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

1 Summary

1.1 This report is the final 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 February 2008, 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. Underspends are anticipated in respect of the repairs and maintenance winter contingency, County Council elections, the external audit fee and also Members' grants budgets. Other budgets are expected to be in line with cash limit. IT Services forecast deficit has reduced in the last quarter while trading units within the business services group expect to achieve the revised target surplus of £85,000 comfortably. The final outturn position for Policy and Resources overall will be reported to Cabinet in June 2008 and carry forward proposals will be made in accordance with the approved policy.

1.3 Capital expenditure for the County Council for 2007/08 is forecast to be slightly lower than the estimate of £192.2m reported to Cabinet in February 2008. Actual capital receipts to 29 February 2008 were £38m, with a further £9.5m due in March in respect of disposals which have already been completed .

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

a) To note the current position on the monitoring of the 2007/08 Policy and Resources revenue budget and capital programme.

b) To agree the transfer of £90,000 to an earmarked reserve to fund additional editions of Hampshire Now.

c) To defer consideration of the treatment of over and under-spendings against the 2007/08 revised budget until the final outturn position is known.

d) To approve the carry forward into 2008/09 £1.938m of the capital repairs programme relating to specific commitments that have been unavoidably delayed.

e) To approve the carry forward of schemes in the 2007/08 capital programme that are not started by 31 March 2008, subject to the cost of the shemes being accommodated within the approved programme limit.

1 Policy and Resources cash limited revenue budget 2007/08

1.1 The latest cash limit for 2007/08 is £56.0m as set out in Appendix 1. This takes account of the planned underspends to be carried forward to 2008/09 agreed by the Executive Member at his decision day on 28 January 2008. Since then the cash limit has been increased by £42,000 funded by grant from the Government's capacity building fund as part of the Hampshire and Isle of Wight Authorities improvement programme designed to achieve efficiency savings from shared service provision and other collaborative working.

1.2 Comments on budget issues for 2007/08 based on monitoring of expenditure up to the end of February 2008 are given below.

Chief Executive's Department (including Human Resources)

1.3 The current projection for Chief Executive's is that the department will remain within its revised cash limit, with HR achieving the SAP savings target for 2007/08. There is a projected underspend on County Council elections of £57,000 due to no elections occurring in 2007/08. There is also an underspend on Hampshire Now estimated to be £90,000. It is proposed to transfer this amount to an earmarked reserve to be carried forward to fund the publication of additional editions. It is likely that a part of the additional Equal Pay funding of £75,000 for external legal costs will be carried forward due to the deferral of tribunal hearings until 2008/09.

County Treasurer's Department

1.4 The County Treasurer's department has already declared an underspend of £100,000 for 2007/08 to assist with the significant pressures within the department in 2008/09. Having taken account of this, the department is looking to be at cash limit at the year end.

Property Business and Regulatory Services

Property Services and Office Accommodation

1.5 The impact of management action previously reported (recruitment freeze, reduction in the use of consultants and agency staff) together with additional measures implemented in 2007/08 including a number of early retirements means the outturn will be within cash limit.

Repairs and maintenance

1.6 The winter maintenance contingency in 2007/08 remains largely intact following a relatively mild winter and if this position remains to the end of the year approval is sought to carry forward the unspent balance in full in line with practice in previous years. The current level of the unspent balance is £384,000.

Corporately held land and Sites for Gypsies and Travellers

1.7 Pressures relating to the Corporate Estate, Development Account and Sites for Gypsies and Travellers budgets totalling £211,000 were reported as part of the revised budget. Shortfalls in rental and other income and the cost of securing properties awaiting disposal being the key reasons. These pressures have increased since then, in particular on the Corporate Estate and Sites for Gypsies and Travellers budgets and the latest forecasts indicate an overspend of £264,000. It is anticipated that this overspend can be contained within PBRS' overall revenue resources.

HM Coroner Service

1.8 Cost pressures continue to grow on this service from above inflation increases from hospitals, higher charges for court space and the ongoing increase in the number and sophistication of test techniques. Despite the increase in the cash limit for 2007/08 of £75,000 (funded from 2006/07 underspends within Policy and Resources overall), the overspend is now projected at £89,000.

Other non-departmental Policy and Resources budgets

1.9 Other budgets within Policy and Resources comprise contributions and subscriptions to national and local organisations, grants to councils of community service and to voluntary organisations and the external audit fee. A lower audit fee is now expected in relation to grant certification following changes in the Audit Commission's certification strategy. Consequently a budget saving of £37,000 is anticipated.

1.10 This part of the Policy and Resources budget also includes the Members' grants budgets totalling £780,000. The scheme closed for this year at the end of February. Actual expenditure at the end of February was £559,594, leaving an unspent balance of £220,406 to be carried forward to 2008/09.

1.11 No other significant variations on non-departmental budgets have been identified in this review.

Summary

1.12 At the end of February 2008, the anticipated variations in cash limited expenditure are:

Chief Officer controlled budgets:
Corporately held land and sites for gypsies and travellers	+£264,000
Repair and maintenance winter contingency	-£384,000	-£120,000
Other budgets:
Election expenses	-£57,000
Coroners	+£89,000
Audit Fee	-£37,000
Members' grants budgets	-£220,000	-£225,000
Overall forecast underspend for Policy and Resources		-£345,000

1.13 Other budgets are expected to be in line with cash limit. The final outturn position for Policy and Resources overall will be reported to Cabinet in June 2008 and carry forward proposals will be made in accordance with the approved policy.

Business Units

Property, Business and Regulatory

1.14 The revised target surplus of £85,000 reported in January should be comfortably achieved although the final outturn will depend on March trading results. HC3S meal numbers were below target in February with the ending of free meals to Lunchtime Supervisory Assistants as part of the implementation of Pay and Benefits but performance in the other businesses continues to be strong.

IT Services

1.15 IT Services trading position has improved significantly in the final quarter of the year. This is mainly due to slippage in a few key work programmes coupled with some late increases in trading income. The current outturn forecast is that IT Services will generate a trading deficit of £1,200,000 for the year, an improvement of £600,000 from the previously reported figure of £1,800,000.

1.16 Expenditure overall has reduced due to delays in planned recruitment of 15 vacancies across the department, a lower than expected volume of hardware replacement and delays to some key projects. Additional revenue has been generated through service growth including the extension of IT Services to Connexions and additional consultancy work for departments.

2 Policy and Resources capital programme

2.1 The Policy and Resources capital programme for 2007/08 amounts to £52.6m, as set out in Appendix 2. This includes the re-profiling of the New Deal for Schools capital repairs programme as agreed by the Executive Member in January 2008. It also includes a proposal to carry forward into 2008/09 £1.9m relating to capital repairs in schools that have been unavoidably delayed. A major programme of structural work in schools has been delayed and is not now expected to start until 2008/09 and approval is sought to carry forward £1.68m to meet this commitment in the new financial year subject to agreement of the Schools Forum. In addition to this, another programme of work has been delayed following issues with the contractor which will result in commitments of £258,000 being carried forward into 2008/09. Approval to carry this funding forward is also sought.

2.2 The capital repairs programme, including New Deal for Schools, totals £37.6m and is controlled on an expenditure basis. The balance of £15.0m, is controlled on a starts basis.

2.3 As at 29 February 2008, expenditure on capital repairs totalled £28.5m, and schemes to the value of £9.0m had started, representing an overall commitment of £37.5m.

3 Overall capital payments and sources of finance

3.1 As at 29 February 2008, capital expenditure for the County Council for 2007/08 is forecast to be a little below the estimate of £192.2m reported to Cabinet on 8 February 2008. The latest projection is £186.3m.

3.2 The target for capital receipts for 2007/08 reported to Cabinet on 9 February 2007 adjusted for slippage in 2006/07 is £64.5m. Actual capital receipts to 29 February 2008 amounted to £38m, but a number of completed disposals are subject to stage payments due in the remainder of 2007/08, which would increase capital receipts in respect of disposals to date to £47.5m.

4 Carry forward of 2007/08 capital schemes not started by 31 March 2008

4.1 The County Council's policy is to allow the carry forward of capital schemes not started by 31 March subject to the cost of the schemes carried forward being contained within the programme limit. Approval is sought for the carry forward of schemes on this basis. Details of the scheme carried forward will be reported to the Cabinet in June in the report on the 2007/08 final accounts.

5 Impact assessment

5.1 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