Contact: Nick Gibbins, ext 7544, e-mail [email protected]

(With the concurrence of the Executive Member under Section 100 (B)(4)(b) of the Local Government Act 1972 this matter was included on the agenda to enable proposals to be submitted to the Cabinet on 11 February 2005)

1 Introduction

1.1 This report sets out the proposed Policy and Resources revenue budget for 2005/06 and reports on the revised budget for 2004/05, within the context of the guidelines set by the Cabinet on 13 December 2004. It will be reported to the Leader and Cabinet on 11 February 2005 to make final recommendations to County Council on 23 February 2005.

1.2 The Policy and Resources revenue budget for 2005/06 supports:

· Maximising life opportunities

· Stewardship of the environment

· Achieving economic prosperity

· Building strong and safe communities

· Improving services

· Developing councillors and staff

by focusing financial resources in these areas.

1 Budget strategy

1.1 The Cabinet has set a provisional budget strategy based on the following guidelines:

· For Education non-schools budgets, Environment, Policy and Resources and Recreation and Heritage services, the guidelines are at the level of the base budget, adjusted for inflation on the same assumptions made in previous budget forecasts - pay increases at 2.95% to reflect national agreements, prices at 2.5%, together with an allowance of 1.5% for the increase in the employers' contribution to the Local Government Pension Scheme

Schools formula spending share increase will be fully passported, as constrained by the Secretary of States' reserve power to require this outcome· . Schools will be required to meet all cost pressures, demands, contingency, new pressures and priorities within these cash limited resources

· The Social Care Executive Member is required to prepare separate budget proposals for children's services and other client groups. The Executive Member will ensure that separate efficiency savings targets set by Government for Supporting People be achieved without additional cross subsidy elsewhere within older people and other adults, or additional council tax support


·All services (other than schools) are required to identify cashable efficiency savings of at least 1.25% (including the firm plans already made for SAP benefit realisation savings) on the basis that these savings could be used in final decisions to absorb pressures within the service or elsewhere, or to reduce the council tax (or any combination of these).

· Extra contingency provision will be made to match the commitments on waste management from new infrastructure costs, increases in volumes and effect of landfill tax on the private sector contract

1.2 In arriving at the base budget Executive Members are required to ensure that:

· Income will be maximised in line with inflation

· Any proposals for spending above the budget guideline are matched by efficiency savings or redeployment of resources.

· All proposals for additional spending, however financed, need to be accompanied by a summary business case containing clear financial and performance data setting out how performance will be improved and value for money achieved, and it links to the key aims of the Corporate Strategy

· Staffing implications of proposed budgets are consistent with the service's workforce plan.

1.3 Preliminary guidelines have also been set for 2006/07 and 2007/08 in order to provide services with a medium term financial planning framework within which to formulate 2005/06 budget proposals.

2 Budget guidelines

2.1 The budget guidelines were considered by the Cabinet on 13 December 2004. For Policy and Resources services, the provisional base budget for 2005/06 is £45.6 m.

2.2 This report contains the responses of the relevant chief officers to the guidelines. The report:

· Reviews the revised budget for 2004/05 (as set out in Appendices 1 and 2) including the carry forward of planned underspendings to 2005/06.

· Reviews the 2005/06 base budget which totals £45.6 m (as set out in appendix 3)

· Examines the scope for efficiency savings of £0.9m in 2005/06 (as set out in Appendix 5)


· Identifies £0.7m of pressures and costs absorbed (as set out in Appendix 5)


· Reviews the charges made by this service (as set out in Appendix 6)

3 Revised Budget

3.1 The cash limit for the revised budget is £43.8 m. The calculation is shown in Appendix 1.

3.2 A summary comparing the revised budget with the cash limit is set out in Appendix 2. This shows that after allowing for the carry forward of planned underspendings of £825,000 to 2005/06 and 2006/07, the revised budget is £197,000 above the cash limit, slightly higher than the forecast reported to the last executive decision day in December as a result of higher Coroner's spending and corporate estate security costs. Savings of £197,000 will therefore need to be identified over the remainder of the financial year to keep within the cash limit.

4 Base Budget 2005/06

4.1 A base budget has been prepared which reflects the current financial policies of the Council, in order to provide a starting point from which decisions can be made. The base budget for this service is £45.6m at outturn prices.

4.2 Appendix 3 shows the make up of the base budget, and it is set out in detail in Appendix 4.

4.3 Overall, the base budget includes a net increase in expenditure at constant prices of £3,689 ,000. The main variations are:

· HR restructuring transfer (+£2,855,000)

The reorganisation of HR services within the County Council is being achieved by centralizing what were formerly devolved budgets for HR services, including the cost of recruitment advertising which will be managed by the Resourcing Centre.

·County Council Elections ( +£550,000)

Provision needs to be made in the 2005/06 budget for the estimated cost of holding County Council elections in May 2005.

·Planned underspendings carried forward (£709,000)

Planned underspendings carried forward from 2004/05 comprise:

	£'000
Accredited community safety officers - cost in a full year will be higher than the £1m initially budgeted, but it is proposed to carry forward the part year savings in 2004/05 to provide additional funding in 2005/06 and 2006/07	134
Office accommodation - an underspending is planned in 2004/05 as a result of a non-recurring saving in 2004/05. Carry forward of the underspending will enable higher office accommodation costs to be contained in 2005/06	200
Community Planning Grants - the current year's budget is fully committed to partnership initiatives but spending in some cases will not take place until 2005/06	145
HR restructuring - transitional funding of £200,000 was made available in 2004/05 to maintain service levels during the period in which the new structure was being implemented. Due to later implementation than originally envisaged, some of the transitional costs will now fall in 2005/06.	100
Leadership and Equalities Training - non-recurring resources were earmarked for the Leadership programme and for equalities training, which will now be required in 2005/06 rather than 2004/05	100
Treasurers - a small saving is planned in 2004/05 which will assist in the phasing in of further SAP benefit realisation savings in 2005/06	30
	709

· Deletion of non-recurring expenditure (-£377,000)

This saving relates primarily to the funding made available for the Leadership programme and pay strategy and to the invest to save funding earmarked for capital receipt generation and reducing business rate valuations, both of which have been successful and for which invest to save funding can continue to be made available but are subject to review in this budget round at the end of the initial four year period for which the funding was agreed.

· Full year effect of 2004/05 approved growth (+£240,000)

Contingency provision was made in the 2004/05 budget for continued funding of the Pay and Benefits review team in 2004/05 and 2005/06 and for a Policy and Resources grant to INTECH for three years, ending in 2006/07.

· Reductions to offset excess inflation in 2004/05 (-£263,000)

Provision was made for increased non-pay costs of 2.5% in 2004/05 and any higher inflation costs experienced in 2004/05 are required to be absorbed within the base budget. These costs are summarized in Annex 2 to Appendix 3 and mainly relate to repair and maintenance of buildings and to electricity and gas prices.

Passported increases in the schools block/social services
5

5.1 The guidelines agreed by the Cabinet on 13 December 2004 provide for the passporting of the increase in the Schools formula spending share in 2005/06. A small element of the County Council's expenditure against the schools block relates to Policy and Resources services delegated to schools in respect of Repair and Maintenance of buildings, central support services and revenue contributions to capital in respect of Schools Capital repairs. Having made allowance in the base budget for inflation based on corporate assumptions, there remains a sum of £0.3m within the passported sum which on a proportionate basis could be applied to central spending. In view of continued higher inflation on repair and maintenance work (assessed at 6.1% from November 2003 to November 2004), it is proposed to add a further £0.3m to the sum delegated to schools for repair and maintenance of buildings to maintain resources in real terms at the level planned in 2004/05.

5.2 No firm guidelines for Social Services spending was set at December's Cabinet meeting and the Executive member for Social Care was requested to consider the implications of budget guidelines at the base budget level, based on full passporting and at an intermediate level. If the principle of Social Services passporting is agreed by the Cabinet in February, and applied on a proportionate basis to Policy and Resources spending in support of Social Services, this would release £0.3m in support of budget pressures identified by Chief Officers as paragraph 8 below.

6 Redeployment proposals, efficiency improvements and cost pressures

6.1 The Cabinet requires all services to consider and report on:

· efficiency improvements achieved in absorbing pressures and costs within the budget guidelines

· the redeployment of any resources required to offset any new spending priorities, or inescapable budget pressures, or legislative requirements which otherwise cannot be met within their budget guidelines

· the annual review of charges and the maximisation of income.

6.2Executive Members have been asked to identify cashable efficiency savings of at least 1.25% (including the firm plans already made for SAP benefit realisation savings) on the basis that the Cabinet would determine in February whether these savings could be used to absorb pressures within the service or in other services or to reduce the council tax (or any combination of these). Policy and Resources revenue budget efficiency savings targets over three years are as follows:

At 2005/06 prices	2005/06	2006/07	2007/08	Total
	£,000	£,000	£,000	£,000
Chief Executive	96	95	94	285
Property, Business & Regulatory Services	256	251	246	753
Human Resources	50	250	350	650
County Treasurer	250	250	450	950
IT Services	200	26	25	251
Other Budgets	30	29	29	88
	882	901	1194	2977

6.3 Appendix 5 also summarizes efficiency improvements in the form of cost pressures that have been absorbed within the base budget, totalling £

7 Chief Officer controlled budgets

Chief Executive

7.1In the current financial year a number of new spending initiatives have been planned. Some of these either span this and the next financial year or have continuing financial implications. In summary these are:

· Running of pilot Area Committees and establishing a Policy and Resources Select Committee - The 12 month pilot has been running since September 2004. If , following evaluation, a decision is taken to roll out Area Committees across the County there will be a need for additional resources. Members agreed £172,000 for the running costs of the Select Committee and Area Committees in Havant and Test Valley on a full year basis plus an additional £25,000 for evaluation. The cost for the whole County is likely to be in the region of £500,000. If £200,000 could be found towards this, with capacity to deliver the remainder of the wider roll-out generated by a significant reduction in other meetings, it may be possible to phase-in arrangements across the County subject to the results of the evaluation.

· Health Scrutiny - Over the last year work in this area has gained momentum with the result that resources are stretched. Depending on the programme of reviews that Members want to undertake it may be necessary to provide additional support which could not be accommodated within the existing budget

· Older Person's Communication Campaign - Research among Hampshire's older residents identified the need for an information and awareness raising campaign to bring together all relevant information and available services for older people from the County Council and other organisations. This would support the corporate aim of maximising life opportunities and building strong and safe communities. It is anticipated the campaign would run for a period of around 6 months at a cost of £130,000. This will require one-off funding spread over 2004/05 and 2005/06.

· South East Plan - options for communicating and consulting on the SE Plan are currently being considered. Indicative costs indicate that one-off provision of around £130,000 would be required depending on how far reaching the exercise is. This again will be spread over 2004/05 and 2005/06.

· Existing commitments - there are two areas where spending has been agreed but where funding has not yet been made available on a permanent basis:

¬ County Council stand at county shows (£40,000)

¬ Additional support to Members - full year cost £50,000 (part year cost 2004/05 £ 25,000).

7.2 In addition to the above there are also spending pressures in the following areas:

· Legal Support for the Capital Programme - The County Council runs one of the largest and most complex capital programmes in the Country. Increasingly there is a need for high level legal advice to maximise the commercial benefit to the County Council. A business case has been developed and it is proposed that, the funding of an additional team, the estimated cost of which is £264,000 should be achieved by increasing the targets for capital receipts and developers contributions on a 50:50 basis and then adjusting revenue contributions to capital. This will need to be subject to the agreement of the departments generating the work (Property Business & Regulatory Services and the Environment Department)

· Legal Support for Child Care - A proposal has also been made that a 0.5 legal post should be created to focus on expanding training to social workers to improve their court skills. No appointment has yet been made as permanent funding has not been agreed (estimated cost £22,000)

· Contingency for Emergency Planning and Health and Safety - the new Civil Contingencies Act which puts statutory duties on local authorities comes into force on 1 April 2005. Agreement has been reached in principle with the Districts that the County Council will continue to deliver the service on their behalf and they will pay accordingly. The responsibilities placed on local authorities have increased substantially and the government expects authorities to increase their spending on Emergency Planning. The 2.9% increase in the County Council's EPCS FSS includes £161,000 which has been attributed by the Government to Emergency Planning, and resources have also been made available to district councils for the first time. In addition to the requirements of the Civil Contingencies Act a review has been taking place of the management of Health and Safety across the County Council and the need to link it more closely with the Corporate Risk Management arrangements. It is therefore suggested that a contingency of up to £200,000 be made to deal with the potential spending pressures arising in these areas. It is likely that this will need to be ongoing but will be subject to the approval of a business case before any allocations of funding is agreed.

· County Council Profile - In order to protect the provision of services locally it is important to ensure that the County Council contributes to the growing debate on issues such as ways of providing and funding cost effective public services. Linked to this is the increasing evidence that the public want to have more information about the County Council. As Hantsweb is one of the key channels by which the County Council can get across its message the information needs a much better customer focus. The estimated cost of the staffing resources to achieve these aims is £60,000

7.3 Identification of Efficiency Savings - If the department is required to achieve the target set of 1.25% cashable efficiency savings over the next three years a different approach would need to be taken from the traditional top-slicing or pro-rata cuts from all budgets. It would be necessary to take a robust look at all the functions of the department to identify what reductions could be made which would minimise the impact on the corporate priorities of the County Council. It is likely however that certain activities would have to cease. This would not be a quick exercise and therefore a flexible approach to the achievement of savings would be needed. Some of the areas where possible efficiencies could be investigated are:

· Significant reduction in the volume of member and officer meetings

· Reviewing charges for external work and earmarking a proportion of the income generated

· Further pro-active risk management to identify what action can be taken to reduce claims against the County Council

· Better co-ordination of common functions e.g. post room, reception facilities (this would need to be done in relation to the long term proposals for the Castle Complex)

· Further use of electronic communication

· Review of spending on consultation, communication and IT

· Review the support given to external organisations

7.4 It is important to recognise that the bulk of the department's budget is spent on staffing and therefore if cash savings are to be achieved it will result in a reduction in staff. In order to do this in the most cost effective way a long term approach would have to be taken i.e. over the three years as a whole. In the short term vacancy management remains the surest way of achieving the savings.

Property, Business and Regulatory Services

7.5 The 1.25% cashable efficiency savings target for Property, Business and Regulatory Services is £256,000 in 2005/06 and £250,000 in 2006/07 with an equivalent sum to be identified as non-cashable efficiency improvements. The target has been based on gross expenditure however some fifty percent of the Department's overall gross expenditure is offset by income from various sources. The Director of Property, Business and Regulatory Services has proposals for the use of the cash savings that exceed the above mentioned target. The current inflationary pressures alone will exceed the extent of the redeployment sum, hence the efficiency target acts to further cut base budget provision for these services.

7.6 In some areas such as the Registration Service if the costs were reduced then the scope for income would also be reduced. In others such as Hampshire Scientific Service experience has indicated that increased charges to external customers often results in a correspondingly lower volume of work being commissioned. The Department will therefore continue develop flexible options for increasing income that will provide the best outcome for the individual services.

Redeployment pressures

Addressing legislative requirements for County Council properties

7.7 Resources have been re-deployed within existing Property Services budgets in recent years to address mandatory health and safety issues such as asbestos (£379,000) and DDA (£120,000). Both of these are corporate legislative pressures that fall on the County Council but have been met by adjustments to Property Business and & Regulatory Service's budgets. This workload is likely to increase in future for example in meeting the requirements of the Regulatory Reform (Fire Safety) Order 2004 which comes into force in 2005. The continued redeployment of resources in this fashion simply erodes the purchasing power of the maintenance budgets over time particularly in the non-education estate.

Addressing corporate strategy initiatives

7.8 Resources have also been re-deployed within existing budgets to address corporate strategy initiatives such as e-government, improved procurement for construction (Property Services) and to develop new services to the public such as Buy with Confidence and Safe and Sound (Trading Standards) and Citizenship, Baby Naming Ceremonies and Remembrance Ceremonies (Registration Service).

Cost Pressures

Office Accommodation

7.9 In 2005/06 demand for additional office space to accommodate a new HR/Payroll centre and potentially a new corporate contact centre will result in continuing pressures on the office accommodation budget. The costs are largely fixed e.g. rates, rents, service charges and energy costs, where the recent rises in the market for gas and electricity have resulted in significant increases in the new contract prices.

7.10 The measures already agreed including asking occupants to contribute to the costs from their cash limited budgets and a one-off technical adjustment mean that pressures in 2005/06 can be partly contained although an overspend of £150,000 is still forecast. The underlying full year pressures from existing commitments including increased energy costs and running costs associated all the newly acquired properties of £400,000 will re-emerge in 2006/07 and beyond. This forecast excludes any impact on the revenue budget of the proposed major re-development of Ashburton Court.

7.11 Property Business Regulatory Services will continue to seek to achieve best value in the use of available resources e.g. by relinquishing leases as the opportunity arises if freehold space is available and by developing more efficient use of available office space (flexible working, space planning and a range of modern techniques for improving the utilisation of space). To be successful these approaches require a collaborative approach from all departments and this reflects the corporate nature of the budget.

7.12 Savings achieved by the measures outlined above would contribute to bringing the budget position back towards longer-term balance but it will clearly not be possible to reach a position of a 1.25% cashable saving against this budget. The inclusion of Office Accommodation gross expenditure in the overall calculation of efficiency savings targets therefore means that a disproportionate target will fall on other budgets.

Corporate Estate

7.13 Invest to Save funding to support the Capital Receipts Team (£190,000) and Rates Revaluation Team (£75,000) within the Corporate Estate budget was agreed for four years until March 2005. Their work has been of considerable benefit to the whole organisation : the Capital Receipts Team has delivered total capital receipts for 2004/05 and 2005/06 of £47m and the Rates Revaluation Team have identified savings to the County Council in excess of £5m since inception. There is an ongoing need to maximise capital receipts available to the County Council to support the capital programme and the 2005 Rating List will require a further programme of work for the Rates Revaluation Team to ensure charges continue to be challenged where appropriate.

7.14 These considerable achievements have not however delivered any savings directly to the Corporate Estate net income budget of £107,400 and this budget would not be able to accommodate these teams without either permanent additional funding or a continuation of the Invest to Save money.

Repair and Maintenance

7.15 The rate of inflation experienced on repair and maintenance work continues to run ahead of general price inflation and the forecast figure for 2005/06 is in excess of 6%. In previous years some of the total gap (estimated as £452,000 in 2005/06) has been offset by the passported element of the Schools block increase for central budgets delegated to schools. In 2005/06 this would provide £313,000 but the balance will constitute a cut in spending power. This approach has been in evidence for several years which, coupled with requirement for efficiency savings, begins to threaten the ability of the Repairs and Maintenance budgets to meet major liabilities on non-education properties.

Conclusion

7.16 The under funding on office accommodation, the budget pressures facing the department, and the inflation shortfall on repairs and maintenance are considerably in excess of the 1 ¼ % cashable savings of £256,000, leaving in practice no scope for redeployment of resources or efficiency savings to meet other budget pressures.

Human Resources

7.17 2005/06 will be the first full year of operation for the reorganised Human Resources department. This follows the successful implementation of the Employment Practice Centre and Resourcing Centre in Athlestan house, Winchester. Occupational Health and Employee Support Line staff will have relocated to new accommodation in Eastleigh House, Eastleigh.

7.18 Work to develop the shared service centre concept, including the combined HR and payroll responsibilities is on-going. It is planned that this centre will be implemented within 2005/06. The impact of these new arrangements has yet to be assessed in detail.

7.19 HR will deliver all required SAP and efficiency savings required of it within 2005/06. These savings will be made via the continued improvement in economy, efficiency and effectiveness of corporate staff advertising delivered via the Resourcing Centre. These savings will be at least equal to the SAP realisation benefits savings target of a further £50,000 on top of the £100,000 already targeted for 2004/05.

7.20 A series of firm financial controls are being put into place to identify and harvest savings across the department. These include the imposition of strict protocols which will be used to determine the retention of current vacant posts and any posts which become vacant in the future. These require budget holders to identify scope for service improvements and efficiencies, progress against which will then be evaluated. The criteria specified within the Cabinet's budget planning strategy will be applied to all initiatives within the department.

7.21 In addition, a monthly report identifying efficiency gains will be scrutinised, identifying progress against performance and volume indicators set against actual hours paid for and actual hours delivered within the department.

7.22 These strict management controls will enable the HR department to consolidate the gains made by reorganising its structure, in preparation for the impact of SAP realisation benefits savings targets of £750,000 by 2007/08. Income generation opportunities will be explored, including work related to the New Forest National Park.

7.23 The delivery of these savings, while still maintaining service delivery standards and volumes is a primary objective for the department. However, this task has been made more difficult by the outcome of the negotiations with departments on the transfer of budgets. Actual funding is below the level which was originally envisaged when restructuring plans were first drawn up. This means that recovering the same value of savings from a smaller level of funding is proportionately more difficult than originally intended.

7.24 This problem is compounded by two further issues. Unfunded pressures totalling £110,000 during 2004/05 required the early utilisation of transitional staffing funds intended to be carried over to 2005/06. These unfunded pressures include increased insurance cover for contracts, sickness cover and direct, above the line, charges for accommodation imposed by other departments, all of which will recur within 2005/06. Making compensating savings to fund these pressures mainly affecting the occupational health service, together with the need to deliver SAP realisation savings presents a challenging target.

County Treasurer's Department

7.25 2004/05: whilst current indications are of spend at cash limit if no further action is taken, the likely savings targets for Treasurer's in 2005/06, which include £250,000 SAP benefit realisation and absorption of £190,000 cost of increments, are extremely challenging. Every effort will therefore be made to reduce spending in the remainder of 2004/05 in order to achieve a carry forward to assist with the requirements for 2005/06, and an underspend of £30,000 is being planned for on that basis.

7.26 2005/06: this is the second year of SAP benefit realisation savings, with £250,000 of new savings to be achieved (equivalent to 1.5%), bringing the total recurring annual savings to £0.5m towards the target of £1.2m for the finance function (this reduction is not yet reflected in the department's cash limit, but is instead expressed as a requirement for Treasurer's to pay this sum towards the SAP capital costs). In addition, £190,000 (equivalent to 1.2%) cost of increments is to be absorbed, so that the overall efficiency gain required is 2.6%. The primary means of making these savings are to reduce staff numbers by 11 full time equivalents and impose turnover savings of 3% on all sections. Improved working practices, in accordance with process reviews facilitated by SAP, should enable existing workloads to be carried with fewer staff.

7.27 There will also be changes in the make-up of the Treasurer's budget which follow from changes in responsibility and accounting arrangements, notably the transfer of budgets to the Human Resources Department, the transfer of 19 staff from Education to Treasurer's as Education Financial Services become part of the Education Devolved Finance Unit, transfer of six staff from Social Services to Treasurer's in association with the centralisation of assessment of non-residential charges in order to improve efficiency, new arrangements for the Treasurer's Training Team (which was funded largely from the SAP roll-out budget, but with the end of that process will rely on income from departments and be re-sized accordingly) and the rebasing of IT charges. None of those changes should affect the underlying business of the Council.

Other budgets

7.28Other budgets mainly consist of grants to voluntary organisations and to councils of community service, contributions and subscriptions to national and local organisations, and the external audit fee.

7.29 A non-recurring additional provision of £300,000 was included in 2004/05's budget for grants, contributions and subscriptions which was used to fund a three year grant to INTECH and other specific proposals, only one of which is potentially continuing, should the County Council continue to subscribe to Localis/Policy Exchange, costing £11,000 in 2004/05.

7.30 Because the County Council is not directly responsible for service provision, efficiency savings are dependent upon the action of the relevant bodies in setting subscriptions or require an assumption to be made about the scope of the grant receiving body to provide its services more efficiently. It should be possible to incorporate an efficiency saving into the budget for audit and inspection fees on the basis of the County Council's retention of its excellent status and of the Audit Commission's strategy of developing a more strategic form of regulation. However consultation on fee scales for 2005/06 has yet to be finalised.

8 Review of charges

8.1 The service's 2005/06 revenue budget includes income of £7.8 m from fees and charges. Details of the material headings are included in Appendix 6.

8.2 There are some mandatory and national charges which the County Council is not able to vary. The main examples relate to charges for the registration of births, deaths and marriages and Commons registration charges.

8.3 Discretionary charges are reviewed annually except when they are subject to agreements which cover longer periods when the review takes place at the end of the period of the agreement. Examples of charges not subject to annual review are agricultural lettings and most commercial lease rentals.

8.4 Charges for Support Services are reviewed annually and are set to recover the full cost. Other discretionary charges are set to recover the full cost except where charges are governed by market forces and are only expected to make a contribution towards the cost of the service. No new charges are proposed.

9Magistrates' Courts Committee

9.1 The migration of Magistrates Courts into a new government agency of the Department of Constitutional Affairs (DCA) takes effect from April 2005. During 2004/05 planning has been underway for the untying of funding, estates and services from the County Council, as well as managing the transition to the DCA.

9.2 From 1 April 2005 the Magistrates' Courts Committee (MCC) will be abolished and all MCC estates, people and funding will transfer to the LCD. There will no longer be County Council direct support in terms of owning and managing the MCC estate, provision of MCC funding, provision of financial or other services including payroll, or provision of pensions for MCC staff.

10 Workforce levels and costs

The workforce implications of the proposed budget are set out in Appendix 7. Inclusive of 1294 staff working in the business units, the 2005/06 base budget supports a planned workforce of 2854 full time equivalent (fte) staff, 87 ftes above the 2004/05 original budget. The main changes are as follows:
10.1

· 30 additional FTEs in HC3S as a result of additional contracts

· 25 staff transferred from Education and Social Services to the Treasurer's Department arising from the implementation of the Finance Best Value review

· 5 additional HR staff, including short term additional posts in the Education Personnel Services business unit, funded by schools and extra training staff funded by specific grant and additional income, offset by vacancies expected to be covered by agency staff

· 4 extra staff in the Chief Executive's Department, funded from external income or by charges to services

· After allowing for the transfer of the asbestos team from Regulatory Services to Property Services, there is a net addition of 11 FTEs in Regulatory Services, following some minor organizational changes.

11 Business units

11.1 The trading accounts of the business units are summarised in Appendix 8.

Property Business and Regulatory Services

11.2 The financial performance of the Property, Business and Regulatory businesses is likely to show a modest increase against the original target for 2004/05 of £264,000 despite the reduced number of available trading days for HC3S. The target for 2005/06 of £286,000 is broadly similar to 2004/05 with the return of HC3S to more usual surplus levels being offset by lower projections for HTM (increased leasing costs) and County Supplies, where costs associated with corporate procurement work have not been offset by equivalent additional funding.

IT Services

11.3 E-Government - the additional funding of £0.5m for 2004/05 has been used to progress work on the business warehouse for data analysis, and to put in place a programme to improve Hantsweb, with the aim of returning it to the recognised top 20 of local government websites in the country. The Government's target of making all relevant services capable of being delivered electronically (BVPI 157) by the end of December 2005 will involve some coordinating and supporting work at a corporate level. The principal burden falls on individual service departments to "e-enable" their services by the end of the year. This will undoubtedly lead to additional calls on resources over the coming months. Work is also in hand to develop more effective ways of handling telephone contacts in particular, through the use of contact centre arrangements.

11.4 IT Services - the trading account incorporates the income and expenditure relating to the Enterprise project. A review of IT pricing and charges has been completed and mainframe charges will be replaced by SAP charges from April 2005. Completion of the SAP rollout and continued parallel running of the mainframe have contributed to a trading deficit in 2004/05, however the trading account is planned to break-even by the end of 2005/06 after achieving savings of £400,000 from SAP benefit realisation.

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

Appendices