Contact: Jon Pittam, ext 7400; [email protected]

With the concurrence of the Chairman under Section 100(B)(4)(a) of the Local Government Act 1972, this matter is included on the agenda in order to meet the County Council budget decision making timetable.

1 Summary of overall position

1.1 This report proposes the recommendations to County Council on the 2006/07 budget and the council tax, based on the budget guidelines approved on 19 December 2005. The proposals take account of the consideration of the guidelines by the relevant Policy Review Committees and Executive Members.

1.2 The budget guidelines were based upon a budget of £566m and a council tax rise of 4.7%. The proposed budget is raised to £568m (a 5.2% increase) but results in the same council tax uplift of 4.7%. This is possible because of a higher surplus on collection funds (which increases the income from council tax) and total savings of £10.8m.

1.3 The council tax rise has been set within the Government's capping limit of 5%. There have been no other significant changes in income, but there was a loss of £52,000 Government grant in the final settlement.

1.4 The Government grant increase remains 2% for 2006/07 and 2.7% for 2007/08. This overstates the true position as two specific grants have been withdrawn (access and capacity - for delayed discharges from hospitals - and safeguarding children). Taking these adjustments into account the effective grant increase is 0.2%. This is below inflation and below the cost and other pressures, especially on adult social care and waste management, impacting on the County Council. In broad terms most of the budget increase falls on the council tax.

1.5 The Government has not taken any account of the representations the County Council made on its provisional settlement. There remains a damping grant from the general grant floor of £24m at the end of 2007/08 and a further loss of formula grant within adult social care of £14m. A potential cliff edge of £38m results and the budget strategy has provided some transitional protection against this through the grant equalisation reserve.

1.6 However the reserve can only be used once and plans need to be made to reduce spending now, and into the future, within the constrained increase (almost non-existent) in Government grant support and the 5% capping limit. Although the grant increase for 2007/08 is known, figures for 2008/09 and beyond await the results of the next public spending round (comprehensive spending review 2007) and the outcome of the Lyons inquiry into the future function, form and funding of local government. The current grant system will see a further loss of grant of up to £38m over time - in practice because of the operation of the grant floor/damping arrangements, a grant rise of between 0 - 2% per annum at best can be anticipated. As adult social care is the largest budget now that schools are funded by the new 100% specific grant (dedicated schools grant or DSG) and as this is the service losing formula grant support, it is inevitable that pressures will be greatest here given the other demographic and cost pressures. This is a national problem, but made worse for Hampshire by the redistribution of grant away to other authorities outside the South-East.

1.7 The tight grant position for services contrasts starkly with the 6.4% increase in cash terms in the DSG for schools in 2006/07. This allows cost pressures of £18.4m to be absorbed, together with £17.5m new growth proposals for Hampshire's schools. There is substantial real growth of at least 3.7% per pupil, with a total increase in the schools' budget of £35.9m.

1.8 Budget guidelines for other services allowed a base budget roll forward (broadly an inflation uplift only of 2.95% for the national pay award and 2.5% for prices) together with growth of £3.4m for personal social services to reflect anticipated pressures. This was based on the national spending plans, but not supported in grant terms in Hampshire. £0.9m was allocated to adult social care and £2.5m to children's services (£2.7m for adults and £1.2m for children's in 2007/08).

1.9 Executive members have submitted budgets within these guidelines, after scrutiny and review by the Policy Review Committees, with the exception of a £2.7m shortfall for adult social care in 2006/07 only. It is proposed to add £2.7m to the guideline cash limit to reflect this shortfall. Adult social care will still be required to find total savings of £6.4m in 2006/07, a stretching target which may not all be achieved in the first year.

1.10 Total growth proposals of £16.9m in 2006/07 (and £7.5m in 2007/08) have been identified for services. These growth proposals will be met in full by the further cash limit addition of £2.7m for adult social care and by:

		£m
·	efficiency savings	5.1
·	other savings	5.7
·	total savings	10.8
·	growth in budget guidelines	3.4
·	additional growth now added	2.7
		16.9

1.11 In addition to the increase in the adult social care cash limit of £2.7m in 2006/07, it is also proposed to commit additional one-off amounts in 2006/07 towards libraries (£220,000) and development of a bid for yellow bus funding (£60,000).

1.12 A number of corporate priorities have also been identified as follows:

		£m
·	Hampshire action teams, devolved funding for local roads and pavements	780
·	met by virement from Environment	-780
·	democratic process	100
·	repairs and maintenance	120
·	additional mobile team of 8 accredited community safety officers	300
·	other (internal audit, new members, older persons and equalities)	170
		690

1.13 There are three imperatives for reserves and balances

· rebuild capacity in the grant equalisation reserve because of the grant floor (£38m total after 2007/08)

· provide for pay and benefits/job evaluation which must be implemented under the single status agreement by March 2007 - to cover both recurring costs and back pay

· cover the potential risk of overspending, because of the tight savings targets and time required to reposition services, particularly adult social care.

1.14 The changes in reserves and the rationale for them are set out in the report.

1.15 It is also proposed to make a budgeted contribution of £1.8m to balances to deal with identified risks. Balances will remain very low in percentage terms - at 1.9%.

1.16 The one-off additions proposed in 2006/07 will be met by the surplus on the collection fund and from balances. The contribution to balances will be met by higher interest on balances, after meeting extra unsupported borrowing costs.

1.17 The comparison of the 2006/07 budget proposal with 2005/06 requires a number of adjustments because of changes in funding which are described in the report. The adjusted budget requirement for 2005/06 is £540.1m (because of the introduction of DSG, and other changes to formula and specific grant) rather than the 2005/06 budget requirement which was £1,107.9m

Table 1 : Overall Summary of 2006/07 budget proposal

	2005/06	2006/07	Increase
	£m	£m	%
Budget requirement	1,107.9	568.4	* 5.2
Revenue support grant	-304.8	-19.5
National non-domestic rates	-380.8	-100.9
Collection fund	-1.8	-3.3
Precept	420.5	444.7	5.8
Tax base, Band D dwellings	483,613	488,368	1.0
Council tax, Band D	£869.40	£910.62	4.7

* 5.2% on adjusted 2005/06 budget base of £540.1m

1.18 The majority of proposed council tax rises for other counties appears to be close to the 5% capping limit. Despite the difficult situation, the extent of reductions required in Hampshire County Council, appears to be less drastic and not so volatile as others because of the underlying financial stability and forward planning. It is anticipated that the County Council's council tax will remain within the lowest quartile. This is despite the County Council having the second lowest formula grant per head in 2006/07 (after floors damping) and the lowest relative needs grant per head. On the other hand under the Comprehensive Performance Assessment (CPA) 2005 - The Harder Test, the Audit Commission has judged the Council to be improving well and performing at the 4 (out of 4) star level. This is based upon continued achievement of high performance across most services that matter to residents, the trend of improvement shown by 60% of key performance indicators over the last 3 years and the effective plans in place for future performance. The Council therefore continues to provide high quality services with a council tax in the lowest quartile in line with the corporate strategy.

1.19 This summary paragraph contains the key issues in the 2006/07 Budget. The remainder of the report provides more detail and consists of the following paragraphs:

· Revised estimates 2005/06 (paragraph 2)

· Final local government finance settlement 2006/07 (paragraph 3)

· 2006/07 base budget (paragraph 4)

· budget guidelines, redeployment of resources and issues arising (paragraph 5)

· efficiency savings, value for money, and efficiency plan (paragraph 6)

· annual review of charges and maximisation of income (paragraph 7)

· workforce plan (paragraph 8)

· additional resources and budget proposals (paragraph 9)

· performance and risk management (paragraph 10)

· earmarked reserves (paragraph 11)

· balances (paragraph 12)

· overall budget proposals (paragraph 13)

· 2007/08 provisional budget plan (paragraph 14)

· treasury management and annual investment strategies for 2006/07 (paragraph 15)

· prudential code for borrowing purposes (paragraph 16)

· Local Government Act 2003, Section 25 Statement (paragraph 17).

1.20 Appendices to the report are:

1 Final local government finance settlement 2006/07 (Blue)

2 Revised estimates 2005/06 (Salmon)

3 Base budget 2006/07 (Pink)

4 Proposals for additional spending pressures and redeployment of resources in 2006/07 and 2007/08 (Yellow)

5 Proposals for efficiency improvements in 2006/07 and 2007/08 (Blue)

6 Review of income 2006/07 (White)

7 Budget 2006/07 - detailed analysis (Green)

8 Workforce statement and summary of workforce budgets (Blue)

9 Provisional budget 2007/08 (Pink)

10 Summary of reserves and balances in 2006/07 and 2007/08 (Green)

11 Treasury management and annual investment strategies for 2006/07 (Yellow)

12 Prudential indicators (Blue)

13 Treasurer's report on risks, reserves and balances (Section 25 of the local Government Act 2003) (Pink)

14 Past trends (Salmon)

1 Revised Budget 2005/06

Service budgets

1.1 There is no formal review of the revised budget as budgets are monitored regularly during the year and changes, with required action, reported as they occur. All services are controlling estimates to their cash limits for 2005/06 with a risk of a year end overspend of £2m (or up to £4m) on adult social care from additional service pressures. Action is being taken to manage spending back down to the cash limit, and a contingency of £2m has been set aside within adult social care's cash limit in 2006/07 to allow any overspend to be carried forward and recovered.

2005/06 carry forwards

1.2 Other services are showing projected underspendings totalling £565,000 which are recommended for carry forward to 2006/07. It is proposed to transfer the underspending on children's services to a new change for children's reserve to which future contributions are planned in 2006/07 and 2007/08.

Table 2: Proposed service carry forwards to 2006/07

Capital financing and interest on balances

1.3 Higher capital financing costs from additional borrowing incurred in 2004/05 are more than offset by lower interest costs on capital financing. Increased interest on balances, which are higher than budgeted, and improved cash flow have resulted in more income.

Amending reports

1.4 The Government has adjusted revenue support grant in 2006/07 for errors made in estimating population figures in the grant calculations for 2004/05 and 2005/06. These reduce the Council's grant by £1.7m, but allowance for £1.2m of this cost had been made in closing the accounts for 2004/05.

1.5 The net effect of these changes is a saving of £2.6m which will accrue to balances.

Table 3: Underspending on other budgets

1.6 Details of the variations on service budgets and other budgets are set out in Appendix 2.

2 2006/07 Local Government finance settlement

2.1 The Cabinet received a presentation on the provisional settlement on 19 December 2005. There has been a reduction of £52,000 in Government grant in the final settlement announced on 31 January 2006.

Consultation response

2.2 A general response was made by the Office of the Deputy Prime Minister to the County Council's representations on the provisional settlement. In further reply another letter was sent pointing out that 0.2% effective grant support was not a generous settlement and did not keep pace with either general inflation (2.7%) or the national pay award (2.95%). Furthermore no response had been made to the Council's specific points or to the concern about the eventual grant loss of £38m. Copies of this correspondence are set out as annexes to Appendix 1 which contains the full details of the final settlement.

Key points

2.3 Cabinet will recall that Government now propose a system "that deals in honest currency - cash grant - not fanciful assumptions about spending". So comparisons with formula spending shares are no longer possible.

2.4 The Government also expects "to see average council tax increases in each of the next two years of less than 5%. There is no excuse for excessive increases". 5% is the capping limit.

2.5 The Council's grant allocations are shown next

Table 4: Government grant

2.6 The general grant floors in 2006/07 and 2007/08 contribute £21.6m and £23.3m respectively to the total grant allocated. Total grant loss from the end of 2007/08 is £38m including the £14.5m damping within the relative needs amount for adult social care.

2.7 Formula grant support is now about 21% of the Council's budget compared with 62% in 2005/06, mainly as the result of the introduction of DSG. Council tax payers therefore will fund about 80% of the budget from 2006/07 onwards. This makes the Council less susceptible to gearing from marginal changes in grant support. However as potential grant increases may be no more than retail price inflation at best for the foreseeable future, and more likely between 0 - 2%, it does mean that the majority of future budget increases will be met by local council tax payers within a 5% capping regime.

Adjusted base

2.8 The 2005/06 budget needs to be adjusted in line with grant changes to enable comparisons between 2005/06 and 2006/07 on a consistent basis as shown below

Table 5: 2005/06 budget adjustments

2.9 Similar adjustments are made to formula grant, to calculate the 2% cash increase. Formula grant was not however adjusted for two more specific grants which were withdrawn, in calculating the adjusted grant for the floor calculations. This method of removing these grants without adjusting formula grant means that the grant floor increase of 2% is only effectively 0.2% for Hampshire (or about £0.2m in cash terms).

3 2006/07 base budgets

3.1 The base budget assumptions make allowance for pay and price increases. The overall base budget is £563.0m after taking account of specific grants. This is an increase of 4.2% on the adjusted budget for 2005/06 which represents the continuation of the current financial policies of the County Council.

3.2 Details of the construction of the base budget, for services and for other budgets, are set out in Appendix 3. The details of significant variations in service spending are contained in annexes A - E of Appendix 3, as reported to Policy Review Committees and as submitted by Executive Members to Cabinet within the base budget guidelines.

4 Budget guidelines 2006/07 (and 2007/08)

4.1 The Cabinet 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 adult social care and children's services above the base budget level to recognise extra demographic and other pressures in line with the increase in 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 adult social care and children's services above the base budget level.

4.2 In managing within budget guidelines Executive Members are required to ensure that:

· income will be maximised by reviewing charges and introducing new income wherever possible 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

4.3 Before considering the responses to the budget guidelines, it helps to set the scene by pointing out the cumulative cash increases targeted at services between the 2001/02 and 2005/06 budgets. These are set out in Table 6 and show

· Government's increased use of specific grants over the period to direct funding where it wants, especially direct to schools and for certain transfers of funding from Government open-ended benefits systems to cash limited social care budgets

· the cumulative cash increase in adult and children's social care is over 60% (excluding function changes) and the waste contract has increased by 58%

· both are more than twice the increase for other services

· the inflation rate in Government terms, over this period is just over 12%

Table 6 : Summary of cumulative cash increases 2001/02 to 2005/06 Budgets

4.4 This historical rate of growth on social care services will not be sustainable. The budget guidelines provide percentage increases of 3.4% in 2006/07 and 4.1% in 2007/08 for adult social care, and 5.2% and 3.7% for children's services in 2006/07 and 2007/08. Thereafter the cash increases are at best likely to be around 3% in line with inflation - depending on grant support (0 - 2%) and council tax rises (3 - 5%?). This retrenchment comes at a time when demographic and cost pressures continue to rise more quickly, especially on adult social care.

4.5 The provisional service budget guideline figures were set in December, but subject to further adjustment as estimates were completed and specific grant changes notified.

Table 7: Service budget guidelines 2006/07 and 2007/08

4.6 Table 7 shows the higher priority given to children's services, adult social care and environment (waste management), with Policy and Resources having much lower percentage increases to target budget rises at front line services.

4.7 Executive Members have submitted budgets within their guidelines with the exception of adult social care, which has a shortfall against its cash limit of £2.7m in 2006/07.

Growth proposals

4.8 The schools budget has identified growth proposals of £17.5m in 2006/07 and £13.8m in 2007/08. This growth is possible within the real terms increase in DSG.

4.9 Other services have identified growth proposals, cost and other pressures totalling £16.9m in 2006/07 (£6.8m in 2007/08)

Table 8: Service budgets 2006/07 and 2007/08

Schools (£17.5m)

4.10 The cash increase in the DSG for the schools budget allows for £18.4m of cost pressures to be absorbed. The `earmarked' growth proposals in the modified DSG distribution of £10m are for

· personalised learning at key stage 3

· personalised learning for primary pupils

· practical learning for 14 - 16 year olds

· workforce reform in primary schools

· increasing early years participation from 33 to 38 weeks

4.11 Total headroom remaining was £7.5m, making total growth of £17.5m for 2006/07. This was allocated across a number of proposals including service families, ICT in schools, home to school link workers and change for children generally in combined budgets.

4.12 The main growth proposals from cost and demand pressures on other services in 2006/07 are:

Adult social care (£10m)

· costs of transition from children and families to adults (£1.2m)

· additional learning disability pressures (£1.3m)

· increased domiciliary care because of demographic growth (£0.7m)

· loss of specific grant (access and capacity) (£1.3m)

· price increases on purchased care services more than 2.5% assumption (£1.5m)

· contingency for overspend in 2005/06 and new pressures in 2006/07 (£2.0m)

Children's services (£3.6m)

· home to school transport (£0.4m)

· loss of specific grant (safeguarding children) (£0.8m)

· non-county placements and independent fostering agency costs (£1.4m)

Environment (£2.1m)

· street lighting - increased energy costs (£1m)

· other increases in highway maintenance (£0.6m)

· waste management (£0.2m)

Policy and Resources (£0.7m)

· occupational health, pay and benefits, procurement, accredited community safety officers

Recreation and Heritage (£0.5m)

· people's network (£0.3m)

Savings and redeployments

4.13 The total growth proposals of £16.9m in 2006/07 (£6.8m in 2007/08) are met by savings and redeployments, or the available growth in the budget guidelines.

Table 9: Total savings and redeployments

4.14 This shows the gap of £2.7m still to be plugged for adult social care in 2006/07 - for 2007/08 adult social care is within the guideline

4.15 Substantial savings are required (except of course for schools). The efficiency savings shown in Table 9 are the cashable savings in the budget, which also count towards the annual efficiency statement (Gershon savings). To these can be added savings (such as not budgeting for the cost of increments) which do not reduce the budget in cash terms, but are still regarded as cashable efficiency savings in Gershon terms. Other savings include a combination of savings - transfers between capital and revenue, increased charges above the price increase target, and reductions in lower priority areas.

4.16 The impact of these different strategies between the various services is summarised next

Table 10: Service budgets - savings and redeployments 2006/07

4.17 Further details of these savings are shown in Appendix 5, but the main areas in 2006/07 are

Adult social care (-£6.4m)

· service remodelling and re-provision (-£2.2m)

· staffing efficiencies (-£1.1m)

· savings from clients leaving adult services (-£0.7m)

· additional income from fees and charges in excess of inflation (-£0.6m)

· additional savings and service withdrawals (-£0.8m)

Children's services (-£1.1m)

· reduced contribution to standards fund (-£0.4m)

· Stonham contract (-£0.4m)

Environment (-£2.1m)

· developers' contributions and efficiency savings on highway maintenance (-£0.5m)

· various savings on highway management and support services (-£0.3m)

· landscape planning and heritage (-£0.6m)

· natural resources and environmental futures (-£0.1m)

· waste management from additional income and disposal of abandoned vehicles (-£0.2m)

Policy and Resources (-£0.7m)

· increased income from schools, capital receipts, council tax on second homes (-£0.3m)

· use of reserve for pay and benefits (-£0.3m)

· procurement savings (-£0.1m)

Recreation and Heritage (-£0.5m)

· IT efficiencies and other reductions (-£0.3m)

· library efficiencies (-£0.2m)

5 Efficiency savings

5.1 The savings achieved in offsetting pressures in the budget have been identified in paragraph 5. Total savings of £10.8m have been identified in the 2006/07 budget - £5.1m from efficiency savings and £5.7m from other savings.

5.2 In addition to these savings included in the budget further efficiency improvements of £5.5m (2006/07) have been identified which will count towards the annual efficiency statement (Gershon savings). They do not reduce the budget in cash terms, but they are costs which are avoided or would otherwise have been incurred. The £5.7m of other savings (paragraph 6.1) include redeployments which are excluded from the total in Appendix 5, reducing that amount to £5.1m in Table 11 below.

5.3 The total savings in the budget and annual efficiency statement (AES) are summarised in the next table.

Table 11: Efficiency summary

5.4 On that basis the total efficiency savings in the budget are £10.2m in 2006/07 and £3.3m in 2007/08. The savings in AES terms are £10.6m and £4.4m in each of the two years. The overall efficiency improvement and savings made in County Council terms are £15.7m in 2006/07 and £7.1m in 2007/08.

6 Annual review of charges and maximisation of income

6.1 Fees and charges have been raised where there is scope to do so in policy and financial terms, and the inflation allocation has been calculated on the basis that charges are increased in line with the allowance for inflation on gross expenditure, averaging 3%.

6.2 Details of income reviews and charges made are set out in Appendix 6 and in summary below:

Table 12: Summary of income from fees and charges

	Mandatory	Discretionary	Total
	Charges	Charges
	£m	£m	£m
Adult social care	35.0	6.6	41.6
Childrens' services	2.1	2.9	5.0
Environment	0.2	8.5	8.7
Policy and Resources	1.0	7.1	8.1
Recreation and Heritage	-	6.9	6.9
Total income	38.3	32.0	70.3

7 Workforce plan

7.1 The workforce plan will be developed in the context of the budget. The details of the workforce costs and proposed changes in 2006/07 are set out in Appendix 8B, excluding schools based and business unit staff. Appendix 8A summarises changes in the overall workforce supported by the budget, though the impact of proposed changes in the provision of adult social care on the workforce have still to be assessed.

7.2 The base budget together with the growth and redeployment proposals in Appendix 4 support an increase of 669 posts as follows:

Table 13: Budgeted increase in (full time equivalents) workforce numbers by service

7.3 The increase of 669 represents 3% of the work force - not as great as the 5.2% increase in the budget. The main changes are

Adult social care

· Implementation of ENHANCE project, additional care and fieldwork staff (275)

Children's services

· Increased staffing supported by schools budget (324), and early years staff (20)

Environment

· Net staffing reductions included within redeployment proposals (-10)

Policy and Resources

· Fewer catering staff due to reduced demand for school meals (-46) increase in property staffing in place of use of external consultants and temporary staff (43) together with other staffing changes mainly financed from additional income or charged to the capital programme

Recreation and Heritage

· New posts predominantly funded by external contributions or by use of the policy fund (12)

8 Proposed changes to budget guidelines

8.1 In the main further pressures have been identified and met by redeployments and savings and services are within budget guidelines with the exception of a £2.7m shortfall for adult social care in 2006/07. The savings required will need firm plans for Executive Members to monitor achievement and there is a risk that targets will be stretching and difficult to achieve, especially in adult social care.

8.2 The budget proposals are contained within the council tax rise of 4.7% which was consulted on before the grant settlement. (Another £0.8m would be available if the council tax was increased by 4.9% rather than 4.7%)

8.3 There are two main sources of additional resources

· an increase in the collection fund surplus notified by district councils during January 2006 (£2.3m)

· an increase in interest on balances from bigger balances and improved cash flows, partly offset by increased unsupported borrowing costs (£2.8m)

8.4 It is proposed to eliminate the £2.7m shortfall on adult social care as the first priority against these additional resources. This means that further reductions in adult social care will not be needed in 2006/07 to meet the budget guidelines but the targeted reductions already identified of £6.4m will remain in place for 2006/07.

8.5 Further support to the transitional arrangements for libraries of £220,000 in 2006/07 only is proposed.

8.6 £60,000 is required to appoint a specialist transport consultant to project manage a `pathfinder' bid to the Department for Education and Skills (DfES) which will examine the feasibility of introducing a range of innovative home to school transport initiatives, including a possible `yellow bus' fleet. The Leader also proposes adding £20,000 to continue the work of the `futures group' working with schools to create a future vision for the County Council.

8.7 These are all one-off measures and can be met as follows

Table 14: Additional resources in 2006/07 only

8.8 Policy and Resources included some pressures met by savings: occupational health, met by extra school income (£150,000); the extended timescale into 2006/07 for the pay and benefits project team met from the job evaluation transitional costs reserve (£295,000); affordable and key worker housing strategy funded from capital receipts (£50,000); and the corporate procurement unit funded by procurement savings (£100,000). Other pressures were not funded, but most can be met as described in the following paragraphs.

8.9 It is proposed to use carry forward savings within the Policy and Resources revised budget of £75,000 from 2005/06 towards promoting Hampshire, by creating a temporary post (£55,000) within Chief Executive's to capitalise on the freedom and flexibilities given to four star authorities to maximise the benefits for Hampshire's residents. An additional appointment is also proposed to enhance the capacity of the Council to bid for external funding for new projects or services (£20,000 - with another £20,000 contributed from service departments). These two proposals will be funded for 2006/07 only.

8.10 Changes in democratic processes, particularly the move towards local action teams will bring increased costs, including the reinstatement of the savings planned in the 2005/06 budget of £100,000. This will provide some flexibility, but the two year pilot and review of the new democratic arrangements agreed in principle by the County Council on 30 January 2006, will require additional staff resources, at least in a transitional period, to ensure success. A further report will be made when the staffing requirements are quantified.

8.11 Cabinet also wish the momentum on older persons communications to be continued in co-ordination with partners and to support the developing early intervention and well being proposals. £50,000 is suggested for corporate communications, but with adult social care being the client for its deployment.

8.12 Following the last election, the number of councillors increased from 74 to 78. One-off funding was allocated in 2005/06, but £60,000 is required on a continuing basis.

8.13 £20,000 was identified in 2005/06 for equalities in order to respond to the statutory duty to promote race, disability and gender equality. There will be a need to publish a race scheme and draft disability scheme in 2006/07, consult with the communities affected and continue other equalities projects. £20,000 is therefore suggested on a continuing basis.

8.14 Similarly one-off funding of £60,000 was made in 2005/06 because of increased requirements for efficiency work and this additional resourcing will need to be sustained to enable the County Council to demonstrate improved value for money. Additional funding of £40,000 is also required for internal audit because of increased corporate governance work and a greater incidence of investigative work. This will ensure that 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.

8.15 The rate of inflation experienced on repairs and maintenance of buildings is assessed at 7% over the last year. Increased costs on schools are met within the cost pressures within DSG, but £120,000 is suggested towards the Council's other buildings.

8.16 Additional costs of £100,000 in 2006/07 (£250,000 in 2007/08) have emerged on accredited community safety officers (ACSOs) from higher allowances for shift working and lower income than originally expected from fixed penalty notices. These costs can be met by using £100,000 from the contingency retained from the reduced council tax discount on second homes. 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. In the longer run the continued value for money of these arrangements will need to be reviewed in the light of the planned recruitment of 540 police community support officers over the next two years and similar, much smaller teams, of accredited community support officers at district council level. It is anticipated that there might be some national standardisation and rationalisation of the various schemes as well, despite the innovation and success of the Council's arrangements.

8.17 Finally the Leader proposes to set aside the equivalent of £10,000 per county councillor towards the new Hampshire Action Teams agreed by the Council in January. The intention is to devolve resources at a local level on the `street scene' for local road and pavement improvements. This could be achieved from the £3.769m set aside for improvements in local roads and pavements in the Environment budget, leaving about £3m ring-fenced within Environment, subject to annual review of improvements in performance in the condition of local roads and pavements.

8.18 Some further savings of £20,000 on the external audit fee and £40,000 on the contingency set aside for risk management are available, reducing the net cost of the proposed additions to £690,000 in the 2006/07 budget.

Table 15: Additional corporate priorities

8.19 Paragraph 9.3 referred to a net increase in income from interest on balances. This consists of three broad changes:

· budgeted increase from continuing improvement in cash flow and higher balances retained than budgeted (£2.5m)

· further improvements in cash flow from an advantageous profile with the introduction of dedicated schools grant payments in 2006/07, partly offset by a change in the estimated payment profiles of value added tax (£1.2m)

· increased capital financing costs from unsupported borrowing in advance of capital receipts (£0.9m)

8.20 Other significant changes in other budgets include

· lower tax base increase than assumed (£245,000)

· reduced levy for flood protection from the Department for Environment, Food and Rural Affairs on the merger of the Southern Region (£250,000)

· other various base budget changes since the provisional budget guidelines were set in December 2005 (£215,000)

· loss of grant in the final settlement announced on 31 January 2006 (£52,000)

8.21 The main strain in the budget strategy remains the tight cash limit for adult social care because of the increased cost and demographic pressures. Adult social care has growth of £10m to meet these pressures of which £6.4m is met by savings and £3.6m is now met by growth in the proposed budget. The net growth is about 1.4% over and above inflation. £3.4m of the savings are efficiency savings, the remaining £3m being other savings including additional income charges. £0.8m requires additional savings and service withdrawals. There remains a potential loss of Government grant of £14m for adult social care, further losses of grant for Supporting People, and future settlements will not allow much more than an anticipated 0 to 2% Government grant increase for all services.

8.22 Against this background steps need to be taken now to plan for savings to absorb future pressures by concentrating additional resources on the most vulnerable and high priority clients. Existing care packages will not be withdrawn, but future eligibility will be more restricted than at present. Some reductions in day care will be required which mean the closure of some buildings but with the expectation that replacement provision will represent better value for money and be more aligned towards models of care focused on well being and prevention.

8.23 Adult social care includes a £2m contingency towards the repayment of an overspend in 2005/06. If this risk could be reduced then more resources will be available in 2006/07. However there are also some risks from late payments towards the community care cost of adults with mental disabilities.

8.24 Against this background it is therefore proposed to make a budgeted contribution of £1.8m to balances to cover the risk of a £2m overspend on adult social care in 2005/06, some default on late payments from health authorities and to cover the potential under-achievement of the stretching savings target of £6.4m for adults in 2006/07.

8.25 These changes offset each other with no impact on council tax:

Table 16: Overall summary of changes proposed

8.26 All the changes in this section of the report result in a withdrawal of £692,000 from balances in 2006/07 on a one off basis, but a budgeted contribution of £1.8m for 2006/07 onwards towards higher risks in the budget strategy.

9 Performance and risk management

9.1 As part of the process of linking budgets more closely with performance management, proposals for additional spending should indicate measurable improvements in performance anticipated and any significant savings proposals should include a plan showing how the proposal will be implemented.

9.2 This is a key feature of assessment by the Audit Commission in the Comprehensive Performance Assessment. It is therefore necessary for all Executive Members to review their plans and monitor achievement against them during 2006/07 and 2007/08 for all the proposed growth and redeployment proposals set out in Appendix 4, and especially to monitor performance against specific plans for achieving all savings targets.

9.3 Although the grant increase is known for 2007/08, there remains considerable uncertainty in 2008/09 and beyond. By that time the Lyons inquiry into the function, form and funding of local government should have been completed. At present the cliff edge of a potential £38m of grant support loss remains. There may still be some form of continued damping, even if the system remains unchanged, but as indicated elsewhere in the report this outlook in the context of the Comprehensive Spending Review 2007 suggests much lower spending increases nationally than in SR 2004. The best prognosis is to plan for Government cash increases of between 0 and 2%.

9.4 The budget strategy therefore needs to plan for the reinstatement of the grant equalisation reserve to provide some transitional, one-off support towards future grant loss. This reverses the 2005/06 strategy to run down the reserve in proportion to the loss of grant from 2005/06 through to 2007/08.

9.5 The provisional 2007/08 budget is discussed in paragraph 14. The use of reserves and balances is explained in paragraphs 11 and 12. The consideration of risks, use of reserves and balances and forward financial plans are also critical to the statement required under Section 25 of the Local Government Act which is dealt with in paragraph 17. That statement covers the other potential areas of risk that need to be taken into account in setting both the 2006/07 budget and then looking forward to the provisional 2007/08 budget and possible further grant changes from 2008/09, together with council tax revaluation and any other changes resulting from the Lyons inquiry.

10 Earmarked reserves

10.1 In addition to general balances there are a number of specific reserves earmarked for particular purposes. The protocol for earmarked reserves, setting out the purpose, use, management, control and review of each reserve is detailed in Annex 1 to Appendix 10. This is a key component in the Section 25 statement. The estimated variations in each reserve are summarised in Appendix 10.

10.2 There are three imperatives for reserves and balances

· to rebuild capacity in the grant equalisation reserve because of the grant floor (£38m after 2007/08)

· to provide for pay and benefits, both the continuing costs resulting from job evaluation and any back pay or compensation settlement under the single status agreement

· potential overspends in 2005/06 and 2006/07, particularly on adult social care, although services will be expected to continue their normal budgetary control disciplines to remain within cash limits

Modernisation, restructuring and efficiency reserve

10.3 This reserve was created in 2005/06 and was expected to cover the continuing costs arising from pay and benefits, as well as specific contingency pressures and potential liabilities identified in setting the 2005/06 budget. The reserve was expected to have been fully utilised by the end of 2006/07 when one-off investment would have been completed and continuing spending assimilated within service revenue budget cash limits.

10.4 Pay and benefits will not now be implemented in 2005/06. The planned amount of the reserve at 31 March 2006 was £12.7m. This included a budget contribution of £8.7m, of which £7.5m had been planned to support the continuing costs of the implementation of pay and benefits. As this is now not necessary, it is proposed to switch the planned contribution to the grant equalisation reserve in 2005/06 and then to make a £7.5m contribution to a pay and benefits contingency sum in 2006/07 to match the continuing costs of the pay and benefits proposals which have to be implemented by March 2007 under the single status agreement.

10.5 The balance of the reserve was planned to meet specific contingencies in addition to pay and benefits including

· a contingency for the set up and transitional costs of the Children Act

· potential new liabilities in the choice directive for residential care, delayed discharge from community hospitals, health service reductions towards care packages (section 28), exceeding the VAT partial exemption limit and grant loss from amending reports.

· invest to save initiatives and other restructuring or modernisation costs.

10.6 Costs have been incurred in implementing the Children Act (creation of the Director of Children's and Adult Services' posts with the deletion of the former posts of County Education Officer and Director of Social Services, together with external recruitment costs).

10.7 The choice directive did not have a material effect and delayed discharge fees were not introduced for community hospitals. The potential reduction in health authority funding remains and will be dealt with by the contribution to balances (paragraph 9.24). Careful management and national lobbying to change some definitions has reduced the risk of exceeding the VAT partial exemption limit for the time being. Grant loss did occur in the amending reports in 2004/05 but was met instead from higher balances. The grant loss in 2005/06 will also be met from balances (see paragraph 12.3)

10.8 The major invest to save initiative will be the introduction of the contact centre at an estimated cost of around £5m. The balance in the modernisation reserve will be insufficient to meet these costs and additional capital receipts are being sought to provide the necessary investment. Failing that, unsupported borrowing will be required which will roll up interest and repayment costs, requiring a higher pay back target. Provided that service budgets are adjusted for the resources transferred to run the contact centre and meet the benefits reduction targets set out in the report to Cabinet in December 2005 the reserve would be reinstated after five years. Executive Members and chief officers will need firm plans to achieve these benefit realisation targets and monitor them closely during the year. Further reports will be made to Cabinet.

10.9 The Director of Property, Business and Regulatory Services may also require additional staffing resource to implement the planned strategic review of land and buildings, with the aim of achieving efficiency savings, better value for money in the use of assets and additional capital receipts. This would be suited to an invest to save approach with repayment from extra capital receipts. The Executive Member, Policy and Resources will be able to review the business case for any proposals before commitments are made.

10.10 The other potential modernisation cost was the implementation of the local area agreement. In the event Cabinet agreed to top slice the local public service agreement performance reward grant by £1.5m to provide some additional resources to implement the agreement. Business plans will be agreed by the Executive Member, Policy and Resources, as amounts are committed.

10.11 It will therefore be prudent to retain as much resource as possible in this reserve towards invest to save and efficiency projects (including a contribution towards the contact centre) and to provide limited corporate contributions to restructuring costs in children's services and adult social care.

10.12 Taking all these factors into account the position on this reserve can be summarised

Table 17: Modernisation, restructuring and efficiency reserve

Grant equalisation reserve

10.13 It had been planned to withdraw £5.9m in 2005/06 leaving £15.1m at 31 March 2006. Switching £8.7m from the modernisation, restructuring and efficiency reserve (paragraph 11.4) increases the grant equalisation reserve to £23.8m. That provides one-off cover for the general grant floor (£23.6m) but not the further £14m within the relative needs amount for adult social care.

10.14 In the 2006/07 budget it is proposed to switch £7.5m of the budgeted contribution to the modernisation, restructuring and efficiency reserve into a contingency to cover the costs of pay and benefits implementation during 2006/07. This leaves a budgeted contribution of £1.2m which can be redirected to the grant equalisation reserve during 2006/07 taking the total balance to £25m at 31 March 2007.

Pay and benefits

10.15 This approach will also require a pay and benefits realisation strategy to save the balance of £2.5m continuing costs from the estimated £10m total costs of implementing the results of job evaluation. Schools and business units will be required to meet their share of costs from within their delegated budgets and trading accounts respectively. Similarly those activities mainly in Recreation and Heritage (for example Calshot Activities Centre) which have a fixed subsidy, and meet other costs from charges will need to adjust their trading position to recover any additional costs which result from pay and benefits. It has not been possible to identify increased costs at detailed budget level, pending final analysis and agreement with trade unions. Again Executive Members and chief officers are asked to prepare provisional contingency plans to reduce staffing costs 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. Targets will be set later to take account of £2.0m already allocated in advance to the former social services budget, total workforce costs and the cost increases for those services whose employees gain from the job evaluation process.

Job evaluation transitional costs reserve

10.16 This was set up to meet some of the transitional, one-off costs arising from job evaluation. The budgeted balance at 31 March 2006 was £4.7m. It was later agreed to meet the costs of £450,000 for the launch of the new pay strategy and the extension of the project team beyond 2005/06 into 2006/07 from the reserve, reducing the balance to £4.3m. Cabinet are aware that they and the trade unions were briefed on the amount available for back pay of around £6m, including the use of the reserve and another £1.25m taken from balances. It is now proposed to take another £4m from balances to take the total reserve to £10m. This is now the total amount available for back pay.

10.17 The budget strategy in respect of pay and benefits has been

· to avoid council tax rises to pay for the costs of pay and benefits because of the constraints of the capping regime and the impact upon council tax payers

· to use existing resources and a benefits realisation plan to meet continuing costs

· to set aside a reasonable sum in reserve to meet the one-off back pay costs

10.18 The sum now provided for back pay at £10m is a substantial sum. It would meet all the pressures on adult social care without requiring any compensating savings. Any significant increase in the amount negotiated for settlement of back pay will now mean loss of jobs in the affected areas to finance back pay costs in excess of £10m. Further service reductions will be difficult given the strain already put on services and the future grant loss. Raising council tax and cutting services further are not options the Cabinet will be either able or willing to pursue.

Capital reserve

10.19 The capital programme report refers to the need for unsupported borrowing in 2005/06 because of a shortfall of funding resources even after the full use of the capital reserve which was budgeted at £9.1m at 31 March 2006. Surplus capital financing resources in 2006/07 from capital receipts, are anticipated rebuilding the capital reserve to £6.5m in 2006/07. It will then be fully utilised again and unsupported borrowing will be required pending the achievement of future capital receipts or adjustments to planned spending levels.

10.20 The capital programme report refers to the consequences of

· unsupported borrowing in advance of capital receipts

· lack of government revenue support grant with the new formula grant towards borrowing approvals because of the floor damping arrangements

10.21 Recommendations on dealing with these issues are contained in the capital programme report.

School reserves

10.22 The other major reserve is that for schools. That was budgeted at £19.4m at 31 March 2006 and is likely to be around £29.6m at the year end, after allowing for use of £4.4m on a loan basis to finance schools capital schemes. The underlying level of reserves is therefore £33m

Summary of earmarked reserves

10.23 Full details of each reserve showing movements from the actual amount at 1 April 2006, to estimated amounts at 31 March 2007 and 31 March 2008 are shown in Appendix 10. A comparison between budgeted reserves at 31 March 2007 and those originally budgeted at 31 March 2006 is shown in the next table.

Table 18: Summary of earmarked reserves

11 Balances

11.1 The 2005/06 budget included additional balances of £2m to recognise the risks in that year's budget. Adult social care is attempting to manage its current year's budget within its cash limit, and has set aside a contingency of £2m in 2006/07 to meet the potential repayment of an overspend of £2m from 2005/06. That may be optimistic and the overspend in 2005/06 could be as much as £4m to £6m. The additional balances of £2m provide scope to underwrite some of these potential difficulties if necessary, and can be carried forward for potential use when the accounts are closed in 2005/06.

11.2 An additional £4.2m was added to balances with the closure of the 2004/05 accounts.

11.3 There will be a further pick up in balances from the revised budget position in 2005/06. There will be savings on capital financing etc. The grant amending report for 2004/05 and 2005/06 incorporated in the 2006/07 grant settlement, results in a total loss of grant for the County Council of £1.7m. This results from errors in the 2001 Census data which are still finding their way through the settlement. Provision was made for £1.2m of the estimated 2004/05 loss when closing the accounts for 2004/05, but £0.5m still needs to be found. As also budgeted for 2006/07, higher balances and more favourable cash flow will result in more interest on balances in 2005/06. It is proposed to deal with all these issues through the use of balances.

Table 19: Addition to balances in 2005/06

11.4 The effect of the changes requiring contributions to balances, and withdrawals from balances as set out in paragraphs 11 and 12, are shown in the next table.

Table 20: Estimated balances at 31 March 2007

11.5 The level of balances, given the risks of stretching in year saving targets, and the other risks identified, is about 1.9% of the new budget base. This is higher than the previous target of 0.6% simply because of the introduction of the DSG for schools which are now fully funded by this new specific grant and have their own collective balances of £33m. Balances for all other services represent about 1.9% on this new base, still a very low amount compared with most authorities despite the greater uncertainty ahead whilst the Government funding position remains volatile.

12 2006/07 Budget

12.1 Taking all these changes into account the final budget proposals for 2006/07 can be summarised by comparison with the 2005/06 adjusted budget

Table 21: Service cash limits 2006/07

12.2 Other budgets compared with 2005/06 can be summarised as follows

Table 22: Other budgets 2006/07

12.3 The main changes between years are

· a reduction in revenue contributions to match the cash flow of capital payments: a deficit in 2005/06 followed by a surplus of financing reserves in 2006/07, and back into deficit in 2007/08. This is explained in the capital programme report and the capital reserve and the temporary use of unsupported borrowing manages the fluctuation between years

· the contingency has increased because of the £7.5m added to the contingency for the costs of pay and benefits in 2006/07

· a net withdrawal from balances in 2005/06 has been replaced by a net contribution in 2006/07 - as a result of the changes in the use of balances and the budgeted contribution of £1.8m in 2006/07. There has been a net £0.7m increase in contributions to earmarked reserves

· interest on balances and capital financing both increase for the reasons set out in the report

· the impact of the introduction of DSG is stark, but other specific grants show a net reduction of £6.2m

· there is a slight reduction in other budgets because of the savings in flood protection and the ending of mandatory awards.

12.4 The total contingency of £12.6m includes:

Table 23: 2006/07 contingency

12.5 Bringing all these budgets together results in an overall budget requirement of £568.4m which is a 5.2% increase on the adjusted budget base for 2005/06 of £540.1m

Table 24: 2006/07 budget requirement

12.6 The budget requirement will be met as shown in the next table.

Table 25: 2006/07 precept met by council tax payers

12.7 It is anticipated that the overall council tax bill for 2006/07 will increase by about 4.5%, (assuming an average district council tax increase of say 3.1%) as follows:

Table 26: Provisional council tax bill 2005/06

	2005/06 Band D	2006/07 Band D	Increase
	£		%
Hampshire County Council	869.40	910.62	4.7
Hampshire Police Authority	113.76	119.43	5.0
Hampshire Fire and Rescue Authority	52.11	53.52	2.7
Average District	154.04	158.82	3.1
Average Band D in Hampshire	1,189.31	1,242.39	4.5

12.8 The overall budget can no longer be compared with formula spending shares as in previous years.

12.9 The trends in spending plans (formula spending shares until 2005/06, overall Government grant from 2006/07), budgets and council tax are as follows:

Table 27: Percentage increases in council tax compared with spending plans, grant and budget
	Government		County Council
	Plans	Grant	Budget	Council tax
	%	%	%	%
2000/01	5.2	4.7	5.3	5.8
2001/02	5.8	5.6	5.9	5.5
2002/03	5.4	5.1	6.9	7.9
2003/04	5.7	3.8	8.2	15.0
2004/05	5.3	6.0	5.9	4.7
2005/06	5.3	5.0	4.7	3.5
2006/07	3.8	2.0	5.2	4.7

12.10 The council tax rise remains at 4.7% - the lower option used in the budget consultation meetings and the community workshop run by MORI. It was also the amount set with the budget guidelines in December 2005.

12.11 Provisional comparisons with other County Councils suggest that Hampshire County Council

· has the second lowest formula grant per head in 2006/07 (after floor damping)

· the lowest relative needs grant per head

· council tax which remains below average and at or within the lowest quartile target

· slightly lower council tax rise than most counties which appear close to the 5% capping limit, but some counties not at the grant floor, will have lower rises in 2006/07.

· well below average reductions in spending to keep within the capping limit

· budget rise in the upper quartile

13 2007/08 Budget

13.1 It is not possible this year to do a three year financial projection as the Government's spending plans do not go beyond 2007/08. There is, however, for the first time, a grant increase figure notified for the following year. This indicates a 2.7% rise.

13.2 For planning purposes a grant rise of perhaps between 0 to 2% can be projected for the third year 2008/09. This is despite the cliff edge loss of grant of £38m in that year, based on floor damping arrangements continuing and tight national grant settlements at best in line with inflation when the Comprehensive Spending Review 2007 is announced. It is quite possible that actual cash reductions will be implemented but past experience suggests that the full grant loss may take two to three years to work through. The grant equalisation reserve helps safeguard this uncertainty.

13.3 Appendix 9 assesses the likely budget and council tax increase in 2007/08, explaining the assumptions made. The outlook can be summarised next

Table 28: 2007/08 and forward budgets

13.4 The figures for 2008/09 are very speculative but indicate the scale of budget increase consistent with a 4.9% increase in council tax and no increase in Government grant. The 2% grant increase in 2006/07 is in effect just 0.2% when account is taken of the withdrawal of specific grants.

Financial planning framework

13.5 The Annex to Appendix 9 contains the County Council's current financial management policies which are presented in the form of a medium-term financial planning strategy and form the framework for the provisional budget 2007/08 and the three year medium term budget forecast which will be updated in September 2006.

Past trends

13.6 As well as looking forward, it is possible to update the past trends in Government spending plans, grant, the council's budget and council tax and these are set out in Appendix 14.

14 Treasury Management Strategy and Investment Strategy for 2006/07

14.1 The County Council is required to adopt a treasury management strategy and an annual investment strategy for 2006/07 and these are set out in Appendix 11 for approval. The Appendix

· outlines a proposed strategy for the management of the Council's long-term debt portfolio in the light of forecast trends in long and short-term interest rates over the next year and beyond

· summarises the arrangements for the investment of the Council's surplus funds

· sets out an investment strategy for submission to the County Council for approval, conforming with the prudential code for capital finance.

15 Prudential indicators

15.1 The Cabinet agreed a policy on the use of unsupported borrowing in November 2003. The prudential code provides a framework for local authority capital finance to ensure that:

· capital programmes are affordable

· external borrowing and other long-term liabilities are within prudent and sustainable levels

· treasury management decisions are taken in line with professional good practice.

15.2 Appendix 12 contains the prudential indicators required by the code for the County Council. The summary of prudential indicators in the Annex to Appendix 12 will be submitted for approval by the full Council in setting the budget.

16 Section 25 report, Local Government Act 2003

16.1 Section 25 of the Act requires the Chief Financial Officer (the County Treasurer) to report to the County Council when setting its council tax on:

· the robustness of the estimates included in the budget

· the adequacy of the financial reserves in the budget

16.2 The County Council is required to have regard to this report in approving the budget and council tax. It is appropriate for this report to go first to Cabinet and then made available to the County Council in making its final decision. The full report is set out in Appendix 13.

16.3 The level of balances and reserves has been recommended taking into account greater risks and uncertainty in the 2006/07 budget and ensuring sustainability into 2007/08 and beyond to the cliff edge of grant loss in 2008/09. The estimates, balances and reserves should be robust enough if the County Council accepts the budget recommendations.

16.4 The main areas of risk are

· completion of job evaluation during 2006/07 and settlement of back pay claims in excess of budget provision

· requirement to achieve cash efficiency savings and other savings of £10.8m which will require close monitoring during 2006/07

· further grant losses when floor damping is removed from 2008/09 (up to £38m, 2% of current grant support)

· council tax revaluation and the outcome of the Lyons inquiry into the form, function and funding of local government

Recommendations

17 The recommendations are contained in the summary decision sheet.

Section 100 D - Local Government Act 1972 - background documents

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

NB the list excludes:

1. Published works.

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