Hampshire County Council
	Executive Member for Policy and Resources		Item 3
	28 January 2008
	Policy and Resources Select Committee		Item 7
	25 January 2008
	Revenue Budget 2008/09, 2009/10 and 2010/11
	Report of the County Treasurer and Chief Officers

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

1 Summary

1.1 This report sets out the proposed Policy and Resources revenue budget for 2008/09, a provisional budget for 2009/10 and 2010/11 and recommends a revised budget for 2007/08. This report has been prepared in consultation with the Executive Member and will be reviewed by the Policy and Resources Select Committee. It will be reported to the Leader and Cabinet on 8 February 2008 to make final recommendations to County Council on 21 February 2008.

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

Recommendations

A. To approve for submission to the Leader and Cabinet:

1 The revised budget for 2007/08 totalling £56.4m (as set out in appendices 1 and 2)

2 The base budget for 2008/09 totalling £54.2m (as set out in Appendix 3)

3 The proposals for redeployment of resources totalling £828,000 in 2008/09 (as set out in Appendix 4)

4 The proposals for efficiency improvements totalling £3.6m (2.9% of the base budget) in 2008/09 (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 2008/09 (as set out in Appendix 8)

8 The workforce implications of the proposed budget for 2008/09 (as set out in Appendix 10)

9 The provisional budget for 2009/10 of £54.7m and for 2010/11 of £55.1m (as set out in Appendix 11).

B. To approve the reviews to be undertaken by the Chief Executive referred to in the report relating to HR and legal resources, capital receipt generation and corporate efficiency improvements including IT Services.

1 Budget strategy

1.1 A provisional budget for 2008/09 and 2009/10 was agreed by the Cabinet in February 2007 alongside the 2007/08 budget. The budget strategy was incorporated in the Medium Term Financial Strategy approved by Cabinet in May. The budget strategy was reviewed by Cabinet in October following the publication of the Comprehensive Spending Review and in December to update inflation assumptions. The strategy is based on the following principles:

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

· Above inflation increases for Adult Services and Children's Services

· Redeployment within each service of cashable efficiency improvements identified in 2008/09 towards new priorities and pressures

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

· Pay inflation of 2.5% per annum over the next three years, together with an additional 0.25% in respect of the 2007 pay award

· 2.5% for non-pay

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

1.2 The same assumptions have been used to set a provisional budget guideline for 2010/11.

1.3 For this service, the adjusted budget guidelines are:

	£m	% cash increase on previous year's adjusted budget
2008/09 guideline	54,247	2.4
2009/10 provisional guideline	54,432	3.6
2010/11 provisional guideline	54,841	0.9

The variation in the guideline increase in 2009/10 and 2010/11 reflects a non- recurring addition to the 2009/10 budget for the 2009 County Council election.

2.4 This report sets out the Policy and Resources Executive Member's responses to the guidelines. The report:

· Reviews the revised budget for 2007/08 ( as set out in Appendices 1 and 2)

· Reviews the 2008/09 base budget which totals £54.2m (as set out in Appendix 3)

· Proposes the redeployment of £0.8m of resources (as set out in Appendix 4)

· Identifies efficiency improvements of £3m, being 5.6% 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 2008/09 (as set out in Appendices 8 and 9)

· Identifies the workforce implications of the budget proposals (as set out in Appendix 10)

· Proposes a provisional budget for 2009/10 and 2010/11 (as set out in Appendix 11).

2 Revised budget

2.1 The cash limit for the revised budget is £56.4m. The calculation is shown in Appendix 1. This includes two proposals to carry forward 100% of planned underspendings in 2007/08, two recommendations to re-profile one-off allocations from 2007/08 to 2008/09 and an addition to the cash limit funded by capital receipts. Further details are set out below. A summary comparing the revised budget with the cash limit for each Chief Officer is set out in Appendix 2.

2.2 The Chief Executive's department forecast outturn for 2007/08 is likely to be below the cash limit. This is primarily due to a higher proportion of the legal practice's workload generating income from charges to specific projects. If an underspending is achieved at year end, proposals will be made in accordance with the approved policy to use them to meet any one-off costs associated with the restructuring of central and corporate services.

2.3 Scrutiny function and Hampshire Action Teams (HATs) - Following the review of democratic processes in 2006, a one-off sum of £742,600 was allocated to increase the amount of resources available for the scrutiny function and to run a two year pilot with HATs. It was planned to use the funding over three financial years: 2006/07, 2007/08 and 2008/09. In line with the developing function it is proposed to re-profile funding of £112,000 from 2007/08 into 2008/09.

2.4 Hantsdirect - contingency funding of £120,000 was included in the budget for Hantsdirect in 2007/08. It is now proposed to use this in 2008/09.

2.5 The Occupational Health Unit set aside £50,000 in their budget this year to purchase a computer health system to support the programme of enhancing employee wellbeing across the County Council. Due to delays in the tendering process and refining of requirements for the system there has been a slippage in purchasing the system and therefore the £50,000 is now required in 2008/09. Therefore a request to carry forward £50,000 for this specific project is being made.

2.6 It is proposed that a new earmarked reserve be established for Hampshire Now to enable additional advertising income attracted by Hampshire Now to be carried forward to fund the publication of additional editions.

2.7 The County Treasurer's department is forecasting an underspend of £100,000 for 2007/08. This position is intended to deliver one off assistance to manage significant pressures in Student Support in 2008/09 and approval for carry forward of 100% of this declared underspend is sought.

2.8 The revenue repairs and maintenance budget including £11m of work funded through the schools' Service Level Agreement is expected to be managed within cash limit. The final position will be influenced by the severity of the winter and to this end a winter contingency is allocated within the overall budget. To date the contingency has not been required and in line with previous practice it is recommended that any unspent winter contingency balance at the year end be carried forward in full. The current balance is £395,000.

2.9 The ongoing pressures relating to the Corporate Estate, Development Account and Sites for Gypsies and Travellers budgets persist with shortfalls in rental and other income and the cost of securing properties awaiting disposal (Corporate Estate) being the key reasons. In order to meet part of the cost of securing properties a one-off adjustment to the budget of £154,000 is proposed, funded from the ultimate capital receipts. This leaves a gap of £211,000 which will be funded through savings to be identified elsewhere in the overall revenue budget for the department.

2.10 The Property Services and Office Accommodation budgets are expected to be managed within the cash limit.

2.11 Cost pressures continue to grow for HM Coroners' Service as a result of above inflation increases from hospitals, higher charges for court space and the ongoing increase in the number and sophistication of test techniques. Despite the increased budget in 2007/08, the overspend is projected at £100,000. It is proposed to use the previously unallocated £20,000 from the 2006/07 carry forward to reduce this overspend in 2007/08. The balance will need to be funded from any savings achieved elsewhere within Policy and Resources or carried forward to 2008/09 when savings in other Policy and Resources budgets might be possible.

2.12 Other budgets within Policy and Resources comprise contributions and subscriptions to national and local organisations, the external audit fee, grants to councils of community service and to voluntary organisations. Also included is the £780,000 budget devolved to Members for the purpose of supporting local need. To date, £298,000 has been spent. The agreed scheme allows any unspent balance to be carried forward for one year. Other budgets are forecast to match the revised cash limit.

3 Base budget 2008/09

3.1 A base budget for 2008/09 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 £54.2m at outturn prices.

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

3.3 Overall, the base budget includes a net reduction in expenditure at constant prices of £1.6m. The main variations are:

i) Additions to offset reduced cost of inflation (+£0.1m)

ii) Exclusion of non-recurring expenditure mainly on the setting up of Hantsdirect and spending on Pay and Benefits, the Local Area Agreement related initiatives and the democratic review funded from earmarked reserves (-£3.6m)

iii) Office accommodation savings, linked to the funding of the Ashburton Court refurbishment project (-£0.2m)

iv) SAP benefit realisation savings (-£0.3m)

v) Hantsdirect operational costs, as further services transfer in 2008/09 (+£1.2m)

vi) Office accommodation budget transfers (+£0.5m)

vii) Economic Development spending funded by specific grant (LABGI) (+£0.2m)

viii) Pay and benefits equal pay team (+£0.1m)

ix) Carry forward from 2007/08 (+£0.4m)

4 Redeployment proposals and efficiency improvements - 2008/09 - 2010/11

4.1 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.

4.2 Section 6 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 redeployment proposals of £0.8m are included in Appendix 4.

4.3 In the 2007 Comprehensive Spending Review (CSR07) the Government set an annual efficiency target for local government overall of 3%, all of which has to be cashable, compared with 1.25% cashable improvements required by Gershon. The County Council will be required to publish a performance indicator demonstrating how it has contributed to the national target. Appendix 5 identifies planned efficiency improvements totalling £3.6m (2.9%).

5 Chief Officer controlled budgets

Chief Executive's budgets

5.1 When considering the budget it is important that this is done against the priorities set by the Cabinet contained in the Corporate Strategy and Corporate Business Plan. This provides the framework for identifying critical budget pressures and assessing the impact of efficiencies and savings that are required. In a number of areas the department has been given temporary funding to either run pilots or to cover specific projects. If these activities are to continue, the longer term funding will need to be considered as part of the budget setting process. These are outlined in further detail below.

Corporate Communications

5.2 The communications and consultation work of the Corporate Communications team supports the corporate strategy and contributes to our CPA. There is clear evidence that the level and quality of communication contributes to the overall satisfaction levels of the County Council. The proposal to earmark any savings achieved in the net cost of Hampshire Now due to higher advertising income will enable additional editions of Hampshire Now to be produced.

5.3 Other budget pressures relate to the establishment of an out of hours rota of media staff to comply with the Civil Contingencies Act, market research co-ordination, e-consultation and communications.

5.4 Opportunities for redeployment and efficiencies will be sought to provide resources for these pressures.

Economic Development

5.5 The challenge in 2008/09 will be to maintain external income, which accounts for 50% of turnover. There are currently 12 posts in the Economic Development Office which are dependent on external funds.

5.6 The delivery of the economic development priorities contained in the Corporate Business Plan is also supported by the decision taken by the Executive Member for Policy and Resources in December 2007 to allocate in principle 30% of future Local Authorities Business Growth Incentive grant (LABGI) for economic development purposes, together with agreeing spending proposals totalling £210,000 over the next two years.

Legal Practice

5.7 In 2007/08, there are three areas in particular where there has been growth in resources to meet anticipated pressures. The position on these is as follows:

· Adult Services - the Director has agreed to invest an additional £80,000 in an additional Senior Solicitor, to give legal advice on key strategic initiatives.

· Children's Services - redeployment proposals are currently being considered by Children's Services which would lead to an additional investment of £100,000 in legal services, to bolster the Child Care Team at paralegal level, freeing solicitor/barrister time to do more advocacy, therefore reducing spend on external counsel.

· Equal Pay Act litigation - temporary funding of £100,000 was agreed to expand the Employment Law team by creation of a Senior Solicitor post and administrative support to handle the Equal Pay work. It is anticipated that the additional posts will continue to be required for 2008/09, after which the position will be reviewed. Of the original £100,000 allocated, £49,000 has been used in 2007/08 leaving £51,000 for 2008/09. The estimated cost for the full year in 2008/09 is £81,000 thus a further £30,000 is required. It is proposed to fund this in 2008/09 from the Pay and Benefits Reserve.

Policy Unit

5.8 Following the review of democratic processes, a one-off sum of £742,600 was allocated to increase the amount of resources available for the scrutiny function and to run a two year pilot with Hampshire Action Teams (HATs). This additional funding will run out during 2008/09. Scrutiny is core work with permanent staff that needs to be incorporated into the base budget. There is an additional case to be made to increase the support arrangements given the current overstretch and the extended role and powers of scrutiny included within the recent Local Government and Public Involvement in Health Act, including the requirement to establish a Local Involvement Network (LINk) for health and social care to replace NHS specific arrangements which is supported by a new funding stream, included within the Area Based grant.

5.9 There are several options for funding HATs:

· Incorporate into the base budget in advance of the review of the HATS pilot

· Extend the pilot funding which runs out in October 2008 to March 2010 to put locality working on a firmer footing whilst still retaining the short term nature

· Extend the funding to March 2009 to allow time for the HATs pilot evaluation to take place as planned in summer 2008 whilst ensuring retention/continuity of staff

· There is an additional case to be made to increase the support given the current overstretch and any future decision to increase the number or function of HATs or their equivalent.

5.10 The part year cost of extending the current arrangements in 2008/09 is £62,000 for Scrutiny and £115,000 for HATS, the full year cost would be £198,500 for Scrutiny and £259,500 for HATS after taking into account the resources re-directed from Democratic Services. A decision on these resourcing issues will need to be taken in the light of the options set out in paragraph 6.9.

5.11 Community Safety - there is a proposal to appoint a partnership manager for the county level Crime and Disorder Reduction Partnership (CDRP) and strategic assessments. County Council awareness in this regard was an area flagged in the Corporate Assessment where more work was required. Consideration can be given to the funding of this proposal from the Stronger and Safer Communities element of the area based grant.

5.12 In addition potential future budget pressures include:

· Corvu phase two - further development of the performance management IT system to enable use beyond performance monitoring to include service planning and wider use by departments is required

· Local Area Agreement - there is a need for ongoing management and staffing and ensuring funding for pump priming and event support (previously funded from LPSA1 reward as a one off and further pump priming grant is anticipated)

· Voluntary and Community Sector (VCS) review - implement recommendations

· Support to any future democratic developments across Hampshire

Pay and Benefits

5.13 The provision contained within the 2007/08 budget on a non-recurring basis of £524,000 for Pay and Benefits implementation has been deducted from HR's cash limit for 2008/09. It is estimated that the cost of maintaining the team to carry out the work required in 2008/09 is £438,000 net of the funding contained within the HR base budget. The longer term composition of the team and funding required will need to be reviewed to ensure we continue to develop and maintain appropriate reward arrangements. However, the team's workload in relation to the pay and benefits project is projected to extend beyond 2008/09 due to:

· Fully refining and implementing the new pay framework

· Reviewing the Individual Performance Planning (IPP) process

· Managing equal pay claims

· Dealing with on-going SAP and payroll technical/pension issues

It is proposed to provide funding for the Pay and Benefits Team in 2008/09 of £438,000 from the Pay and Benefits Reserve.

6.14 In addition to the above a one-off sum of £140,000 was allocated for the funding for the Equal Pay team in HR. It is projected that £50,000 of this will be required in 2007/08 leaving £90,000 for 2008/09. There was also an initial fund of £75,000 established to fund the cost of external legal advice. Depending on the outcome of the current cases it is likely that it will be necessary to review this provision during 2008. The Leader has proposed that the Chief Executive undertakes a review designed to optimize the use of internal staffing and external HR and legal advisers in relation to future reward arrangements and equal pay issues.

HR SAP benefit realisation savings

5.15 Cumulatively since 2004/05, HR has had to make SAP savings year on year and to 2008/09 the total cumulative amount is £2.5m. Major efficiencies within the Resourcing Centre in the recruitment process have primarily enabled these savings to be achieved. The HR Service Centre has had specific SAP savings targets within this. In 2006/07 and 2007/08 £60,000 was deducted in both years from the Service Centre's cash limit due to identified SAP savings which were achieved. The final savings target for the Service Centre is £120,000 in 2008/09. However, the Service Centre would not be able to meet the full target without severely impacting on service delivery and requests that this last tranche of savings be made over two years, £60,000 in each year. Since the savings targets and timescales were calculated in 2004/05 a number of changes have occurred and there have been several new pieces of work introduced into the Service Centre which have increased the workload and delayed the implementation of efficiency improvements, namely:

· Pay & Benefits support and related work

· Creation of Children's Centres

· Connexions transfer

· Casual new starters for Children's Services

· Work permit renewals (Nursing Strategy)

· Criminal Records Bureau check volumes increasing

There is currently a project underway to look at the use of e-forms which upload directly into SAP which could be implemented in 2008/09 and rolled out in 2009/10 which would also help achieve the SAP savings required for the Service Centre should they be spread evenly over the two years. This proposal is incorporated in the redeployment proposals in Appendix 4.

Other Areas

5.16 Growth in Education appeals - the new Appeals Code laid before Parliament requires all first round admission appeals to be heard by the end of June, and the implications of the new code will need to be monitored.

Efficiency improvements

5.17 To meet the overall cash limit for the Chief Executive's budgets, efficiency savings of just under £1m are required in 2008/09 equating to 4.8%, including the replacement of non-recurring savings made in 2007/08. The department will continue with the measures already used to meet efficiency targets. In addition, the proposed establishment of a Corporate Services Department, the review of Facilities Management and the further implementation of Hantsdirect should provide new opportunities for efficiencies.

County Treasurer's department

5.18 The County Treasurer's department has prepared its 2008/09 to 2010/11 budgets in line with the Cabinet set cash limits. Meeting the cash limit has required continuing work on various change and innovation projects to deliver cashable savings and service improvements and seeking value for money throughout the department has been a priority for service planning. Benchmarking has been an important management tool for the department both to establish our performance and cost in comparison with other county councils and to highlight areas for further review.

5.19 The 2008/09 budget has been reduced in several major areas:

· The final year of SAP benefit realisation savings amounted to £160,000 bringing the total delivered since 2004/05 to £960,000 per annum

· Blue Badges function has now transferred in its entirety to Hantsdirect (£90,700)

· The final stage of the Payroll and Pensions business process innovation will result in the Teachers' Pensions administration being transferred to the HR Service Centre where it aligns more closely with teachers' pay (£45,000)

· The nationalisation of the Student Support service which requires the unit to be run down over the period 2009-12 with new students being processed nationally from 2009. The baseline adjustments nationally assume an efficiency improvement through increased use of internet applications, a 50% reduction in staff from January 2009 and the end of publicity and awareness activity from September 2008. This amounts to a £114,000 reduction to the department's budget in 2008/09, £345,000 in 2009/10, £131,000 in 2010/11 with a final reduction in 2011/12.

5.20 The department has significant pressures in 2008/09 in managing the implementation of Pay and Benefits in the Payroll Technical section and is seeking assistance of £60,000 from the Pay and Benefits reserve. There will be a reduced requirement into 2009/10 and beyond to manage the pay award, step progression and performance related progression processes. The management of equal pay claims will require significant input from the department and £40,000 is sought from the reserve for 2008/09.

5.21 The scale of the downsizing of Student Support is not considered achievable given the Department of Innovation and Universities commitment to raising the threshold for eligibility which it is expected will bring a 25% increase in assessment workload in 2008/09, and the department is planning to achieve a £100,000 underspending in 2007/08 to carry forward to help manage this position. With this one off support in place, the result is a budget shortfall of £250,000 for the department which will be met through management of vacancies and turnover and through further efficiency measures in the department to give a balanced position.

Property, Business and Regulatory Services

Corporate and key service priorities

5.22 The Strategic Property Review has been established to review long-term corporate requirements for property holdings and make more efficient use of accommodation. Options regarding the office accommodation phase have been considered at officer level and work to date indicates long term revenue savings are achievable but to deliver these savings will require both revenue and capital investment up front. The capital position is anticipated to be self-funding over the course of the project but the timing of receipts and capital outlay during the project would generate a requirement for temporary borrowing. To drive the programme forward and ensure the long term benefits are delivered will require the establishment of a dedicated team for a period of up to five years. The existing Invest to Save funding of £160,000 agreed for two years is due for review in 2008/09 and it is recommended that this funding is continued and reflected in the capital receipt targets. The annual cost of the project team over the three year budget period to 2010/11 will be developed as part of an initial business case but early estimates suggest an additional £340,000 per annum is likely to be required, also on an invest to save basis.

5.23 Asset Management continues to be a key priority for the department. Property Services is responsible for the maintenance of the whole of the built estate, both for schools through the successful conclusion of a new five year Service Level Agreement from 2007/08 and non-schools properties. Inflation continues to run above the 2.5% provision with a forecast of 6% to outturn 2008/09 for building tender prices - if this materialises, the buying power of the Policy and Resources revenue repair budget would reduce by about £150,000. This trend is expected to continue over the three year planning period with the "Olympics effect" likely to push prices higher in the run-up to 2012. The renewal of the engineering term maintenance contract in August 2007 (Winchester HQ in October 2008) has provided a major opportunity to generate efficiency savings. The contract has not yet run for a full year but the experience of the first five months suggests an annual saving of £200,000 (3.1%) should be achievable. This saving can be redeployed to offset the impact of higher inflation.

5.24 A corporate review of Facilities Management (FM) is underway with the twin aims of identifying efficiencies in the way FM is currently delivered and, linking in with both the refurbishment of Ashburton Court and the Strategic Property Review, ensuring future FM provision will support new ways of working and changing needs. To date the project has been progressed within existing resources. An initial business case will be brought forward early in 2008.

5.25 Recent Government announcements have confirmed a significant reduction in the level of New Deal for Schools (NDS) funding allocated to the County Council over the next three years and that the support in the next two years is to be provided as 100% borrowing approvals. The reduction will be exacerbated if it is not possible to take up borrowing approvals in full. The reduction in capital works will be matched by a corresponding reduction in the level of fee income from this work to the Property Services revenue budget. A proposed re-profiling of the NDS programme is recommended in the report on the capital programme for Policy and Resources and this would smooth the transition to the lower programme levels. In addition, the anticipated increase in external work e.g. South East Centre of Excellence (SECE) projects will allow redeployment of staff to other work and further restrictions on recruitment and use of consultants will continue to be required to make good this reduction.

5.26 Securing capital receipts for reinvestment projects and to support the locally resourced capital programme continues to be a priority. The target in 2007/08, on course to being delivered, of £60m is considerably higher than in previous years and the resource implications for Estates were recognised by invest to save funding of £150,000 for two years. This is now due for review. Against the backdrop of the increasingly difficult financial climate for the County Council it is anticipated that targets for the three years from 2008/09 are again likely to be significantly higher than in previous years. It is recommended that the existing invest to save funding of £150,000 is continued over this period to ensure annual receipts targets continue to be achieved, and the targets will be set accordingly. It is also proposed that the Chief Executive and County Treasurer review the resource implications of securing a longer term stream of capital receipts to support the County Council's capital programme

5.27 Initial work on Key Worker Housing has been supported by the use of one-off funding of £190,000 over four years to 2008/09. The next stage in the strategy is to explore implementation of a series of delivery projects and two sites have been identified in Basingstoke and Aldershot with work ongoing to bring forward additional sites. In addition the County Council has now been asked to be involved in the Hampshire Alliance for Rural Affordable Housing (HARAH) initiative, a partnership of housing authorities and associations that is looking to bring forward rural exception sites in central Hampshire for affordable housing, and the staffing costs of co-ordinating this initiative could be funded from council tax from second homes income. A report on the development of a rural housing initiative will be presented to Cabinet in March. To progress the key worker housing strategy more generally would require an increase in expenditure and a business case will be developed during 2008/09.

5.28 The Accredited Community Safety Officer Service plays a key role in supporting the corporate priority of Hampshire safer and more secure for all and since its inception has been very well received by residents, other local authorities and the police. The service has benefited from external funding from other councils within Hampshire which has been helpful in developing the service. One authority, New Forest District Council, has now decided it can no longer afford to provide funding at the current level and is proposing to reduce its contribution by £52,000. The impact of this would be to reduce the establishment of officers by two in this area. The future resourcing of the service will form part of the review of the use of Safer and Stronger Communities funding.

Legislative change and requirements

5.29 Since April 2007 a new duty to enforce criminal offences relating to copyright has been placed on Trading Standards under sections 107A and 198A of the Copyright, Designs and Patents Act 1988. To discharge these duties requires the adoption of an intelligence-led approach and in addition to the additional enforcement work there will be an increase in related prosecution work. In 2007/08 the new duty has been recognised by the provision of specific grant funding of £89,552 but from 2008/09 the funding becomes part of the revenue support grant. Consequently, it is added to the Policy and Resources base budget, together with two other funding transfers relating to Animal Feed (£29,000) and Food Hygiene (£21,000), all of which have been built into the baseline for calculating the County Council's 2008/09 grant.

5.30 The recent enactment of the Statistics and Registration Bill has meant Registration Service staff, currently Statutory Officers accountable to the Registrar General, have become local authority employees from December 2007. This change, together with the introduction of `New Governance Schemes', has presented the opportunity to review the structure and ways in which the Registration Service is delivered in Hampshire. The review is largely complete and the efficiencies achieved through the new arrangements will form part of the strategy to deliver the savings of £111,000 required in relation to Hantsdirect without any adverse effect on service provision to the public.

Other pressures

5.31 The underlying pressures relating to shortfalls in rental income and unavoidable costs such as securing properties awaiting disposal in the Corporate Estate, Development Account and Sites for Gypsies and Travellers budgets are expected to persist over the next three years.

Corporate efficiency improvements

5.32 Property, Business and Regulatory Services contributes both corporately and at a departmental level to efficiency improvements.

5.33 The Strategic Property Review is expected to deliver long-term revenue savings across the corporate office accommodation portfolio but these are not anticipated within the scope of the three year budget period to 2010/11. An initial business case will be prepared early in 2008.

5.34 Securing capital receipts to support capital investment avoids the need to borrow an equivalent amount to fund the same level of programme and the interest saved generates an efficiency saving. The target level of receipts in 2007/08 is high and is expected to generate £2.2m interest saving. The savings over the next three years will depend on the level of receipts targeted and prevailing interest rates but if the requirement remains high it would be reasonable to assume savings of £1.5m-£1.8m each year.

5.35 Savings delivered through County Supplies' procurement activity have delivered £1m in 2006/07 and a further £1m is anticipated in 2007/08.

5.36 The level of savings generated by the rates revaluation team over the next three years will depend on the programme of work undertaken but based on previous years it is reasonable to assume annual savings of £150,000 (£0.5m including schools) could be achieved. The projected figure including schools for 2007/08 is £1m.

5.37 The Chief Executive will be bringing forward a review of the opportunities to exploit other savings opportunities identified by the recent external consultancy reviews.

Departmental efficiency improvements

5.38 The renewal of the engineering term maintenance contract which accounts for almost one third of revenue repairs and maintenance spending is anticipated to deliver £200,000 per year savings in this major area of work.

5.39 The Regulatory Services review of senior management and administrative support following co-location has saved £100,000 per year.

5.40 The modernisation of the Registration Service and the new Governance Scheme will develop efficiencies that will form part of the strategy to deliver the savings of £111,000 required in relation to Hantsdirect without any adverse effect on service provision to the public.

HM Coroner Service

5.41 In addition to the underlying pressures in 2007/08 of £100,000 there is expected to be a requirement in 2008/09 for additional inquests in the Portsmouth and South East Hampshire Coroner's District. This is likely to require the appointment of an additional Assistant Deputy Coroner to hear these cases together with additional court space in which to hear them. It is anticipated that the inquests will take place over a three month period during 2008/09 and the additional costs are provisionally estimated at a further £100,000. The County Council is statutorily required to meet the cost of any inquests in Hampshire undertaken by HM Coroners.

6 Review of charges

6.1 The service's 2008/09 revenue budget includes income of £10.2m fees and charges. Details of the material headings are included in Appendix 6.

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

6.3 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.

6.4 Charges for support services are reviewed annually and are set to recover the full cost. Other discretionary charges are set to recover full cost except where charges are governed by market forces. In these cases, charges are expected to cover at least the marginal cost of providing the service. Total income is expected to increase in 2008/09 by 23% over the original 2007/08 budget, mainly as a result of additional workloads for external bodies. Significant changes in 2008/09 include:

· Legal fees from other bodies - income is expected to increase by 68% in 2008/09 due to legal fee income associated with conveyancing and developer's contributions.

· The Commons registration fee has reduced by 60% to £29,000, as much of the income and service provision has been transferred to the Environment department. This amount is set by the Department for the Environment, Food and Rural Affairs (DEFRA) and will cover the full cost of services provided. There is no impact on the overall provision of service.

Other expenditure

6.5 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. In future the audit of the Pension Fund and Hillier charity accounts will be subject to separate audit appointments and charged separately and an adjustment to the County Council's external audit fee budget has been made accordingly. No other significant changes to these budgets are proposed. Short term funding for the innovation forum project finishes at the end of 2007/08 and future funding responsibility for this project lies with Adult Services. Policy and Resources funding for the home to school transport pilot ceases at the end of 2008/09.

6.6 The budget includes some items which are not counted against the cash limit. This includes the budget for depreciation of £227,000, 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).

7 Business units

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

Business Services Group

7.2 The revised forecast for the business units as a whole represents an improvement of £246,000 over the original plan for 2007/08. Most of this improvement has come from HC3S where improved meal numbers and higher than anticipated grant have offset the additional costs both of the higher pay award for staff on the lowest grade and the increases to the new pay scales A and B during 2007. The other businesses have all shown a modest improvement against the original plan.

7.3 HTM's improved performance during 2007/08 following good results in 2006/07 has allowed an in-year reduction in contract hire rates to internal customers of 4% backdated to April 2007 saving £90,000 for customers. The forecast for 2008/09 assumes no increase in contract hire rates against inflation of 2.5%.

7.4 In 2008/09 the overall planned surplus for the business units is £198,000 (turnover £38m). The key risks to this position are again in HC3S where continued growth in meal numbers will be required together with a further reduction of £50,000 in overheads whilst food prices continue to rise well above the general level of inflation. This risk is offset by the cautious assumption included around the level of the new School Meals Grant that will be available to support provisions and labour costs and it is considered that the central forecast for a surplus of £12,000 is achievable.

IT Services

7.5 IT Services operates as a business unit and investment and operating costs are recovered through charges for services. The business unit operates a five year trading forecast and uses this to maintain stable service charges even though costs may fluctuate considerably.

7.6 At present, IT Services is in the middle of a major development and investment programme, implementing Service Orientated Architecture, Information Management and replacing the Castle telephone system including the switchboard and associated cabling. At the same time, IT Services is supporting a range of corporate programmes such as the Ashburton Court redevelopment programme and the Corporate Contact Centre, HantsDirect.

7.7 The impact of these programmes is that the business unit is expected to generate a trading deficit of £1.8 million in 2007/08. This will be recovered over the following two years through existing service charges, with breakeven being achieved by March 2010.

7.8 IT Services are required to make substantial savings in order to achieve break even in this period. A number of measures have been taken, or are planned to be taken, to make this possible. These include:

· A review of staffing needs which has reduced headcount in Service Delivery and Business Support by 8.2ftes, the roles being absorbed with other roles through restructuring. Further reductions are being sought.

· Replacing external contractors through recruitment of in-house staff

· Improved project resource planning, expected to deliver 6% efficiency gains, equivalent to £90,000 per annum in this area.

· Server Consolidation will reduce continuing licence and maintenance costs by £110,000 per annum

· The new Castle telephone system will reduce support and maintenance costs by £50,000 per annum, in addition to reduced costs for moves and changes.

· Efforts continue to secure further cost reductions in mobile telephony and the Hampshire Public Services Network. Significant cost reductions have been achieved and passed on to departments and the implementation of a ring network is expected to reduce costs by £150,000 per annum.

7.9 IT Services have used benchmarking, for a number of years, as a tool to identify possibilities for cost reduction. Benchmarking results have been very positive with clear evidence of the relatively low costs of the thin client infrastructure within the County Council. Cost and performance benchmarking is carried out against the public sector and the wider IT industry and the evidence gained has been used to negotiate lower supplier prices and to challenge how services are delivered. This process will continue with a particular emphasis in 2008 on software licensing.

7.10 IT Services have recently implemented best practice service management processes in accordance with ITIL, the IT infrastructure library. As a result, ISO 2000 accreditation is expected to be gained early in 2008. A review of IT costs will form part of the wider review of corporate efficiency opportunities

8 Legal implications

8.1 Whilst some budget proposals are in response to legal requirements, no specific legal implications have been identified.

9 HR implications

9.1 The workforce implications of the proposed budget for 2008/09 are set out in Appendix 10. Inclusive of 1,186 staff working in business units, the 2008/09 base budget supports a planned workforce of 2,978 full time equivalent (FTE) staff. This compares with the adjusted original estimate for 2007/08 of 2,902 which is an increase of 76. The main changes are as follows:

· 55 FTEs for Hantsdirect, mainly transferred from other services

· An additional scrutiny support officer and an additional HATs policy officer

· An additional European Policy Officer funded by transfers from other departments

· 1.5 FTEs legal administrative assistants funded by external income

· 2 FTE Performance Management Officers funded by the Police Authority

· 2.5 FTEs in the Equal Pay team and 2 FTEs in the Legal practice on a temporary basis dealing with equal pay claims funded from the Pay and Benefits reserve

· 2 FTEs transferred to the Employment Practice Centre from the Youth Service

· An additional Employee Support Line (ESL) counsellor funded by income

· 5 FTEs in the Registration Service previously accountable to the Registrar General became County Council employees from December 2007

· 19 additional staff in HC3S, the catering service, funded by grant and sales income

· A net increase of 8 FTEs in IT Services following the replacement of external consultants through recruitment of in-house staff and to meet additional demand for business solutions

· Efficiency savings of 13 FTEs in the County Treasurer's department, 9 FTEs in Property Services and 3 FTEs in County Supplies.

The redeployment proposals in Appendix 4 aim to provide continuing funding, mostly in the short term, for existing staff. The proposals do not increase or decrease the workforce plans.

10 Provisional budget for 2009/10 and 2010/11

10.1 The provisional budget at outturn prices for 2009/10 and 2010/11 for this service is set out in Appendix 11 and summarised below:

2009/10	£ 54.7m
2010/11	£ 55.1m

10.2 The 2009/10 provisional budget excludes non-recurring expenditure of £2.7m including one-off redeployment proposals in 2008/09, the transfer of the Student Support Service, Hantsdirect set up costs and funding for the Home to School Transport pilot. The budget includes £800,000 for County Council elections in May 2009.

10.3 The 2010/11 provisional budget includes a further reduction of £131,000 for the transfer of the Student Support Service and excludes the non-recurring expenditure of £800,000 for County Council elections and the two year funding for Economic Development funded by LABGI

11 Impact assessment

11.1 The proposals in this report are derived from the departmental service plans and are in accordance with the corporate 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.

11.2 Elements of the Policy and Resources budget support the voluntary sector. These budgets have been developed in accordance with the financial policy agreed by the voluntary sector and the County Council and in accordance with the Hampshire Compact. Specifically, inflation for voluntary sector budgets has been calculated in line with County Council's assumptions for pay and non-pay inflation, averaging 2.95% in 2008/09.

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 Impact Assessment - http://www3.hants.gov.uk/impactassessments/cx-puimpact-tres.htm

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 2007/08 - calculation of the cash limit	yellow
2	Revised budget 2007/08 - comparison with cash limit	yellow
3	Base budget 2008/09 - summary of cash limit	pink
3 - Annex 1	Base budget 2008/09 - definition of base budget	pink
3 - Annex 2	Base budget 2008/09 - significant costs of inflation	pink
3 - Annex 3	Base budget 2008/09 - significant variations from 2007/08 repriced budget	pink
4	Proposals for redeployment 2008/09, 2009/10 and 2010/11	yellow
5	Efficiency statement	yellow
6	Review of income 2008/09	yellow
7	Business units - summarised trading accounts	White
8	Revenue budget 2008/09 - analysis of variations	Blue
9	Revenue Budget 2008/09 - budget book detail	Green
10	Workforce levels and costs 2007/08 - 2009/10	Blue
11	Provisional budget 2009/10 and 2010/11	Pink
11 - Annex 1	Provisional budget 2009/10 and 2010/11 - analysis of variations	blue

Appendix 1

Policy and Resources

Revised budget 2007/08

Calculation of the cash limit for the revised budget 2007/08

The following table shows the progression from the original budget for 2007/08 to the cash limit for the revised budget 2007/08. Both are at estimated outturn prices 2007/08.

				£'000	£'000
Original budget 2007/08 at outturn prices					53,710
Transfers to/from other services and contingency allocations: European Policy Officer for Adult Services Members' Devolved Budgets				6 800	806
=	Adjusted original budget				54,516
Variations: Budget carry forward - Carry forward 2006/07 underspend - Carry forward to 2008/09 : Occupational Health computer system (HR) HATS and Scrutiny - Chief Executives County Treasurer underspend Grant Funding - Local Area Agreement Grant - LPSA2 Pump Priming Grant - Copyright Enforcement Grant - Local Area Agreement - Capacity & Co-ordination - HIOW Improvement Grant - Hampshire Marketplace				87 -50 -112 -100 70 1 90 78 21
Transfers between services: - Busy Bees Salary Sacrifice - Corporate Travel Strategy - Youth Services transfer to HR Employment Practice - Field Centre Grant (P&R and Children's Services) - Hantsdirect - Operational costs (P&R & Environment) - Talented Athletes Programme Other: - Employment Law team - equal pay litigation - Pay and Benefits Equal Pay Team - Bar End Community Sports Project - Trinity Centre Grant - YMCA Fairthorne Manor Grant - Corporate Estate Security costs - System configuration for Pay & Benefits - Hantsdirect - Set up costs - Innovation Forum - Home to Schools pilot - Repair and Maintenance				26 -3 28 -95 29 29 49 50 210 50 40 154 4 851 -22 407 32	1,924
=		Cash limit for the revised budget 2007/08			56,440

Appendix 2

Policy and Resources

Revised budget 2007/08

Summary comparing the revised budget with the cash limit

	Revised Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Cash limited expenditure
Chief Executive	13,432	13,432	-	-
HR Department	6,360	6,360	-	-
	19,792	19,792
County Treasurer	5,517	5,517	-	-
Property, Business & Regulatory - Other	23,112	23,323	211	+9.8
- Savings to be identified	-	-211	-211	-
	23,112	23,112	-	-
Other budgets	8,019	8,099	80	-
Other savings to be identified	-	-80	-80
Total	56,440	56,440	-	-

Appendix 3

Policy and Resources

Revenue budget 2008/09

Calculation of the base budget 2008/09 - summary of cash limited expenditure

The following table shows the progression from the original budget for 2007/08 which was prepared at outturn prices 2007/08 to the base budget 2008/09 at outturn prices 2008/09.

		£'000	£'000
Original budget 2007/08 at outturn prices			53,710
Transfers to/from other services and contingency allocations Members' Devolved Budgets European Policy Officer		800 6	806
=	Adjusted original budget		54,516
Increases for inflation to reflect November 2007 prices (see Annex 2)
-	Allocation for excess cost of 2007 pay award		137
-	Difference between actual cost of inflation and the inflation allowance		-110
Original budget at November 2007 prices			54,543
Other variations (see Annex 3)
-	Additional cash limit as a result of lower inflation	110
- - -	Exclusion of non-recurring 2007/08 expenditure/income: Hantsdirect - set up costs 2006/07 underspending Pump priming grant Local Area Agreement Crossborough Road capital receipt Pay and Benefits Equal Pay Student Support funding Transfers between services: Corporate Travel Strategy Youth Services transfer to Employment Practice Savings: Office accommodation savings - Ashburton Court SAP savings Other: Office accommodation charges - moving to `below the line' Gower Review grant assimilated into RSG Capital receipt - Invest to save Animal Health services transfer Economic Development funding (year 1 of 2) Hantsdirect - operational costs Pay and Benefits - Equal Pay Team School Business rating assessment Carry forward from 2007/08: County Treasurer's Health computer system - Human Resources HATS and Scrutiny - Chief Executive's Audit fee amendments for Pension fund and Hilliers	-2,073 -38 -70 -630 -10 -663 -114 -10 56 -225 -280 482 90 -200 50 155 1,354 141 45 100 50 112 -51	-1,619
Allocation for future inflation			1,306
=	Base budget 2008/09 at outturn prices		54,230

Annex 1 to Appendix 3

Policy and Resources

Calculation of base budget 2008/09

Parameters used in the compilation of the base budget

1	Definitions
1.1	The first stage in the construction of the budget for 2008/09 is the preparation of a base budget. The rules used this year are similar to those applied in 2007/08, which are summarised below.
1.2	The 2008/09 base budget is defined as the current year's budget adjusted for: · allocations made for inflation in 2007/08 including the full year effect of the provision made for outstanding pay awards from 2006/07 · exclusion of expenditure included in the 2007/08 budget which was financed by the carry forward of planned underspendings from 2006/07, 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 2007/08 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

Policy and Resources

Calculation of base budget 2008/09

Significant costs of inflation

1.	Variation between the actual cost of inflation in 2007/08 (as at November 2007) and the provision for inflation included in the 2007/08 budget
						£'000	£'000
	Reduced cost of inflation						-110
2.	Significant costs of inflation between budgeted 2007/08 outturn prices and November 2007 prices
2.1	Pay awards
	Provision was originally made in 2007/08 for pay awards of 2.25% for teachers and other employee groups.						1,275
	The additional cost in 2008/09 of the pay awards agreed in 2007/08 has been met in full and is:						137
	The pay awards agreed were:
	Negotiating body: Effective date:						%
	Local Government Services Staff Hampshire Management Grades				1 April 2007 1 April 2007		2.475 2.475
2.2	Non pay inflation
	Provision was originally made in 2007/08 for a net amount of -£443,000
	This was for general price increases of 2.5% (£1,065,000) offset by increased income to match inflation in gross expenditure (£1,508,000)
	Reduced cost of inflation other than pay and net of income						£110,000
	The most significant variations within this additional cost are as follows: Gas Electricity Postage				Outturn 2007/08 at November 2007 prices % -26.6 -7.6 5		Cost in 2008/09 £ -97 -133 13
3.	Allocation for future inflation						£'000
	Provision for pay awards of 2.5% in 2008/09						1,422
	Increase in local government employers' pension contributions						198
	Provision for non-pay inflation at 2.5%						1,138
	Reduction for increased income						-1,452
	Total allocation for future inflation						1,306

Annex 3 to Appendix 3

Policy and Resources

Calculation of base budget 2008/09

Significant variations

Major variations between the repriced budget 2007/08 and the base budget for 2008/09 at November 2007 prices contributing to the decrease of £1,619,000 (3.0%) are set out below:

		Variations against the repriced 2007/08 budget
		£'000	%
	Chief Executive:
	Deletion of non-recurring items:
	Spending from Pay and Benefits reserve	-524	-0.96
	Pump priming grant	-50	-0.09
	PSA reward grant	-340	-0.62
	2006/07 underspending used in 2007/08	-30	-0.06
	Savings:
	Office accommodation	-150.2	-0.28
	SAP benefit realisation savings	-120	-0.22
	Hantsdirect	+1,347	+2.47
	Economic Development two year funding	+155	+0.28
	Equal Pay	+141	+0.26
	Youth Service transfer to Employment Practice	+56.4	+0.10
	Teachers' pensions transfer from Treasurer's to HR	+45	+0.08
	Transfer to corporate travel strategy	-2	-0.01
	County Treasurer:
	Deletion of non-recurring items:
	Spending from Pay and Benefits reserve	-139	-0.25
	Savings:
	SAP benefit realisation savings	-160	-0.29
	Reduction re nationalisation of student support service	-114	-0.21
	Transfer of services to Hantsdirect	-91	-0.17
	Teachers' pensions transfer from Treasurer's to HR	-45	-0.08
	Property, Business and Regulatory Services:
	Savings:
	Office accommodation	-74.8	-0.14
	Transfer of services to Hantsdirect	-22	-0.04
	Transfer to corporate travel strategy	-7.6	-0.01
	Office accommodation charges	+482	+0.88
	Gower Review grant assimilated into RSG	+90	+0.17
	Animal Health Services transfer	+50	+0.09
	Capital receipt - invest to save	-200	-0.37
	Hilliers charity accounts audit appointment	+8	+0.01
	Miscellaneous Policy and Resources budgets:
	Deletion of non-recurring items:
	Hantsdirect set up costs	-2,073	-3.80
	Pump priming grant	-20	-0.04
	Local Area Agreement top slice funding	-290	-0.53
	2006/07 underspending used in 2007/08	-8	-0.01
	Audit fee change in arrangements for Pension fund	-59	-0.11

Appendix 4

Policy and Resources

Proposals for redeployment 2008/09 to 2010/11

Proposals are shown at outturn prices for the relevant year.

Agreed proposals will be incorporated into future year's base budgets and so on-going costs are shown in the first year only. One-off costs are shown in the first year and subtracted from the following year.

					Staffing (FTEs)
		2008/09	2009/10	2010/11	2008/09	2009/10	2010/11
		£'000	£'000	£'000
Redeployment proposals:
Chief Executive:
	Employment Law team - equal pay litigation	+30	-30	-	-	-	-
	HR Service Centre deferred SAP benefit realisation savings	+60	-60	-	-	-	-
	P&B team funding	+438	-438	-	-	-	-
Property, Business and Regulatory Services:
	Invest to save - capital receipts	+200	+110	-	-	-	-
County Treasurer:
-	Pay and benefits project implementation costs	+60	-60		-	-	-
-	Equal pay claims	+40	-40	-	-	-	-
Total		+828	-518	-		-	-
	Pay and Benefits reserve	-568	+568	-	-	-	-
	Revenue contributions to capital	-260	-50	-	-	-	-
Total		-828	+518	-	-	-	-

Appendix 5

Policy and Resources

Cashable efficiency improvements 2007/08 to 2010/11

	2007/08 £'000	2008/09 £'000	2009/10 £'000	2010/11 £'000
a) Cashable efficiency improvements producing a budget saving available for redeployment and meeting the Government's definition of efficiency: None
b) Cashable efficiency improvements producing a budget saving but not meeting the Government's definition of efficiency: Rates revaluation work	100	150	150	150
c) Cashable efficiency improvements not producing a budget saving available for redeployment: SAP benefits realisation savings Human Resources County Treasurer's Cost of increments Chief Executive's Human Resources County Treasurer's Property, Business & Regulatory Recruitment savings - Human Resources Water filter savings BACS advice e-mailing savings Engineering term maintenance contract Registration Services modernisation / New Governance Scheme HTM contract hire reductions Windows Server consolidation Restructuring Software Asset Management Renegotiation of Mobex phone contract Castle Complex network Replacement of external contractors with permanent staff Ring network Tivoli Storage Manager Service Orientated Architecture Capital receipts avoiding unplanned additional borrowing Corporate procurement contract savings	410 114 116 116 194 162 50 - - 100 n/a 90 34 56 80 15 - - - - 2,200 611	60 160 153 131 187 162 50 - - 200 111 90 34 56 80 15 77 150 40 200 1,500 -	60 - 153 131 187 162 - 8 15 200 111 90 34 56 80 15 77 150 40 300 1,500 -	- - 153 131 187 162 - 8 15 200 111 90 34 56 80 15 77 150 40 420 1,500 -
Total cashable efficiency improvements	4,448	3,606	3,519	3,579
% of turnover	3.5%	2.9%	2.9%	2.9%

Notes

Cashable efficiency improvements occur 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) Cashable efficiency improvements producing budget savings and meeting the Government's definition of efficiency include general procurement savings against the budget provision of a 2.5% increase in prices.

b) Cashable efficiency improvements producing budget savings but not meeting the Government's definition of efficiency include introducing new charges for services and fortuitous savings.

c) Cashable efficiency improvements not producing budget savings arise 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

Appendix 6

Policy and Resources

Review of income 2008/09

		Current charge	Total income	Date of last review	Planned date for next review	Proposed increase (if proposed now)	Is charge set to recover full cost Yes/No	Is charge subject to an assessment scale determined locally? Yes/No	Additional income from increased or new charge
		£	£			£			£
1	Mandatory/National charges Chief Executive - Commons registration - Recovery of legal costs Registration Service - Statutory registration fees	- - -	29,000 203,600 855,500	01/09/2007 n/a Annual	- n/a Nov 08	- n/a -	- n/a -	No n/a No	- - n/a
2	Discretionary charges Mandatory/National charges Chief Executive - Legal fees for Fire - Legal fees for other bodies County Treasurer - Contractual income Human Resources - Employee Support Line Property, Business & 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	- - - £7 for external customers - - - - - - - - - - - - -	6,000 73,400 2,987,600 32,000 2,218,300 313,100 308,500 121,500 132,300 39,200 386,700 141,200 113,000 288,200 75,500 1,096,700 826,500	Apr 07 Apr 07 Annual Currently under review - - Per agreements Oct 07 Oct 07 2007 2007 2007 2007 Various As lease allows Annual	Apr 08 Apr 08 Next year Sep 08 - Various - - Oct 08 Oct 08 2008 2008 2008 2008 Various As lease allows 2008/09	n/a n/a - £7.20 - - - - - - 10% - - - - - 8%	Yes Yes - Yes Yes Yes Yes Yes No No Yes Yes Yes No Yes Yes Yes	No 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
			10,247,800

Appendix 7

Policy and Resources

Business units - summarised trading accounts 2008/09 to 2010/11

		Original budget 2007/08	Revised budget 2007/08	Base budget 2008/09	Provisional forecast 2009/10	Provisional forecast 2010/11
		£'000	£'000	£'000	£'000	£'000
	Hampshire Printing Services Trading Account Income Expenditure	-2,358 2,318	-2,379 2,333	-2,398 2,340	-2,398 2,340	-2,398 2,340
	Net Operating surplus	-40	-46	-58	-58	-58
	Reserve Account Surplus brought forward Surplus Depreciation Funding of capital expenditure	-401 -40 -31 -	-389 -46 -63 -	-498 -58 -21 -	-577 -58 -21 -	-656 -58 -21 -
	Surplus carried forward	-472	-498	-577	-656	-735
	IT Services Trading Account Income Expenditure	-30,036 28,061	-29,972 31,845	-31,280 30,468	-31,402 30,421	-31,459 30,065
	Net Operating (surplus)/deficit	-1,975	1,873	-812	-981	-1,394
	Reserve Account Deficit brought forward (Surplus)/deficit Funding of capital expenditure	- -1,975 1,875	47 1,873	1,920 -812	1,108 -981	127 -1,394
	(Surplus)/deficit carried forward	-100	1,920	1,108	127	-1,267
	Capital expenditure funded by prudential borrowing, repaid over 5 years		1,725	1,000
		£'000	£'000	£'000	£'000	£'000
	Caretaking and Cleaning Support Service Trading Account Income Expenditure	-402 402	-432 417	-422 422	-422 422	-422 422
	Net Operating surplus	-	-15	-	-	-
	Reserve Account Surplus brought forward Surplus Funding of capital expenditure	-109 - -	-123 -15 -	-138 - -	-138 - -	-138 - -
	Surplus carried forward	-109	-138	-138	-138	-138
	County Supplies Trading Account Income Expenditure	-9,946 9,887	-9,932 9,852	-9,967 9,926	-9,967 9,926	-9,967 9,926
	Net Operating surplus	-59	-80	-41	-41	-41
	Reserve Account Surplus brought forward Surplus Depreciation Funding of capital expenditure	-1,020 -59 -27 200	-1,079 -80 -56 200	-1,015 -41 -50 -	-1,106 -41 -50 -	-1,197 -41 -50 -
	Surplus carried forward	-906	-1,015	-1,106	-1,197	1,288
	Segensworth Unit Factories Trading Account Income Expenditure	-20 -	-15 -	-20 -	-20 -	-20 -
	Net Operating surplus	-20	-15	-20	-20	-20
		£'000	£'000	£'000	£'000	£'000
	Reserve Account Surplus brought forward Surplus Funding of capital expenditure	-223 -20 -	-224 -15 -	-239 -20 -	-259 -20 -	-279 -20 -
	Surplus carried forward	-243	-239	-259	-279	-299
	Former Direct Service Organisations
	HC3S Trading Account Income Expenditure	-16,282 16,623	-16,662 16,855	-17,442 17,430	-17,442 17,430	-17,442 17,430
	Net Operating (surplus)/deficit	341	193	-12	-12	-12
	Hampshire Cleaning Services Trading Account Income Expenditure	-564 564	-580 574	-605 605	-605 605	-605 605
	Net Operating surplus	0	-6	0	0	0
	Hampshire Transport Management Trading Account Income Expenditure	-8,356 8,276	-7,577 7,431	-7,573 7,486	-7,573 7,486	-7,573 7,486
	Net Operating surplus	-80	-146	-87	-87	-87
	Former DSO Reserve Account
	Surplus brought forward (Surplus)/deficit Depreciation Funding of capital expenditure	-733 261 - 457	-1,170 41 -104 607	-626 -99 -148 50	-823 -99 -148 50	-1,020 -99 -148 50
	Surplus carried forward	-15	-626	-823	-1,020	-1,217

Appendix 8

Policy and Resources

Revenue budget 2008/09

Analysis of variations

(separate excel sheet)

	Adjusted original budget 2007/08	Variation in inflation to November 2007 prices		Other base budget variations	Inflation allocation to 2008/09 outturn		Growth and redeploy-ment proposals	Revenue Budget 2008/09
	£'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

Appendix 9

Policy and Resources

Revenue Budget 2008/09

Reconciliation of the original 2007/08 budget on the following pages with the 2007/08 budget in the published budget book.

		£'000
Net expenditure on page B73 of the published budget book		25,573
Adjustments for items not included in the budget book: Recharges		30,896
Adjustments made to the original budget figures:		806
Total net expenditure for 2007/08 original budget shown overleaf on page B73		57,275

Appendix 10

Policy and Resources

Workforce levels and costs

	2007/08 Revised	2008/09 Original
	£'000	£'000
Analysis of workforce costs in base budget (excluding business units) :
Salaries of permanent staff (including employer's national insurance and pension contributions)	58,537	61,789
Temporary/fixed term/casual staff	723	582
Agency staff	483	444
Additional hours	608	558
Total workforce costs	60,351	63,373
Average FTE staff actually in post	1,703	1,792
Staffing changes in redeployment proposals (Appendix 4):
Variation in staff (FTEs)		-
Variation in budget (£'000)		-
Workforce implications of budget proposals:
FTE posts available		1,792
Workforce budget available (£'000)		63,373

Appendix 11

Policy and Resources

Provisional budget 2009/10 and 2010/11

The following table shows the progression from the 2008/09 proposed budget at outturn prices to the provisional budget for 2009/10 and 2010/11 at outturn prices.

			£'000	£'000
Proposed budget 2008/09 at outturn prices				55,058
-	Base budget variations:
	County Council elections			+800
	Corporate travel strategy			+2
	Economic Development (year 2 of 2)			-100
-	Exclusion of non-recurring 2008/09 expenditure:
	2007/08 carry forwards		-150
	2008/09 redeployment proposals		-628
	Student Support transfer		-345
	PSA Pump priming grant		-60
	LAA top slice funding		-328
	Capital receipt - invest to save		-110
	Hantsdirect set up costs		-380
	Home to school transport pilot		-500
	End of use of Crossborough Rd capital receipt		-40
	Revenue contributions to capital		-40	-2,581
-	Full year effect of 2008/09 growth proposals			-
Growth and redeployment proposals				+110
Allocation for future inflation				+1,375
Provisional budget 2009/10 at outturn prices				54,664
-	Base budget variations:
	Corporate travel strategy			+7
-	Exclusion of non-recurring 2009/10 expenditure
	Student Support transfer		-131
	Economic Development funding		-55
	County Council elections		-800	-979
-	Full year effect of 2009/10 growth proposals			-
Growth and redeployment proposals				-
Allocation for future inflation				+1,388
Provisional budget 2010/11 at outturn prices				55,073

(on blue paper) Annex 1 to Appendix 11

Service

Provisional budget 2009/10 and 2010/11

Analysis of variations

	Proposed Budget 2008/09	Base budget variations	Growth and redeployment	Inflation allocation to 2009/10 outturn		Provisional Budget 2009/10	Base budget variations	Growth and redeployment	Inflation allocation to 2010/11 outturn		Provisional Budget 2010/11
	£'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 31 Jan 2008.