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Contact: Sheila Little, Education Finance Unit (01962 847545) ([email protected])

1. Summary

1.1 This report follows on from the issues paper presented to members on 12 October 2004 and builds on the most recent monitoring reports for the period to the end of October 2004.

1.2 This shows a projected outturn within the cash limit, following the management action discussed in section 5.

2. Cash Limit 2004/05

2.1 The original cash limit agreed for 2004/05 by County Council in February 2004 was £666.7m and reflected the agreed strategy that the overspend in 2003/04 would be met from reserves. Since that date, amendments to the cash limit have been approved which reflect changes in grant levels and other issues resulting from the closing of the 2003/04 accounts, giving a new total of £675.2m. Details are set out in Appendices 1(a) and 1(b).

3. Forecast Outturn 2004/05 up-date

3.1 A detailed breakdown comparing the cash limit and projected outturn is attached as Appendix 2. Overall monitoring indicates, subject to further management action, a balanced budget, after allowing for variations in individual areas. The following paragraphs expand on those areas where the projected outturn is significantly different from the cash limit

School Specific Contingencies. + £120,000 (cash limit £2.5M)

3.2 The deficit on the Hawthorns school account when it closed (£120,000) falls to be funded from this contingency budget. The school has now been merged with Ashwood Education Centre to form `Basingstoke School Plus', and is being managed and accounted for within the Education Otherwise Than at School (EOTAS) budget from September 2004. The additional running costs for the remainder of 2004/05 are £70,000 and these are reflected in the projected costs of EOTAS. The overall effect of this restructuring is a budget pressure in 2004/05 of £190,000, split between the Schools contingency and EOTAS.

Home to School Transport (cash limit £19.5m)

3.3 Monitoring reports continue to indicate that the additional costs identified can be accommodated by the use of the specific contingency which is held for home to school transport. The figures in the appendix reflect this assumption. However, there remains significant pressure on this budget, particularly for the transport of children with special needs where cost pressures exceed inflation allocations and a further up-date will be provided in the next budget monitoring report.

Inclusion (SEN)

3.4 Budget pressures on these services (i.e. Statements, Out-County Placements and EOTAS) continue. Against a base budget of £18.55m, current forecasts indicate that:

· Statements / Out-County Placements (Cash limit £13.1m)

As indicated in the earlier report, a balanced budget is still forecast on this very volatile budget.

· Education Otherwise Than At School (EOTAS) +£141,000

(cash limit £5.84m)

Approximately half of this total relates to the creation of `Basingstoke School Plus' (see para 3.2). Managers are continuing in their efforts to contain expenditure whilst dealing with intense service pressures; at present, EOTAS provision is running in excess of 50% over capacity.

New Early Years Places -£560,000

(cash Limit £18.7m)

3.5 The take up of three year old places during the Summer term once again reflected a level lower than that included in the budget. The saving against budget assumes a similar lower level of take up in the third term.

Interest on School Balances -£87,000 (Non Delegated schools - miscellaneous)

3.6 Interest rate rises, together with a higher than anticipated level of primary school balances, have resulted in an increase in income from this source.

Services to Schools and Support - ICT costs £564,000

3.7 It was reported on 12 October 2004, against a cash limit of £1.25m, that the outturn forecast indicated a significant projected overspend (£564,000) for a variety of reasons, as discussed in that report. The position remains unchanged and management action continues in order to minimise the final outturn overspend against this budget.

Vosper Thorneycroft Southern Careers (VTSC) £331,000 (included in Continuing Education Budget)

3.8 As mentioned in the October report as a result of a change in service delivery arrangements for provision of the Connexions service outside the control of Hampshire County Council, VTSC will not be paying the annual dividend to the County Council in 2004/05 or for future years. South Central Connexions is now delivering the service under arrangements which do not yield dividends.

Although costs relating to the Connexions contract have been recharged to the new organisation for delivery, premises and staffing, there are on-going discussions to agree their liability for the IT costs relating to the service.

3 Business Units

4.1 Based on the latest business plans, indications are that, in total, the education business units will reduce the cumulative surplus to £482,000, compared with the projected level of £897,000 set in February 2004. This relates mainly to a projected increase in the deficit within the EdICT business unit and a three year recovery plan is currently being prepared. The planned strategy of providing additional resources in the current financial year to support SAP rollout to schools in 2004/05 accounts for the remainder.

4 Summary Position and Proposed Strategy

4.1 The major factor contributing to the Service's pressure against the cash limit are set out in the following table

Budget Description	Variation from Cash Limit £'000
School specific contingencies	120
Education Otherwise Than at School	141
New Early Years Places	-560
Interest on school balances	-87
Support Services -ICT costs	564
Vosper Thornycroft Southern Careers	331
Other minor variations	124
Net pressures on Specific Budgets	633
To be funded by:
Additional Childcare Grant 2003/04	-192
General contingency budget	-376
Net Pressure on Cash Limit	65

4.2 The general contingency budget (£376,000) will be used partially to fund the project overspend.

4.3 At this early stage of the year no further action is required beyond that already initiated. All budget holders will continue to monitor expenditure closely and alert senior managers to any potential increases and savings opportunities, including scrutinising all vacancies before allowing appointments to proceed. This will apply across the whole department and be reviewed regularly by the Education Department Management Team.

5 Capital

5.1 The Education Capital Programme for 2004/05 is summarised below, although in practice it is often supported by funding from Policy and Resources mainly in respect of repair and maintenance elements.

5.2 The Executive Member for Education receives regular monitoring reports from the PBRS Department on the capital starts programme at individual scheme level, where this is appropriate. The current situation is summarised in the following paragraphs.

5.3 Resources totalling £58.8m have been allocated for the starts programme in 2004/05 (see table below). Of this total, £23.1m relates to block allocations for Schools Devolved Formula Capital, Schools Access Initiative, Furniture and Equipment, Contingency and Retained Capital Receipts, leaving £35.7m for specifically identified schemes. Schemes to the value of £14.2m have started, with £21.5m of schemes still scheduled to start before the end of the financial year.

	£'m	£'m
Education Capital Programme 2004/05 - resources
Original Budget Book		39.659
Internal Funding Changes
Balance from 2003/04	1.622
Carry-over schemes from 2003/04	11.069
Share of 2003/04 capital receipts	1.788
Prices Trust Interest	0.111
Prudential Borrowing	0.750	15.340
Additional DFES Allocations and Grant
Additional Devolved Capital	0.104
School Travel Plans	0.498
Youth Service Disabled Discrimination Act (DDA) Schemes	0.134
Adult Education DDA Schemes	0.592
Specialist Schools	0.748	2.076
Other Funding
Schools Contributions from Revenue	1.182
Others (inc NOF)	0.512	1.694
Total Resources		58.769

6 Legal Implications

6.1 None

7 Financial Implications

7.1 Financial implications as set out are the main purpose of the report.

8 Personnel Implications

8.1 None

9 Impact Assessment

9.1 Race and equality impact assessment has been considered in the development of this report and no adverse impact has been identified.

10 Crime prevention issues

10.1 None

11 Views of the Local County Councillor

11.1 None

Recommendation

1. That the budget monitoring report and an identification of costs pressures is noted.

Section 100 D - Local Government Act 1972 - background documents

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. - none

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