Contact: Nick Gibbins, ext 7544

1. Introduction

1.1 This report is the final Policy and Resources monitoring report for 2004/05 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets

· Policy and Resources business units

· Policy and Resources capital programme

· The County Council's capital payments and sources of finance

· Carry forward of 2004/05 schemes not started by 31 March 2005

· Proposal for use of 2004/05 second homes income resulting from reduced second home council tax discounts in Eastleigh.

1.2 The review identifies some of the savings that need to be identified to enable planned underspendings to be carried forward to 2005/06 as proposed, while containing actual spending within the revised 2004/05 cash limit. Capital payments and capital receipts are likely to be close to the forecast in the financing plan.

1.3 The Policy and Resources revenue budget and capital programme includes financial resources for those central services that support all other County Council services and as such contribute to all six of the aims of the Corporate strategy.

2. Policy and Resources cash limited revenue budget 2004/05

2.1 The latest cash limit for 2004/05 is £43.8m as set in Appendix 1. The 2004/05 revised budget approved in January contained spending levels £197,000 above the cash limit and therefore required savings of £197,000 to be identified over the remainder of the financial year, to bring spending into line with the cash limit. The cash limit had however been set on the basis of planned underspendings of £825,000 being carried forward to 2005/06 for specific purposes, rather than part of these underspendings being used to balance the 2004/05 budget.

2.2 Based on monitoring of expenditure up to the end of February 2005, additional savings of £127,000 had been identified, leaving further savings of £70,000 still to be identified prior to the year end.

Chief Executive's department

2.3 Overall the budgets for which the Chief Executive's department is responsible are broadly on target. Some additional spending is anticipated as a result of the restructuring of support services to members, but underspendings of approximately £10,000 are anticipated on both Election expenses and on Emergency Planning. The saving on Emergency Planning is the result of the deferral of training exercises in 2004/05 while preparations are under way for the implementation of the Civil Contingencies Act and the scope for carry forward of this underspend can be reviewed when the overall position is clearer following closure of the accounts.

Human Resources department

2.4 Expenditure on Human Resources is anticipated to be at budget, allowing for adjustments to the cash limit so that funding allocated for specific projects matches the anticipated cash flow on the projects.

2.5 Significant progress has been made in developing the new Human Resources department. Office moves bringing together Resourcing Centre staff and Employment Practice staff in Athlestan House, Winchester have been completed. The new structures have been created in order to further improve efficiency and effectiveness together with enabling the more responsive, flexible and innovative service to stakeholders outlined in aim five, "improving services", of the Corporate Strategy. Business processes have been redesigned and are continuing to be reviewed, building on the identification and sharing of best practice from previously developed personnel units, external private and public sector HR departments, external HR consultants and customers. Hampshire Learning Centre, the Employee Support Line and Occupational Health units have all successfully relocated to new sites in Winchester and Eastleigh. To facilitate these changes the cash limit includes £300,000 transitional funding for infrastructure, alterations to buildings and removals and £200,000 for the use of short-term contract staff and consultants. Costs have been controlled within these limits. It was previously agreed that it would be necessary to carry forward £100,000 of this funding to 2005/06. This funding is required to purchase and implement Employee Relationship Management software which originally it had been hoped would be in place this year.

2.6 In respect of Pay and Benefits specific growth of £300,000 in respect of staffing and project costs was granted for 2004/05. Delays in the implementation of the project have meant that expenditure totalling £70,000 will now not take place until 2005/06, and the cash limit has been adjusted accordingly. Also £200,000 remains in contingency for the anticipated costs of SAP configuration for Pay and Benefits. This funding will also not be required until 2005/06.

2.7 Under new management arrangements, the entire SAP realisation savings of £100,000 required for 2004/05 in respect of recruitment advertising were built into the HR cash limit. HR is responsible for the management of this budget for only half the financial year. It is anticipated that this savings target will be achieved.

2.8 As identified in previous monitoring reports, Occupational Health Unit cost increases of £80,000 relating to accommodation charges following the move to Eastleigh and the cost of tendered doctors due to increased work volumes and higher standards of insurance cover required by the County Council, continue to put pressure on the HR budget in 2004/05

Property, Business and Regulatory Services

2.9 Overall, the forecast outturn for 2004/05 is expected to be close to budget although there are likely to be some variations between services. Approval has already been given at the meeting on 9 December 2004 to carry forward the following amounts: £200,000 for Office accommodation and £250,000 for Accredited Community Safety Officers.

2.10 Recent unforeseen delays in concluding the contract for supply of CCTV for Accredited Community Safety Officers' vans may mean that the related expenditure of £100,000, planned for 2004/05, may now slip into 2005/06. Whilst every effort is being made to take delivery of the equipment during March there is a strong possibility that some or all of this will not now be delivered until 2005/06 - if this is the case it is requested that the appropriate amount be carried forward into 2005/06.

2.11 A modest improvement in the projection for the Coroner Service means the projected overspend has now reduced to £20,000, from £59,000 and pressures on the Corporate Estate budget are also now expected to be accommodated within the cash limit.

County Treasurer's department

2.12 There are considerable pressures on the County Treasurer's budget in the current year with the requirement to achieve savings of £250,000 as the first stage of SAP benefit realisation and every effort is being made to meet the cash limit, although this is not certain at this stage.

Other non-departmental Policy and Resources budgets

2.13 A small further saving of £5,000 on the external audit fee is now anticipated on the basis of better information about the likely cost of auditing grant claims.

2.14 Following the decision in the 2005/06 budget to make savings on grants to voluntary organisations of £100,000 on a one-off basis and £50,000 on a continuing basis, £83,000 of the one-off savings can be made in 2004/05 rather than 2005/06 and the cash limit has been adjusted accordingly. This includes a saving of £9,000 on the budget allocated to the Havant Area Committee and an equivalent sum will be made available in 2005/06 from the grants to voluntary organisations budget for Havant-based projects.

Summary

2.15 The revised budget was set at a level £197,000 above the cash limit, but as a result of the revised forecasts contained in this report, the potential overspend has been reduced to £70,000 or 0.2% of the budget, as set out below:

3. Business units' anticipated trading position

3.1 Overall the Property, Business and Regulatory services business units should at least achieve the revised 2004/05 target of £316,000, with some minor variations between businesses. IT Services' business unit is projecting a deficit of £580,000 in 2004/05, an improvement of £110,000 on the revised budget, due to some slippage in hardware achievement and additional income.

4. Policy and Resources capital programme

4.1 Appendix 2 summarises the latest 2004/05 Policy and Resources capital programme cash limit, totalling £42.6m. During the autumn, some rephrasing of locally resourced capital repairs expenditure was agreed from 2004/05 and 2005/06 to 2006/07 to complement the profile of NDS condition funding. Spending in 2004/05 is now likely to be higher than previously anticipated and an increase of £1.8m in 2004/05's capital repairs programme is proposed, with compensating variations in the programmes for 2005/06 to 2007/08.

4.2 Expenditure on capital repairs and starts on other projects in 2005/06 are expected to total approximately £40m, with the balance available for carry forward to 2005/06.

5. Overall capital payments and sources of finance

5.1 The capital financing plan approved by the Cabinet in February was based on projected capital expenditure of £203.1m in 2004/05.

5.2 Capital expenditure to 28 February 2005 totalled £148.1m and on previous years' capital payments profiles, payments are likely to be close to but possibly slightly below the forecast approved in February. Excellent progress has again been made in implementing a large capital programme in 2004/05.

5.3 Excluding in/out schemes, capital receipts of £12m in 2004/05 were allowed for in the latest financing plan. Actual capital receipts in 2004/05 are expected to total £11.7m, following the completion of two major land disposals at Binfields. Completed in and out disposals total £6.8m , which brings the overall level of capital receipts up to £18.5m.

6. Carry forward of 2004/05 schemes not started by 31 March 2005

6.1 The County Council's policy is to allow the carry forward of capital schemes not started by 31 March subject to the cost of the schemes carried forward being contained within the programme limit. Approval is sought for the carry forward of schemes on this basis. Details of the schemes carried forward will be reported to the Cabinet in June in the report on the 2004/05 final accounts.

7. Use of income from reduced council tax discount on second homes

7.1 The County Council agreed that its share of the income generated from reduced council tax discounts on second homes in 2004/05 would be ring fenced for use in the relevant district council area. The Cabinet agreed in September 2004 that although its use to support affordable housing for key workers remained the first priority, that the use of second homes income would be subject to agreement with individual district councils.

7.2 Eastleigh Borough Council have put forward a proposal which would involve the use of the County Council (£58,700) and the Borough Council (£7,600) shares of 2004/05 second homes income within the Borough to support a specialist housing occupational therapist post based in the Social Services department for a three year period. This would improve the quality and speed of delivery of occupational therapy services for the physically disabled in Eastleigh. Eastleigh regards its current key worker development programme as being adequate to meet the demand for key worker housing in Eastleigh. The occupational therapy proposal is supported by the Director of Social Services.

Recommendation

The following decisions are sought:

1 to note the current position on the monitoring of the revenue budget and capital programme and the action being proposed

2 to approve the proposed rephasing of the Capital repairs programme, increasing the 2004/05 programme by £1.8m to £17.8m with compensating variations in the programme for 2005/06 to 2007/08

3 to agree the use of second homes income received in 2004/05 relating to the Eastleigh area to fund a special housing occupational therapist post for a three-year period

4 to approve the carry forward of schemes in the 2004/05 capital programme, subject to the cost of the schemes being accommodated within the approved programme limit.

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

None

Appendix 1

Policy and Resources - latest 2004/05 cash limit

Appendix 2

Policy and Resources 2004/05 capital programme