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

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:

	£ million
Provisional budget for 2007/08	32.5
Base budget adjustments including inter-service transfers
Hampshire Direct	-0.3
Pay and Benefits benefit realisation	-0.2
Guideline redistribution	-0.1
Other adjustments	0.1
2007/08 Provisional guideline	32.0

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:

For 2007/08	£32.0 million
For 2008/09	£32.5 million
For 2009/10	£33.0 million

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

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	blue
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	white
11	Provisional budget 2008/09 and 2009/10	pink
11 - Annex 1	Provisional budget 2008/09 - analysis of variations	blue

Appendix 1

Recreation and Heritage Service

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					31,715
Transfers to/from other services and contingency allocations: - Hampshire Wardrobe - Corporate Procurement					30 -8
=	Adjusted original budget				31,737
Inflation Provision added since the original budget for business rates					-7
Other variations - Busy Bees scheme - Pay and Benefits savings - Local Public Service Agreement - Reduction for Calshot Prudential loan					-3 -50 113 -22
=		Cash limit for the revised budget 2006/07			31,768

Appendix 2

Recreation and Heritage Service

Revised budget 2006/07

Summary comparing the revised budget with the cash limit

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Cash limited expenditure
Museums and Archives Milestones Tourism, Marketing and Design Library and Information Service Countryside Service Arts Sports and Community Calshot Activities Centre Policy Development Initiatives Director and Business Development	3,418 200 578 17,217 4,499 2,075 2,057 233 765 726	3,418 200 578 17,217 4,499 2,075 2,057 233 765 726	- - - - - - - - - -	- - - - - - - - - -
Total	31,768	31,768	-	-

Appendix 3

Recreation and Heritage Service

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			31,715
Transfers to/from other services and contingency allocations
- -	Hampshire Wardrobe Corporate procurement		30 -8
=	Adjusted original budget		31,737
Increases for inflation to reflect November 2006 prices (see Annex 2)
-	Inflation allocated during 2006/07 from the central inflation contingency for business rates		131
-	Excess cost of inflation over the inflation allowance		56
Original budget at November 2006 prices			31,924
Other variations (see Annex 3)
-	Reductions to offset excess inflation	-56
-	Exclusion of non-recurring 2006/07 expenditure	-220
-	Reduction for Calshot Prudential loan	-22
-	Local Public Services Agreement	39
-	Allowable base budget growth	30
-	Hampshire Direct	-259	-488
Allocation for future inflation			939
=	Base budget 2007/08 at outturn prices		32,375

Annex 1 to Appendix 3

Recreation and Heritage Service

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.

Annex 2 to Appendix 3

Recreation and Heritage Service

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						187
	Less:
	-	Allocation from contingency for business rates					-131
	-
	=	Shortfall in the provision					56
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 £118,000
	This was for general price increases of 2.5% (£233,000) offset by increased income of £115,000 to match inflation in gross expenditure
3.	Allocation for future inflation						£'000
	Provision for all pay awards of 2.25% in 2007/08						558
	Increase in local government employers' pension contributions (from 275% to 295% of employee contributions)						254
	Provision for non-pay inflation at 2.5%						183
	Reduction for increased income						-56
	Total allocation for future inflation						939

Annex 3 to Appendix 3

Recreation and Heritage Service

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 decrease of £488,000 (-1.5%) are set out below:

		Variations against the repriced 2006/07 budget
		£'000	%
	Museum and archives
	Reduction for Hampshire Direct operation	-29	-0.8
	Tourism, marketing and design
	Transfer to Arts	-37	-
	Libraries and information
	Cessation of 2006/07 one-off increase	-170	-1.0
	Reduction for excess inflation	-29	-
	Reduction for Hampshire Direct operation	-138	-0.8
	Transfer from Policy Fund for Central Support Services	20	-
	Increments	182	1.5
	Restructuring reductions	-676	-5.4
	Reduced income	474	23.6
	Countryside
	Reduction for Hampshire Direct operation	-35	-0.8
	Arts
	Net transfer from Policy Fund for continuing grants	77	-
	Transfer from Tourism marketing and design	37	-
	Reduction for Hampshire Direct operation	-16	-0.8
	Policy fund
	Cessation of 2006/07 one-off increase	-50	-
	Additional resource	30	-
	Transfer to Libraries	-20	-
	Net transfer to Arts	-77	-
	Transfer to Director	-102	-
	Director
	Transfer from Policy Fund for Health and Safety and capital implementation team	102	-

Appendix 4

Recreation and Heritage Service

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

					Staffing (FTEs)
		2007/08	2008/09	2009/10	2007/08	2008/09	2009/10
		£'000	£'000	£'000
	Growth proposals:
	Winchester Discovery Centre	70	220	220	1	4	4
	Bursledon Library	17	17	17	-	-	-
	Libraries restructure net one-off costs	150	0	0	-	-	-
	Existing Libraries pressures	450	450	450	-	-	-
	People Network Phase 1 equipment replacement	20	40	40	-	-	-
	Policy Fund	200	180	180	-	-	-
	Total cost pressures	907	907	907	1	4	4
	Redeployment proposals:
	IT efficiencies	-50	-50	-50	-	-	-
	Service reductions	-857	-857	-857	-21	-21	-21
		-907	-907	-907	-21	-21	-21
	Corporate redirections
	Service reductions	-337	-473	-612	-9	-9	-9
		-1,244	-1,380	-1,519	-30	-30	-30
	Net reduction	-337	-473	-612	-29	-26	-26

Winchester Discovery Centre

Revenue costs of new Discovery Centre

Bursledon Library

Revenue costs of improved library

Existing Libraries pressures

Pressures on income and staffing budgets

Peoples Network

Replacement programme

Policy Fund

New initiatives and contingency

Section 5 of this report indicates how the redeployment proposals and corporate redirections will be achieved. A more detailed action plan will be brought to the Executive Member's decision day in March for approval.

Appendix 5

Recreation and Heritage Service

Efficiency statement

		2006/07		2007/08		2008/09
		AES £ million	Budget £ million	AES £ million	Budget £ million	AES £ million	Budget £ million
Cashable efficiency improvements:
a	AES eligible and budget saving Service efficiency savings	0.6	0.6	0.6	0.6	0.6	0.6
b	AES eligible but no budget saving Increments	0.3		0.3		0.3
c	Budget saving but AES ineligible
Non-cashable efficiency improvements:
	Redirection to Policy Fund	0.2		0.2		0.2
Totals		1.1	0.6	1.1	0.6	1.1	0.6
% of base budget		3.5	1.8	3.5	1.8	3.5	1.8
Total of all efficiency improvements		1.1	0.6	1.1	0.6	1.1	0.6
% of base budget		3.5	1.8	3.5	1.8	3.5	1.8

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 eg 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

Recreation and Heritage Service

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
			£'000			£			£'000
1	Museums and Archives Fees and charges, publications, photocopying, micro-form, microfiche, microfilm, photos, searches, cinema use, miscellaneous	Various	990	2006	2007	N/A	No	No	N/A
2	Milestones Fees and charges, publications, miscellaneous	Various	549	January 2006	-	N/A	No	No	N/A
3	Libraries Fines, video hires, publications	Various	1,637	January 2006	-	N/A	No	No	N/A
4	Countryside Entrance charges, car parks	Various	797	2006	2007	N/A	No	No	N/A
5	Arts Fees and charges, rents, bar, car parks	Various	669	2006	2007	N/A	No	No	N/A
6	Sport and Community Fees and charges, rents, bar, car parks	Various	289	2006	2007	N/A	No	No	N/A
7	Calshot Activities Centre	Various	2,282	2006	2007	N/A	Yes	No	N/A
	Total		7,213						-

Appendix 7

Recreation and Heritage Service

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	Provisional forecast 2009/10
		£'000	£'000	£'000	£'000	£'000
	Arts and Marketing Hampshire
	Income	-478	-353	-388	-435	-467
	Expenditure	478	326	405	431	448
	Net operating (surplus) deficit	-	-27	17	-4	-19
	Reserved balance brought forward	-11	-11	-38	-21	-25
	Reserved balance carried forward 31 March	-11	-38	-21	-25	-44
	Hampshire Wardrobe
	Income	-	-	-54	-68	-74
	Expenditure	-	-	72	73	74
	Net operating (surplus) deficit	-	-	18	5	-
	Reserved balance brought forward	-	-	-	18	23
	Reserved balance carried forward 31 March	-	-	18	23	23
	Total Business Units balance	-11	-38	-3	-2	-21

Appendix 8

Recreation and Heritage Service

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
Museums and Archives	3,535		6	0.2	-37	105	3.0	-134	3,475
Milestones	304		-2	-0.7	-1	6	2.0	-21	286
Tourism, Marketing and Design	593				-33	19	3.2	-13	566
Libraries and Information	16,958		144	0.8	-318	496	2.9	71	17,351
Countryside	4,576		6	0.1	-24	147	3.2	-188	4,517
Arts	2,088		5	0.2	98	61	2.9	-71	2,181
Sport and Community	1,985		1	0.1	2	61	3.1	-70	1,979
Calshot	221		27	12.2	-16	6	2.7	-9	229
Policy Fund	831				-254	18	2.2	99	694
Director and Business Development	646				95	20	3.1	-1	760
Net cash limited expenditure	31,737		187	0.6	-488	939	3.0	-337	32,038
Expenditure outside cash limit:
Capital charges	6,045				-68				5,977
FRS17 pension adjustment	-70				230				160
Expenditure met from/ income transferred to:
Arts Marketing Hampshire					17				17
Hampshire wardrobe					18				18
Specific grants					-39				-39
Total net expenditure	37,712		187	0.5	-330	939	2.5	-337	38,171

Appendix 9

Recreation and Heritage Service

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 B101 of the published budget book		40,552
Adjustments for items not included in the budget book: - support services and repair and maintenance of buildings - charges to Corporate and Democratic core	-2,989 127	-2,862
Adjustments made to the original budget figures: - Procurement savings - Hampshire wardrobe	-8 30	22
Total net expenditure for 2006/07 original budget shown overleaf on page B101		37,712

Appendix 10

Recreation and Heritage Service

Workforce levels and costs

	2006/07	2007/08
	£'000	£'000
Analysis of workforce costs in base budget:
Salaries of permanent staff (including employer's national insurance and pension contributions)	25,445	26,876
Temporary/fixed term/casual staff	602	622
Agency staff	-	-
Additional hours	266	275
Total workforce costs	26,313	27,773
Average FTE staff actually in post	1,005	1,015
Staffing changes in growth, savings and redeployment and proposals:
Variation in staff (FTEs)	-	-29
Variation in budget (£'000)	-	-794
Workforce implications of budget proposals:
FTE posts available	1,005	986
Workforce budget available (£'000)	26,313	26,979

Appendix 11

Recreation and Heritage Service

Provisional budget strategy 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				32,038
-	Base budget variations:
-	Exclusion of non-recurring 2007/08 expenditure			-39
-	Full year effect of 2007/08 growth proposals
	- Winchester Discovery Centre			150
	- Cessation of libraries restructure costs			-150
	- Reduction to Policy Fund			-20
	- Peoples network costs			20
-	Hants Direct operation			-74
-	Revenue effect of capital programme			30
Growth and redeployment proposals
-	Redistribution of guidelines			-136
Allocation for future inflation				652
Provisional budget 2008/09 at outturn prices				32,471
-	Base budget variations:
-	Exclusion of non-recurring 2008/09 expenditure			-
-	Full year effect of 2008/09 growth proposals			-
-	Revenue effect of capital programme			30
Growth and redeployment proposals				-139
Allocation for future inflation				662
Provisional budget 2009/10 at outturn prices				33,024

Annex 1 to Appendix 11

Recreation and Heritage 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
Museums and Archives	3,475	-8	-15	69	2.0	3,521		-16	71	2.0	3,576
Milestones	286	-1	-1	6	2.1	290		-1	6	2.1	295
Tourism, Marketing and Design	566	-1	-3	13	2.3	575		-3	13	2.3	585
Libraries and Information	17,351	-19	-72	345	2.0	17,605		-74	351	2.0	17,882
Countryside	4,517	-10	-20	98	2.2	4,585		-20	99	2.2	4,664
Arts	2,181	-5	-9	45	2.1	2,212		-9	46	2.1	2,249
Sport and Community	1,979	-44	-9	43	2.2	1,969		-9	44	2.2	2,004
Calshot	229	-1	-1	5	2.2	232		-1	4	1.7	235
Policy Fund	694	8	-3	14	2.0	713	30	-3	14	2.0	754
Director and Business Development	760	-2	-3	14	1.8	769		-3	14	1.8	780
Net cash limited expenditure	32,038	-83	-136	652	2.0	32,471	30	-139	662	2.0	33,024
Expenditure outside cash limit:
Capital charges	5,977					5,977					5,977
FRS 17 Pensions adjustment	160					160					160
Expenditure met from/income transferred to:
Arts Marketing Hampshire	17	-21				-4	-15				-19
Hampshire Wardrobe	18	-13				5	-5				-
Specific grants	-39	39				-					-
Total net expenditure	38,171	-78	-136	652	1.7	38,609	10	-139	662	1.7	39,142