Archived decisions
REPORT OF THE
Cabinet / Leader
PART II
FINAL ACCOUNTS 2005/06
The Final Accounts for 2005/06 were considered by the Cabinet on 26 June 2006 prior to submission in the format required by the relevant code of practice to the Governance Committee on 28 June 2006 for approval. A copy of the original report to the Cabinet is available on Hantsweb at:
/decisions/decisions-index/index-docs-6423
and copies have been placed in the Members' Rooms. A summary of the significant features of the accounts are described in the following paragraphs.
Service Cash Limited Expenditure and Total Expenditure
Service cash-limited spending in 2005/06 was in line with the predictions in the last monitoring report in April. The extenuating circumstances of the projected Adult Services overspend had been previously reported to the Cabinet in May 2006 and the final overspend was £11.1m. This was due to higher spending on care for older people (£8.4m) and younger adults (£2.9m), offset by other minor savings
(-£0.2m). However, other services spending was at levels very close to their cash limits: Children's Services was in balance following the utilisation of an underspend of £260,000; Environment had a small underspend of £13,000; Recreation and Heritage had a small overspend of £14,000 and Policy and Resources had an overspend of £139,000 which was predicted in the last monitoring report. Due to the achievement of net savings of £5.5m on non-service budgets (principally from reduced insurance liabilities and more interest on balances), the overall budget position for 2005/06 is therefore a net overspend of £5.7m (0.5%) for the year.
Appendix 1 of the original Cabinet report details adjustments made to cash limits since the revised budget for 2005/06 and Appendix 2 analyses the main variations between actual spending and cash limit for each service.
Action with regard to underspendings and overspendings
On the underspendings, 50% of the Environment Department's underspend is to be returned to the service, which is in accordance with the County Council's financial management policy. Policy and Resources and Recreation and Heritage will carry forward their overspendings to 2006/07, which is also in line with current policy. In respect of Adult Services, the overspending in 2005/06 will be written off in accordance with the proposed recovery strategy.
Other Budgets
The overall underspend on other budgets is £5.5m, as set out in Appendix 3 of the original Cabinet report, compared with the previous projection of £3m.
Outturn and balances
Taking into account the above, the 2005/06 outturn may therefore be summarised as follows:
£'000
Service overspending 11,264
Other budgets -5,538
Earmarking of 50% of service underspend 7
______
Reduction in balances at 31 March 2006 5,733
Carry forward of service overspendings to 2006/07 -153
______
Potential reduction in balances (to £3.5m) 5,580
______
This leaves savings of £3.5m to be identified to restore the level of balances to the target level of £7m assessed when the 2006/07 budget was set, but a further risk assessment will be required in the light of progress on the adult services recovery plan, before determining what action is required.
Earmarked Reserves
Earmarked reserves are £11.8m higher than budgeted at £92.9m at 31 March 2006. Full details are set out in Appendix 4 of the original Cabinet report.
Treasury Management
The Cabinet approved the County Treasurer's annual report on the exercise of the Treasury Management function. Full details are set out in Appendix 5 of the original Cabinet report.
Prudential Indicators
The prudential code for capital finance in local authorities includes a number of prudential indicators for which actual indicators for the year as well as budgeted indicators need to be approved. A summary of the relevant indicators for 2005/06 are detailed in Appendix 6 of the original Cabinet report.
Annual Efficiency Statement
The County Council is required to submit its 2005/06 `backward look' annual efficiency statement (AES), based on actual performance, to the Department for Communities and Local Government. Following the necessary certification of the Leader, Chief Executive and County Treasurer, the AES was submitted to meet the deadline of 6 July 2006. The submission indicated that the County Council is on target to demonstrate achievement of efficiency gains in excess of 2.5% per annum. The revised guidance on measuring and reporting efficiency gains is summarised in Appendix 7 of the original Cabinet report, with the improvements included in the submission detailed as an annex to that appendix.
Pension Fund accounts
The separate accounts for the Hampshire Pension Fund are detailed in Appendix 8 of the original Cabinet report.
Financial Management Policy
The County Council's financial management policy incorporates both the financial planning policies that underpin the County Council's medium-term financial planning strategy and policies relating to the provision of financial services. The progress made in 2005/06 is detailed in Appendix 9 of the original Cabinet report.
Conclusion
Taking into account the challenging circumstances encountered by Adult Services, the Cabinet were nonetheless satisfied with the close level of budgetary control overall, but will be considering at their next meeting what action is required to restore the level of balances in 2006/07.