A. FINAL ACCOUNTS 2003/04

1. The Cabinet has approved the Final Accounts for the year ending 31 March 2004. The draft Statutory Statement of Accounts giving full details is still being finalised and will be submitted to the Statement of Accounts Members' Panel set up for the purpose at May County Council, for approval. A copy of the original report to Cabinet is available on Hantsweb and copies have been placed in the Members' Rooms. Some of the significant features of the accounts are described in the following paragraphs, with a specific recommendation relating to the updated Prudential indicators.

Service Cash Limited Expenditure and Total Expenditure

2. Service Cash Limited expenditure in 2003/04 was £1.6m below the revised estimate. This represents 0.15% of service spending and the Cabinet is very satisfied with this close level of budgetary control. Education's outturn of £555,000 is more than the original budget but is £0.5m lower than assumed in the revised budget as savings have been achieved to cover approximately half of the projected overspending. This net overspend has been offset by underspendings of £784,000 (Social Care), £281,000 (Policy and Resources), £36,000 (Environment) and £32,000 (Recreation and Heritage), as summarised in Appendix 1.

Action with regard to underspendings and overspendings

3. On the underspendings, the Cabinet has agreed to adhere to current policy and return 50% of unplanned underspending to the services. In the case of Education, when the 2004/05 budget was set, it was agreed that the Education budget for that year should be set on the basis that the projected overspending on special educational needs in 2003/04 would not be carried forward to 2004/05. This took account of the passporting arrangements for the Schools Budget in 2004/05. A final decision on whether to write off the overspending was deferred to the end of the financial year, taking into account the success of the action to contain the level of overspending. Savings of £487,000 against the projected overspending of £1,042,000 had been achieved in the Education final accounts for 2003/04 and it is recommended that the write off of the balance of the overspending of £555,000 be approved rather than being carried forward within the Education Service.

Other Budgets

4. The overall underspend on other budgets is £2.8m, as set out in Appendix 2, compared with the sum projected of £2.1m.

Outturn and Balances

5. Taking into account the above, the 2003/04 outturn may therefore be summarised as follows:

£'000

Service underspending against revised budget 1,620
Other budgets 2,773
Earmarking of 50% of service underspends -567
_____
Potential increase in balances 3,826
_____

Earmarked Reserves

6. Earmarked reserves have increased by £4.8m to £66.5m at 31 March 2004. The total position with regard to variations in the earmarked reserves is set out as Appendix 3.

Treasury Management

7. The Cabinet has approved the County Treasurer's annual report on the exercise of the Treasury Management function.

Prudential Indicators

8. The Prudential Code for Capital Finance in Local Authorities introduces a number of prudential indicators for which actual indicators for the year as well as budgeted indicators need to be set by the County Council. Appendix 4 summarises the relevant indicators for 2003/04, together with proposed revisions to future year indicators which result from the outturn for 2003/04 or from changes to the capital programme that have been approved since its original approval in February. These are commended to the Council for approval.

Financial Management Policy

9. The County Council's Financial Management Policy seeks to ensure a high standard in the management of public finances in the best interests of the people of Hampshire. The policy document contains key policies designed to maintain and seek continuous improvement in

- overall financial planning and budget strategy


- capital programming


- effective management of budgets


- ensuring good practice and probity


- the efficient and accessible processing of transactions.


Full details are contained in the original report to Cabinet.

Capital Spending and Financing 2003/04

10. The Cabinet has reviewed capital spending and financing in 2003/04. Total capital payments amounted to £153m, some £6.4m less than the adjusted revised budget. Adjusted for creditors, capital expenditure for the year was £155.7m.

11. Total capital financing of £153m has been agreed as set out in Appendix 6.

12. The County Council's debt outstanding on 31 March 2004 was £394.5m. The net increase in debt was £38.9m.

13. Appendix 5 shows the extent to which the capital programme of each service area was achieved in 2003/04. The record of payments for each service and the nature of those payments is shown in Appendix 6. An analysis of capital receipts is shown in Appendix 7.

RECOMMENDATION:

That the updated Prudential Indicators be approved.

Appendix 1

2003/04 outturn variations

2002/03 outturn variation		2003/04 cash limit	2003/04 outturn variation
£'000		£'000	£'000	%
-16	Education	633,644	555	0.09
256	Environment	83,006	-36	-0.04
-334	Policy and Resources	38,545	-281	-0.74
-18	Recreation and Heritage	26,618	-32	-0.12
-72	Social Services	272,237	-784	-0.29
-184		1,054,050	-578	-0.05

Appendix 2

Summary of variations on other budgets

	£'000
Fire Levy	-486
Capital financing charges	-27
Business rates	-1,277
Interest on balances	-2,346
Winter maintenance	1,261
Waste management contract contingency	-788
Insurance provision	-347
Contribution to insurance reserve	1072
Part-time pensions	250
Revenue contributions/contribution to capital reserve	-
Other variations	-85
	-2,773

Appendix 3

Earmarked reserves at 31 March 2004

	Movement in year £'000
Schools general reserve	12
Capital reserve	-1,953
Trading accounts	1,210
Designated underspendings	-291
On street parking	-4,036
Insurance	1,072
Job evaluation transitional costs	2,000
Delayed hospital discharge	-950
Grant equalisation	7,857
Other	-143
	4,778

Appendix 4

Prudential indicators

Actual and estimated capital expenditure

Capital financing requirement

Ratio of capital financing costs to net revenue stream

Actual external debt

Appendix 5

Analysis of capital programmes 2003/04 and requests by services to carry forward further schemes to 2004/05

Analysis of Capital Programmes 2003/04

Appendix 6

- Summary of capital payments 2003/04

Analysis of payments over services

Analysis of payments over type of expenditure

Capital financing

Appendix 7

Analysis of capital receipts 2003/04