Contact: Jon Pittam, ext 7400

1. Summary

1.1 This report sets out the current projection of the outturn for 2001/02. Actual spending is expected to be close to the budget. The following decision is sought:

· that no specific action is required at this stage, in advance of consideration of the final accounts in July.

2. Reason

2.1 The Cabinet should routinely review budget monitoring reports.

3. Other options considered and rejected

3.1 None.

4. Conflicts of interest declared by the decision maker or a member or officer consulted

4.1 Not applicable.

5. Dispensation granted by the Standards Committee

5.1 Not applicable.

6. Reason for the matter being dealt with if urgent

6.1 Not applicable.

Approved by: Date:

Councillor T K Thornber

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Contact: Nick Gibbins, ext 7544

1. Summary

1.1 This report summarises the latest projection of the outturn for 2001/02.

1.2 Service cash-limited spending in 2001/02 is likely to be very close to the revised budget, with latest projections indicating that net expenditure will be within 0.1% of the revised budget.

2. 2001/02 projected outturn - service cash-limited expenditure

Education

2.1 The Education revised budget for 2001/02 incorporated planned underspendings of £651,000, which were carried forward to ease budget pressures in 2002/03. The latest monitoring report in March indicated that expenditure would be contained within the revised budget and that a further small underspending, estimated at £35,000, was likely to be achieved.

Environment

2.2 Planned underspendings of £642,000 were allowed for in the Environment revised budget to be carried forward to 2002/03. No significant variations on the approved revised budget are currently projected.

Policy and Resources

2.3 Spending in 2001/02 on Policy and Resources' own services is currently projected to exceed the revised budget by approximately £200,000 (0.6%). Although there may be some offsetting savings, still to be determined, any balance will need to be carried forward to 2002/03. The main factors are:

	£'000
Repair and maintenance of buildings - mainly due to cost pressures on term maintenance contracts	40
Coroners - continuing higher activity levels	50
County Treasurer's - transitional costs associated with Enterprise project implementation	40
Personnel and Training - Hampshire Training Solutions' deficit likely to exceed budgeted £100,000	70
	200

2.4 IT Services were projecting a deficit of £1.0m in 2001/02 as a result primarily of the initial investment required in the roll-out of IT2000, which would then be recovered in 2002/03 and 2003/04. The deficit for 2001/02 is now expected to be significantly lower as a result of additional IT2000 charges paid by departments and re-profiling of expenditure.

Recreation and Heritage

2.5 Recreation and Heritage's 2001/02 budget has been significantly affected by the impact of the foot and mouth precautions taken in the first half of the year upon countryside and outdoor centre services. As a result of both higher costs and reduced income, a consequential overspending of £376,000 was projected. The latest monitoring report indicates that specific action taken and prudent financial management will lead to savings of £105,000 within the Countryside and Sport and Community services to offset part of the overspending. Allowance was made in the revised budget for 50% of the projected overspending from the impact of foot and mouth to be met corporately, estimated at £188,000. It has been assumed however that the Cabinet would wish to write-off any remaining overspending (currently estimated at £271,000 or £83,000 more than provided) given the evidence that strenuous efforts have been made to achieve compensating savings.

2.6 The agreed subsidy for Milestones Museum in 2001/02 is £308,000 shared equally between the County Council and Basingstoke and Deane Borough Council. The revised income targets for the year, set in the light of higher visitor numbers in the early months of the museum than forecast, have not been achieved and a deficit of £245,000 in 2001/02 is now forecast. Action has been taken to amend staffing levels and opening hours in 2002/03 and it has been agreed that the Joint Museum Committee should plan to "repay" the additional subsidy required in 2001/02.

Social Services

2.7 The latest Social Services monitoring report based on expenditure to the end of February identifies spending pressures in excess of the revised budget of £0.2m, as compared with £0.9m at the end of September and £0.5m at the end of January. This reflects the success of the measures taken during the year to contain budget pressures and is expected to result in an end of year position which is within the cash limit.

3. 2001/02 projected outturn - other budgets

Business rates

3.1 Not likely to be any significant variation.

Capital financing costs

3.2 Base rate has remained unchanged since November 2001 as assumed in the revised budget so no significant variation is anticipated as a result of interest rate changes. However, favourable cash flow trends are likely to result in higher levels of interest on balances than forecast of around £1m. The favourable cash flow trends result from various factors including slippage on capital payments and from the extra grants targeted at schools including the facility to spend the 2001/02 Standards Fund over 17 months.

Winter maintenance

3.3 Spending on winter maintenance in 2001/02 is expected to be close to the budget, which is based on the average of actual spending in the past four years adjusted for inflation. A small underspending of up to £50,000 is forecast.

Waste management contract contingency

3.4 The allocation from the contingency for the third quarter was assessed at £747,000, leaving a balance available for the final quarter of £566,000. The forecast of the final position is that the call on the contingency could be up to £100,000 in excess of the budget. However, this includes costs of £112,000 relating to the collection and storage of refrigerators since 1 January 2002, when new regulations came into force. The Government has made available a broadly equivalent sum (£120,000) to cover the period 1 January 2002 to 31 March 2002 within the revenue support grant settlement for 2002/03, so that any overspending at the projected level could be carried forward and accommodated within the 2002/03 budget. It remains a matter of concern that Department of the Environment Food and Rural Affairs (DEFRA) has still to announce what additional funding will be made available to local authorities in 2002/03 to cover the higher cost of disposal of refrigerators, when authorities will need to provide not only for collection and storage costs but also for disposal costs.

Hampshire Fire and Rescue Authority (HFRA)

3.5 The revised budget assumed that the HFRA levy for the year would be at the same level as originally budgeted (£36.1m) and the most recent budget monitoring report concluded that spending was likely to be close to the cash limit. The latest indications are that some further savings on pension costs and on other budgets are likely to arise, and though an overall saving is possible, there are still some uncertainties to be resolved, particularly surrounding the provision required for retrospective liabilities following the demise of the Independent Insurance Company.

3.6 The County Council's current policy is to earmark any short-term savings that arise from lower pension payments to an earmarked reserve on the basis that the long-term trend is for fire pension payments to rise more rapidly than the Government recognises in the revenue support grant settlement. The White Paper suggests establishing combined fire authorities as precepting authorities (receiving their own share of Government grant and non-domestic rates and setting their own council tax) rather than levying authorities. If so, retaining a separate reserve for this purpose becomes unnecessary and this is an issue that can be considered when the final accounts for 2001/02 are reported in July.

Insurance

3.7 The contribution to or from the insurance provision based on the value of claims paid in the year and the assessed value of outstanding liabilities has still to be finalised. As a result of the increase in premiums charged to services of £2m in 2001/02, an additional contribution is unlikely to be required. However, buildings cover has been extended to cover major storm and flood damage as well as fire in 2002/03 without any increase in premiums. This will need to be taken into account in reviewing the level of the insurance reserve at the year end.

Revenue contributions to capital

3.8 Capital payments in 2001/02 are likely to be lower than the £108m previously forecast despite the much improved performance this year in starting projects included in the 2001/02 starts programme. Capital receipts in 2001/02 are also likely to be marginally higher than forecast as a result of successful completion of a number of large disposals at the end of the financial year. Although the overall capital financing position has still to be finalised, the indications are that the level of revenue contributions to capital required for financing purposes in 2001/02 will be lower than budgeted, but that an equivalent transfer to capital reserve is required to finance higher payments in future years.

4. Conclusion

4.1 On service cash limited budgets a net overspending of around £0.7m (0.1%) is currently projected. Part of the further overspending on Recreation and Heritage Committee due to foot and mouth precautions might need to be written off, depending on the final position for the Committee as a whole.

4.2 An underspending of around £1.0m is currently forecast on other budgets.

4.3 There are however other accounting entries to make and the figures on all budgets are provisional. There is possibly about £1.0m to add to forecast balances at 31 March 2003, and its use can be determined when the final accounts are considered in July 2002. It could be held to provide towards

· further protection against the expected 2003/04 budget pressures

· for one-off investment or liabilities during 2002/03

· any balancing investment required to bridge the £2.5m funding gap in the 2003/04 capital programme.

Recommendation

That the relatively close outturn against budget currently projected be noted and final decisions taken when the final accounts are reported in full.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

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