Contact: Nick Gibbins, ext 7544

1. Summary

The review indicates a few areas in which revenue spending is likely to differ from the assumptions in the budget. At the end of February 2004, an underspend of £131,000 is forecast for the Policy and Resources revenue budget overall, including an underspending of approximately £103,000 for community planning grants.

Capital payments are likely to be close to the forecast in the financing plan.

1.1 The following decisions are sought:

i) To note the current position on the monitoring of the revenue budget and capital programme and the action being proposed.

ii) That the principle of allowing the underspending on community planning grants to be carried forward be approved, subject to a decision when the final accounts are considered.

iii) To approve additions to the capital programme for 2003/04:

a) £632,000 in respect of New Deal for Schools capital repairs

b) £5,000 in respect of computer equipment for Hampshire and Isle of Wight Magistrates' Courts Committee

iv) To approve the carry forward of schemes in the 2003/04 capital programme, subject to the cost of the schemes being accommodated within the approved programme limit.

2. Reason

Regular service budget monitoring reports are submitted to Executive Members to review whether any action is required to contain spending within cash limits and ensure that resources are utilised effectively.

Decisions on the Policy and Resources revenue budget and capital programme impact on the financial resources used by those central services that support all other County Council services and as such relate to all the corporate strategy aims:

· Maximising life opportunities

· Stewardship of the environment

· Achieving economic prosperity

· Building strong and safe communities

· Improving services

· Developing councillors and staff.

3. Other options considered and rejected - Not applicable

4. Conflicts of interest declared by the decision maker or a member or officer consulted - Not applicable

5. Dispensation granted by the Standards Committee - not applicable

6. Reason(s) for the matter being dealt with if urgent - not applicable

Approved by: (signature) Date: (date of decision)

Councillor T K Thornber

Contact: Nick Gibbins, ext 7544

1. Introduction

1.1 This report is the final monitoring report for 2003/04 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets including an update on the implementation of growth proposals

· Policy and Resources business units

· Policy and Resources capital programme

· the County Council's capital payments and sources of finance

· Carry forward of 2003/04 schemes not started by 31 March 2004.

1.2 The review indicates a few areas in which revenue spending is likely to differ from the assumptions in the budget. Capital payments are likely to be close to the forecast in the financing plan.

1.3 The Policy and Resources revenue budget and capital programme includes financial resources for those central services that support all other County Council services and as such contribute to all the corporate strategy aims:

· Maximising life opportunities

· Stewardship of the environment

· Achieving economic prosperity

· Building strong and safe communities

· Improving services

· Developing councillors and staff.

2. Policy and Resources cash limited revenue budget 2003/04

2.1 The latest cash limit for 2003/04 is £38.5m as set out in Appendix 1. Based on monitoring of expenditure up to the end of February 2004, some variations from cash limit are forecast. These are outlined below.

Chief Executive's Department

2.2 The Cabinet in October agreed an increase in the cash limit for members support costs of up to £127,000 to cover the cost of the recommendations of the Independent Review Panel approved by the County Council in September, which mainly relate to the inclusion of Members within the Local Government Pension Scheme. For 2003/04 pension costs for Members are forecast to be £45,000 and the cash limit has been increased to cover this amount. In addition, in line with previous projections, additional spending of about £46,000 is forecast in other Members' support costs, mainly relating to conference and travel expenses.

2.3 The budget for County Council elections is forecast to be underspent by £31,000 as fewer elections have needed to take place during the year than allowed for in the budget.

2.4 The community planning grants budget will not be fully spent this year and a request has been made by the Executive member for Community Development and Regeneration to carry forward an underspending estimated at £103,000 to 2004/05. This could be agreed in principle, but be made subject to decision when the final accounts are reported, as the policy is to allow only 50% of unplanned service underspendings to be carried forward.

2.5 As reported in the last budget monitoring report in December 2003, the Economic Development budget has had to meet unbudgeted costs of around £25,000 in respect of court costs relating to the organisation of farmers' markets.

County Treasurer's Department

2.6 The forecast outturn is expected to be at or marginally below the cash limit.

Personnel and Training

2.7 Leading for Success - this project continues to be successfully delivered but the later than planned start means that the volume of managers participating in the programme is not matching the original phasing of project funding. The Executive Member agreed in December 2003 to carry forward a planned underspending of £75,000. A further underspending of £60,000 is expected in 2003/04 and the phasing of the non-recurring corporate contribution towards the programme can be adjusted accordingly.

2.8 Pay and benefits - an underspend of £18,000 is forecast against the non-recurring sum included in the 2003/04 budget and this contribution can be similarly rephased.

2.9 The Hampshire Learning Centre has exceeded its income target due to higher than anticipated bookings for pay for place courses in the last quarter of the year, the earlier than expected completion of several significant contracts and improved internal debt recovery. This additional income results in a projected underspending of £83,000. Other personnel functions are forecasting an overspend of £41,000, so that there is an overall underspending of £42,000 projected on Personnel and Training.

Property Business and Regulatory Services

2.10 Overall the forecast outturn for 2003/04 is expected to be close to budgeted levels, although some variation between services is expected.

2.11 The revenue repairs and maintenance winter contingency has not been needed in full this year and the balance of approximately £100,000 will be carried forward to the 2004/05 winter contingency, by adjusting the appropriate cash limits.

Other non-departmental Policy and Resources budgets

2.12 Audit Fee - a reduction in the audit fee of approximately £26,000 is anticipated mainly as a result of lower grant claim audit costs due to the removal of ring-fencing of grants in 2003/04 due to the Council's excellent Comprehensive Performance Assessment result.

Summary

2.13 At the end of February 2004 the main variations from cash limit are forecast to be:

3. Update in implementing 2003/04 growth proposals

3.1 The last budget monitoring report to the Leader in December 2003 confirmed good progress by all departments in implementing growth proposals to achieve the expected outcomes and improvement in performance. There is only one area to be updated in this report; that is to confirm that the County Treasurer's use of growth money to improve Comprehensive Performance Assessment (CPA) scores from `good' to `excellent' for finance and from one out of four to at least three for prompt payment has been achieved following the CPA `refreshment' review.

4. Business units' anticipated trading position

4.1 The 2003/04 original budget anticipated net surpluses of £288,000 for Property, Business and Regulatory business units. Higher surpluses than budgeted were achieved in 2002/03 and surpluses in 2003/04 are expected to exceed the levels included in the original budget, although the forecast surplus of £432,000 reported to the last meeting of the Buildings, Land and Contracts Panel may not be fully achieved.

4.2 The year end projection for IT Services is to generate a trading surplus of around £500,000. This will eliminate the brought forward deficit of £426,000 and is an improvement on the forecast trading position reported in December 2003. The reasons for the improved projection include slippage on the core network replacement programme and slippage in the planned replacement of ageing IT2000 hardware. There has also been greater than anticipated growth in income particularly on network services, IT2000 and consultancy.

5. Policy and Resources capital programme

5.1 Appendix 2 summarises the 2003/04 capital programme. The Department for Education and Skills confirmed allocations from its New Deal for Schools (NDS) Modernisation Fund for 2003/04 after the capital programme for Policy and Resources was agreed early last year. Hampshire's allocation was increased by £632,000 to £15,068,000. The Department for Constitutional Affairs has recently allocated additional capital grant and credit approval totalling £5,000 for computer equipment in respect of the Hampshire and Isle of Wight Magistrates' Courts Committee. It is recommended that the capital programme be increased by these amounts. Taking account of this increase, carry forwards from 2002/03 and recent virements, the capital programme totals £42.952m.

5.2 Schemes to the value of approximately £35.6m had started by the end of February 2004.

6. Overall capital payments and sources of finance

6.1 The capital financing plan approved by the Cabinet in February is based on projected capital payments of £159.6m in 2003/04, on projects committed in previous years or started during the current financial year.

6.2 Capital payments to 29 February 2004 totalled £118.8m and based on previous year's capital payments profits, payments are likely to be close to but possibly slightly below the forecast approved in February. Nonetheless excellent progress has again been made in implementing a large capital programme in 2003/04.

6.3 Inclusive of in and out schemes, capital receipts of £15.5m were allowed for in the latest financing plan. Actual capital receipts to 29 February 2004 amounted to £15.3m, within £0.2m of the forecast, following the successful completion of a substantial disposal at Binfields.

7. Carry forward of 2003/04 schemes not started by 31 March 2004

7.1 In previous years details of capital schemes not started by 31 March have been reported to the May Executive decision day for approval to carry them forward into the following financial year. Approval has been granted to carry forward the schemes provided that the latest estimated scheme cost can be accommodated within the starts limit for the programme.

7.2 In order to streamline the process, it is recommended that the carry forward of 2003/04 schemes not started by 31 March 2004 be approved, subject to the cost of carry forward schemes being contained within the programme limit. Details of the schemes carried forward will be reported to the Cabinet in June in the report on 2003/04 final accounts.

Recommendation

1. To note the current position on the monitoring of the revenue budget and capital programme and the action being proposed.

2. That the principle of allowing the underspending on community planning grants to be carried forward be approved, subject to a decision when the final accounts are considered.

3. To approve additions to the capital programme for 2003/04:

v) £632,000 in respect of New Deal for Schools capital repairs

vi) £5,000 in respect of computer equipment for Hampshire and Isle of Wight Magistrates' Courts Committee

4. To approve the carry forward of schemes in the 2003/04 capital programme, subject to the cost of the schemes being accommodated within the approved programme limit.

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.

TITLE FILE

None.

Appendix 1

Policy and Resources Revenue budget - latest 2003/04 cash limit

Appendix 2

Policy and Resources 2003/04 capital programme