Contact: Ejner Knudsen, ext 7403, e-mail: [email protected]

1 Introduction

1.1 This report provides a further update on the budget monitoring position for the Environment services for the 2004/05 financial year, covering the budgets for highways and transportation, planning and waste management.

1.2 The budget monitoring review reflects the outcome of the most recent budget monitoring exercise, carried out in consultation with budget holders within the Environment department, during January and February. During the review, expenditure and income trends have again been considered and planned commitments for the remainder of the year evaluated. An updated forecast outturn has been calculated for each budget heading and variations from the 2004/05 revised budget, which was approved in January, have been identified.

1.3 Members need to be aware that the figures in this final budget monitoring report for 2004/05 reflect estimated expenditure and the projected outturn for the year, based on monitoring information available during February. It does not, at this stage, represent the final year end position for the 2004/05 financial year, which will be reported in June after the accounts have been closed.

1 Corporate strategy

1.1 Monitoring of the Environment budget helps to support all of the aims of the corporate strategy, by focusing financial resources in support of the provision of the various Environment services which contribute towards:

1. Maximising life opportunities

2. Stewardship of the environment

3. Achieving economic prosperity

4. Building strong and safe communities

5. Improving services

6. Developing councillors and staff

2 Cash limit 2004/05

2.1 The most recent budget monitoring position, setting out the revised budget for the 2004/05 financial year, was presented as part of the 2005/06 revenue budget report to the Environment Policy Review Committee and the Executive Member - Environment's decision day, on 21 January 2005. A revised budget totalling £90.506 million was approved for submission to the Cabinet.

2.2 The revised budget reflected a number of changes including additional provision of £470,000 for routine highways maintenance and £100,000 for a contribution towards the repairs to the Micheldever depot. These increases were partially absorbed by utilising available savings on the budgets for school crossing patrols (£50,000) and expired historic buildings grants offers (£127,000), together with a balancing transfer of £393,000 from the locally resourced capital programme provision for highways structural maintenance.

2.3 The recommended approved budget also included a request that the Cabinet agree to a transfer of £300,000 from the projected underspending on the waste management budget for the disposal of abandoned vehicles, to meet additional expenditure in connection with the submission to the Government of revised proposals for the South Hampshire Rapid Transit project.

2.4 The 2004/05 revised budget, including the above proposal, was approved by the Cabinet at their meeting on 11 February 2005.

2.5 The only subsequent change to the 2004/05 revenue budget cash limit since January has been in relation to the waste management contract related budgets. A further allocation of £657,000 has been made from the central waste management contingency to cover estimated cost increases on the operation of the waste management contract during the third quarter of the financial year.

2.6 The Environment service's budget has been increased to take account of the above change, giving an adjusted 2004/05 cash limit figure of £91.163 million. Further adjustments to the cash limit will be made at the end of the year to reflect the final quarter's call on the waste management contingency together with any other changes that may be required.

3 Outcome of latest budget monitoring review

3.1 Appendix 1 provides a detailed summary of the 2004/05 revised budget over the standard divisions of service, together with details of assessed expenditure to 31 January 2005 and the latest forecast outturn for each budget heading.

3.2 The main issues arising from the budget monitoring review are discussed in the following paragraphs.

Highways maintenance

3.3 The 2004/05 cash limit for routine highways maintenance, taking into account the additional sums included in the revised budget to cover additional pressures and the contribution towards repairs to the Micheldever depot, is £21.823 million.

3.4 A number of changes to the 2004/05 maintenance programme have recently been made and works allocations to the various highways units and other departmental budget holders have been revised to take into account inflation increases and other demands. All but £97,000 of the budget has been allocated to budget holders and further phased allocations are planned to be made during March to fully allocate the budget. Details are presented in Appendix 2.

Traffic surveys

3.5 A projected underspending of £22,000 has been identified on the traffic surveys operational budget, mainly as a result of additional income from the supply of data and services. At the time of preparing this report, it was considered prudent to retain this saving pending the achievement of required savings on the departmental management and support services budget.

Public transport

3.6 The report on the revised budget in January suggested that overall expenditure on the public transport budget would be in line with the cash limit of £6.068 million and that the allocation from the Government of £1.375 million for rural bus grant funded services would also be fully utilised. On the bus subsidies budget, projected expenditure based on existing contractual commitments was forecast to be £5.643 million, compared with the budget of £5.675 million, leaving just £32,000 available to meet any further pressures during the remainder of the year.

3.7 The latest monitoring review indicates that overall expenditure on public transport is expected to be contained within the revised budget cash limit. However, a small overspending of £10,000 on bus subsidies is now being projected, reflecting a contribution of £25,000 towards the extension of Winchester Park and Ride scheme and the inclusion of a number of other minor contractual changes and other adjustments to the forecast outturn. However, this additional expenditure is being more than offset by estimated savings of £44,000, following changes to the projected outturn for cross boundary bus services.

3.8 The balance of £34,000 from the savings on cross boundary bus services has been allocated to cover higher expenditure on public transport publicity.

Management and support services

3.9 The 2004/05 budget for management and support services assumes that incidental savings from staff turnover and vacancies, together with other housekeeping efficiencies, will be achieved during the year so that overall departmental expenditure may be contained within the cash limit. The original savings requirement for 2004/05 was £684,000, equivalent to 3.1% of the management and support services budget.

3.10 The process of regular budget monitoring and review has been tracking the achievement of these savings during the year. The outcome of the previous budget monitoring review was reflected in the 2004/05 revised budget approved in January. This identified actual savings of £434,000, leaving a further £250,000 to be found during the remainder of the financial year.

3.11 The departmental budget monitoring review just completed has identified further savings of £171,000, mainly relating to additional savings from staff vacancies and lower expenditure on office running costs, leaving a residual savings target of £79,000 for the remainder of the year. Projections suggest that the overall 2004/05 savings target should be met in full enabling total expenditure on management and support services to be within the approved budget.

Waste management

3.12 The waste management revenue budget is sub-divided into two separate categories for budget monitoring purposes:

· The waste contract related budgets, including trade waste income and recycling credits.

· The other non-contract related waste management services covering facility maintenance, administration, promotions and developments, disposal of abandoned vehicles and provision for household waste recycling centre (HWRC) management.

Waste contract related services

3.13 The 2004/05 original budget for the waste contract related services was based on expenditure commitments at the time of its preparation in November 2003. No allowance was included for further growth in waste volumes during 2004/05, or for future price increases, variations in landfill tax or other contractual cost pressures. As these factors are principally demand led and subject to long term contractual obligations, there is very little scope within the management of the budget to vary expenditure. These pressures are therefore covered by an annual amount set aside within the County Council's central contingency for inflation and other contingencies. In 2004/05 this contingency sum was £3.850 million.

3.14 As reported in the revenue budget report in January, waste volume levels have been higher than expected this year. The latest figures for 2004/05 confirm this trend, showing average waste growth during the first nine months of the year of 4.0%, against the assumed growth level of 2.5% included in the budget. Although household waste growth levels at 1.9% during the first nine months of the year have been below budgeted expectations, this has been more than offset by the increase of 8.4% in civic amenity growth from household recycling centres.

3.15 As mentioned in paragraph 3.5, a further call of £657,000 has been made from the central waste contingency to cover cost variations on the operation of the waste contract during the third quarter of the year. The total call for the first nine months of the year is £2.164 million, leaving £1.686 million available to cover cost variations during the final quarter of the year. At this stage, it is thought likely that total expenditure on the waste contract budget, including a number of contractual claims that are still being negotiated, will be contained within the overall budget allocation for 2004/05.

Other waste management budgets

3.16 The 2004/05 revised budget for non-contract waste management services is £2.981 million. It reflects the transfer of £300,000 from the forecast underspending on the budget for the disposal of abandoned vehicles to meet additional departmental expenditure in connection with the submission to the Government of revised proposals for the South Hampshire Rapid Transit scheme, which was approved as part of the 2004/05 revised budget.

3.17 Further underspendings of £309,000, beyond the £300,000 figure, are projected on the abandoned vehicles budget. However Cabinet policy requires that these additional savings be ring-fenced and used to offset excess waste contract related expenditure. Adjustments to the cash limit will be made at year end to reflect this policy when the final accounts for 2004/05 are prepared.

4 Conclusion

4.1 The 2004/05 revised budget totalling £90.506 million, including proposals to reallocate savings of £300,000 from the budget for the disposal of abandoned vehicles to meet additional expenditure in connection with the South Hampshire Rapid Transit project, was approved by the Cabinet on 11 February 2005.

4.2 A further increase to the 2004/05 cash limit of £657,000 has subsequently been made to cover the third quarter's call on the central waste contingency to cover the cost variations on the operation of the waste management contract. The adjusted 2004/05 cash limit is therefore £91.163 million.

4.3 The budget monitoring position, as set out in this report, shows a satisfactory position for this stage of the financial year. Expenditure on the majority of the main operational budgets, including highways maintenance and public transport, is being carefully managed to utilise available funding and is expected to be close to the approved allocations.

4.4 Savings of £171,000 from staff vacancies and lower office running costs have been identified on management and support services, helping to contribute towards the achievement of the savings target of £684,000 included in the 2004/05 budget. Further savings of £79,000, which are expected to be achieved during the remaining weeks of the year, would enable expenditure on management and support services to be contained within the approved budget.

4.5 A projected saving of £22,000 has been identified on traffic surveys as a result of additional income. This sum is being withheld pending the achievement of the further savings of £79,000 required to balance the budget on management and support services.

4.6 Total expenditure on the waste management contract related budgets is expected to be within the overall budget allocation, including the central contingency sum of £3.850 million. Additional underspendings of £309,000 are projected on the abandoned vehicles budget, which would need to be ring-fenced at year end to cover higher expenditure on the waste disposal contract, in line with Cabinet policy.

Recommendation

1 That the report be noted.

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

1. Environment Department Management Team : 7 February 2005 - Revenue Budget Monitoring 2004/05

Appendix 1

Environment
Revenue budget 2004/05 - monitoring statement
Analysis of variations

Appendix 2

Environment
Summary showing detailed allocation of highways maintenance budget

Capital maintenance programme 2004/05