Contact: Bevis Ingram, Contact Ext. 7508, e-mail: [email protected]

1 Summary

1.1 This report summarises the Recreation and Heritage service's spending in 2004/05, and it recommends that the final accounts for 2004/05 be approved.

1.2 Decisions on (Recreation and Heritage service) revenue, expenditure and capital programmes impact on the financial resources available to this service to contribute to the following 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

vi) developing councillors and staff

1.3 Overall there is no variation against the 2004/05 adjusted revised revenue cash limit of £28m. This has been achieved because of a planned transfer from capital of £352,000 to accommodate Library and Information service budget pressures of £420,000 offset by net budget savings of £68,000 on other services. This represents an improved position since reported in the latest budget monitoring report. The required transfer from capital to revenue has reduced from £420,000 to £352,000.

1.4 The major variations are:

	£'000	£'000
Museums and Archives		-33
Milestones		-33
Libraries and Information Services	+420
Transfer from capital	-352	+68

1.5 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% underspending. Because the Recreation and Heritage variation is zero none of these apply.

1.6 The outturn position on the service's business and trading unit Arts Marketing Hampshire is a deficit of £11,000.

1.7 On capital, schemes to the value of £3.1m were committed in the year and schemes to the value of £0.9m have been approved to be carried forward to start in 2005/06. In total the value of the cash limit is to be carried forward is £1.1m.

1.8 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. The results of the trading units are reported in Part B. Part C deals with capital schemes. Part D explains the basis of the control assurance statement included as Appendix 8.

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 £28m as set out in Appendix 1.

2.2 The final outturn was equal to the adjusted cash limit. The position has improved since the March monitoring report with a reduced capital transfer requirement of £352,000 (the March report forecast £425,000 capital transfer). 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 Variations from budget in recent years have been:

	Variations from revised budget
	£'000	%
2001/02	+593	2.4
2002/03	-18	-0.1
2003/04	-32	-0.8
2004/05*	-	-

* Note The planned transfer from capital has matched what would otherwise have been an overspend of £352,000 (1.3%)

The most significant elements within the total net under/overspending are explained in the following paragraphs.

2.4 Museums and Archives (-£33,000)

Museums vacancy savings (-£60,000) and additional spending requirements on supplies and services (+£64,000), in particular the purchase of the Tichborne Collection funded by additional grant income (-£31,000).

2.5 Milestones (-£33,000)

Increased income and retail margin, partially offset by a reduction in catering income.

2.6 Library and Information service (+£68,000)

Pressures arose on the library Service as a result of reduced income (£277,000) while libraries closed for refurbishment, and also additional spending on bookstock for refurbished libraries. Management action to address these pressures resulted in vacancy management savings of £246,000 and a planned transfer from capital of £352,000. Previous monitoring reports (1 March 2005 and November 2004) have endorsed this action.

3 Key achievements

3.1 The library investment and refurbishment programme referred to earlier enabled the opening of Gosport Discovery Centre and the new library at Alton. Refurbishment was also completed at the libraries at:

· Odiham Bridewell

· Chandlers Ford

· Yateley

· Farnborough.

3.2 Other key achievements in 2004/05 have included:

· A successful bid for Cultural Pathfinder status

· The opening of a new accommodation block at Tile Barn Outdoor Centre

· Work began on new residential accommodation at Calshot Activities Centre

· Increased participation in cultural activities and visits

· Higher levels of satisfaction with our services (MORI survey)

· Implementation of new "open access" rights to countryside

· Green Flag recognition for Queen Elizabeth County Park

· Strategic reviews of Arts and Museums and Archives services

· Mini, Parallel and Youth Games

4 Part B - Trading units

Details of the financial performance of Arts Marketing Hampshire are set out in Appendix 5

5 Part C - Capital expenditure 2004/05

5.1 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.

5.2 The total programme limit for 2004/05 amounted to £4,229,000 and schemes to the value of £3,107,000 were committed in the year

5.3 Schemes approved to be carried forward to start in 2005/06 included Romsey library extension, grants to village halls and countryside and rights of way improvements. The list of schemes committed and carried forward are included in Appendix 7.

5.4 The combined value of schemes which were committed in 2004/05 and those carried forward to start in 2005/06 is £4,052,000 which is below the cash limit and the balance of the cash limit can also be carried forward to 2005/06.

5.5 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.

5.6 The final cost of the schemes completed in 2004/05 is £1,000 more than the latest approved estimate for those schemes charged to the service's capital cash limit.

5.7 It is proposed that the additional cost is charged to the capital cash limit for 2005/06.

6 Part D - Departmental assurance statement

6.1 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 8 contains the statement relating to the Recreation and Heritage service and concludes that the Recreation and Heritage service has 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 the cash limit adjustments, as detailed in Appendix 1, be approved.

3 That the additional cost of capital schemes completed in 2004/05 be deducted from the 2005/06 capital programme limit.

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.

TITLE

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 Trading units - summarised accounts 2004/05

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

7 Capital expenditure 2004/05

8 Departmental assurance statement9

Appendix 1

Recreation and Heritage service

Revenue expenditure 2004/05

Construction of cash limit

Appendix 2

Recreation and Heritage service

Final Accounts 2004/05

Summary of Revenue expenditure

Appendix 3

Recreation and Heritage service

Revenue expenditure 2004/05

Analysis of cash limited expenditure over services

Appendix 4

Recreation and Heritage Service

Revenue expenditure 2004/05

Major variations in cash limited expenditure - overall variation nil

Appendix 5

Recreation and Heritage service

Trading units - summarised Trading Accounts 2004/05

The trading unit in this statement operates under the arrangements in Section D5 of Financial Procedures. This statement summarises its trading position and shows the movement in its reserve accounts.

Appendix 6

Recreation and Heritage service

Revenue expenditure 2004/05 not included in the cash limit

1 Capital charges (£6.2m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £0.4m more than the budget. 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 (£2.9m)

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 (£0.6m)

This adjustment includes:

4 Corporate and democratic core (recharge £0.1m)

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.

Appendix 7

Recreation and Heritage service

Capital expenditure 2004/05

Appendix 8

Recreation and Heritage 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 Recreation and Heritage 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