Contact: Bevis Ingram, (01962) 847508, e-mail: bevis.ingram @hants.gov.uk

1 Summary

1.1 This report summarises the Recreation and Heritage service's spending in 2005/06.

1.2 It recommends that the final accounts for 2005/06 be approved, that a further capital allocation of £75,000 for the Calshot Mitchell building be made and that a transfer of £14,000 from capital to revenue be made to meet the revenue overspend.

1.3 Decisions on Recreation and Heritage revenue expenditure and capital programme impact on the financial resources available to this service to contribute to the following corporate strategy aims:

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

1.4 Overall there is a net overspending of £14,000 (-%) against the 2005/06 adjusted revised revenue cash limit of £30.4m.

1.5 The major variations against the cash limit are:

	£'000
Museums and Archives	-43
Libraries and Information	102
Sport and Community	-36

1.6 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% underspending. On this basis £14,000 would normally be deducted from the service cash limit for 2006/07.

1.7 However it is proposed that £14,000 should come from capital since there is unallocated capital at the end of 2005/06.

1.8 The outturn position on the Service's business and trading unit Arts Marketing Hampshire is a surplus of £1,000.

1.9 The unit operates under arrangements agreed by the County Council which permit it to retain planned surpluses for purposes approved in its business plan.

1.10 On capital, schemes to the value of £8.8m were committed in the year and schemes to the value of £0.6m have been approved to be carried forward to start in 2006/07. In total this amounts to £0.2m less than the approved cash limit for the capital programme. The schemes committed include a proposal for a further £75,000 for the Calshot Mitchell building which will reduce the prudential loan required to fund the balance of the scheme. It is proposed to offset this by removing the £75,000 provision for the Calshot climbing wall in the 2006/07 capital programme.

1.11 Further details on the main differences between the actual revenue expenditure and the revised budget for cash limited expenditure are given in Part A below while details of revenue expenditure which is not included in the cash limit are contained in the appendices at the end of the report. The results of the trading units are reported in Part B. Part C deals with capital schemes. Part D explains the basis of the control assurance statement included as Appendix 8. Part E covers the requirement to report on partnership accounts.

2. Part A - revenue expenditure under the Service's control

2.1 Revenue expenditure under the Service's direct control is subject to a cash limit. For 2005/06 the adjusted amount is £30.4m as set out in Appendix 1.

2.2 The final outturn was £14,000 more than the cash limit, and is very much in line with the March monitoring report which forecast a £6,000 overspend. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget.

2.3 Variations from budget in recent years have been:

	Variations from Revised Budget
	£'000	%
2002/03	-18	0.1
2003/04	-32	0.8
2004/05	-	-
2005/06	+14	-

The most significant elements within the total net overspending are explained in the following paragraphs.

2.4 Museums and Archives ( - £43,000)

Museums vacancy savings (-£62,000) and additional spending on projects (£40,000) offset by additional contributions towards projects (-£15,000).

2.5 Library and Information service (+ £102,000)

Pressures continue on the library service as a result of reduced income (£92,000) and increased premises costs (£66,000) and supplies and services costs (£53,000). Management action resulted in vacancy savings of £140,000 to offset the pressures.

2.6 Sport and Community (- £36,000)

Work was deferred on county owned community centres (-£19,000) and reduced allocation for community centres special projects (-£10,000).

3. Part B - Trading units

3.1 Details of the financial performance of Arts Marketing Hampshire are set out in Appendix 5.

4. Part C -Key achievements and performance indicators

4.1 In the course of the year the department achieved the highest score of 4 for the culture service block assessment. Other key achievements include:

· Green Flag Award achieved by Staunton Country Park and Queen Elizabeth Country Park.

· Arts Service organised over 1,700 events including many in County Council residential homes for the elderly.

· Sports Hampshire and Isle of Wight became the first County Sports Partnership nationally to launch a four year programme.

· Charter Mark for excellence in customer service awarded to:

· Library and Information Service

· Museum Service

· Countryside Service

· Arts Service

· Outdoor Service

· Sport Hampshire and Isle of Wight

· Hampshire Record Office (renewal) (National Archive accreditation also renewed).

· MORI Survey indicated increased levels of satisfaction with Recreation and Heritage services.

· Continued success in attracting external funding, ranging from smaller grants to £100,000 funding for improvements to Westbury Manor Museum.

· School library service achieved a 98% renewal rate for the 2005-08 Service Level Agreement with schools.

4.2 During the financial year 2005/06, the regular budget monitoring reports to the Executive Member and Policy Review Committee have been developed to include some of the key performance indicators for Recreation and Heritage.

4.3 The final position for 2005/06 for these indicators is shown in Appendix 9. This indicates that, with very few exceptions, service usage has increased since 2004/05 and has also exceeded the target levels for 2005/06. Given the improved satisfaction levels mentioned earlier, and financial outturn so close to budget, this suggests a very successful year for Recreation and Heritage.

5. Part D - Capital expenditure 2005/06

5.1 The outturn for 2006/07 is set out below with details of the total resources and of the individual schemes started in the year appearing in Appendix 7.

	Total
	£'000
Total resources	9,615
Value of schemes started in 2005/06	-8,766	*
Value of schemes carried forward to 2006/07	-666
Undercommitment against the cash limit	183
* includes a proposed £75,000 new allocation for the Calshot Mitchell building

5.2 The total programme limit for 2005/06 amounted to £9,615,000 and schemes to the value of £8,766,000 were committed in the year.

5.3 Schemes approved to be carried forward to start in 2006/07 included discovery centre and library improvements and grants to village halls. The list of schemes started and carried forward are included in Appendix 7.

5.4 The combined value of schemes which started in 2005/06 and those carried forward to start in 2006/07 is £9,432,000 which is below the cash limit and the balance of the cash limit can also be carried forward to 2006/07.

5.5 In accordance with the County Council's Financial Procedures, the final costs of capital schemes completed in 2005/06 are listed in Appendix 7. These relate to improvement works in countryside, and furniture, fittings and improvements in libraries. "Completed" in this context means when the final payment has been made. Some of these schemes may have been in operation prior to April 2005, but the final payment was only made in 2005/06.

5.6 The final cost of the schemes completed in 2005/06 is £15,000 more than the latest approved estimate for those schemes charged to the service's capital cash limit.

5.7 It is proposed that the additional cost is charged to the capital cash limit for 2006/07.

6. Part E - Departmental assurance statement

6.1 The Code of Practice on Local Authority Accounting in the UK requires the County Council within its Statement of Accounts to publish a Statement of Internal Control signed by the Leader and Chief Executive. As part of this process the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the system of internal control operating in each department and in the County Council as a whole. These opinions are reviewed by the Governance Committee. Appendix 8 contains the statement relating to Recreation and Heritage and concludes that overall there is an appropriate framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council objectives.

7. Impact assessment

7.1 In completing this report, account has been taken of the Corporate Equalities and Race Scheme, and of the Department's service impact assessments.

Recommendations

It is recommended that Members support the following recommendations for the approval of the Executive Member:

1. That the final acounts for 2005/06 be approved.

2. That the proposal to transfer £14,000 from capital to revenue to meet the revenue overspending be approved.

3. That a further capital allocation of £75,000 be approved for the Calshot Mitchell building.

4. That the removal of 2006/07 capital programme provision for the Calshot climbing wall be approved.

5. That the additional cost of capital schemes completed in 2005/06 be deducted from the 2006/07 capital programme limit.

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.

Appendix Contents

1 Construction of the cash limit

2 Summary of revenue expenditure

3 Analysis of cash limited revenue expenditure over services

4 Major variations in cash limited expenditure

5 Trading Units - summarised accounts 2005/06

6 Revenue expenditure 2005/06 not included in the cash limit

7 Capital expenditure 2005/06

8 Departmental assurance statement

9 Performance Indicators 2005/06

Appendix 1

Recreation and Heritage service

Revenue Expenditure 2005/06

Construction of cash limit

1 In the revised budget, revenue expenditure under the service's direct control was subject to a cash limit set by Cabinet of £30.3m. Business rates other than relating to schools was an exception because the level of business rates on the County Council's own properties could not be determined precisely when the revenue budget was set. As a result of revaluations actual expenditure on rates is £52,000 higher than was provided for in the revised budget and the cash limit has been adjusted accordingly.

2 During the year part of the lump sum provisions in the capital programme were allocated to minor schemes of a revenue nature. Under the Code of Practice on Local Authority Accounting the expenditure on these schemes is required to be accounted for in the revenue account. The revenue budget has been increased by £79,000 to cover this expenditure by a transfer from the County Council's overall budget for revenue contributions to capital. The individual schemes will still however, continue to be controlled through the capital programme.

3 A reduction in the revenue cash limit of £2,000 for the staff computer equipment salary sacrifice scheme.

4 A reduction in the revenue cash limit of £4,000 for contribution towards flail equipment and a corresponding increase in the capital cash limit.

5 The adjustments referred to above are incorporated in the table below which summarises the position for the service in the year:

	£'000
Revised budget for 2005/06	30,312
Business rates adjustment	52
Revenue schemes	79
Salary sacrifice scheme	-2
Flail contribution	-4
Amended cash limit Net expenditure	30,437 30,451
Net overspending against Service's controllable expenditure.	14

Appendix 2

Recreation and Heritage service

Final Accounts 2005/06

Summary of Revenue Expenditure

Appendix 3

Recreation and Heritage service

Revenue Expenditure 2005/06

Analysis of cash limited expenditure over services

Appendix 4

Recreation and Heritage service

Revenue Expenditure 2005/06

Major variations in cash limited expenditure -overspending of £14,000

Appendix 5

Recreation and Heritage service

Revenue Expenditure 2005/06

Trading units - summarised Trading Accounts 2005/06

The trading unit in this statement operate under Financial Regulation 20. This statement summarises its trading position and shows the movement in its reserve account.

Appendix 6

Recreation and Heritage service

Revenue Expenditure 2005/06 not included in the cash limit

1 Capital charges (£6.4m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £0.2m more than the budget. However, this will have no direct effect upon the overall budget requirements of the County Council as the capital charges are replaced by actual financing costs in the central asset management revenue account.

2 Central support services, repairs and maintenance of buildings (£2.9m)

These items are within the control of Policy and Resources. Support services are apportioned to services in accordance with the level of services provided and office accommodation occupied. Control of the budget for repairs and maintenance of buildings is exercised on a functional basis rather than service basis, but actual costs are allocated to the relevant service.

3 Adjustment for pension and early retirement costs (£0.5m)

This adjustment includes:

a) the difference between the cash value of employer's contributions to the Local Government Pension Scheme (LGPS) (included within the service's cash limited expenditure) and the current cost of pension benefits earned by members of the LGPS during 2005/06, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK and is calculated in accordance with Financial Reporting Standard 17 (FRS 17) Retirement Benefits. It relates only to "defined benefit" schemes, including the LGPS, where the assets and liabilities of the scheme can be attributed to individual employers on a consistent and reasonable basis.

b) the costs arising from early retirement decisions and the granting of compensatory added years. These are within this service's cash limited expenditure, but are excluded from the cost of services, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.1m)

Corporate and democratic core covers management and support costs that relate to member support and advice. They are within the control of Policy and Resources and so are charged against that service's cash limit. However, the Best Value Accounting Code of Practice requires these costs to be aggregated and separated from the cost of providing front line services.

Appendix 7

Recreation and Heritage service

Capital Expenditure 2005/06

Appendix 8

Recreation and Heritage service

Department assurance statement for the year ended 31 March 2005

Introduction

The Accounts and Audit Regulation 2003 require the County Treasurer to maintain an adequate and effective system of internal audit.

From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04 the Leader and Chief Executive have also been required to sign a more general statement of internal control. To support this process, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

Responsibilities

It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control.

Basis of opinion

The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. The internal audit plan has been delivered in accordance with the Code of Practice for Internal Audit in Local Government in the United Kingdom, issued by CIPFA.

Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control.

Opinion

In my opinion the Recreation and Heritage Department has an appropriate framework of control which provides partial assurance regarding the effective, efficient and economic achievement of the department's objectives. This is because audit testing has shown that existing controls are not operating in practice.

Ejner Knudsen
Chief Internal Auditor
County Treasurer's Department
Hampshire County Council
5 June 2006

Appendix 9

Recreation and Heritage service

Performance Indicators 2005/06