AT A MEETING of the CABINET of HAMPSHIRE COUNTY COUNCIL held at The Castle, Winchester on 26 September 2005.

PRESENT:

Councillors: T.K. Thornber, CBE (in the Chair); C.R.H. Davidovitz; J.K. Glen; Felicity Hindson; D.A. Kirk; T.G. Knight; R. Perry; Mrs M.D. Snaith; M.J. Woodhall.

Also in attendance:

Councillors: B.D. Dash; A.G. Dowden

Councillor K.G. Chapman (for minute 50)

Councillor A.P. Collett (for minutes 50 and 51)

46. DECLARATIONS OF INTEREST

Members were mindful that, where they believed they had a personal or personal prejudicial interest in any matter to be considered at the meeting, they should normally at the time of the debate, declare their interest, and, having regard to the circumstances described in paragraphs 9, 10, 11 and 12 of the County Council's Code of Conduct, consider whether to leave the meeting whilst the matter was discussed.

47. MINUTES

The minutes of the meeting held on 25 July 2005 were confirmed as a correct record.

48. CHAIRMAN'S COMMUNICATIONS

(a) The Chairman welcomed the following people to the meeting as

observers:

* Lise-Anne Boissiere who is on secondment from the Office of the

Deputy Prime Minister. Lise-Anne has replaced Becky Whale who

is dividing her time between the Children's Services Department

and the Government Office of the South East;

* Jackie Spatcher, Head of the Local Education Authority School
Funding Division at the Department for Education and Skills;

* Members of the Youth Parliament: Matt Burghess, Della Hamerton,

Andrew Perry, Carla Reid and Katie Weston;

* Rolli Rowlands of UNISON.


(b) The Chairman called forward Item 9 on the agenda "Consultation on Proposed Government Changes" as the first matter for discussion.

49. DEPUTATIONS

There were no deputations.

50. CONSULTATION ON PROPOSED GOVERNMENT FUNDING CHANGES

The Cabinet considered the report of the County Treasurer (Item 9 in the minute book) detailing, in three sections, consultation papers issued by the Government on proposed changes to (a) the formula grant distribution, (b) school funding, and (c) the Local Transport Plan financial allocations. The County Treasurer also reported on the recent announcement by the Government to defer the Council Tax re-evaluation and the extension to the terms of the Inquiry being conducted by Sir Michael Lyons.

During the course of a full discussion, the County Treasurer, and for Item 9(c) only the Director of Environment, expanded on the effect the proposed changes would have and the implications for Hampshire in the longer term which were not encouraging. The Cabinet expressed strong concerns about the increased bureaucracy and control these changes would bring, and of the overall outcome which is highly likely to result in further funding losses to the County Council. In respect of formula grant distribution the worst case scenario would be a loss of £37m notwithstanding the Government's concession to withdraw the new formulae for deprivation funding for older people's care. In addition, early indications are that the County Council's allocation of Local Transport Plan funding could be reduced by up to £8.2m over the five-year period of the Plan, depending on how soon the current transitional arrangements end, with any additional reward funding unlikely to be available at the highest level of 25%. The Cabinet expressed the view that they are determined to fight for a better deal for Hampshire.

In conclusion, the Cabinet authorised the County Treasurer, in consultation with the Leader of the County Council, to respond to the Government's consultations as set out in the report's appendices subject to the addition of introductory paragraphs for each response and some amendments to reflect the Cabinet's strong concerns. It was further agreed that these responses be copied to Hampshire MPs and other interested parties to lobby on behalf of the County Council's position, especially the potential further loss from Hampshire of Government grant to urban areas in 2006/07. A copy of the substantive decision sheet is attached to these minutes as Appendix1.

51. THE HAMPSHIRE LOCAL AREA AGREEMENT

The Cabinet considered the report of the Chief Executive (Item 5 in the minute book) detailing progress with, and a consultation draft document in respect of the Hampshire Local Area Agreement following the Government's announcement in June that Hampshire had been selected for the second round pilots. The Chief Executive reported that this was an exciting opportunity for organisations, including the County Council and Health Services plus other agencies, to work in partnership to draw together expertise and funding streams, and to focus on priority areas of activity which had been identified by robust evidence based data. During the course of the ensuing discussion, the Cabinet expressed their support for the Local Area Agreement and were keen for the document to be taken forward as a prime example of dynamic and innovative local government working. The Cabinet recognised the vast amount of work that will be required in the future and congratulated officers on the sterling work that had been done to reach this stage of the project. The Cabinet expressed a number of detailed comments in respect of the draft document which were noted by the Chief Executive and would be taken into account as part of the consultation process.

The Cabinet, on behalf of the County Council as a major partner, approved the outcomes and priority action areas set out in the consultation draft entitled "Hampshire LAA - promoting sustainable communities" for further development. A copy of the decision sheet is attached to these minutes as Appendix 2.

52. DIRECTION OF TRAVEL SELF-ASSESSMENT APPROACH

The Cabinet considered the report of the Chief Executive (Item 6 in the minute book) outlining the requirement for the County Council to submit a `direction of travel' self-assessment as part of the tougher Comprehensive Performance Assessment (CPA) regime and which will also link strongly into the Audit Commission's Annual Audit letter. The Chief Executive reported that this was the second of two new assessment documents that the County Council is required to submit, the first being the Value for Money assessment which the Cabinet approved on 25 July. Furthermore, the Chief Executive highlighted the difficulty of producing this assessment within such a tight timescale given that the final guidance was still awaited from the Audit Commission and would not be published before the submission deadline of 30 September. The Audit Commission had therefore indicated that if the final guidance differed from the draft guidance, authorities would accordingly have the opportunity to submit an amended assessment. The Cabinet noted these difficulties and recognised the amount of time and effort that was being expended to produce a high level response.

In conclusion of a full discussion, the Cabinet authorised the Chief Executive, in consultation with the Leader of the County Council, to submit the direction of travel self-assessment to the Audit Commission by 30 September 2005. A copy of the decision sheet is attached to these minutes as Appendix 3.

53. REVIEW OF THE REGIONAL ECONOMIC STRATEGY

The Cabinet considered the report of the Director of Environment and the Chief Executive (Item 7 in the minute book) detailing the background, and a proposed response to the Review of the Regional Economic Strategy. The review is a major, region-wide exercise and has been undertaken to assist the South East England Development Agency (SEEDA). The Chief Executive highlighted that this was a preliminary report prior to a draft Regional Economic Strategy being published for consultation in November 2005. The Cabinet's attention was drawn to the five priorities identified for the South-East region and their relevance to local priorities, and agreed that it will be important for these to be taken forward into the final document. During the course of a full discussion, the Cabinet expressed the importance of this review being incorporated into the overall work being carried out in respect of the South East Plan, and were of the view that the success of this Strategy would be dependent on infrastructure needs being adequately addressed.

The Cabinet approved the proposed response subject to some amendments to reflect their comments. A copy of the substantive decision sheet is attached to these minutes as Appendix 4.

54. 2005/06 BUDGET MONITORING

The Cabinet considered the budget monitoring report of the County Treasurer (Item 8 in the minute book) for the 2005/06 financial year. The report reviewed corporate issues arising from the service budget monitoring reports to Executive Members and other developments affecting the County Council's financial planning in the short and medium term. The Cabinet noted the overall position and for the purposes of clarity, and in line with the new organisational structure, agreed that monitoring reports for the former Social Care budgets covering both children and adults would now be referred to as Children's and Adults Services budgets. The Cabinet approved the recommendations as detailed in the report's decision sheet, a copy of which is attached to these minutes as Appendix 5.

Contact: Jon Pittam, (01962) 847400; [email protected]

1. Summary

The Government has issued a number of consultation papers on:

· formula grant distribution

· school funding

· local transport plan

1.2 The Office of the Deputy Prime Minister (ODPM) issued a consultation paper on 19 July 2005 setting out proposed changes to the formulae used in its system for distributing revenue grant to local authorities from 2006/07
(Report A). The closing date for responses to the consultation is
10 October 2005.

1.3 The Department for Education and Skills (DfES) issued a consultation paper on 5 August 2005 on a modified method of distributing the dedicated schools grant in 2006/07 and 2007/08 (Report B). The closing date for responses is
30 September 2005.

1.4 The Department for Transport is consulting on proposals to change the way that financial allocations are calculated for local transport plans (Report C).

1.5 The following decisions are sought:

· that the County Treasurer, in conjunction with the Leader, responds to the Government's consultations as set out in the report's appendices subject to the addition of introductory paragraphs for each response and some amendments to reflect the Cabinet's strong concerns.

· that the responses be copied to Hampshire MPs and other interested parties to lobby on behalf of the County Council's position, especially the potential further loss of Government grant away from Hampshire to urban areas in 2006/07.

2. Reason(s)

2.1 The County Council needs to safeguard its financial position and the interests of council tax payers in Hampshire by influencing the Government in reaching its decisions on changes to the revenue grant distribution system.

2.2 Achieving an equitable grant distribution system will support all the aims of the Corporate Strategy by providing the financial resources needed for their delivery.

2.3 Responses to the other consultations are also required to ensure practical changes and to safeguard the funding of Hampshire's schools and local transport.

3 Other options considered and rejected:

3.1 Not applicable.

4 Conflicts of interest declared by the decision maker or other Executive member consulted

4.1 Not applicable.

5 Dispensation granted by the Standards Committee

5.1 Not applicable.

6 Reason(s) for the matter being dealt with if urgent

6.1 Not applicable

Approved by: ................................... Date: ...............................

Councillor T K Thornber, CBE

Ms Arvind Thandi

Formula Grant Review Team

Office of the Deputy Prime Minister

Zone 5/G5, Eland House

Bressenden Place

LONDON SW1E 5DU By email to: [email protected]

Dear Ms Thandi

Local Government Finance - Formula Grant Distribution Consultation

The County Council has considered its response to the Formula Grant Distribution consultation paper. It has done so against the background of the Government's decision to postpone the revaluation of council tax and to defer the implementation of improvements to the system of local taxation by extending the timescale of the Lyons Inquiry into Local Government Funding.

The County Council views this development with great concern, as the council tax in its current form and with the current council tax benefit system has become unsustainable as the sole basis for local taxation. If local taxation is to contribute proportionally to the Government's plans to improve the quality of local services, a more progressive property tax bearing more relationship to ability to pay and placing less of a burden on people with low and fixed incomes is required, covering both domestic and business properties.

The Government's decision to make additional grant available on a non-recurring basis in both 2004/05 and 2005/06 provided a means of putting off a decision on reforming local taxation until the new parliament. Now that the decision has been delayed until a further parliament, ongoing additional Government grant in 2006/07 and subsequent years will be required to compensate for the inadequacy of the local tax base.

As things stand, however, within the context of SR2004, an unsustainable strain will be put on the council tax in 2006/07, as the increase of 2% in the council tax that was temporarily deferred by the additional Government grant in 2005/06 is added to the 5.5% increase initially planned for 2006/07 in SR2004. The problem is compounded by the transfer of schools funding to specific grant, as the remaining local authority spending is now planned by the Government to increase in 2006/07 by only 4.5%. It would be difficult enough to explain why the council tax has to increase by 7.5% to finance a 4.5% increase in spending

if council tax was a buoyant and robust tax but, in its current state, this is not a remotely viable proposition.

It is in the context of an already unsustainable planned increase in council tax in 2006/07, that the County Council has reviewed with alarm the options included within the consultation paper to transfer further grant away from Hampshire. According to the exemplifications published with the consultation paper, the loss to the County Council in the long term could be as much as £37m which would add a further 9% to the council tax.

The County Council is particularly concerned about the potential impact of the revised formula spending shares (FSS) for personal social services and the proposals for further resource equalisation adjustments. The Government's decision to abandon the most damaging of the options for the FSS for older people is welcomed. On similar grounds, the County Council urges the Government to withdraw option SSA2 for younger adults. It too is based on data taken from an inadequate sample which has produced a formula that is not statistically robust.

In all the FSS formulae, the Government should fund in full the basic amount per client with any residue, only, used to fund identified deprivation costs. This would accord better with the principles for a grant distribution system set in 2003/04 and would reverse the methodology used in the current formulae and the latest proposals. It would go some way to counter the double and even treble funding of deprivation through FSSs, the Neighbourhood Renewal Fund and other specific grants.

Further resource equalisation is not justified. The figures in the consultation paper show that local authorities are spending below FSS in total. There is no justification for cherry- picking the three services where spending is above FSS and ignoring those on which local authorities are spending below FSS. The County Council urges the Government not to proceed with the resource equalisation proposals which will transfer substantial resources away from areas such as Hampshire. Otherwise, the proposals will only lead to further increases in the average council tax as areas that gain spend up and areas that lose have to make good their grant losses by raising their council tax if service levels are to be protected.

The County Council does not support the Government's proposals for an `alternative' grant system. This would add to the complexity of the local government finance system, contrary to the accepted principles that it should be transparent, easy to understand and explain, and be determined in an open and accessible way. Unnecessary changes to the system should be avoided at a time when stability is essential with the potentially disruptive impact of the transfer of schools funding. It would also pre-empt the outcome of the Lyons Inquiry.

The County Council urges the Government to introduce a separate FSS block for waste management, using resident population plus area costs as the indicator factor. Waste costs have risen rapidly and are now substantially more than other services that already have separate FSS blocks.

The County Council also asks once again that the costs of providing capital infrastructure for waste disposal facilities through the its service contract are recognised in the capital financing FSS. This ground-breaking service contract has many of the characteristics of a private finance initiative scheme but was entered into before the Government provided support for such contracts through the revenue support grant system.

The proposals for separate area cost adjustment (ACA) factors for each upper tier authority are welcomed. Whichever option is chosen, however, it is essential that the Government breaks the link, introduced without consultation in the 2003/04 settlement, between the Isle of Wight and Hampshire for ACA purposes. However strong the case for providing additional grant support to the Isle of Wight, it should not be achieved at the expense of Hampshire's level of grant which is the effect of the current combined ACA factor.

Responses to the specific questions in the consultation paper are attached as an Appendix.

Yours sincerely

Jon Pittam

·

·

Appendix

Hampshire County Council

Responses to questions in the consultation paper on Formula Grant Distribution

See also the general points in the covering letter accompanying this Appendix.

Schools Transfer

Q1: Do you think that there should be a customised damping system?

No. The general grant floor should provide any necessary protection. There is no case for providing additional protection through a customised damping system for education authorities that decided in 2005/06 to give a higher priority to non-schools spending than to schools.

At a technical level, it is not clear how the proposed customised damping system, as described in the consultation paper, could be applied in practice in 2006/07.

Q2: Do you have comments on the Government's other proposals:

(i) to adjust the base using spend figures

This is a pragmatic solution, provided that a customised damping system is not also applied.

(ii) to isolate police, fire and shire district authorities from the effects of the transfer?

This would be equitable.

New Grant System

Q3: Whether we should use the proposed alternative grant system?

No. This proposal appears to be motivated by a wish to prevent commentators from treating formula spending shares (FSSs) as the Government's view of how much individual local authorities should spend.

The Government's proposed alternative system, however, adds unnecessary complexity to the system. It conflicts with the widely accepted principles for a grant distribution system that it should be transparent and easy to understand and explain. It is perverse to add a further layer of complexity solely to stop some people from misunderstanding the existing system.

The proposed system provides more scope for ministerial `judgement' in influencing the results. Such judgements should be reduced to the minimum and where they are applied, they should be transparent.

The proposed alternative system would fail most of the Government's own principles that a grant distribution system should:

· be fair

· be transparent

· be easier to understand and explain

· be stable and predictable

· promote accountability

· be determined in an open and accountable way.

Education - Local Education Authority (LEA) FSS Block

Q4: Do you think we should remove the element for Further Education residual pensions?

Yes. If the Government feels unable to regulate manipulation of the spending data on which the existing FSS element is based, it is sensible to remove this element.

Q5: Do you think the LEA damping block should be removed?

Yes. Whilst Hampshire received LEA damping in 2005/06, there is no technical justification for applying damping to FSS blocks whilst there is also a general grant floor mechanism in place to protect those authorities with low FSS increases.

Personal Social Services - Children's Services

Q6: Do you agree with the Government's proposal to implement option SSC1? If not, what alternative would you propose?

No. The basic amount per child should be increased, not reduced as proposed in option SSC1 (from £121.57 in the existing formula to £90.96). The increase in the basic amount should be funded by reducing the top-up for `deprivation' which has increased by an average nationally of over £30 per child in the proposed formula.

The Government should reverse its approach of only funding the basic amount as a residue after fully funding deprivation costs above the threshold of the least deprived authority. The basic amount per client indicator for all FSSs should be funded in full with any residue, only, used to fund deprivation costs.

Making the basic amount the residual also takes no account of the double-counting of specific grants and neighbourhood renewal fund to assist deprivation and deprived areas.

Incorporating the much-delayed data from Census 2001 into the Children's FSS should have benefited the County Council. It appears that the proposed formula has been tailored to offset the redistributive effects of incorporating this data.

Q7: Which option for updating the Foster Cost Adjustment do you prefer?

Option SSC2. As stated in the consultation paper, it is better statistically.

Q8: Do you think that there should be specific floors with either ceilings or scaling factors on the children's social services FSS to limit the extent of the changes?

No, it is not necessary to apply floors to individual FSSs if a general grant floor is in place.

It may be necessary to apply a floors damping arrangement to social services specific grants, if the new FSS formulae are used to distribute such grants.

Personal Social Services - Older People

Q9: Which needs formula option do you prefer - SSE1 or SSE2?

The Government has already announced the withdrawal of option SSE1 on the grounds that a statistically robust formula could not be constructed from the data available.

The County Council welcomes this decision for the reasons given in the Government's explanation - points that the County Council would have made if the option had been retained. Even so, the remaining option SSE2 is still based on limited and unrepresentative data, with over-sampling of London and Metropolitan areas even though a higher percentage of older people live outside the urban centres. Only one large authority (Hampshire) was included in the sample.

Option SSE2 reduces the basic amount per older person, from £405.32 in the existing formula to £368.01, with corresponding increases in the top-ups for deprivation. The basic amount should be increased substantially in a new formula by reducing the top-up for deprivation. A reduced basic amount makes the double counting of deprivation factors through the use of specific grants and neighbourhood renewal fund allocations even worse than at present.

Option SSE2 implies that it costs almost four times as much to provide for an older person in Hackney (£2,058 per person) compared with Hampshire (£550 per person). This is not credible.

Q10: Do you agree with the proposal to revise the Low Income Adjustment to include 2001 Census data?

Yes.

Q11: Which method of distributing the sparsity top-up do you prefer?

Either option is acceptable.

Q12: Do you favour increasing the quantum for the sparsity adjustment to more than 0.4%?

No. Whilst this change would have little impact on Hampshire, in principle the County Council supports allocating as much as possible through the basic amount per head of population and minimising all top-ups other than the Area Cost Adjustment.

Personal Social Services - Younger Adults

Q13: Which option do you prefer for the Younger Adults Social Services formula?

The research underpinning these options is extremely limited and unrepresentative. Hampshire contributed data to the research but it is the only large local authority included in the sample which is otherwise heavily slanted towards London and other urban areas. Some parts of the research appear to be based on data from only 7 of the 150 social services authorities in England. Further, wider-ranging research is required and, in the meantime, the Government is urged to withdraw option SSA2, in particular, on similar grounds to its decision to withdraw option SSE1 for older people.

If the Government is insistent on using one of these two inadequate formulae, option SSA1 is the least damaging. But that should not be interpreted as a positive vote for option SSA1.

Police and Fire

Questions Q14 to Q19 concern changes to the FSSs for Police and Fire services. They do not directly affect the County Council.

Highway Maintenance

Q20: Do you agree that back lanes should be included in the highway maintenance formula?

This appears to have minimal impact on the highways maintenance FSS. As a more general point, the County Council is concerned about the validity and consistency of local authorities' data for road lengths used in the FSS formulae, particularly for unclassified roads. It is essential that the Department for Transport applies appropriate validity checks on road length data submitted by local authorities.

Environmental, Protective and Cultural Services (EPCS)

Q21: Do you think we should adjust the coefficients for concessionary fares?

Whilst this does not directly affect county councils, it would be better to increase the basic amount per head of population in the lower tier EPCS formula than to make the proposed changes to the weightings of deprivation indicators which appear to be based solely on `judgement' rather than any objective evidence.

Q22: Do you think we should make any further changes to coefficients; for example, it has been argued that we should do so to take into account the increasing expenditure on waste?

The Government should introduce a separate FSS block for waste management costs, as argued in the paper (ref SWG/05/47) submitted to the Settlement Working Group in June 2005 by the Society of County Treasurers (SCT). Waste management represents a significant cost to local authorities, larger than some other costs for which there are separate FSS blocks. Waste costs are also rising significantly.

If the Government is insistent on not introducing a separate waste management FSS, it should change the weightings in the formula to increase the amount allocated by the basic amount per head of population. This would be consistent with the findings of the SCT paper that resident population is a good indicator of the need to spend on waste management.

Q23: Do you think we should update the fixed cost element?

No, the fixed cost element should be deleted. The need for such support for smaller authorities has been overstated and is a disincentive for partnership and joint working.

If the Government insists on providing a fixed cost element it should be restricted to shire districts and funded by top-slicing the lower tier EPCS control total.

Q24: Do you agree with the proposed method for transferring Critical Ordinary Watercourses (COWs) to the Environment agency?

No comments as this transfer does not affect county councils.

Capital Financing

Q25: Do you think we should remove the Interest Receipt elements?

Removal of the two (negative) interest receipts FSS blocks will have significant redistributional effects, as the Government's exemplifications show. Whilst removal would help to simplify the grant distribution system, it is essential that any consequent changes to the system reflect the relative ability of classes of authority to earn interest.

Q26: If we retain one or both of the Interest Receipt elements, do you have any views on how they should be distributed?

If the elements are retained, no changes to the existing methodology are necessary beyond ensuring that it reflects the relative ability of different classes of authority to earn interest.

Q27: If we remove the Interest Receipt elements, should we reduce other FSS totals to compensate, or not? And if we reduce other FSS elements, where should we make the reductions?

Assuming that the Government has no plans to increase its grant if it removes the interest receipts FSSs, it will be necessary to reduce other FSS control totals. Otherwise, the effect would be further unwarranted resource equalisation uplift which would be particularly unjustified as, according to the Government's own figures in the consultation paper, local authorities are already spending less than the FSS total on capital financing costs net of interest receipts.

The necessary reductions should be made to the non-capital finance FSS control totals but only if the reductions first reflect the ability of each class of local authority to earn interest receipts. In particular, the exemplified reductions in option CF3 appear to ignore lower tier authorities' greater access to interest receipts from housing.

Recognising waste management costs in the Capital Finance FSS

The Government's consultation proposal does not include any changes to the capital finance FSS to recognise the costs incurred by the County Council in providing capital infrastructure for waste disposal facilities through its waste service contract with its private sector provider. This innovative service contract has the characteristics of a public finance initiative (PFI) arrangement but because it was entered into before the introduction of the Government support for PFI projects, it does not attract revenue grant towards the cost of providing new waste disposal facilities.

The County Council urges the Government to rectify this unfair anomaly by recognising the Hampshire contract as the equivalent of a PFI arrangement for revenue support grant purposes.

Area Cost Adjustment

Q28: Do you have any comments on our intention to use the full Annual Survey of Hours and Earnings (ASHE) data set to calculate the ACA?

The Government should use the Labour Force Survey for the ACA as it provides more comprehensive data for lower paid employees. This would give a more accurate recognition of the extent of higher costs experienced in areas such as Hampshire.

Q29: Do you think that we should remove the very small rates cost adjustment, or do you think that we should update the weighting of the RCA in line with 2003/4 expenditure data?

In principle, the ACA should reflect all elements of higher costs in areas such as Hampshire, including business rates.

Q30: Do you agree with the Government's proposal to retain the current method of setting the lower limit for options ACA1-3?

There should be no lower limit so that the ACA recognises the full extent of higher costs in areas such as Hampshire.

Q31: Do you think that we should calculate a separate ACA factor for each upper tier authority?

Yes. In particular, it is essential that Hampshire County Council is not linked to the Isle of Wight for ACA purposes whichever option is chosen. The County Council has argued strongly for separate treatment ever since the Government decided to combine the two areas, without consultation, in the RSG settlement for 2003/04. There is no justification for artificially reducing Hampshire's ACA factor, and therefore its grant, simply to direct grant towards the Isle of Wight.

Q32: If we implement the change above, which option for setting the lower limit do you prefer?

There should be no lower limit, as explained in answer to Q30. Of the options outlined in the consultation paper, the County Council would prefer that the existing limit is retained (option ACA5) in preference to moving the limit up to the authority with average wage pressures.

Additional Resource Equalisation

Q33: Do you think we should increase resource equalisation?

No. There is no case for any additional resource equalisation. As the Government's figures in the table in paragraph 258 of the consultation paper show, spending by local authorities is less, not more, than FSSs in total, based on the latest outturn data available. There is no justification for any resource equalisation uplift, or worse for cherry-picking the above-FSS spending on personal social services, police and fire, and ignoring the below-FSS spending on highways maintenance and capital financing. This suggests that in tailoring its resource equalisation proposals, the Government has focused on which authorities gain or lose.

The resource equalisation changes introduced in 2003/04 diverted grant away from the shire counties, particularly those in the South East, to authorities in the North. A similar pattern is evident in the latest proposals, with London also a beneficiary. Shire counties are the main losers and yet they account for the major part of the above-FSS spending on social services, in part as a result of the formula changes in 2003/04. This forms a vicious circle of grant losses from changes to the personal social services FSS, leading to above-FSS spending, leading to further grant losses because of resource equalisation.

Q34: Which of the options do you prefer?

There should be no further resource equalisation but if the Government insists on forcing through such iniquitous proposals, the least damaging option of `half additional' resource equalisation (option RE2) should be adopted. But that should not be interpreted as a positive vote for option RE2 or any other form of resource equalisation.

Floor Damping

Q35: Do you consider that the capital adjustment should be abolished?

Yes. The capital adjustment has a minimal impact and its abolition would simplify the floors methodology.

Q36: Which approach for paying for damping do you prefer (i.e. the existing method, DMP2 or DMP3)?

The Government should provide additional funding to pay for the floor without top-slicing existing grants.

If the Government insists on requiring other local authorities to pay for the floor, the existing method of scaling back authorities' grant increases on a percentage basis is preferred. This proportional basis is the most equitable with the authorities that benefit from the largest grant increase contributing most to funding the floor.

Scaling by taxbase (option DMP2) penalises areas with relatively high taxbases such as Hampshire. It is also technically unsound to pool the four existing floor calculations, each of which has different floor levels. It could lead to education and social services authorities, say, subsidising much more expensive damping regimes for police and fire authorities and shire districts. Authorities' scaling losses would also be affected by the unaccountable use of ministerial `judgement' in setting Assumed National Council Tax (ANCT) shares for each class of authority.

Scaling by reducing the basic amount per head by a flat rate amount (option DMP3) would penalise authorities whose grant increase is only marginally above the floor. Their grant increase above the floor would be eliminated whilst those authorities with larger grant increases would suffer less significant losses in relative terms. The methodology used in option DMP3 appears not to distinguish between county councils that provide fire services and those that do not (such as Hampshire), which may be a technical fault in the methodology.

· If the average national increase in formula grant in 2006/07 is as low as 0.7%, as currently appears to be the Government's intention, there may not be enough flexibility to implement an effective grant floors scheme whichever option is chosen.

Day Visitors

Q37: Would you prefer us to use the new day visitors indicator?

Yes. The more recent data used in the new indicator, together with the lower threshold for the exclusion of local trips (from 20 miles to 10 miles) is an improvement.

· Additional Questions

Q38: Do you agree that the January pupil count should be used instead of the September pupil count as the source for pupils aged 11 and over?

· Yes, data from the January pupil count should be used in the FSS for the LEA block. This will be consistent with proposals from the Department for Education and Skills to use January data in the calculation of the Dedicated Schools Grant. This is preferred even though the data used for the LEA block will be a year out-of-date because of the earlier deadline for data used for FSSs (ie, January 2005 data will be used for 2006/07 FSSs).

Q39: Do you agree that an adjustment to the 2001 Census based country of birth indicator used in EPCS should be made?

No. The justification for the proposed adjustment appears to be speculation that the people omitted from Census 2001 in some urban areas (for whom a subsequent addition has already been made to population estimates used in FSSs) may have different country of birth characteristics to those that did respond to the Census. There appears to be no evidence to support this speculation and so no adjustment to the country of birth indicator should be made.

Q40: If you agree that there should be floors on the children's social services FSS, would you prefer a damping scheme based on a floor, ceiling and scaling factor or just on a floor and scaling factor?

· As explained in the response to question 8, the County Council does not agree that it is necessary to apply separate damping schemes to individual FSSs, such as the children's FSS, if a general grant floor is in place. However, if the Government decides to introduce a separate damping scheme, the County Council would urge the Government to provide additional funding (but not by top-slicing existing allocations) to meet the full cost of the damping scheme without the need to scale back other authorities' allocations or apply a ceiling.

· In principle, the County Council opposes ceilings on FSS and grant entitlements. However, if the year-on-year changes in entitlement for individual authorities are particularly large, the cost of implementing a floor damping scheme without a ceiling could result in a very large scaling factor. In that case, there may be some justification for considering a ceiling on an exceptional basis to reduce the extent of scaling and limit the impact on authorities whose grant increases are just above the floor.

Q41: Do you agree that an adjustment to the 2001 Census based output area density indicator, used in both the EPCS and Police blocks, should be made?

· No. This is a similar adjustment to that proposed in question 39. The justification appears to be based on speculation and not hard evidence.

·

Robert Ormerod, ext 5122, email: [email protected]

1. Summary

1.1 The following decision is sought:

To agree, on behalf of the County Council as a major partner, the outcomes and priority areas for action set out in the consultation draft- `Hampshire LAA - promoting sustainable communities', for further development

2. Reasons:

2.1 This decision supports all the 6 key aims of the Corporate Strategy and in particular Aim 4 (Building Strong and Safe Communities) by working together with local people to build strong and safe communities for everyone.

3. Other Options considered and rejected: Not applicable

4. Conflicts of Interest declared by the decision maker or executive member consulted - Not applicable.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the matter being dealt with if urgent - Not applicable.

Approved by: Date:

Councillor T.K. Thornber, CBE

Contact: Gary Smith, ext 7691 Email: [email protected]

1 Summary

As part of the tougher CPA 2005 regime the Council is required to submit a direction of travel self-assessment. The following decision is sought:

(a) Authorise the Chief Executive, in consultation with the Leader, to submit the self-assessment by the 30 September deadline.

2 Reason

2.1 This is required by the Audit Commission. It will also strengthen the Council's overall ability to perform and specifically supports Aim 5 of the Corporate Strategy (Improving services).

3 Other options considered and rejected

3.1 None.

4 Conflicts of interest declared by the decision maker or other Executive Member consulted

4.1 None.

5 Dispensation granted by the Standards Committee

5.1 None.

6 Reason(s) for the matter being dealt with if urgent

6.1 Not applicable.

Approved by: .......................................... Date: ..............................
Councillor T K Thornber, CBE

Contact: Roger Lawes, ext 6743 email: [email protected]

1. Summary

1.1 A major, region-wide exercise is underway to assist the South East England Development Agency with its review of the Regional Economic Strategy. Views are being sought on how best to ensure the continuing prosperity and quality of life for people across the South East, particularly in areas where low skills and expectations are holding back individuals and communities.

1.2 The following decision is sought:

That the Cabinet informs the South East England Development Agency that, without prejudice to any detailed comments that Hampshire County Council might wish to make on the Review of the Regional Economic Strategy when it is published in November 2005, it:

(i) notes the South East England Development Agency's extensive stakeholder approach to the review of the Regional Economic Strategy;

(ii) considers that the priorities in the current Regional Economic Strategy: competitive business; successful people; vibrant communities; effective infrastructure; and sustainable use of natural resources, remain pertinent to the sustainable development of the regional economy taking account of the environmental compatibility in relation to quality of life;

(iii) would support and welcome initiatives that recognise the increasing number and variety of business opportunities arising from the sustainable use of natural resources;

(iv) considers that the Regional Economic Strategy should fit within the development framework established in the South East Plan and therefore expects the Review to make it clear how the emerging Plan has influenced the strategy, particularly in relation to the link between sustainable economic growth and housing;

(v) suggests that the Review should clearly differentiate the roles of individual County Council's and sub-regions in contributing towards the overall achievement of sustainable development;

(vi) would like to see a review and rationalisation of the roles of the various stakeholders in the implementation of the strategy; and


(vii) suggests that the Review clearly differentiates between stakeholder and public aspirations.

2. Reason

2.1 This decision supports Aim 2 (Stewardship of the Environment), Aim 3 (Achieving Economic Prosperity), Aim 4 (Building Strong and Safe Communities) and Aim 5 (Improving Services) of the Corporate Strategy by helping to ensure that Hampshire's economic prosperity, and all the benefits that accrue from a healthy economy, are reflected in the new Regional Economic Strategy for the South East Plan being developed by the South East England Development Agency.

3. Other Options Considered and Rejected

3.1 The option of not responding at this stage in the process was rejected as it would mean that the County Council missed a clear opportunity to influence the outcome of the Review.

4. Conflicts of Interest Declared by the Decision Maker or Other Executive Member Consulted - None.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the Matter being dealt with if Urgent - Not applicable.

Approved by: ..................................... Date: ...................................

Councillor T K Thornber, CBE

576Decn/RL

Contact: Jon Pittam, (01962) 847400; [email protected]

1. Summary

This is the first report to the Cabinet on the monitoring of the 2005/06 budget. It reviews corporate issues arising from the service budget monitoring reports to Executive members and other developments affecting the County Council's financial planning both in the short and medium term.

The following decisions are sought:

i) that the transitional arrangements for the management of Children's and Adult Services budgets in 2005/06 be approved

ii) that the business case for the allocation of the additional £250,000 earmarked within the contingency for the Youth Service be approved

iii) to agree the continued funding of £60,000 for youth initiatives in Andover following the evaluation of the pilot schemes

iv) to agree the proposal for a mid-year review of progress against the 2005/06 efficiency targets.

2. Reason(s)

The Cabinet needs to review the County Council's overall financial position regularly in the context of any issues of corporate significance emerging from service budget monitoring reports.

The proposals in this report support all of the aims of the corporate strategy.

3. Other options considered and rejected - Not applicable.

4. Conflicts of interest declared by the decision maker or other Executive member consulted - Not applicable.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the matter being dealt with if urgent - Not applicable.

Approved by: ................................. Date: ............................

Councillor T K Thornber, CBE