Contact: Anne Hibbert, tel 847533, e-mail: [email protected]

1. Summary

1.1 This is the second budget monitoring report for 2005/06. The main pressure area identified in the previous report related to the budget for the Human Resources Department but progress has been made in reducing the projected overspending. In other areas, actions have been identified with the intention of containing spending within the cash limit.

1.2 Capital payments for the County Council at this stage of the year are expected to be broadly in line with the budget forecast of £192m.

1.3 The following decisions are sought:

i) To note the current position on the monitoring of the revenue budget and capital programme.

ii) To agree that part of the provision set aside for local links development be used to meet the £100,000 target saving relating to the reduction in the number of member meetings.

iii) To release the £40,000 earmarked in the contingency for communication and consultation for the South East Plan and agree a virement of £10,000 from Policy and Resources unallocated capital (a virement of £10,000 from Environment has also been agreed) to cover the planned revenue expenditure.

iv) To agree in principle the carry forward of planned underspendings relating to the Wellbeing of Older People Team, with the planned carry forward amount to be agreed as part of the 2006/07 budget.

v) To approve the release of £50,000 for the Pay and Benefits project team and £140,000 for SAP configuration for the new pay arrangements from the project's earmarked reserve.

vi) To approve a one-off allocation of £20,000 from the contingency provision in the 2005/06 budget for two sustainability initiatives.

2. Reason

2.1 Regular service budget monitoring reports are submitted to Executive Members to review whether any action is required to contain spending within cash limits and ensure that resources are utilised effectively.

2.2 Decisions on the Policy and Resources revenue budget and capital programme impact on the financial resources used by central services to support all other County Council services and as such relate to all the corporate strategy aims:

· Maximising life opportunities

· Stewardship of the environment

· Achieving economic prosperity

· Building strong and safe communities

· Improving services

· Developing councillors and staff.

3. Other options considered and rejected

3.1 Not applicable

4. Conflicts of interest declared by the decision maker or a member or officer 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: (signature) Date: (date of decision)

Councillor T K Thornber

Contact: Anne Hibbert, tel: 01962 847533, e-mail: [email protected]

1. Introduction

1.1 This report is the second monitoring report for 2005/06 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets including an update on the implementation of growth proposals

· Policy and Resources business units

· Policy and Resources capital programme

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

1.2 The budgetary position will require close monitoring and prompt management action in 2005/06 across all budgets, in particular to ensure that the budgeted efficiency savings of £1m are achieved. The main pressure area identified in the previous report related to the budget for the Human Resources Department but progress has been made in reducing the projected overspending. In other areas, actions have been identified with the intention of containing spending within the cash limit. This report includes a number of decisions on contingency allocations for 2005/06.

1.3 Capital payments for the County Council at this stage of the year are expected to be broadly in line with the budget forecast of £192m.

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

2. Policy and Resources cash limited revenue budget 2005/06

2.1 The latest cash limit for 2005/06 is £46.7m as set out in Appendix 1, this includes a reduction of £193,300 being Policy and Resources share of the procurement savings target totalling £1m across all services. An adjustment of +£231,700 is also included as a result of further refinement of the budget transfers required in 2005/06 to reflect changes in the incidence of IT charges. Based on monitoring of expenditure up to the end of October 2005 some pressures in keeping within the cash limit are forecast. These are outlined below.

Chief Executive's Department

2.2 The Chief Executive's Departmental budget remains in line with the cash limit for 2005/06. As indicated in the September monitoring report, the review of democratic processes has not yet been finalized and so it will not now be possible to achieve the £100,000 target saving from reducing the number of member meetings in 2005/06. It is therefore proposed to meet the £100,000 savings target by utilizing part of the provision for members local links development. A revised approach to local representation is currently under detailed consideration and the outcome may enable revised targets to be set for the future. A business case is currently being prepared to use the balance of the earmarked contingency to improve the provision of information in relation to democratic processes. Similarly a report will be brought forward in January to release the remaining part of the contingency provision for the implementation of the new arrangements for the Management of Risk and Health and Safety and implementation of a corporate risk register.

2.3 Communication and consultation support for the second phase of the South East Plan is nearing completion. This has included the production of a Hampshire Now Special in paper form and on Hantsweb and analysis and feedback of questionnaire responses. The Executive Member is now asked to release the £40,000 earmarked in the contingency created from 2004/05 underspending. It is proposed to fund the remaining costs from a virement of £10,000 from Policy and Resources unallocated capital and a virement of £10,000 from Environment.

2.4 In the 2005/06 budget, provision of £100,000 was made to establish a `Wellbeing of Older People Team' as part of the County Council's priority for Older Persons Wellbeing. An appointment has now been made to head the team but as the person is not due to start until February it is unlikely that all the resources will be committed in the current financial year. Given the positive outcomes that have already been achieved it is proposed that any unspent provision be carried forward to 2006/07 to enable the work that has already been done to be extended further.

2.5 A significant new initiative has been Hampshire's invitation to develop a Local Area Agreement (LAA) to promote more effective partnership working. The first stage is to complete the immediate negotiations with partners and produce an action plan to be agreed with central government. This will involve costs being incurred for facilitation and management of each of the priorities, events and communications and to provide some financial support to enable the voluntary sector to participate actively in the process.

2.6 The development phase will also involve consultancy support to explore data collection and research and system changes to support performance management, consultancy support for analysing funding streams for inclusion in the LAA and consultancy support to undertake an indicator consolidation exercise. A significant exercise will need to be commissioned to establish baseline information to support future LAA and community planning processes, for which there will be a number of initial costs. It is estimated that £300,000 will be required in 2005/06 from the £1.5 m set aside for LAAs from the first Local Public Service Agreement (LPSA1) reward grant.

County Treasurer's Department

2.7 As indicated in the previous monitoring report, there are substantial pressures on the County Treasurer's budget:

vii) Some delay in achieving the £250,000 of cost benefit realisation savings built into the budget, due mainly to the time taken to clarify the new arrangements for Payroll and move into new accommodation in Eastleigh.

viii) Departments have not purchased sufficient SAP training to pay for the size of training team set up, and this has added £100,000 to the pressures

ix) In addition, severe long term sickness issues have combined with a number of unplanned audit investigations to deplete the internal audit resource available to carry out the work required to support an opinion on internal control. This is critical to the end of the year opinion on the accounts and Comprehensive Performance Assessment and so it has been necessary to plan for diversion of some £50,000-worth of resource into internal audit.

2.8 Efforts are being made to contain these pressures within the cash limit, but this may prove difficult to achieve in full.

Human Resources Department

2.9 Human Resources expenditure during 2005/06 is projected to be £60,000 above budget. This is a significant improvement from the September monitoring report which reported £150,000 above budget. A vacancy management scheme is being undertaken to further minimise the potential overspending.

2.10 The continuing need to retain the Pay and Benefits project team has created additional pressure in 2005/06. The Executive Member is asked to approve an allocation of £50,000 from the reserve for transitional costs. A fully costed business case for the configuration of SAP around new terms and conditions is currently being developed. This is necessarily based on a number of assumptions. Consequently the final cost is uncertain and it is not yet clear how costs will fall across the 2005/06 and 2006/07 financial years. Based on the current project plan, it is recommended that £140,000 be released in 2005/06 from the earmarked reserve of £200,000.

2.11 A combination of continuing ill-health problems in key positions and significantly high levels of maternity leave in senior posts within the department have necessitated temporary short term contracts being put into place to sustain the department through this period. The anticipated additional cost to the department from these arrangements is estimated at £125,000, but has been offset to some degree against savings made in other areas.

2.12 As a result of the review of Safety and the recommendations agreed by CMT last year, the corporate safety role/function will be integrated with Risk Management and sit within the Chief Executives department, whilst departments will appoint safety managers with executive power. The consequence of this is that the HR budget covering safety will transfer to either Chief Executives or individual departments. The final arrangements are yet to be agreed but it is anticipated that this will happen before the end of this financial year.

2.13 SAP realisation benefits savings of £50,000 are required from recruitment advertising expenditure this year. The department is on course to achieve this target.

Property Business and Regulatory Services

2.14 As indicated in the previous budget monitoring report, the Department anticipates that net expenditure will be managed within the cash limit, but this will be difficult in a number of areas.

2.15 The pressure on the Accredited Community Safety Officer Service resulting from higher costs for out of hours working allowances and reduced fixed penalty notice income was reported to the September meeting. There has been a modest reduction in the projected overspend from £70,000 to £63,000 but it is unlikely that it will reduce further by the year end. With the agreement of the Cabinet, the Director of Property, Business and Regulatory Services has written to all the District Councils seeking financial contributions to this development, however none have been forthcoming.

2.16 The Scientific Service has had a noticeable reduction in income from external clients this year. This income is used to offset the costs of providing the statutory requirements associated with this service. The adverse impact on the budget is currently assessed at £77,000 for the current financial year but this includes some one-off benefits that will not be available in 2006/07.

2.17 As explained in the last budget monitoring report, the Department continues to manage budget pressures relating to office accommodation, securing properties awaiting disposal and repairs and maintenance.

Other non-departmental Policy and Resources budgets

2.18 No significant variations on non-departmental budgets have been identified in this review.

Summary

2.19 At the end of October 2005 the main variations from cash limit are forecast to be within the Human Resources Department, although significant pressures also exist within County Treasurer's Department and within Property Business and Regulatory Department in respect of the Accredited Community Safety Officers Service and Scientific Services.

3. Business Units

Property, Business and Regulatory

3.1 The position for HC3S continues to be uncertain due to the loss of income following the adverse national publicity about school meals earlier in the year. Despite a favourable reaction to the new menus from many stakeholders, meal numbers in the autumn term to date have been disappointing and the forecast outturn for HC3S has been correspondingly reduced. The current forecast for the business units overall is that the original target surplus of £286,000 is now unlikely to be achieved and, in advance of the completion of the new business plans, a revised figure of £140,000 is now anticipated.

IT Services

3.2 IT Services are forecasting a trading deficit for 2005/06 which will completely offset the reserve brought forward from 2004/05. This is a slight improvement on the position reported in the last budget monitoring report and results from a number of measures. These include:

· A new data storage solution has been introduced which both increases capacity and reduces costs

· Renegotiation of the hardware maintenance contract has resulted in both improved service levels and reduced costs

· Network management tools have been introduced which enable remote installation and maintenance of software. This has reduced costs through reduced numbers of site visits and by enabling more frequent installation of software security patches and upgrades.

· Continuing development of systems to improve resilience and reduce the cost of support

· Using benchmarking data to inform and improve negotiation with suppliers, most notably with respect to mobile phones.

4. Policy and Resources capital programme

4.1 Following the approval of the carry forward of schemes totalling £3.6m from 2004/05, the Policy and Resources capital programme for 2005/06 amounts to £46.5m, as set out in Appendix 2. The capital repairs programme, including New Deal for Schools, totals £27.2m and is controlled on an expenditure basis. The balance of £19.3m, including £14.1m for North Popley infrastructure, is controlled on a starts basis.

4.2 As at 31 October, expenditure on capital repairs totalled £11.7m, and schemes to the value of £15.6m had started, representing an overall commitment of £27.3.

5. Overall capital payments and sources of finance

5.1 The capital financing plan approved by the Cabinet in February was based on projected capital expenditure of £191.6m in 2005/06.

5.2 Capital expenditure to 31 October 2005 totalled £78.8m. Expenditure in October has been a little lower than average. However, based on the underlying expenditure profile for the year to date, there is no reason to anticipate that expenditure will vary significantly from the planned level.

5.3 Inclusive of the in-and-out schemes, capital receipts of £20.5m are allowed for in the latest financing plan. Actual capital receipts to 31 October 2005 amounted to £4.9m. Success in achieving the forecast, or an outcome close to the estimate in 2005/06, will be dependent upon progress in completing a few significant disposals.

6. Corporate Sustainability Budget

6.1 At the 1 June 2005 Corporate Management Team discussion on the Annual Sustainability Report, it was agreed that it would be sensible to allocate a small operational budget of £20,000 to the Corporate Sustainability Development Steering Group. This is needed for two key areas. Firstly, to remove barriers to providing meaningful indicator information, for example investment in system improvements to ensure core business mileage data is recorded electronically. Until adequate systems are in place, sustainability performance cannot be accurately assessed. Secondly, to assist with developing innovative approaches to internal communications on sustainability, ensuring all colleagues understand the issues and can relate them to their individual areas of work. The Executive Member for Policy and Resources is asked to approve a one-off allocation of £20,000 which can be accommodated from the contingency provision in the 2005/06 budget.

7. Impact Assessment

7.1 The decisions in this report are not considered to be discriminatory.

8. Recommendations

8.1 To note the current position on the monitoring of the revenue budget and capital programme.

8.2 To agree that part of the provision set aside for local links development be used to meet the £100,000 target saving relating to the reduction in the number of member meetings.

8.3 To release the £40,000 earmarked in the contingency for communication and consultation for the South East Plan and agree a virement of £10,000 from Policy and Resources unallocated capital (a virement of £10,000 from Environment has also been agreed) to cover the planned revenue expenditure.

8.4 To agree in principle the carry forward of planned underspendings relating to the Wellbeing of Older People Team, with the planned carry forward amount to be agreed as part of the 2006/07 budget.

8.5 To agree that £300,000 from the £1.5 m set aside for LAAs from the LPSA1 reward grant be allocated in 2005/06 to cover development costs.

8.6 To approve the release of £50,000 for the Pay and Benefits project team and £140,000 for SAP configuration for the new pay arrangements from the project's earmarked reserve.

8.7 To approve a one-off allocation of £20,000 from the contingency provision in the 2005/06 budget for two sustainability initiatives.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

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

TITLE FILE

None.

Appendix 1

Policy and Resources Revenue budget - latest 2005/06 cash limit

Appendix 2

Policy and Resources 2005/06 capital programme