Contact: Contact Name, Nick Gibbins

Contact Ext. Ext 7544

e-mail: nick.gibbins@hants.gov.uk

1 Summary

1.1 The following decisions are sought:

i) That the final accounts for 2004/05 be approved.

ii) That 50% (65,000) of the underspending in 2004/05 be carried forward and be added to the 2005/06 budget as set out in paragraph 1.9.

1 Reason

1.1 To approve the final accounts for Policy and Resources for 2004/05 and agree the carry forward of over and underspendings to 2005/06.

1.2 Decisions on Policy and Resources revenue expenditure and capital programmes impact on the financial resources available to Policy and Resources direct services and to the central services that support all of the County Council's services. As such these decisions impact on the full range of corporate strategy aims.

i) maximizing life opportunities

ii) stewardship of the environment

iii) achieving economic prosperity

iv) building strong and safe communities

v) improving services

vi) developing councillors and staff

2 Other options considered and rejected - not applicable.

3 Conflicts of interest declared by the decision maker or a member or officer consulted - not applicable.

4 Dispensation granted by the Standards Committee - not applicable.

5 Reasons(s) for the matter being dealt with if urgent - not applicable.

Approved by: Date:

............................................. ............................

Councillor T.K.Thornber

Contact: Nick Gibbins

Contact Ext:7544

e-mail: [email protected]

1 Summary

1.1 This report summarises Policy and Resources spending in 2004/05.

1.2 It recommends that the final accounts for 2004/05 be approved and that 50% of the underspending (£65,000) be carried forward to 2005/06 in accordance with corporate policy on the treatment of service under and overspendings.

1.3 Decisions on Policy and Resources revenue expenditure and capital programme impact on the financial resources available to Policy and Resources direct services and to the central services that support all other County Council services. As such these decisions impact upon all six of the corporate strategy aims

1.4 Overall there is a net underspending of £129,000 (0.3%) against the 2004/05 adjusted revised revenue cash limit of £42.773m. This represents a small variation on the overspending of £70,000 reported in the latest budget monitoring report, mainly because the installation of CCTV cameras in the vans used by the Community safety service slipped into 2005/06.

1.5 The major variations against the cash limit are:

1.6 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% of the underspending. On this basis £65,000 will be added to Policy and Resources' cash limit for 2005/06, as agreed by the Cabinet on 27 June.

1.7 The proposals for dealing with the carry forward of over and underspendings are based on the following assumptions:

· that in accordance with corporate policy, 50% of any underspendings on chief officer controlled budgets and any overspendings should be carried forward to 2005/06

· that in view of the specific circumstances relating to the community safety underspending involving start up costs which were delayed unexpectedly to 2005/06, that 100% of this underspending should be carried forward

· that in accordance with the policy of earmarking an annual winter contingency within the repair and maintenance of buildings budget, any under or over spending should be carried forward in full

· that there should be no automatic policy of carrying forward either under or overspendings on non-Chief Officer controlled budgets unless an overspending is likely to lead to an underspending in the following year or vice-versa

1.8 Applying these assumptions, a carry forward of £28,000 to 2005/06 would be required. It is proposed that the remaining £37,000 is used to write off part of the HR overspending of £65,000 in 2005/06. An overspending of £110,000 had been forecast in the revised budget as a result of the cost of sickness absence cover and cost increases affecting the occupational health service, towards which savings of £45,000 were achieved in the outturn.

1.9 On the basis outlined in paragraphs 1.7 and 1.8 above, the amendments to the 2005/06 budget to reflect carry forwards are:

1.10 The outturn position on the service's business and trading units are in summary:

1.11 All of the units operate under arrangements agreed by the County Council which permits them to retain planned surpluses for purposes approved in their business plans, either as a contingency against future trading risk, to finance future capital investment or to be returned to customers through lower prices. Appendix 6 summarises the results of each of the business units.

1.12 An improvement on the forecasts contained in the revised budget had been anticipated in the previous budget monitoring report, but the improvement in IT Services' final trading position was mainly the result of securing an agreement with Education on charges for the Hampshire Web Interface in schools which more closely matched IT Services' cashflows.

1.13 The final trading results for the Property, Business and Regulatory services business units reflect a successful outcome for the year with a surplus slightly above the targeted level, representing about 1% of income.

1.14 On capital, schemes to the value of £38.3m were committed in the year and schemes to the value of £3.6m have been approved to be carried forward to start in 2005/06, representing the balance of the approved cash limit for the capital programme, totalling £41.9m

1.15 Further details on 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 schemes. Part C explains the basis of the control assurance statement included as Appendix 9.

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 is £42.773m as set out in Appendix 1.

2.2 The final outturn was £129,000 less than the cash limit, as compared with a potential overspend of £70,000 in the previous monitoring report. But for the delay in equipping community safety service vans with CCTV, spending would have been even closer to 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 There have been underspendings over the last three years, but the underspending was smaller than in the previous years as set out below:

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

Chief Executive's Department (-£29,000)

2.4 The last year saw the development of a number of new initiatives that were either led by or had a significant input made by the Chief Executive's Department, these included:

· the running of pilot Area Committees in Havant and Test Valley and the re-configuration of the Policy and Resources Scrutiny Committee to operate as a Select Committee similar to the parliamentary model. Provision of £125,000 was made for the pilot in 2004/05 together with a further £100,000 to allocate as grants for the Havant Area Committee

· Preparations for the implementation of the Children Act. Work in 2004/05 focussed on the organisational implications and the development of appropriate performance management measures and outcomes related to the requirements of the Act.

· A sum of £55,000 was allocated for Crime and Disorder on the basis of £5,000 to each of the Crime and Disorder Reduction Partnerships to enable audits to take place, the information from which has fed into new local strategies

· Launch of the Hampshire Market Town's Project (£1.2m funded by SEEDA) to support the development of healthy market towns

· Launch of the Hampshire Broadband project (£250,000) to promote the take up and use of broadband by business and education

· Major consultation and communication exercises in relation to the SE Plan and the Older Persons Campaign

2.5 Overall there was a net underspend of £29,000 on budgets managed by the Chief Executive's Department in 2004/05. The major variations within the overall underspend were:

· Main dept (+35,000) which reflected the need to put additional resources in to cover maternity and support to Members

· Emergency Planning (-£18,000) due mainly to the fact of preparing for the Civil Contingency Act which has meant fewer training exercises have been run.

· Consultation & Communications (-£21,000) - which relates to budget provision for two projects, a Citizens' Panel and possible budget consultations, neither of which took place in 2004/05

· Health Scrutiny (-£13,000) primarily due to staff turnover and training costs

HR Department (£65,000)

2.6 Significant progress was made during 2004/05 developing the Human Resources Department. The new structures were 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 successfully relocated to new sites in Winchester and Eastleigh. Office moves bringing together Resourcing Centre and Employment Practice Centre in Athlestan House, Winchester were completed.

2.7 This progress was achieved at the same time as successfully containing a number of pressures on its budget. The SAP realisation savings target of reducing costs for recruitment advertising by £100,000 was fully met. This significant achievement was made despite responsibility for these activities only being transferred to the Resourcing Centre half way through the year and the unplanned use of temporary staff due to ongoing problems with the e-recruitment system. Transitional costs of infrastructure, temporary staffing and consultancy support were £120,000 higher than anticipated. Owing to sickness in key posts, unforeseen backfilling arrangements had to be put into place. Additionally, the costs of implementing the replacement Health and Safety reporting system for AIRS were incurred during the year.

2.8 However, it was not possible to contain all of the pressures on the provision of the Occupational Health service. Increased work volumes and higher standards of insurance increased the cost of tendered doctors services. Also, the cost of the additional accommodation in the service's new Eastleigh offices was met from the cash limited budget. The impact of these pressures caused the costs of the Occupational Health service to increase by £80,000. This has resulted in expenditure for the department being £65,000 above the cash limit.

County Treasurer's Department (-£3,000)

2.9 A small underspend was achieved whilst delivering the first £250,000 of the SAP benefit realisation savings and retaining a maximum score of 4 in the CPA use of Resources assessment.

Property, Business and Regulatory Services (-£86,000)

2.10 With the exception of the underspending on the Community Safety Service, spending overall on Property, Business and Regulatory Services was very close to budget.

2.11 The major new development in 2004/05 was the introduction of a community safety service, which was formally launched in November 2004 and currently operates in four pilot areas. Initial responses to the performance of the service have been excellent and the number of incidents dealt with has risen from 78 in December to 821 in April.

2.12 The delays in concluding the contract for the supply of CCTV for the Community Safety Officers' vans reported in April did indeed mean the related expenditure of £100,000 was not incurred in 2004/05 as planned and, as a result, this budget was underspent by £102,000. The equipment is now being delivered and fitted and it is proposed that the underspend on this budget be carried forward into 2005/06 to meet these costs.

3 Part C - Capital expenditure 2004/05

3.1 The outturn for 2004/05 is set out below with details of the total resources and of the individual schemes committed in the year appearing in Appendix 7.

3.2 The total programme limit for 2004/05 amounted to £41.9m and schemes to the value of £38.3m were committed in the year. Part of the capital programme relating to block votes is controlled on an expenditure basis, while other projects continue to be controlled on a starts basis. Commitments in the year therefore represent a combination of expenditure on block votes and starts relating to other projects.

3.3 Schemes approved to be carried forward to start in 2005/06 included an undercommitment of £1.1m on advantageous land which it was agreed at the decision day in April would be transferred to capital repairs. The list of schemes committed and carried forward are included in Appendix 7.

3.4 The combined value of schemes which were committed in 2004/05 and those carried forward to start in 2005/06 match the cash limit for the 2004/05 programme.

3.5 In accordance with the County Council's Financial Procedures, the final costs of capital schemes controlled on a starts basis completed in 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 April 2004, but the final payment was only made in 2004/05. Equally projects which are operationally complete such as Alton Library and Sir George Staunton Country Park still have outstanding final payments.

3.6 The final cost of the schemes completed in 2004/05 is £19,000 less than the latest approved estimate for those schemes charged to Policy and Resources' capital cash limit, but as the saving relates to a business unit funded project, the impact on the capital programme cash limit is neutral .

4 Part C - Departmental assurance statement

4.1 From 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 9 contains the statement relating to Policy and Resources services and concludes that overall there is an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council objectives.

Recommendations

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

2 That 50% (£65,000) of the underspending in 2004/05 be carried forward and be added to the 2005/06 budget as set in paragraph 1.9.

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:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

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