AT A MEETING of the CABINET of HAMPSHIRE COUNTY COUNCIL held at The Castle, Winchester on Friday 10 February 2006

Chairman:

p Councillor T.K. Thornber, CBE

Councillors:

Also present: Councillors Mrs C.A. Bailey (part of meeting); A.P. Collett, B.D. Dash; A.G. Dowden; Dr. R.J. Ellis and Mrs C.A. Leversha.

95. APOLOGIES

There were no apologies.

96. 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.

100. MINUTES

The minutes of the meeting held on 23 January 2006 were confirmed as a correct record.

101. CHAIRMAN'S COMMUNICATIONS

The Chairman welcomed to the meeting Graham Duncan from the Local Government Team at the Office of the Deputy Prime Minister and Jonathan Mills of the Local Government Team at HM Treasury.

102. DEPUTATIONS

There were no deputations.

103. REVENUE BUDGET AND PRECEPT 2006/07 AND PROVISIONAL BUDGET 2007/08

The Cabinet considered the report of the County Treasurer (Item 6 in the Minute Book) setting out the proposed revenue budget and precept for 2006/07 and the provisional budget for 2007/08. In opening the discussion, the Chairman drew attention to three main areas of constraint in which the County Council is operating:

· only a 0.2% increase in Revenue Support Grant (was 2% increase but this did not reflect the loss of two specific grants: access and capacity for delayed discharges from hospitals, and safeguarding children), this being the second lowest level of grant per head for County Councils

· threat of a 5% capping level

· £38m loss of grant support from 2008/09

Despite the low increase in revenue support grant, a 4.7% council tax level is possible due to a higher surplus on collection funds and savings (including Gershon efficiency savings) totalling £10.8m. Attention was drawn to a community workshop held to consult members of the public, who felt that a council tax increase of just under 5% was acceptable.

The County Treasurer expanded on the report and provided an executive summary of the overall position; changes to the way grant is calculated; savings and redeployments; growth proposals for 2006/07 (£16.9m) identified for services which will be met in full by savings (£10.8m), a growth in budget guidelines (£3.4m) and a further cash limit addition for adult social care (£2.7m); other one-off payments and additional corporate priorities including the introduction of Hampshire Action Teams (HATs). He particularly emphasised the pressure on adult social care and the implications for the longer term in respect of further grant losses. There was a critical need to start saving now to offset these pressures and accordingly it was proposed that the grant equalisation reserve be built up.

During the course of a full and detailed discussion, Members expressed strong concerns in respect of the low level of grant support received and the implications of further substantial losses in 2008/09. The particular pressures in adult social care were noted and the Cabinet would continue to lobby Government about the under-funding of these services. However, it was recognised that schools had received a good settlement, which was good news. Despite the difficulties highlighted and coupled with the disappointment of the loss of the specific grants detailed earlier, Members were determined to continue to provide a full range of quality services for the people of Hampshire.

The Cabinet adopted the recommendations set out in the report which would now be submitted to the County Council for approval at its meeting scheduled for 22 February 2006. A copy of the decision sheet is attached to these minutes as Appendix 1.

104. CAPITAL PROGRAMME 2006/07 TO 2009/10

The Cabinet considered the report of the County Treasurer (Item 7 in the Minute Book) setting out the proposed capital programme for 2006/07 to 2009/10 based on the guidelines agreed by the Cabinet on 19 December 2005.

The report detailed the background to the proposed capital programme, which collates the service programmes prepared by the Executive Members. The main points of the report were:

· the starts programmes proposed are in line with the guidelines set by the Cabinet in December 2005, together with schemes supported by Government grant and borrowing allocations


· the total value of the programme over the four-year period is £525m

The County Treasurer drew attention to a short term delay in obtaining capital receipts in 2005/06, for which disposals are expected to be completed in 2006/07, and the higher than allowed for level of professional fees required on capital receipt reinvestment schemes and capital building projects. The County Treasurer and the Director of Property, Business and Regulatory Services would be monitoring the situation and reviewing the level of provision for fees to ensure the successful delivery of building projects in future capital programmes. The County Treasurer also highlighted the need to consider whether the County Council could continue with its policy to take up Government supported borrowing approvals if the Government does not change the basis for its revenue support towards the consequential capital financing costs.

During the course of a full discussion, the Cabinet noted the points raised by the County Treasurer. The Cabinet adopted the recommendations set out in the report which would now be submitted to the County Council for approval at its meeting scheduled for 22 February 2006. A copy of the decision sheet is attached to these minutes as Appendix 2.

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

1. Summary

1.1 The accompanying report sets the scene for decisions on the 2006/07 revenue budget and council tax, based on the budget guidelines approved on
19 December 2005. As a result of the two year grant settlement it is also possible to set a provisional budget for 2007/08. The three year budget forecast will be updated in September 2006. The 2006/07 budget takes account of subsequent developments and the reports back by Executive members after scrutiny by the relevant Policy Review Committees. The council tax rise is 4.7% as set in the guidelines and within the Government's capping limit of 5%.

1.2 The following decisions are sought, based upon the recommendations from the Leader and Cabinet to the County Council for the 2006/07 budget and council tax that:

1 the revised estimates 2005/06 (Appendix 2) be approved

2 £565,000 of service underspendings in 2005/06 be carried forward to 2006/07 (Table 2)

3 the base budget 2006/07 (Appendix 3) be approved

4 a provision for future inflation and contingencies of £12.6m including £4.8m for the waste management contract and £7.5m towards the continuing costs of job evaluation be approved (Table 23)

5 Executive Members prepare provisional contingency plans to reduce staffing and improve productivity as part of a benefits realisation strategy to offset a further £2.5m of continuing costs anticipated to arise from job evaluation (paragraph 11.13)

6 Executive Members also prepare contingency plans to deal with the resource transfer required when the contact centre is set up (paragraph 11.8)

7 the cash limit for adult social care be increased by £2.7m to eliminate its shortfall against the budget guidelines in 2006/07

8 the additional pressures and growth proposals from Executive Members totalling £16.9m be approved (Table 9 and Appendix 4)

9 the cash efficiency savings and redeployment proposals of £10.8m put forward by Executive Members, be approved (Table 10, paragraph 6.1 and Appendix 4)

10 additional one-off spending of £3m in 2006/07 (Table 14) and continuing spending of £690,000 be approved (Table 15)

11 the annual review of charges and maximisation of income across services (Table 12 and Appendix 6) be approved

12 adjustments to reserves as set out in paragraph 11 and Table 18 and the overall level of reserves (Appendix 10) be approved

13 a budgeted contribution of £1.8m to balances and the estimated level of balances at 31 March 2007 of £10.9m (Table 20) be approved

14 the workforce implications of the proposed budget 2006/07 (Appendix 8) be agreed

15 the budget for 2006/07 as summarised in Tables 21 to 25, set out in detail in Appendix 7 and including the adjustments in recommendations 7 to 13 of the report, be approved

16 the provisional budget for 2007/08 as set out in Appendix 9 be approved

17 the treasury management and the annual investment strategies for 2006/07, as set out in Appendix 11, be approved

18 it be a recommendation to Council that

a) the Treasurer's report under Section 25 of the Local Government Act 2003 be taken into account when the Council determines its budget and precept for 2006/07 (Appendix 13)

b) the revenue budget for 2006/07 (as set out in the attached draft budget book) and the provisional budget for 2007/08 be approved

c) the total budget requirement for the general expenses of the County Council for the year beginning 1 April 2006 be £568,360,000

d) the County Council's band D average council tax for the year beginning 1 April 2006 be £910.62

e) the County Council's council tax for the year beginning 1 April 2006 for properties in each tax band be:

	£
Band A	607.08
Band B	708.26
Band C	809.44
Band D	910.62
Band E	1,112.98
Band F	1,315.34
Band G	1,517.70
Band H	1,821.24

f) precepts be issued totalling £ 444,717,358.55 on the billing authorities in Hampshire, requiring the payment, in such instalments and on such dates set by them and previously notified to the County Council, in proportion to the taxbase of each billing authority's area as determined by them and as set out below:

Basingstoke and Deane Borough Council	60,116.70
East Hampshire District Council	46,626.44
Eastleigh Borough Council	42,628.47
Fareham Borough Council	41,536.00
Gosport Borough Council	26,476.40
Hart District Council	36,860.00
Havant Borough Council	42,327.00
New Forest District Council	71,105.30
Rushmoor Borough Council	29,980.50
Test Valley Borough Council	44,503.00
Winchester City Council	46,207.85

g) that the annual investment strategy (section 6 to Appendix 11) be approved

h) the prudential indicators (annex to Appendix 12) be approved.

2. Reason

2.1 The full County Council must agree the 2006/07 revenue budget and set the council tax for 2006/07 at its meeting on 22 February 2006. The Leader will present his budget speech and recommendations at that meeting. This report provides the background to those budget decisions and presents the recommendations from the Leader and Cabinet to the County Council.

2.2 The County Treasurer under Section 25 of the Local Government Act 2003 is also required to report to the full Council on the:

· robustness of the estimates for 2006/07

· adequacy of the financial reserves in the budget.

2.3 These decisions support all the aims of the corporate strategy as it provides the financial resources for:

· Aim 1 - maximising life opportunities

· Aim 2 - stewardship of the environment

· Aim 3 - achieving economic prosperity

· Aim 4 - building strong and safe communities

· Aim 5 - improving services

· Aim 6 - developing councillors and staff

3. Other options considered and rejected

3.1 Other options are not available as far as process and timetable are concerned, but it is expected that the leaders of the opposition parties will wish to present their own recommendations on the budget and council tax to the County Council as amendments to these proposals.

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

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

6. Reason for the matter being dealt with if urgent

6.1 To meet the County Council budget decision-making timetable.

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

Contact: Jon Pittam, ext 7400, e-mail: [email protected]

1. Summary

1.1 The accompanying report sets out for approval the proposed capital
programme for 2006/07 to 2009/10, based on the guidelines agreed by Cabinet
on 19 December 2005 and the support for capital schemes recently announced
by the Government. The proposals take account of the County Council's
capital strategy and the Prudential Code for Capital Finance in Local
Authorities including the capital financing position, the level of debt
outstanding and the consequences for the revenue budget and council tax.

1.2 The following decisions are sought, based on the recommendations of the Leader and Cabinet to the County Council, for the capital programme for 2006/07 to 2009/10:

1 That the policy on the use of unsupported borrowing be amended to require services to finance the cost of interest and the statutory minimum revenue provision on all `bridging' loans in the years that such costs are incurred (paragraph 3.10 of the main report)

2 That the County Council continues to lobby the Government to provide full revenue grant funding for Government supported borrowing allocations or provide its support as capital grants (section 4)

3 That, if the Government does not change the basis for its capital support as outlined in recommendation 2, the County Council limits the use of Government supported borrowing allocations from 2007/08 onwards to the amount that will replace debt falling out as a result of normal debt repayment, so that the total level of annual loan charges rises by no more than the overall increase in the revenue budget (paragraph 4.9)

4 That unsupported borrowing be used to meet the temporary shortfall of resources in 2005/06, estimated to be £9.3m, to be repaid from estimated surplus resources in 2006/07 (paragraph 2.4)

5 That the Director of Property, Business and Regulatory Services review and update the projections of capital receipts and report to Cabinet during summer 2006 (paragraph 2.4)

6 That the County Treasurer and Director of Property, Business and
Regulatory Services review the basis for estimating the cost of fees and
report to Cabinet during summer 2006 on proposals for bringing future
years' capital expenditure flows into line with available resources
(paragraph 2.5)

7 That the executive member for Adult Social Care be asked to report to an early meeting of Cabinet on the outstanding financing of the following schemes, as originally requested by Cabinet in February 2005, and that the approval of the Adult Services' capital programme be deferred until solutions for the financing shortfall on these schemes has been agreed by Cabinet (paragraph 7.2):

· £1.32m for Social Services' contribution towards the cost of the improvements already made to residential homes for older people

· £0.375m for the replacement day centre for older people in the Hythe and Dibden area

· £1.7m for the shortfall on the SWIFT social care IT system

8 That Children's Services schemes and resources totalling £7.277m be deferred from the 2005/06 capital programme to 2006/07 (paragraph 8.2)

9 That unsupported borrowing of £0.547m be approved to finance part of the cost of the replacement special school at Sundridge School, Havant to be repaid from part of the anticipated capital receipt from the sale of land at Woolston Road, Havant, subject to the requirement in recommendation 1 to fund the interest and repayment costs on an annual basis (paragraph 8.12)

10 That unsupported borrowing of up to £11.3m, including the Sundridge School scheme, be approved in principle for schemes in the Children's Services capital programme for 2006/07, subject to further reports to Cabinet on specific proposals and the requirement in recommendation 1 to fund the interest and repayment costs on an annual basis (paragraph 8.13)

11 That it be a recommendation to Council that:

a) Cabinet be authorised to determine any further use of unsupported borrowing within the County Council's agreed prudential framework for capital finance

b) approval of the capital programme for Adult Services for 2006/07 to 2009/10 be deferred pending agreement by Cabinet of solutions for the outstanding financing shortfalls arising from the existing schemes for improvements to residential homes for older people, the proposed replacement day centre for older people in the Hythe and Dibden area, and the SWIFT social care IT system

c) the remainder of the capital programme for 2006/07 be approved as set out in Appendix 4 of the accompanying report and subject to the conditions set out in section B.3 of the County Council's Financial Procedures and, where appropriate, to the approval of the executive member for Policy and Resources to proposals by executive members to retain more than a 25% share of capital receipts

d) the remainder of the capital programmes for 2007/08 to 2009/10 be approved as set out in Appendix 4 for the purpose of undertaking design work (including the preparation of feasibility and design project appraisals)

e) expenditure on preliminary design and planning work for major transport schemes be permitted when they have achieved a place in the County Council's Local Transport Plan, subject to the cost being met within existing Government allocations

f) authority be given to incur expenditure on land purchases as follows:

g) up to the sum specified in respect of sites still required for the schemes included in the capital programme for the period 2006/07 to 2009/10 provided that the relevant scheme has been the subject of a feasibility or design project appraisal approved by the relevant executive member

h) up to the amount included in the 2006/07 programme in respect of advance and advantageous land purchases.

2. Reason

2.1 The full County Council must agree the capital programme for 2006/07 to 2009/10 at its meeting on 22 February 2006. The Leader will present his budget speech and recommendations at that meeting, including proposals for the capital programme. This report provides the background to the capital programme and proposes the recommendations from the Leader and Cabinet to the County Council.

2.2 These decisions support all the aims of the corporate strategy as the capital programme provides financial resources for:

Aim 1 - maximising life opportunities

Aim 2 - stewardship of the environment

Aim 3 - achieving economic prosperity

Aim 4 - building strong and safe communities

Aim 5 - improving services

Aim 6 - developing councillors and staff

3. Other options considered and rejected

3.1 Other options are not available as far as process and timetable are concerned, but the leaders of the opposition parties may wish to present their own recommendations on the capital programme to the County Council as amendments to these proposals.

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

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

6. Reason for the matter being dealt with if urgent

6.1 To meet the County Council budget decision-making timetable.

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