Contact: Jon Pittam, ext 7400

1. Summary

1.1 This report sets out the current projection of the outturn for 2002/03, prior to work commencing on producing final accounts for 2002/03. 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 the consideration of the final accounts in June.

2. Reason

2.1 Budget monitoring reports are submitted regularly to the Cabinet, to review whether any action is required to deal with variations between planned and actual spending.

3. Other options considered and rejected

3.1 Not applicable.

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

Contact: Jon Pittam, ext 7400

1. Summary

1.1 This report summarises the latest projection of the outturn for 2002/03.

1.2 Service cash-limited spending in 2002/03 is likely to be close to the revised budget with latest projections in most cases to the end of February indicating that net expenditure will be within 0.02% of the revised budget. Underspendings against non cash-limited expenditure of around £0.8m are anticipated.

2. Service cash-limited expenditure

Education

2.1 It is anticipated that expenditure in 2002/03 will be contained within the cash limit, after allowing for the planned carry forward of £1.3m approved in February. No significant underspending is anticipated. The deficits on business units in 2002/03 are likely to be slightly lower than previously forecast so that the reserve balance estimated at £614,000 at 31 March 2003 is higher than forecast.

Environment

2.2 Pressures on the Environment budget resulting from the implementation of the highways network management blueprint and from flooding emergencies are expected to be accommodated within the cash limit and a small underspending of £22,000 is forecast.

Policy and Resources

2.3 The revised budget included a number of projected over and underspendings against cash limits but overall the budget was in balance, subject to a requirement to achieve unidentified savings of £14,000. Spending is likely to be around £240,000 lower than the cash limit, although there will be issues around the carry forward of over and under spendings to be resolved when the final accounts are presented.

Recreation and Heritage

2.4 Spending on Recreation and Heritage services is expected to be close to the revised budget except for the shortfall at Milestones Museum which after allowing for the agreed level of partnership funding from the County Council and Basingstoke and Deane Borough Council is now forecast at £215,000 as compared with £156,000 in the revised budget. The increased shortfall is mainly the result of even lower visitor numbers in January and February than the reduced numbers on which the revised budget was based. Contingency provision was made in the revised budget for the write-off of the deficit incurred in 2001/02 and of the forecast deficit of £156,000 in 2002/03, subject to an anticipated 50% contribution from Basingstoke and Deane Borough Council. The position regarding any further deficit can be considered at year end but it is anticipated that Recreation and Heritage would be expected to contain any variations within its overall cash limit for 2003/04 to prevent an open ended subsidy to Milestones.

Social Services

2.5 The Social Services budget has been under pressure throughout the year but management action has been taken which has progressively reduced the forecast potential overspend. Latest monitoring indicates that it would be difficult but feasible to achieve a spending level in line with the cash limit.

2.6 In view of the reserve of £2m agreed in December to assist in meeting targets for reducing delayed hospital discharge for the last quarter of 2002/03 and into 2003/04, and of the substantial additional funding in the 2003/04 budget, it would be realistic to expect any residual overspending to be carried forward to 2003/04.

3. Expenditure outside service cash limits

Business rates

3.1 A small underspending on Education's business rates is projected but no substantial business rate appeals have been settled since the revised budget was approved.

Capital financing costs and interest on revenue balances

3.2 The revised budget was set on the assumption that base rate would remain at 4% until the end of the financial year. The reduction in base rate to 3.75% in February reduces revenue financing costs which together with more interest on revenue balances from more favourable cash flow trends, is likely to result in around £1m more than forecast in the revised budget.

Winter Maintenance

3.3 Spending on winter maintenance in 2002/03 is expected to be about £220,000 higher than the budget, which is based on the average of actual spending in the past four years adjusted for inflation (£1.7m). This is because of the sequence of relatively mild winters underlying the four year average.

Waste management contract contingency

3.4 The allocation from the contingency for the third quarter was assessed at £555,000 leaving a balance available in the final quarter of £1,514,000. However no allowance has yet been made in the allocation of the contingency for the expected shortfall of around £400,000 in the Government grant made available for funding the disposal of redundant fridges in 2002/03. It had been anticipated that these costs would be accommodated within the contingency sum as a result of lower growth in waste volumes this year, but it is possible that a small overspending may be incurred.

Hampshire Fire and Rescue Authority (HFRA)

3.5 Provision had been made in the revised budget for a 4% increase in firefighters' pay from November 2002. This remains the increase proposed in 2002/03 in the latest offer made by the local authority employers. There remains some uncertainty about the calculation of the saving in the firefighters' pay as a result of strike action, which will have to be paid over to the Government to offset the cost of additional support from the police and armed forces. However it is not anticipated that there will be a significant variation between the actual levy for the year and the budgeted levy, which remained unchanged in the revised budget.

Insurance

3.6 The contribution to or from the insurance provision is based on the value of claims paid in the year and the assessed value of outstanding liabilities, and this has still to be assessed. There have been some encouraging trends in the level of both employers and public liability claims, but in 2002/03 they have been more than matched by the additional provision that has been made for an Education claim, where the liability is likely to be substantially higher than originally assessed.

3.7 The County Council has an insurance reserve of £5.0m brought forward from 2001/02, which could support an increase in the insurance provision in 2002/03. However the position will need to be reviewed at the year end in the light of the value of outstanding fire reinstatement work which has still to be accounted for within the County Council's self-insurance arrangements.

Revenue contributions to capital

3.8 The overall capital financing position in 2002/03 has still to be finalised and compared with the financing plan for the year. However any variation in the timing of payments and receipts affecting the requirement for revenue contributions to capital in 2002/03 would usually need to be adjusted against the capital reserve in order to have a neutral impact on 2003/04's financing plan.

4. Conclusion

4.1 On service cash-limited budgets a net underspending of around £0.2m is currently projected assuming that the potential overspending on Social Services is eliminated.

4.2 An underspending of around £0.8m is currently forecast on other budgets.

4.3 However there are likely to be further variations before the accounts are closed and reported to the Cabinet in June. Any addition to balances at 31 March 2003 would be available to support one-off investment in 2003/04, but the Cabinet may consider that the main priority is to offset the reductions in services and increases in council tax that will otherwise result from the anticipated loss of Government grant in 2004/05 and 2005/06.

Recommendation

That the relatively close projected outturn against the revised budget be noted, and that no specific action be taken in advance of the consideration of the final accounts in June.

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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