Contact: Ejner Knudsen, (01962) 847403; [email protected]

1 Introduction

1.1 This report provides a further update on the revenue budget monitoring position for the Environment services for the 2005/06 financial year, covering the budgets for highways and transportation, planning and development and waste management.

1.2 The report reflects the outcome of the most recent budget monitoring review, which was carried out in consultation with departmental budget holders during January and February. During the review, expenditure and income trends have again been considered and planned commitments for the remaining weeks of the year evaluated, in order to update the forecast outturn for comparison with the 2005/06 revised budget which was approved in January.

1.3 It should be noted that the figures in this final 2005/06 budget monitoring report project the likely outturn for the year, based on the available monitoring information during February. It does not, at this stage, represent the final year end position for the 2005/06 financial year, which will be reported in May after the accounts have been closed.

1 Corporate strategy

1.1 Monitoring of the Environment revenue budget supports all of the aims of the corporate strategy, by focusing financial resources in support of the provision of the various Environment services, which contribute towards:

(a) Maximising life opportunities

(b) Stewardship of the environment

(c) Achieving economic prosperity

(d) Building strong and safe communities

(e) Improving services

(f) Developing councillors and staff

2 Cash limit 2005/06

2.1 The most recent budget monitoring position was included in the report on the 2006/07 and 2007/08 revenue budget, which was presented to the Environment Policy Review Committee and Executive Member for Environment: South Hampshire and Resource Management on 18 January 2006. That report set out proposals for the 2005/06 revised revenue budget, which were approved for submission to the Cabinet.

2.2 The recommended revised budget included a number of changes to the cash limit that had been made since the beginning of the year together with proposals to accommodate higher expenditure of £130,000 on public transport bus subsidies, by utilising available savings on other Environment budgets. The revised budget also reflected a request to carry forward to the 2006/07 budget projected underspendings of £105,000 on the implementation of the Traffic Management Act and £150,000 on asset management.

2.3 The 2005/06 revised budget, totalling £95.618 million, was approved by the Cabinet at their meeting on 10 February 2006.

2.4 The only subsequent change to the 2005/06 revenue budget cash limit since January has been in relation to the waste management contract related budgets. A further allocation of £1.457 million has been made from the central waste management contingency to cover estimated cost increases arising on the operation of the waste management contract during the third quarter of the financial year.

2.5 The Environment services' budget has been increased to take account of the above change, giving an adjusted 2005/06 cash limit of £97.075 million. Further changes to the cash limit will be made at the end of the year to reflect the final quarter's call on the waste management contingency together with any other adjustments that may be necessary.

3 Outcome of latest budget monitoring review

3.1 Appendix 1 provides a summary of the 2005/06 revised budget over the standard divisions of service, together with details of assessed expenditure to 31 January 2006 and the latest forecast outturn for each budget heading.

3.2 The main issues arising from the budget monitoring review are discussed in the following paragraphs.

Highways maintenance

3.3 The 2005/06 revised revenue budget for routine highways maintenance is £19.572 million, excluding winter maintenance (salting and snow clearance). Further allocations to the highways units and other departmental budget holders were made during January to meet operational requirements and monitoring suggests that expenditure is being progressed in accordance with the revised plan. These additional allocations have almost fully committed this year's highways maintenance budget, leaving a small sum of £24,000 in reserve to cover any unforeseen requirements during the latter stages of the year.

3.4 The 2005/06 revised budget includes provision of £2.388 million for expenditure on highways winter maintenance salting and snow clearance operations. Assessed winter maintenance expenditure up to 3 March 2006 was £2.765 million, being £377,000 in excess of the budget allocation. Further expenditure of approximately £150,000 on salting might be expected during the remainder of March, based on "average" winter weather during this period.

3.5 Expenditure at this level would result in an overspending of the winter maintenance budget of at least £500,000 at year end and this figure would increase significantly should further severe winter weather, including snowfall, be experienced. However, under the special budgeting arrangements that apply to winter maintenance, any excess expenditure on this heading does not count against the Environment services' cash limit as any overspending is covered by central balances. Nevertheless, higher expenditure during 2005/06 would feed through into a higher four yearly average expenditure figure, which is used in calculating following years' winter maintenance budgets.

School crossing patrols

3.6 A further underspending of £10,000 is available on this budget, which is additional to the savings of £50,000 from staff vacancies identified and redistributed in the 2005/06 revised budget. Again, the reason for the additional saving relates to the ongoing staff recruitment difficulties that have been identified in previous budget monitoring reports.

Management and support services

3.7 Previous budget monitoring reports have referred to the actions which have been taken throughout the second half of the year in order to contain expenditure on the management and support services to the cash limit. The latest budget monitoring review indicates that these measures have been successful in restricting expenditure and a small underspending of £67,000 is currently projected, partially reflecting additional departmental income and higher fee recharges.

Waste Management

3.8 Information on waste volumes during the third quarter of the financial year has now been evaluated and this confirms the trends identified during the first half of the year. Overall, waste volumes during the first nine months of the year were lower than assumed in the 2005/06 budget. Household waste levels rose by only 0.7% during this period, below the budgeted allowance of growth of 2.0%, whilst civic amenity waste fell by just under 4% during the same period. As a result, total waste volumes for the first nine months of the year were 0.7% lower than during the corresponding period of 2004/05.

3.9 Although waste volumes have been lower than expected, any cost savings are required to cover expenditure on a number of unfunded or only partially funded items within the waste management budget. This includes higher costs associated with the introduction of a third shift at the Alton materials recovery facility (MRF) and the cost of operating the composting site at Little Bushy Warren, which were only partially funded in the 2005/06 original budget. Additional expenditure in connection with paint collection and disposal, together with the disposal of televisions and monitors under the hazardous waste directive, were completely unfunded.

3.10 The call on the 2005/06 central waste management contingency of £4.730 million has been provisionally assessed at £1.457 million , for the third quarter of the year. This results in an overall call of £3.249 million for the first nine months, leaving a sum of £1.481 million available to cover higher waste contract related expenditure during the final quarter of the year. Indications suggest that it is unlikely that there will be significant savings against the overall waste management contract budget allowance, despite the encouraging waste volume trends.

4 Other services

4.1 Budget monitoring indicates that spending on the other main Environment services budgets, including public transport support and road safety education, is being progressed in accordance with the 2005/06 revised budget.

5 Impact assessment

5.1 Monitoring of the Environment revenue budget benefits all sectors of the community as it helps to ensure that the department's services are delivered in a cost effective manner within corporate budget guidelines and in accordance with the County Council's race and equalities policies.

6 Conclusion

6.1 The budget monitoring position, as set out in this report, shows a satisfactory position for this stage of the financial year. Expenditure on the main operational budgets, including highways maintenance and public transport support, is being carefully managed to utilise available funding and the year-end outturn is expected to be close to the approved allocations.

6.2 At the time of preparing this report total savings of £77,000 have been identified on management and support services and school crossing patrols. Opportunities will be taken to utilise this projected underspending, together with any further savings that may be identified during the latter stages of the year, to bring forward high priority items of expenditure, for example highways maintenance pre-surface dressing patching, that would otherwise need to be met from the 2006/07 budget.

6.3 Expenditure on highways winter maintenance salting and snow clearance is expected to exceed the budget allowance by at least £500,000. Any overspending on this activity would not count against the outturn on the cash limited budgets as this would be met from central balances, in accordance with the special budgetary arrangements that apply to this activity

Recommendations

1 That the actions that are being taken to manage expenditure within the approved funding allocation be endorsed.

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.

(a) Environment Department Management Team: 7 February 2006 - Revenue Budget Monitoring 2005/06 report.

Appendix 1

Environment

Revenue budget 2005/06 - monitoring statement

Analysis of variations

Appendix 2

Environment

Revenue budget 2005/06

Summary showing detailed allocation of highways maintenance budget