Hampshire County Council
	Executive Member for Environment		Item 1
	16 January 2007
	Policy and Resources Scrutiny Committee
	1 February 2007
	Revenue Budget 2007/08, 2008/09 and 2009/10
	Report of the County Treasurer and Director of Environment

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

1 Summary

1.1 This report sets out the proposed Environment revenue budget for 2007/08, a provisional budget for 2008/09 and 2009/10 and recommends a revised budget for 2006/07. This report has been prepared in consultation with the Executive Member and will be reviewed by the Policy and Resources Scrutiny Committee. It will be reported to the Leader and Cabinet on 9 February 2007 to make final recommendations to County Council on 21 February 2007.

1.2 The budget proposals contained in this report are derived from the departmental service plan which has been developed to support the priorities of the Corporate Strategy.

1.3 The revised budget for 2006/07 is anticipated to come in close to the cash limit, except for £0.490 million of planned underspends which have arisen due to timing delays on specific projects. These are all within the highways area (see paragraphs 4.5 and 4.12). It is proposed, subject to Cabinet approval, that these are carried forward to meet the expenditure which is now expected to occur in 2007/08.

1.4 The budget plans for 2007/08 include a number of significant issues. These include the impact of rolling out pay and benefits (Environment's 25% contribution of £0.226 million towards its total cost), the contact centre (£0.129 million), the budget redistribution for Adult Services (£0.244 million), as well as needing to manage salary increments and the vacancy provision within existing resources (£0.425 million). In addition to this, the department is facing locally identified unavoidable operational pressures of £1.116 million which will be managed within existing resources. These fall within highways management, street lighting (mostly relating to the PFI project) and passenger transport.

1.5 The department is making savings to cover its share of the cost of pay and benefits, the contact centre, incremental growth and vacancy management through reducing staff and support cost budgets by £0.780 million, including the loss of 8.5 full time equivalent posts. Within this is a sum of £0.298 million (6.5 full time equivalent posts) identified as a direct consequence of the Area/HQ review of highways management, including some restructuring within the Departmental Management Team.

1.6 Although this report only deals with the revenue budget, the department's budget strategy for 2007/08 - 2009/10 has been integrated with capital planning. Government support for borrowing has been capped in line with the floor grant settlement and as a consequence the amount of borrowing funded capital programme for highways has been reduced by £5.733 million, or about 28%. In view of this, the whole capital programme has been reviewed. Structural road maintenance has been protected and alternative funding, including accelerating the use of developer contributions, has largely been identified to support the same level of integrated transport spending in 2007/08. In addition the local transport settlement has been increased by capital grant of £2.6 million in 2007/08 which offsets 45% of the reduction in supported borrowing.

1.7 Other priorities in the budget strategy, including allocations from Local Public Services Agreement (LPSA) reward grant, have included road safety and waste management. It is proposed that the further savings target be met by the removal of subsidised Sunday bus services. In addition, the programme of area reviews of subsidised bus services will continue to offset higher than inflationary cost pressures when services are re-tendered.

1 Budget strategy

1.1 A provisional budget for 2007/08 was agreed by the Cabinet in February 2006. This was based on the following principles:

· Increases for all services in accordance with the County Council's base budget rules.

· Additional increases for adults' and children's social care to reflect the Government's spending plans for those services in 2007/08 in the Spending Review 2004.

· Redeployment within each service of any further cashable efficiency improvements identified in 2007/08 towards new priorities and pressures.

· No other provision for any new service developments unless funded 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 priorities of the Corporate Strategy.

The inflation assumptions used to construct the provisional base budget for 2007/08 were:

· 2.5% for pay together with the planned increase in the employers' contribution to the Local Government Pension Scheme from 275% to 295% of employee's contributions.

· 2.5% for non-pay.

· Income to be maximised by reviewing charges in line with the average inflation on the related gross expenditure and introducing new income wherever possible, taking account of the powers to charge for discretionary services in the Local Government Act 2003.

1.2 Services are also required to identify annual efficiency improvements of at least 2.5% for the annual efficiency statement. These need to be integrated into budget planning and categorised into cashable and non-cashable. Cash savings in budget terms will be required to meet new pressures and service development proposals.

1.3 The principles and assumptions outlined in paragraphs 2.1 and 2.2 were reviewed by Cabinet in September 2006 and revised guidelines for the 2007/08 budget set to reflect changed circumstances, new priorities and additional information emerging since February. The revised guideline reflects:

· Pay inflation reduced to 2.25% in line with the Government's expectation of a downward movement in the level of public sector pay increases in 2007/08.

· Budget transfers in respect of the phased introduction of the contact centre Hampshire Direct.

· The need to make reductions in the workforce plan in order to contribute to the anticipated cost of the new pay framework.

· An additional £6 million for Adult Services reflecting the continuing impact of demographic factors.

1.4 For the Environment service, the provisional guideline for the 2007/08 budget was £100.9 million as shown in the table below:

	£ million
Provisional budget for 2007/08	101.3
Base budget adjustments including inter-service transfers	0.1
Hampshire Direct	-0.1
Pay and Benefits benefit realisation	-0.2
Guideline redistribution	-0.2
2007/08 Provisional guideline	100.9

1.5 Indicative budget guidelines for 2008/09 and 2009/10 were also set by the Cabinet in September, based on the following assumptions:

· Increases for all services in accordance with the County Council's base budget rules

· Additional increase of 4.3% for adult services and an increase for children's social care based upon 2007/08 passporting assumptions

· Redeployment within each service of any further cashable efficiency improvements identified in 2007/08 towards new priorities and pressures

· No other provision for any new service developments unless funded by cashable efficiency savings

· Pay inflation restricted to an average of 2% with no increase in the employers' contribution to the Local Government Pension Scheme

· 2.5% for non-pay

· Income to be maximised by reviewing charges in line with the average inflation on the related gross expenditure

· Continuation of the policy of funding inescapable waste contract spending pressures through a central contingency, including funding for landfill tax and waste volumes increases.

2 Budget guidelines

2.1 Since the provisional guidelines were set by the Cabinet in September, work on preparing the revenue budgets has been ongoing and a number of changes have been made to the provisional guideline figures. These include confirmation of the base budget provision for the waste disposal contract and adjustments to reflect the approved allocation of £2.1 million Local Public Service Agreement (LPSA) reward grant.

2.2 The adjusted budget guidelines for this service are:

For 2007/08	£106.0 million
For 2008/09	£106.6 million
For 2009/10	£107.5 million

2.3 This report sets out the Executive Member for Environment's responses to the guidelines. The report:

· Reviews the revised budget for 2006/07 ( as set out in Appendices 1 and 2)

· Reviews the 2007/08 base budget which totals £106.4 million (as set out in Appendix 3)

· Identifies £1.2 million of unavoidable pressures and costs to be absorbed (as set out in Appendix 4)

· Proposes savings and redeployment of resources totalling £1.6 million (as set out in Appendix 4)

· Identifies further efficiency improvements of £1.8 million in 2007/08, being 1.7% of the base budget (as set out in Appendix 5)

· Reviews the charges made by this service (as set out in Appendix 6)

· Reviews the trading accounts of business units (as set out in Appendix 7)

· Proposes a detailed budget for 2007/08 (as set out in Appendices 8 and 9)

· Identifies the workforce implications of the budget proposals including plans for workforce reductions to contribute to the increased cost of the new pay framework (as set out in Appendix 10)

· Proposes a provisional budget for 2008/09 and 2009/10 (as set out in Appendix 11).

3 Revised budget 2006/07

3.1 The most recent monitoring report to the Executive Member in November presented an interim update on the 2006/07 revenue budget and the actions that were being taken to manage the cash limit before the budget was revised later in the year. The report showed a satisfactory position for the halfway stage of the financial year, with the anticipated outturn being in line with the approved cash limit. However, it also drew attention to a number of areas where potential underspendings were thought likely to arise, which would need to be considered more fully in preparing the 2006/07 revised budget

3.2 A further review of the 2006/07 budget position has recently been carried out within the Environment department during November and December. The review has taken into account progress in implementing spending plans, together with recent information on trends in expenditure and income, and a revised budget for 2006/07 has been prepared. The main issues arising from the preparation of the revised budget are considered in the following paragraphs.

Changes to 2006/07 cash limit

3.3 The most recent figure for the 2006/07 cash limit was £101.307 million, reported in the budget monitoring report in November. This figure included a number of changes to the cash limit agreed earlier in the year. A number of further changes to the 2006/07 cash limit have recently been made:

· An increase of £1,021,000 reflecting the assessed call on the central waste management contingency, to reflect additional expenditure arising from the operation of the waste management contract during the second quarter of the year.

· An allocation of £295,000 to cover anticipated expenditure during 2006/07 on projects being funded from the LPSA reward grant allocation of £2.1 million, agreed by the Cabinet on 30 October 2006.

· An additional inflation allocation of £15,000 to cover higher costs of business rates.

· An additional £11,000 in respect of additional Government de-trunking special grant for highways maintenance on the A339.

· A transfer of £3,000 to Policy and Resources in respect of the staff childcare voucher scheme.

3.4 The adjusted 2006/07 cash limit is therefore £102.646 million, taking into account the above variations. A full summary of all of the changes to the 2006/07 cash limit since the beginning of the year is set out in Appendix 1, whilst details of the projects to be funded from the £2.1 million LPSA reward grant allocation are set out in Annex 1 to Appendix 1.

Highways maintenance

3.5 The recommended 2006/07 revised budget for routine highways maintenance is £23.773 million. This figure is £390,000 below the highways maintenance cash limit, reflecting a proposal to request the carry forward of three underspendings to the 2007/08 budget, where the phasing of expenditure has been delayed compared to that originally envisaged for 2006/07:

· Street lighting maintenance Private Finance Initiative (PFI) - the 2006/07 budget included an initial allowance of £400,000 to cover consultancy and other preparation costs of the proposed PFI project, including the cost of a project director and initial work in connection with the development of an outline business case. The anticipated phasing of planned expenditure during 2006/07 has recently been reviewed as a result of Government delays and it is now estimated that total PFI project spending will not exceed £150,000 this year, which would result in an underspending of £250,000 against this budget.

· Tree management - an additional sum of £200,000 was included in the 2006/07 highways maintenance revenue budget to implement a pilot for more pro-active policies for tree management, in order to reduce risk to members of the public from falling trees and branches. An underspending of £100,000 is now anticipated because of delays in implementing the necessary IT system in support of the project.

· Traffic Management Act - a sum of £105,000 was included in the 2006/07 budget, which was originally carried forward from 2005/06, for IT system development and running costs in connection with the implementation of the Traffic Management Act. An underspending of £40,000 is now expected against this allocation during 2006/07 because of delays by the Government in implementing changes to the existing regulatory framework and associated detailed guidance.

3.6 Expenditure on all of the above initiatives will still be required for its original purpose next year. Consequently, the carry forward of these underspendings to the 2007/08 budget would enable progress to be maintained in these areas, without impacting upon the management of next year's routine highways maintenance budget.

Road safety education

3.7 A 2006/07 revised budget of £346,000 is proposed for road safety education, in line with the cash limit for this division of service. The revised budget includes an allowance of £50,000 for LPSA2 pump-priming grant for performance target 8, aimed at reducing the numbers of people killed or seriously injured on Hampshire's roads, together with a sum of £65,000 for young driver safety ("Pass Plus") courses, from within the overall £2.1 million LPSA reward grant allocation.

Public transport

3.8 A revised budget of £7.811 million has been prepared for public transport support, which is in line with the cash limit for this service. The revised budget assumes that any higher expenditure during 2006/07 from contract extensions and re-tendering, together with any additional costs that may arise from de-registration of commercial services, are successfully accommodated within the approved budget limit by implementing various savings measures, in line with the approved service strategy.

3.9 The previous budget monitoring report during November discussed the measures that would need to be implemented to contain the significant cost increases in the Havant and New Forest tender areas, following service re-tendering earlier in the autumn. Action was taken to implement the necessary economies in these contract areas to offset these increases, to ensure that future patterns of bus subsidy support in these areas could be sustained financially, whilst taking into account the need to minimise the impact of service changes on passengers.

3.10 Subsequent contract re-tendering results from the Alton tender area have also now been received and evaluated. These also show significant increases of approximately 20%, compared with the current cost of these services, which would amount to an additional pressure of £81,000 in a full year. Offsetting savings from service withdrawals, which are to be replaced with a re-routed commercial service and community transport provision, have been identified to offset this pressure and balance the budget.

3.11 The 2006/07 revised budget includes a sum of £1.464 million for public transport services to be funded from Rural Bus Subsidy grant. It is anticipated that this sum will be fully consumed during the year in providing rural bus services.

Highways and transport management and support services

3.12 The recommended 2006/07 revised budget for the highways and transport management and support services is £19.930 million, which is £100,000 below the approved cash limit for this division of service. The revised budget reflects a proposal to seek the approval for a carry forward of resources to the 2007/08 budget, relating to delayed expenditure on work in connection with the development of an asset management approach for highways.

3.13 The 2006/07 original budget contained a total allocation of £208,000 to cover this work, including a sum of £150,000 which was originally carried forward from 2005/06. This funding was split between consultancy work and inventory development, as identified in the draft Transport Asset Management Plan published in May 2006. It has not been possible to progress the inventory development as quickly as originally envisaged due to the higher priority of the mapping services agreement work, together with ongoing development of a highways mapping system. This has slowed the development of asset management data systems and it is anticipated that this work will roll over into the next financial year, requiring the remaining £100,000 to be carried forward to next year's budget as a planned underspending.

3.14 Allowance of £60,000 has been included in the management and support services' revised budget to reflect the anticipated phasing of a LPSA reward grant project of £500,000 to accelerate the release of developer contributions. This funding will be used to increase capacity to identify suitable schemes and to undertake feasibility and design work, in order to accelerate the release of developer contributions which would help to deliver appropriate highways infrastructure improvement schemes.

Waste management

Waste contract related services

3.15 The approved 2006/07 original budget for waste management contract related services was £39.538 million, based on an estimate of expenditure commitments at the time it was prepared during November 2005. In addition, a sum of £4.800 million was included in a central contingency to cover future growth in waste volumes beyond estimated 2005/06 levels, together with an allowance for future contract price increases, changes in landfill tax and other contract pressures.

3.16 Periodic allocations are made from this central contingency throughout the year, based on quarterly assessments of cost increases on this part of the budget. An assessment has now been made of the call on the central waste management contingency to reflect additional expenditure arising from the operation of the waste management contract during the second quarter of the year, which amounted to £1.021 million.

3.17 The overall call on the contingency for the first half of the year is £2.225 million, including the first quarter's call of £1.204 million calculated earlier in the year, resulting in a revised budget of £41.763 million for the waste contract related services. This leaves just under £2.6 million to cover higher contract related expenditure during the remainder of the year.

3.18 The overall level of waste volumes during the first seven months of the year fell by 0.7%, compared to the allowance for growth of 2.5% provided in the central contingency. Within this figure, waste volumes from household collections fell by 1.3%, compared with a year earlier. On the other hand, civic amenity waste from household waste recycling centres rose by 0.9%.

3.19 On the assumption that these trends continue during the second half of the year, it is currently anticipated that variable cost savings from lower waste volumes will enable a number of additional fixed contract costs to be absorbed, including the disposal of hazardous waste such as paint, televisions and computer monitors. This should enable total waste contract related expenditure to be contained within the overall budget allowance, including the central contingency, during 2006/07.

Other waste management services

3.20 The 2006/07 revised budget for the other non-contract waste management services is £3.783 million, including a sum of £170,000 for anticipated expenditure during 2006/07 in connection with a number of investment proposals being funded from the £2.1 million allocation of LPSA reward grant. These projects are aimed at helping to contain future waste contract cost increases and to achieve LPSA2 stretch targets for waste management.

Summary of 2006/07 revised budget position

3.21 Detailed figures relating to the 2006/07 revised budget are shown in Appendix 9 (the green pages), whilst Appendix 2 provides a summary by division of service.

3.22 Overall the recommended revised budget is £102.156 million, being £490,000 below the 2006/07 cash limit of £102.646 million. This position reflect the request that is being made to carry forward earmarked underspendings of £390,000 on highways maintenance and £100,000 on highways and transport management and support services, to the 2007/08 budget.

4 Base budget 2007/08

4.1 A base budget for 2007/08 has been prepared which contains the current financial policies of the Council, in order to provide a starting point from which decisions can be made. The base budget for this service is £106.434 million at outturn prices.

4.2 Appendix 3 shows the make up of the base budget. Overall, the base budget includes a net increase in expenditure of £2.716 million, at constant (November 2006) prices, together with an allocation of £1.618 million to cover future inflation during 2007/08. The main variations affecting the individual services are discussed below.

Highways maintenance

4.3 The 2007/08 base revenue budget provision for routine highways maintenance is £25.234 million, representing an increase of £460,000 (+1.9%) at constant prices, compared with the re-priced 2006/07 original budget, together with an increase of £600,000 (+2.4%) to cover the cost of inflation next year.

4.4 The base budget includes additional sums of £93,000 to cover routine maintenance of recently adopted highways and £195,000 for additional revenue expenditure resulting from the implementation of capital improvement schemes, both of which have been added in accordance with the base budget preparation rules.

4.5 The base budget also includes increased funding of £263,000 for highways winter maintenance activities such as salting and snow clearance. This increase has been met by making a corresponding reduction to the locally resourced capital programme provision for structural maintenance schemes. This base budget treatment is in accord with the special budgeting arrangements that apply to winter maintenance, whereby the base budget provision is set at a level equivalent to the average expenditure on these activities during the past four years. A corresponding adjustment is then made to the allocation for highways structural maintenance, to offset any increases or reductions in the calculated winter maintenance provision.

4.6 Other variations within the highways maintenance base budget show an overall reduction of £91,000. These relate to:

· A339 special grant - the County Council is still receiving special grant from the Government in respect of its maintenance responsibilities for part of this highway, following its de-trunking in 2004/05. Provision of £439,000 is included in the 2007/08 base budget, which is an increase of £11,000 compared to the sum included in the 2006/07 original budget.

· LPSA2 pump priming grant - an allocation of £45,000 relating to performance target 15 for improved street cleanliness and pavement conditions in hotspots.

· Non-recurring items of expenditure - a reduction of £105,000, relative to the 2006/07 original budget, relating to provision for one-off expenditure in connection with the implementation of the Traffic Management Act (which was itself carried forward from the 2005/06 budget).

· Excess inflation - absorption of higher expenditure of £42,000 because inflation was higher than the 2.5% allowance included in the 2006/07 budget.

Road safety education

4.7 The 2007/08 base budget for road safety education is £304,000. This is £65,000 higher, at constant prices, than the original 2006/07 budget. This increase reflects an allowance of £30,000 for LPSA2 pump-priming grant for performance target 8, aimed at reducing the numbers of people killed or seriously injured on Hampshire's roads, together with a sum of £35,000 for young driver safety ("Pass Plus") courses from the one-off £2.1 million LPSA reward grant allocation.

Public transport

4.8 The 2007/08 base budget for public transport support and co-ordination has been set at £7.970 million, in line with the control total for this service. The calculation of the base budget includes higher inflation costs of £622,000, compared with the 2.5% allowance for inflation included in the current year's original budget. This reflects the higher full year costs arising from bus service contract re-tendering and re-pricing during 2006/07, which has been included within the definition of the base budget at November 2006 prices.

4.9 The 2007/08 base budget for bus subsidies of £5.920 million, which is within the above total provision for public transport support and co-ordination, is currently sufficient to cover the full year cost of existing bus service contractual commitments. It makes full allowance for the various changes to the supported bus network that have been implemented following the area reviews which were carried out as part of contract re-tendering in the New Forest, Havant and Alton areas, together with the other housekeeping savings implemented earlier in the year. However, the budget leaves virtually no scope for the accommodation of any additional cost increases that may emerge from future contract re-tendering, re-pricing or other service pressures during 2007/08.

4.10 Provision of £1.464 million has been included in the 2007/08 base budget for the provision of rural bus services, in line with the amount of Rural Bus Subsidy grant previously notified by the Government for 2006/07.

Environment department staffing and support costs

4.11 A budget planning exercise was carried out by the various branches within the Environment department, during the early part of the autumn, in order to identify likely service pressures during the three year budget planning period and to develop options for efficiency and other cost savings from within staffing and support services. This would enable budgets to be prepared in accordance with the anticipated revenue guidelines and allow a number of known cost pressures to be absorbed.

4.12 Overall pressures of £780,000 were identified for 2007/08 on the budgets for staffing and support costs, including top-slices of £129,000 to help fund the Hampshire Direct contact centre and £226,000 for pay and benefits savings, together with locally identified pressures such as staff salary increments.

4.13 Equivalent total efficiency and other savings of £780,000 have subsequently been identified to offset these pressures, from within the overall departmental budget. Savings of £412,000 are to be found from staff related budgets, reflecting a reduction of 8.5 full time equivalent posts, of which reductions of £298,000 (or 6.5 full time equivalents) are the direct consequence of the department's review of how highways management services are provided across both the area offices and headquarters. The remaining savings of £368,000 are to be found from a number of other support cost headings, including more effective use of in-house design teams resulting in less consultancy support, additional income, and efficiencies in district council administration, service level agreements and printing budgets.

4.14 £554,000 of the above total departmental savings of £780,000 are reflected in the construction of the 2007/08 base budget and have been allocated over the management and support services for highways and transport (£435,000), planning and development services (£75,000) and waste management administration (£44,000). The remaining part of the savings has been used in meeting the pay and benefits implementation savings of £226,000, which are included in the overall revenue budget guidelines, but which do not fall within the definition of the base budget.

Management and support services - highways and transport

4.15 The 2007/08 base budget for the highways and transport management and support services is £20.583 million, which is £45,000 (-0.2%) lower than the 2006/07 original budget, at constant prices. A number of transfers and other variations are included within the make-up of this figure, as detailed in Annex 3 to Appendix 3, the most significant of which are:

· Staff and support cost - as mentioned in paragraph 5.14 above, the budget includes allocated departmental savings of £435,000 which are required to offset a number of base budget pressures including staff salary increments and changes to the revenue budget guidelines.

· LPSA reward grant - provision of £420,000 has been made in the 2007/08 base budget for anticipated expenditure next year on projects being funded from the approved £2.1 million LPSA reward grant allocation. This comprises estimated expenditure of £220,000 for the project to accelerate the release of developer contributions and £200,000 for highways and transport initiatives and innovations, some of which are expected to be subsequently re-allocated to operational budgets.

· Exclusion of non-recurring items - an overall budget reduction of £290,000 has been made, relative to the 2006/07 budget, to exclude items which were included in the previous year on a non-recurring basis. This comprised expenditure in connection with the highways land asset project, additional consultancy support for home to school transport initiatives and an underspending carried forward from the 2005/06 budget for the development of an asset management approach for highways.

· Full year effect of 2006/07 budget savings - additional savings of £65,000 have been included reflecting the full year impact of efficiency measures approved as part of the 2006/07 budget relating to the administration of traffic management and intelligent transport systems.

Planning and development services

4.16 A base budget of £3.454 million has been calculated for the planning and development services. This is £106,000 (3.1%) lower than the 2006/07 original budget, at constant prices, reflecting a number of adjustments including the exclusion of non-recurring items, the full year effect of 2006/07 budget savings and an adjustment between revenue and capital.

4.17 The budget includes savings in staff and support costs, totalling £75,000, which are required to meet this service's share of higher departmental costs including the payment of staff salary increments, together with a budget adjustment relating to services transferring to the new Hampshire Direct contact centre.

Waste management

4.18 A base budget of £47.595 million has been set for the waste management services for 2007/08. In considering the key elements included within the calculation of the base budget, it is necessary to divide this service into two distinct categories:

· The waste contract related services, comprising the main waste disposal contract, together with the related budgets covering trade waste income and recycling credits. The 2007/08 base budget for this element is £43.137 million, equivalent to 91% of overall waste management expenditure.

· Other waste management services, including facility maintenance, administration, promotions and developments, the disposal of abandoned vehicles, the natural resources initiative and provision for household waste recycling centre (HWRC) management. This part of the base budget accounts for £4.458 million, or 9%, of overall waste management spending.

Waste contract related budgets

4.19 As the contract related waste management budgets are principally demand led and are subject to long term contractual obligations, thus providing very little scope within the overall management of the service to vary expenditure, special guidelines have been agreed by the Cabinet relating to the construction of the annual base budget.

4.20 The base budget allows for the cost of current contractual commitments, including known and estimated waste tonnages for the current financial year, at January 2006 prices. The contract is subsequently re-priced each year, on 1 January, in line with changes to the Retail Prices Index (RPI). The 2007/08 base budget for the contract related services reflects increases of £1.425 million (3.6%) for inflation covering the contract re-pricing in January 2006 and the increase in landfill tax in April 2006, together with £2.174 million (5.3%) in respect of other cost increases.

4.21 No allowance has been included in the calculation of the base budget for any future growth in waste volumes, beyond anticipated 2006/07 levels, future price or landfill tax increases, or other potential service related pressures. As in previous years, a central contingency sum, under the control of the Cabinet, will be provided within the overall County Council budget to meet these estimated costs during 2007/08. Quarterly allocations will be made to the waste management budget in line with actual cost increases incurred during the next financial year.

Other waste management services

4.22 A base budget of £4.458 million has been set for the other waste management services, in line with the relevant control totals, based on a roll forward of the 2006/07 situation. The base budget is expected to be sufficient to match the likely level of expenditure on the various non-contract related services next year. Overall, the 2007/08 base budget shows an increase of £790,000 (22.1%) at constant prices. The most significant variations within this total increase relate to:

· LPSA2 pump priming grant - a sum of £66,000 has been provided to reflect the anticipated phasing of expenditure in connection with a project to increase the volumes of waste to be diverted from landfill.

· LPSA reward grant - a sum of £730,000 is included for anticipated expenditure next year on a number of investment proposals being funded from the £2.1 million allocation of LPSA reward grant, which are aimed at helping to contain future waste contract cost increases and to achieve LPSA2 stretch targets for waste management.

4.23 The base budget for waste management administration makes allowance for savings in staff and support costs, totalling £44,000, which are required to meet this service's share of higher departmental costs including the payment of staff salary increments.

4.24 On 30 October, Cabinet approved the introduction of new trade waste controls at Household Waste Recycling Centres (HWRCs). It is estimated that if current trends continued, trade waste illegally dumped at HWRCs could be costing £1 million in 2008. This development and other invest to save schemes funded through LPSA reward grant (such as capacity optimisation at HWRCs, material flow planning, sustainable transport flows and infrastructure investigations), are aimed at future cost containment and performance improvements in key indicators. Without this investment, waste management budget pressures are at risk of escalating with a continuing significant impact on limited resources.

5 Cost pressures, redeployment proposals and efficiency improvements - 2007/08 - 2009/10

5.1 The Cabinet requires all services to consider and report on:

· cost pressures absorbed within the budget guidelines

· the redeployment of any resources required to offset any new spending priorities, or inescapable budget pressures, or legislative requirements which otherwise cannot be met within their budget guidelines

· annual efficiency improvements.

5.2 Details of additional cost pressures of £1.166 million in 2007/08, rising to £1.724 million in 2009/10, have been identified, as set out in Appendix 4. This appendix also includes details of proposals for the redistribution of resources within the relevant service operation budget to absorb these pressures, together with other savings against the base budget which are required to comply with reductions included in the budget guidelines. These issues are considered in more detail under the following headings:

· Operational budget pressures

· Budget guideline redistribution

· Pay and benefits review

Operational budget pressures

5.3 A number of pressures have been identified which are anticipated to fall on the revenue budgets for routine highways maintenance and public transport support and co-ordination:

· Street lighting - early estimates suggest that additional expenditure of £400,000 will be required in 2007/08, reducing to £200,000 in 2008/09 and 2009/10, for consultants and other project related expenditure in connection with the proposed street lighting maintenance Private Finance Initiative (PFI), which would be in addition to the sum of £250,000 that is proposed to be carried forward from the 2006/07 budget. Additional expenditure of £80,000 will also be incurred on street lighting maintenance, in excess of the corporate provision of 2.5% for inflation, following the agreement to extend the current street lighting maintenance contract into 2007/08 and also possibly the following year.

· Highways term maintenance contract - a pressure of £210,000 has been identified relating to the estimated impact of higher costs arising from the annual re-pricing of the contract, in excess of the 2.5% corporate allowance for inflation in the base budget, together with an additional payment to cover extra resources that will need to be employed by the contractor to carry out data collection and notice input, arising from the implementation of the Traffic Management Act.

· Other highways maintenance - provision of £14,000 for an extra priority 1 salting route in the Test Valley area, together with additional inflation of £12,000, above the allowance in the budget, relating to the district agency grass cutting and tree maintenance arrangements.

· Public transport - continuing pressures on the public transport budget are anticipated both from contract re-tendering and the fall out of Government funding towards community transport and other initiatives. Tendering results during 2006/07 have been significantly in excess of the 2.5% allowance for inflation included in the budget, ranging from increases of 39% in the New Forest to 20% in the Alton tendering area reflecting, to a significant extent, increases in bus operators' costs which are currently rising at an annual rate of 9%. It is anticipated that this trend will continue in future years, which taken together with reducing Government funding towards Cango services and other initiatives, would result in an estimated budget pressure of £450,000 on the public transport budget in 2007/08, rising to just over £1.2 million by 2009/10.

5.4 It is proposed that the above pressures be met by making savings within the same operational budget area. Although the level of expenditure on these services would remain unchanged, inflation and cost pressures will mean that service delivery will reduce in some areas. However, priority is being given to protect highways maintenance and additional capital grant for highways maintenance will be sufficient to offset the inflationary pressure and the reduction in the locally resourced capital to accommodate higher levels of winter maintenance spending.

5.5 The impact on the street lighting service, of funding the project team costs of the PFI scheme and additional expenditure arising from the contract extension, would be to reduce the existing street lighting column replacement programme by £480,000 in 2007/08, which equates to some 600 columns, or about 22% of the annual replacement programme. This reduction in the programme would have a marginal effect on the total number of columns that would eventually require replacement through the life of the anticipated future PFI contract.

5.6 Other routine highways maintenance operational budgets support a number of services to maintain the integrity of the highways infrastructure. Increased use of technology (eg intelligent traffic controls), the adverse effects of changes in weather patterns currently being experienced and the growth in the size and volume of traffic, adds pressure to the existing level of works required to maintain the highways asset.

5.7 Passenger transport savings proposals, which would be required to absorb estimated future pressures on this activity, would be made up from a combination of factors including re-configured services resulting from the passenger transport area reviews, reduced Sunday and evening services and refinancing or reducing the cost of services currently met from external funding. The implications of implementing these actions, in the short term, would be reduced frequencies and hence lower levels of service provision, although actions will be taken to extend the use of community transport, wherever possible, to help to alleviate the loss of subsidised commercial services and maintain access. In the longer term, there could be some erosion of bus patronage in the county, which may affect the achievement of the County Council's BVPI and accessibility targets, although the majority of patronage arises on the fully commercial services.

Budget guideline redistribution

5.8 The provisional corporate revenue budget guidelines for 2007/08, 2008/09 and 2009/10 approved by the Cabinet in September 2006, included an additional sum of £6 million for Adult Services, reflecting the continuing impact of demographic factors on the cost of providing these services. The majority of this increase is to be met from an unallocated contingency of £4.9 million in the provisional 2007/08 County Council budget, leaving a shortfall of £1.1 million which has been applied across all other service budget guidelines.

5.9 The Environment service's share of the budget guideline redistribution is £244,000 in 2007/08, rising to £495,000 in 2008/09 and £753,000 in 2009/10. Savings of this order would need to be found from reductions in front line services as there is no further immediate capacity to make further savings with staffing and support cost budgets, having already absorbed cost pressures of £554,000 within the construction of the base budget and the need to make additional savings of £226,000 towards the anticipated cost of the new pay framework, following the implementation of the pay and benefits review (see below).

5.10 Having reviewed options for reductions against the three main service areas of passenger transport, highways maintenance and discretionary environmental services, it is considered advantageous to try to manage the impact of the budget guideline redistribution by looking for savings through a strategic review of passenger transport support. This would follow on from the Policy Review Committee's Review of Transport in the Community and the current round of public transport area reviews.

5.11 Pending the outcome of such a review (which may or may not result in options for savings), it is proposed initially to fund the budget redistribution top-slice by removing support for Sunday bus services from 2007/08 onwards, which could realise savings of up to £0.5 million per annum. In addition, the department will continue to look for further efficiencies in staff and support costs, on top of those already required to offset the cost of pay and benefits and other cost pressures over the next three or four years. Together, these strategies offer a long term approach to rebalancing the budget, which minimises the risk of failure, whilst pursuing the possibility of innovation in the County Council's role in supporting the provision of passenger transport.

Pay and benefits review

5.12 The revenue budget guidelines includes ongoing efficiency savings of £226,000 per annum towards the cost of implementing the new pay framework arising from the pay and benefits review. Savings in the department's budgets for staff and support services have been identified to meet this requirement, as set out in paragraph 5.14 above, and have been allocated over the relevant divisions of service.

Reconciliation of overall revenue budget cash limit 2007/08

5.13 The overall recommended revenue budget for 2007/08 is £106.454 million, including base budget increases of £2.716 million, at constant prices, together with an allocation of £1.618 million for inflation during 2007/08 and resources of £0.490 million carried forward from the 2006/07 budget. The following table summarises the main elements included in its construction:

			£'000
	Adjusted 2006/07 original budget Inflation variation		99,987 2,113
	Repriced 2006/07 original budget		102,100
	Base budget variations, at constant prices 2007/08 inflation allocation		2,716 1,618
	Base budget 2007/08		106,434
	Resources to be carried forward from 2006/07		490
			106,924
	Pay and benefits efficiency savings	-226
	Redistribution of budget guidelines	-244	-470
	Total recommended cash limited budget 2007/08		106,454

Efficiency improvements

5.14 The County Council is required to identify annual efficiency improvements of at least 2.5% for the annual efficiency statement (AES) for the period to 2007/08. At least 1.25% of the improvements in each year needs to be `cashable' in the Government's terms. These occur when inputs (money, people, assets etc) are reduced but outputs remain unchanged or when the price of inputs are reduced but outputs remain unchanged. However, not all cashable efficiency savings in AES terms provide usable cash in budget terms. For example, absorbing the cost of increments within the base budget counts towards the AES but does not generate new budget provision. The basis for future efficiency targets will be determined as part of the Comprehensive Spending Review (CSR) in 2007, but the Chancellor announced in his pre-budget report that the baseline savings ambition for the 2007 CSR period will be at least three per cent per year across central and local government, with a focus on net cashable savings.

5.15 Appendix 5 identifies additional efficiency improvements totalling £1.8 million (1.7%) in 2007/08, which are expected to be eligible for inclusion in the annual efficiency statement. Of these, £1.1 million (1.0%) represent usable savings that have been taken into account in the construction of the revenue budget.

5.16 The Department Management Team has established a Business Efficiencies Group to investigate and drive forward the efficiencies agenda within the Environment Department. The current work programme includes a review of the use of accommodation outside The Castle complex, electronic payments in school transport, efficiencies deliverable through the contact centre, a review of the provision of administrative services, and support in helping identify further possible savings arising as part of the Area/HQ review. Further areas will be added as they are identified by senior managers and linked to service and budget planning for future years. It is anticipated that some of these reviews will identify real efficiency improvements which will allow funds to be redirected and invested in other areas.

5.17 In addition to the work of the efficiency group, and the efficiency savings identified through the Area/HQ review, the Passenger Transport Group has carried out a series of area reviews of subsidised bus services, work from which will continue into 2007/08. The reviews are linked to contract retendering and suggest options for alternative provision which improve value for money. This is done by comparing anticipated cost against a measure of service accessibility. So far, significant savings have been identified whilst largely maintaining accessibility to key facilities and services, and these have been used to fund the cost of inflationary increases arising during retendering of contracts (bus contract inflation is running significantly in excess of standard inflationary levels funded through the budget process). An assessment to determine what proportion of these savings is eligible for inclusion in the AES will be carried out in due course.

6 Review of charges

6.1 The service's 2007/08 cash limited revenue budget includes income of £9.5 million from fees, charges and other reimbusements. Details of the material headings are included in Appendix 6.

6.2 There are some mandatory and national charges which the County Council is not able to vary, the main example for the Environment services being planning application fees. Most other charges to users are designed to ensure full recovery of costs, including an appropriate contribution towards departmental overheads. Wherever possible, charges are reviewed regularly in accordance with financial regulations, or rise automatically in line with increases in costs.

6.3 Charges for the two main waste management sources of income, namely disposal site rentals and trade waste, are increased from the beginning of January each year in accordance with price increases applied to the long-term waste disposal contract. This is based on a formula contained within the contract which effectively provides for an increase based on the change in the Retail Prices Index (RPI) to the previous October. The charge for trade waste is currently subject to a further flat rate increase in April, to reflect increases in the cost of disposal arising from variation in the rate of landfill tax.

7 Other expenditure

7.1 The budget includes some items which are not counted against the cash limit. At the present time, this includes the budget for capital charges of £29.1 million, which is allocated to services to show the full cost of service provision, together with £0.4 million for supplementary levies from the three divisions of the Environment Agency, in relation to the County Council's responsibilities for the funding of flood protection. A charge of £0.1 million has also been made for pension and early retirement costs, in accordance with Financial Reporting Standard 17 (FRS 17).

7.2 Further adjustments to the 2007/08 budget for other items of non-cash limited expenditure will be made later on in the budget preparation process, including charges for central departments' support services and for repairs and maintenance of buildings. These costs are excluded at this stage because Policy and Resources controls this expenditure and the budgets and subsequent allocation of expenditure to other services has not yet been agreed.

7.3 Included within the Environment services' cash limit are costs relating to member support, which will be recharged to the Policy and Resources budget for corporate and democratic core services, at a later stage of the budget process.

7.4 The revised 2006/07 and 2007/08 budgets include non-cash limited expenditure and income relating to the operation of the landfill allowances trading scheme (LATS). These estimates have been included in the budget in accordance with the guidance on accounting for LATS, issued by the Local Authority Accounting Panel.

8 Business units

8.1 The trading accounts for the River Hamble Harbour Board are summarised in Appendix 7.

9 HR implications

9.1 The workforce implications of the proposed budget for 2007/08 are set out in Appendix 10. In summary, there has been a reduction of 8.5 full time equivalent posts (FTEs).

9.2 Adjustments have been made to the staffing figures for the 2006/07 original budget to reflect technical changes in the way in which staff numbers are being recorded corporately. This is designed to improve the consistency of the workforce data included in the budget reports and facilitate the integration of workforce and financial reporting, by adopting the same conventions employed in counting full time equivalent staff (FTEs) in the data reported using SAP.

9.3 As a result, the staffing figures have been re-based to include employees on temporary contracts and externally funded staff, together with the inclusion of staff where the County Council is the responsible employer, but where the employees are seconded to work on the Highways Agency contract (Area 3). This results in an adjusted original 2006/07 staffing budget of 858.5 FTEs (excluding school escorts).

9.4 Further adjustments to the staffing numbers have also been made to reflect anticipated improvement in the retention and recruitment of school crossing patrol officers, within the existing approved service staffing structure, together with a revised assumption for departmental staff turnover and vacancy savings. This results in an adjusted base budget of 871.5 FTEs.

9.5 As mentioned in paragraph 5.13 above, efficiency savings of £412,000 are to be found from staff related budgets, representing a reduction of 8.5 FTEs, to offset a number of departmental pressures, including the increased cost of the new pay framework.

9.6 The workforce implications of the 2007/08 budget proposals are summarised in the following table:

		FTEs	FTEs
Re-based 2006/07 original staffing budget			858.5
Technical adjustments:
	School crossing patrols	9.0
	Reduced vacancy allowance in budget	4.0	13.0
Adjusted base budget			871.5
Workforce reduction due to efficiency savings:
	Highways Management Area/HQ review	-6.5
	Other efficiency measures	-2.0	-8.5
2007/08 staffing budget			863.0

10 Provisional budget for 2008/09 and 2009/10

10.1 The provisional budget at outturn prices for 2008/09 and 2009/10 for this service is set out in Appendix 11 and summarised below:

2008/09	£106.6 million
2009/10	£107.5 million

10.2 Annex 1 of Appendix 11 provides a further analysis of the provisional budgets over the main service headings. This includes details of anticipated future years' base budget changes, including adjustments for the phasing of the PSA reward grant projects, together with indicative inflation allocations and planned growth and re-deployment variations

11 Impact assessment

11.1 The proposals in this report are derived from the departmental service plan and are in accordance with the budget strategy and the County Council's financial management policy. As such, the proposals in this report are not considered to be discriminatory.

Recommendations

To approve for submission to the Leader and Cabinet:

1 The revised budget for 2006/07 totalling £102.2 million (as set out in Appendices 1 and 2), including proposals for the carry forward of resources of £490,000 to the 2007/08 budget.

2 The base budget for 2007/08 totalling £106.4 million (as set out in Appendix 3).

3 Details of inescapable pressures totalling £1.2 million, together with proposals for redeployment of resources and savings totalling £1.6 million, in 2007/08 (as set out in Appendix 4) .

4 The proposals for efficiency improvements totalling £1.8 million (1.7% of the base budget) in 2007/08 (as set out in Appendix 5).

5 The annual review of income and charges (as set out in Appendix 6).

6 The summarised trading accounts of business units (as set out in Appendix 7).

7 The detailed budget for 2007/08 (as set out in Appendix 8).

8 The workforce implications of the proposed budget for 2007/08 including plans for workforce reductions to contribute towards the increased cost of the new pay framework (as set out in Appendix 10).

9 The provisional budget for 2008/09 of £106.6 million and for 2009/10 of £107.5 million (as set out in Appendix 11).

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

Departmental Service Plan

Financial Management Policy Impact Assessment

Links to Corporate Strategy
	Yes	No
Hampshire safer and more secure for all	_
Maximising well-being	_
Enhancing our quality of place	_

Appendices

Appendix		Colour
1	Revised budget 2006/07 - calculation of the cash limit	yellow
1 - Annex 1	LPSA reward grant schemes	yellow
2	Revised budget 2006/07 - comparison with cash limit	yellow
3	Base budget 2007/08 - summary of cash limit	pink
3 - Annex 1	Base budget 2007/08 - definition of base budget	pink
3 - Annex 2	Base budget 2007/08 - significant costs of inflation	pink
3 - Annex 3	Base budget 2007/08 - significant variations from 2006/07 repriced budget	pink
4	Proposals for unavoidable pressures, growth and redeployment 2007/08, 2008/09 and 2009/10	yellow
5	Efficiency statement	yellow
6	Review of income 2007/08	yellow
7	Business units - summarised trading accounts	white
8	Revenue budget 2007/08 - analysis of variations	blue
9	Revenue Budget 2007/08 - budget book detail	green
10	Workforce levels and costs 2006/07 - 2007/08	blue
11	Provisional budget 2008/09 and 2009/10	pink
11 - Annex 1	Provisional budget 2008/09 and 2009/10 - analysis of variations	blue

Appendix 1

Environment

Revised budget 2006/07

Calculation of the cash limit for the revised budget 2006/07

The following table shows the progression from the original budget for 2006/07 to the cash limit for the revised budget 2006/07. Both are at estimated outturn prices 2006/07.

				£'000	£'000
Original budget 2006/07 at outturn prices					99,901
Transfers to/from other services and contingency allocations:
Waste management - aftercare of landfill sites no longer responsibility of contractor				80
Health and safety - transfer of one staff member from Human Resources department				37
Reservoirs Act 1975 - transfer of function to Environment Agency				-27
Allocation from corporate provision for procurement savings				-4	86
=	Adjusted original budget				99,987
Inflation provision added since the original budget for:
	Business rates				15
Variations in Government grants:
	A339 de-trunking special grant			11
	Planning delivery grant			77
	LPSA 2 - allocation of pump priming grant			115
	LPSA - reward grant allocation			295	498
Transfers to locally resourced capital programme
	Landscape planning and heritage planned budget savings being met from revenue budget				-61
Other variations:
		50% share of 2005/06 revenue underspending		7
		Cabinet approved allocation for sustainability/ communication action plan		33
		Pay and benefits - benefits realisation brought forward to 2006/07		-55
		Transfer to Policy and Resources - childcare voucher scheme		-3	-18
Waste management contingency:
		Allocation for quarter 1		1,204
		Allocation for quarter 2		1,021	2,225
=		Cash limit for the revised budget 2006/07			102,646

Annex 1 to Appendix 1

Environment

Local Public Service Agreement reward grant

Investment proposals 2006/07 to 2008/09

	2006/07	2007/08	2008/09	Total
	£'000	£'000	£'000	£'000
Revenue
Highway: accelerate release of developer contributions	60	220	220	500
Waste : material flow planning	30	70	-	100
Waste: capacity optimisation at HWRCs	60	290	-	350
Waste: sustainable transport flows	-	50	-	50
Waste: infrastructure investigations	80	320	-	400
Road Safety: young driver safety ("Pass Plus" courses)	65	35	-	100
Highways initiatives and innovations	-	200	200	400
Sub total: revenue	295	1,185	420	1,900
Capital
Road Safety - renewal of casualty reduction engineering schemes	-	200	-	200
Sub total: capital	-	200	-	200
Overall total: LPSA Reward Grant schemes	295	1,385	420	2,100

Appendix 2

Environment

Revised budget 2006/07

Summary comparing the revised budget with the cash limit

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Highways and transportation Highways maintenance Road safety education School crossing patrols Traffic surveys Parking services Public transport support & co-ordination Rural Bus Subsidy Grant Management and support services	24,163 346 980 229 -95 6,347 1,464 20,030	23,773 346 980 229 -95 6,347 1,464 19,930	-390 - - - - - - -100	-1.6 - - - - - - -0.5
	53,464	52,974	-490	-0.9
Planning and development Development control Planning policy Environment initiatives Economic development Community development and other projects	611 1,563 1,088 11 224	611 1,563 1,088 11 224	- - - - -	- - - - -
	3,497	3,497	-	-
Waste management Contract and related services Other waste management services	41,763 3,783	41,763 3,783	- -	- -
	45,546	45,546	-	-
Other services Chichester Harbour Conservancy	139	139	-	-
	139	139	-	-
Total	102,646	102,156	-490	-0.5

Appendix 3

Environment

Revenue budget 2007/08

Calculation of the base budget 2007/08 - summary of cash limited expenditure

The following table shows the progression from the original budget for 2006/07 which was prepared at outturn prices 2006/07 to the base budget 2007/08 at outturn prices 2007/08.

		£'000	£'000
Original budget 2006/07 at outturn prices			99,901
Transfers to/from other services and contingency allocations:
Waste management - aftercare of landfill sites no longer responsibility of contractor		80
Health and safety - transfer of one staff member from Human Resources department		37
Reservoirs Act 1975 - transfer of function to Environment Agency		-27
Allocation from corporate provision for procurement savings		-4	86
=	Adjusted original budget		99,987
Increases for inflation to reflect November 2006 prices (see Annex 2)
-	Inflation allocated during 2006/07 from the central inflation contingency: Waste management contract related services Increases in business rates	1,425 15
-	Excess cost of inflation over the inflation allowance	673	2,113
= Original budget at November 2006 prices			102,100
Other variations (see Annex 3)
-	Reductions to offset excess inflation	-673
-	Exclusion of non-recurring 2006/07 expenditure	-415
-	Transfers between revenue and capital	-146
- - - - - -	Highways maintenance variations arising from: additional road lengths revenue effect of 2006/07 capital programme winter maintenance four-yearly average of expenditure Variations in Government grant Increase to waste management contract related budgets to 2006/07 volumes LPSA2 allocation of pump-priming grant LPSA reward grant allocation Hampshire Direct - budget transfer to Policy and Resources	93 195 263 28 2,174 141 1,185 -129	2,716
=	Base budget 2007/08 at November 2006 prices		104,816
Allocation for future inflation			1,618
=	Base budget 2007/08 at outturn prices		106,434

Annex 1 to Appendix 3

Environment

Calculation of base budget 2007/08

Parameters used in the compilation

1	Definitions
1.1	The first stage in the construction of the budget for 2007/08 is the preparation of a base budget. The rules used this year are similar to those applied in 2006/07, which are summarised below.
1.2	The 2007/08 base budget is defined as the current year's budget adjusted for: · allocations made for inflation in 2006/07 including the full year effect of the provision made for outstanding pay awards from 2005/06 · exclusion of expenditure included in the 2006/07 budget which was financed by the carry forward of planned underspendings from 2005/06, the one-off use of reserves or balances, or which was approved on a non-recurring basis · the revenue effect of past capital programmes, subject to its inclusion in the approved capital programme unless a specific Cabinet decision to the contrary · the full year effect of council-approved policies included in the 2006/07 original budget, which have been introduced part-way through the year · changes in income volumes which are not the result of policy decisions · correction of arithmetical errors in the current year's budget · The following specific items:
		Environment		Routine highway and street lighting maintenance arising from variations in road length
				Variations in waste disposal volumes

Annex 2 to Appendix 3

Environment

Calculation of base budget 2007/08

Significant costs of inflation

1.	Variation between the actual cost of inflation in 2006/07 (as at November 2006) and the provision for inflation included in the 2006/07 budget
							£'000	£'000
	Additional cost of inflation							2,113
	Less:
	-	Allocation from contingency for business rates					15
	-	Waste management contract					1,425	1,440
	=	Shortfall in the provision						673
2.	Significant costs of inflation between budgeted 2006/07 outturn prices and November 2006 prices
2.1	Pay awards
	Provision was originally made in 2006/07 for pay awards of 2.95% for teachers and other employee groups.
	No additional cost in 2007/08 of the pay awards agreed in 2006/07 is anticipated.
	The pay awards agreed were:
	Negotiating body:				Effective date:				%
	Local Government Services Staff Hampshire Management Grades					1 April 2006 1 April 2006			2.95 2.95
2.2	Non pay inflation
	Provision was originally made in 2006/07 for a net amount of £654,000 on all non-pay budgets, excluding the waste management contract and business rates which were covered by a central contingency sum.
	This was for general price increases of 2.5% (£1,176,000) offset by increased income to match inflation in gross expenditure
	The additional cost of price increases other than pay and net of income is £673,000 which is not funded corporately but has been managed by reductions in volumes of expenditure, within existing budgets
						Outturn 2006/07 to November 2006			Cost in 2007/08
						%			£'000
	The most significant variations within this additional cost are as follows:
	Routine highways maintenance Bus subsidy contracts					0.2 10.6			42 620
3.	Allocation for future inflation								£'000
	Provision for all pay awards of 2.25% in 2007/08								625
	Increase in local government employers' pension contributions (from 275% to 295% of employee contributions)								276
	Provision for non-pay inflation at 2.5%								1,184
	Reduction for increased income and recharges								-467
	Total allocation for future inflation								1,618

Annex 3 to Appendix 3

Environment

Calculation of base budget 2007/08

Significant variations

Major variations between the repriced budget 2006/07 and the base budget for 2007/08 at November 2006 prices contributing towards an increase of £2,716,000 (2.7%)

		Variations against the repriced 2006/07 budget
		£'000	%
	Highways maintenance
	Increased roads lengths - additional routine maintenance and street lighting expenditure arising from highway adoptions	93	0.4
	Capital programme - additional expenditure arising from the implementation of highways improvement schemes	195	0.8
	Transfer from structural maintenance to compensate for required increase in winter maintenance provision	263	1.1
	Increased in Government grant to cover expenditure arising from de-trunking of A339	11	-
	Local Public Service Agreement - allocation of LPSA2 pump-priming grant relating to the improvement of footways	45	0.2
	Traffic Management Act - exclusion of non-recurring expenditure included in 2006/07 budget, financed from planned carry forward of underspendings from 2005/06	-105	-0.4
	Budget adjustment arising from higher inflation compared to allocation included in 2006/07 original budget	-42	-0.2
	Road safety education
	Local Public Service Agreement - allocation of LPSA2 pump-priming grant aimed at reducing the numbers of people killed or seriously injured on Hampshire's roads	30	13.0
	Local Public Service Agreement - allocation of LPSA reward grant aimed at improving young driver safety	35	15.2
	Public transport
	Bus subsidies - budget adjustment to absorb higher expenditure from contract re-tendering in excess of provision for inflation included in the 2006/07 budget	-622	-8.9
	Highways and transport management and support services
	Higher expenditure arising from cost of salary increments and other cost increases	334	1.7
	Local Public Service Agreement - allocation of LPSA reward grant for a programme of highways initiatives and innovations	420	2.1
	Exclusion of non-recurring expenditure included in 2006/07 budget financed by the carry forward of planned underspendings from 2005/06 or from other one-off approvals	-290	-1.4
	Variations to budget arising from the full year effect of savings proposals included in the preparation of the 2006/07 budget	-65	-0.3
	Staffing and support services - efficiency and other cost savings	-435	-2.2
	Planning and development
	Higher expenditure arising from cost of salary increments and other cost increases	53	1.5
	Planning Delivery Grant - approved allocation for 2007/08	17	0.5
	Exclusion of non-recurring expenditure included in 2006/07 budget financed from one-off approvals	-20	-0.6
	Variations to budget arising from the full year effect of savings proposals included in the preparation of the 2006/07 budget	-20	-0.6
	Transfer to capital - landscape planning and heritage 2006/07 budget savings being met from revenue budget	-61	-1.8
	Staffing and support services - efficiency and other cost savings	-75	-2.2
	Waste management
	Waste contract related services
	Waste disposal contract - adjustment to budget to reflect increases in expenditure, other than inflation	2,174	5.3
	Other waste management services
	Higher expenditure arising from cost of salary increments and other cost increases	38	1.1
	Local Public Service Agreement - allocation of LPSA2 pump-priming grant aimed at increasing tonnage of waste diverted from landfill	66	1.8
	Local Public Service Agreement - allocation of LPSA reward grant for a number of projects aimed at helping to contain future waste contract cost increases	730	20.4
	Staffing and support services - efficiency and other cost savings	-44	-1.2

Appendix 4

Environment

Details of unavoidable pressures together with proposals for redeployment of resources and savings 2007/08 to 2009/10

					Staffing (FTEs)
		2007/08	2008/09	2009/10	2007/08	2008/09		2009/10
		£'000	£'000	£'000
	Unavoidable pressures:
1	Highways maintenance Street lighting
1.1	Street lighting Private Finance Initiative (PFI) - additional project development related expenditure	400	200	200	-	-		-
1.2	Street lighting maintenance - additional expenditure arising from contract extension	80	80	80	-	-		-
	Highways term maintenance contract
1.3	Estimated impact of higher costs arising from re-pricing highways term maintenance contract	110	110	110	-	-		-
1.4	Additional resource for data collection and notice input arising from implementation of Traffic Management Act	100	100	100	-	-		-
	Other highways
1.5	Winter maintenance - additional priority 1 salting route in Test Valley area	14	14	14	-	-		-
1.6	District Agency grass cutting and tree maintenance - excess contract inflation	12	12	12	-	-		-
	Total highways maintenance	716	516	516	-	-		-
2	Public transport
2.1	Bus subsidies - anticipated higher costs from service re-tendering and re-pricing	343	601	883	-		-	-
2.2	Reduced availability of funding from time limited external grants	107	254	325	-		-	-
	Total public transport	450	855	1,208	-		-	-
	Total unavoidable pressures	1,166	1,371	1,724	-		-	-
	Redeployment and savings proposals
3	Highways maintenance
3.1	Review of priorities to accommodate pressures for additional expenditure	716	516	516	-		-	-
	Total highways maintenance	716	516	516	-		-	-
4	Public transport
4.1	Bus subsidies - savings to accommodate pressures for higher expenditure	450	855	1,208	-		-	-
4.2	Savings in public transport to offset redistribution of budget guideline	244	495	495	-		-	-
	Total public transport	694	1,350	1,703	-		-	-
5	Highways and transport management and support services
5.1	Savings in staff and support costs to offset budget reduction arising from pay and benefits savings realisation	180	180	180	-4		-4	-4
	Total highways management and support services	180	180	180	-4		-4	-4
6	Planning and development
6.1	Savings in staff and support costs to offset budget reduction arising from pay and benefits savings realisation	33	33	33	-1		-1	-1
	Total planning and development	33	33	33	-1		-1	-1
7	Waste management administration
7.1	Savings in staff and support costs to offset budget reduction arising from pay and benefits savings realisation	13	13	13	-		-	-
	Total waste management	13	13	13	-		-	-
8	Management and support services
8.1	Savings in staff and support costs	-	-	258	-		-	-7
	Total management and support services	-	-	258	-		-	-7
	Total redeployment and savings proposals	1,636	2,092	2,703	-5		-5	-12
	Net budget savings equal to reduction in budget guidelines	470	721	979	-5		-5	-12

Appendix 5

Environment

Efficiency improvements 2006/07 to 2009/10

			2006/07	2007/08	2008/09	2009/10
			£'000	£'000	£'000	£'000
Cashable efficiency improvements:
a		AES eligible and budget saving:
		A3 contracts - innovative term contract	300	-	-	-
		Engineering - scheme design packaging	112	-	-	-
		Construction lean improvement programme (CLIP)	100	-	-	-
		Waste efficiencies - improved recycling	244	110	-	-
		Waste - MRF income	7	95	-	-
		2006/07 budget:
		Network management - various savings	100	-	-	-
		Traffic management - reduced advice and advertising	60	40	-	-
		Intelligent Transport systems - reduction in staff, etc	74	25	-	-
		IT - savings in printing, software and hardware maintenance etc	30	-	-	-
		Ecology - savings against operational and staffing budgets	64	-	-	-
		Spatial strategy - savings against operational and staffing budgets	61	20	-	-
		Strategy and information - staffing saving	9	-	-	-
		Income - additional income from new funding streams	120	-	-	-
		2007/08 budget:
		Area/HQ review - staff savings	-	298	-	-
		Other staff savings	-	114	-	-
		Highways units - efficiencies in scheme design	-	100	-	-
		District council administration - efficiency savings requirement	-	55	-	-
		Service level agreements - efficiencies in the provision of technical data and information	-	29	-	-
		Printing and publications - savings	-	19	-	-
		Office expenses - various savings	-	38	-	-
			1,281	943	-	-
b		AES eligible but no budget saving
		Developers' contributions - avoidance of capital borrowing	395	869	303	316
		Staff - absorption of increments (note: in 2007/08 to be offset against identified budget savings)	358	-	450	450
			753	869	753	766
c		Budget saving but AES ineligible
		2006/07 budget:
		Income - estimated additional income from commuted sums, etc	150	100	-	-
		Traffic Management Act - savings against non-recurring items in budget	75	-	-	-
		IT system development - highways maintenance systems	50	-	-	-
		SHRT development - reduced provision	58	-	-	-
		Landscape planning and heritage - reduced support	571	-85	-	-
		Natural resources and environment futures - operational budgets, etc	132	-	-	-
		Income - anticipated additional income	75	-	-	-
		School crossing patrols - staff recruitment difficulties	25	-	-	-
		Road safety - economies in operational support	5	-	-	-
		Traffic surveys - additional income	5	-	-	-
		2007/08 budget:
		Additional income from site monitoring, abnormal loads, etc	-	114	-	-
		Spatial strategy - reduction in studies and events	-	13	-	-
			1,146	142	-	-
Non-cashable efficiency improvements:
d		Passenger transport	4	-	-	-
		Safety camera partnership	2,927	-	-	-
		Capital programme review	100	25	-	-
			3,031	25	-	-
Total AES eligible (a+b+d)			5,065	1,837	753	766
% of base budget			5.1	1.7	0.7	0.7
Total budget savings (a + c)			2,427	1,085	-	-
% of base budget			2.4	1.0	-	-
Total of all efficiency improvements (a+b+c+d)			6,211	1,979	753	766
% of base budget			6.2	1.8	0.7	0.7

Notes

Cashable efficiency improvements are defined in the annual efficiency statement (AES) as occurring when:
-	inputs (money, people, assets etc) are reduced but outputs remain unchanged
-	the price of inputs (procurement, labour costs etc) are reduced but outputs remain unchanged.
A reduction in price of inputs is measured in general against the increase in the Gross Domestic Product deflator (likely to be around 2.5% in 2007/08). Thus if the price of inputs remains constant there is a gain of 2.5%.
a	efficiency savings that count against the AES and produce budget savings - this will include general procurement savings against the budget provision of a 2.5% increase in prices
b	efficiency savings that count against the AES, but do not produce a budget saving because the efficiency is avoiding unbudgeted cost e.g. staff reductions made to absorb increments, procurement efficiencies where costs are still exceeding 2.5%, capital receipts or developer contributions applied to avoid unplanned additional borrowing
c	efficiency savings that do not meet the AES criteria but produce a budget saving. These will include efficiency savings that relate to LEA services to schools (that are outside the scope for AES) and fortuitous savings that are not strictly efficiencies.
Non-cashable efficiency improvements are defined in the AES as occurring when
-	increased outputs or improved quality of service are obtained for the same inputs
-	increased outputs or improved quality achieved at a rate that exceeds the increase in inputs.

Appendix 6

Environment

Review of income 2007/08

		Current charge	Total income	Date of last review	Planned date for next review	Proposed increase (if proposed now)	Is charge set to recover full cost Yes/No	Is charge subject to an assessment scale determined locally? Yes/No	Additional income from increased or new charge
		£	£			£			£
1	Mandatory/National charges
	Planning application fees	Various	170,300	Apr-06	Apr-07	N/A	Yes	No	N/A
2	Discretionary charges
	Road traffic accidents
	- works recharged	Actual cost	239,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	- administration	8%-15% oncost	130,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Rent from highways properties	Various	35,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Transport charges	Actual cost	72,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Trench inspection fees	Actual cost	446,200	Apr-06	Apr-07	N/A	Yes	No	N/A
	Land search fees	Various	24,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	TAG external income	Various	10,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Highways Agency area 3	Actual cost	60,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Road closures	Various	5,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Safety audits	£375	1,500	Apr-06	Apr-07	N/A	Yes	No	N/A
	Engineering consultancy external fees	Various	5,200	Apr-06	Apr-07	N/A	Yes	No	N/A
	County Highways Laboratory external	Various	250,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Land search status enquiries	Actual cost	59,700	Apr-06	Apr-07	N/A	Yes	No	N/A
	DfT/EU grant	Actual cost	165,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Income from outside bodies	Actual cost	24,200	Apr-06	Apr-07	N/A	Yes	No	N/A
	NRSWA Section 74	Actual cost	51,600	Apr-06	Apr-07	N/A	Yes	No	N/A
	TRICS income	Actual cost	44,300	Apr-06	Apr-07	N/A	Yes	No	N/A
	Abnormal loads	Actual cost	10,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Tourist signing	Actual cost	2,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Speed checks	Actual cost	500	Apr-06	Apr-07	N/A	Yes	No	N/A
	Publication income	Various	1,500	Apr-06	Apr-07	N/A	Yes	No	N/A
	Miscellaneous income	Various	30,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Receipts from other authorities	Actual cost	48,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Section 38 income	Actual cost	759,200	Apr-06	Apr-07	N/A	Yes	No	N/A
	Traffic surveys	Various	20,300	Apr-06	Apr-07	N/A	Yes	No	N/A
	Road safety fees and materials	Various	55,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	On-street parking charges	Various	2,181,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Lorry rent	Various	94,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Minibus driver training and assessment	£100 to £450	43,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Bus contracts district council contribution	Actual cost	217,000	Apr-06	Apr-07	N/A	Yes	No	N/A
	Cross boundary bus subsidies	Various	484,100	Various	Various	N/A	Yes	No	N/A
	Ferries (contributions from cities)	Various	29,500	Apr-06	Apr-07	N/A	No	No	N/A
	Routine publicity - contributions from districts	Various	15,000	Apr-06	Apr-07	N/A	No	No	N/A
	Planning - other charges	Various	35,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Trade waste	Various	684,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management rent	Various	762,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management (PCC/SCC contribution	Various	99,600	Apr-06	Apr-07	N/A	Yes	No	N/A
	NFFO income	Various	35,100	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management (West Berkshire contributions	Various	55,600	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management (dry recyclables processing	Various	186,800	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management - other miscellaneous	Various	15,400	Apr-06	Apr-07	N/A	Yes	No	N/A
	Waste management - commercial use of incinerators	Various	125,000	Apr-06	Apr-07	N/A	Yes	No	N/A
3	Services provided free where charges could be made	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

Appendix 7

Environment

Business units - summarised trading accounts 2006/07 to 2007/08

The budget of the River Hamble Authority is outside the cash limited budgets of the Environment services and operates on a trading basis. The following statement shows the summarised trading position and movement in the earmarked reserve accounts.

	Original Budget 2006/07 £'000	Revised Budget 2006/07 £'000	Base Budget 2007/08 £'000
River Hamble
Income	-747	-778	-650
Expenditure (excluding capital charges)	577	739	569
Net operating (surplus)/deficit	-170	-39	-81
Reserve Balance brought forward at 1 April	-256	-286	-325
Reserve Balance carried forward at 31 March (surplus)/deficit	-426	-325	-406

Note

The detailed budget has been considered by the River Hamble Harbour Management Committee before being approved by the Harbour Management Board when the annual charges were agreed.

The above summarised accounts reflect the position following the dissolution of the Visitor Centre Partnership arrangement with the Crown Estate at the end of 2005/06 and bring together income, expenditure and reserves of the statutory Harbour Undertaking.

The net operating surplus includes exceptional income of £100,000 in 2006/07 from the sale of river piles to the Crown Estate (being the final instalment of five).

It also includes estimated interest of £27,000 in 2006/07 and £28,000 in 2007/08, together with the second and third of three planned annual contributions of £38,000 from income to reserves. These contributions were intended to bring the Harbour Undertaking Reserve out of the deficit which arose following the income period adjustment made in 2004/05. Following on from the unbudgeted underspend in 2005/06, a projected underspend of £21,000 at the end of the 2006/07 financial year will reduce the deficit ahead of plan to a surplus of £48,000. The budgets in both 2006/07 and 2007/08 include a further planned transfer of £14,100 to the boat replacement reserve. In 2006/07 the surplus also includes a transfer of £11,500 expenditure relating to the construction of the Fisherman's Jetty which will be offset against the reserve established during 2005/06.

A further £50,500 of receipts will be used to partially offset the total cost of £200,000 for the replacement of the Harbourmaster's jetty in 2006/07. These are included in the income figure of £778,000 whilst the costs are shown in the expenditure figure of £739,000.

Appendix 8

Environment

Revenue budget 2007/08

Analysis of variations

	Adjusted original budget 2006/07	Variation in inflation to November 2006 prices			Other base budget variations	Inflation allocation to 2007/08 outturn			Growth and redeploy-ment proposals	Revenue Budget 2007/08
	£'000	£'000		%	£'000	£'000		%	£'000	£'000
Cash limited expenditure by division of service
Highways and transportation
Highways maintenance	24,132	42	0.2		460	600	2.4		390	25,624
Road safety education	231	-	-		65	8	2.7		-	304
School crossing patrol	980	-	-		-	29	3.0		-	1,009
Traffic surveys	229	-	-		-	6	2.6		-	235
Parking services	-95	-	-		-	-	-		-	-95
Public transport	6,347	622	9.8		-622	159	2.5		-244	6,262
Rural bus subsidy grant	1,464	-	-		-	-	-		-	1,464
Management and support services	20,010	9	-		-45	609	3.0		-80	20,503
	53,298	673	1.3		-142	1,411	2.6		66	55,306
Planning services
Development control	463	-	-		68	18	3.4		-6	543
Planning policy	1,668	-	-		-121	45	2.9		-14	1,578
Environmental initiatives	1,087	-	-		-48	33	3.2		-10	1,062
Economic development	11	-	-		-1	1	3.1		-	11
Community develop-ment and other projects	227	-	-		-4	7	3.1		-3	227
	3,456	-	-		-106	104	3.1		-33	3,421
Waste management
Contract related services	39,538	1,425	3.6		2,174	-	-		-	43,137
Other waste management services	3,556	15	0.4		790	97	2.2		-13	4,445
	43,094	1,440	3.3		2,964	97	0.2		-13	47,582
Other services
Chichester Harbour Conservancy	139	-	-		-	6	4.3		-	145
	139	-	-		-	6	4.3		-	145
Net cash limited expenditure	99,987	2,113	2.1		2,716	1,618	1.5		20	106,454
Expenditure outside cash limit:
Capital charges	30,403	-	-		-1,285	-	-		-	29,118
Flood protection	742	-	-		-339	-	-		-	403
FRS 17 pension adjustment	-120	-	-		243	-	-		-	123
Trading undertaking - transfer to reserve account	-170	-	-		89	-	-		-	-81
Landfill allowance trading scheme:
Expenditure	-	-	-		2,160	-	-		-	2,160
Income	-	-	-		-3,605	-	-		-	-3,605
Total net expenditure before grant	130,842	2,113	1.6		-21	1,618	1.2		20	134,572
Specific Government grants
A339 de-trunking grant	-428	-	-		-11	-	-		-	-439
Rural bus subsidy grant	-1,464	-	-		-	-	-		-	-1,464
Waste performance and efficiency	-728	-	-		-35	-	-		-	-763
Planning delivery grant	-	-	-		-17	-	-		-	-17
Total net expenditure	128,222	2,113	1.6		-84	1,618	1.2		20	131,889

Appendix 9

Environment

Revenue Budget 2007/08

Reconciliation of the original 2006/07 budget on the following pages with the 2006/07 budget in the published budget book.

	£'000	£'000
Net expenditure on page B55 of the published budget book		130,679
Adjustments for items currently included in the detailed budget pages: - Central support services - Charges to corporate and democratic core	-3,020 477	-2,543
Adjustments made to the original budget figures: - Aftercare of landfill sites no longer responsibility of contractor - Health and safety; transfer of staff member from Human Resources - Reservoirs Act 1975 - transfer of function to Environment Agency - Allocation from corporate provision for procurement savings	80 37 -27 -4	86
Total net expenditure for 2006/07 original budget shown overleaf on page B55.		128,222

Appendix 10

Environment

Workforce levels and costs

	2006/07	2007/08
	£'000	£'000
Analysis of workforce costs in base budget:
Gross cost	28,023	28,669
Less vacancy provision	-625	-500
Salaries of permanent staff (including employer's national insurance and pension contributions)	27,398	28,169
Temporary/fixed term/casual staff	307	338
Agency staff	30	26
Additional hours	205	224
Workforce budget available	27,940	28,757
Budgeted FTE staff	858.5	863.0
Staffing arising from budget proposals, included above (see also section 10.6 in main report):
Technical changes not resulting in changes to establishment (FTEs)	-	+13.0
Workforce reduction due to efficiency savings (FTEs)	-	-8.5
Variation in budget (£'000)	-	-412

Appendix 11

Environment

Provisional budget 2008/09 and 2009/10

The following table shows the progression from the 2007/08 proposed budget at outturn prices to the provisional budget for 2008/09 and 2009/10 at outturn prices.

			£'000	£'000
Proposed budget 2007/08 at outturn prices				106,454
-	Base budget variations:		446
-	Exclusion of non-recurring 2007/08 expenditure		-1,413
-	Growth and redeployment proposals		-251
Allocation for future inflation			1,378	160
Provisional budget 2008/09 at outturn prices				106,614
-	Base budget variations:		167
-	Exclusion of non-recurring 2007/08 expenditure		-420
-	Growth and redeployment proposals		-258
Allocation for future inflation			1,408	897
Provisional budget 2009/10 at outturn prices				107,511

Annex 1 to Appendix 11

Environment

Provisional budget 2008/09 and 2009/10

Analysis of variations

	Proposed Budget 2007/08	Base budget variations	Growth and redeployment	Inflation allocation to 2008/09 outturn		Provisional Budget 2008/09	Base budget variation	Growth and redeployment	Inflation allocation to 2009/10 outturn		Provisional Budget 2009/10
	£'000	£'000	£'000	£'000	%	£'000	£'000	£'000	£'000	%	£'000
Cash limited expenditure by division of service
Highways and transportation
Highway maintenance	25,624	23	-	613	2.4	26,260	167	-	627	2.4	27,054
Road safety education	304	-65	-	7	2.3	246	-	-	7	2.8	253
School crossing patrols	1,009	-	-	20	2.0	1,029	-	-	21	2.0	1,050
Traffic surveys	235	-	-	6	2.6	241	-	-	6	2.5	247
Parking services	-95	-	-	-	-	-95	-	-	-	-	-95
Public transport	6,262	-	-251	165	2.6	6,176	-	-258	169	2.7	6,087
Rural bus subsidy grant	1,464	-	-	-	-	1,464	-	-	-	-	1,464
Management and support services	20,503	-112	-	405	2.0	20,796	-420	-	431	2.1	20,807
	55,306	-154	-251	1,216	2.2	56,117	-253	-258	1,261	2.2	56,867
Planning services
Development control	543	-	-	11	2.0	554	-	-	12	2.2	566
Planning policy	1,578	-17	-	32	2.0	1,593	-	-	33	2.1	1,626
Environmental initiatives	1,062	-	-	22	2.1	1,084	-	-	23	2.1	1,107
Economic development	11	-	-	-	-	11	-	-	-	-	11
Community development and other projects	227	-	-	5	2.2	232	-	-	5	2.2	237
	3,421	-17	-	70	2.1	3,474	-	-	73	2.1	3,547
Waste management
Contract related services	43,137	-	-	-	-	43,137	-	-	-	-	43,137
Other waste management services	4,445	-796	-	86	1.9	3,735	-	-	68	1.8	3,803
	47,582	-796	-	86	0.2	46,872	-	-	68	0.1	46,940
Other services
Chichester Harbour Conservancy	145	-	-	6	4.1	151	-	-	6	4.0	157
	145	-	-	6	4.1	151	-	-	6	4.0	157
Net cash limited expenditure	106,454	-967	-251	1,378	1.3	106,614	-253	-258	1,408	1.3	107,511
Expenditure outside cash limit:
Capital charges	29,118	-	-	-	-	29,118	-	-	-	-	29,118
Flood protection	403	-	-	-	-	403	-	-	-	-	403
FRS17 pension protection	123	-	-	-	-	123	-	-	-	-	123
Trading undertaking - transfer to reserve account	-81	-	-	-	-	-81	-	-	-	-	-81
Landfill Allowance Trading Scheme:
Expenditure	2,160	-	-	-	-	2,160	-	-	-	-	2,160
Income	-3,605	-	-	-	-	-3,605	-	-	-	-	-3,605
Total net expenditure before grant	134,572	-967	-251	1,378	1.0	134,732	-253	-258	1,408	1.0	135,629
Specific Government grants
A339 de-trunking grant	-439	-	-	-	-	-439	-	-	-	-	-439
Rural bus subsidy grant	-1,464	-	-	-	-	-1,464	-	-	-	-	-1,464
Waste performance and efficiency	-763	763	-	-	-	-	-	-	-	-	-
Planning delivery grant	-17	17	-	-	-	-	-	-	-	-	-
Total net expenditure	131,889	-187	-251	1,378	1.0	132,829	-253	-258	1,408	1.1	133,726