Contact: Jon Pittam, ext 7400

1. Summary

1.1 This report sets out a number of issues which have occurred since the last meeting but which do not require any particular action at this stage.

1.2 The following decision is sought:

· to note the recent changes since the budget was approved

2. Reason

2.1 The Cabinet will wish to keep abreast of current developments which affect the budget.

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. Reasons 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 The report sets out a number of issues which affect both the revenue budget and the capital programme since the Council approved the budget for 2003/04. No significant action is required at this stage and the report is to keep the Cabinet informed of current developments.

2. Education

2.1 The Government has announced an additional grant to support school budgets for those councils which have received not only the lowest increase in their education formula spending share (EFSS) but also a reduction in grant through the standards fund.

2.2 The Government says it has listened to representations and will pay an additional grant of £28m to 36 councils. Hampshire's share is only £278,000 (Portsmouth get £0.9m and Southampton £1m). The Government say this will ensure that the increase in general funding for schooling, including standards fund and other changes between 2002/03 and 2003/04 is at least 3.2% per pupil. The extra grant which has to be allocated to schools is equivalent to £1.60 per pupil, so it by no means covers the big funding gap between the total grant support that the Council had and the increase it had to give to its total schools budget. As the schools budget was protected by the floor in 2003/04 and as this grant protection will be reduced by further grant loss in 2004/05, it is suggested that schools be advised to utilise this late allocation in their budgets during 2004/05 rather than in 2005/06.

3. Policy and Resources

3.1 The Leader has requested a delay in the payment of the annual subscription to SEERA for 2003/04 until revised regional planning arrangements and their impact upon the County Council are determined. The subscription is £98,000 lower than in 2002/03 because the regional planning costs are now being funded directly by Government (with the formula spending share for environmental protective and cultural services reduced accordingly). The remaining subscription due for 2003/04 is £47,762.

4. Social Services

4.1 The Government has announced its details of grant for Supporting People. A new funding system for providing housing related support to vulnerable people was introduced from 1 April 2003. The Supporting People programme will be funded initially by specific grant with Social Services authorities designated as lead authorities working in partnership with local housing, health and probation services. Previously these services were funded from a variety of social security, housing and probation grants.

4.2 Assessing the commitment that local authorities have inherited has been difficult and the initial allocations announced by the Office of the Deputy Prime Minister are based on local authority returns to 31 December 2002 and will be adjusted in the light of the final position at 31 March 2003. The County Council's initial allocation is £29.7m and in addition there is a grant towards administrative costs of £0.8m. Allocations will also be adjusted in the light of expected savings from the early review of services, but the initial funding arrangements are intended to avoid financial turbulence from the transfer of responsibility. However the Government's intention is to move towards formula based funding from 2005/06, which creates uncertainty about the financial implications of the transfer in the medium-term.

4.3 The Community Care (Delayed Discharges etc) Act has now made its progress through Parliament. The Act introduces a system of reimbursement for delayed hospital discharges and removes local authorities ability to charge for community equipment and intermediate care. Following parliamentary debate the Government has agreed to a phased implementation of the reimbursement system. The new duty placed upon the national health service (NHS) and local authorities relating to the discharge of patients will start in October 2003. However, councils will not be charged for delays which are their responsibility until January 2004.

4.4 Key points in the Act are described by the Department of Health in the following terms:

· it places a duty on the NHS Trust to notify local authorities as soon as it becomes apparent that a patient in acute care may require community care services upon discharge. Local authorities and the NHS are required to work together to determine the services that the individual needs.

· it creates a strong financial incentive for local authorities to assess individuals when in hospital and make provision for any community care services that they may need as quickly as possible.

· it promotes the independence of older people by creating incentives for them to be transferred from an acute ward (where they are at risk of losing their independence) to a more appropriate community setting as soon as they are ready for discharge.

· community equipment (aids to daily living such as walking sticks and shower chairs) and intermediate care (rehabilitation care provided in a variety of settings) provided by local authorities will no longer be charged for and will now be free to users simplifying the existing system and making it more user friendly. It is also supposed to make it easier for community trusts and local authorities to work together to provide these services more effectively through a pooled budget.

4.5 Instead of the £100m previously expected as Government grant to assist this process councils will now receive £50m to cover the whole second half of the 2003/04 financial year which will be made available as a specific formula grant.

4.6 The fine will be set at a "fair daily rate". Rates of £100 per day and £120 in the south-east were suggested in the original consultation. The Government says that responses to the consultation indicated that this was a fair amount! The actual fines will be laid out in regulations, and will be published shortly. Given the reduction in the County Council's area cost adjustment for 2003/04, to a level which is equivalent to the sum outside the south-east for some counties, the imposition of a fine of £120 is less than fair.

4.7 The use of the Council's own budgeted contingency of £3.5m for 2003/04 can be reviewed during the autumn. This can then be used with the Government grant to reduce delayed discharges down to the performance target before fines are introduced from January. Further reports can be made to identify the performance measures and business case for using this resource later in the year.

5. Fire

5.1 The fire pay dispute has still not been settled but the latest pay offer is for an increase of 4% in November 2002 and 7% in November 2003, subject to various modernisation conditions. The Hampshire Fire and Rescue Authority (HFRA) budget provided for increases of 4% in November 2002 and November 2003, so some savings would need to be achieved by HFRA in 2003/04 to accommodate the pay offer within the levy, unless transitional funding is provided by Government.

6. Flood defence levy

6.1 The Government proposes that the Environment Agency's flood defence work in England should, subject to the Water Bill, be funded by a single stream of DEFRA block grant covering both capital and revenue expenditure. The Agency will therefore no longer raise most of its funding from levies on local authorities, which are in turn supported by local Government funding arrangements.

6.2 The Government expects to introduce the capital block grant on 1 April 2004 for individual capital projects but the timing and implementation of revenue block grant is under further consideration.

6.3 Local flood defence committees will be abolished and replaced by regional committees despite the Council's opposition to these proposals during consultation on the Water Bill.

7. Council tax rises 2003/04

7.1 The Government has published figures which show that the average increase was 12.9% in 2003/04 leading to an average council tax for a Band D dwelling at £1,102. Local Government Minister Nick Raynsford said that "we are disappointed some councils have decided to set high increases. They must explain to their tax payers why they have done so. We are still looking in detail at all the figures but we will not accept increases of this scale year after year."

7.2 It is of course very clear for Hampshire why the council tax increase was 15% because of the loss of Government grant. As well as looking at the very high council tax increases caused by loss of grant the Government should also look at the relatively high increases for councils in the North and Midlands which have gained grant and have not passed those gains on in terms of reductions to their council tax payers.

8. Area cost adjustment

8.1 Despite further written representations by the Leader to the Minister about the late introduction of the Isle of Wight Council into the sample which determined the area cost adjustment for Hampshire, the County Council has not been successful in getting any change in the way this calculation was carried out. This issue can be pursued prior to the settlement for 2005/06 when the main impact of the inclusion of the Isle of Wight will be felt, due to the loss of protection from the floor.

9. Chancellor's budget statement

9.1 The Chancellor announced his budget on 9 April 2003. There was very little direct impact upon the County Council's budget as a consequence of the budget apart from the reiteration of decisions already made on future increases in the landfill tax which will increase from £14 to £15 per tonne from April 2004 and by a further £3 per tonne in 2005/06 and by at least £3 per tonne in years after that until it reaches £35 per tonne.

9.2 The Government also reaffirmed its decision to invest £125m in a `futurebuilders fund' to assist voluntary and community sector organisations in their public service work. Further details on the scope and scale of this are awaited and the Government will consult shortly on how the funding should be used.

9.3 The Government also announced a number of key issues for consideration in the lead up to spending review 2004:

· tackling child poverty

· devolving decision making from the centre - "to examine how best to achieve decentralised delivery and responsive local and regional services in a way that is consistent with equity and efficiency against the framework of national standards"

· engaging in the community and voluntary sectors

· delivering better childcare

9.4 The Chancellor also referred to the possible introduction of local and regional pay for public services, but it is not clear how this will be introduced or the timescale for doing so.

10. Accounts and audit regulations

10.1 The Government has continued its progress with the new accounts and audit regulations despite representations about unneccessary prescription and detail together with too many reserve powers. The only significant changes have been:

· to reduce the period for which the public accounts would otherwise have been held open for inspection

· to drop the proposal to show individually by name each chief officer's individual salary, instead continuing to show these by bands in the final accounts report.

10.2 The main changes brought about by the new regulations relate to the earlier approval and publication of the accounts, which were reported to the last meeting of the Cabinet.

11. Council tax revaluation

11.1 Initial work suggests that revaluation will further increase Hampshire's tax base relative to the average resulting in above average increases in council tax. So once the Council has escaped the effects of the grant distribution review in 2005/06 there will be just one year's respite before the effect of revaluation in 2007/08.

12. Capital

12.1 The Government has announced details of targeted capital allocations for 2003/04. The County Council has been allocated £10.3m in total (including aided schools) of which £5m is for the East Hampshire special school reorganisation. The support funds one of the main priority projects not previously accommodated within the education capital programme.

12.2 Some further details of formula funding for 2004/05 and 2005/06 have also been announced, though details of specific allocations for primary schools have yet to be announced. The current separate funding streams for condition and suitability schemes are being combined. Formula funding for 2004/05 is likely to increase to approximately £30m from the current level of £23.8m in 2003/04, However this will be reduced in 2005/06, when the Government intends to introduce new arrangements for targeting resources on improving secondary schools.

Recommendation

To note the recent changes since the budget was approved.

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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