Contact: Bevis Ingram, (01962) 847508, email [email protected]

Stuart Dorward, (01962) 846110, email [email protected]

1 Summary

1.1 This report sets out the proposed Recreation and Heritage 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 plans which have been developed to support the priorities of the Corporate Strategy.

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 meet 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 this service, the revised guideline for the 2007/08 budget is £32 million as shown in the table below:

1.5 Indicative budget guidelines for 2008/09 and 2009/10 have been set 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.

2 Budget guidelines

2.1 The budget guidelines for this service are:

2.2 This report sets out the Recreation and Heritage Executive Member'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 £32.4 million (as set out in Appendix 3)

· Identifies £907,000 of departmental pressures and costs absorbed (as set out in Appendix 4)

· Proposes the redeployment of £1.2 million of resources (as set out in Appendix 4). This includes both the £907,000 above and corporate redirections

· Identifies efficiency improvements of £1.1 million, being 3.5% 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

3.1 The cash limit for the revised budget is £31.8 million. The calculation is shown in Appendix 1.

3.2 Regular monitoring reports in the course of the year have indicated significant pressures on the Department's revenue budget, which are currently approaching £0.5 million. Savings targets, which account for approximately half this sum, have been allocated for services to achieve in 2006/07. £250,000 of the Libraries' materials budget is currently being held back, and this can be released, as appropriate, towards the end of the financial year in the light of the remaining pressures at that time.

3.3 The final accounts report in July 2006 outlined several major achievements of the Recreation and Heritage Service. This record of achievement has continued in 2006/07 as indicated by the following;

· Charter Mark award for Customer Service Excellence for the whole department

· New £300,000 extension opened at the Welsh Mountain Centre extending capacity for young people to learn in an outdoor setting with dining space, kitchen and indoor multi-activity space expanded

· Romsey Library re-opened in June on completion of the £820,000 extension and refurbishment

· Silver Surfer Council of the Year Award

· First Re-act 50 plus Games organised by the Sport Hants and IoW partnership to encourage adults to return to sport

· Launch of the prototype museum exhibition bus- BackTrack - taking displays, museum artefacts, objects for handling and using out to communities which are distant from a museum

· Green Flag Awards for customer care, maintenance and community engagement for Staunton and Queen Elizabeth Country Parks

· Sports Hampshire and IoW (the County Sports Partnership) achieved excellent status in Sports Council's "Towards an Excellent Service" quality assessment

· Building work started on "Making Space", a new facility at Leigh Park due to open in 2007 and substantially funded by SEEDA and the Arts Council, which will provide workshop space for craftspeople and provide a base for education and outreach work in the local community

· Further programmes run by the Arts and Outdoor Services aimed at supporting children looked after by the County Council and improving motivation and self esteem of children attending Education Centres in Andover and Basingstoke

· "Trailblazer" a joint project with Children's Services which uses outdoor education to enhance curriculum based learning and environmental awareness, now extended to over 200 schools and youth groups

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 £32.4 million at outturn prices.

4.2 Appendix 3 shows the make up of the base budget.

4.3 Overall, the base budget includes a net reduction in expenditure at constant prices of £488,000. The main two factors in this are:

· Removal of one-off growth in 2006/07 budget - £220,000

· Contribution to costs of Hants Direct - £259,000.

4.4 Service managers' proposals for achieving this reduction in expenditure also cover the other reductions required for corporate and redeployment purposes (discussed in Section 6 below). As management action covers the base budget and other reductions, managers' proposals are outlined in this section of the report. Appendix 8 shows that the real terms reduction in the base budget and in the growth and redeployment proposals are approaching £830,000. In addition, there remain continuing pressures on the Library Service budget of some £450,000 which need to be addressed. The redeployments deal with the current forecasts of cost pressures in the base budget for future years such as loss of income and the running costs associated with the People's Network.

4.5 As a consequence of the factors outlined in 5.4 above, services are required to identify reductions of approximately £1.3 million in 2007/08 in order to achieve a balanced budget. This represents 4.2% of the net budget and consequently each service has been set a savings target of 4.2%, and this section outlines how it is planned to achieve this. The savings are focused on the largest resource commitment which is the service's staffing budget. There is no intention to reduce the grants budget in cash terms. It is clearly challenging to achieve savings of this magnitude, but the earlier availability of budget guidelines and the fact that the pressures were known mean that managers' plans are further advanced than might usually be the case at this time of year. It is essential to meet financial targets to ensure that the culture of achievements outlined in section 4 above is sustained.

4.6 The Library and Information Service's fundamental ambition is to widen and expand its user base. This process of transformation began five years ago when the Audit Commission rated the service as good but with uncertain prospects for improvement. The refurbishment programme, widening of the IT and learning provision, more outreach work, the use of libraries for local events, together with the rebranding of some town centre locations into Discovery Centres are all part of this move. The initial impact has been the halting and reversal of the long term decline in library visits and the Comprehensive Performance Assessment rating for the Culture Block moving to 4 star. This programme of transformation is continuous as the service must change to meet customer needs and must do so within budget. In the last few years there has been a number of pressures on the budget which have been addressed by one-off action. This is unsustainable in the long term. The Service is currently undertaking a major restructuring exercise which is designed both to meet its financial targets and to ensure that all libraries remain open, with no reduction in opening hours and with core services to the public being sustained. In order to achieve the longer term financial targets of the Library Service, and the one-off costs associated with the restructure, the annual reduction in staff costs needs to be at least £1 million.

4.7 The reductions for the Museum and Archive service total £159,000. An £11,000 reduction in the Major Acquisitions Fund is anticipated. The balance of the savings will be achieved through reductions in staffing expenditure. Current and anticipated vacancies could yield a saving of approximately £100,000.

4.8 The Countryside Service's allocation is £180,000. Of this, savings of £20,000 can be made through increased grant income and reducing spending on promotions and access development. The remainder will be staffing savings, the majority of which can be achieved through vacancy management.

4.9 Arts, Tourism, Marketing and Design have a total savings target of £107,000. It is considered that it would be counter-productive to reduce the marketing budget, as this could lead to a reduction in service usage, and income, and could also mean that information about services would not reach priority service users. There are savings which can be achieved on Tourism and Design, including seeking sponsorship for high profile publications. Again, it is inevitable that staff savings will be necessary, and the majority of this may well be achieved through vacancy management.

4.10 The target for Sport, Community and Outdoor Services totals £86,000. It is proposed that support to the unitary cities outdoor centres will be reduced, as well as support for non-core activities in Sport and Community.

4.11 Finally, £79,000 reductions need to be achieved from the Policy Fund, Director and Business Development and associated headquarters functions. Of this, £29,000 relates to the Policy Fund which reduces the amount available for priority service innovation. The majority of spending on the other functions is on staffing, and process and efficiency reviews will be undertaken to identify opportunities for savings without a detrimental impact on services provided.

4.12 As a consequence of these proposals, staff numbers will be reduced by approximately 50 FTEs, some 5% of the staffing establishment. Some of this will be achieved through natural wastage and a number of vacant posts have been identified that will not be filled, or will be filled by redeployment, but redundancies are likely to be necessary.

4.13 A net reduction of up to 24 posts relates to the base budget reduction of £488,000. A further net reduction of up to 29 posts relates to the redeployment proposals in paragraph 6 below.

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 cost pressures of £907,000 and redeployment proposals of £1.2 million to fund these and corporate requirements are included in Appendix 4. The net reduction of £337,000 is owing to:

· Guideline redistribution - £133,000

· Pay and Benefits benefit realisation - £204,000

5.3 The most significant areas of growth included in the redeployment proposals are:

· part-year running costs of Winchester Discovery Centre which will open in 2007

· addressing existing inescapable budget pressures

· an enhancement to the Policy Fund, most of which will initially be held as a contingency.

5.4 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.

5.5 Appendix 5 identifies efficiency improvements totalling £1.1 million (3.5%), all eligible for inclusion in the annual efficiency statement. £0.6 million (1.8%) represents usable budget savings. The total value of cashable savings is £0.9 million.

5.6 It is essential that these savings are achieved in order to deliver a balanced budget. This will also need to be monitored to ensure that the savings do not have an adverse impact on the quality and quantity of services and thus remain eligible for inclusion in the annual efficiency statement.

6 Review of charges

6.1 Under the policy on charging agreed in December 2002, responsibility for decisions on the level of library fines, reservation fees and charges for replacement borrower tickets, remains with the Executive Member. These charges were increased in 2006.

6.2 All other charges are reviewed annually in accordance with the agreed policies and framework approved by the Executive Member. Charges will be adjusted where appropriate with the aim of increasing income or to further specific policy objectives.

7 Other expenditure

7.1 The budget includes some items which are not counted against the cash limit. This includes capital charges and budgets for central departmental support services, except where they have been given to departments to buy services, and repair and maintenance of buildings. It also includes cost of member support within this budget which are rechargeable to Policy and Resources budget for corporate and democratic core services. Apart from capital charges, these have been excluded at this stage as Policy and Resources control them and they have not yet been agreed. They are being agreed in the same cycle as this report. In the original budget they totalled £2.9 million.

8 Business units

8.1 The trading accounts of Arts Marketing Hampshire and Hampshire Wardrobe are summarised in Appendix 7.

9 Legal implications

9.1 None.

10 HR implications

10.1 The workforce implications of the proposed budget for 2007/08 are set out in Appendix 10. The 2007/08 base budget supports a planned workforce of 986 full time equivalent (FTE) staff. This compares with the original estimate for 2006/07 of 1,029 which is a reduction of 43. Within the workforce are approximately 60 staff employed by Hampshire County Council on behalf of jointly managed committees such as the Basingstoke Canal and Staunton or through directly funded grant posts.

10.2 The net effect of proposals for growth, savings and redeployment of resources (Appendix 4) on staffing levels are as follows:

2007/08	-29 FTEs
2008/09	-26 FTEs
2009/10	-26 FTEs

11 Provisional budget for 2008/09 and 2009/10

11.1 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	£32.5 million
2009/10	£33 million

12 Impact assessment

12.1 The proposals in this report are derived from the departmental service plan(s) and are in accordance with the budget strategy and the County Council's financial management policy. An impact assessment of the departmental service plan and the financial management policy has been carried out and 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 £31.8 million (as set out in appendices 1 and 2)

2 The base budget for 2007/08 totalling £32.4 million (as set out in Appendix 3)

3 The proposals for growth of £907,000 and redeployment of resources totalling £1.2 million in 2007/08 (as set out in Appendix 4)

4 The proposals for efficiency improvements totalling £1.1 million (3.5% 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 £32.5 million and for 2009/10 of £33 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