Contact: Bevis Ingram, 01962 847508, e-mail [email protected]

Stuart Dorward, 01962 864110, e-mail [email protected]

1 Introduction

1.1 This report sets out the proposed Recreation and Heritage revenue budget for 2005/06 and the revised budget for 2004/05. It has been prepared in consultation with the Executive Member for review by the Policy Review Committee before the budget is considered formally by the Executive Member. 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 revenue budget provides the financial resources for all Recreation and Heritage services and therefore supports their contribution to the aims of the Corporate Strategy and the Cultural Strategy. The budget focuses available resources on improving quality of life by:

· creating a thriving cultural life in the County which celebrates diversity and fosters local identity

· increasing participation in a wide range of cultural, recreational and sporting activities

· broadening access and tackling the barriers that leave people feeling excluded from these activities

· using cultural resources for learning and skills development, and

· increasing the benefits to the local economy flowing from cultural activities.

1 Budget strategy and guidelines

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% increase in the employers' contribution to the Local Government Pension Scheme

· 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).

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.

1.4 The consistent objective of the Recreation and Heritage budget strategy has been to provide a stable resource base for the continuing development of services in line with the aims of the Corporate Strategy and the Cultural Strategy. This has been achieved by a progressive realignment of resources where fundamental reviews of current policies and existing service provision indicate that this is necessary. This approach has already brought about a cumulative redirection of revenue funding equivalent to nearly 7% of the base budget over the last two financial years. The intention is to continue these policies as far as possible, whilst recognising the pressure to make further efficiency gains in all areas of activity

1.5 The budget guidelines were considered by the Cabinet on 13 December 2004. For Recreation and Heritage the provisional budget guideline for 2005/06 is £29.9m.

1.6 This report sets out the Executive Member's response to the strategy and guidelines. The content of the report and its appendices is as follows:

· 2004/05 revised budget totalling £28.2m at outturn prices (paragraph 3 and Appendices 1 and 2)

· 2005/06 base budget totalling £29.9m at outturn prices (paragraph 4 and Appendix 3)

· details of budget in "Budget Book" format (Appendix 4)

· details of expenditure that falls outside cash limited budgets (paragraph 7)

· cost pressures totalling £730,000, redeployment proposals totalling £730,000 which include efficiency improvements totalling £422,000 equivalent to 1.25% of the base budget (paragraph 5 and Appendices 5 and 6)

· review of the charges made by Recreation and Heritage services (paragraph 6 and Appendix 7)

· workforce levels and costs (paragraph 8 and Appendix 8)

· summarised accounts of business units (paragraph 9 and Appendix 9).

2 Revised Budget 2004/05

2.1 The cash limit for the revised budget is £28.2m. The calculation of the cash limit is shown in Appendix 1.

2.2 The budget monitoring report presented in November predicted a potential net overspending of £404,000 against the cash limit. Current projections suggest that this position is unchanged. The potential overspend is being offset by a combination of:

· deferring to 2005/06 half of the planned £500,000 transfer to capital from the Library and Information Service book fund to allow books and other materials to be purchased for new and refurbished libraries (£250,000)

· freezing part of the revenue funded capital programme provision for Discovery Centre developments and library refurbishments (made possible by the extended timescale of the Havant scheme) (£154,000).

2.3 The revised budget for 2004/05 is therefore presented at the cash limit as summarised in Appendix 2 and shown in detail in Appendix 4. It is proposed that the precise amount of the necessary transfers between capital and revenue to reflect this are determined when the final accounts for 2004/05 are considered by the Executive Member in June. On the basis of these projections a compensating transfer between capital and revenue will probably need to be made in 2005/06.

2.4 The November monitoring report also included proposals to use anticipated revenue underspendings on Outdoor Centres to reduce the prudential borrowing requirement which partially finances the new accommodation block at Calshot and to contribute to the funding of improvements at the Welsh Mountain Centre. It is proposed that the necessary transfers are dealt with at final accounts.

3 Base Budget 2005/06

3.1 The base budget provides the starting point from which decisions can be made. Appendix 3 shows the make up of the base budget for Recreation and Heritage totalling £29.9m at outturn prices. It has been prepared on the basis of the current financial policies of the County Council, which are summarised in Annex 1 to Appendix 3. The key factors in the budget are:

· the reinstatement of £500,000 to the Book Fund, having temporarily been transferred to support capital spending

· a transfer of £347,000 to fund the new working arrangements for HR in the County Council

· pressures of £730,000 (Appendix 5) considerably exceed potential cashable efficiency savings of £422,000 (Appendix 6). Accommodating these pressures would require:

_ retaining in the Recreation and Heritage budget the cashable savings (these include failing to allocate £102,000 of Policy Fund and £150,000 of efficiency targets for managers)

_ further reductions across services of £308,000.

3.2 Overall, the base budget includes a net increase in expenditure at constant prices of £189,000. The main variations are shown in Annex 3 to Appendix 3.

3.3 The original 2004/05 budget (shown on a service basis in Annex 4 of Appendix 3) reflects the spending plans approved in July 2004¹. These plans consolidated redirections of revenue funding to key development priorities totalling £1.91m over the last two years, equivalent to 6.8% of the revised budget. This has been achieved as a result of major reorganisations of the Library and Information Service and the Countryside Service and through efficiency gains in all the Recreation and Heritage services.

3.4 For management purposes, these redirected resources, together with additional funds totalling £300,000 provided in 2004/05 for increased library opening hours and other service improvements, are drawn together in a Policy Fund and allocated to support initiatives designed to make the Recreation and Heritage services more attractive and accessible to a much broader range people and to extend the ways in which they contribute to the aims of the Corporate Strategy and the Cultural Strategy. In the base budget for 2005/06 the bulk of the Policy Fund has been reallocated to services to continue these initiatives.

3.5 In 2003/04 and 2004/05, £500,000 per annum was reallocated from the Library and Information Service revenue budget to support a programme of improvements to libraries. The base budget for 2005/06 transfers £500,000 to the book fund from capital, which restores the fund to its previous level in real terms, subject to the transfer mentioned in paragraphs 3.2 and 3.3 above.

4 Cost pressures, redeployment proposals and efficiency improvements

4.1 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

· cashable efficiency savings of 1.25%.

4.2 In preparing the budget for 2005/06 a number of costs pressure have been identified that cannot be contained in the base budget. These total £730,000 and are detailed in Appendix 5. They arise mainly from the continuation of the factors that have affected the 2004/05 position. It is proposed to meet these pressures by applying the £422,000 cashable efficiency savings detailed in Appendix 6 and by making further savings totalling £308,000 across all Recreation and Heritage services.

4.3 The record of the Recreation and Heritage services in generating substantial efficiency savings over the last two years to fund priority developments severely limits the scope for making further savings in 2005/06 and beyond without a noticeable impact on public services.

4.4 Appendix 6 also gives details of non-cashable efficiency improvements made in constructing the base budget.

5 Review of charges

5.1 The Recreation and Heritage 2005/06 revenue budget includes income of £7.6m from fees and charges. Details of the material headings are included in Appendix 7.

5.2 Under the policy on charging agreed in December 2002, responsibility for decisions on the level of library fines, reservation fees and charges for replacement borrower tickets remains with the Executive Member. Library fines are currently 10p per day for adults and 1p per day for children (aged 5-17). No changes are proposed for 2005/06. A report elsewhere on the agenda recommends changes in the arrangements and charges for book reservations.

5.3 All other charges are reviewed annually in accordance with the agreed policies and framework approved by the Executive Member in consultation with the Recreation and Heritage Policy Review Committee. Charges will be adjusted where appropriate with the aim of increasing income or to further specific policy objectives.

6 Other expenditure

6.1 The budget includes some items which are not counted against the cash limit. This includes capital charges and budgets for central departmental support services, except where they have been given to departments to buy services, and repair and maintenance of buildings. It also includes cost of member support within this budget which are rechargeable to Policy and Resources Budget for corporate and democratic core services. Apart from capital charges, these have been excluded at this stage as Policy and Resources control them and they have not yet been agreed. They are being agreed in the same cycle as this report. In the original budget they totalled £2.3m.

7 Workforce levels and costs

7.1 The workforce costs of the proposed budget are set out in Appendix 8. The 2005/06 base budget supports a planned workforce of 945 full time equivalent (FTE) staff. This compares with the revised estimate for 2004/05 of 940 which is an increase of 5.

7.2 A 1.25% efficiency reduction in staffing would mean a reduction of £294,000 and 12 FTE. The Recreation and Heritage staffing budget includes several staff who work on a seasonal basis - for example at Country Parks and outdoor centres, and reducing these would have a disproportional impact on the service and in particular on income generated. It should be possible to make some short term savings by holding vacancies temporarily but this would not be sustainable without impacting on services in the long run; in particular minimum staffing levels are required for operational and health and safety reasons in Recreation and Heritage services.

7.3 The Recreation and Heritage workforce plan for 2004/05 included a net increase in establishment of 20.9 FTE, most of which is funded by specific grant income.

8 Business units

8.1 The trading accounts of Arts Marketing Hampshire are summarised in Appendix 9.

8.2 This shows that Arts Marketing Hampshire continues to operate at or around breakeven.

Recommendation

1 That the Executive Member approves the revenue budget for 2005/06 for submission to Cabinet.

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

Appendix 1

Recreation and Heritage Service

Revised budget 2004/05

Calculation of the cash limit for the revised budget 2004/05

The following table shows the progression from the original budget for 2004/05 to the cash limit for the revised budget 2004/05. Both are at estimated outturn prices 2004/05.

Appendix 2

Recreation and Heritage Service

Revised budget 2004/05

Summary comparing the revised budget with the cash limit

Note

As explained in paragraph 3.2 an overspend is currently forecast and is being managed down. This overspend will be funded by deferring or freezing capital schemes and the precise amount required will be calculated when the accounts are closed in June.

Appendix 3

Recreation and Heritage Service

Revenue budget 2005/06

Calculation of the base budget 2005/06 - summary of cash limited expenditure

The following table shows the progression from the original budget for 2004/05 which was prepared at outturn prices 2004/05 to the base budget 2005/06 at outturn prices 2005/06.

Annex 1 to Appendix 3

Recreation and Heritage Service

Calculation of base budget 2005/06

Parameters used in the compilation

Annex 2 to Appendix 3

Recreation and Heritage Service

Calculation of base budget 2005/06

Significant costs of inflation

Annex 3 to Appendix 3

Recreation and Heritage Service

Calculation of base budget 2005/06

Significant variations

Major variations between the repriced budget 2004/05 and the base budget for 2005/06 at November 2004 prices contributing to the increase/decrease of £189,000 (0.7%) are set out below:

Annex 4 to Appendix 3

Recreation and Heritage Service

Base budget 2005/06

Analysis of variations

Appendix 4

Recreation and Heritage Service

Base budget 2005/06

Reconciliation of the original 2004/05 budget on the following pages with the 2004/05 budget in the published budget book.

Appendix 4 Paper copy only available from Chief ExecutiveAppendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive Appendix 4 Paper copy only available from Chief Executive

Appendix 5

Recreational and Heritage Service

Revenue budget 2005/06

Proposals for growth and redeployment

Note

Peoples Network

On-going costs incurred for implementation of peoples network. Initial funding received from central government but on-going costs not provided for.

Income shortfall through library closures

Shortfall in income through closure of libraries as a result of the policy decision to invest in the refurbishment of library buildings. The shortfall is only an estimate, and as libraries and discovery centres re-open additional income should be expected. Consequently the majority of the reductions mentioned above (£308,000) will be absorbed by the Library Service.

ICT development

Recurring revenue costs following the roll-out of IT2000 to all recreation sites as agreed in 2002/03.

Arts and Museums Review

See papers elsewhere on agenda.

Appendix 6

Recreation and Heritage Service

Revenue budget 2005/06

Proposals for efficiency savings and improvements

Appendix 7

Recreation and Heritage Service

Revenue Budget 2005/06

Review of income

Appendix 8

Recreation and Heritage Service

Workforce levels and costs

Appendix 9

Recreation and Heritage Service

Base revenue budget 2005/06

Business units - summarised trading accounts

The significant increase in 2005/06 reflects the Arts Council England, South East channeling all their audience development funds through Arts Marketing Hampshire.