Contact: Anne Hibbert, (01962) 84 7533; [email protected]

1 Summary

1.1 This report is the first monitoring report for 2007/08 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets

· Policy and Resources business units

· Policy and Resources capital programme

· the County Council's capital payments and sources of finance.

1.2 At the end of May 2007, on-going budget pressures within corporately held land, sites for gypsies and travellers and the Coroner Service mean net expenditure for 2007/08 is likely to exceed the budget for these areas. Actions have been identified to manage the budget and the budgetary position will be monitored closely throughout the year. IT Services have identified a funding gap in the current year requiring action in order to achieve breakeven. Other budgets are anticipated to be within cash limit.

1.3 Capital payments for the County Council for 2007/08 are forecast to be close to the estimate of £190.2m reported to Cabinet on 9 February 2007. Actual capital receipts to 31 May 2007 are £12.7m.

1.4 The Policy and Resources revenue budget and capital programme includes financial resources for a range of direct services and for central services that support all other County Council services and as such contribute to all three priorities of the corporate strategy.

Recommendations

1 To note the current position on the monitoring of the revenue budget and capital programme.

2 To agree the proposed amendments to the 2007/08 budget to reflect the net underspend of £87,000 carried forward from 2006/07.

3 To approve a grant of £50,000 for the Trinity Centre, Winchester.

1 Policy and Resources cash limited revenue budget 2007/08

1.1 The latest cash limit for 2007/08 is £56.3m as set out in Appendix 1. This includes the carry forward from 2006/07 of the net underspending for Policy and Resources of £87,000.

1.2 The variations against the amended 2006/07 cash limit were:

Chief Officer controlled budgets:	£'000	£'000
Chief Executive:
Chief Executive support services Human resources support services Hampshire Now Community planning grants Emergency planning	-2 15 -8 -4 -1	0
Property Business and Regulatory Services:
Departmental budget County Farms Corporately held land Sites for gypsies and travellers Regulatory services Registration	-45 -12 +113 +67 -3 +6	+126
County Treasurer		-76
Other budgets:
Grants to voluntary organisations Coroners County Council elections Members' support costs Audit fee Other services	-17 99 -31 -33 -77 -164	-223
Total for Policy and Resources		-173

1.3 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% underspending. On this basis £87,000 will be added to the Policy and Resources cash limit for 2007/08.

1.4 The proposals for dealing with the carry forward of over and underspendings within Policy and Resources are based on the following assumptions:

· that in accordance with corporate policy, 50% of any underspendings on chief officer controlled budgets and any overspendings should be carried forward to 2007/08

· that there should be no automatic policy of carrying forward either under or overspendings on non-Chief Officer controlled budgets unless an overspending is likely to lead to an underspending in the following year or vice-versa.

1.5 Proposed amendments to the 2007/08 budget to reflect carry forwards are:

	Overspending (+) Underspending (-)	Reduction (-) Addition (+) Carry forward to 2007/08
	£'000	£'000
Chief Executive	0	0
Property Business and Regulatory Services	+126	-64
County Treasurer	-76	+38
Grants to voluntary organisations	-17	+9
Audit fee (to cover additional cost in 2007/08 relating to CPA)	-77	+29
Coroners		+55
Balance available to be allocated in the revised budget to meet budget pressures		+20
		+87

1.6 Comments on these proposals together with other budget issues for 2007/08 based on monitoring of expenditure up to the end of May 2007 are given below.

Chief Executive's Department (including Human Resources)

1.7 The department faces a number of issues with budget implications to be managed, including the costs associated with recruiting the next Chief Executive. Nevertheless, at this early stage in the financial year, it is anticipated the Department will keep within its cash limit.

1.8 The Hantsdirect programme manager is currently satisfied the programme is progressing in line with its overall budget. Significant expenditure is due in the next quarter as more staff move to Fareham Parkway and the first phase of the programme goes live.

County Treasurer's Department

1.9 The department has the ongoing pressures of SAP benefits realisation with a further £200,000 to be found in 2007/08 (£686,400 having been delivered by the department to date) along with £62,000 of savings for Pay and Benefits. The budget is being managed to deliver these further savings with a review of Support Services, the Financial Systems Training team and the temporary review of the senior management structure. Of the total savings required, £114,000 is yet to be identified and work continues to deliver further efficiency improvements. Alongside this the ongoing staffing pressures continue with the long term sickness absence within the internal audit section requiring additional staffing to maintain services to all customers.

Property Business and Regulatory Services

1.10 The Department will carry forward an overspend of £64,000 from 2006/07. This will be absorbed within the overall cash limit by continuing the work done last year to reduce costs through the efforts to control staffing and minimise agency and consultant costs as well as the implementation of longer terms savings initiatives.

Corporately held land

1.11 The position of the Corporate Estate budget continues to be difficult as the costs of unavoidable repairs, security costs and maintenance work on surplus property continue to be extensive leading to an anticipated overspend in 2007/08 of £175,000. Of this, £70,000 alone is accounted for by security costs. The shortfall in income on the Development Account resulting from maintenance liability and vacancies continues to be in the region of £80,000 and work is underway to review all aspects of costs and charging on this budget.

County Farms and Sites for Gypsies and Travellers

1.12 Management action has been successful in bringing the County Farms budget back to cash limit, however, pressures continue on the Gypsy and Travellers budget which currently projects an overspend of £65,000.

Regulatory Services

1.13 The pressure on income from external clients continues for the Hampshire Scientific Service. Options to increase income and reduce costs continue to be pursued and it is expected to stay within the overall cash limit for Regulatory Services.

1.14 Trading Standards have received a new grant this year in respect of the Gower Report on Intellectual Property Rights in the sum of £90,000 and options are being considered for managing this new and ongoing responsibility. It is understood that this grant will be subsumed into Revenue Support Grant (RSG) in next and future financial years and for this work to continue an equivalent sum will need to be included within the budget for Trading Standards.

Summary of actions

1.15 Considerable efforts are being made to keep spending within cash limit. The most significant area of cost is staffing and the freeze on recruitment in some areas will continue together with reductions in agency staff. Staff are being deployed flexibly to meet key priorities across teams and senior managers continue to be used on project issues. The Department continues to implement further cost savings initiatives and the Property Business Travel Plan is being implemented at the end of June to assist staff to coordinate travel arrangements and reduce costs. The IT management plan to save up to £100,000 in 2007/8 is being implemented and is currently on target.

HM Coroner Service

1.16 The level of expenditure incurred by the Coroners' service has exceeded the budget in five out of the last six years. The forecast for 2007/08 is expenditure of £100,000 in excess of the original budget. This results from higher mortuary fees, court attendance costs and the requirement for special analyses and examinations. Work continues to develop a framework for mortuary charges in future years and to implement a range of improvements in financial and management arrangements which it is hoped will yield efficiencies. The Coroner Service budget is not part of PBR's cash limited budget so the impact of higher spending has to be managed across the overall budget.

1.17 Given the nature of the service and the fact that the number of cases requiring special investigations is uncontrollable, it is proposed that the service is not required to carry forward its 2006/07 overspending and in addition, an allocation of £55,000 is proposed in 2007/08 funded from carried forward underspendings elsewhere within Policy and Resources.

Other non-departmental Policy and Resources budgets

1.18 Part of the budget saving relating to last year's audit fee will be required in 2007/08 to pay for the additional fee relating to the Corporate Performance Assessment.

1.19 Following the Leader's announcement at County Council in February, that each Member will receive a budget of £10,000 to be spent by them on initiatives within their Division which benefited their community, the Policy and Resources cash limit has been increased by £780,000. The framework for operating the scheme was agreed by Cabinet in May, and £20,000 is also included in the Policy and Resources cash limit to administer the scheme.

1.20 Additional funding was earmarked by the Cabinet from 2006/07 underspending for a specific grant for the Trinity Centre, Winchester. The Trinity Centre is a registered charity which provides support for people experiencing the effects of homelessness, drugs and alcohol dependency. An appeal was launched in 2005 to fund the provision of new operational premises estimated to cost £1.7m net of the proceeds from the sale of the charity's existing premises. A request for funding of £200,000 was originally made by the charity to the County Council and a grant of £100,000 was approved in September 2005. A further £50,000 is now recommended.

Summary

1.21 At the end of May 2007, on-going budget pressures within corporately held land, sites for gypsies and travellers and the Coroner Service mean net expenditure for 2007/08 is likely to exceed the budget for these areas. Actions have been identified to manage the budget and the budgetary position will be monitored closely throughout the year. Other budgets are anticipated to be within cash limit.

Business Units

Property, Business and Regulatory

1.22 The expected impact of Pay and Benefits on HC3S has meant that their target outturn in 2007/08 is a deficit of £341,000 and this has meant that the overall plan for the businesses this year is for a deficit, which will be met from the accumulated surpluses of the businesses. The final result for HC3S will be influenced by the actual impact of Pay and Benefits once implemented but early trading results indicate meal numbers are ahead of target levels and costs continue to be tightly controlled. The early results for the other businesses indicate that their target surpluses will be achieved and this means the projection for an overall deficit of £161,000 should be achieved or improved upon.

IT Services

1.23 The business unit's trading performance was better than expected for 2006/07, generating an in year surplus of £1.04m allowing it to fund £0.55m of capital expenditure, contribute £0.1m to corporate funds and clear its accumulated deficit. However, this was largely the result of the slippage of a number a significant projects, the expenditure for which will now be incurred in 2007/08.

1.24 The slippage of projects into 2007/08 plus a number of additional significant projects, such as the implementation of the enterprise licence agreement, present a financial challenge for the department. Together with a decline in the amount of commissioned consultancy work results in a forecast deficit of up to £2m. A review of planned activity is taking place to ensure that costs are reduced wherever possible and sources of funding are identified in order to achieve a break even position at the earliest opportunity and certainly within a three year trading period.

2 Policy and Resources capital programme

2.1 The Policy and Resources capital programme for 2007/08 amounts to £62.5m, as set out in Appendix 2. This takes account of Cabinet's decisions in June to supplement the original programme with:

· schemes carried forward from 2006/07 plus the unallocated cash limit from 2006/07

· Policy and Resources' share of capital receipts

· additional prudential borrowing to increase the scope of the Ashburton Court refurbishment work.

2.2 The capital repairs programme, including New Deal for Schools, totals £47.5m and is controlled on an expenditure basis. The balance of £15.0m, is controlled on a starts basis. Of this, £5m relates to IT projects including the enterprise licence agreement for IT infrastructure and the Castle complex telephone system replacement due to be completed early next year.

2.3 An allocation of £4m relates to the Ashburton Court data centre fitting out costs and additional refurbishment work. The scale of the planning and organisation and decant for Ashburton Court, including the time needed to plan the internal spaces, is being undertaken using in-house resources which are beyond those covered in the original fee allocation.

2.4 The asbestos removal associated with the redevelopment is being co-ordinated and managed internally by the Scientific Service and it is hoped that the cost of this work on the first block can be absorbed. This position will need to be reviewed as work progresses.

2.5 As at 31 May 2007, expenditure on capital repairs totalled £8.8m, and schemes to the value of £1.7m had started, representing an overall commitment of £10.5m.

3 Overall capital payments and sources of finance

3.1 As at 31 May 2007, capital payments for the County Council for 2007/08 are forecast to be within the estimate of £187.5m reported to Cabinet on 9 February 2007.

3.2 The target for capital receipts for 2007/08 reported to Cabinet on 9 February 2007 was £61.1m Actual capital receipts to 31 May 2007 amounted to £12.7m.

4 Impact assessment

4.1 The proposals in this report are the result of budget monitoring carried out in accordance with the County Council's financial management policy. This policy applies equally to all services and ensures consistent financial management decisions across all services. The proposals in this report are not considered to be discriminatory.

Section 100 D - :Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

None.

Appendix 1

Policy and Resources Revenue budget - latest 2007/08 cash limit

Appendix 2

Policy and Resources 2007/08 capital programme