This ensures only those with entitlement to drive are allowed on the road.

As part of the driver licensing process medical testing standards are applied. High risk offenders will now have to prove their fitness to drive before being allowed back on the road. Raising awareness around medical standards is a key goal for the agency and we are working closely with organisations such as Diabetes UK to improve this.

The DVLA’s vehicle register contains details of around 36 million licensed vehicles and those responsible for them. Vehicles have to meet specific standards before they can be registered for use on the road. The sharing of up to date records allows the police and other enforcement bodies to trace those involved in criminality. The currency of DVLA records will be further improved by the introduction of new services to allow changes to be made online. Work will also continue on supporting the insurance industry to reduce the level of uninsured driving.

DVLA works closely with the police and other government organisations to ensure that the opportunity for fraud is minimised and preventative measures are put in place to safeguard the integrity of both the driver and vehicle registers.

3.5 Business operations

An analysis of the performance of the business during the financial year has already been presented using the Business Plan measures as a baseline. Some of the key events and strategic developments during the year are considered in more detail below.

Centralisation of local office services

Centralisation at Swansea of the services previously carried out in our network of regional offices will save taxpayers around £26 million a year. This is as a result of reducing the size of the estate, customer channel shift, process improvement and increased productivity. These savings represent a significant percentage of overall operating expenditure. There are over 4,600 Post Offices providing our services to the customer.

What this means for the customer

The closure of the local office services network has meant the removal of DVLA presence across the country. Face to face contact with DVLA was a popular choice with some, particularly local motor traders and personalised number plate dealers. As the centralised services continue to bed in, we are confident that customers will enjoy the benefits that more digital transactions will bring in the future.

Front Office Counter Services

The contract for providing DVLA front office counter services awarded to the Post Office commenced in April 2013. It is an extremely important channel that provides customers with an option to transact in person. The continuation of the contract became increasingly important following the local office closures.

The contract has generated significant efficiencies due to reduced prices. It presents good value for money as part of a package of service channels. The contract includes the scope to offer more services to customers as DVLA continues to consolidate its operations in Swansea. The full year efficiency contribution is around £19 million.

What this means for the customer

The contract provides a valuable face to face option for customers that complement DVLA digital services. The contract offers services across over 4,600 local post offices and supports DVLA’s aim to provide excellent services regardless of the channel. Customers like using the services with customer satisfaction ratings currently standing at 97%.

Northern Ireland Electronic Vehicle Services

The announcement made during the year to centralise DVLA activities in Swansea through the closure of local service provision in Northern Ireland (NI) is consistent with the strategy implemented across the rest of the UK. The decision will realise further operational efficiencies with annual savings estimated at between £12-14 million commencing in July 2014.

As with the closure of the local services network, the centralisation of work from NI will lead to job losses and a change in the way that services are delivered.

What this means for the customer

The announcement and delivery of the NI electronic vehicle services will ensure a parity of service across UK for all customers. Motorists in NI will be able to take advantage of Electronic Vehicle Licensing (EVL) for the first time. Customers in NI will also benefit from local face to face service provision at 175 post offices.

Integrated Enquiry Platform and Services to the Insurance Industry

The first iteration of an integrated enquiry platform and flagship services to the motoring public was delivered in 2013-14. The overall aim of this service is to increase the channels whereby individuals and commercial sectors can legitimately access driver and vehicle data. The development is in its early stages, but significant efficiency savings should be made both internally and across the wider commercial sectors by making information available through the various portals rather than directly to a customer service agent.

What this means for the customer

Customers will be able to access key data online for the first time. This is a significant step for DVLA and should facilitate savings for commercial customers and make access to data far more convenient for all customers. The delivery of this service is in line with both the Government’s Digital Strategy and DVLA goals to make services simpler and better.

3.6 Reducing administrative burden – Red Tape Challenge

DVLA has continued to simplify and reduce the compliance burden imposed on both the public and businesses. During the year we delivered on several key policy initiatives, the most high profile of which is the Red Tape Challenge commitments made in our Business Plan 2013-14. To date all commitments that have been made have been delivered on target. Within the year the following initiatives have been introduced.

Removal of the insurance check

The requirement to check motorists’ insurance details at the point of licensing was removed in December 2013. Removal of this burden has been made possible through legislative change facilitated by joint working between DVLA and the insurance industry in developing continuous insurance enforcement. Removal of the requirement to check insurance details streamlines the licensing process saving time and cost to DVLA, the insurance industry and the individual motorist. This has led to additional take-up through our online vehicle licensing channel with an estimated additional 600,000 transactions.

We were able to make the changes to insurance checks because DVLA regularly checks existing databases for insurance under Continuous Insurance Enforcement rules. DVLA’s records are compared regularly with the Motor Insurance Database to identify registered keepers of vehicles that have no insurance.

Introduction of ‘Indefinite SORN’

This initiative was introduced in December 2013. Motorists no longer have to declare vehicles ‘off the road’ annually as the alternative to re-licensing. This saves the motorist time and effort.

What this means for the customer

As a result of the changes we made in December 2013, motorists no longer need motor insurance policies to be checked when getting their vehicle tax. The changes, which came into force in December 2013, also mean that motorists now only need to tell DVLA once when they declare their vehicle off the road. Previously, motorists who made a Statutory Off Road Notification (SORN) had to renew their SORN every year.

In addition to the above, part of the red tape challenge for DVLA was to introduce the option for fleet operators not to hold a vehicle registration certificate (V5C). During the year we took a decision to delay the delivery of this initiative in order to better align it to organisational strategy. This will now be delivered during 2014-15 (for more information see our [Business Plan 2014-15]https://www.gov.uk/government/publications/dvla-business-plan-2014-to-2015).

3.7 Contribution to Government Digital Agenda

The Government Digital Strategy sets out how government will redesign its digital services so that they are more convenient and easier to use for the customer. DVLA is at the forefront of this transformation and is responsible for delivery of 3 of the 25 exemplar services being transformed across government which represents the whole of DfT’s work in this phase. The 3 exemplars (View Driver Record, Vehicles Management and Personalised Registrations) are being managed through ‘Agile’ or incremental development. This has been challenging, however the overall progress in 2013-14 has been significant.

View Driver Record – this service was successfully released into a live test phase in March 2014 (see Integrated Enquiry Platform and Services to the Insurance Industry above).

Vehicle Management – This service will allow private and commercial customers to manage all aspects of their vehicle record online. The first service to be launched is the disposal of a vehicle into the used motor trade. This is currently in its second build phase and is scheduled for release during 2014-15. There will be further online services offered as part of this exemplar, providing organisational efficiencies and cost savings/convenience for customers.

Personalised Registrations – This service will allow individual and commercial customers to manage their personalised registrations online. This is currently in its first build phase and is scheduled for release in March 2015.

DVLA intends to continue to develop high quality, simple customer focused channels that will streamline processes both internally and externally.

3.8 Our staff

At DVLA we are committed to being a responsible business and understand that we have a responsibility to support the people that work with us and the communities in which we work. We are committed to implementing the government’s policies on diversity and equality. The promotion of equality and diversity principles are incorporated into delivering inclusive services accessible for staff, customers and the general public. For more information visit our website.

DVLA managed the redeployment/redundancy programme for the local services network, redeploying 275 people to other government departments. The remaining staff left on a voluntary basis. Throughout the transformation process, staff were supported to find new roles with refresher training/retraining and outplacement support.

Over the past year we have undertaken many activities to support our staff and communities these include:

• Staff Engagement - The Civil Service People Survey 2013 produced an overall engagement score 56% with a plan of activities to improve staff engagement
• Health and Well-being - promoting a healthy lifestyle and a focus on sustaining a healthy working environment
• Volunteering - complying with the central department’s policy to allow staff to take paid special leave to volunteer. The agency is reviewing its approach in this area over the next 12 months
• Work Experience - DVLA completed its participation in the government’s ‘Get Britain Working’ work placement programme. A total of 356 unemployed people participated and analysis undertaken by Department Work and Pensions (DWP) early 2013 revealed that 53% of these had subsequently gone into work including a number at DVLA
• Diversity – A number of activities have taken place to DVLA’s staff representation from the black and minority ethnic job market

The DVLA strategic plan and change delivery in particular target the local and regional communications as the key focus for developing skills and capabilities to enable the organisation to realise its ongoing objectives.

As a result of the centralisation of regional office services and other changes, the workforce level has reduced from 5,612 full time equivalents (FTE) at the start of the year to 4,985 FTE’s at the year end. There are six members of the Executive Team; five are male and one female. The graphs below show the current gender and age of staff in the agency.

Breakdown of gender and age of DVLA staff

Modernising Employment Contracts (MEC)

As part of the Civil Service reform agenda, DVLA has reviewed and modernised its employment offer. The package includes a pay award for the period 2012-14, revised terms and conditions, and additional payments to compensate for changes to pay and contractual terms.

3.9 IT transformation

At the outset of the year we were preparing the ground for a major IT contract let in anticipation of our contract with IBM expiring in September 2015. This has evolved over the course of the year and we have worked closely with colleagues within Government Digital Services (GDS) to develop a revised strategy which is set out within the strategic plan.

The direction is to move away from more expensive, inflexible, ‘proprietary’ products to using innovative development methodologies and less expensive, more flexible products, combined with developing as much ‘in house’ capability as possible. Progress has been made during the year to build the internal capability by creating partnerships with regional technology enterprises, universities and using the skills of our staff within the business. The strategy is ultimately focussed on significant reductions in the costs of developing systems and procuring expertise whilst simultaneously improving products and growing a highly skilled and flexible workforce.

3.10 Change portfolio

This term broadly covers the detailed IT delivery plan and division of the change portfolio into logical streams of work. The change agenda spans a number of financial years with some examples of the key initiatives delivered covered under ‘business operations’. As the year has progressed DVLA has started to embed the principles of the IT strategy in its change delivery portfolio. The trialling of existing in-house capability supported by external experts and GDS using shorter more focussed procurements, has led to a step change in the speed and expense of delivery, the first phases of the enquiry platform and other exemplar services being examples.

The DVLA change portfolio has been segregated into the following 3 categories during the year. The themes represent the need to gradually shift from existing systems to the newer platforms in order to protect services and business continuity.

Legacy Ramp-down – this programme is dealing with the need to maintain existing or ‘legacy’ systems in order to support business operations. These projects have included a refresh of the casework system (CASP), the telecoms system and other necessary technical refreshes.

Transition to Transform – this programme has dealt with projects that facilitate the organisation’s movement to its future vision of service delivery and with projects that ensure compliance with legislative changes. The key projects here include the Centralisation of Local Office Services and Northern Ireland Vehicle Electronic Services. Part of these key deliverables has included the development of first phase online systems to meet customer requirements following the closure of DVLA local offices across the GB and Northern Ireland.

Strategic Transform – this programme sets out the initiatives that provide the organisation and its business operations with the tools and systems needed to meet its strategic objectives. It moves DVLA away from complex ‘legacy’ systems to modern, flexible IT solutions as defined in the IT strategy. These initiatives focus on further online provision but not at the expense of the quality of service offered under other channels. Some of the developments progressed during the year include the exemplar services referred to above, direct debit and abolition of the tax disc.

3.11 Financial review

Business Accounts

DVLA’s accounts are segmented (see Business Accounts – Note 2 in the PDF version) between:

• maintenance of the driver and vehicle databases and related services
• collection and enforcement of Vehicle Excise Duty (VED)
• sale of personalised registrations which represents commercial income directly from the public. DVLA retains income to recover its costs in administering personalised registration services with the excess paid directly to HM Treasury as Consolidated Fund Extra Receipts (CFERs)

DVLA is funded by a combination of income from fees, cost recovery charges and supply funding from DfT. The DVLA seeks to break even year on year. The overall aim is to reduce fees and provide value for money for the taxpayer.

Financial results

We collected £506 million through gross income during the year which is an increase of £47 million against the Business Plan forecast. The increase against the plan is due in the main to:

• vehicle first registration volumes exceeding forecasts by 16% resulting in additional income of £20 million
• increased personalised registration sales and cherished transfer transactions have generated additional gross income of £19 million
• driver related income is above plan by £4 million mainly as a result of increased first applications for driving licences

The total expenditure for the year was £500 million against a Business Plan forecast of £507 million. This variance reflects amongst other things:

• project delivery costs have reduced by around £10 million
• higher than anticipated efficiencies made as a result of, for example, procurement exercises and process changes amounting to an additional £14 million netted off by one off increases in relation to MEC costs and back payment of approximately £9 million VAT relating to service provision in Northern Ireland

Fees surplus and fees strategy

The final position for 2013-14 shows a net fee surplus of £38 million against a business plan forecast of £16.4 million. The table below sets out the reconciliation from the Statement of Comprehensive Net Expenditure in the accounts to the fees surplus:

	Reference	£m
Agency Net Operating Income		5.8
Less payments to HM Treasury	CFERs payable
	* Cherished Transfers	(55.1)
	* Personalised Registrations	(64.3)
Add back net operating expenditure for VED related activity	Costs incurred on VED activity	151.6
Fees surplus		38.0

The fees surplus for the year has been offset against the net VED related expenditure. This has reduced the agency’s overall supply funding requirements from the Department for 2013-14. The agency’s financial objective is to recover costs associated with keeping the vehicle and driver registers with fees generated from these activities. As fees exceeded related costs in the current year, the in-year fees surplus has been passed on to the Department through a reduced supply funding requirement.

As set out in our Business Plan 2013-14, DVLA has conducted a review of its fees structure during the year with the aim of re-distributing a proportion of the efficiencies it has generated to its customers. DVLA has achieved its Business Plan commitment by attaining Ministerial agreement to consult on an approach to reducing fees over the next three years. The consultation and its results will be published early in Financial Year 2014-15.

The purpose of the fee re-structuring is to better align fees with the reducing cost base of the agency. Phase 1 aims to re-distribute almost £30 million per annum by reducing some driver fees. This phase will commence in Quarter 3 2014-15. DVLA is considering a more holistic approach but with a focus on vehicle fees in Phase 2. The purpose of the fees changes are to align fees with the overall efficiency savings that the agency plan to make by passing the savings on to the customer but to balance this to ensure we protect the agency from the volatility of fluctuations in volumes.

DVLA is not a Trading Fund. We will focus on collecting revenue on behalf of Her Majesty’s Treasury (HMT) and generating efficiencies which will be passed onto the customer.

DEL position

As a government body, the agency has an expenditure limit set at the start of the financial year in respect of certain activities. DVLA Resource Departmental Expenditure Limit (R-DEL) position was £140 million against the business plan allocation of £172 million. The main reason for the substantial difference is due to the additional vehicle and driver income collected of £24 million and a reduction in operating costs as set out above.

Efficiency

Over £70m of the £100m efficiency savings target has been realised by March 2014. These savings are recurring and sustainable. The key contributors to the increase in efficiency during the year are as follows:

• a full year impact of the reduced pricing as a result of the Front Office Counter Services contract which has led to an estimated 18.6 million sustainable saving commencing in 2013-14
• the initial realisation of benefits as a result of Modernising Network Services (MNS) which resulted in £3.53 million of efficiency savings during the year
• card procurement savings amounting to £2.37 million
• a further realisation of cost savings via the DVLA wheel-clamping contract totalling £3.6 million.

With the combination of efficiencies already realised, a full year impact of the centralisation of local office services (estimated at £26m) and other continuing savings, DVLA is confident that it will achieve its target of £100m savings against operational expenditure by March 2015. The current forecast is that DVLA will achieve £110m against its baseline (including the impact of inflation) which will represent a real cost reduction of more than 20%.

The DVLA strategic agenda builds on the continuous drive for efficiency by introducing a further target of a 30% reduction in total cost net of relevant income by 2016-17 as illustrated in the following diagram:

Note: relevant income is defined as additional income generated from other commercial activities and increased sales of personalised registrations compared to baseline.

Trust Statement

The Trust Statement sets out the VED taxation and fine revenue collected by the agency that is due to the Consolidated Fund.

During the year gross receipts for VED amounted to £6.1 billion in 2013-14, which is a slight increase on 2012-13 of £6 billion. VED evasion is down from 0.7% reported in the survey conducted in December 2011 to 0.6% in December 2013.The cost of collecting VED and the cost of enforcement action taken as a result of non-compliance has fallen significantly, mainly due to the closure of the local office network. The net cost of both activities was £151.6m for 2013-14; this is down £22.6m from £174.2m in 2012-13.

Shared Services Divestment

In March 2013 Arvato, part of the Bertelsmann Group, was awarded the contract to operate the Shared Services Centre (SSC) in Swansea which provided our transactional services in finance, procurement and HR. On 1 June 2013, Arvato took over as the new owner of the SSC, employer of its staff and responsibility for service provision to DfT. As a result of this contract, DVLA will move to a new platform during 2014-15 with a planned migration date of October 2014. Work in migrating to the new platform has initiated during the year. This migration is not without risk and careful management prior to the switch over is essential. DVLA is managing this risk through a multi disciplined project working alongside DfT and Cabinet Office colleagues.

3.12 Sustainability and environmental impact

A full sustainability report providing detail of performance against all of our Greening Government and transparency commitments has been published separately on our website. Data tables containing the minimum sustainability reporting requirements in accordance with the HM Treasury Sustainability Reporting Guidance 2013-14 and Greening Government Commitments Guidance are included in Appendix C in the PDF version.

Whilst we are slightly behind on this year’s interim target for the reduction of greenhouse gases we are still on track to meet the three main Greening Government Commitments which come to an end in 2014-15.

2013-14 (Year 4/5)

Measure	Greening Government Commitment	DfT reduction target	Reduction achieved
Greenhouse Gas Emissions (tCO₂e)	Total Business and travel carbon emissions	20%	15.25%
Waste	Reduce Waste Arising by 25% by 2014-15, relative to 2009-10 levels. (Tonnes)	20%	29.3%
Water	Reduce water consumption to an average of less than 6m³ per person per year. (m3/FTE) N.B. includes “Office” accommodation only.	Achieve 6m³	4m³

2014/2015 (Year 5/5)

Measure	Greening Government Commitment	GGC reduction target	Forecasted achieved
Greenhouse Gas Emissions (tCO₂e)	Total Business and travel carbon emissions	25%	31%
Waste	Reduce Waste Arising by 25% by 2014-15, relative to 2009-10 levels. (Tonnes)	25%	41%
Water	Reduce water consumption to an average of less than 6m³ per person per year. (m3/FTE) N.B. includes “Office” accommodation only.	Achieve 6m³	4m³

Green house Gas Emissions: We had only expected to achieve half of the Green House Gas target because the programme of work to close our local offices (completed in December 2013) meant an increase in our business travel and dual running of some of our operations. However, we exceeded our initial forecast with a 15.25% reduction. We believe that alongside the energy efficiency projects that have taken place on our main site and the early release of some of the leases has assisted in exceeding our plan. The closure of our local office network has provided a significant decrease in energy use and the full benefit of this restructure will be realised when all the leases have come to an end.

Waste: During 2013-14 we continued to further reduce our waste and are on course to exceed our 2014-15 waste minimisation targets. We are likely to achieve in excess of a 40% reduction in waste from the 2009-10 base line year.

Water: We continue to achieve good practice consumption figures for our water consumption at 4m³ per FTE (Good practice is between 4-6m³ per FTE). However we are aware the overall water consumption on our main site is increasing, despite waterless urinals and low flow toilets, this we believe is due to the increasing levels of staff employed here. We are currently considering ways to reduce water consumption.

3.13 Social responsibility

DVLA has a long and proud history of promoting charitable causes. During the year DVLA staff have voted for a ‘charity of the year’ which will benefit from the total charitable activity of all staff during the period. Following the vote, Wales Air Ambulance was announced as the beneficiary for 2013-14. To date nearly £7,000 has been raised.

The DVLA strategic plan and change delivery plan in particular target the local and regional communities as the key focus for developing skills and capabilities to enable the organisation to realise its ongoing objectives.

3.14 Risk and uncertainty

Focus on risk management remains on identifying and effectively managing risks to ensure minimum impact on the delivery of our strategic plan, whilst maintaining our ability to protect the integrity of our data, collect VED on behalf of the Treasury, meet customer service targets and fulfil commitments to policy driven change. Details of the risks identified and addressed in 2013-14 are outlined in the Governance Statement.

Our key risks moving forward are:

• those relating to formulation of non-UK Policy which DVLA can seek to influence but which is largely outside of the organisation’s control
• those relating to Business Continuity which is a pervasive corporate risk that can be mitigated through planning
• the ongoing risks relating to fraud, error and debt
• the related risks associated with data breaches/and poor data quality
• the ongoing risks to IT security which is mitigated through the IT change agenda i.e. making new and existing systems as robust as is possible

Oliver Morley

Accounting Officer and Chief Executive DVLA

11 June 2014