Hampshire County Council
	Environment Policy Review Committee		Item 7
	23 June 2005
	Executive Member for Environment : South Hampshire and Resource Management			Item
	28 June 2005
	Final Accounts 2004/05
	Report of the County Treasurer and the Director of Environment

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

1 Introduction

1.1 This report summarises the Environment service's spending in 2004/05.

1.2 It recommends that the final accounts for 2004/05 be approved and that the Cabinet be requested to carry forward the revenue underspending to 2005/06, aided by the use of other resources, to meet new pressures in that year.

1.3 Decisions on the Environment service's revenue expenditure and capital programmes impact on the financial resources available to this service, which contribute to all of the corporate strategy aims:

i) maximising life opportunities

ii) stewardship of the environment

iii) achieving economic prosperity

iv) building strong and safe communities

v) improving services

1.4 Overall there is a net underspending of £15,000 (0.02%) against the 2004/05 adjusted revised revenue cash limit of £90.4m. This outturn is in line with the year's final budget monitoring report, presented to members in March, which indicated that the final outturn for the year was expected to be close to the approved financial allocation.

1.5 The major variations are:

	£'000
Highways maintenance	+108
Traffic Surveys	-12
Highways management and support	-115
Waste management non-contract services	+23
Other variations	-19
	-15

1.6 The County Council's policy is to carry forward into the following year 100% of net revenue underspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% underspending. On this basis, £8,000 would be added to the Environment service's cash limit for 2005/06.

1.7 In considering the final outturn position compared to the service's cash limit, budgets and expenditure on highways winter maintenance (salting and snow clearance) are excluded. This is because special budgetary arrangements apply whereby any underspendings or overspendings against the winter maintenance budget provision, which is set at a level equivalent to average expenditure on this activity during the past four years, are reflected against the County Council's central balances.

1.8 During 2004/05, winter maintenance expenditure totalled £2,924,000, which was £832,000 above the revised budget provision. A significant element of the County's annual winter maintenance expenditure relates to fixed payments to the highways maintenance contractor for the provision of plant and other operational resources. In 2004/05 this fixed cost element amounted to £1,317,000. The balance of the expenditure, £1,607,000, related to the variable costs arising from actual salting and snow clearance operations, particularly during the cold weather spell in the second half of February, which included extensive shift working by the contractor.

1.9 On capital, schemes to the value of £52.2m were committed in the year and schemes to the value of £1.3m have been approved to be carried forward to 2005/06.

1.10 In total this amounts to £2.3m less than the approved cash limit for the capital programme. This undercommitment represents the net value of variations to the programme approved by the Executive Member - Environment during the course of the year in order that capital expenditure could be contained within Government spending targets. It is therefore not necessary to carry forward the balance of the cash limit to 2005/06.

1.11 Capital schemes to the value of £5.1m, to be externally funded from developers and other contributions, were also started during the year.

1.12 Further details of the main differences between the actual revenue expenditure and the revised budget for cash limited expenditure are given in Part A below, while details of revenue expenditure which is not included in the cash limit are contained in the appendices at the end of the report. Part B deals with capital expenditure. Part C explains the basis of the control assurance statement included as Appendix 8. Part D covers the requirement to report on the service's partnership accounts.

2 Part A - Revenue expenditure under the service's control

2.1 Revenue expenditure under the service's direct control is subject to a cash limit. For 2004/05 the adjusted amount was £90.4m as set out in Appendix 1.

2.2 The final outturn was £15,000 less than the cash limit. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget.

2.3 The underspending during 2004/05 compares with the outturns achieved in recent years for the Environment services, as set out in the following table:

	Variations from Revised budget
	£'000	%
2001/02	-35	-
2002/03	256	0.3
2003/04	-36	-
2004/05	-15	-

The more significant elements within the total net underspending are explained in the following paragraphs.

Highways and transportation services

Highways maintenance

2.4 Expenditure on highways maintenance (excluding winter maintenance salting and snow clearance - see paragraphs 1.7 and 1.8 above) totalled £19,839,000, representing additional expenditure of £108,000 (+0.5%) compared to the cash limit for this division of service. This higher expenditure was made possible by the identification of excess savings on the management and support services budget during the latter stages of the year, which were re-allocated to support additional expenditure on the routine highways maintenance activities.

2.5 Appendix 5 sets out the final outturn on the highways maintenance budget on each of the main operational headings, compared with the previously approved programme reported in January. In the main, the variations between the outturn and the January programme reflect subsequent approved changes to the make-up of the maintenance programme, arising from the allocation of remaining reserves and the accommodation of additional expenditure on hazard clearance, street lighting maintenance and column replacements.

Road safety education

2.6 Total expenditure on road safety education was £215,000, which was £9,000 below the revised budget. This variance reflects delays in completing the printing of publicity information in support of the County's walking to school campaign.

Traffic surveys

2.7 The final outturn on this division of service was £12,000 below the revised budget, mainly as a result of additional income from the sale of data and services to external organisations.

Public transport

2.8 Expenditure during 2004/05 on public transport bus subsidies and other support amounted to £6,061,000, representing a small underspending of £7,000 (-0.1%) compared to the revised budget for this division of service. The variation mainly relates to additional income from sales of publicity material.

2.9 The 2004/05 budget included additional growth of £500,000 provided by the Cabinet which was fully utilised during the year in covering higher costs of supported bus services following contract re-tendering and for the continuation of Cango services and other community transport initiatives.

2.10 During 2004/05, the Government made available rural bus subsidy grant of £1,375,000 in support of rural bus services, which was fully consumed in supporting these services during the year.

Management and support services

2.11 Total expenditure on the highways management and support services, amounted to £18,154,000, which was an underspending of £115,000 (-0.6%) against the revised budget.

2.12 The process of regular budget monitoring and review during the year has been tracking progress of actual savings from staff turnover, vacancies and other housekeeping savings, against the departmental target of £684,000, required to contain departmental expenditure within the cash limit. The most recent budget monitoring review, based on the position in January, reported that all but £79,000 of these savings had been identified and that projections were suggesting that the target should be met in full by the end of the year

2.13 In the event, the final outturn position shows that excess savings of £115,000 were achieved on the highways management and support services during the final stages of the year, beyond the residual savings target. Savings on transport hire (-£17,000), administrative equipment (-£14,000), postage
(-£17,000) and advertising traffic regulation orders (-£23,000), together with additional income from the recovery of administration costs (-£37,000), contributed towards the overall position. As mentioned in paragraph 2.4 above, the additional savings on departmental management and support services were utilised in the latter stages of the year to support additional expenditure on routine highways maintenance.

Planning and development services

2.14 Expenditure during 2004/05 on the planning and development services totalled £3,701,000, reflecting the allocation of staff and other costs to this division of service of expenditure from within the overall departmental budget. Although the overall outturn was just £7,000 (+0.2%) in excess of the 2004/05 revised budget, the apportionment of expenditure to the individual services within the planning and development heading shows higher expenditure on planning policy work, with largely offsetting reductions on the cost of development control, environment initiatives and economic development. These variations largely relate to a revised basis of cost allocation, based on up-to-date staff time recording information, which was used in the assessment of 2004/05 actual expenditure.

Waste management

Contract related services

2.15 The final 2004/05 cash limit for the waste management contract related services was £36,799,000. This includes the final quarter's allocation of £1,664,000 from the central waste management contingency of £3,850,000, which was included in the 2004/05 budget to cover inescapable cost pressures arising from contract price increases, higher waste volumes, increases in landfill tax and other waste contract cost pressures including contractual claims. During 2004/05 the total call on the waste management contingency amounted to £3,827,000, producing an outturn saving of £23,000 against this central provision.

2.16 The calculation of the cash limit for the contract related services also takes into account savings of £377,000 on the cost of disposal of abandoned vehicles (see below). A reduction equal to this underspending has been reflected in the construction of the cash limit in line with the policy of the Cabinet that these savings be ring fenced and used to reduced waste contract related expenditure.

2.17 As reported in the most recent budget monitoring report in March, waste volumes were higher than expected last year. The outturn figures for 2004/05 showed average waste growth of 2.9%, compared with the assumed growth of 2.5% included in the budget. Although household waste growth levels at 0.9% were below budgeted expectations, this was more than offset by an increase of 7.6% in civic amenity growth from household waste recycling centres.

Disposal of abandoned vehicles

2.18 A 2004/05 revised budget of £559,000 was set for the disposal of abandoned vehicles, which took into account an approved transfer of £300,000 from previously identified underspendings on this activity, to meet additional expenditure in connection with the submission to the Government of revised proposals for the South Hampshire Rapid Transit project.

2.19 The final expenditure on the disposal of abandoned vehicles during 2004/05 was £182,000, representing a further underspending of £377,000 on this activity. The underspending reflects a reduction in the level of expenditure incurred by the agency district councils on behalf of the County Council as a result of the buoyant market for scrap metal and delays in fully implementing the End of Life Vehicles (ELV) directive.

Other waste management budgets

2.20 The final outturn on the other waste management budgets, comprising facility maintenance, household waste recycling centre management, promotions and developments and waste management administration was £2,460,000, an overspending of £23,000 (0.9%) compared to the 2004/05 revised budget. This mainly related to additional expenditure on closed landfill sites, in order to ensure environmental and safety legislation requirements were met, together with higher administrative costs arising from the employment of additional temporary staff and extra weekend working. These increases were partially offset by savings on the budget for promotions and developments, reflecting the priority given to these activities in connection with the implementation of DEFRA funded recycling initiatives.

Carry forward to 2005/06 of underspending

2.21 As mentioned in paragraph 1.6, it is the County Council's policy that 50% of any net revenue underspendings should be carried forward and added to the service's budget in the following year, with the Cabinet deciding what use should be made of the other 50%. On this basis, the Environment service's share of the underspending would be £8,000.

3 Part B - Capital expenditure 2004/05

Capital programme 2004/05

3.1 The outturn for 2004/05 is set out below with details of the total resources and the individual schemes committed during the year or being carried forward to 2005/06 appearing in Appendix 7.

		Locally resourced programme	Supported by Government approvals	Total
		£'000	£'000	£'000
Total resources		14,639	41,138	55,777
Value of schemes committed in 2004/05		14,061	38,102	52,163
Value of schemes carried forward to 2005/06		578	740	1,318
Undercommitment against the cash limit		-	2,296	2,296

3.2 The total capital programme limit for 2004/05 amounted to £55.8m, and schemes to the value of £52.2m were committed in the year. Parts of the capital programme relating to block allocations are now controlled on an expenditure basis, whilst other projects continue to be controlled on a starts basis. Total commitments in the year therefore represent a combination of expenditure on block allocations and starts values on other projects.

3.3 Schemes in the locally resourced County Council funded programme, including £0.6m to be carried forward, exactly matched the level of capital resources of £14.6m.

3.4 Commitments on the balance of the programme, which is supported by Government borrowing approvals, totalled £38.1 million, with an additional £0.7m of schemes to be carried forward into 2005/06. In total this represents an undercommitment against the cash limit of £2.3m, representing the net effect of changes to the programme approved by the Executive Member during the year, aimed at ensuring that Government spending targets were not exceeded. Any schemes that were deferred as part of this process have either already been included in preparing the 2005/06 capital programme or will be considered for inclusion in later years' programmes. There is therefore no requirement to carry forward the balance of the cash limit to 2005/06.

Capital payments 2005/06

3.5 Total capital payments during 2004/05 amounted to £59.1m, of which £9.6m is to be funded from external sources, including contributions from developers, district and parish councils, and Government and European grants. Most significant is the use of £2.7m of Government Section 56 grant towards the funding of the A3 corridor bus priority scheme. Payments on those capital programme schemes funded from local County Council resources totalled £14.8m.

3.6 The balance of the expenditure, £34.7m, is to be funded from credit approvals provided by the Government. This included spending of £12.8m on integrated transport projects, £19.3m on capitalised highways and bridge maintenance and £1.5m on the A3 corridor bus priority scheme.

3.7 The following table summarises capital payments during 2004/05 and the main sources of funding:

Capital payments	£'000
Major transport projects	5,142
Other transport improvements	19,686
Structural maintenance of roads and bridges	31,109
Regeneration of older urban areas	424
Environmental improvements	393
Waste management projects	2,182
Coast Protection Act contributions	153
	59,089
Sources of funding
Supported capital expenditure	34,679
Government grants	3,887
Developer and other contributions	5,694
On-street parking reserve	210
Other local resources	14,619
	59,089

Completed capital schemes

3.8 In accordance with the County Council's financial procedures, the final costs of capital schemes with a value of £250,000 or more and which were completed during 2004/05, are listed in Appendix 7. "Completed" in this context means when the final payment has been made. Some of these schemes may have been in operation prior to 2004/05, but the final payment was only made last year.

3.9 The final cost of the schemes completed in 2004/05 was £287,000 less than the approved estimate for those schemes charged against the service's capital programme cash limit. However, this variation in expenditure has already been taken into account in assessing resources available to support other schemes in the capital programme.

4 Part C - Departmental assurance statement

4.1 Introduced during 2003/04, the Code of Practice on Local Authority Accounting in the UK requires the County Council, within its Statement of Accounts, to publish a Statement of Internal Control signed by the Leader and the Chief Executive. As part of this process, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the system of internal control operating in each department and in the County Council as a whole. These opinions are reviewed by the Governance Committee. Appendix 8 contains the statement relating to the Environment service and concludes that this service has a framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council's objectives.

5 Part D - Partnership accounts

5.1 Details are given in Appendix 9 for the Safety Camera, Life 3 and ESPACE partnerships in 2004/05. These are partnerships for which the County Council is the accountable body, but where no report is made to another committee or partnership board including members of the County Council and where the full expenditure and income is not included in the service's accounts.

Recommendations

1 That the final acounts for 2004/05 be approved.

2 That the departmental assurance statement of the Chief Internal Auditor be noted.

Section 100D - 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

Summary of accounts

Summaries of actual spending 2004/05

Appendix Contents

1 Construction of the cash limit

2 Summary of revenue expenditure

3 Analysis of cash limited revenue expenditure over services

4 Major variations in cash limited expenditure

5 Summary showing detailed outturn on highways maintenance budget.

6 Revenue expenditure 2004/05 not included in the cash limit

7 Capital expenditure 2004/05

8 Departmental assurance statement

9 Partnerships

Appendix 1

Environment service

Revenue expenditure 2004/05

Construction of cash limit

1	Revenue expenditure under the service's direct control was subject to a cash limit of £88,414,000 (excluding highways winter maintenance), reflecting the 2004/05 revised budget presented as part of the 2005/06 revenue budget report to the Environment Policy Review Committee on 21 January 2004 and to the Executive Member - Environment at his decision day meeting on the same day.
2	The 2004/05 revised budget, included a request to the Cabinet to agree the release 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 South Hampshire Rapid Transit. This transfer was subsequently approved by the Cabinet at their meeting on 11 February 2005.
3	A revised budget of £2,092,000 was set for highways winter maintenance salting and snow clearance, based on the average level of expenditure during the past four years. The special budgetary arrangements that apply to highways winter maintenance expenditure enable any underspendings or overspendings against the budget provision to be reflected against the County Council's central balances.
4	The overall County Council budget for 2004/05 included a contingency sum of £3,850,000 to cover anticipated higher expenditure on the waste management contract from growth in waste volumes beyond 2003/04 levels, future price increases, increases in landfill tax and other cost pressures. Periodic allocations are made from this contingency to the waste management budget, based on quarterly assessments of cost increases to the contract and related budgets.
5	The 2004/05 revised budget for waste management reflected the first and second quarter's calls on the contingency of £639,000 and £867,000 respectively. A further call on the contingency of £657,000 for the third quarter was subsequently made and included as an adjustment to the cash limit in the final budget monitoring report for the year, which was presented to members in March.
6	The final call on the waste management contingency, covering higher expenditure during the final quarter of the financial year was £1,664,000. However, this final cash limit adjustment to the waste contract services budget
	has been reduced to reflect additional savings of £377,000 on the waste management budget for the disposal of abandoned vehicles, which have been ring-fenced and used to reduce waste contract related expenditure, in line with Cabinet policy.
7	A further minor cash limit increase of £15,000 has been made in respect of higher business rates on the County Council's own properties, as this sum could not be estimated precisely when the revenue budget was set.
8	No cash limit adjustments are required in respect of rural bus subsidy grant as the 2004/05 grant allocation of £1,375,000 was fully utilised during the accounting period. Similarly, the allocation of special Government grant of £418,000, relating to additional highways maintenance expenditure following the detrunking of the A339, has also been fully consumed during the year.
9	The net effect of the above changes, which have been incorporated into the adjusted revised budget as shown in column 1 of Appendix 3, are summarised below:
		£'000
	Cash limit approved in the revised budget	88,414
	Waste management contingency call - Q3	657
	Waste management contingency call - Q4	1,664
	Underspending on disposal of abandoned vehicles	-377
	Business rates - higher actual costs	15
	Adjusted cash limit (excluding winter maintenance)	90,373
	Net expenditure	90,358
	Net underspending against service's cash limited expenditure	15

Appendix 2

Environment service

Final Accounts 2004/05

Summary of revenue expenditure

	(1)	(2)	(3)
	Adjusted revised estimate	Actual 2004/05	Variation (Col 2 - Col 1)
	£'000	£'000	£'000	%
Cash limited expenditure	90,373	90,358	-15	-
Other expenditure which is the responsibility of the service: - Winter maintenance	2,092	2,924	832	39.8
Sub total	92,465	93,282	817	0.9
Trading units (income)/expenditure transferred to/from reserves - River Hamble	-50	-99	-49	98.0
Capital charges	28,501	29,231	730	2.6
Other expenditure which is controlled centrally by Policy and Resources and recharged to this service:
- Repair and maintenance of buildings	3	10	7	233.3
- Central support services	3,052	3,070	18	0.6
	123,971	125,494	1,523	1.2
Adjustment for pension costs	-226	722	948	-419.5
Expenditure controlled by this service recharged to Policy and Resources:
- Corporate and democratic core	-439	-439	-	-
Flood protection	654	638	-16	-2.4
Net expenditure before grant	123,960	126,415	2,455	2.0
Government grants:
- Rural bus subsidy grant	-1,375	-1,375	-	-
- Detrunking of A339	-418	-418	-	-
- Waste recycling grant	-346	-346	-	-
Total net expenditure	121,821	124,276	2,455	2.0

Appendix 3

Environment service

Revenue expenditure 2004/05

Analysis of cash limited expenditure over services

	(1)	(2)	(3)
	Adjusted revised estimate	Actual 2004/05	Variation (Col 2 - Col 1)
	£'000	£'000	£'000	%
Cash limit expenditure
Analysis by division of service
Highways and transportation
Highways maintenance (excluding winter maintenance)	19,731	19,839	108	0.5
Road safety education	224	215	-9	-4.0
School crossing patrols	912	910	-2	-0.2
Traffic surveys	246	234	-12	-4.9
Parking Services	-95	-95	-	-
Public transport	6,068	6,061	-7	-0.1
Rural bus subsidy grant	1,375	1,375	-	-
Management and support services	18,269	18,154	-115	-0.6
	46,730	46,693	-37	-0.1
Planning and development
Development control	672	605	-67	-10.0
Planning policy	2,235	2,437	202	9.0
Environment initiatives	658	571	-87	-13.2
Economic development	52	14	-38	-73.1
Community development and other projects	77	74	-3	-3.9
	3,694	3,701	7	0.2
Waste management
Waste contract related services	36,799	37,176	377	1.0
Disposal of abandoned vehicles	559	182	-377	-67.4
Other waste management services	2,437	2,460	23	0.9
	39,795	39,818	23	0.1
Other services
Reservoirs Act 1975	25	17	-8	-32.0
Chichester harbour conservancy	129	129	-	-
	154	146	-8	-5.2
Total net expenditure (excluding highways winter maintenance)	90,373	90,358	-15	-
Highway winter maintenance	2,092	2,924	832	39.8
Total	92,465	93,282	817	0.9

Appendix 4

Environment service

Revenue expenditure 2004/05

Major variations in cash limited expenditure - underspending of £15,000

Budget heading	Variation	Adjusted revised budget	Reason
	£'000	£'000
Highways transportation
Highways maintenance - county roads and bridges	108	19,731	Higher expenditure on hazard clearance, street lighting maintenance and column replacements, partially offset by lower expenditure on routine bridge maintenance.
Road safety education	-9	224	Delays in completing printing of publicity information in support of road safety campaigns.
Traffic surveys	-12	246	Additional income from sale of data and services to external organisations.
Public transport	-7	6,068	Additional income from sales of publicity materials.
Management and support services	-115	18,269	Savings on transport hire (-£17,000), administrative equipment (-£14,000), postage (-£17,000), advertising of traffic regulation orders (-£23,000), additional income from administration costs recovered (-£37,000) and other minor variations (-£7,000).
Planning and development
Development control Planning policy Environmental initiatives Economic development	-67 202 -87 -38	672 2,235 658 52	Variations in expenditure on the planning and development sub-service headings reflect a revised basis of cost allocation from the overall Environment department budget, based on up-to-date time recording information.
Waste management
Waste contract related services	377	36,799	Higher expenditure in connection with operation of waste disposal contract, offset by underspending on disposal of abandoned vehicles.
Disposal of abandoned vehicles	-377	559	Lower costs incurred by agency district councils, reflecting higher scrap metal values on delay in introducing End of Life Vehicles (ELV) directive.
Other non-contract related services	23	2,437	Higher expenditure on administration (+£20,000) and facility maintenance (+£18,000), partially offset by lower expenditure on promotions and developments (-£15,000).
Other services
Reservoirs Act 1975	-8	25	Lower expenditure in connection with the inspection of reservoirs.

Appendix 5

Environment service

Summary showing detailed outturn on highways maintenance budget

Revenue budget 2004/05

Operational heading	Approved programme at 31 Jan 2005	Outturn 2004/05
	£'000	£'000
Ordinary maintenance
Routine carriageway and footways running repairs	3,880	3,811
Gully cleansing	985	1,008
A321 routine maintenance - payment to Surrey County Council and BVR pumping stations	22	22
Aids to movement	1,288	1,240
Hazard clearance (road traffic accidents)	500	645
Traffic management	370	363
Sign renewals	76	83
Traffic signal maintenance and modifications	649	634
Intelligent transport systems	247	252
Urban traffic control	64	86
Remote monitoring of traffic signals	85	79
Rechargeable accident damage	171	278
Grass cutting, trees and shrubs maintenance	2,144	2,163
Weed control	614	559
Arboricultural	495	509
Sub total - ordinary maintenance	11,590	11,732
Street lighting and illuminated signs
Energy - street lights	1,750	1,756
Energy - signs and bollards	111	82
Energy - traffic signals and crossings	250	200
Maintenance contract - street lights	3,197	3,231
Maintenance contract - signs and bollards	410	415
Special replacement programme - works	1,291	1,563
Special replacement programme - scheme design fees	52	123
Sub total - street lighting and illuminated signs	7,061	7,370
Bridges
Routine maintenance	106	62
Subway pumps - maintenance and energy	45	13
Subway graffiti cleaning	136	180
Disused railway bridges	9	7
Weight restriction signing	6	5
Monitoring of sub-standard bridges	11	4
Sub total - bridges	313	271
Other items
Technical surveys	411	348
Depots maintenance	138	268
Highways maintenance IT system development	700	570
Contractual claims	76	110
Joint HCC/RCS programmes	8	8
General reserves - to meet unforeseen demands	97	-
Other reserves - Micheldever depot repairs	100	-
Previous year's accounting adjustment	-39	-39
Sub total - other items	1,491	1,265
Winter maintenance	2,092	2,924
Income
Depots net rentals	-155	-168
Rechargeable works	-113	-177
Private street works interest from frontagers	-6	-4
Allocation from commuted sums for soakaways maintenance	-450	-450
Sub total - Income	-724	-799
Total highways maintenance revenue programme	21,823	22,763

Capital maintenance programme
Operational heading	Approved programme at 31 Jan 2005	Outturn 2004/05
	£'000	£'000
Principal roads structural maintenance
Carriageway, footway and drainage routine repairs	757	790
Strengthening major maintenance schemes	2,800	2,963
Special maintenance	811	568
Resurfacing	822	673
Surface dressing - high performance roads contract	722	722
Completion of 2003/04 works programme	583	583
Design and supervision fees:
- major maintenance schemes	163	159
- special maintenance, resurfacing and surface dressing	154	142
- routine maintenance	8	9
Reserves	171	-
Sub total - principal roads structural maintenance	6,991	6,609
Non-principal roads structural maintenance
Carriageway, footway and drainage routine repairs	4,313	4,936
Surface dressing - high performance roads contract	469	469
Surface dressing - minor roads contract	1,205	1,203
Surface dressing - footways contract	452	452
Special maintenance and recycling	3,647	3,370
Operational heading	Approved programme at 31 Jan 2005	Outturn 2004/05
	£'000	£'000
Tactile surfacing and pram crossings	136	126
Resurfacing	3,192	2,950
Blacktop testing	15	14
Portchester Home Zone	125	125
Design and supervision fees:
- special maintenance, resurfacing and surface dressing	642	637
- routine maintenance	88	103
Sub total - non-principal roads structural maintenance	14,284	14,385
Non-principal roads structural maintenance - additional programme of £3.588m
Footways special maintenance schemes	1,658	1,658
Carriageway haunch repairs, resurfacing and recycling	1,492	1,492
Footways surface dressing	80	80
Patching	100	100
Fees	258	258
Sub total - non-principal roads additional programme	3,588	3,588
Additional Government funding for repairs to heat damaged roads
Carriageway repairs	926	926
Fees	74	74
Sub Total - Government funding for heat damaged roads	1,000	1,000
Operational heading	Approved programme at 31 Jan 2005	Outturn 2004/05
	£'000	£'000
Bridges
Strengthening schemes	1,380	1,512
Assessments, studies and feasibility	190	175
Structural maintenance	4,677	3,810
Sub total - bridges structural maintenance	6,247	5,497
Total capital maintenance programme	32,110	31,079

Appendix 6

Environment service

Revenue expenditure 2004/05 not included in the cash limit

1 Capital charges (£29.2m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £0.7m more than the budget due to higher deferred charges. However, this will have no direct effect upon the overall budget requirement of the County Council as the capital charges are replaced by actual financing costs in the central asset management revenue account.

2 Central support services, repairs and maintenance of buildings (£3.1m)

These items are within the control of Policy and Resources. Support services are apportioned to services in accordance with the level of services provided and office accommodation occupied. Control of the budget for repairs and maintenance of buildings is exercised on a functional rather than service basis, but actual costs are allocated to the relevant service.

3 Adjustment for pension and early retirement costs (£0.7m)

This adjustment includes:

a) the difference between the cash value of employers' contributions to the Local Government Pension Scheme (LGPS) (included within the service's cash limited expenditure) and the current cost of pension benefits earned by members of the LGPS during 2004/05, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK and is calculated in accordance with Financial Reporting Standard 17 (FRS 17) Retirement Benefits. It relates only to "defined benefit" schemes, including the LGPS, where the assets and liabilities of the scheme can be attributed to individual employers on a consistent and reasonable basis

b) the costs arising from early retirement decisions and the granting of compensatory added years. These are within this service's cash limited expenditure, but are excluded from the cost of services in the final accounts, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.4m)

Corporate and democratic core covers management and support costs that relate to member support and advice, but are under the control of this service and thus are included within the service's cash limit. However the Best Value Accounting Code of Practice requires these costs to be aggregated and separated from the cost of providing front line services.

5 Flood protection levies (£0.6m)

Flood defence expenditure representing annual levies on the County Council by the Environment Agency.

Appendix 7

Environment service

Capital expenditure 2004/05

		£'000	£'000
1	Construction of total resources
	Approved programme limit - local resources		14,708
	Government Borrowing Approvals
	Original settlement for 2003/04	31,179
	Assumed support for waste management projects	5,500
	Assumed support for Coast Protection Act projects	100
	South Hampshire Rapid Transit	119,000
	Adjustment to starts programme to meet government spend target	3,626
			159,405
	Original starts programme in budget book		174,113
	Adjustments:
	Deletion of South Hampshire Rapid Transit	-119,000
	Contaminated land SCA	-100
	Coast Protection Act SCA	53
	Drought repairs SCA	1,000
	Adjustment to accrued expenditure basis (P&R Exec member 15 Sept 04)	104
	Transfer structural maintenance resources to revenue	-393
	Total adjustments		-118,336
	Total resources		55,777
2	Schemes committed during 2004/05
	Schemes controlled on a starts basis
	Supported by Government Approvals
	Casualty reduction programme
	Loss of control priority sites	1,010
	A339 Ramsdell	150
	Casualty reduction partnership	350
	Refurbishment and betterment (net)	370
			1,880
	Area strategies
	Central Hampshire
	Charlton/Foxcotte/Hatherden	370
	CHTS bus infrastructure improvements	150
	B2177 Colden Common	200
	CHARTS village initiatives	60
	City Road, Winchester - street lighting	20
	Eastgate Street, Winchester - street lighting	30
			830
	New Forest
	North St, Pennington	70
	Station Rd/Manor Rd, New Milton (net)	77
	Ringwood peds and cycles	135
	Longslade cycle footbridge	30
			312
	North Hampshire
	Blackwater Valley QBP - real time information (net)	252
	Blackwater Valley QBP - Aldershot bus infrastructure (net)	90
	Lynchford Road, Farnborough	75
	Summit Ave, Farnborough (net)	100
	North Camp, Farnborough	120
	NHTS village initiatives	25
	A323 Ash Road, Aldershot	250
	Yateley - Blackwater cycles	80
			992
	Solent
	Denmead village centre (net)	160
	Clanfield village initiative	27
	Fareham-Gosport QBP - Gosport BDIS	105
	Fareham-Gosport QBP - bus infrastructure (net)	145
	Havant QBP route 21	200
	Havant decriminalised parking	110
	Havant bus station (net)	1,850
	St Margarets Lane, Titchfield	60
	Havant Accessibility (net)	85
	Rumbridge Street, Totton (net)	600
	Eastleigh QBP bus infrastructure improvements (net)	165
	Romsey Route 15 bus infrastructure improvements (net)	100
	Leigh Road, Eastleigh SVD	70
	Abshot Road/Hunts Pond Road (additional costs)	60
	West Lane, Hayling Island (net)	13
	North Baddesley - Rownhams Cycles	400
	Abshot Road/Warsash Road (additional costs)	20
	Hythe Pier maintenance	90
	Hythe Promenade	70
			4,330
	Other integrated transport
	Pedestrian crossings (net)	430
	MIRACLES	100
	Central ITS	200
	Community Transport	650
	Minor Schemes (net)	310
	Hill Road, Portchester	60
	Greatbridge Road rail bridge	130
			1,880
	Other
	Landfill sites remedial works	-
	Waste minimisation and recycling	5,400
			5,400
	Locally funded schemes
	Environment improvements	396
	Regeneration of older urban areas	979
	Waste management - landfill remedial works	60
	Household waste recycling centres	316
	Private street works	28
			1,779
	Total schemes controlled on a starts basis		17,403
	Schemes controlled on an expenditure basis
	Supported by Government Approvals
	Structural maintenance of bridges and roads		18,797
	Casualty reduction programme
	Low cost safety schemes	1,417
			1,417
	Other integrated transport
	Community safety initiative	43
	Rural (Parish) partnerships	162
	Passenger transport information	148
	Safer routes to schools	1,347
	Railway stations/interchanges	217
	Air quality and noise monitoring	31
	LTP monitoring and initiatives	90
	Recreational cycling	73
			2,111
	Other
	Coast Protection Act	153
			153
	Locally funded schemes
	Structural maintenance of non principal roads	12,282
			12,282
	Total schemes controlled on an expenditure basis		34,760
	Total schemes committed during 2004/05		52,163

3	Schemes carried forward to 2005/06
		£'000
	Schemes controlled on a starts basis
	None	-
	Schemes controlled on an expenditure basis
	Structural maintenance - locally resourced	578
	Structural maintenance - Government supported	453
	Community safety initiative	37
	Rural partnership schemes	65
	Passenger transport information	12
	Air quality and noise monitoring	19
	LTP monitoring and initiatives	127
	Recreational cycling	27
	Total	1,318

4	Externally funded schemes started in 2004/05
	Central Hampshire	£'000
	Winchester Road, Andover - footways	50
	Holybourne to Four Marks cycles - stage 3	86
	New Forest
	Station Road, New Milton (contribution)	15
	North Hampshire
	Ayling Lane, Aldershot - traffic calming	55
	Blackwater Valley QBP - real time information (contribution)	218
	A30 Blackwater pedestrian enhancements	78
	Victory Roundabout, Basingstoke - subway improvements	100
	Chineham bus infrastructure	20
	A30 Blackwater CCTV	30
	West Aldershot highway improvements	200
	A30/A340 route 1 bus quality partnership	500
	A327 Elles Road, Farnborough - street lighting	120
	A327 Summit Avenue, Farnborough - cycles/peds (contribution)	220
	Blackwater Valley QBP - Aldershot bus infrastructure (contribution)	10
	Solent
	Eastleigh bus quality partnership - access to station	70
	Templars Way/Castle Lane traffic signals	100
	Hamble Lane/Portsmouth Road Toucan Crossing (contribution)	50
	Eastleigh controlled parking zone	175
	Bournemouth Road, Chandler's Ford - Pedestrians	80
	West Lane, Hayling Island (contribution)	13
	Maunsell Way, Hedge End - traffic calming	365
	Valley Park to Toynbee School cycles	285
	A32 Gosport - traffic signal improvements	15
	Fareham-Gosport QBP - bus infrastructure improvements (contribution)	50
	Broom Way, Fareham - cycleway	424
	Newgate Lane/Tukes Avenue, Fareham - cycles	121
		£'000
	Havant accessibility (contribution)	15
	Havant bus station (contribution)	80
	Rumbridge Street, Totton (contribution)	400
	A335/B3037 Twyford Road roundabout, Eastleigh	96
	Denmead village centre (contribution)	70
	Anglesea Gardens, Gosport - footway	40
	Eastleigh BQP bus infrastructure improvements (contribution)	35
	Romsey route 15 bus infrastructure improvements (contribution)	50
	Casualty reduction
	Refurbishment and betterment (contribution)	40
	Other transport
	Pedestrian crossings (contributions)	138
	Community safety initiatives (contributions)	25
	Minor works (contribution)	18
	Community transport schemes (contributions)	630
	Total	5,087

5	Final costs of capital schemes completed in 2004/05
Scheme		Start Year	Final cost	Funded from external contributions	Net cost chargeable to capital cash limit	Latest approved cost	Variation
			£'000	£'000	£'000	£'000	£'000
Castle Lane cycle route, Chandler's Ford		00/01	397	397	-	340	+57
A30 Ringway to Winton Square, Basingstoke		01/02	459	-	459	500	-41
Bashley Crossroads, New Milton		02/03	288	-	288	292	-4
Eastleigh safer routes to school		02/03	374	-	374	365	+9
Chesil Street, Winchester		02/03	252	-	252	260	-8
Stockbridge Road, Winchester		02/03	404	-	404	390	+14
Winchester Station interchange		02/03	949	-	949	930	+19
Otterbourne traffic calming		02/03	706	-	706	695	+11
Hatch Warren to Basingstoke town centre		02/03	721	721	-	750	-29
A30 Southwood Corner, Dummer		03/04	293	-	293	450	-157
Block allocations and schemes under £250,000			3,979	925	3,054	4,137	-158
Total			8,822	2,043	6,779	9,109	-287

Appendix 8

Environment service

Department assurance statement for the year ended 31 March 2005

1 Introduction

1.1 The Accounts and Audit Regulation 2003 require the County Treasurer to maintain an adequate and effective system of internal audit.

1.2 From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive have also been required to sign a more general statement of internal control. To support this process, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

2 Responsibilities

2.1 It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control.

3 Basis of opinion

3.1 The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. The internal audit plan has been delivered in accordance with the Code of Practice for Internal Audit in Local Government in the United Kingdom, issued by CIPFA.

3.2 Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control.

4 Opinion

4.1 In my opinion the Environment department has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown that the controls are generally working in practice.

Ejner Knudsen

Chief Auditor

County Treasurer's Department

Hampshire County Council

9 June 2005

Appendix 9

Partnerships

1	Safety Camera Partnership
1.1	The Hampshire Safety Camera Partnership aims to improve road safety by using fine income to fund the installation of safety cameras.
1.2	The partnership includes six partners: Hampshire County Council, Magistrates Court Committee, Southampton City Council, Portsmouth City Council, Isle of Wight Council and Hampshire Police Authority. Hampshire County Council is also the beneficiary of the funding from the Department for Transport.
1.3	Project summary statement
		£
	Opening balance 1 April 2004	266,193
	Income	2,402,436
	Expenditure	1,605,072
	Closing balance 31 March 2005	1,063,557
1.4	The balance brought forward as at 1 April 2004 represents unallocated funding from 2003/04.
1.5	Income received from DfT in the year was £2,355,257. Interest of £47,179 was earned on this account in the year.
1.6	Funding from the account from 1 April 2004 to March 2005 totalled £1,605,072.
1.7	The balance on the account of £1,063,557 represents £47,179 interest and unused DfT funding of £1,016,378 which will be carried forward to 2005/06 subject to agreement of the audited final claim for 2004/05. Payment from DfT in 2005/06 will be adjusted to incorporate unused funding from 2004/05. Unused funding was due to scheme slippage, which has been reflected in the 2005/06 business case.
2	Life 3
2.1	The objective of the Life 3 project is to restore 604ha of wetland habitat in the New Forest candidate Special Area of Conservation, and ensure their future sustainable management and regeneration.
2.2	The project began 1 July 2002 and will run for four and a half years until 31 December 2006. The project has a total budget of €4,584,262 40% of which is funded by the European Union (EU). The remaining funds are sourced from the six partners: Hampshire County Council, Environment Agency, English Nature, Forestry Commission, National Trust and the Royal Society for the Protection of Birds. Hampshire County Council is also the beneficiary for the EU funds, with responsibility for receiving, verifying and paying claims from partners for their share of the EU funding.
2.3	All EU funds are received in Euros and all claims received from partners for their share of the EU funding are paid in Euros.
2.4	Project summary statement
		€	£
	Opening balance 1 April 2004	511,339	351,099
	Income	3,599	2,471
	Expenditure	438,714	301,233
	Closing balance 31 March 2005	76,224	52,337
2.5	The expenditure represents the payments to partners made in 2004/05.
2.6	The first tranche payment from the EU, representing 30% of the total budgeted EU funding, was received in October 2002. Interest earned on the Euro account for the year 2004/05 amounted to €3,599.
2.7	The closing balance of €76,224 will be carried forward to 2005/06.
3	ESPACE
3.1	ESPACE (European Spacial Planning:Adapting to Climate Events) is an ambitious four year European project that aims to prepare for the impact of climate change and develop solutions. It will also underline the need to adapt to climate change at local, regional, national and European levels.
3.2	The project commenced in September 2003 and will run for four years until 2007. The total project budget is €4.75 million (approximately £3.2 million of which Hampshire County Council's share is approximately £847,694) and is 50% funded by the INTTEREG IIIB North West Europe Programme ( a European regional development fund). Further funding is received from the Office of the Deputy Prime Minister (ODPM) and the remaining balance is sourced from 10 partners: Hampshire County Council, Environment Agency, Regionnal Landschap Zenne Zuun en Zonien, South East Climate Change Partnership, South East England Regional Assembly, Surrey County Council, Waterschap Rivierenland, West Sussex County Council, Ministeria van VROM and Bayerisches Landesanmt fur Wasserwirtschaft.
3.3	Hampshire County Council is the lead partner in the ESPACE project and therefore responsible for receiving and verifying all partners claims along with compiling the partnership claim, receiving and distributing funding from the INTTEREG IIIB and the ODPM.
3.4	All EU funds are received in Euros and all claims received from partners for their share of the EU funding are paid in Euros.
3.5	Project Summary Statement
		€		£
	Opening balance 1 April 2004	38,287		26,289
	INTTEREG Income	2,120,897		1,456,265
	ODPM Income	290,736		199,627
	Expenditure	2,277,216		1,563,598
	Closing balance 31 March 2005	172,704		118,583
3.6	The closing balance of £118,583 is due to ODPM additional funding that was not distributed to partners as at 31 March 2005 and will be carried forward to 2005/06.