Contact: Paul Carey-Kent, Deputy Treasurer, 01962 847525
David Howells, Director of Corporate Services, 023 8064 4000 ext 203

1 Introduction

1.1 The following steps have occurred to date in process for setting the Authority's budget for 2003/04:

· the Authority meeting on 4 December 2002 noted a base budget of £51.2m, and asked a cross-party working group of members to prioritise possible options for new growth in 2003/04 (ie beyond the full year effects of previous years' growth)

· the working party met on 13 December

· meetings were held with unions (6 January) and constituent authorities (9 January) in order to obtain their views on the budget as a whole and the prioritised list of possible new growth options. The resulting comments from the constituent authorities are attached at appendix 1 to this report. The unions favoured the budget including the full £1.035m of new growth options considered by the member working group, but made no formal response.

· The Finance and General Purposes Committee met on 15 January to consider what recommendations to make on the budget to this meeting in the light of consultation comments received. The paper to that meeting (attached as appendix 2) sets out the budget position in full. The timing was such that this report did not include the results of the consultation, but these were made available at the meeting.

2 Finance and General Purposes Committee recommendations

2.1 The Committee resolved that it be recommended to the Authority that:

1 The base budget to be approved.

2 The capital programme be approved, leaving the asset management working party to give further consideration to detailed priorities and make recommendations to the Finance and General Purposes Committee in due course as to implementation.

3 That as set out in appendix 5 to the report to the Finance and General Purposes Committee:

1 an overall borrowing limit be fixed at £12.544m for the year ending 31 March 2004

2 a short-term limit be fixed at £9.378m for the year ending 31 March 2004

3 the proportion of interest paid at rates which can be varied by the level of external factors be set at 32% for the year ending 31 March 2004.

3 Effects of Finance and General Purposes Committee recommendations

3.1 If agreed by the Authority, the recommendations would lead to a budget which consists of the base budget (£51.2m) plus the revenue effects of the capital programme (only £16,000 in 2003/04, but more substantial in future years as the effects of leasing arrangements in particular work through). There would be no new growth proposals. However, it is in addition proposed to add a one-off amount to the base budget as presented to cover repairs to Copnor Fire Station, which have now been completed at a cost of £135,000. Members will recall that costs of up to £250,000 in respect of repairs to Copnor, and constituent authorities were asked whether they would be willing to pay this in 2002/03 or would prefer it to be taken into account in setting the 2003/04 budget. All three constituent authorities preferred the latter option, and it is now thought necessary to levy that £135,000 as previously flagged up because the spending on Copnor has reduced the Authority's capacity to respond flexibly to other pressures on the budget.

3.2 This would lead to total budget and levies as follows:

Table 1: Budget summary

* note - the base budget has been shown here as a constant figure across all three years so that changes, eg to the forecast cost of pensions, do not distort the picture.

3.2 If set at this level, the levies on the constituent authorities would be as follows:

Table 2: Levies at proposed level

This budget would make directly available £135,000 against the priority items of pressures and potential new growth items prioritised by the member working group. This, together with measures to be assessed further and taken forward over the next year, will provide the potential to meet the highest priorities identified. Future reports will identify what can be progressed and through what funding, but in broad terms the areas to be explored will include:

· seeking to carry forward any savings made in 2002/03 by flagging up now with constituent authorities that they be added to the levy for 2003/04

· examining the potential to deal with some pressures on the revenue budget by transfer where appropriate to the capital programme

· possible delays in implementing in full the growth agreed for 2002/03 which has a full year effect in 2003/04

· any other savings measures or reprioritisation of existing spend in favour of proposed new areas of spend

4 European convention on Human rights and the Human Rights Act 1998.

4.1 The proposals within this report are compatible with the provisions of the European Convention on Human Rights and the Human Rights Act 1998.

Recommendations

1 That the Authority sets levies on the three constituent authorities for 2003/04 based on a 5% increase as set out above, ie base budget plus the revenue effects of the capital programme plus the cost of the repairs to Copnor Fire Station

2 That further reports be brought to the Finance and General Purposes Committee in due course to establish the scope within that budget to take forward the priorities for new growth

3 That constituent authorities be given notice that these levies may be increased later for (a) the amount of any underspend achieved by this Authority in 2002/03 (ie with a neutral overall effect on constituent authorities); and (b) the amount by which any eventual cost of implementing the firefighters' pay awards for November 2002 and November 2003 exceeds the budgeted assumption of 4% + 4%, insofar as that cost is not covered by transitional funding or savings realisable in 2003/04.

4 That as set out in appendix 5 to the report to the Finance and General Purposes Committee:

(a) an overall borrowing limit be fixed at £12.544m for the year ending 31 March 2004

(b) a short-term limit be fixed at £9.378m for the year ending 31 March 2004

(c) the proportion of interest paid at rates which can be varied by the level of external factors be set at 32% for the year ending 31 March 2004.

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:

1. Published works.

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

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