Hampshire County Council
	Policy and Resources Scrutiny and Select Committee		Item 6
	25 January 2006
	Executive Member for Policy and Resources		Item
	31 January 2006
	Revenue Budget 2006/07 and 2007/08
	Report of the County Treasurer and Chief Officers

Contact: Anne Hibbert, (01962) 847533; [email protected]

1 Introduction

1.1 This report sets out the proposed Policy and Resources revenue budget for 2006/07, a provisional budget for 2007/08 and recommends a revised budget for 2005/06. This report has been prepared in consultation with the Executive Member for review by the Scrutiny and Select Committee, before the budget is considered formally by the Executive Member. It will be reported to the Leader and Cabinet on 10 February 2006 to make final recommendations to County Council on 22 February 2006.

1.2 The Policy and Resources revenue budget for 2006/07 and 2007/08 supports:

· Maximising life opportunities

· Stewardship of the environment

· Achieving economic prosperity

· Building strong and safe communities

· Improving services

· Developing councillors and staff

by focusing financial resources in these areas.

1 Budget strategy

1.1 The Cabinet has set a provisional budget strategy based on the following guidelines:

For 2006/07:

· dedicated schools grant for schools

· base budget for all other services, adjusted for inflation on the same assumptions made in previous budget forecasts: 2.95% for pay increases to reflect national agreements, 2.5% for price increases and 1.5% for the increase in employer's contributions to the Local Government Pension Scheme

· an extra £3.4m for social care above the base budget level to recognise extra demographic and other pressures in line with the increase to national spending plans.

For 2007/08:

· dedicated schools grant for schools

· base budget for all other services, adjusted by 2.5% for pay increases (following the Chancellor's recent announcement to bear down on national pay awards - in line with the teachers' pay settlement of 2.5%), 2.5% for price increases and 1.2% rise in employer's pension contributions

· an extra £3.9m for social care above the base budget level

1.2 In arriving at the base budget Executive Members are required to ensure that:

· Income will be maximised by reviewing charges and introducing new income wherever possible in excess of the 2.5% price inflation assumption, taking account of the powers to charge for discretionary services in the Local Government Act 2003.

· Any proposals for spending above the budget guideline are matched by cashable efficiency savings.

· All proposals for additional spending, however financed, are accompanied by a summary business case containing clear financial and performance data setting out how performance will be improved and value for money achieved, and how it links to the key aims of the Corporate Strategy

· Staffing implications of proposed budgets are identified for inclusion within the service's workforce plan.

1.3 There is also a requirement to identify annual efficiency improvements of at least 2.5% for the annual efficiency statement. These need to be integrated into budget planning and categorised into cashable and non-cashable. Cash savings in budget terms will be required to meet new pressures and service development proposals.

2 Budget guidelines

2.1 The budget guidelines were considered by the Cabinet on 19 December 2005. For this service, the provisional budget guidelines are:

For 2006/07	£46.4m
For 2007/08	£46.8m

2.2 This report sets out the Policy and Resources Executive Member's responses to the guidelines. The report:

· Reviews the revised budget for 2005/06 (as set out in Appendices 1 and 2)

· Reviews the 2006/07 base budget which totals £46.4m (as set out in appendix 3)

· Proposes the redeployment of £0.6m of resources (as set out in Appendix 4)

· Identifies efficiency improvements of £2.6m, (as set out in Appendix 5)

· Reviews the charges made by this service (as set out in Appendix 6)

· Identifies the workforce implications of the budget proposals (as set out in Appendix 7)

· Proposes a detailed budget for 2006/07 (as set out in Appendix 8)

· Reviews the trading accounts of business units (as set out in Appendix 9)

· Proposes a provisional budget for 2007/08 (as set out in appendix 10)

3 Revised Budget

3.1 The cash limit for the revised budget is £47.0m. The calculation is shown in Appendix 1.

3.2 A summary comparing the revised budget with the cash limit for each service within Policy and Resources is set out in Appendix 2. This shows that after allowing for the carry forward of planned underspendings of £175,000 to 2006/07 the revised budget is £50,000 below the cash limit.

3.3 This relates to a reduced estimate of the external audit fee reflecting the County Council's excellent status and now four star rating resulting from the Comprehensive Performance Assessment. A similar saving may not arise in 2006/07 due to revised Audit Commission fee proposals which no longer contain lower fees for top rated authorities. Nevertheless, the saving in 2005/06 is available to be carried forward to provide one-off funding in 2006/07.

3.4 For Chief Officer controlled budgets, the intention is to keep the revised budget within the cash limit. However, as reported to the last Executive Member decision day in December, there are a number of cost pressures to be managed between now and the end of the financial year. These are estimated to be in the region of £175,000 and are outlined in section 7 below.

4 Base Budget 2006/07

4.1 A base budget for 2006/07 has been prepared which contains the current financial policies of the Council, in order to provide a starting point from which decisions can be made. The base budget for this service is £46.4m at outturn prices. Overall, the base budget includes a net reduction in expenditure at constant prices of £1.4m. The main variations are:

i) Reductions to offset excess inflation (-£0.2m)

ii) Exclusion of non-recurring expenditure (-£0.8m)

This relates to one-off expenditure in 2005/06 on the older people's survey and County Council elections and the 2005/06 funding for the pay and benefits project. A proposal to fund the pay and benefits project team in 2006/07 is made in paragraph 7.19 below.

iii) Full year effect of 2005/06 growth (+£0.3m)

This includes £200,000 for office accommodation and £64,000 for the Hampshire own grown initiative

iv) Contingency provision (+£0.1m)

Contingency provision was created in the 2005/06 budget to provide on-going funding to improve the arrangements for managing risk and health and safety. This funding will be required from 2006/07 when a new Risk and Health and Safety manager will be in post to take this work forward.

v) Exclusion of 2004/05 underspendings used in 2005/06 (-£0.6m)

The 2005/06 budget was increased by one-off underspendings carried forward from 2004/05. These were used in 2005/06 and so are not available in 2006/07.

vi) SAP benefit realisation savings (-£0.35m)

The target for 2006/07 comprises £200,000 savings from Human Resources services, £50,000 from recruitment advertising, and £100,000 from Treasurer's services.

vii) 2005/06 planned underspendings carried forward (+£0.2m)

It is proposed to carry forward to 2006/07 £90,000 in respect of a Community Planning grant relating primarily to the funding of the Rowner project and £85,000 to provide pump-priming resources for the older peoples well-being initiative.

4.2 Appendix 3 shows the make up of the base budget.

5 Cost pressures, redeployment proposals and efficiency improvements - 2006/07 and 2007/08

5.1 The Cabinet requires all services to consider and report on:

· cost pressures absorbed within the budget guidelines

· the redeployment of any resources required to offset any new spending priorities, or inescapable budget pressures, or legislative requirements which otherwise cannot be met within their budget guidelines

· annual efficiency improvements.

5.2 Section 7 of this report identifies a number of cost pressures affecting the services funded by Policy and Resources, in some cases with associated redeployment proposals or potential sources of funding that are still being explored. A summary of redeployment proposals of £595,000 are included in Appendix 4.

5.3 The County Council is required to identify annual efficiency improvements of at least 2.5% for the annual efficiency statement (AES). At least 1.25% of the improvements in each year need to be `cashable' in the Government's terms. These occur when inputs (money, people, assets etc) are reduced but outputs remain unchanged or when the price of inputs is reduced but outputs remain unchanged. However, not all cashable efficiency savings in AES terms provide usable cash in budget terms. For example, absorbing the cost of increments within the base budget counts towards the AES but does not generate new budget provision.

5.4 Appendix 5 identifies efficiency improvements totalling £2.5m. Of these, £1.2m relate to Policy and Resources own services representing 2.6% of the base budget. The balance arise from corporate savings. All of the identified improvements are eligible for inclusion in the annual efficiency statement and £0.1m represents usable budget savings.

6 Chief Officer controlled budgets

Chief Executive's department

6.1 Risk and Health and Safety Management. When the budget for 2005/06 was set a contingency provision of £200,000 was made for the impact of the new Civil Contingencies Act and for improvements to the arrangements for managing risk and health and safety. Of this, £60,000 has already been allocated to supplement income from District Councils for additional staffing for the Civil Contingencies Act and those staff have been appointed. A request is now being made for a further allocation in relation to Risk Management and Health and Safety.

6.2 Over recent years the County Council has established a good process for managing risk. This work, however, needs to be developed further and become more embedded across the organisation. Similarly, significant effort has been put into the management of Health and Safety. What has become increasingly evident is the need to link the two together to ensure a more proactive approach than is currently possible and to ensure that a risk aware but not risk averse culture is developed. In order to move this forward a new role of Corporate Risk and Health and Safety Manager is proposed. This post will enable the organisation to manage risk by moving to an executive rather than advisory approach as at present.

6.3 The need for better information in relation to risks has also been identified and therefore an exercise has been carried out with Internal Audit to implement a joint risk and audit management system. It is therefore requested that £50,000 be earmarked to contribute to the cost of acquiring and implementing the system and that £100,000 be allocated for 2006/07 onwards to cover the additional post and to make provision for the development of a training programme. This would leave £40,000 from the original contingency provision and it is not proposed that any further calls would be made against this sum.

6.4 Development of Local Links - The 2005/06 budget included a one-off contingency of £200,000 for the development of local links. A sum of £100,000 has already been used in 2005/06 to off-set the savings target for member meetings pending the outcome of the review of democratic processes, leaving a further £100,000 to be allocated. Several IT developments have been started to support the delivery of Local Link groups, now known as Hampshire Action Teams (HATs), including the upgrading of information on the decisions database. This project will enable members and officers to track decisions and receive email alerts on proposals and decisions which relate to geographical and topic area, enabling HATs to know in advance, what the County Council is doing which might affect their area. The cost for the development and implementation of this facility is £45,000. This funding is required in 2005/6.

6.5 In addition to this there is a proposal to develop a specialised HATs web site which will include a bulletin board for members, an enhanced calendar of meetings, local information using mapping technology, and email alerts about information that relates to the local area. This project also includes further development of the members' portal. The estimate for this work is around £55,000, and will be carried out during 2006/07. It is therefore requested that this sum be carried forward.

6.6 Two further areas of underspending are planned in 2005/06:

Older Persons Well-Being - As highlighted in the December budget monitoring report, the 2005/06 budget included provision of £100,000 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. As the person is not due to start until February, it is now clear that only a small element of the resources available for 2005/06 will be committed in the current financial year and it is proposed that the projected unspent provision of £85,000 be carried forward to 2006/07. This will allow the Head of Well Being for Older People to develop, initiate and fund a range of early projects aimed specifically at enhancing the independence of older people living in their own homes. This is a new County Council initiative and it is important that the Council can demonstrate real progress on the ground with a readily identified outcome for older people. Relevant projects will be identified with older people themselves and appropriate voluntary agencies. Assistance may include help around the home and garden and projects to avoid social isolation and therefore enhance a sense of personal confidence and well being. Successful projects may also reduce the need for more 'acute' services from the County Council.

· Community Strategy - an underspending of £90,000 is planned in 2005/06 as committed spending primarily in relation to the Rowner project will not take place until 2006/07.

6.7 A number of budget pressures arise in 2006/07, these are outlined below:

6.8 Democratic Processes- At the end of January the County Council will be considering proposals for improving its democratic processes. This is key to re-invigorating local democracy and developing the community leadership role required of Councillors and local authorities. The County Council's democratic structures have previously followed a centralised model which has enabled them to be run at a low overall cost. It is likely that a move to a more devolved arrangement will bring increased costs, including the reinstatement of the savings planned in the 2005/06 budget and therefore it would be sensible to create a provision in the 2006/07 budget to meet the additional costs.

6.9 Promoting Hampshire - Having achieved 4 star status it is important for the County Council to capitalise on the freedoms and flexibilities given to top rated local authorities to maximise the benefits for Hampshire's residents. This is increasingly important given the discussions that are taking place around the provision of social care services, reforms to education and consideration of the wider structural changes for the provision of public services. It is therefore proposed that a temporary post be created for a twelve month period the cost of which is estimated at £55,000.

6.10 External Funding - The Department runs (through the Economic Development Office) the corporate support service to Departments wishing to bid for external funding for new projects or services. This has provided assistance leading to successful bids for over £1m income to the Council p.a., as well as providing a corporate newsletter with best practice case studies, and a corporate database detailing successful funding income, which is circulated to Members and Chief Officers. The service also provides an information service on new funding streams.

6.11 It is proposed to enhance this service in 2006/07, with the recruitment of 1 FTE additional member of staff (to add to the current establishment of 1FTE). It is estimated that this will cost approx £40,000 in a full year, though the payback to the Council should be many times over. Service Departments have been approached for contributions, which in total is likely to be of the order of £20,000. The Chief Executive's Department is therefore seeking to achieve 50% of the funding from corporate sources. This amount should be on a 'one-off' basis (with a review at year end), as the investment will demonstrate to Departments the potential which is being missed at present (e.g. Lottery/European funding etc). It would also provide the means to set up a commission based system of charging for the future (e.g. no win no fee). Most Councils invest substantially more in their external funding support service with teams of up to 10 staff. Whilst the Council does have resources based in Departments, it is still unable to respond to all the opportunities which arise, and for a modest initial investment of £20,000, could be far more successful.

6.12 Older Persons Communications - Cabinet recently discussed the necessity to target communications more efficiently and the older people campaign has already been effective in this area. The first phase resulted in over 2000 direct requests for further information and during the second phase approximately 40,000 copies of a special edition of Hampshire Now were targeted directly at older people. The campaign has started to bring information together in a way never achieved before and has involved a number of Hampshire County Council departments as well as a wide range of external partners including the Primary Care Trusts (PCTs), charities and voluntary groups. This work on communicating with older people is linked directly to some of the organisation's key priorities as highlighted by residents in the MORI Residents Survey and also in the more recent budget workshop. With this in mind it may also be necessary to start thinking about expanding the groups targeted, in particular people living in deprived areas, a subject upon which cabinet recently had a presentation, and also young people, another group highlighted as a priority. A budget of £50,000 would allow for the momentum achieved on the older persons campaign to be continued in co-ordination with partners and to support the developing early intervention and well-being agenda. It would also provide an opportunity to explore communications to other priority groups.

6.13 Members' expenses - following the last election, the number of councillors increased from 74 to 78. One off funding was allocated in 2005/06. On-going funding of £60,000 needs to be identified.

County Treasurer's Department

6.14 Every effort continues to be made to find savings in order to keep the 2005/06 revised budget within the cash limit. However there are four main areas of cost pressures that might cause an overspend of up to £100,000:

· Slippage in achieving the £250,000 savings required for SAP benefit realisation in this year's budget, principally due to delays in setting up the Payroll Service Centre

· Shortfall in funding from departments for the SAP training carried out by the Treasurer's Systems Training Team: given the corporate importance of delivering the training and continuing to update work instructions, the £100,000 deficit has been met jointly by County Treasurer's and by IT services

· Exceptionally high levels of long term sickness in Audit Services which have reduced resources available, exacerbated by increased corporate governance work and a much higher than usual volume of reactive audit work required in response to reported concerns. These two factors together have required additional resources to be brought in to cover the mainstream system and regularity work of the section (£40,000).

6.15 These pressures are all likely to carry forward into 2006/07. In recognition of that, it is proposed that the SAP benefit realisation timetable be rescheduled so that only an additional £100,000 is required in 2006/07 with a further £250,000 due in 2007/08 and the remaining £350,000 in 2008/09.

6.16 A one-off allocation of £60,000 was made in 2005/06 for on-going work arising from the efficiency agenda and this additional resourcing will need to be sustained to enable the County Council to demonstrate improved value for money. In addition, one-off funding of £40,000 will need to be identified in 2006/07 to ensure the Treasurer's duty to provide an adequate and effective audit service is fulfilled, particularly in terms of value for money, governance and anti fraud and corruption requirements.

Human Resources (HR)

6.17 SAP benefit realisation savings of £50,000 are required from recruitment advertising in 2005/06. The department is on course to achieve this target, but keeping the 2005/06 revised budget within the cash limit has been challenging given the significantly high levels of maternity leave in senior posts and continuing ill-health problems in key positions necessitating temporary short term contracts. Vacancies are being held to minimise potential overspending. Savings of up to £75,000 need to be identified in order to meet the cash limit.

6.18 Payroll Service Centre - The new HR / Payroll service centre has begun moving into Nuance Global House, a process which will be completed towards the end of this financial year. This new centre reorganises payroll services previously within County Treasurer's Payroll Services, the Employment Practice Centre and Education Personnel Services. Existing payroll staff have either transferred to the HR Service Centre, or remained in Treasurer's as part of the Payroll Technical Team. A transfer of £150,000 from the County Treasurer's cash limit to Human Resources has been made reflecting the new management arrangements and a split of future payroll SAP benefit realisation savings agreed (75% attributable to the Service Centre).

6.19 Pay and Benefits - The Pay and Benefits project team will be funded until the anticipated completion of the project in July 2007 from the contingency set aside for transitional arrangements following the implementation. A sum of £295,000 in 2006/07 is now formally requested to be transferred into the HR cash limit and this proposal is contained in Appendix 4 A review of ongoing Remuneration and Benefit resource requirements following the completion of the project will need to be carried out and approved before Dec 2006. The project outcomes and requirements for pay and benefit expertise will be more transparent in that timescale. Comparisons with modelling and management of the pay framework in other local authorities, including Kent and Essex, will be undertaken. The review will take into account the desire to move all HR operational and transactional work into a shared service centre, building on the HR/Payroll centre currently being developed.

6.20 Claims from part-time staff to backdate membership of the Teachers' and Local Government Pension Schemes - a provision was established to meet the potential cost of backdated employers' contributions. However it appears that most of the claims are capable of being defended. It is therefore recommended that the provision be used on a call-off basis to fund the additional costs which the County Council will incur in defending claims.

6.21 Equalities - In 2005/06 £20,000 was identified for Equalities on a `potentially recurring' basis, in order to respond to the statutory duty to promote race, disability and gender equality. This included the external validation of the Equalities Standard for Local Government, to meet the target of achieving Level 3 by March 2006, associated communication activity in redeveloping publications and websites together with support of the Corporate Equality Group. In 2006/07 there will be a need to publish a race scheme and draft disability scheme, consult with the communities affected, continue to support the development of the corporate group and fund specific equality related projects: continuation of the £20,000 is therefore desirable.

6.22 Occupational Health - A report to the Corporate Management Team in July on Occupational Health recognised that the workload from schools equates to some 40% of the total. To date schools have made no direct funding contribution for the services they receive and workload from them is expected to rise. Funding has now been identified and agreed with the Schools' Forum within the growth headroom within the Dedicated Schools Grant to enable schools to make an additional contribution of £150,000 for occupational health services in 2006/07.

6.23 Health and Safety - As a result of the review of Health and Safety, the corporate safety role/function will be integrated with Risk Management and sit within the Chief Executive's 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 in time for the 2006/07 financial year.

6.24 SAP benefit realisation savings - For 2006/07 SAP benefits realisation savings of £250,000 are required from the department (leaving aside the Payroll Service Centre, dealt with as above). This target comprises £200,000 from efficiency savings in Human Resources services, and £50,000 in recruitment advertising, though flexibility between these categories is possible. This is a demanding target, representing 3.5% of the Human Resources cash limit. It will be tackled through strict budgetary control, headcount management and restructuring. Specific unit targets for the delivery of these savings are agreed and have been built into the forward budget. Progress against targets for each unit will be monitored throughout 2006/07 to inform the extent of any further management action required to realise SAP improvements. Nonetheless, given the other pressures faced by the department, this scale of saving may not prove feasible, in which case it may be necessary to seek some retiming of the savings programme at revised budget stage.

6.25 For 2007/08 further SAP benefits realisation savings of £350,000 are required from the department. These comprise £300,000 efficiency savings in Human Resource services and £50,000 in recruitment advertising. This would complete the original departmental savings targets of £750,000 required since 2004/05. Outline targets for unit budgets in 2007/08 have been agreed. Work to develop specific proposals to meet these targets has yet to be undertaken and represents a significant challenge.

Property, Business and Regulatory Services

6.26 The work of the Department supports many aspects of the County Council's services and contributes to the achievement of all aspects of the Corporate Strategy. The department is already committed to work with significant corporate impact in developing efficiencies and value for money across a number of areas such as office accommodation, procurement, rate valuation appeals and the generation of capital receipts to support the locally resourced capital programme. While efficiencies generated in these areas are of considerable benefit to the County Council as a whole, the financial impact on the Department's own budgets is limited and significant pressures exist.

6.27 Office Accommodation - The full year net additional costs from the recent purchase of Capital House in Winchester where previously just one floor was rented are currently estimated at £64,000. The additional space will be used as a temporary home for the Winchester Library and as decanting space during the Ashburton Court refurbishment project. If a decision is taken to acquire three additional floors at Nuance Global House in Eastleigh, to be determined by a formal business case linked to the disposal of other non-core properties, the additional annual costs would be £309,000. It remains the case that an overwhelming majority of the existing budget is committed to rent, rates and other unavoidable costs associated with holding properties leaving little scope for redeployment to offset these pressures. The base budget does not include provision for any additional office accommodation costs that may be required for the corporate Contact Centre or any additional space for Children's Services.

6.28 The longer-term, more radical approach being developed to achieve genuine efficiency improvements in this area involves reviewing and rationalising the existing portfolio of offices. In particular seeking to relinquish leasehold property where practicable and developing flexible working arrangements based on major investment in technology, business systems and furniture/storage to improve the utilisation of the remaining space. The exact timing and impact will be determined both by lease expiry dates and future corporate decisions on accommodation requirements but the work already done at Chantry House in Andover suggests that this approach can yield significant capacity gains without the need to increase floor area.

6.29 Repair and Maintenance - The rate of inflation experienced on repair and maintenance work continues to run ahead of general price inflation and in 2006/07 is expected to average 7%. In previous years revenue repair and maintenance for schools has benefited from the passported funding arrangements. The new arrangement for school funding from 2006/07 provides £420,000 to meet part of the shortfall in inflation leaving a shortfall of £177,000 on repairs to other County Council properties. Given the nature of this budget, which is spent almost entirely on the cost of works, there is relatively little scope for making savings of this order without a reduction in service provision.

6.30 Manydown - In 1996 land west of Basingstoke was acquired with Basingstoke and Deane Borough Council. To date the master planning work involved has been funded primarily from rental income from the farmed estate, however to maintain overall progress on this project will require a more significant annual contribution from the two authorities. The total increase required is estimated at £500,000 with each authority contributing equally i.e. Hampshire's share is £250,000. A report on a way forward is being prepared for Buildings, Land and Procurement Panel and the Executive Member for Policy and Resources.

6.31 Strategy for Affordable and Key Worker Housing - There is a need to maintain momentum on the Strategy for Affordable and Key Worker Housing and to develop this work further it is estimated that £50,000 will be needed in both 2005/06 and 2006/07. A proposal to redeploy a capital receipt for this purpose is included in Appendix 4.

6.32 Community Safety Officer Service - The Community Safety Officer Service has been in operation for just under a year and its work has been well-received. The net annual costs of running the current level of service are estimated to be £1.25m. The underlying base budget provision of £1m plus inflation has been supported by a carry forward from 2004/05 of £250,000 (reflecting the implementation part-way through the year). This transitional funding is used up in 2006/07 when projected costs for the existing service provision are expected to exceed the cash limit by £100,000. The cash limit in 2007/08 will revert to the original £1m plus inflation and the underlying budget pressure of £250,000 will re-emerge. The additional costs result in the main from higher allowances for shift working and lower income than originally expected from fixed penalty notices.

6.33 The service currently only operates across four pilot areas. The lowest cost option to extend coverage across the whole of the county would involve the creation of a mobile team of eight officers at an annual cost of £300,000. The current funding for the service is obtained from the earmarking of extra annual council tax income from reducing the discount on second homes. The use of the income available to the County Council in 2006/07 will be reviewed once district council taxbase data is available.

6.34 Hampshire Scientific Service (HSS) - HSS acts as Public Analyst to Hampshire County Council under the Food Safety Act 1990. The current net expenditure budget for the service is £24,000. The base budget is supplemented by income from other local authorities - in 2005/06 this is expected to total £600,000 - but income from this source has been at best static in real terms in recent years and efforts to win new customers have been offset by continuing reductions in volumes of work from existing customers. As a result, pressure on the budget has been building steadily to the point where it is difficult to contain within existing resources and it is estimated that £100,000 would be required to secure the statutory service provision. In the longer term efficiency savings within the Regulatory Services group would provide a possible source of funding.

6.35 Corporate Procurement - The Corporate Procurement Unit is a part of County Supplies and works to deliver procurement efficiencies for the County Council as a whole. Agreement was given by the Executive Member for Policy & Resources in April 2005 for £150,000 to support the delivery of corporate procurement savings and for this funding to be recovered via the corporate procurement savings target. The additional staff required to support this work will be in post from early 2006 and the costs for the remainder of 2005/06, along with the existing Corporate Procurement Unit costs, will be absorbed within the County Supplies trading account. £100,000 of the corporate funding will be required during 2006/07 with any additional costs absorbed within the trading account. The Unit expects to deliver £400,000 of efficiency savings in 2006/07.

6.36 Efficiency improvements - The Department is developing efficiency improvements in a number of areas with significant corporate impact such as:

· The generation of capital receipts to support the locally resourced capital programme which in 2006/07 and 2007/08 will total £26m. The interest saved on borrowing for the same period that would otherwise have been necessary is estimated as £1.3m.

· Rating and valuation appeals which to date have saved the County Council over £5m.

· Procurement savings, both on common use goods and services where efficiency savings of £400,000 are planned for 2006/07 and in construction, where framework agreements and greater aggregation and collaboration are delivering consistent improvement across a number of key performance indicators.

· The Office Accommodation strategies to rationalise the portfolio and improve utilisation of the remaining properties.

6.37 Regulatory Services - A review of the Regulatory Services senior management structure and the co-location of Trading Standards staff from three offices onto one site in Winchester during 2006/07 will generate cashable efficiency savings. The project group will complete its work early in 2006 but initial estimates indicate gross full year savings of up to £100,000 may be achievable in the longer-term. In the short term it is likely that the majority of these savings would be redeployed to meet the costs associated with the move, the introduction and facilitation of flexible working arrangements for the new office and potential additional travel costs to cover the whole county from a single office base.

6.38 Trading Standards - Trading Standards has both implemented new services such as a new role as Responsible Authority under the new Licensing Act and expects to maintain its 100% score for Best Value Performance Indicator BV166 with reduced staff numbers and hours. The efficiency improvement for these areas is calculated as £88,000.

7 Review of charges

7.1 The service's 2006/07 revenue budget includes income of £8.1m from fees and charges. Details of the material headings are included in Appendix 6.

7.2 There are some mandatory and national charges which the County Council is not able to vary. The main examples relate to charges for the registration of births, deaths and marriages and Commons registration charges.

7.3 Discretionary charges are reviewed annually except when they are subject to agreements which cover longer periods when the review takes place at the end of the period of the agreement. Examples of charges not subject to annual review are agricultural lettings and most commercial lease rentals.

7.4 Charges for support services are reviewed annually and are set to recover the full cost. Other discretionary charges are set to recover the full cost except where charges are governed by market forces and are only expected to make a contribution towards the cost of the service. No new charges are proposed. Significant changes in income in 2006/07 include:

· Legal fees - the Police Authority are no longer purchasing a legal service from the County Council resulting in a decrease in income of £70,200. It is also anticipated that the Police Authority will use a national framework agreement for police pensions administration from October 2006 resulting in a loss of income to County Treasurer's department of £135,000 in a full year

· Sir Harold Hillier Gardens - increased income of £117,300 (19%) principally from increased conference lettings

· Registration fees for marriages in approved places - increased income of £464,000 (179%)

8 Workforce levels and costs

8.1 The workforce implications of the proposed budget are set out in Appendix 7. Inclusive of 1,220 staff working in business units, the 2006/07 base budget supports a planned workforce of 2,856 full time equivalent (FTE) staff. This compares with the original estimate for 2005/06 of 2,837 which is an increase of 19. This excludes an anticipated reduction in Human Resources and County Treasurer's in line with SAP benefit realisation savings. The main changes are as follows:

· A reduction of 46 staff in HC3S (Hampshire County Council Caterer's) in line with reduced demand for school meals.

· A reduction of 15 staff in IT Services

· 6.5 additional legal staff funded from recharges to services and the capital programme

· 5 additional staff in emergency planning funded by external income from District Councils

· 7 additional staff in the Hampshire Learning Centre including the equalities training post and staff recharged to Adult Services Learning and Development Team

· 4 additional staff in the Employment Practice Centre, including staff in the pay and benefits team funded from contingency

· 2 additional staff in occupational health and Employee Support Line (ESL)

· 2 Additional registrars funded by increased income

· 2 additional staff at Sir Harold Hillier Gardens funded by increased income

· 5 additional technicians in the asbestos management team

· an increase of 43 Property Services staff arising from a reduction in the use of external consultants and some temporary contracts becoming permanent employees.

8.2 The net effect of proposals for redeployment of resources (Appendix 4) on staffing levels are as follows:

2006/07	+ 6
2007/08	+ 6

9 Business units

9.1 The trading accounts of the business units are summarised in Appendix 9.

9.2 Property, Business and Regulatory Services - The business plans show that the group will continue to maintain a trading surplus in both 2005/06 and 2006/07, although national pressures on school meals services will result in a short term deficit for HC3S between 2005/06 and 2007/08 and lower than average surpluses for the group as a whole. However, the group will continue to be well placed to support planned investments and maintain its substantial aggregate surplus.

9.3 IT Services - As reported to the last Executive Member decision day in December, a trading deficit is forecast for 2005/06 which will offset the surplus brought forward from 2004/05. A number of cost saving measures including server consolidation and renegotiating supplier contracts are planned to achieve a break even position by the end of 2006/07 and 2007/08.

10 Provisional budget for 2007/08

10.1 The provisional budget for 2007/08 for this service is £46.8m at outturn prices as set out in Appendix 10.

10.2 The main variations from the 2006/07 proposed budget are:

· Exclusion of non-recurring 2006/07 expenditure (-£0.2m)

· Exclusion of 2005/06 underspendings used in 2006/07 (-£0.2m)

· SAP benefit realisation savings (-£0.6m)

· Allocation for future inflation (+£1.3m)

11 Impact assessment

11.1 The proposals in this report are not considered to be discriminatory.

12 Recommendations

12.1 The recommendations are included in the covering decision sheet.

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

noneAppendices

Appendix		Colour
1	Revised budget 2005/06 - calculation of the cash limit	yellow
2	Revised budget 2005/06 - comparison with cash limit	yellow
3	Base budget 2006/07 - summary of cash limit	pink
3 - Annex 1	Base budget 2006/07 - definition of base budget	pink
3 - Annex 2	Base budget 2006/07 - significant costs of inflation	pink
3 - Annex 3	Base budget 2006/07 - significant variations from 2005/06 repriced budget	pink
3 - Annex 4	Base budget 2006/07 - analysis of variations	blue
4	Proposals for redeployment 2006/07 and 2007/08	yellow
5	Efficiency statement	yellow
6	Review of income 2006/07	yellow
7	Workforce levels and costs 2005/06 - 2007/08	blue
8	Revenue Budget 2006/07 - budget book detail	green
9	Business units - summarised trading accounts	white
10	Provisional budget 2007/08	pink

Appendix 1

Policy and Resources

Revised budget 2005/06

Calculation of the cash limit for the revised budget 2005/06

The following table shows the progression from the original budget for 2005/06 to the cash limit for the revised budget 2005/06. Both are at estimated outturn prices 2005/06.

				£'000	£'000
Original budget 2005/06 at outturn prices					45,475
Contingency allocations:
	- Promoting well being of older persons			100
	- Hampshire's Own Grown			129
	- Asbestos and Disability Discrimination Act			250
	- Civil Contingencies Act			60
	- Occupational Health services			110
Procurement savings target				-194
Adjustment to reflect revised incidence of IT charges				220	675
=	Adjusted original budget				46,150
Other variations
		Carry forward of 50% of underspending from 2004/05		65
		Grants to voluntary organisations		141
		Pay and benefits review including system configuration		260
		Allowances for additional members		66
		Finance input to efficiency plans and CPA		60
		Pre-employment checks		55
		Equalities strategy		20
		Futures Group		21
		Second public service agreement (LPSA2) - to be funded from pump priming grant		49
		Virements from Capital		48
		South East Plan		60
		Local links development including reinstatement in 2005/06 of planned savings resulting from fewer member meetings		145
		Tsunami relief team expenditure to date		32
		Planned underspendings carried forward to 2006/07		-175	847
=		Cash limit for the revised budget 2005/06			46,997

Appendix 2

Policy and Resources

Revised budget 2005/06

Summary comparing the revised budget with the cash limit

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Cash limited expenditure
Chief Executive
- Chief Executive's Department	6,376	6,376	-	-
- Economic Development	210	210	-	-
- Links with Europe	112	112	-	-
- Emergency Planning and oil pollution	408	408	-	-
- Other direct services	1,474	1,474	-	-
- Other central services	1,932	1,932	-	-
	10,512	10,512	-	-
HR Department
- HR Department	5,429	5,429	-	-
- Hampshire Learning Centre	888	888	-	-
- Occupational Health	165	165	-	-
- HR restructuring transitional costs	100	100	-	-
- Leadership training	75	75	-	-
- Pay and Benefits review	320	320	-	-
- Other central services	216	216	-	-
	7,193	7,193	-	-
County Treasurer	5,566	5,566	-	-
	5,566	5,566	-	-
Property, Business and Regulatory
- Office accommodation	4,959	4,959	-	-
- Property Services	6,232	6,232	-	-
- Repair and maintenance	3,882	3,882	-	-
- Regulatory Services	3,078	3,078	-	-
- Accredited community safety officers	1,268	1,268	-	-
- Other direct services	1,070	1,070	-	-
- Other central services	63	63	-	-
	20,552	20,552	-	-
Other budgets
- Centrally retained expenses	138	138	-	-
- Corporate and democratic core	299	299	-	-
- External Audit Fee	374	324	-50	-13%
- Other direct and corporate services	1,702	1,702	-	-
- Other central services	662	662	-	-
	3,190	3,140	-50	-13%
Total	46,997	46,947	-50	-0.1%

Appendix 3

Policy and Resources

Revenue budget 2006/07

Calculation of the base budget 2006/07 - summary of cash limited expenditure

The following table shows the progression from the original budget for 2005/06 which was prepared at outturn prices 2005/06 to the base budget 2006/07 at outturn prices 2006/07.

		£'000	£'000
Original budget 2005/06 at outturn prices			45,475
Contingency allocations: Civil Defence Asbestos management/Disability Discrimination Act Older people's wellbeing Occupational Health Hampshire own grown Procurement savings Transfers between services: To reflect change in incidence of IT charges		60 250 100 110 129 -194 220	675
=	Adjusted original budget		46,150
Increases for inflation to reflect November 2005 prices (see Annex 2)
-	Excess cost of inflation over the inflation allowance		212
Original budget at November 2005 prices			46,362
Other variations (see Annex 3)
-	Reductions to offset excess inflation	-212
-	Deletion of non-recurring 2005/06 expenditure: Older people's survey County Council elections 2005/06 one-off funding for Pay and Benefits	-50 -550 -200
-	Full year effect of 2005/06 growth items: Office accommodation Hampshire own grown	200 64
-	Contingency provision: risk and health and safety	100
-	2004/05 underspendings used in 2005/06: County Treasurer's Community Support Officers Office Accommodation HR restructuring HR equalities and leadership training Community Planning	-30 -18 -200 -100 -100 -145
-	2006/07 SAP benefit realisation	-350
-	Planned underspendings brought forward from 2005/06: Community Planning grant Older peoples' wellbeing project	90 85
-	Transfer to schools budget to fund purchase of occupational health services	-50
-	Virement from capital	10
-	Adjustment to fund cash flow costs relating to Community Action Hampshire payroll reimbursement	19	-1,437
Allocation for future inflation			1,475
=	Base budget 2006/07 at outturn prices		46,400

Annex 1 to Appendix 3

Policy and Resources

Calculation of base budget 2006/07

Parameters used in the compilation

1	Definitions
1.1	The first stage in the construction of the budget for 2006/07 is the preparation of a base budget. The rules used this year are similar to those applied in 2005/06, which are summarised below.
1.2	The 2006/07 base budget is defined as the current year's budget adjusted for: · allocations made for inflation in 2005/06 including the full year effect of the provision made for outstanding pay awards from 2004/05 · exclusion of expenditure included in the 2005/06 budget which was financed by the carry forward of planned underspendings from 2004/05, the one-off use of reserves or balances, or which was approved on a non-recurring basis · the revenue effect of past capital programmes, subject to its inclusion in the approved capital programme unless a specific Cabinet decision to the contrary · the full year effect of council-approved policies included in the 2005/06 original budget, which have been introduced part-way through the year · changes in income volumes which are not the result of policy decisions · correction of arithmetical errors in the current year's budget · The following specific items:
		Children		Variations arising directly from changes in the number of pupils in schools, pupils eligible for free meals and numbers of days in the school year
		Environment		Routine highway and street lighting maintenance arising from variations in road length
				Variations in waste disposal volumes
		Adults		Increased cost of joint finance schemes with health due to operation of the taper

Annex 2 to Appendix 3

Policy and Resources

Calculation of base budget 2006/07

Significant costs of inflation

1.	Variation between the actual cost of inflation in 2005/06 (as at November 2005) and the provision for inflation included in the 2005/06 budget
							£'000
	Additional cost of inflation						212
	=	Shortfall in the provision					212
2.	Significant costs of inflation between budgeted 2005/06 outturn prices and November 2005 prices
2.1	Pay awards
	Provision was originally made in 2005/06 for pay awards of 2.95% for teachers and other employee groups. No additional cost in 2006/07 of the pay awards agreed in 2005/06 is anticipated.						£1,441,000
	Provision was also included for the increase in
	The pay awards agreed were:
	Negotiating body: Effective date:						%
	Local Government Services Staff Hampshire Management Grades				1 April 2005 1 April 2005		2.95 2.95
2.2	Non pay inflation
	Provision was originally made in 2005/06 for a net amount of £593,000
	This was for general price increases of 2.5% (£838,000) offset by increased income to match inflation in gross expenditure
	Additional cost of price increases other than pay and net of income						£212,000
	The most significant variations within this additional cost are as follows: Repairs and maintenance Water Sewerage				Outturn 2005/06 to November 2005 % 7 15.8 18.5		Cost in 2006/07 £'000 177 13 12
3.	Allocation for future inflation						£'000
	Provision for all pay awards of 2.95% in 2006/07						1,601
	Increase in local government employers' pension contributions (from 250% to 275% of employee contributions)						598
	Provision for non-pay inflation at 2.5%						1,026
	Reduction for increased income and recharges						(1,750)
	Total allocation for future inflation						1,475

Annex 3 to Appendix 3

Policy and Resources

Calculation of base budget 2006/07

Significant variations

Major variations between the repriced budget 2005/06 and the base budget for 2006/07 at November 2005 prices contributing to the decrease of £1,437,000 (-3.1%) are set out below:

		Variations against the repriced 2005/06 budget
		£'000	%
Chief Executive:
	Deletion of non-recurring expenditure: County Council elections Older people's survey	-550 -50	-1.1 -0.1
	Deletion of one-off funding from 2004/05 underspend: Community Planning grant	-145	-0.3
	2005/06 planned underspend carried forward: Community Planning Older people's wellbeing	+90 +85	+0.2 +0.2
County Treasurer:
	Deletion of one-off funding from 2004/05 underspend	-30	-
	Budget transfer to Human Resources: payroll service centre	-150	-0.3
	SAP benefit realisation savings	-100	-0.2
Director of Human Resources:
	Deletion of one-off funding for the pay and benefits project in 2005/06 only	-200	-0.4
	Full year effect of 2005/06 growth: Hampshire Own Grown	+64	+0.1
	Deletion of one-off funding from 2004/05 underspend: HR restructuring HR Equalities and Leadership training	-100 -100	-0.2 -0.2
	Budget transfers: From County Treasurer for the payroll service centre To schools to fund the purchase of occupational health services	+150 -50	+0.3 -0.1
	SAP benefit realisation savings	-250	-0.5
Director of Property, Business and Regulatory Services:
	Deletion of one-off funding from 2004/05 underspend: Community Support Officers Office Accommodation	-18 -200	- -0.4
	Full year effect of 2005/06 growth: Office Accommodation	+200	+0.4

Appendix 4

Policy and Resources

Proposals for redeployment 2006/07 and 2007/08

			2006/07	2007/08	Staffing (FTEs)
					2006/07	2007/08
			£'000	£'000
	Redeployment proposals:
	Human Resources: Occupational Health services to schools funded by increased income Pay and Benefits Team funded from the job evaluation transitional costs reserve Property, Business and Regulatory Services: Affordable and key worker housing strategy funded from capital receipts Corporate Procurement Unit funded by corporate procurement savings		150 295 50 100	150 - 50 100	3 - 1 2	3 - 1 2
	Total redeployment proposals		595	300	6	6

Appendix 5

Policy and Resources

Efficiency statement

		2005/06		2006/07		2007/08
		AES £'000	Budget £'000	AES £'000	Budget £'000	AES £'000	Budget £'000
Cashable efficiency improvements:
a	AES eligible and budget saving Procurement savings: Chief Executive County Treasurer Human resources Property, Business and Regulatory Services Corporate Procurement Unit	24 14 24 132	24 14 24 132	100	100
b	AES eligible but no budget saving Cost of increments: Chief Executive County Treasurer Human resources Property, Business and Regulatory Services Regulatory Services Corporate Procurement Unit SAP benefit realisation savings: County Treasurer Human Resources Interest saved, using capital receipts instead of borrowing IT Services - keeping price increases below inflation	98 190 113 224 88 250 50		98 190 113 224 300 100 250 975 238		98 190 113 224 100 250 350 325
c	Budget saving but AES ineligible: None identified
Non-cashable efficiency improvements: none identified
Total of all efficiency improvements		1,207	194	2,588	100	1,650	0

Notes

Cashable efficiency improvements are defined in the annual efficiency statement (AES) as occurring when:

- inputs (money, people, assets etc) are reduced but outputs remain unchanged

- the price of inputs (procurement, labour costs etc) are reduced but outputs remain unchanged.

A reduction in price of inputs is measured in general against the increase in the Gross Domestic Product deflator (likely to be around 2.5% in 2006/07). Thus if the price of inputs remains constant there is a gain of 2.5%.

a efficiency savings that count against the AES and produce budget savings - this will include general procurement savings against the budget provision of a 2.5% increase in prices

b efficiency savings that count against the AES, but do not produce a budget saving because the efficiency is avoiding unbudgeted cost e.g. staff reductions made to absorb increments, procurement efficiencies where costs are still exceeding 2.5%, capital receipts or developer contributions applied to avoid unplanned additional borrowing

c efficiency savings that do not meet the AES criteria but produce a budget saving. These will include efficiency savings that relate to LEA services to schools (that are outside the scope for AES) and fortuitous savings that are not strictly efficiencies

Non-cashable efficiency improvements are defined in the AES as occurring when:

- increased outputs or improved quality of service are obtained for the same inputs

- increased outputs or improved quality achieved at a rate that exceeds the increase in inputs.

Appendix 6

Policy and Resources

Review of income 2006/07

		Current charge	Total income	Date of last review	Planned date for next review	Proposed increase (if proposed now)	Is charge set to recover full cost Yes/No	Is charge subject to an assessment scale determined locally? Yes/No	Additional income from increased or new charge
		£	£			£			£
1	Mandatory/National charges
	Chief Executive
	- Commons Registration		72,600	1 Oct 2003	-	-	-	No	-
	- Recovery of legal costs		64,600	n/a	n/a	n/a	n/a	n/a	-
	Registration Service
	- Statutory registration fees		841,400	Annual	Nov 06	-	-	No	n/a
2	Discretionary charges
	Chief Executive
	- Legal fees for Police		0	-	-	-	-	-	-
	- Legal fees for Fire		11,300	Apr 05	Apr 06	n/a	Yes	No	-
	- Legal fees for other bodies		42,600	Annual	Apr 06	n/a	Yes	No	-
		Current charge	Total income	Date of last review	Planned date for next review	Proposed increase (if proposed now)	Is charge set to recover full cost Yes/No	Is charge subject to an assessment scale determined locally? Yes/No	Additional income from increased or new charge
		£	£			£
	County Treasurer
	- Contractual Income	Various	2,989,300	Annual	Next Year	-	-	-	-
	Property, Business and Regulatory
	- Property Services		518,500	-	-	-	Yes	No	n/a
	Office Accomodation
	- Rent and service charges from other bodies		377,650	-	Various	-	Yes	No	n/a
	County Farms
	- Agricultural lettings		280,300	Per Agreements	-	-	Yes	No	n/a
	- Other rents and income		110,400	Per Agreements	-	-	Yes	No	n/a
	Sites for gypsies and travellers
	- Rents		124,600	May 05	May 06	-	No	No	n/a
	- Utilities		29,800	May 05	May 06	-	No	No	n/a
	Sir Harold Hillier Gardens
	- Entrance fees		336,000	2005	2006	-	Yes	No	n/a
	- Conference lettings		145,000	2005	2006	-	Yes	No	n/a
		Current charge	Total income	Date of last review	Planned date for next review	Proposed increase (if proposed now)	Is charge set to recover full cost Yes/No	Is charge subject to an assessment scale determined locally? Yes/No	Additional income from increased or new charge
		£	£			£
	- Rents (gardeners)		80,000	2005	2006	-	Yes	No	n/a
	- Other income		183,700	2005	2006	-	Yes	No	n/a
	Corporately held land
	- Great Hall sales		69,900	Various	Various	-	Yes	No	n/a
	- Commercial and other rents		1,077,000	As lease allows	As lease allows	-	Yes	No	n/a
	Registration Services
	- Fees for marriage in approved premises		724,900	Annual	2006/07	-	Yes	No	n/a
3	Services provided free where charges could be made
	- None
			8,079,550

·

Appendix 7

Policy and Resources -Workforce levels and costs

	2005/06 revised		2006/07
Posts included in base budget (FTE)		1,597		1,636
Average cost per FTE		£31,722		£32,167
Salaries (including employer's national insurance and pension contributions)	£50,660,000		£52,624,800
Temporary/fixed term/casual staff	£1,296,000		£778,100
Agency staff	£868,500		£66,000
Additional hours	£393,600		£276,200
Total workforce costs in base budget		£53,218,100		£53,745,100
New posts proposed (FTE) (See appendix 4 for details)		-		6
Full year cost of new posts at midpoint		-		193,000
Deletion of posts proposed (FTE) (see appendix 4 for details)		-		-
Full year saving from deleted posts at midpoint		-		-
Revised FTE establishment		1,597		1,642
Revised cost of establishment		£53,218,100		£53,938,100

Appendix 8

Policy and Resources

Revenue Budget 2006/07

Reconciliation of the original 2005/06 budget on the following pages with the 2005/06 budget in the published budget book.

	£'000
Net expenditure on page B37 of the published budget book	26,556
Adjustments for items not included in the budget book: Recharges to other services	23,163
Adjustments made to the original budget figures:	675
Total net expenditure for 2005/06 original budget shown overleaf on page B37	50,394

Appendix 9

Policy and Resources

Business units - summarised trading accounts 2006/07 and 2007/08

		Original budget 2005/06	Revised budget 2005/06	Base budget 2006/07	Provisional forecast 2007/08
		£'000	£'000	£'000	£'000
	Hampshire Printing Services Trading Account
	Income	-2,354	-2,504	-2,599	-2,664
	Expenditure	2,322	2,466	2,551	2,615
	Net Operating (surplus)/deficit	-32	-38	-48	-49
	Reserve Account
	Surplus brought forward	-305	-301	-413	-535
	Surplus	-32	-38	-48	-49
	Depreciation	-97	-74	-74	-66
	Funding of capital expenditure	96	-	-	-
	Surplus carried forward	-338	-413	-535	-650
	IT Services Trading Account
	Income	-33,034	-31,045	-32,625	-33,000
	Expenditure	32,732	31,712	32,462	33,000
	Net Operating (surplus)/deficit	-302	667	-163	-
	Reserve Account
	(Surplus)/deficit brought forward	302	-507	160	-3
	(Surplus)/deficit	-302	667	-163	-
	(Surplus)/deficit carried forward	-	160	-3	-3
	Caretaking and Cleaning Support Service Trading Account
	Income	-390	-400	-402	-402
	Expenditure	390	396	402	402
	Net Operating (surplus)/deficit	-	-4	-	-
	Reserve Account
	(Surplus)/deficit brought forward	-106	-122	-126	-126
	(Surplus)/deficit	-	-4	-
	(Surplus)/deficit carried forward	-106	-126	-126	-126
	County Supplies Trading Account
	Income	-9,446	-9,791	-9,865	-10,111
	Expenditure	9,394	9,707	9,771	10,015
	Net Operating (surplus)/deficit	-52	-84	-94	-96
	Reserve Account
	(Surplus)/deficit brought forward	-947	-987	-1,086	-987
	(Surplus)/deficit	-52	-84	-94	-96
	Depreciation	-14	-15	-15	-16
	Funding of developments	215	-	208	-
	(Surplus)/deficit carried forward	-798	-1,086	-987	-1,099
	Segensworth Unit Factories
	Income	-15	-20	-20	-20
	Expenditure	-	-	-	-
	Net Operating (surplus)/deficit	15	20	20	20
	Reserve Account
	(Surplus)/deficit brought forward	-245	-220	-240	-260
	(Surplus)/deficit	-15	-20	-20	-20
	(Surplus)/deficit carried forward	-260	-240	-260	-280
	Former Direct Service Organisations HC3S Trading Account
	Income	-17,288	-16,169	-16,808	-17,745
	Expenditure	17,165	16,278	17,031	17,806
	Net Operating (surplus)/deficit	-123	109	223	61
	Hampshire Cleaning Services Trading Account
	Income	-547	-557	-564	-578
	Expenditure	547	547	564	578
	Net Operating (surplus)/deficit	-	-10	-	-
	Hampshire Transport Management Trading Account
	Income	-6,918	-7,076	-7670	-7862
	Expenditure	6,839	6,928	7,568	7,757
	Net Operating (surplus)/deficit	-79	-148	-102	-105
	Former DSO Reserve Account
	Surplus brought forward	-436	-750	-927	-762
	(Surplus)/deficit for the year	-202	-49	121	-44
	ADD: Depreciation	-80	-210	-156	-156
	LESS: Funding of capital expenditure	330	82	200	250
	Surplus carried forward	-388	-927	-762	-712

Appendix 10

Policy and Resources

Provisional budget 2007/08

The following table shows the progression from the 2006/07 proposed budget at outturn prices to the provisional budget 2007/08 at outturn prices.

			£'000	£'000
Proposed budget 2006/07 at outturn prices				46,400
-	Base budget variations:
-	Exclusion of non-recurring 2006/07 expenditure: In-tech grant Community Safety Officers		-40 -116
-	Exclusion of 2005/06 underspendings used in 2006/07: Community Planning grant Older people's well being		-90 -85
-	SAP benefit realisation savings		-600	-931
Allocation for future inflation				1,337
Provisional budget 2007/08 at outturn prices				46,806