Contact: Bevis Ingram, ext 7508 e-mail: [email protected]

1 Summary

1.1 The following decisions are sought:

i) That the final accounts for 2003/04 be approved.

ii) That 50% (£16,000) of the underspending in 2003/04 be carried forward and be added to the 2004/05 budget as set out in paragraph 1.6.

1 Reason

1.1 To approve the final accounts for the Recreation and Heritage service for 2003/04 and agree the carry forward of underspendings to 2004/05.

1.2 Decisions on (Recreation and Heritage service) revenue, expenditure and capital programmes impact on the financial resources available to this service to contribute to the following corporate strategy aims:

i) maximising life opportunities

ii) stewardship of the environment

iii) achieving economic prosperity

iv) building strong and safe communities

v) improving services

vi) developing councillors and staff.

2 Other options considered and rejected

Not applicable.

3 Conflicts of interest declared by the decision maker or other Executive Member consulted

None.

4 Dispensation granted by the Standards Committee

Not applicable.

5 Reasons(s) for the matter being dealt with if urgent

Not applicable.

Approved by: Date:

............................................. ............................

Councillor J Waddington

Contact: Bevis Ingram, ext 7508, e-mail: [email protected]

1 Summary

1.1 This report summarises the Recreation and Heritage service's spending in 2003/04.

1.2 It recommends that the final accounts for 2003/04 be approved and that the underspendings be carried forward to 2004/05 based on current policy and aided by the use of other resources to meet new pressures in 2004/05.

1.3 Decisions on (Recreation and Heritage service) revenue, expenditure and capital programmes impact on the financial resources available to this service to contribute to the following corporate strategy aims:

i) maximising life opportunities

ii) stewardship of the environment

iii) achieving economic prosperity

iv) building strong and safe communities

v) improving services

vi) developing councillors and staff.

1.4 Overall there is a net underspending of £32,000 (-0.1%) against the 2003/04 adjusted revised revenue cash limit of £26.6m. This is inline with the report to the Cabinet in April.

1.5 The major variations are:

	£'000
Museums and archives	+22
Tourism	+13
Libraries and information	-34
Arts, sport and community	-13
Policy development fund	-18

1.6 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% underspending. On this basis £16,000 will be added to the Recreation and Heritage service cash limit for 2004/05.

1.7 The amendments required in the 2004/05 budget for the carry forwards are:

	Overspending (+) Underspending (-)	Reduction (-) Addition (+) Carry forward to 2004/05
	£'000	£'000
	-16	+16

1.8 The outturn position on the Service's business and trading unit, Arts Marketing Hampshire, is a deficit of £3,000.

1.9 On capital, schemes to the value of £3.2m started in the year and schemes to the value of £1.9m have been approved to be carried forward to start in 2004/05. In total this amounts to £0.1m less than the approved cash limit for the capital programme.

1.10 Further details on the main differences between the actual revenue expenditure and the revised budget for cash limited expenditure are given in Part A below while details of revenue expenditure which is not included in the cash limit are contained in the appendices at the end of the report. The results of the trading units are reported in Part B. Part C deals with capital schemes. Part D explains the basis of the control assurance statement included as Appendix 8.

2 Part A - Revenue Expenditure under the Service's control

2.1 Revenue expenditure under the Service's direct control is subject to a cash limit. For 2003/04 the adjusted amount is £26.6m as set out in Appendix 1.

2.2 The final outturn was £32,000 less than the cash limit, very much in line with previous monitoring reports. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget.

2.3 This is a small variation in line with the previous year's outcome.

	Variations from Revised Budget
	£'000	%
2000/01	+27	0.1
2001/02	+593	2.4
2002/03	-18	-0.1
2003/04	-32	-0.1

The most significant elements within the total net underspending are explained in the following paragraphs.

Museums and archives (+£22,000)

2.4 Recruitment costs of new head of service (+£13,000) and insurance arrears on Bursledon Windmill (+£7,000).

Tourism (+£13,000)

2.5 Extra staffing costs (+£12,000).

Libraries and information (-£34,000)

2.6 The underspending was achieved through prudent management of the budget to allow for the Library Review (-£80,000) and higher income (-£93,000) offset by higher costs of the people's network and additional spending on the bookfund (+£131,000).

Countryside (+£8,000)

2.7 Increased employees' costs from the countryside review (+£25,000) and increased spending on operational equipment (+£79,000) offset by extra income (-£96,000).

Arts Sport and Community (-£13,000)

2.8 Increased arts events income (-£60,000) offset by costs of additional arts events (+£31,000). Additional requirement for arts operational equipment and materials (+£41,000). Turnover savings on sports and community staff
(-£13,000) and planned deferral of grants (-£15,000).

Policy development fund (-£18,000)

2.9 Minor variations across several schemes, particularly under the heading of `expanding the user base'. This was an area that had growth money allocated to it in the budget and considerable progress was made with new initiatives to expand the user base including arts events in residential homes, learning development, youth outreach, and creative partnerships. Other initiatives included investment in IT2000 and staff development.

3 Part B - Trading Units

Details of the financial performance of Arts Marketing Hampshire are set out in Appendix 5.

4 Part C - Capital expenditure 2003/04

4.1 The outturn for 2003/04 is set out below with details of the total resources and of the individual schemes started in the year appearing in Appendix 7.

				Total
				£,000
Total resources				5,181
Value of schemes started in 2003/04				-3,178
Value of schemes carried forward to 2004/05				-1,947
Undercommitment against the cash limit				56

4.2 The total starts limit for 2003/04 amounted to £5,181,000 and schemes to the value of £3,178,000 were started in the year.

4.3 Schemes approved to be carried forward to start in 2004/05 included grants to village halls, Winchester Cultural Centre, Romsey library extension and various library improvements schemes. The list of schemes started and carried forward are included in Appendix 7.

4.4 The combined value of schemes which started in 2003/04 and those carried forward to start in 2004/05 is £5,125,000 which is £56,000 below the cash limit and the balance of the cash limit can also be carried forward to 2004/05.

4.5 In accordance with the County Council's Financial Procedures, the final costs of capital schemes completed in 2003/04 are listed in Appendix 7. "Completed" in this context means when the final payment has been made. Some of these schemes may have been in operation prior to April 2003, but the final payment was only made in 2003/04.

4.6 The final cost of the schemes completed in 2003/04 is £5,000 more than the latest approved estimate for those schemes charged to the service's capital cash limit.

4.7 It is proposed that the additional cost is charged to the capital cash limit for 2004/05.

5 Part D - Departmental Assurance Statement

5.1 From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive will also be required to sign a more general statement of internal control. As part of this process the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the system of internal control operating in each department and in the County Council as a whole. These opinions are reviewed by the Standards Committee. Appendix 8 contains the statement relating to the Recreation and Heritage service and concludes that the Recreation and Heritage service has a framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council objectives.

Recommendations

That the following proposals be supported and submitted to the Executive Member for Recreation and Heritage for his consideration:

i. That the final acounts for 2003/04 be approved.

ii. That £16,000 of the underspendings in 2003/04 be carried forward as detailed in paragraph 1.5 be added to the 2004/05 budget as set in paragraph 1.6.

iii. That the additional cost of capital schemes completed in 2003/04 be deducted from the 2004/05 capital programme limit.

Section 100D - 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

Summaries of actual spending 2003/04

Appendix Contents

1 Construction of the cash limit

2 Summary of revenue expenditure

3 Analysis of cash limited revenue expenditure over services

4 Major variations in cash limited expenditure

5 Trading Units - summarised accounts 2003/04

6 Revenue expenditure 2003/04 not included in the cash limit

7 Capital expenditure 2003/04

8 Departmental assurance statement

9 Partnerships

Appendix 1

Recreation and Heritage service

Revenue Expenditure 2003/04

Construction of cash limit

1 In the revised budget revenue expenditure under the service's direct control was subject to a cash limit set by Cabinet of £27.3m. Business rates was an exception because the level of business rates on the County Council's own properties could not be determined precisely when the revenue budget was set. As a result of revaluations actual expenditure on rates is £425,000 lower than was provided for in the revised budget and the cash limit has been adjusted accordingly.

2 During the year part of the lump sum provisions in the capital programme were allocated to minor schemes of a revenue nature. Under the Code of Practice on Local Authority Accounting the expenditure on these schemes is required to be accounted for in the revenue account. The revenue budget has been increased by £103,000 to cover this expenditure by a transfer from the County Council's overall budget for revenue contributions to capital. The individual schemes will still however, continue to be controlled through the capital programme.

3 A reduction in the revenue cash limit has been made in order to increase the capital cash limit by £51,000 for the fit out of Alton Library.

4 A reduction in the revenue cash limit of £273,000 for contributions to the people's network to allow a matching contribution to capital outlay.

5 The adjustments referred to above are incorporated in the table below which summarises the position for the service in the year:

		£'000
Revised budget for 2003/04		27,264
Decrease for the lower level of business rates payable		-425
Revenue schemes		+103
Transfer to capital		-51
People's network		-273
Amended cash limit		26,618
Net expenditure		26,586
Net underspending against Service's controllable expenditure		-32

Appendix 2

Recreation and Heritage service

Final Accounts 2003/04

Summary of Revenue Expenditure

Appendix 3

Recreation and Heritage service

Revenue Expenditure 2003/04

Analysis of cash limited expenditure over services

Appendix 4

Recreation and Heritage service

Revenue Expenditure 2003/04

Major variations in cash limited expenditure - underspending of £32,000

Appendix 5

Recreation and Heritage service

Revenue Expenditure 2003/04

Trading units - summarised Trading Accounts 2003/04

The trading unit in this statement operates under Financial Regulations. This statement summarises its trading position and shows the movement in its reserve account.

Appendix 6

Recreation and Heritage service

Revenue Expenditure 2003/04 not included in the cash limit

1 Capital charges (£5.7m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £104,000 more than the budget. However, this will have no direct effect upon the overall budget requirements of the County Council as the capital charges are replaced by actual financing costs in the central asset management revenue account.

2 Central support services, repairs and maintenance of buildings (£2.5m)

These items are within the control of Policy and Resources. Support services are apportioned to services in accordance with the level of services provided and office accommodation occupied. Control of the budget for repairs and maintenance of buildings is by the nature of work and where it is most required rather than by service.

3 Adjustment for pension and early retirement costs (£8,000)

This adjustment includes:

a) the difference between the cash value of employer's contributions to the Local Government Pension Scheme (LGPS) (included within the service's cash limited expenditure) and the current cost of pension benefits earned by members of the LGPS during 2003/04, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK. A Statement of Recommended Practice (2003) (SORP) with effect from
1 April 2003. The adjustment is calculated in accordance with Financial Reporting Standard 17 (FRS 17) Retirement Benefits. It relates only to "defined benefit" schemes, including the LGPS, where the assets and liabilities of the scheme can be attributed to individual employers on a consistent and reasonable basis

b) the costs arising from early retirement decisions and the granting of compensatory added years. These are within this service's cash limited expenditure, but are excluded from the cost of services, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.1m)

Corporate and democratic core covers management and support cost that relate to member support and advice. They are within the control of Policy and Resources and so are charged against that service's cash limit. But they are then recharged to other services outside of the cash limit as the Best Value Accounting Code of Practice requires these to be included in the cost of services.

Appendix 7

Recreation and Heritage service

Capital Expenditure 2003/04

Appendix 8

Recreation and Heritage service

Department assurance statement for the year ended 31 March 2004

1 Introduction

1.1 The Accounts and Audit Regulation 2003 require the County Treasurer to maintain an adequate and effective system of internal audit.

1.2 From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive will also be required to sign a more general statement of internal control. To enable them to do this, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

2 Responsibilities

2.1 It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control.

3 Basis of opinion

3.1 The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. The internal audit plan has been delivered in accordance with the Code of practice for internal audit in local government in the United Kingdom, issued by CIPFA.

3.2 Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control.

4 Opinion

4.1 In my opinion Recreation and Heritage Department has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown that the controls are generally working in practice.

Ejner Knudsen

Chief Internal Auditor

County Treasurer's Department

Hampshire County Council - 7 June 2004