Contact: Ejner Knudsen, tel 01962 847403 email: [email protected]

1 Summary

1.1 This report provides a further update on the revenue budget monitoring position for the Environment services for the 2007/08 financial year, covering the budgets for highways and transportation, planning and development and waste management.

1.2 The budget monitoring position shows a satisfactory position for this stage in the financial year and the year-end outturn on the cash limited services is expected to be close to the approved budget. Expenditure on highways winter maintenance, which is outside of the cash limit for the purposes of reporting the final outturn position at year-end, is also expected to be contained within the approved budget allowance.

1 Recommendation

1.1 That the actions being taken to manage expenditure within the approved funding allocation be endorsed.

2 Cash limit 2007/08

2.1 The previous budget monitoring position for the current financial year, based on a review carried out within the Environment department during November, was reflected in the construction of the 2007/08 revised budget. This was approved by the Executive Member for Environment on 22 January 2008, for submission to the Leader and the Cabinet.

2.2 The revised budget totalled £109.004 million and included a number of changes to the cash limit that had been made since the beginning of the year, together with specific proposals for the carry forward of underspendings of £980,000 to the 2008/09 budget. This was to provide support towards:

· Street lighting PFI project, reflecting expenditure delayed from 2007/08 (£260,000)

· Sub regional development of transport evidence (£380,000)

· Partnership for Urban South Hampshire (£90,000)

· £250,000 for one-off purposes (either high priority highways maintenance works or public transport support)

2.3 The revised budget proposals were subsequently approved by the Cabinet at its meeting on 8 February 2008.

2.4 The only subsequent change to the 2007/08 revenue budget cash limit since January has been in relation to the waste management contract related budgets. A further allocation of £692,000 has been made from the central waste management contingency to cover estimated cost increases arising from the operation of the waste management contract during the third quarter of the financial year.

2.5 The Environment services' budget has been increased to take account of the above changes, giving an adjusted 2007/08 cash limit of £109.696 million. Further changes to the cash limit will be made at the end of the year to reflect the final call on the waste management contingency, together with any other adjustments that may be required, such as variations in expenditure being funded from Government grants and costs arising from the implementation of the new pay framework.

3 Outcome of latest budget monitoring review

3.1 This report reflects the outcome of the most recent budget monitoring review, which was carried out in consultation with departmental budget holders during January and February. During the review, expenditure and income trends were considered and planned commitments for the remainder of the year evaluated, in order to update the forecast outturn for comparison with the recently approved 2007/08 revised budget.

3.2 Appendix 1 provides a summary of the updated 2007/08 cash limit over the standard divisions of service headings, together with assessed expenditure to 31 January 2008. Appendix 2 provides a statement of key volume and activity indicators.

3.3 No variations between the forecast outturn and the approved budget plan are currently anticipated. However, it should be noted that the figures in this final 2007/08 budget monitoring report are only projections of the likely outturn for the year, based on the most up-to-date information available during February. They do not, at this stage, represent the final year end position for the 2007/08 financial year, which will be reported in June after the accounts have been closed.

3.4 The main issues arising from the budget monitoring review are discussed in the following paragraphs.

Highways maintenance

3.5 The 2007/08 revised revenue budget for routine highways maintenance is £25.636 million, after allowing for the sum of £260,000 carried forward to the 2008/09 budget for the street lighting PFI project, reflecting slippage in expenditure this year following delays in Government approval for the project.

3.6 Further allocations to the highways units and other departmental budget holders were made during January to meet operational priorities and monitoring suggests that expenditure is being progressed in accordance with the revised plan. These additional allocations have now almost fully committed this year's highways maintenance budget, apart from a small reserve sum of £13,000 to cover any minor cost increases. Provided that progress is maintained in implementing the various schemes and programmes, a close outturn can be expected at year end.

3.7 The revenue budget for highways maintenance includes a ring-fenced sum of £3.030 million to cover winter maintenance salting and snow clearance operations. At the time of writing this report, the level of winter maintenance activity on salting and snow clearance is at a similar level to 2006/07 and below what could be expected in an average year. Although the position on this budget can change quite quickly if severe weather is experienced, if current trends continue then overall expenditure on this activity during 2007/08 should be contained within the winter maintenance budget. Under the special budgeting arrangements that apply to this activity, any underspending or overspending against this budget heading would not count against the Environment services' cash limit, as year-end variations are either credited to or met from central balances.

Public transport

3.8 The 2007/08 revised budget for public transport support was set at £6.262 million, in line with the original cash limit for this service. Overall expenditure is expected to be contained within the revised budget, which took account of the planned savings from bus services which were agreed earlier in the year to meet the £244,000 budget redistribution included in the make-up of the 2007/08 original budget.

3.9 A number of minor variations against the approved public transport 2007/08 revised budget have been identified during the recent budget monitoring review, including more up-to-date information on the level of expenditure on cross boundary services and levels of contribution income from district councils towards bus services in their areas. The budget position is being actively managed by the Passenger Transport Group and adjustments to spending plans are being made as necessary to utilise the available funding to offset pressures and to meet other service priorities within the approved cash limit.

3.10 In addition, a sum of £1.499 million for rural bus services was included in the 2007/08 revised budget in line with the provision for Government Rural Bus Subsidy grant. Monitoring information indicates that this grant is expected to be fully consumed this year in supporting these services.

Waste management

3.11 Information on waste volumes during the third quarter of the financial year has now been evaluated and shows that variations in tonnages during the third quarter have remained at a similar level to the trend during the first half of the year. The overall level of waste volumes during the first nine months of the year is only 0.3% above that in 2006/07, which is well within the 2.1% allowance for overall waste growth included in the make-up of the £4.241 million central waste management contingency. Within this overall variation, waste volumes from household collections fell by 1.2%, compared to a year earlier. On the other hand, volumes of civic amenity waste from household waste recycling centres rose by 4.2%.

3.12 An assessment has now been made of the call on the central waste management contingency to reflect additional expenditure arising from the operation of the waste management contract during the October to December 2007 period. This has been assessed at £692,000, resulting in an overall call of £2.063 million for the first nine months of the year, including the previous quarterly calls totalling £1.371 million calculated earlier in the year.

3.13 This leaves just under £2.2 million within the contingency to cover higher contract related expenditure during the remainder of the year which is consistent with the forecast of a possible full-year underspending of £1 million, as mentioned in the budget report to the Executive Member on 22 January 2008. As previously reported, expenditure this year on the waste contract related services has been lower than when the budget was set because of the lower than anticipated growth in waste volumes, together with other cost savings from the introduction of new arrangements for the disposals of waste based-paints and for the funding of the disposal costs of waste electrical and electronic equipment and fridges.

3.14 It is currently anticipated that overall expenditure on the non-contract related waste management services will be contained within the 2007/08 cash limit. However, expenditure on this part of the waste management budget includes volatile services such as the disposal of abandoned vehicles, where expenditure levels can vary year-on-year and are subject to external factors, such as the market for scrap metal.

Staffing and support services

4.15 The approved 2007/08 revised budget for staffing and support costs is £24.986 million, covering the overall running costs of the Environment department, together with the highways agency arrangements with the district councils. The budget figure also takes into account cost recharges to the capital programme and sources of external income.

4.16 The revised budget was set at a level £720,000 below the cash limit for this heading, reflecting excess savings from staff turnover and the normal delay in filling vacancies, enabling the projected underspendings to be carried forward to meet a number of pressures identified in the construction of the 2008/09 revenue budget. As previously reported, staff vacancy levels have continued at a relatively high level during the current year, significantly exceeding the normal savings allowance of some £0.5 million or approximately 2% built into the annual staffing and support budget.

4.17 The projected underspending of £720,000 against the cash limit took into account known savings from current and previous staff vacancies, together with an estimate of likely future savings during the final quarter of the financial year, which would need to be closely monitored. The latest budget projections indicate that satisfactory progress is being made in achieving the additional planned savings, although a shortfall in income from capital fee recharges is now expected, partially as a result of some loss of productivity caused by the recent office moves within the department. Nevertheless, action is being taken to manage the situation and the overall outturn on the budgets for staffing and support costs is still expected to be close to the revised budget.

4.18 The projections on the staffing and support budgets assume that any additional costs during 2007/08 of implementing the new pay framework, following the pay and benefits review, are fully covered by a corresponding increase in the department's cash limit. Financial adjustments will be confirmed towards the end of the financial year, taking into account any pay arrears which were due to be paid during February.

4 Impact assessment

4.1 Monitoring of the Environment revenue budget benefits all sectors of the community equally, as it helps to ensure that the department's services are delivered in a cost effective manner within overall corporate budget guidelines. As such, proposals in this report are not considered to be discriminatory.

5 Conclusion

5.1 The budget monitoring position shows a satisfactory position for this stage of the financial year. Expenditure on the main operational budgets, including highways maintenance and public transport support, is being carefully managed to utilise the available funding and the year-end outturn is expected to be close to the approved allocations. Expenditure against the ring-fenced highways winter maintenance budget is also forecast to be within the allocated sum.

5.2 Expenditure on the waste contract related services is expected to be lower than the overall budget allocation and an underspending in the order of £1 million is anticipated against the central waste management contingency.

5.3 The projected savings of £720,000 on staffing and support costs, which were built into the 2007/08 revised budget to enable underspendings to be carried forward in support of the 2008/09 budget, are expected to be fully achieved, subject to the satisfactory management of the anticipated shortfall in income from capital fee recharges.

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.

Environment Departmental Management Team - 6 February 2008: Revenue Budget Quarterly Report

APPENDIX 1

Environment

Revenue budget 2007/08 - monitoring statement

Analysis of variations

APPENDIX 2

Environment

Revenue budget 2007/08

Summary of volume and activity indicators - covering the period to 31 December 2007

Highways maintenance

Cleansing of highways drainage: 180,000 gulleys - on target

Grass cutting on highways land: 24.4 million (m²) being maintained - on target

Street lighting columns, illuminated signs and bollards being maintained: 136,000 - on target

Street lighting energy consumption: 35.2 million Kwh

(71.0% of estimated full year consumption of 49.6 million Kwh)

Winter maintenance salting activity - number of days salting carried out to 31 December 2007: 16 days

(equivalent average during same period of previous three years: 20 days)

Road safety education

Pass plus courses completed: 447 - on target

Cycle proficiency training courses carried out: 1,040 - on target

Number of children trained: 5,200 - on target

School crossing patrols

Number of locations being covered: 329 (96.5% out of total of 341 sites)

Annual staff turnover rate as at 31 December 2007: 14.6%

(equivalent annual staff turnover rate as at 31 December 2006: 19.8%)

Traffic surveys

Manual surveys completed: 104 - on target

Automatic traffic counts and speed detection radar surveys: 343 - on target

Public transport support

Original 2007/08 budgeted number of bus service contracts: 120

Actual number of bus service contracts at 31 December 2007: 123

Planning and development

Total planning applications determined in 12 months to 31 December 2007: 136

(applications determined in 12 months to 31 December 2006: 133)

Waste management

Waste tonnages in 12 months to 31 December 2007:

Overall waste tonnages: 830,369 (+1.6%)

Household waste collections: 610,380 (-0.3%)

Household waste recycling centres: 219,989 (+ 7.4%)

Staffing and support costs

Annual staff turnover rate as at 31 December 2007: 16.8%

(equivalent annual staff turnover as at 31 December 2006: 13.2%)