Hampshire County Council
	Executive Member for Policy and Resources		Item 4
	25 January 2007
	Revenue Budget 2007/08, 2008/09 and 2009/10
	Report of the County Treasurer and Chief Officers

Contact: Anne Hibbert, (01962) 847533; [email protected]

Summary

1.1 This report sets out the proposed Policy and Resources 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 Policy and Review 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 Hantsdirect.

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

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

1.4 For this service, the revised guideline for the 2007/08 budget agreed by Cabinet in September is £51.6m as shown in the table below:

	£m
Provisional budget for 2007/08	47.9
Base budget adjustments including inter-service transfers	0.9
Hantsdirect	3.4
Pay and Benefits benefit realisation	-0.4
Guideline redistribution	-0.2
2007/08 Provisional guideline	51.6

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 Since the provisional guidelines were set by the Cabinet in September, some minor changes to the base budget have occurred affecting the budget guidelines, mainly as a result of the rephasing of the Hantsdirect set up costs.

2.2 The adjusted budget guidelines for this service are:

For 2007/08	£53.7m
For 2008/09	£51.7m
For 2009/10	£52.1m

2.3 This report sets out the Policy and Resources 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 £53.3m (as set out in Appendix 3)

· Proposes savings and the redeployment of resources of £0.4m (as set out in Appendix 4)

· Identifies efficiency improvements of £1.7m being 3.2% 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 £51.7m. The calculation is shown in Appendix 1.

3.2 A summary comparing the revised budget with the cash limit is set out in Appendix 2. This shows spending pressures totalling £359,000 mainly within Property Business and Regulatory Services as outlined below.

3.3 There continues to be considerable pressure on the Property Services budget associated with the cost of feasibility work, the delivery of the Ashburton Court project and other pressures. These contribute to spending of £200,000 above the cash limit. It is proposed to use invest to save funding available to meet the cost of generating additional capital receipts to offset these pressures in 2006/07.

3.4 The increasing cost of security and essential maintenance for properties within the Corporate Estate means the position on the Corporate Estate budget has worsened since the last budget monitoring report. It is proposed to allocate £129,000 by adjusting revenue contributions to capital to reflect the costs incurred in securing properties awaiting disposal in order to maximise the potential capital receipt. This will leave an anticipated shortfall of £91,000.

3.5 Shortfalls against income targets on the Development Account, County Farms and Sites for Gypsy and Travellers budgets are persisting and a combined overspend of £205,000 is now likely. Options will continue to be explored to accommodate these additional costs within approved capital and revenue budgets.

3.6 The revised budgets for the Treasurer's Department and the Chief Executive's Department match the cash limit for these departments.

3.7 Pressures on the Coroners' budget include higher mortuary fees, special analyses and examinations and court attendance costs and are forecast to exceed the cash limit by £100,000. A service level agreement is being developed to provide a framework for mortuary charges in future years and financial and procurement arrangements for the services are currently being reviewed by County Treasurer's consultancy team.

3.8 For other budgets an underspending of £37,000 is anticipated. This relates to a reduced estimate of the external audit fee particularly relating to the audit of grant claims. This outturn forecast takes account of the proposed carry forward of £8,000 resulting from the revised timescale for the work of the futures group and £30,000 relating to the delayed implementation of an emergency planning logging system.

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 £53.3m at outturn prices.

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

4.3 Overall, the base budget includes a net increase in expenditure at constant prices of £4.3m. The main variations are:

i) Reductions to offset excess inflation (-£0.2m)

ii) Exclusion of non-recurring expenditure (-£0.6m)

iii) Local Public Service Agreement 2 (LPSA2) pump priming funding (£0.1m)

iv) LPSA1 reward grant (£0.8m)

v) Home to school transport pilot (£0.5m)

vi) Hantsdirect net additional budget (£4.1m)

vii) SAP savings (£0.6m)

5 Cost pressures, savings and 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 Section 7 of this report identifies a number of cost pressures affecting the services funded by Policy and Resources, in some cases with associated redeployment proposals or savings and potential sources of funding that are still being explored. A summary of the savings and redeployment proposals of £0.3m is included in Appendix 4.

5.3 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 3 per cent per year across central and local government, with a focus on net cashable savings.

5.4 Appendix 5 identifies efficiency improvements totalling £1.7m (3.2%). All of these are eligible for inclusion in the annual efficiency statement. There are no budget savings identified other than those already included within the base budget assumptions.

6 Chief Officer controlled budgets

Chief Executive's department (including Human Resources)

6.1 The first stage in planning next year's budget requires consideration of a number of functions and projects for which the department is currently responsible but for which there is no provision in the 2007/08 budget. These are outlined below.

6.2 The ongoing cost of the Remuneration and Benefits team to implement the new pay strategy and the link between the individual performance planning (IPP) process and pay, together with other potential costs arising from the implementation of the new pay framework, were agreed on an indicative basis at the meeting of the Employment in Hampshire County Council (EHCC) Committee in September 2006. At the meeting, it was noted that a decision would be required as part of the budget process on the financing of some of the costs. The report identified the need for, an additional team member to the end of June 2008. In addition, some of the costs funded from savings in the HR budget in 2006/07 will require additional funding in 2007/08 due to the higher SAP benefit realisation target. Consequently, funding of £410,000 will be required from the Job Evaluation Transitional Costs reserve, for the cost of the project team in 2007/08. The longer term requirement for a continuing remuneration and benefits team will be reviewed within the limited flexibility available within the budget strategy for 2008/09. A further £114,000 funding from the Job Evaluation Transitional Costs reserve will also be required in 2007/08 for implementation costs relating to communications and system testing and training within the HR Service Centre.

6.3 Delivering the Best Value Review of consultation - the best value review identified a need for a post to co-ordinate the numerous consultation activities across the organisation. This was endorsed by the Policy and Resources PRC and Cabinet. In 2006/07 this work has been done by using a market research contractor, part time, funded from the consultation budget. In order to maintain progress it will be necessary to continue the work and therefore it is proposed that the ongoing cost of £28,000 continues to be met from the consultation budget.

6.4 Hampshire Media Plan for Major Incidents- the Civil Contingencies Act requires the Authority to have a formal out of hours staffing arrangement for media handling in the event of a major emergency. The estimated cost of introducing a standby-rota is £12,000 the cost of which will need to be absorbed within existing budgets

6.5 External Funding Post - a pump priming contribution of £20,000 was made available for this post in 2006/07. As this was for one year only the continuation of the post will be dependant upon those departments who benefit from the work of the officer being prepared to contribute towards the cost of the post.

6.6 Project Augur has been a regeneration study initiated by the County Council and now under review by potential consortium members seeking Board level approval for the proposed funding and permissions to proceed. The County Council has been the enabler of progress to this decision point through, among other things, its funding and recruitment of a project co-ordinator. The Project Co-ordinator is on a two year contract to May 2007 which has to date been funded from the Community Planning budget. It is proposed that the cost of the remainder of the two year contract, estimated at £10,000 should be funded from the same source in 2007/08. This should ensure the County Council's interests are protected and enable appropriate knowledge transfer.

6.7 Futures Group - in the current year a sum of £20,000 was made available for the work of this group. The main area of expenditure will be a Schools Competition and there is likely to be an underspend of approximately £8,000. As the work of the Group is on-going it is requested that this underspend be carried forward and a sum of £10,000 be earmarked to be allocated when the work programme of the group is clearer.

6.8 In Emergency Planning the need for a 'logging system' has been identified. This is a means of recording actions generated by either management decisions/ incoming calls/e-mails/etc in responding to major emergencies. It details issues arising in emergency situations and generates a time line or 'log' of decisions and subsequent actions.  The system will be used by the Emergency Planning team, support staff and staff within District Councils engaged in responding to emergencies.  It will also give a timed history of what happened when and can be used as supporting evidence in any post incident review. The cost of implementing the system is estimated to be £30,000 and it had been intended to fund this project from one off savings on the staffing budget in 2006-07. However due to other work priorities e.g. Daedelus it has not been possible to progress the development in the current financial year and a request is made to carry this sum forward to 2007/08

6.9 In addition to the above the department has to achieve further SAP savings of £410k in 2007/08 as part of the ongoing SAP benefits realisation strategy including the Payroll Shared Service Centre. The department has also been asked to identify how it would meet savings arising from:

· Costs of implementing Pay and Benefits £132,000

· Redistribution of budget guidelines £ 88,000

· Contribution to Hantsdirect £ 49,000

6.10 Delivery of the SAP savings is being achieved as a result of the move to the new model for the HR function and from having centralised delivery of recruitment processes. Although all SAP savings have been achieved to date there are increasing pressures as the demand for more HR services continues arising from the number of major change programmes going on across the organisation.

6.11 With regard to Pay and Benefits savings it is estimated that the actual cost of implementation for the Chief Executive's Department will be less than £100,000 and therefore the proportion that has to be found by the department will be less than the indicative figure calculated on a pro-rata basis. The approach to the achievement of these savings will be to set targets for budget managers in accordance with the impact of the new pay framework in their areas to drive out the benefits from the investment being made by the County Council in the new pay framework.

6.12 The strategy for achievement of the savings target arising from the redistribution of budget guidelines will be to target back office functions and drive out further efficiencies by better co-ordination across the department. The scope for this has been increased following the merger with HR. As in previous years the department will also continue with an active policy of vacancy management and will also seek to maximise income generation opportunities. The latter includes both selling services to other organisations which helps to contribute to overhead costs and also seeking sponsorship deals and advertising to help defray the cost of specific events and publications.

6.13 Work is ongoing to identify the department's contribution to Hantsdirect. This primarily relates to the operation of Information Centres. The role of the latter is currently being reviewed in light of the transfer of telephone calls to Hantsdirect, the development of a `face to face' customer contact strategy, the strategic review of property and the need to increase our community engagement. A range of options are being explored to re-focus the work of Information Centres with a view to more flexible use of resources.

6.14 It should be noted that the need to absorb existing pressures plus the requirement to make further savings will not be achieved easily. In 2007/08 the organisation faces huge challenges which will put increasing demand on services provided by the Chief Executive's Department. The Department will therefore be seeking wherever possible to make savings in the current year with a view to carrying forward an underspend to enable the savings to be achieved over a longer time period and thereby protecting service delivery as far as is possible.

County Treasurer's department

6.15 The County Treasurer's department has prepared its budget to meet the guidelines set by Cabinet in September and deliver savings for Adults Services recovery, Pay and Benefits and Hantsdirect. These savings come on top of the ongoing pressures within the budget to fund increments with a 3% staff turnover target.

6.16 They also come on top of the ongoing and increasing programme of SAP savings; by the end of 2007/08, the department will have delivered a total of £800,000 cash savings for SAP benefits realisation since 2004/05. An additional £86,000 in excess of its target is expected to be delivered for 2006/07 and for 2007/08 further SAP savings of £114,000 are required. The remaining savings to be made in 2008/09 amount to £160,000 including a substantial £88,000 required from the Adult Services finance unit - a process review is planned for early 2007/08 to develop the approach for realising these.

6.17 In order to deliver the Pay and Benefits savings of £62,000, the department is planning a review of its support services and of its senior management structure. The Hantsdirect savings will be achieved with the transfer of the Blue Badges function.

6.18 The serious sickness absence pressures continue for Audit Services requiring a further £40,000 in the budget to meet the cost of staff to ensure delivery of the audit plan. The Training Team continues to be undersubscribed by departments, despite being fully utilised, at a time when efficient and effective use of our finance and resource management systems should be at a premium, there is an income shortfall of £40,000. Against this pressure the team is looking to combine its administration function with the IT Services function, aiming to release savings of £20,000.

6.19 A report to EHCC identified various funding requirements for implementing the Pay and Benefits project in 2007/08. For Treasurer's these total £79,000 and comprise £17,000 for additional staffing for testing and implementing the new framework by the Payroll Technical Section, £22,000 as the employer's costs for the pensions administration costs of managing contributors who move onto frozen pay (there will also be a cost to be met by the Pension Fund for the pensions administration aspect of the work) and £40,000 for the Treasurer's Training team to meet the training costs of the implementation. These costs will require funding from the Pay and Benefits Transitional Costs reserve and are in addition to the £60,000 required in 2007/08 for configuring the payroll system in line with the new pay framework for which resources have previously been earmarked.

Property Business and Regulatory Services

6.20 The department will continue to face significant cost pressures in 2007/08 and beyond. Construction industry inflation rates continue to run ahead of standard inflation and the shortfall is likely to mean a reduced programme of work. Recent market increases in the price of gas and electricity will also have major impact on the Office Accommodation budget with potential additional costs of up to £291,000 expected. The fixed nature of many of the costs in this budget means scope for redeployment to offset this pressure is limited.

6.21 The department is also committing significant resource to projects in support of the new Corporate Priorities and to deliver corporate efficiency gains. These include:

· Ashburton Court refurbishment (Enhancing our quality of place)

· The Strategic Property Review which will increase utilisation of office space through flexible working and reduce overall requirement for office space

· The further development of Hampshire County Council's lead role in construction procurement on behalf of the South East Centre of Excellence

· The delivery of the new SLA to schools including new health and safety services

· The delivery of significant additional capital receipts to support the locally resourced capital programme.

6.22 The existing cost pressures associated with the Corporate Estate, County Farms and Sites for Gypsy and Traveller budgets are expected to persist in 2007/08. These budgets are currently under review but the nature of the budgets means scope to achieve savings is limited.

6.23 The table below summarises the cost pressures facing the department in 2007/08. The table excludes costs covered by existing or agreed funding and excludes the impact of 2006/07 spending above the cash limit.

Cost Pressures 2007/08	£'000
Additional inflation - construction	33
Additional inflation - energy	291
Ashburton Court	165
Strategic Property Review	43
New SLA with schools	47
Corporate Estate	148
Sites for Gypsies and Travellers	86
County Farms	60

6.24 The implementation of the new pay framework is also expected to add to net costs in 2007/08. The final impact will depend on staff turnover levels over the coming years. The following paragraph outlines the steps being taken both to achieve the required budget saving in 2007/08 and to address the uncertainties around the ultimate cost to the department.

Workforce reduction plans to contribute to the increased cost of the new pay framework

6.25 The department is planning to achieve the savings required of £196,000 by a reduction of ten full-time equivalent posts across Property and Regulatory Services as a result of:

· A review of the level of administrative support required by Trading Standards following co-location of staff currently based at Basingstoke, Fareham and Winchester early in 2007.

· A review of the nature and provision of administrative and secretarial support in Property Services to enable the services to be provided by fewer staff.

· A review of the way in which finance & procurement transactions are handled within Property Services.

6.26 The full year effect of these reductions at 2006/07 pay levels is expected to total £198,500. In addition to this and to help address the longer-term impact of both the new pay framework and the overall financial position the department is actively pursuing voluntary early retirements, has reduced the number of agency staff and will continue to hold vacancies although there may be a need in 2007/08 for some minimal recruitment to specialist roles where internal redeployment is not an option.

6.27 In addition to work on the workforce reduction proposals outlined in 7.25 the department continues to develop both corporate and departmental efficiencies and value for money improvements. The key additional areas where efficiencies have been targeted for 2007/08 are:

Delivery of corporate efficiency improvements

· The Strategic Property Review which will reduce overall floor area requirement by improving utilisation of office space through the development and implementation of more flexible working approaches.

· Continuing work on construction procurement and Hampshire County Council's lead role in developing arrangements for the South East Centre of Excellence.

· The Corporate Procurement team will continue to take forward the Corporate Procurement Strategy and will work with the Corporate Procurement Network and directly with individual departments in delivering efficiencies in 2007/08.

· Continuing work of the Rating Revaluation team supported by £75,000 of Invest to Save funding. Savings in 2006/07 to date total £600,000 and a similar figure is anticipated for 2007/08.

· The generation of significant additional capital receipts to support the locally resourced capital programme.

· Business unit 2007/08 price increases held below inflation e.g. Hampshire Transport Management contract hire increase of 1.5% and no increase for Hampshire Printing Services (anticipated saving excluding schools and non-Hampshire County Council customers £50,000).

Efficiency improvements benefiting departmental budgets

· Rationalise IT and other equipment in particular printers, photocopiers and managed PCs. A target reduction of £100,000 has been set and a plan developed to achieve this.

· Reduce non-rechargeable travel costs through better planning of journeys and more efficient and effective use of alternatives to private mileage. A target reduction of £50,000 has been set and a departmental Travel Plan to support managers and staff in achieving this is being prepared.

· Continue to reduce the requirement for training budget through use of techniques such as coaching and cascade training to deliver learning and development priorities.

· Absorption of the cost of increments £187,600.

6.28 The report on the capital programme for Policy and Resources proposes an increase of £0.5m per annum in the provision within the capital programme for feasibility studies and associated costs from 2007/08 onwards. This is to be funded from additional capital receipts in accordance with the strategy agreed by the Cabinet in July. This together with continued additional invest to save funding for the capital receipt generation will assist in dealing with some of the pressures affecting the Property Services budget in 2007/08 while plans to accommodate the remaining cost pressures are developed.

7 Review of charges

7.1 The service's 2007/08 revenue budget includes income of £8.3m from fees and charges. Details of the material headings are included in Appendix 6.

7.2 There are some mandatory and national charges which the County Council is not able to vary. The main examples relate to charges for the registration of births, deaths and marriages and Commons registration charges.

7.3 Discretionary charges are reviewed annually except when they are subject to agreements which cover longer periods when the review takes place at the end of the period of the agreement. Examples of charges not subject to annual review are agricultural lettings and most commercial lease rentals.

7.4 Charges for support services are reviewed annually and are set to recover the full cost. Other discretionary charges are set to recover the full cost except where charges are governed by market forces and are only expected to make a contribution towards the cost of the service. Significant changes in 2007/08 include:

· Legal fees - Income is expected to increase by 26% in 2007/08 due to legal fee income associated with conveyancing and developer's contributions.

· Gypsies and travellers utilities - Increase of £9,400 (32%) income reflects better monitoring and coding as well as an increase in the unit cost to cover the increased rates for Electricity.

8 Other expenditure

8.1 Other budgets within the Policy and Resources cash limit mainly consist of grants to voluntary organisations and to councils of community service, contributions and subscriptions to national and local organisations, and the external audit fee.

8.2 The budget also includes some items which are not counted against the cash limit. This includes the budget for capital charges (depreciation and the notional cost of capital employed) of £5.4 million, which is allocated to services to show the full cost of service provision. Adjustments to the budget have also been made for pension and early retirement costs, in accordance with Financial Reporting Standard 17 (FRS 17).

8.3 Later on in the budget preparation process, a further adjustment will be made to the non-cash limited part of the budget to recharge the cost of central departments' support services and repairs and maintenance of buildings to all direct services across the County Council.

9 Business units

9.1 The trading accounts of the business units are summarised in Appendix 7.

9.2 Trading conditions for HC3S are showing some signs of improvement but continue to be challenging however the main factor contributing to the planned deficit for the year of £341,000 is the impact of the new pay framework for which business units will receive no corporate support. The position assumes a 10p (5.9%) increase in the meal price in 2007/08.

9.3 Hampshire Transport Management's planned surplus for 2007/08 is £80,000. A key target for the coming year will be to retain contract hire business and price increases have been held below inflation at 1.5% to support this aim. The implementation of the new Fleet Management system is expected both to improve services to customers and allow similar below inflation price increases in future years.

9.4 Hampshire Printing Service's planned surplus for 2007/08 of £40,000 assumes prices held at 2006/07 levels and a significant efficiency gain from the new five colour press the acquisition of which was approved in 2006.

9.5 County Supplies and Corporate Procurement's planned surplus for 2007/08 is £60,000. This position includes investment in service improvements e.g. electronic tendering.

9.6 IT Services have made a modest improvement in the predicted trading forecast for 2006/07, mainly as a consequence of slippage in some key projects which will now start to incur significant costs in 2007/08. The forecast trading surplus is now likely to exceed £200,000 as measures to reduce costs and increase external income take effect. This will go some way towards eliminating the accumulated trading deficit.

9.7 Planned headcount has been reduced by 11.3 ftes from 2005/06 and with staff turnover now doubled to 11.5% pa, actual headcount is a further 6.3 ftes lower. However reduced employee costs will largely be absorbed by increased spend on external contractors.

9.8 IT Services costs are largely met through charges for services supplied to customers. The pricing schedule for 2007/08 has been prepared with finance managers across the County Council and in line with corporate inflation guidelines. When applied to predicted service volumes this indicates a 1% reduction in revenue, compared with the predicted outturn for 2006/07.

9.9 However, whilst available revenue is expected to reduce, IT Services are required to invest heavily in infrastructure development and replacement to meet the needs of Transforming Through Technology strategy. This investment includes:

· Enterprise software programme to upgrade Hantsnet and enable seamless integration between applications and with partner organisations. The benefits include the provision of a document management system which is a cornerstone of the emerging information management strategy.

· Replacement of the ageing Btex switchboard and Core Network to increase bandwidth and improve resilience. These programmes are key enablers of new ways of working at the Castle complex.

· Server Consolidation programme to reduce costs, improve flexibility of server management and increase resilience.

· Procurement of a second data centre which is necessary to ensure business continuity and to enable extended service availability. Dialogue with potential business partners has begun with a view to developing a business model which will form the basis of a business case.

9.10 Other cost pressures in 2007/08 and beyond will include the implementation of the new pay structure, disruption associated with the Ashburton Court redevelopment programme and the continuing costs of development of corporate IT solutions. IT Services are predicting a trading surplus of £100,000 in 2007/08 and 2008/09 which will eliminate any remaining accumulated trading deficit by March 2009.

10 HR implications

10.1 The workforce implications of the proposed budget for 2007/08 are set out in Appendix 10. Inclusive of 1,162 staff working in business units, the 2007/08 base budget supports a planned workforce of 2,890 full time equivalent (FTE) staff. This compares with the original estimate for 2006/07 of 2,865 which is an increase of 25. This excludes an anticipated reduction in Human Resources in line with SAP benefit realisation savings. The main changes are as follows:

· 10 additional Accredited Community Safety Officers (ACSOs) agreed by Cabinet in February 2006

· 58 FTEs for Hantsdirect, mainly transferred from other services

· a reduction of 50 FTEs in Hampshire County Council Catering Service (HC3S) in response to the decline in demand

· 6 additional posts to support the Hampshire Action Teams (HATs) and the scrutiny function, funded from Local Area Agreement funds

· 2 additional staff at Sir Harold Hillier Gardens funded by increased income

· 4 additional staff in County Treasurer's funded by SLA income offset by a reduction of 1 FTE as a result of SAP benefit savings and 1FTE transferred to Hantsdirect

· 4 additional posts in the Chief Executive's department funded from additional income

· A reduction of 11 FTEs in IT Services to reflect changes in demand for services.

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

2007/08	-19 FTEs
2008/09	-3.7 FTEs
2009/10	-3.7 FTEs

10.3 It is planned to achieve these reductions by reviewing support services within the Chief Executive's department, following the merger with HR and also within the County Treasurer's department, Property Services and Trading Standards. A review of the senior management structure within the County Treasurer's Department is also planned.

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	£51.7m
2009/10	£52.1m

12 Impact assessment

12.1 The proposals in this report are derived from the departmental service plans and are in accordance with the budget strategy and the County Council's financial management policy. An impact assessment of 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 £51.7m (as set out in appendices 1 and 2)

2 The base budget for 2007/08 totalling £53.3m (as set out in Appendix 3)

3 The proposals for redeployment of resources totalling £0.4m in 2007/08 (as set out in Appendix 4)

4 The proposals for efficiency improvements totalling £1.7m (3.2% 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 £51.7m and for 2009/10 of £52.1m (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

Financial Management Policy - Appendix 1 Budget Book

Links(s) 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
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 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 - 2008/09	Blue
11	Provisional budget 2008/09 and 2009/10	Pink
11 - Annex 1	Provisional budget 2008/09 - analysis of variations	blue

Appendix 1

Policy and Resources

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					47,770
Transfers to/from other services and contingency allocations:
	Transfer Health and Safety to departments			-116
	Procurement savings			-37
	2006/07 SAP benefit realisation			-60	-213
=	Adjusted original budget				47,557
Other variations
		Carry forward 2005/06 net overspend		-125
		Recruitment - Adult Services transfer		75
		Pay & Benefits system configuration		77
		Pay & Benefits launch costs		36
		Local Area Agreement - Top slice		282
		LPSA2 Pump priming grant		76
		Hantsdirect - set up costs		3,091
		Home to School pilot		500
		Increased security costs - Corporate Estate		129
		Invest to save funding Property Services		200
		Employees savings target		-110
		RETIS contribution from Children's Services		10
		Capacity building fund grant		6
		Re-phasing of SAP benefit realisation		-86
		Transfer from capital - contribution to `The Lights' theatre, Andover		33
		Busy Bees salary sacrifice scheme		20
		Carry forward Emergency planning underspend		-30

			£'000	£'000
	Futures group - re-phasing of costs		-8	4,176
=	Cash limit for the revised budget 2006/07			51,733

Appendix 2

Policy and Resources

Revised budget 2006/07

Summary comparing the revised budget with the cash limit

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Cash limited expenditure
Chief Executive
- Chief Executive's Department	6,585	6,585	-	-
- Economic Development	720	720	-	-
- Links with Europe	104	104	-	-
- Emergency Planning and oil pollution	389	389	-	-
- Other direct services	989	989	-	-
- Other central services	2,186	2,186	-	-
	10,973	10,973	-	-
HR Department
- HR Department	3,413	3,413	-	-
- Hampshire Learning Centre	831	831	-	-
- Occupational Health	391	391	-	-
- Payroll Service Centre	325	325	-	-
- Recruitment Centre - Advertising	1,165	1165	-	-
- Pay and Benefits team	370	370	-	-
- Other central services	220	220	-	-
	6,715	6,715	-	-
County Treasurer	5,429	5,429	-	-
	5,429	5,429	-	-
Property, Business and Regulatory
- Office accommodation	5,156	5,156	-	-
- Property Services +310	6,534	6,534	-	-
- Repair and maintenance	4,133	4,133	-	-
- Regulatory Services	3,163	3,163	-	-
- Accredited Community Safety Officers	1,534	1,534	-	-
- Other direct services	369	665	296	80%

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
- Other central services	63	63	-	-
- Savings and redeployments to be identified	-	-296	-296	-
	20,952	20,952	-	-
Other budgets
- Coroners	857	957	100
- Centrally retained expenses	141	141	-	-
- Corporate and democratic core	306	306	-	-
- External Audit fee	363	326	-37	-10%
- Contact Centre - set up costs	3,091	3,091	-	-
- Home to School pilot	500	500	-	-
- Other direct and corporate services	1,620	1,620	-	-
Other central services	786	786	-	-
-Savings to be identified	-	-63	-63	-
	7,664	7,664	-	-
Total	51,733	51,733	-	-

Appendix 3

Policy and Resources

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			47,770
Transfer to other services
	Transfer Health and Safety to departments	-116
-	Procurement savings	-37
-	06/07 SAP benefit realisation	-60	-213
=	Adjusted original budget		47,557
Increases for inflation to reflect November 2006 prices (see Annex 2)
-	Excess cost of inflation over the inflation allowance		150
Original budget at November 2006 prices			47,707
Other variations (see Annex 3)
-	Reductions to offset excess inflation		-150
-	Exclusion of non-recurring 2006/07 expenditure
	Futures group	-20
	Carry forward of 2004/05 underspending - ACSOs	-116
	Intech grant	-40
	Pay & Benefits	-295
	Local Links	-55
	Carry forward of 2005/06 planned underspending	-225	-751
-	Redeployment of 2nd homes income for ACSOs		150
-	LPSA2 Pump Priming grant		130
-	LPSA1 reward grant top slice for Local Area Agreement		846
-	Home to School pilot		500

		£'000	£'000
-	Hantsdirect
	Set up costs	2,453
	Operational costs	1,669	4,122
-	2007/08 SAP benefit realisation		-610
-	Transfer from capital to revenue		40
-	Futures Group - re-phasing of costs		8
-	Carry forward from 2006/07 for Emergency planning		30
Allocation for future inflation			1,325
=	Base budget 2007/08 at outturn prices		53,347

Annex 1 to Appendix 3

Policy and Resources

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:
		Children		Variations arising directly from changes in the number of pupils in schools, pupils eligible for free meals and numbers of days in the school year
		Environment		Routine highway and street lighting maintenance arising from variations in road length
				Variations in waste disposal volumes
		Adults		Increased cost of joint finance schemes with health due to operation of the taper

Annex 2 to Appendix 3

Policy and Resources

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						150
	Less:
	-	Allocation from contingency for business rates					-
	=	Shortfall in the provision					150
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.						£1,601,000
	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 - £126,000
	This was for general price increases of 2.5% (£1,026,000) offset by increased income to match inflation in gross expenditure
	Additional cost of price increases other than pay and net of income £
	The most significant variations within this additional cost are as follows: Gas Fuel oil Water Sewerage Postage			Outturn 2006/07 to November 2006 % 44.5 10 5.8 6 8.6		Cost in 2007/08 £'000 118 1 3 3 29
3.	Allocation for future inflation					£'000
	Provision for all pay awards of 2.25% in 2007/08					1,275
	Increase in local government employers' pension contributions (from 275% to 295% of employee contributions)					493
	Provision for non-pay inflation at 2.5%					1,065
	Reduction for increased income					-1,508
	Total allocation for future inflation					1,325

Annex 3 to Appendix 3

Policy and Resources

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 to the increase of £4.3m (9%) are set out below:

		Variations against the repriced 2006/07 budget
		£'000	%
	Chief Executive and Human Resources: Deletion of non recurring items 2005/06 carry forward of planned underspendings Use of PSA1 reward grant for LAA PSA2 Pump priming grant Hantsdirect - operational costs SAP savings Emergency planning - c/f 2006/07 underspending County Treasurer: Transfer of Services to Hantsdirect SAP benefit realisation savings Property, Business and Regulatory Services: Deletion of non-recurring item Redeployment of 2nd homes income - ACSOs PSA2 Pump priming grant Miscellaneous Policy and Resources budgets: Deletion of non-recurring items Home to School pilot Hantsdirect - set up costs Use of PSA1 reward grant for Innovation forum `The Lights' theatre, Andover	-350 -225 +556 +110 +1,704 -410 +30 -35 -200 -116 +150 +20 £'000 -60 +500 +2,453 +290 +40	-0.7 -0.5 +1.2 +0.2 +3.6 -0.9 +0.1 -0.1 -0.4 -0.2 +0.3 +0.1 % -0.1 +1.0 +5.1 +0.6 +0.1

Appendix 4

Policy and Resources

Proposals for savings and redeployment 2007/08 to 2009/10

					Staffing (FTEs)
		2007/08	2008/09	2009/10	2007/08	2008/09	2009/10
		£'000	£'000	£'000
Savings and Redeployment proposals:
Chief Executive:
-	Pay and benefits implementation costs funded from the Job Evaluation Transitional Costs Reserve	524	-524	-	1	-	-
-	Pay and benefit realisation savings	-132	-	-	-4	-	-
-	Savings required within budget guidelines	-88	-88	-88	-3	-3	-3
County Treasurer:
-	Pay and benefits project implementation costs funded from the Job Evaluation Transitional Costs reserve	139	-139	-	-	-	-
-	Pay and benefit realisation savings	-62	-	-	-2	-	-
-	Savings required within budget guidelines	-22	-22	-22	-0.7	-0.7	-0.7
Property, Business and Regulatory Services
-	Invest to save funding for capital receipt generation - to be reviewed at the end of 2007/08	310	-200	-110		-	-
-	Pay and benefit realisation savings	-196	-	-	-10	-	-

					Staffing (FTEs)
		2007/08	2008/09	2009/10	2007/08	2008/09	2009/10
		£'000	£'000	£'000
-	Savings required within budget guidelines	-93	-93	-93	-	-	-
Other budgets
-	Savings required within budget guidelines - from the Audit fee in 2007/08	-15	-16	-15	-	-	-
Total savings and redeployment proposals		365	-1081	-328	-18.7	-3.7	-3.7

Appendix 5

Policy and Resources

Efficiency improvements 2006/07 to 2009/10

		2006/07 £'000	2007/08 £'000	2008/09 £'000	2009/10 £'000
Cashable efficiency improvements:
A	AES eligible and budget saving Procurement savings: Chief Execs and Human Resources County Treasurer Property Business and Regulatory Services Corporate contribution to County Supplies	12.5 2.8 14.6 7
B	AES eligible but no budget saving SAP benefit realisation savings County Treasurer Human Resources Cost of Increments Chief Execs and Human Resources County Treasurer Property Business and Regulatory Services Rating Revaluation	186 310 232 190 188 525	114 410 232 190 188 525	160 120 232 190 188	0 0 232 190 188
C	Budget saving but AES ineligible None identified
Non-cashable efficiency improvements:
D	None identified
Total AES eligible (a+b+c)		1,667.9	1,659	890	610
% of base budget		3.5%	3.2%	1.7%	1.2%
Total Budget Saving (a+d)		36.9
% of base budget		0.1%
Total of all efficiency improvements (a+b+c+d)		1667.9	1659	890	610
% of base budget		3.5%	3.2%	1.7%	1.2%

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

Policy and Resources

Review of income 2007/08

		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 Chief Executive - Commons registration - Recovery of legal costs Registration Service - Statutory registration fees	72,600 215,500 841,400	01/10/2003 n/a Annual	- n/a Nov 07	- n/a -	- n/a -	No n/a No	- - n/a

		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
		£			£			£
2	Discretionary charges Chief Executive - Legal fees for Fire - Legal fees for other bodies County Treasurer - Contractual income Property, Business and Regulatory Services - Property Services Office Accommodation - Rent and services charges from other bodies County Farms - Agricultural lettings - Other rents and income Sites for Gypsies and Travellers - Rents - Utilities Sir Harold Hillier Gardens - Entrance fees - Conference lettings - Rents (gardeners) - Other income Corporately held land - Great Hall sales - Commercial and other rents Registration Service - Fees for marriage in approved premises	11,600 43,800 2,994,700 518,500 377,650 285,300 112,400 131,500 39,200 364,800 140,000 80,000 208,600 69,900 1,077,000 724,900	April 06 April 06 Annual - - Per Agreements Per Agreements May 06 May 06 2006 2006 2006 2006 Various As lease allows Annual	April 07 April 07 Next Year - Various - - May 07 May 07 2007 2007 2007 2007 Various As lease allows 2007/08	n/a n/a - - - - - - - - - - - - 5% 10%	Yes Yes - Yes Yes Yes Yes No No Yes Yes Yes Yes Yes Yes Yes	No No - No No No No No No No No No No No No No	- - - n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
3	Services provided free where charges could be made - None
		8,309,350

Appendix 7

Policy and Resources

Business units - summarised trading accounts 2007/08 to 2009/10

		Original budget 2006/07	Revised budget 2006/07	Base budget 2007/08	Provisional forecast 2008/09
		£'000	£'000	£'000	£'000
	Hampshire Printing Services Trading Account
	Income	-2,599	-2,345	-2,358	-
	Expenditure	2,551	2,326	2,318	-
	Net Operating (surplus)/deficit	-48	-19	-40	-
	Reserve Account
	Surplus brought forward	-413	-407	-401	-472
	Reduction of balance	-	82	-	-
	Surplus	-48	-19	-40	-
	Depreciation	-66	-57	-31	-
	Funding of capital expenditure	-	-	-	-
	Surplus carried forward	-527	-401	-472	-472
	IT Services Trading Account
	Income	-32,625	-30,365	-30,036	-31,844
	Expenditure	32,462	30,163	29,936	31,744
	Net Operating (surplus)/deficit	-163	-202	-100	-100
	Reserve Account
	(Surplus)/deficit brought forward	160	455	355	255
	Reduction of balance	-	102	-	-
	(Surplus)/deficit	-163	-202	-100	-100
	(Surplus)/deficit carried forward	-3	355	255	155

		Original budget 2006/07	Revised budget 2006/07	Base budget 2007/08	Provisional forecast 2008/09
		£'000	£'000	£'000	£'000
	Caretaking and Cleaning Support Service Trading Account
	Income	-402	-412	-420	-420
	Expenditure	402	411	420	420
	Net Operating (surplus)/deficit	-	-1	-	-
	Reserve Account
	(Surplus)/deficit brought forward	-126	-131	-106	-106
	Reduction of balance	-	26	-	-
	(Surplus)/deficit	-	-1	-	-
	(Surplus)/deficit carried forward	-126	-106	-106	-106
	County Supplies Trading Account
	Income	-9,865	-9,592	-9,946	-10,111
	Expenditure	9,771	9,492	9,886	10,015
	Net Operating (surplus)/deficit	-94	-100	-60	-96
	Reserve Account
	(Surplus)/deficit brought forward	-1,086	-1,118	-1,020	-1,107
	Reduction of balance	-	225	-	-
	(Surplus)/deficit	-94	-100	-60	-96
	Depreciation	-16	-27	-27	-27
	Funding of developments	208	-	-	-
	(Surplus)/deficit carried forward	-988	-1,020	-1,107	-1,230
	Segensworth Unit Factories
	Income	-20	-20	-20	-20
	Expenditure	-	-	-	-
	Net Operating (surplus)/deficit	-20	-20	-20	-20
		Original budget 2006/07	Revised budget 2006/07	Base budget 2007/08	Provisional forecast 2008/09
		£'000	£'000	£'000	£'000
	Reserve Account
	(Surplus)/deficit brought forward	-240	-203	-223	-243
	(Surplus)/deficit	-20	-20	-20	-20
	(Surplus)/deficit carried forward	-260	-223	-243	-263
	Former Direct Service Organisations HC3S Trading Account
	Income	-16,808	-15,997	-16,282	-
	Expenditure	17,031	16,238	16,623
	Net Operating (surplus)/deficit	223	241	341	-
	Hampshire Cleaning Services Trading Account
	Income	-564	-557	-564	-578
	Expenditure	564	547	564	578
	Net Operating (surplus)/deficit	-	-10	-	-
	Hampshire Transport Management Trading Account
	Income	-7670	-8,089	-8,356	-
	Expenditure	7,568	7,929	8,276
	Net Operating (surplus)/deficit	-102	-160	-80	-
	Former DSO Reserve Account
	Surplus brought forward	-863	-1007	-820	-52
	Reduction of balance	-	204	-	-
	(Surplus)/deficit for the year	121	71	261
	ADD: Depreciation	-133	-198	-100	-100
	LESS: Funding of capital expenditure	160	110	607	-
	Surplus carried forward	-715	-820	-52	-152

Appendix 8

(Separate Excel file)

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
Net cash limited expenditure
Expenditure outside cash limit: Capital charges FRS17 pension adjustment
Specific grants
Total net expenditure

App 8app8

Appendix 9

Policy and Resources

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
Net expenditure on page B71 of the published budget book		26,565
Adjustments for items not included in the budget book: Recharges to other services		25,172
Adjustments made to the original budget figures:		-214
Total net expenditure for 2006/07 original budget shown overleaf on page B71		51,523

Appendix 10

Policy and Resources

Workforce levels and costs

	2006/07 revised	2007/08
	£'000	£'000
Analysis of workforce costs in base budget:
Salaries of permanent staff (including employer's national insurance and pension contributions)	53,844	55,871
Temporary/fixed term/casual staff	1,814	1,696
Agency staff	466	70
Additional hours	361	342
Total workforce costs	56,485	57,979
Average FTE staff actually in post	1,661	1,728
Staffing changes in growth, savings and redeployment proposals:
Variation in staff (FTEs)		-19
Variation in budget (£'000)		-466
Workforce implications of budget proposals:
FTE posts available		1,709
Workforce budget available (£'000)		57,513

Appendix 11

Policy and Resources

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				53,710
-	Exclusion of non-recurring 2007/08 expenditure: LPSA2 PSA1 Hants direct - set up costs operational costs transferred services Invest to save Pay & Benefits implementation 2006/07 carried forward underspending		-130 -623 -2,143 +1,278 -84 -200 -663 -38	-2,603
Redeployment proposals: SAP savings Redistribution of guidelines				-280 -217
Allocation for future inflation				1,068
Provisional budget 2008/09 at outturn prices				51,678
-	Exclusion of non-recurring 2007/08 expenditure: PSA1 Hants direct - set up costs Home to Schools pilot Invest to save Transfer from capital		-200 -380 -500 -110 -40	-1,230
County Council elections				800
Redistribution of guidelines				-217
Allocation for future inflation				1,101
Provisional budget 2009/10 at outturn prices				52,132

(separate excel file) Annex 1 to Appendix 11

Service

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 variations	Growth and redeployment	Inflation allocation to 2009/10 outturn		Provisional Budget 2009/10
	£'000	£'000	£'000	£'000	%		£'000	£'000	£'000	%	£'000
Cash limited expenditure by division of service
Net cash limited expenditure
Expenditure outside cash limit
Specific grants
Total net expenditure

Inflation will need to be allocated over divisions of service to be included in the cabinet report going out 1 Feb 2007.