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

1. Introduction

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

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

· Policy and Resources business units

· Policy and Resources capital programme

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

1.2 The previous budget monitoring report in December 2005 and the revised budget included in the 2006/07 revenue budget report in February 2006 identified pressures within Property, Business and Regulatory Services, County Treasurer's and Human Resources Departments. For the Accredited Community Safety Officers Service, the latest forecast outturn exceeds the cash limit by £100,000. In addition, expenditure on Coroners Services is estimated to be £30,000 in excess of the budget and County Council election costs are likely to exceed the budget by £147,000. Whilst pressures have been managed in other areas, for Policy and Resources overall, the forecast outturn is expected to exceed the cash limit by £222,000 and would be carried forward to 2006/07 in accordance with the financial management policy. The report also identifies a number of instances in which planned spending has slipped from 2005/06 to 2006/07. The treatment of over and under-spendings will be considered when the final outturn is known.

1.3 Capital expenditure for the County Council is forecast to be £190.2m, £3.9m above the revised estimate reported to Cabinet on 10 February 2006. Capital receipts will also be higher than forecast in February.

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

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

2.1 The latest cash limit for 2005/06 is £47.2m as set out in Appendix 1. Based on monitoring of expenditure up to the end of February 2006 the outturn is forecast to be above the cash limit by £222,000. The main budget pressures, together with areas of underspends are detailed below.

Chief Executive's Department

2.2 Overall the budgets managed by the Chief Executive's Department are projected to be on target at the year end, with the exception of the budget for County Council elections. There is likely to be a small underspend on Health Scrutiny due to delays in appointing to the Health Review Officer post and on the Members budget in relation to IT and Training.

2.3 Emergency Planning have made provision of £15,000 to purchase a bespoke computer system to support training and emergency planning exercises in consortium with Hampshire Police and Hampshire Fire and Rescue Service. Discussions between the three partners are on-going to agree ownership and operation of the system. Consequently, it will not now be possible to purchase this before the end of the current financial year. Subject to the overall outturn position, a carry forward of this underspending will be sought.

2.4 It is likely that the budget provision for election expenses will be exceeded. This has not previously been identified as a budget pressure as a number of the district councils have still to finalise their election accounts. Since mid January 2006 we have received final claims for only 4 of the 11 districts. Based on estimates recently provided by the other districts, the forecast outturn is likely to exceed the budget by £147,000. Overall, this represents a significant increase on the costs of the 2001 elections. This is partly due to the agreement in January 2003 that Deputy Returning Officers' fees should be paid according to the size of the actual electorate (current average is 13,500) rather than be based on a notional electorate of 5,500 for each division. From the expenditure details so far received, the four year period between elections has also seen marked increases in printing costs, accommodation costs, the cost of postal votes, staffing and support costs. The Chief Executive, as County Returning Officer, has already commenced discussions with district elections managers in order to improve the quality of budget estimate information both in the event of any by-elections being required and in relation to the next Council elections in 2009.

Human Resources Department

2.5 The previous monitoring report in December 2005 predicted an overspend against the cash limit of £60,000. This overspend has been eliminated, mainly because of reduced costs of corporate advertising. Careful management of this programme has delivered a 20% increase in recruitment assignments whilst delivering cost savings of £130,000 in excess of the SAP benefits realisation targets.

2.6 These additional savings have been required, however, to meet some unavoidable additional costs, mainly in the Employment Practice Centre. A combination of continuing ill-health problems in key positions and significantly high levels of maternity leave in senior posts within the department have necessitated temporary short term contracts being put into place to sustain the department through this period. The anticipated additional cost to the department from these arrangements is estimated at £170,000.

2.7 In addition, there has been some slippage in three key projects:

· in the first year of the Hampshire Own Grown (HoG) programme only a small proportion of the budget has been used while the underlying principles were established and suitable consultants for partnership work identified.

· the purchase and development of a Customer Relationship Management (CRM) system has been postponed in order to better assess synergies with the HR / Payroll Service Centre and the Contact Centre, and the transitional funding earmarked for this purpose can be used in 2006/07.

· Personal files - A project to introduce electronic personal files at an estimated cost of £30,000 has been put on hold pending implementation of the Council's proposed Record Management System which is currently under development.

2.8 Taking account of this slippage, an underspend of £40,000 on HR budgets is projected in 2005/06.

A more detailed analysis of the financial position of the department is undertaken in the following paragraphs.

Recruitment Advertising (£130,000 underspent)

2.9An underspend of £130,000 has been achieved, despite a 20% increase in workload, through prudent stewardship of the budget, a thorough review of activity and maximising the appropriateness of all advertising undertaken on behalf of departments together with external factors including a more favourable job market and advertising market than had been expected.

2.10 The combination of these factors has meant that it has been possible to credit some departments to the value of £100,000 where recruitment numbers decreased. Additionally, absorbing the 20% workload increase without the need for additional funding will deliver non-cashable savings in excess of £300,000 which would otherwise have been required to fund extra staff and advertising.

2.11 The department faces a challenging environment for 2006/07 for the following reasons:

· the nature of recruitment advertising work is demand led, dependant upon the unpredictable churn and turnover of diverse job roles within the County Council and subject to changing market conditions

· the stepped increases in SAP realisation savings targets required for advertising in 2006/07 and 2007/08, together with the departmental wide requirement of meeting SAP savings totalling another £500,000 over the next two years

· the likely increase in recruitment activity as departments ease their recruitment freezes.

2.12 Further efficiency gains will be increasingly difficult to achieve. However, opportunities to improve the service are being explored and it is hoped that an investment in the Resourcing Centre's IT systems can be made next year in order to maximise the ability of the Centre to respond to future corporate and departmental requirements, maintain the excellent results from the current year and minimise the risks to HR's corporate management of the budget in the future. This investment is planned to be funded from within the 2006/07 advertising budget.

Hampshire Own Grown (£79,000 underspent)

2.13 Hampshire Own Grown is a high quality new project, sponsored by the Leader, which promotes Hampshire County Council as an employer of choice. Work in the first few months of the project has outlined the principles of how the programme will interact with the organisation and identified suitable consultants to work in partnership with Hampshire. Alongside this, the development of the work experience and graduate placement programmes is also underway. There are plans to offer the organisation and graduates a range of funded places to encourage the best students to spend time with Hampshire County Council.

2.14 While these principles have been developed, expenditure on the extensive development of the Future Leaders programme and the Graduate programme has been delayed and will be deferred to 2006/07. Hence, only a small proportion of the HoG budget has been spent to date. The case for carrying forward all or part of this underspending can be considered once the final outturn is known.

County Treasurer's Department

2.15 At the revised budget stage an overspend of £100,000 was expected but it was indicated that management action would be taken in an attempt to bring this figure down. In the event, it is now expected that the department's outturn will be in line with its cash limit due to a combination of staff vacancies arising and additional income.

2.16 Work to configure SAP to accommodate the Pay and Benefit changes has commenced, based on a number of assumptions. The project plan has been revised to reflect the later implementation date so that part of the £140,000 funding released from the earmarked reserve will not now be needed until 2006/07.

Property Business and Regulatory Services

2.17 The revenue repair and maintenance budget includes a winter contingency provision to mitigate against the financial consequences of severe weather conditions. At the end of February there was a low level of commitment against the contingency, although it is likely that further commitments will be made before the financial year end. In line with previous practice, any unspent contingency will be considered for carry forward, subject to the overall outurn position for Property, Business and Regulatory Services and other Policy and Resources services.

2.18 The pressures previously reported on the Accredited Community Safety Officer budget relating to the higher cost of allowances and lower income from fixed penalty notices have persisted and while every effort will continue to be made to contain this within existing resources an overspend for the service of up to £100,000 is now anticipated.

2.19 In the past year HM Coroner Service has been experiencing above inflationary increases in charges from hospitals e.g. for mortuary and pathology services and an overspend of £30,000 is now forecast.

2.20 Although there will be variations on individual services the overall position for the remaining Property, Business and Regulatory Services budgets is expected to be close to cash limit.

Other non-departmental Policy and Resources budgets

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

Summary

2.22 At the end of February 2006 the main variations from cash limit are forecast to be:

County Council Elections	+£147,000
Emergency planning	-£15,000
Accredited Community Safety Officers	+£100,000
Coroners	+£30,000
Hampshire Own Grown (net of additional spend elsewhere in HR)	-£40,000
Overall forecast for Policy and Resources	+£222,000

3. Business Units

Property, Business and Regulatory

3.1 Whilst the trading position for the catering business, HC3S, remains tight the performance of the other business units continues to be strong and at this stage it is anticipated that the overall forecast included in the recent business plans for a surplus of £170,000 will be achieved.

IT Services

3.2 There is no change to report for IT Services. A trading deficit of £667,000 is forecast for this year which will be offset by the reserve brought forward from 2004/05. The business plan forecasts a breakeven trading position for 2006/07.

4. Policy and Resources capital programme

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

4.2 As at 28 February, expenditure on capital repairs totalled £26.1m, and schemes to the value of £5.6m had started, representing an overall commitment of £31.7m.

5. Overall capital payments and sources of finance

5.1 The capital financing plan approved by the Cabinet in February 2005 was based on projected capital expenditure of £191.6m in 2005/06. A revised expenditure forecast of £186.3m was reported to Cabinet in February 2006.

5.2 Capital expenditure to 28 February 2006 totalled £135.3m. Based on previous capital expenditure profiles, the forecast for the year is £190.2m, £3.9m above the revised forecast.

5.3 The capital receipts forecasts for 2005/06 underpinning the estimates of resources agreed by Cabinet on 10 February 2006 assumed total capital receipts of £5.7m in 2005/06. At 28 February 2006, completed disposals have generated £10.3m, although approximately £2.6m of these will not actually be received until 2006/07. This increased level of capital receipts in 2005/06 will help fund the increased expenditure forecast above.

5.4 In accordance with the revised policy relating to vehicular access over registered common land and village greens, as agreed by the Executive Member for Policy and Resources in February 2005, 100% of capital receipts secured in respect of Deeds of Grants are made available to Recreation and Heritage. As reported to the Executive Member in November 2005, an enlargement to an existing Deed of Grant has been agreed in 2005/06 and this will be transferred to an earmarked reserve to be used to fund the maintenance and management of the commons and village greens in the future.

6. Carry forward of 2005/06 capital schemes not started by 31 March 2006

6.1 The County Council's policy is to allow the carry forward of capital schemes not started by 31 March subject to the cost of the schemes carried forward being contained within the programme limit. Approval is sought for the carry forward of schemes on this basis. Details of the scheme carried forward will be reported to the Cabinet in June in the report on the 2005/06 final accounts.

7. Impact Assessment

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

8. Recommendations

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

8.2 To approve the use of £100,000 from the Human Resources transitional infrastructure funding in 2006/07 to develop a customer relationship management system in collaboration with the developing corporate Contact Centre.

8.3 To defer consideration of the treatment of over and under-spendings against the 2005/06 revised budget until the final outturn position is known.

8.4 To approve the carry forward of schemes in the 2005/06 capital programme, subject to the cost of the shemes being accommodated within the approved programme limit.

Section 100 D - Local Government Act 1972 - background papers

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

NB the list excludes:

Published works.

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

TITLE FILE

None.

Appendix 1

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

Appendix 2

Policy and Resources 2005/06 capital programme