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1 Introduction

1.1 This report provides a further update on the budget monitoring position for the Environment services for the 2002/03 financial year, covering the revenue budgets for highways and transportation, planning and waste management. It reflects the outcome of the most recent budget monitoring review, carried out by budget holders within the Environment department, during January and February 2003.

1.2 The Executive Member needs to be aware that the figures in this final budget monitoring report for 2002/03 reflect estimated expenditure and the projected outturn for the year based on the monitoring information available at the end of February. Therefore it does not, at this stage, represent the final year end position for the 2002/03 financial year.

1.3 Almost certainly some additional variations from the budget plan will have arisen during March, which will need to be identified and reported when the final accounts for the year are prepared. This work is currently underway and is planned to have been completed by the end of May, which would enable the final outturn for the year, together with any significant variations from the budget, to be reported to the Executive Member at his meeting in June.

1 Changes to the 2002/03 revenue budget cash limit

1.1 The most recent budget monitoring position, setting out the revised budget for the 2002/03 financial year, was presented as part of the 2003/04 revenue budget report to the Executive Member at his meeting on 24 January 2003. The revised budget cash limit at that time was £77.198 million. The report drew attention to the likelihood of additional expenditure, beyond the budget provision, of £300,000 on public transport bus subsidies and £90,000 on the waste management budget for the disposal of abandoned vehicles. In addition, it was assessed that the likely level of expenditure on the storage and disposal of fridges might be £400,000 in excess of the available funding.

1.2 The above monitoring position was brought to the attention of the Cabinet at their meeting on 10 February 2003, and it was decided, subject to the overall final outturn on the Environment budget, to allocate an additional sum of £390,000 to the cash limit to cover the anticipated higher expenditure on bus subsidies and abandoned vehicles, although this amount would be adjusted when the final accounts are reported to the Cabinet. It was also agreed, as a result of lower growth in waste volumes in 2002/03, that it should be possible to contain the additional cost of fridges within the contingency allocation of £3 million for the waste management contract.

1.3 The 2002/03 revised budget cash limit includes a sum of £77,000 towards the management of natural resources, reflecting the allocation of pump priming grant under the Government's Public Service Agreement (PSA) initiative. It has now become clear that when the special grant report was laid before Parliament, one of the conditions was that it is to be paid to local authorities as capital grant. However, the types of expenditure to be covered by the grant are not restricted to the types of spending that can normally be charged to the capital accounts as the County Council will be issued with a capitalisation direction to cover any revenue expenditure being financed by the grant. In view of this, the revenue budget cash limit has now been reduced by £77,000 to reflect the planned recharge of expenditure in connection with this PSA to capital.

1.4 The only other change to the 2002/03 revenue budget limit since January has been in relation to the waste management contract related budgets, where a further allocation of £555,000 has been made from the central waste management contingency to cover estimated cost increases during the third quarter of the financial year.

1.5 The Environment service's cash limit has been increased to take account of the above changes, giving an adjusted revised budget figure of £78.066 million.

1.6 Appendix 1 sets out the latest budget monitoring position for each of the standard divisions of service, including an assessment of actual expenditure to the end of February, and the projected outturn. The most significant issues that have emerged from the review are discussed in the following paragraphs.

2 Highways maintenance

2.1 The last report in January indicated that a sum of £255,000 was still being held in reserve and would be available to meet additional demands on the highways maintenance budget during the remainder of the year. This would include any extra spending to deal with flooding, as well as meeting any of the highways network management blueprint implementation costs which could not be absorbed from within the management and support services budget.

2.2 In the event, only £35,000 has so far been required as additional specific allocations to fund flood related emergency works and the blueprint costs have now been fully absorbed against savings on management and support services. It has therefore been possible to allocate the balance of the reserve to meet other high priority routine maintenance works including signs, white lining and technical surveys.

2.3 At the time of preparing this report, assessed expenditure on winter maintenance salting and snow clearance up to the end of February was £1.816 million, being £100,000 in excess of the budget provision. The eventual outturn for the year will depend on the number of nights that salting was required during March. In accordance with the special budgeting arrangements that apply to winter maintenance expenditure, any excess expenditure at year end will be absorbed by central balances and will not count against the cash limited part of the Environment revenue budget outturn.

2.4 Appendix 2 sets out details of the adjusted 2002/03 highways maintenance programme following the release of available reserves, including those works being funded from the capital programme provision for structural highways maintenance.

3 School crossing patrols

3.1 The school crossing patrol service transferred from Education to Environment at the beginning of the financial year, as a key outcome of the best value review of the service. A newly established school crossing patrol service team within the Environment department has made substantive progress in the implementation of the previously approved improvement plan for this service.

3.2 New systems of site and staff risk assessments have been developed and are being acted upon, with urgent findings such as the need for improved uniforms, equipment and training being delivered. The service has also reviewed vacancy management and has initiated new arrangements for advertising and recruiting staff to vacant priority sites. Additionally, a programme of infrastructure maintenance and site improvements has commenced across the county, with priority for these works being directed to the busiest and most needy locations.

3.3 Although some progress has been made in reducing the overall vacancy rate amongst school crossing patrol officers, a residual budget underspending of £17,000 is being projected at this stage, although this is being used as far as possible for infrastructure improvements to assist the safety of school crossing patrol sites.

4 Management and support services

4.1 The previous budget monitoring review which was reported to the Executive Member in January showed that savings of £42,000 would need to be found from staff turnover and other housekeeping efficiencies to enable expenditure on this heading to be contained within the cash limit. This was on the assumption that excess blueprint costs of £250,000, might need to be met from the wider budget for network management, if offsetting savings within management and support services could not be found.

4.2 The latest budget monitoring review has identified savings of £254,000 compared to the revised budget prepared in December, mainly from staff vacancies and turnover, together with higher income from fees and recharges to capital and reduced departmental running costs. These savings fully absorb the excess blueprint costs within the management and support services heading, leaving a small residual savings target of £38,000 to be found during the final weeks of the year. Given that there are a number of vacancies within the department at the present time, this additional saving is almost certain to be realised, which would enable overall expenditure to be contained within the cash limit for this service heading.

5 Waste management

5.1 The waste management revenue budget is sub-divided into two separate categories for budget monitoring purposes:

· The waste contract related budgets, covering the main waste disposal contract, trade waste income and recycling credits

· The other non-contract related waste management services, covering facility maintenance, administration, promotions and developments, disposal of abandoned vehicles and provision for household waste recycling centre management.

5.2 The current cash limit for the waste contract related budgets is £29.907 million, including the assessed third quarter call of £555,000 on the central waste management contingency. Overall, the budget now includes total allocations of £1.471 million from the central waste management contingency sum of £2.985 million, covering known variations on the waste contract related budgets during the first three quarters of the financial year.

5.3 The 2002/03 budget for the non-contract related waste management services, which is subject to normal budget management arrangements which require services' expenditure to be controlled within cash limits, is £2.204 million.

Waste contract related budgets

5.4 In summary, the 2002/03 waste management contract and related budgets are likely to be contained within the overall contract budget, although there are a number of factors which could have a material influence on the final outturn position.

5.5 Waste volume levels during the first nine months of the year were lower than expected partly because of decisions taken by Eastleigh Borough Council and Hart District Council to commercialise their trade waste rounds. Although this may be seen as welcome news, in terms of lower landfill disposal costs, the corresponding losses in trade waste income are greater than the disposal savings related to this reduced activity. In general, household waste volumes during the first three quarters were below budgeted expectations, even after allowing for an increase of almost 20% in collected dry recyclables. Civic amenity growth of 5.8% for the same period exceeded the tonnage allowance of 4.1% within the overall budget.

5.6 As expected, the Chineham energy recovery incinerator was commissioned in January. Some 90,000 tonnes of household waste will be processed at the plant during a full year of operation. In addition, new 3-5 year household waste recycling centre contracts also began in January. Under the terms of the contracts, which were delivered within budget, the contractors will again be able to earn incentive payments where they can demonstrate sustained increases in recycling performance.

5.7 New contractual arrangements for fridge disposal have been in place since the end of February, which has resulted in some financial benefit in the latter stages of the 2002/03 financial year. That said, it is nevertheless estimated that the cost of dealing with redundant fridges in 2002/03 would have exceed the specific funding of £843,000 made available by the Government by some £400,000. However, the Cabinet have now agreed that as a result of the lower growth in waste volumes during 2002/03, it should be possible to contain the additional cost of fridges within the remaining balance of the contingency allocation of £3 million for the waste management contract.

Other waste management budgets

5.8 Expenditure within this area of the waste management budget is expected to have been contained within the available budget provision. Minor savings of £5,000 are projected on the waste management administration budget.

6 Conclusion

6.1 The report provides a summary of expenditure to date and the forecast outturn on the Environment Services revenue budget for 2002/03, based on the budget monitoring position at the end of February 2003.

6.2 It shows that expenditure is being progressed in accordance with the revised budget for 2002/03 which was approved by the Executive Member during January. A number of minor underspendings, totalling £22,000, are being projected on the budgets for school crossing patrols and waste management administration. In addition, excess of expenditure of £100,000 has been incurred on winter maintenance salting and snow clearance, which will need to be met from central balances.

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.

TITLE FILE

Appendix 1

Environment

Revenue Budget 2002/03 - Monitoring Statement

Analysis of variations

Appendix 2

Environment

Summary showing detailed allocation of highways maintenance budget

Revenue Budget 2002/03

Capital maintenance programme 2002/03