Hampshire County Council
	Executive Member - Environment		Item 7
	7 April 2004
	Environment Policy Review Committee
	5 May 2004
	Revenue Budget Monitoring 2003/04
	Report of the County Treasurer and Director of Environment

Contact: Ejner Knudsen, ext 7403 e-mail: [email protected]

1 Introduction

1.1 This report provides a further update on the budget monitoring position for the Environment services for the 2003/04 financial year, covering the revenue budgets for highways and transportation, planning and waste management.

1.2 It reflects the outcome of the most recent budget monitoring exercise, carried out by budget holders within the Environment department, during January and February 2004. During the review, expenditure and income trends have again been considered and planned commitments for the remainder of the year evaluated, in order to arrive at an outturn forecast for each budget heading.

1.3 Members need to be aware that the figures in this final budget monitoring report for 2003/04 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 2003/04 financial year.

1.4 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 in June.

2 Corporate Strategy

2.1 Monitoring of the Environment revenue budget supports all of the aims of the corporate strategy by focusing financial resources in these areas:

1 Maximising life opportunities

2 Stewardship of the environment

3 Achieving economic prosperity

4 Building strong and safe communities

5 Improving services

6 Developing councillors and staff

3 Changes to the 2003/04 revenue budget cash limit

3.1 The most recent budget monitoring position, setting out the revised budget for the 2003/04 financial year, was presented as part of the 2004/05 revenue budget report to the Environment Policy Review Committee on 21 January 2004 and to the Executive Member - Environment at his decision day meeting on 23 January 2004. A revised budget of £83.166 million was approved for submission to the Cabinet and included proposals for the carry forward to the 2004/05 budget of savings of £100,000 on management and support services, in support of planned additional expenditure in 2004/05 on IT and e-Government developments, and a projected underspending of £311,000 on the waste management budget for the disposal of abandoned vehicles.

3.2 The Cabinet subsequently approved the 2003/04 revised budget at their meeting on 12 February 2004. However it was suggested that the carry forward of the anticipated underspending of £311,000 on the budget for the disposal of abandoned vehicles be ring-fenced for the cost of disposal of abandoned vehicles, refrigerators and other electrical or battery components in 2004/05.

3.3 The only change to the 2003/04 revenue budget limit since January has been in relation to the waste management contract related budgets, where a further allocation of £515,000 has been made from the central waste management contingency to cover estimated cost increases during the third quarter of the financial year. The Environment service's cash limit has been increased to take account of the above change, giving an adjusted revised budget figure of £83.681 million. Further adjustments will be made at the end of the year to reflect the final expenditure on the waste management contract related services together with any other changes that may be required.

3.4 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.

4 Highways maintenance

4.1 The 2003/04 cash limit for routine highways maintenance being funded from the revenue budget is £19.865 million. At the time of the final budget monitoring review in February, the value of committed highways maintenance works orders totalled £19.610 million, being an under-commitment of £255,000 against the cash limit. This variation reflected a number of savings against programmes, identified during the budget monitoring review, together with a previous balance of unallocated reserves. Further allocations were subsequently made to the highways units and other departmental budget holders during March to utilise the remaining balances, including provision for additional expenditure on emergencies, signs and road markings, additional traffic management schemes and street lighting energy reduction measures.

4.2 The 2003/04 revised budget for highways winter maintenance salting and snow clearance is £1.817 million, based on the average level of expenditure during the past four years. A provisional assessment has been made of the additional costs that were incurred during the periods of cold weather and associated snowfall in the last week of January and the second half of February. This suggests that the winter maintenance budget is likely to be over-committed in 2003/04 by approximately £800,000 which, in line with the special budgeting arrangements that apply to this activity, would need to be accommodated from central balances. However, this excess expenditure would result in an increase to the level of provision that would need to be made for winter maintenance in future years' base budgets, based on the four-year average, with a resultant decrease in funding available for structural maintenance.

4.3 Appendix 2 sets out details of the adjusted 2003/04 highways maintenance programme following the release of available reserves and other adjustments. Details are also provided of works being funded from the capital programme provision for structural highways maintenance.

5 Public transport

5.1 The 2003/04 revised budget for County Council funding of public transport is £5.406 million, together with a further sum of £1.335 million being provided from Government Rural Bus Subsidy grant. The 2003/04 revised budget which was approved in January, included an uncommitted sum of £30,000 within the bus subsidies budget, which was expected to be sufficient to meet the cost of any further contract increases during the remaining months of the year.

5.2 The latest budget monitoring position on public transport shows a forecast outturn for 2003/04 in line with the revised budget. On the bus subsidies budget, there have been a number of largely offsetting minor contract variations which has enabled the remaining uncommitted sum to be allocated for service improvements in the Petersfield area. The £1.335 million allocation of Rural Bus subsidy grant is also expected to be fully consumed in the provision of rural bus services.

6 Management and support services

6.1 The 2003/04 budget of £20.246 million for management and support services assumed that savings from staff turnover and other housekeeping efficiencies would be achieved during the year in order that overall departmental expenditure could be contained within the budget. The original savings requirement was set at £603,000, which was equivalent to a saving of 3% of the overall net departmental budget for management and support services.

6.2 The previous budget monitoring position, covering the period to the end of November 2003, identified savings to date of £283,000, meaning that further savings of £320,000 would need to be identified during the remainder of the year. However, in view of the likely funding pressures facing the department in 2004/05 for IT developments, due to mainframe system replacements, SAP implementation and continued e-Government developments, it was decided to seek further savings of £100,000 on management and support services during 2003/04. This sum could then be carried forward to 2004/05 to contribute towards the future funding of the IT developments.

6.3 The 2003/04 revised budget therefore required savings totalling £420,000 to be identified during the remainder of the year. Although it was thought likely that some further incidental savings would emerge from staff vacancies, it was decided that it would also be necessary to restrict departmental expenditure by taking management action to strengthen control over the appointment of replacement staff and to implement a small delay in commissioning some work from external consultants until the new financial year.

6.4 As mentioned above, a comprehensive review of all management and support services budgets has been carried out during January and February by departmental budget holders in order to produce revised outturn forecasts for all budget headings. As a result of the review, overall expenditure during 2003/04 on management and support services is forecast to be £20.108 million. This outcome means that further projected savings of £558,000 have been identified during this budget monitoring review, in comparison to the 2003/04 revised budget position reported in January, representing a forecast underspending of £138,000 against the cash limit.

6.5 In summary, the main reasons for the increase in projected savings on the management and support services, compared to the 2003/04 revised budget, are as follows:

· Salaries - additional savings of £252,000 are forecast from staff turnover and holding vacant posts

· Consultants - projected underspending of £230,000, reflecting management decision to delay further commisions until 2004/05, together with projected savings against allocated sums

· Feasibility studies - savings of £21,000 following revised assessment of costs to be capitalised

· Income - additional projected income of £34,000 from planning application fees

· Other minor variations - resulting in savings of £21,000

6.6 With regard to the projected excess savings of £138,000 on management and support services, a decision has been taken, in consultation with the Executive Member - Environment, to allocate this sum to support additional expenditure on highways maintenance. This included additional expenditure on minor patching works in advance of carrying out the 2004/05 programme of surface dressing patching programme, which would otherwise need to be met from the new financial year's highways maintenance budget.

7 Waste Management

7.1 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.

7.2 The current cash limit for the waste contract related budgets is £32.820 million, including the assessed third quarter call of £515,000 on the central waste management contingency. Overall, the budget now includes total allocations of £1.723 million from the central waste management contingency sum of £3.700 million, covering known variations on the waste contract related budgets during the first three quarters of the financial year. This left a sum of £1.977 million available within the contingency to meet any increases during the remainder of the year. Current indications are that there may be an outturn saving against the waste contingency of approximately £1.3 million, although this will be subject to confirmation when the 2003/04 final accounts are prepared.

7.3 The reason for this large saving is directly related to a reduction in the levels of waste requiring disposal during 2003/04, whereas the assumption within the 2003/04 budget was that there would be an increase in waste volumes. As an illustration, waste volumes during the first nine months of the year were 2.5% lower than in the corresponding period in 2002/03, compared to an assumption in the budget that volumes would increase by 3.9%. Similarly, tonnage levels from household waste recycling centres has also decreased since last year by 4.7%, against budgeted growth of 4.4%, although this is partially due to increased levels of recycling being experienced. These reductions in disposal tonnages has contributed to a combined saving of over £1.1 million during the first nine months of the year, compared to the assumption included in the calculation of the waste management contingency.

7.4 The 2003/04 budget for the non-contract related waste management services is £2.562 million, which is subject to normal budget management arrangements which require services' expenditure to be controlled within cash limits. The latest forecast for this service heading makes allowance for an additional provision of £26,000 which has been made available for facility maintenance, offset by equivalent savings on administration and promotions and development. The overall position on this division of service is expected to be in line with the cash limit at year end.

8 Conclusion

8.1 The report provides a summary of expenditure to date and the forecast outturn on the Environment Services revenue budget for 2003/04, based on the budget monitoring position at the end of February 2004. It shows that expenditure is being progressed in accordance with the revised budget for 2003/04 which was approved by the Executive Member - Environment during January.

8.2 Projected savings of £558,000 have been identified on management and support services which more than covers the savings requirement of £420,000 included in the 2003/04 revised budget. The excess savings of £138,000 have been allocated to highways maintenance to enable a programme of patching work to be carried out in preparation for the 2004/05 surface dressing programme.

8.3 Significant savings are expected to be made on the waste contract related budgets against the central contingency provision of £3.7 million as a result of lower than anticipated waste volumes.

8.4 The overall budget monitoring position suggests that that final expenditure for the year on cash limited budgets, which will be reported after the 2003/04 final accounts have been closed, will be close to the revised budget cash limit.

Recommendation

1 That the latest 2003/04 revenue budget monitoring position be noted

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

Environment Departmental Management Board : 17 February 2004 - Revenue Budget monitoring 2003/04 update

Appendix 1

Environment
Revenue budget 2003/04 - monitoring statement
Analysis of variations
			2003/04 cash limit		Assessed expenditure to 29 Feb 2004		2003/04 forecast outturn	2003/04 forecast variation
			£'000		£'000	%	£'000	£'000
Highways and transportation
Highways maintenance			19,865		18,029	90.8	20,003	138
Road safety education			222		169	76.1	222	-
School crossing patrols			934		811	86.8	934	-
Traffic surveys			243		240	98.8	243	-
Parking services			-95		-95	100.0	-95	-
Public transport support & co-ordination			5,406		4,930	91.2	5,406	-
Rural bus subsidy grant			1,335		1,228	92.0	1,335	-
Management and support services			16,706		16,030	95.9	16,712	6
			44,616		41,342	92.7	44,760	144
Planning services
Development control			685		452	66.0	609	-76
Planning policy			1,862		1,638	88.0	1,807	-55
Environmental initiatives			815		852	104.5	802	-13
Economic development			136		124	91.2	138	2
Community development and other projects			42		36	85.7	40	-2
			3,540		3,102	87.6	3,396	-144

	2003/04 cash limit	Assessed expenditure to 29 Feb 2004		2003/04 forecast outturn	2003/04 forecast variation
	£'000	£'000	%	£'000	£'000
Waste management
Contract and related services	32,820	26,859	81.8	32,820	-
Direct managed services	2,562	1,971	76.9	2,562	-
	35,382	28,830	81.5	35,382	-
Other Services
Reservoirs Act 1975	24	12	50.0	24	-
Chichester harbour conservancy	119	119	100.0	119	-
	143	131	91.6	143	-
Total	83,681	73,405	87.7	83,681	-

Environment Appendix 2

Summary showing detailed allocation of highways maintenance budget

Revenue budget 2003/04

Operational heading	Approved programme as at 31 December 2003	Revised Programme as at 29 February 2004
	£'000	£'000
Ordinary maintenance
Routine carriageway and footways running repairs	3,322	3,561
Gully cleaning	978	953
A321 routine maintenance - payment to Surrey County Council	6	6
Aids to movement	1,282	1,242
Hazard clearance (road traffic accidents)	318	366
Traffic management	402	436
Sign renewals	78	78
Traffic signal maintenance and modification	617	589
Intelligent transport systems	175	200
Urban traffic control	70	57
Remote monitoring of traffic signals	66	82
Rechargeable accident damage	166	166
Grass cutting, trees and shrub maintenance	1,517	1,584
Weed control	551	551
Arboricultural	446	441
District managed urban grass cutting	468	468
Sub total - ordinary maintenance	10,462	10,780

Operational heading	Approved programme as at 31 December 2003		Revised Programme as at 29 February 2004
	£'000		£'000
Street lighting and illuminated signs
Energy - street lights	1,449		1,449
Energy - signs and bollards	93		93
Energy - traffic signals and crossings	208		208
Maintenance contract - street lights	2,520		2,535
Maintenance contract - signs and bollards	952		972
Special replacement programme - works	1,292		1,292
Special replacement programme - scheme design fees		51	51
Sub total - street lighting and illuminated signs	6,565		6,600
Bridges
Routine maintenance	98		98
Subway pumps - maintenance and energy	43		43
Subway grafitti cleaning	129		129
Railtrack charges	68		68
Disused railway bridges	9		9
Weight restriction signing	6		6
Footbridges	91		91
Monitoring of sub-standard bridges	11		11
Sub total - bridges	455		455
Other items
Technical surveys	277		277
Depots maintenance	138		138
Highways maintenance IT system development	306		306
General reserves - to meet unforeseen demands	135		-
General reserves - inflation contingency	-		-
General reserves - contractual claims	-		72
Other reserves - A339 grant not yet allocated	44		-
Previous year's accounting adjustment	-16		-113
Sub total - other items	884		680
Winter maintenance	1,852		1,852

Operational heading	Approved programme as at 31 December 2003					Revised Programme as at 29 February 2004
	£'000					£'000
Income
Depots net rental	-138					-149
Rechargeable works	-109					-109
Private street works interest from frontagers	-6					-6
Allocation from commuted sums for soakaways maintenance			-100			-100
Sub total - Income	-353					-364
Total highway maintenance programme	19,865					20,003
Reconciliation to revenue budget
Approved 2003/04 revenue budget - February 2003		19,141				19,141
A339 de-trunking - special Government grant	374					374
Savings reallocated from capital maintenance	350					350
Savings reallocated from management and support services				-		138
Total 2003/04 highways maintenance revenue budget	19,865				20,003

Capital maintenance programme 2003/04

Operational heading	Approved programme as at 31 December 2003					Revised Programme as at 29 February 2004
	£'000					£'000
Principal roads structural maintenance
Carriageway, footway and drainage routine repairs	766					766
Strengthening major maintenance schemes	2,100					2,100
Special maintenance	786					693
Resurfacing	187					175
Surface dressing - high performance roads contract		750				750
Design and supervision fees:
- major maintenance schemes	150					150
-special maintenance, resurfacing and surface dressing			113			103
- routine maintenance	8					9
Reserves	152					163
Sub total - principal roads structural maintenance	5,012				4,909
Non-principal roads structural maintenance
Carriageway, footways and drainage routine repairs			4,674			5,064
Surface dressing - High performance roads contract			765			765
Surface dressing - minor roads contract	1,032					1,032
Surface dressing - footways contract	500					500
Special maintenance and recycling	4,314					4,271
Tactile surfacing and pram crossings	136					136
Resurfacing	3,231					2,989
Blacktop testing	30					30
Aggregates tax	17					17
Design and supervision fees:
- special maintenance, resurfacing and surface dressing				707		694
- routine maintenance	97					108
Reserves	-					-
Sub total - non principal roads structural maintenance	15,503				15,606

Operational heading	Approved programme as at 31 December 2003				Revised Programme as at 29 February 2004
	£'000				£'000
Non-principal roads structural maintenance - additional programme of £3.5m
Footways special maintenance schemes	1,785				1,785
Carriageway haunch repairs, resurfacing and recycling			892		892
Footways surface dressing	474				474
Patching	124				124
Fees	225				225
Sub total - non-principal roads structural maintenance	3,500			3,500
Bridges
Strengthening schemes			1,438		1,438
Assessments, studies and feasibility	450				450
Structural maintenance	1,150				1,150
Sub total - bridges structural maintenance	3,038			3,038
Total capital maintenance allocations	27,053				27,053
Reconciliation to capital programme
Schemes supported from local resources:
Structural maintenance of non-principal roads	11,068				11,068
Additional provision for repairs to local roads and footways	3,500				3,500
Net underspendings brought forward from 2002/03		129			129
Savings transferred to revenue maintenance budget			-350		-350
Schemes supported by Government borrowing approvals	12,706				12,706
Total 2003/04 capital maintenance programme limit	27,053			27,053