Archived decisions

Adjustments to service cash limits 2007/08


	Adults	Children's Schools	Children's other	Environment	Policy and Resources	Recreation and Heritage	Total
	£000	£000	£000	£000	£000	£000	£000
2007/08 cash limit ( as per Page A5 of Budget book)	272,957	739,855	141,960	109,004	55,960	32,315	1,352,051
Variations in business rates	-11	-	-20	-	-	-	-31
Transfers between capital and revenue matched by an adjustment to revenue contributions to capital	-	-231	-25	-	665	-265	144
Variations in expenditure matched by specific grant
Dedicated schools grant	-	-4,423	-	-	-	-	-4,423
Other grants	-3,790	-5,403	-3,855	-40	-146	7	-13,227
Winter maintenance of roads - excluded from cash limit	-	-	-	-3,030	-	-	-3,030
Allocation from contingency for Waste Management	-	-	-	1,818	-	-	1,818
Addition to school reserves from 2007/08 budget shares	-	-5,833	-	-	-	-	-5,833
Targeted underspending to be carried forward to 2008/09 to finance additional capital spending and increase the winter pressures contingency	-3,500	-	-	-	-	-	-3,500
Deficit on schools sickness and maternity leave buy-back scheme	-	269	-	-	-	-	269
Transfer between services	153	-	-	-	-153	-	-
Costs associated with part-time pension claims	-	-	-	-	27	-	27
Repairs and maintenance of buildings contingency not committed in 2007/08	-	-	-	-	-330	-	-330
Contributions to pooled budgets carried forward to 2008/09	-	-350	-	-	-	-	-350
Allocations from Pay and Benefits contingency for higher pay costs arising from new pay structure	2,276	-	505	167	527	309	3,784
Spending financed from PSA reward grant and pay and Benefits reserves deferred to 2008/09	-	-	-218	-962	-944	-	-2,124
Members devolved budgets and Futures group provision carried forward to 2008/09	-	-	-	-	-228	-	-228
Allocation from invest to save and Hillier Gardens reserves	-	-	-	-	141	-	141
Transfer to Hampshire Now and 2012 Olympics earmarked reserves	-	-	-	-	-110	-	-110
Adjusted cash limit	268,085	724,234	137,997	106,957	55,409	32,366	1,325,048

Adult Services

Revenue Expenditure 2007/08

Major variations in cash limited expenditure - underspending of £1,865,000.

Budget heading	Variation	Adjusted cash limit	Reason
	£'000	£'000

Service strategy and regulation	-49	502	Fewer complaints than in previous financial year.

Older people (aged 65 or over) including older mentally ill	-653	135,667	Reduced demand for direct payments and domiciliary care since the budget was set, and tight vacancy management pending the restructure, offset by an increase in high dependency, high cost residential packages.

Adults under 65 years with a physical or sensory impairment	449	26,271	Tight vacancy management pending the restructure more than offset by increased demand.

Adults under 65 years with a learning disability	-1,403	58,881	More clients classified as Continuing Health Care than expected and reductions in the cost of clients transferring from Children's Services. Overachievement of savings from review of high cost placements.

Adults under 65 years with mental health needs	67	13,415	Shortfall in income as a result of increase in Section 117 clients who cannot be charged client contributions.

Other adult services	-235	1,666	Assessment & care management vacancies for substance misuse and reduced expenditure on HIV purchased services, partially offset by increased demand for residential substance misuse care packages.

Children's Services

Revenue Expenditure 2007/08

Major variations in cash limited expenditure - underspending of £1,366,000

Budget heading	Variation	Adjusted cash limit	Reason
	£'000	£'000
Schools' Budget
School-specific Contingencies	-1,585	4,087	Estimates are based predominantly on previous years' actual allocations. £50,000 budgeted for emergency payments was not used. The payments to schools for mentoring Newly Qualified Teachers (NQT) were £140,000 lower than expected due to fewer NQTs in the second half of the year. Fewer qualifying cases than estimated meant that both Special unit retrospective number on roll payments (£26,000) and protected salaries (£21,000) were lower. Schools business rates were £400,000 lower than estimated but not known until the District Councils gave the final figures in March 2008. There was also a reduction of £275,000 in the amounts paid to schools to cover temporary classroom rents. A carry forward adjustment of £662,000 from 2006/07 was held as a contingency as agreed by Schools Forum and was not required to be spent.
Supply cover (not sickness)	187	669	Overspend on suspended staff £269,000 (increased complexity of cases), offset by underspends on union and public duties, and headteachers' conferences.
Education Inclusion Service	129	7,414	Increasing demand for the services, including: several special cases requiring 1:1 tuition; use of agency staff to cover vacant posts; investment in preventative work in schools in the Basingstoke and Deane area; and the impact of `day 6' legislation.
Provision for pupils with statements	-396	7,827	This budget relates to costs of additional support to SEN pupils with statements both within and outside Hampshire, net of income from other authorities' pupils in Hampshire schools. The underspend has mainly arisen due to charges for additional support provided to SEN pupils with Statements in mainstream schools outside Hampshire being lower then estimated for 2006/07 and 2007/08.
Independent and voluntary special schools	-404	8,281	This consists of an underspend of £510,000 on special schools placements, offset by an overspend against pre-schools placements for 3 and 4 year olds of £106,000. The average number of pupils placed in Out of County special school placements has reduced from 224 during 2006/07, to 221 during 2007/08.
Inter-authority recoupment	325	720	This includes recoupment for placements at special schools and SEN resourced provisions, as well as hospital recoupment (Leigh House). The overspend (£355,000) on special schools and units is the result of an increased number of Hampshire pupils in the schools of other authorities, and fewer pupils from other authorities in Hampshire schools. Also, the costs of 2006/07 placements were underestimated, these additional costs falling on the 2007/08 budget, and many other authorities have increased their charges beyond the 2.5% inflation provision. The underspend (£30,000) on hospital recoupment is due to fewer bills than expected.
Behaviour support implementation	-110	343	This underspend has mainly arisen due to a delay in appointing to vacant `Behaviour, Emotional and Social Development' (BESD) social worker posts. Recruitment to these vacancies is being expected to be achieved during early 2008/09.
New Early Years places specific grants	-279	24,548	Although the overall number of children was in line with expectations, the actual claims were lower as a result of actual Number of sessions delivered being less than planned, largely through parental choice e.g. as a result of child sickness, holidays.
Assistance to voluntary and private providers	-234	2,062	This underspend on Assistance to voluntary and private providers is from the Portage Service and the New Opportunities Fund (NOF). As the NOF programme was reducing and some grant had had to be repaid in respect of 2006/07 schemes that fell outside the grant criteria it was difficult to predict the year end position. In practice the reduction in the programme was handled at little cost. The Portage Service had vacancies late in the year and thus lower staffing costs at the year end. The final periods' travel costs were also less than estimated.
Teachers' Pay Reform payments	-223	18,787	There were less claims in 2007/08 than budgeted. However, teachers are entitled to make claims relating to the 2007/08 grant up to September 2008. These will be taken account of in 2008/09.
Other Minor Variations	6	652,080	The cash limit includes the individual schools' budgets (£587.377m), Schools Standards grant budget (£33.797m), Early Years and Child Care Unit budget (£17.787m), Standards Fund grant budgets (£3.556m), School Meals Grant budgets (£1.969m) and Ethnic Minority Achievement Grant budgets (£889k).
Carry Forward of Dedicated Schools grant	2,584	-2,584	DCSF require that DSG funds be applied in the year in which they are used. This sum is part of the total DSG to be carried forward of £6.442 million, The other major components of the carry forward consist of : £1.84m already agreed by Schools Forum for Children's Centres and other specific purposes in 2008/09; and £2.019m of capital expenditure from revenue which had not been spent by 31 March 2008. Apart from the £1.84m already agreed, Schools Forum will need to consider how the rest of the carry forward should be dealt with.
Sub Total Schools' Budget	0	724,234

LEA Budget
SEN Audit and moderation	-53	55	This budget is primarily to pay for the use of school staff in the process of developing and moderating SEN funding models. In 2007/08, most of this work was carried out by officers, hence negating the need for the use of this budget.
Premature retirement compensation	-304	2,871	This consists of £104,000 overspend on ongoing pension payments and a £408,000 underspend on the budget for redundancy payments and other costs associated with new cases. This underspend arose as a result of officers managing down costs by arranging staff re-deployments and with fewer early retirement cases.
Insurance	-24	188	There was a reduction in the amount of insurance recharged to Children's Services, based on claims history.
Security, dangerous substance, interest on schools balances, other	-260	-830	This is mainly the result of additional interest being received on schools' balances as a result of the balances increasing at year end 2006/07 -£222,000. There were also savings on health and safety costs -£4,000, and the Miscellaneous Other (mainly security) -£34,000.
Schools home to school transport	300	21,152	This consists of variations on: escorts -£92,000, contracts +£432,000 (price rises and additional children with SEN), season tickets -£25,000, and income -£15,000. This does not include the £21,000 underspend on home to college transport.
Pupil support	-98	393	Primary & Secondary -£50,000. Reduced demand for providing clothing grants to SEN pupils. Budget provision reduced in 2008/09 as a result of an expected continued underspend. Secondary Exceptions : Underspend of £48,000 resulting from low take up of uniform allowances (-£40,000) and no spend against the allocation for fees and expenses (-£7,000)
Field, outdoor centres, INTECH and grants	65	343	£40,000 of this overspend relates to lower recharges to Minstead and Stubbington Study Centres as a result of lower capital charges.
County matches, residential rents, music ensembles	37	220	Less income than budgeted in respect of housing for caretakers and teachers, as a result of lower occupancy levels.
Continuing education - other	239	537	This overspend relates to charging £274,000 back to the accounts in respect of assumed grant income that had been brought into a previous year's accounts in respect of higher education students. There are doubts as to whether or not this grant income will be achieved, and it was felt prudent not to assume that the income will be received. This charge was offset by an underspend on premature retirement compensation costs for higher education and further education establishments for which Hampshire is responsible.
Support Services	-345	27,205	This represents a range of different support services and management & support costs for Children's Services. The most significant reason for this underspend is due to the department maximising the amount of General Sure Start grant income which could be retained in 2007/08 through re-directing eligible expenditure which had previously been allocated against the departments base budget provision for Support Services.

Children's Social Care
Assessment and Care Management	-490	18,948	This underspend reflects the difficulties experienced by the Department to recruit to qualified social worker posts and administrative support across both the Children and Families and Performance and Resources branches. Work is on-going in this area to recruit new staff and to review the current structure and purpose of social care teams.
Children Looked After	125	32,911	This represents a continuing pressure against fostering services of £345,000, offset by an underspend against residential services of £152,000 (both in-house and purchased provision combined). The balance relates to an underspend of approximately £68,000 against supported lodgings placements for young people who remained looked after by the authority, but who were moving towards independence. Whilst the overall number of full-time `Children Looked After' has reduced over the 2007/08 financial year (from 1,034 as at March 2007 to 1,023 as at March 2008, a net decrease of 11), this change is mainly as a result of a large number of children who had been placed for adoption successfully having adoption orders made, which has not had a significant financial impact on the overall budget position. Over the year the actual number of children placed in residential care has also reduced, (partly as a result of the successful closure of two residential homes, but also reflects a reduction in more high-cost non-county placements from 57 as at March 2007 to 54 as at March 2008). However, the number of children placed with County Council foster carers has increased significantly, (from 536 as at March 2007 to 592 as at March 2008), demonstrating the department's increased ability to place and maintain more children looked after within a family environment. The number of children in purchased foster care has increased from 142 as at March 2007 to 143 as at March 2008. However, in recent months the numbers of purchased foster placements has reduced slightly as the Department has had some success in recruiting additional Foster Carers, which will be further developed during 2008/09 as a result of the fostering investment. For 2007/08 the average number of County Council and purchased foster placements was higher then budgeted for (average number of County Council foster care placements during 2007/08 was 549, compared with a budgeted number of 539, and for purchased foster care placements the average number was 146, compared with a budgeted number of 136). Overall the Department has been able to successfully re-direct funding from Children Looked After services towards more preventative type services to support children on the edge of care, and within more permanent placement arrangement such as special guardianship orders.
Family Support Services	-489	7,419	This budget relates to providing preventative services and support to children and their families in need and on the edge of care, as well as children with disabilities and their families. For 2007/08 the budget was increased to meet an anticipated increase in the level of support. This included support to Children with Disabilities such as the provision of Home Care packages. However, actual demand, and therefore final expenditure has not been as high during 2007/08 as originally anticipated. In addition spend on Family Support Services such as kinship care, residence order and special guardianship placements, as well as other preventative services have been less then originally anticipated.
Other Children and Families	394	5,720	This overspend is mainly due to the increased financial pressure on the Department as a result of the increasing numbers of Care Leavers since the previous financial year. In March 2007 the number of Care Leavers being supported by the department was 426, compared with 485 as at March 2008, a net increase of 59 young people. This trend was reported during the year and appropriate provision has been made in the 2008/09 budget
Asylum Seekers	-85	212	This underspend reflects a reduction in expected claims on unaccompanied asylum seeking children placed with the authority.
Other Minor Variations	-63	20,339
Contingency	-314	314	This budget was not allocated.
Sub Total Non-Schools Budget	-1,366	137,997

Total Children's Services Department	-1,366	862,231

Environment

Revenue Expenditure 2007/08

Major variations in cash limited expenditure - underspending of £23,000

Budget heading	Variation	Adjusted revised budget	Reason
	£'000	£'000
Highways and transportation
Highways maintenance - county roads and bridges	21	22,606	A number of minor variations including lower expenditure on traffic signals, street lighting energy and highways system management and development. Offset by reduced income from developers' contributions, together with provision for irrecoverable debts relating to highways damage by third parties.
Traffic surveys	-17	235	Lower expenditure on survey equipment together with higher income from sales of data.
Public transport support	-17	6,262	Mainly relates to lower expenditure on community transport publicity and new car share services.
Staffing and support costs	20	19,958	Lower savings from staff vacancies and other departmental efficiencies compared with savings assumptions built into the 2007/08 revised budget.
Waste management
Non-contract related services	-29	2,583	Lower expenditure on disposal of abandoned vehicles, partially offset by additional facility maintenance.

Policy and Resources

Revenue Expenditure 2007/08

Major variations in cash limited expenditure - underspending of £125,000

Budget heading	Variation	Adjusted cash limit	Reason
	£'000	£'000
County Treasurer's
Printing	-35	182	Delays in template work for Hart Payroll and P11D's
Income	-29	-180	Additional Audit days delivered for external customers
Pension Fund Administration	32	-1,749	Maintaining the charge per member to Pension fund at previous rate
Chief Executive's
County Council Elections	-57	58	No by-elections in 2007/08
Members expenses	-37	1,955	Reduced demand for training and development
Long Service Awards	-20	71	Fewer Long Service Awards made than anticipated
Hampshire Learning Centre	-24	907	Staff turnover savings
HR Department	21	5,207	One off charge for higher specification telephone line and office refurbishment to support service delivery plus an unexpected early retirement
Property, Business and Regulatory
Sites for Gypsies and Travellers	91	115	High site maintenance and electricity costs together with lower levels of income from rent of pitches
Corporate Estate	32	112	High security costs relating to buildings where no imminent prospect of disposal receipt
Trading Standards	-92	3,339	Planned staff turnover savings
Scientific Services	91	40	Late re-scheduling of work by external customers leading to lower income in 2007/08
Coroners	153	932	Continuing high levels of costs for use of mortuary facilities and other costs associated with investigations and inquests. Change in caseload mix resulted in lower contributions from SCC and PCC than in previous years
Property Services	-30	7,626	Net savings including reduction in the use of consultants and agency staff
Accredited Community Safety Officers	-34	1,669	Staff savings from turnover
Other budgets
Castle Restaurant	-23	71	Lower rates and energy costs due to building works in Ashburton Court
Miscellaneous expenses	-110	22	Clearing of unidentifiable income receipts
External Audit Fee	-36	382	Lower fee in relation to grant certification following changes in the Audit Commission's certification strategy
Subscriptions to LGA & other Gov bodies	-13	253	Rates of subscriptions were lower than expected

Recreation and Heritage

Revenue Expenditure 2007/08

Major variations in cash limited expenditure - overspending of £10,000

Budget heading	Variation	Adjusted cash limit	Reason
	£'000	£'000
Library and Information Service	78	17,867	The libraries restructure has achieved its objective of savings of £1m in a full year. The overspending arises from the residual one-off costs associated with the restructure, and the decline in Libraries income
Arts	-27	2,179	The Arts Centres have exceeded financial performance targets in 2007/08.
Policy Development Initiatives	-25	492	Several projects planned initially for 2007/08 were re-scheduled due to operational reasons. This resulted in an underspend on the Policy Fund.

High Risk/Demand Led and Employee Budgets

1 High risk/demand led budgets

1.1 The action taken during the first three quarters to bring projected spending on high risk/demand let budgets into line with the budget continued in the final quarter and actual spending at the year end was £1.1m below budget, as compared with a projected overspending of £1.4m at the end of the third quarter. Activity and spending trends are summarised graphically in Annex1.

2 Employee budgets

2.1 Overall spending on employee budgets was £0.6m (0.2%) below the budget, a smaller underspending than the £2.7m (0.9%) projected at the end of the third quarter. Average full time equivalent (fte) number (excluding schools and business units) were 8,958 ftes in the final quarter, compared with an average of 8,936 ftes for the first three quarters. Annex 2 summarises the changes in overall employee numbers since April 2007 and the variations at departmental level between actual and budgeted staff numbers and between employee budgets and actual spending on employees in 2007/08.

1 Expenditure outside service cash limits

1.1 The table below provides a detailed schedule of the variations on budgets outside service cash limits, which is summarised in Table 3 of the report.

Table 1

	Revised Budget	Actual	Variation
	£000	£000	£000
Contingency provisions:
Waste Management Contract	811	-	-811
Council tax second homes income	120	-	-120
Pay and benefits	5,716	-	-5,716
Rowner regeneration project	1,500	-	-1,500
Contribution to Job Evaluation reserve	-	5,716	5,716
Contribution to Rowner regeneration reserve	-	1,500	1,500
Contribution from second homes income reserve	-	-270	-270
Business rate savings	31	-	-31
Contribution to invest to save reserve	-	31	31
Capital financing charges	48,724	48,823	99
Interest on balances	-13,176	-18,281	-5,105
Revenue contributions to capital	27,720	15,837	-11,883
Contribution to capital reserve	-	11,883	11,883
Insurance provision	-	-3,624	-3,624
Contribution to insurance reserve	-	2,491	2,491
Highways winter maintenance	3,030	2,388	-642
Flood protection levies	512	512	-
Doubtful debt provision	-	607	607
Landfill allowance scheme	-1,123	-1,123	-
Contribution to LATs reserve	1,123	1,123	-
VAT exceptional item	-	-168	-168
Mandatory awards	-	2	2
Specific grants	-819,228	-818,228	1,000
	-744,240	-750,781	-6,541

Waste Management contract (-£811,000)

1.2 The revised budget included a waste management contract contingency of £2.6m, the remaining balance of the original contingency sum of £4m after allowing for allocations to cover increased costs in the first two quarters. The potential for an underspending had been identified in the November Cabinet budget monitoring report, as a result of a favourable outcome to the arrangements for implementing producer responsibility for the recycling of electrical goods and a lower increase in waste volumes than predicted. After allowing for further allocations of £1.8m to cover cost increases in Quarter 3 and 4 a saving of £811,000 against the contingency sum has been achieved.

Council tax second homes income (£120,000 and a contribution of £270,000 from the second homes income reserve)

1.3 A contingency sum of £120,000 from council tax second homes income had been left unallocated in the budget in view of the possibility that further support for the Key Worker Homebuy Scheme which it had been proposed to introduce in the New Forest, Test Valley and East Hampshire areas funded from 2004/05 second homes income, might be required. It is now proposed not to proceed with the launch of the Homebuy Scheme and therefore the £120,000 is not required for this purpose or a sum of £270,000 earmarked in 2006/07.

Pay and benefits (-£5,716,000 with an equivalent contribution to the Job evaluation reserve)

1.4 A sum of £9.5m was included in the contingency to cover the additional pay costs in 2007/08 arising from the implementation of the new pay structure in February 2008, backdated to April 2007. As a result of the transitional arrangements agreed to phase in the initial increases in pay during the period of pay protection, the allocations to services in 2007/08 were limited to £3.8m. It is proposed to transfer the balance of the contingency to the job evaluation reserve to cover the cost of potential equal pay claims, associated legal costs and backdated appeal costs.

Rowner Regeneration Scheme (-£1,500,000 with an equivalent contribution to an earmarked reserve)

1.5 A sum of £1.5m was earmarked from savings on the closure of 2006/07's accounts as a contribution towards a major regeneration scheme at Rowner which has yet to be committed. It is proposed to carry forward this sum in an earmarked reserve.

Business rates (-£31,000)

1.6 Provision is made centrally for increases in business rates for properties other than schools in view of the uncertainties associated with transitional arrangements arising from revaluations and the impact of appeals against revaluations. Savings of £31,000 have been achieved in the final accounts, which it is proposed should be earmarked in the invest to save and modernisation reserve to provide continued funding for the rating team in Property Services.

Capital financing charges (£99,000)

1.7 The increase of £99,000 against the revised budget is summarised in Table 2 below:

Table 2

	Revised Budget	Actual	Variation
	£000	£000	£000
Loan repayments
Principal	21,404	21,540	136
Interest	28,873	28,844	-29
Depreciation charged to trading accounts	-1,814	1,784	30
Cost of sales	43	43	-
Earmarking of trading account capital charges	218	180	-38
	48,724	48,823	99

1.8 Short-term interest rates in the latter part of the year were very close to the budgeted assumptions, and the average rate payable for the year was 5.55%, compared with 5.56% assumed in the revised budget. This represents an increase on the equivalent average rate of 5.30% in 2006/07, as a result of higher short-term interest rates in 2007/08.

Interest on revenue balances (-£5,105,000)

1.9 Interest on revenue balances is difficult to forecast accurately as relatively small changes associated with large cash flows can have a significant impact on the internal resources available to earn interest from day to day. More favourable revenue and capital cash flows than budgeted have resulted in interest receipts being £5.1m more than forecast in the revised budget.

Revenue contributions to capital (-£11,883,000, matched by an equivalent contribution to the general capital reserve)

1.10 The revised capital financing plan for 2007/08 fully utilised budgeted revenue contributions to capital in 2007/08 and assumed a very small contribution of £18,000 to the capital reserve.

1.11 Capital expenditure was £12.0m lower than forecast, but though there were some variations in the availability of Governing approvals capital grants, external contributions and capital receipts these were largely self-balancing. The requirement for local resources from revenue contributions to capital to finance capital expenditure in 2007/08 was therefore £11.9m lower than forecast. A contribution of £11.9m to the capital reserve is proposed to assist in financing the higher capital expenditure in 2008/09 and later years, resulting from the slippage in the capital programme.

Insurance provision (-£3,624,000 matched by contribution of £2,491,000 to the insurance reserve)

1.12 The assessed value of outstanding liability claims was almost exactly unchanged at 31 March 2007 compared with the previous year, while claims paid in the year were £1.1m lower than the premiums paid by services. Fire reinstatement costs met in 2007/08 were £2.5m lower than premiums. There was therefore a saving of £3.6m in the insurance provision required, as set out in Table 3 below:

Table 3

	Buildings	Liabilities	Total
	£000	£000	£000
Provision at 1 April 2007	-	4,285	4,285
Premiums for 2006/07	4,132	3,328	7,460
Payments charged to provision	-1,641	-2,243	-3,884
Outstanding provision at 31 March 2007	2,491	5,320	7,861
Outstanding liabilities of 31 March 2007	-	4,237	-4,237
Variation in provision required	-2,491	-1,133	-3,624

1.13 Through in accounting terms there are no liabilities for which a provision is required in the accounts in respect of damage to the County Council's own buildings, volatility in the incidence of fire and other reinstatement from year to year support the maintenance of an insurance reserve. As 98% of the premiums in respect of premises insurance are paid by schools, any underspending which is not considered necessary to transfer to the reserve, should be returned to schools in the form of lower premiums. It is proposed to transfer the underspending of £2.5m on premises insurance to the insurance reserve.

Winter maintenance (-£642,000)

1.14 The County Council's policy is to budget for winter maintenance on the basis of average spending at current prices in the previous four years, with any under/overspending at the year end being dealt with outside service cash limits. The winter was relatively mild in 2006/07 resulting in an underspending of £215,000, but an even milder winter in 2007/08 has produced a saving of £642,000.

Doubtful debt provision (-£607,000)

1.15 The County Council's policy is to make a provision against a proportion of debts, proving to be irrecoverable, partly assessed on the age profile of outstanding debts and partly on an assessment of the risk of specific debts not being recovered. An increase in the provision of £607,000 is proposed in 2007/08 to £2.28m, following a reduction of £410,000 in 2006/07. Table 4 below summarises the data relating to the collection of debt in 2007/08.

Table 4 - Analysis of outstanding debt


	Quarter ending
	30/6/07	30/9/07	31/12/07	31/3/08
	£'000	£'000	£'000	£'000
Debt outstanding at the beginning of the quarter	34,628	39,247	21,838	20,230
Debt raised	49,094	28,493	32,061	43,840
Debt settled	-44,432	-45,869	-33,621	-35,631
Debt written-off as irrecoverable	-43	-33	-48	-222
Debt outstanding at the end of the quarter	39,247	21,838	20,230	28,217
Debt outstanding for more than 12 months	4,258	4,308	4,503	4,917

1.16 Irrecoverable debts written-off during the year were equivalent to 0.2% of debt settled during the year, the same level as in 2006/07. The average value of debt outstanding more than 12 months old (including secured debt relating to care charges) was 16.4% of debt outstanding during the year, compared with 17.1% in 2006/07.

Landfill allowance trading scheme (LATs) (equal to the revised budget)

1.17 The landfill allowance trading scheme was introduced in 2005/06 as a means of seeking to achieve the UK's targets for reducing the landfill of biodegradable waste under the EU landfill directive. Allowances are allocated to Waste Disposal authorities at a reducing level each year consistent with the targets, in proportion to 2001/02 landfill levels, each allowance enabling one tonne of waste to be landfilled. Authorities with insufficient allowances to meet their landfill needs can purchase them from authorities with surplus allowances, but otherwise are liable to pay a fine of £150 per tonne to the Government.

1.18 Because of the early investment in waste disposal and recycling infrastructure through Project Integra, Hampshire (together with Portsmouth and Southampton) are in a relatively strong trading position with substantial surplus allowances available over the first four year trading period which ends in 2008/09. The Cabinet in June 2005 agreed a trading strategy for LATs, involving the ring-fencing of any income received from LATs trading in an earmarked reserve to be used to reduce cost pressures from the existing waste management contract and to provide scope for further investment in waste infrastructure, subject to approval of business cases, to avoid future costs.

1.19 During 2007/08 allowances were sold on behalf of the three authorities at an average price of £24, generating income of £1.5m, of which £1.1m is retained by the County Council, in accordance with the revised budget. The level of sales income has fallen compared with 2005/06 and 2006/07 as it has become clear that most authorities will have sufficient allowances available in the initial trading period.

VAT exceptional item (-£168,000)

1.20 The County Council recovered VAT of £439,000 on library CDs/DVDs/electronic games in 2004/05. HMRC were operating on the basis that claims could not be backdated by more than 3 years, but a recent court ruling has challenged the legitimacy of the three year limit, and allowed the County Council to submit a claim covering the period up to 1996, worth £168k. There remains the possibility that it will be possible to extend the period of the claim to cover the remaining period from 1996 to 2001.

Mandatory awards (£2,000)

1.21 Responsibility for paying all awards to students has transferred to the Student Loan Company, but some minor residual costs were incurred in 2007/08.

Specific grants (-£1,000,000)

1.22 The revised budget assumed an allocation in 2007/08 of £1m from the Local Authorities Business Growth Incentive scheme (LABGI). The basis of allocating a share of business rates to local authorities has been challenged by local authorities in both 2005/06 and 2006/07 requiring allocations to be recalculated and in the final year of the scheme, the Government had delayed a decision on the allocation expected in 2007/08 until 2008/09. The provisional announcement made in April indicates that the County Council may receive a contribution of £1.4m in 2008/09.

Earmarked reserves at 31 March 2008

	(1)	(2)	(3)	(4)	(5)	(6)
	Balance 1 April 2007	Income / (Expenditure) during 2007/08	Appropriations (to) / from Revenue 2007/08	Appropriations (to) / from Capital 2007/08	Net contributions to / (from) reserves in 2007/08 (Col 2 to Col 4)	Balance at 31 March 2008
	£'000	£'000	£'000	£'000	£'000	£'000
Schools General Reserve (Note 1)	40,982	-	5,833	-	5,833	46,815
Less temporary use for capital funding	-3,848	-	480	-	480	-3,368
	37,134	-	6,313	-	6,313	43,447
General Capital Reserve	1,432	-	11,901	-	11,901	13,333
Trading accounts
1. Former DSOs	1,170	205	72	-152	125	1,295
2. Supplies	1,079	174	44	-39	179	1,258
3. Printing	389	61	64	-	125	514
4. IT Services	-	-465	-	-	-465	-465
5. Caretaking & Cleaning	123	26	-	-	26	149
6. Services to Schools	1,709	1,543	-	-	1,543	3,252
7. Children's Centres	905	249	-	-33	216	1,121
8. Arts Marketing	7	4	-	-	4	11
9. Hampshire Wardrobe	9	5	-	-	5	14
10. River Hamble	378	76	-	-	76	454
Designated underspendings (Note 2)	6,388	-	4,773	-	4,773	11,161
Other
1. Insurance	6,015	-	2,491	-784	1,707	7,722
2. Segensworth units	224	23	-	-	23	247
3. Historic publications	44	-6	-	-	-6	38
4. Invest to save and modernisation (Note 3)	261	-	404	-	404	665
5. Job-evaluation transitional costs	18,490	-	17,936	-	17,936	36,426
6. Grant equalisation	24,950	-	1,200	-	1,200	26,150
7. PSA reward grant (Note 4)	6,065	-	-2,718	-	-2,718	3,347
9. LATs income	2,835	-	1,123	-	1,123	3,958
	109,607	1,895	43,603	-1,008	44,490	154,097

Notes to summary of earmarked reserves at 31 March 2008

1 Schools general reserve

In aggregate schools incurred expenditure of £5,833,000 less than their delegated budgets increasing the reserve to £46,815,000 at the end of the year. The table below summarises the position over categories of school.


	Variation in the year	Balance at 31 March 2008
	£'000	£'000	% of budget
Nursery	148	556	39.2
Primary	1,092	22,225	7.0
Secondary	3,347	19,670	6.6
Special	1,246	4,364	13.9
	5,833	46,815	7.2

The average level of school reserves has risen as a proportion of budget from 6.8% to 7.2% during 2007/08. £3,368,000 of school reserves have been used temporarily to finance Education capital expenditure, through the School balances loan scheme.

2 3 Designated underspendings

The table below summarises the movements in the reserve balances during 2007/08.


		Variations arising from
	Balance 1 April 2007	2007/08 Budget	2006/07 Final accounts	2007/08 Revised budget	2007/08 Final accounts	Balance 31 March 2008
	£'000	£'000	£'000	£'000	£'000	£'000
Adults Services	2,000	-	-2,000	4,320	933	5,253
Children's Services	-	-	-	-	683	683
Environment	755	-740	-15	980	12	992
Policy & Resources	125	-38	-87	630	63	693
Matched Standards Fund contribution	1,807	-	-1,807	-	-	-
Sickness / Maternity leave buy back	-641	-	641	-	-269	-269
School meals buy back	269	-	-	-	182	451
Hillier Gardens development fund	170	-	-	-	-64	106
Pay and Benefits	64	-60	-	-4	-	-
Second homes income	1,226	-20	-	-	-270	936
Change for children	139	54	-	-	-	193
Children's Trust (CAMHS)	324	-	-324	-	350	350
Part-time pensions	150	-	-	-27	-	123
Rowner Regeneration Scheme	-	-	-	-	1,500	1,500
Hampshire Now	-	-	-	-	100	100
Commons Management	-	-	-	-	40	40
2012 Olympics	-	-	-	-	10	10
Total	6,388	-804	-3,592	5,899	3,270	11,161

4 Invest to Save and modernisation

The table below summarises the movements in the reserve balance during 2007/08:

	£'000
Balance at 1 April 2007	261
Budgeted contributions in 2007/08	700
Financing of additional staff to support generation of capital receipts and business rate appeals	-265
Repayment in respect of capital receipt generation	190
Business rate savings in 2007/08	31
Contributions from the reserve
Library restructuring	-175
Central support services review	-77
Balance at 31 March 2008	665

5 PSA reward grant

The table below summarises the movements in the reserve balance during 2007/08:

	Children's Services	Environment	Policy and Resources	Total
	£000	£000	£000	£000
Balance at 31 March 2007	1,376	2,044	2,645	6,065
Use of the reserve to support:
Local Area agreement	-	-	-606	-606
Home to School Transport pilot	-	-	-292	-292
Other Services	-1,158	-662	-	-1,820
Balance at 31 March 2008	218	1,382	1,747	3,347

Protocol for earmarked reserves

Reserve	Purpose	Use of reserve	Management and control	Review Process
Schools	Earmarking of the balance of unspent delegated budgets.	1 To supplement school budget shares, to finance capital contributions and to provide a contingency.	Responsibility of Head teacher and School governing body.	In addition to review by individual governing body, trends reviewed annually by Children's Services Executive Member.
		2 Up to 25% of total reserve made available on a loan basis to finance school capital projects of an `invest to save' nature. Advances of £5.0m made in 2004/05 and 2005/06 under this scheme mainly to fund rationalisation projects in advance of the realisation of capital receipts with a repayment of £1.1m in 2006/07, and £0.5m in 2007/08.	Proposals subject to approval of the capital programme, involving executive member, Cabinet and County Council approval.	Use of loan scheme subject to appraisal of projects and to 25% upper limit.
General capital	To assist in matching the timing of the availability of capital financing resources with the timing of capital payments.	To finance locally - resourced capital expenditure.	By County Treasurer in conjunction with decisions on the financing of the capital programme.	Reviewed at least twice yearly on closure of the accounts and in approving a new capital programme. Contribution of £11.9m in 2007/08 due to slippage in capital payments.
Trading accounts	To enable business units to carry forward planned surpluses.	To meet future deficits and/or restructuring costs, to fund capital investment or to return surpluses to customers by reducing prices.	By responsible Chief Officer subject to Executive Member approval, where appropriate.	Through production of an annual business plan linked to the budget process.
Designated underspendings	To enable individual services to carry forward 100% of planned underspendings and at least 50% of unplanned underspendings	To fund non-recurring expenditure in future years or to phase-in the requirement for additional funding or to achieve savings	By service Chief Officer reporting to the Executive Member. Cabinet responsible for approval of cases where more than 50% of a saving is earmarked	Reviewed annually during budget cycle
Insurance	To cover fire, flood and storm damage reinstatement costs which are already committed and to reserve against adverse trends in liability claims.	To supplement annual `premiums' charged to services.	Chief Executive and County Treasurer subject to Cabinet approval.	At least annually on closure of the accounts. A contribution of £2.5m to the reserve is proposed in 2007/08, arising from lower than anticipated fire reinstatement costs.
Invest to save and modernisation	To provide funding for investment which will generate future cash savings which can be recycled back into the reserve.	For approved investment purposes subject to Cabinet or Policy and Resources Executive Member approval.	County Treasurer subject to Cabinet approval.	Reviewed annually in conjunction with proposals in the budget meeting invest to save criteria. Currently being used to support initiatives to secure additional capital receipts, business rate revaluations, library restructuring and central support services review.
Job evaluation transitional costs	To assist in meeting transitional salary protection and equal pay claim costs likely to arise from implementation of the Pay and Benefit Review.	To supplement employee budgets in transitional period following implementation and to finance non-recurring implementation costs.	County Treasurer subject to Cabinet approval.	Further contribution of £12.2m agreed in the 2007/08 revised budget from savings in 2006/07's outturn and 2007/08's revised budget. Further contribution of £5.7m from contingency provision not required to meet higher pay costs in 2007/08.
Grant equalisation	To assist in managing the impact of future grant loss initially from the 2003/04 Revenue Support grant formula review and subsequently from the 2006/07 review.	To compensate for service and/or council tax impact of grant loss.	County Treasurer subject to Cabinet approval.	Further contribution of £1.2m in 2007/08 increasing the balance to £26.1m at 31 March 2008. Use of the reserve to compensate for below average increases in grant proposed over 6 years in 2008/09 budget.
PSA reward grant	Established on closure of 2005/06 accounts to earmark the reward grant earned from the first Local PSA for future use.	To be used in accordance with the policy agreed by the Cabinet in July 2005.	Subject to relevant executive member approval.	Policy agreed for the use of the reserve by Cabinet in July 2006, allocating £3.7m for use by Children's Services and Environment for purposes agreed by Cabinet in October/November 2006.
LATS income	Established on closure of the 2005/06 accounts to earmark income from the sale of LATs for future use.	To be used in accordance with the policy agreed by the Cabinet in June 2005 to reduce cost pressures from the existing Waste contract and for further investment in Waste infrastructure.	County Treasurer and Director of Environment, subject to the approval of the Cabinet.	At least annually in conjunction with the budget and capital programme process. Sales income of £1.1m received in 2007/08 transferred to the reserve.
Segensworth unit factories	To enable annual tenant contributions towards repairs to be earmarked for periodic major repair liabilities to infrastructure	To fund maintenance of specific infrastructure which is the responsibility of the County Council as freeholder	Director of Property, Business and Regulatory Services subject to terms of relevant agreement	Reserve is ring-fenced
Other minor reserves	Sums set aside for specific future purposes	To fund spending on specified purpose	Various	Reviewed at least annually on closure of the accounts

Treasury Management Activities, Prudential and Financial Health Indicators 2007/08

1 Summary

1.1 This Appendix:

· contains an annual report on the exercise of Treasury Management functions in accordance with the County Council's Treasury Management Policy Statement

· recommends an annual statement for 2007/08 and 2008/09 on the County Council's policy for making Minimum Revenue Provision for the repayment of debt, as required by the Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008, for submission to the County Council

· sets out the County Council's prudential indicators for the year in accordance with the relevant Code of Practice, together with a number of other financial health indicators.

2 Capital expenditure and capital financing requirement in 2007/08

2.1 The capital financing requirement represents capital expenditure other than that met directly from capital receipts, the revenue budget, capital grants or contributions. This can be financed from external borrowing or by borrowing from internal balances. The variation from year to year in the capital financing requirement represents the impact of new capital expenditure financed by borrowing offset by the provision made in the revenue budget and the use of capital receipts to repay debt. The actual capital financing requirements at 31 March 2007 and 2008 and estimates for 31 March 2009, 2010, and 2011 are set out in the table below.

Table 1: Capital financing requirement

At 31 March	2007 £m	2008 £m	2009 £m	2010 £m	2011 £m
Supported borrowing:
County Council	478.9	488.5	507.2	527.8	547.0
Other bodies	44.7	42.6	40.7	38.9	37.1
	523.6	531.1	547.9	566.7	584.1
Unsupported borrowing	50.6	55.2	68.0	55.3	56.6

Total	574.2	586.3	615.9	622.0	640.7

Estimates approved in February	574.2	587.5	615.9	622.0	640.7

The capital financing requirement at 31 March 2008 of £586.3m is marginally below the revised estimate approved in February of £587.5m because of slippage in the schemes to be financed from borrowing. As that borrowing is expected to be taken up in 2008/09, the estimates for later years are unchanged from those approved in February 2008. The unsupported borrowing included in the capital financing requirement relates to the following projects:

Table 2: Prudential borrowing

At 31 March	2007 Actual £m	2008 Estimate £m	2008 Actual £m	2009 Estimate £m	2010 Estimate £m	2011 Estimate £m
Local Government Reorganisation	0.3	0.0	0.0	0.0	0.0	0.0
Nursing Care	18.5	17.7	17.7	17.0	16.4	15.7
Calshot	0.1	0.1	0.1	0.1	0.1	0.1
IT Services	0.0	1.7	1.2	2.2	2.1	2.1
Ashburton Court	8.8	12.2	14.0	21.6	6.3	6.0
Winchester Discovery Centre	1.2	0.0	2.9	0.0	0.0	0.0
Recreation Advance	0.0	0.1	0.1	0.1	0.1	0.0
Hantsdirect	2.2	5.5	5.1	4.6	3.4	2.3
Swanwick Lodge	0.1	0.8	0.7	0.0	0.0	0.0
Highways Structural Maintenance	0.0	0.0	0.0	4.0	6.9	6.6
Andover Children's Centre	0.0	0.0	0.0	0.4	1.2	0.0
Basingstoke Discovery Centre	0.0	0.0	0.0	0.5	3.0	3.0

Total School Restructuring	18.7	12.3	11.8	15.8	4.2	1.2

Total Developer Funding	0.7	0.7	1.6	1.7	6.8	14.4

Temporary Borrowing	0.0	0.0	0.0	0.0	4.8	5.2

Total	50.6	51.1	55.2	68.0	55.3	56.6

2.2 The explanation of the increase in the capital financing requirement is as follows in Table 3 below:

Table 3: Increase in capital financing requirement

	£m
New capital expenditure financed by loan. Total capital payments in 2007/08 amounted to £177.1m, of which £126.5m was financed from Government grant, revenue contributions, reserves, usable capital receipts and external contributions, leaving £50.6m to be financed from loan.	50.6
The sums set aside in the revenue budget for the normal repayment of debt.	-21.5
Repayments of unsupported borrowing from capital receipts	-14.9
Increase in net capital financing requirement	14.2
Reduction in transferred debt	-2.1
Increase in capital financing requirement	12.1

2.3 The capital expenditure prudential indicators are set out in Table 4 below, which shows the actual capital expenditure incurred in 2006/07 and 2007/08, and estimated capital expenditure in the years to March 2011:

Table 4: Capital expenditure

2006/07 Actual £m	2007/08 Estimate £m	2007/08 Actual £m	2008/09 Estimate £m	2009/10 Estimate £m	2010/11 Estimate £m
173.2	189.0	177.1	197.3	172.5	159.9

2.4 The actual capital expenditure in 2007/08 of £177.1m is £11.9m lower than the adjusted revised estimate of £189.0m. The estimated capital expenditure for 2008/09 and beyond will be subject to revision during the year, to reflect the slippage of payments from 2007/08.

3 External borrowing requirement in 2007/08

3.1 Changes in the availability of internal resources have resulted in a decrease in the net external borrowing requirement by £76.9m, as set out in Table 5:

Table 5: net external borrowing requirement

	£m	£m
Net increase in capital financing requirement		12.1
Increase in earmarked reserves and provisions	-44.5
Increase in revenue account balance	-6.6
Increase in other internal resources	-37.9.3
		-89.0
Decrease in net external borrowing		-76.9

3.2 Table 6 below summarises the relationship between movements in the capital financing requirement and net external borrowing requirement and provides an analysis of the composition of external borrowing and of the internal resources which reduce the requirement to borrow.

Table 6: Net capital financing requirement


	Capital financing requirement
	1.4.07		31.3.08
	£m	£m	£m	£m
Long-term borrowing
- Public Works Loan Board	233.0		250.8
- Lender's option/borrower's option (LOBOs)	64.0	297.0	74.0	324.8

Temporary loans
- Pension Fund	60.6		50.5
- Police Authority	8.2		0.0
- Other	16.6		13.8
- Cash overdrawn	11.1	96.5	17.4	81.7
		393.5		406.5
Temporary investments		-71.7		-161.6

Net external borrowing		321.8		244.9

Internal resources
- Earmarked reserves and provisions	114.1		158.6
- Revenue account balance	16.7		23.3
- All other internal resources	121.6	252.4	159.5	341.4
Capital financing requirement		574.2		586.3
Less
Advances for transferred Services		44.7		42.6
Net capital financing requirement		529.5		543.7

Actual external debt

3.3 Actual external debt at 31 March 2008 was £406.5m. Total external borrowing increased by £13.0m during 2007/08. However, this was accompanied by an increase of £89.9m in the level of temporary investments. The reasons for the decrease in net external borrowing of £76.9m over the year are set out in paragraph 3.1 to this report.

4 External borrowing

4.1 At its meeting in February 2007 the County Council set authorised and operational prudential limits on total external debt of £590m and £480m respectively. External borrowing stayed within these limits throughout the year, reaching a maximum level of £455m in January 2008.

Long-term borrowing

4.2 The Cabinet approved a treasury management strategy for 2007/08 in February 2007. At that time, inflationary pressures in the UK economy had been mounting. Following an unchanged base rate of 4.5% since August 2005, there were subsequently three 0.25% increases in August and November 2006 and January 2007, leaving the base rate standing at 5.25%. Whilst some commentators had been suggesting that base rates had reached their peak, 12-month money market rates had been factoring in further rate rises to 5.75%. The latter view turned out to be correct. There were two further 0.25% base rate rises in May and July 2007 as fears about overheating in the UK economy increased.

4.3 However, the global credit crunch dramatically reversed the prospect of any further base rate rises and the Bank of England followed the US Federal Reserve's lead by cutting the base rate to its current level of 5.0% amid fears of a global recession.

4.4 Long-term rates had been on a very slow upward trend in the year to February 2007, particularly for loans over short maturities, and the Public Works Loan Board (PWLB) rates stood then at 5% for the shorter maturities, but still relatively low at 4.5% for loans maturing between 25-30 years. Rates on 30-year PWLB loans stood at 4.5% at 31 March 2008.

4.5 The Cabinet agreed the following strategy in February 2007:

· long-term and short-term rates to be closely monitored

· long-term fixed-rate borrowing to be considered if long-term rates stand at 4.5% or below

· long-term fixed-rate borrowing to be considered at rates higher than this if clear signs of a rising trend in rates occur.

4.6 The Cabinet agreed guideline target figures for long-term borrowing in 2007/08 to 2009/10 of up to £16m per annum, alongside a longer-term target for LOBOs of a further £27m by March 2010, which gave an annual target for LOBOs of £9m. These guideline figures could be exceeded if circumstances were considered appropriate. The amount of new fixed-rate PWLB borrowing taken in 2007/08 was £33m, of which £10m relates to a planned debt restructuring exercise and £5m was a medium-term loan, so that new long-term loans of £18m were taken out. The new loans taken are listed below:

Table 7: New PWLB loans in 2007/08

		£m
PWLB
19 July	£2m for 30.1 years at 5.0%	2
25 July	£2m for 30.2 years at 4.8%	2
31 July	£2m for 28.2 years at 4.85%	2
31 July	£2m for 30.3 years at 4.75%	2
2 August	£2m for 30.8 years at 4.7%	2
22 August	£2m for 28.1 years at 4.75%	2
13 September	£2m for 31.9 years at 4.6%	2
13 September	£2m for 28.0 years at 4.65%	2
11 October	£2m for 28.5 years at 4.75%	2
12 October	£2m for 29.5 years at 4.7%	2
22 November	£2m for 34.9 years at 4.51%	2
27 November	£2m for 33.8 years at 4.48%	2
4 January	£2m for 34.1 years at 4.43%	2
9 January	£2m for 34.7 years at 4.39%	2
20 March	£5m for 3.0 years at 3.89%	5
		33

4.7 The average rate payable on the long-term fixed-rate portfolio fell during the year from 5.8% to 5.5% due to the debt restructuring exercise and new loans taken out at rates below the portfolio's average rate. The current PWLB rate for over 25-30 years is 5.0%.

Debt restructuring

4.8 The Cabinet approved the debt restructuring strategy in February 2007 and gave the County Treasurer delegated authority to repay PWLB loans held at high coupon rates prematurely, replace with longer term loans at lower rates, and amortise the early termination penalties over the outstanding periods of those replacement loans. At that time, calculations by the County Treasurer on a selection of eight PWLB loans taken at relatively high interest rates in the 1980s showed that, if they were replaced by loans with later maturity dates, savings in the budget requirement in excess of £800,000 per year could be generated over the short term.

4.9 As part of a measured approach towards implementing this strategy, in Autumn 2008 the Council prematurely repaid a £10m PWLB loan at 9.875% which was originally due for repayment in 2018, incurring a premium of £3.9m replacement loans of £10m in total were taken out at an average interest rate of 4.74% maturing between 2035 and 2037. This was done in order to achieve savings of an estimated £159,000 in the annual budget requirement for Council Tax setting purposes to 2018, based on prevailing interest rates at the time.

4.10 However, the PWLB introduced a separate set of rates applicable to early repayments from 1 November 2007. Hitherto, the same set of rates had applied to loan advances and to calculating the premium or discount due on an early repayment. The rates used to calculate the premium/discount due on the early repayment of a loan are now lower than those applying to advances. This has had the effect of increasing the premiums payable in respect of the early repayment of loans.

4.11 Nevertheless, the County Treasurer will continue to implement the approved debt restructuring strategy where there would seem to be financial advantage in doing so, whilst paying due regard to the need to maintain the Council's ability to continue to take full advantage of falling interest rates by avoiding a heavily skewed maturity profile.

Lender's option/borrower's option loans

4.12 Over recent years, the commercial money market has endeavoured to offer loan products to local authorities which are competitive with those available from the PWLB. Since June 2002, lender's option/borrower's option loans (LOBOs) have been of particular interest as an alternative form of borrowing in order to generate short-term savings in interest borrowing costs.

4.13 A standard LOBO means taking out a long-term loan for an initial primary period (normally between one and three years) at a preferential fixed interest rate, followed by a higher rate for the remaining period of the loan. `Single-rate only' LOBOs are also available, where the rate over the primary period is the same as that for the remaining period. In both instances, the lender can choose to increase the rate at the end of the primary period and every six months or annually thereafter. If the lender increases the rate, the Council as a borrower can choose to repay the loan.

4.14 LOBO loans can generate short-term savings in borrowing costs over the initial primary periods. However, such loans will track any upward movement in long-term interest rates and may therefore equate to higher future long-term borrowing costs. Unlike long-term fixed rate PWLB loans, LOBOs cannot provide guaranteed long-term interest rate stability. Whilst the Council has a choice over repaying the LOBO loan when the lender opts to increase the relevant interest rate, it will ultimately need to re-finance this by taking out a replacement loan at prevailing borrowing rates.

4.15 In 2006/07, it was agreed to set a 15% limit on the proportion of the Council's capital financing requirement to be financed from LOBOs. This provided headroom for a longer-term target for LOBOs of £27m to be taken by March 2010, which gave an annual target for LOBOs of £9m in 2007/08 based on the forecast of the Council's capital financing requirement at that time.

4.16 For information, the Council currently has a total of £73m LOBOs at interest rates ranging between 3.5% and 5.0% and an average overall rate of 4.41%. Of this total, £21m has been taken out since April 2007 at fixed initial rates ranging between 3.89% and 4.77%, averaging 4.30%. Given that £12m LOBO loans were repaid during 2007/08, the total of new LOBOs taken out, net of repayments, of £9m was in line with the original annual target guideline figure for 2007/08.

4.17 The new loans taken out and the ones repaid in 2007/08 are listed below:

Table 8: LOBO's taken out and repaid in 2007/08

Date	Term	Interest rate	Amount
			£m
25 April	30.0 years	4.45%	4
31 July	33.0 years	4.77%	4
10 October	30.0 years	4.42%	5
25 January	35.0 years	3.89%	4
14 March	35.0 years	3.94%	4
5 July	Repaid	4.55%	-4
30 July	Repaid	4.65%	-4
30 July	Repaid	4.62%	-4
Total			9

Temporary borrowing

4.18 Temporary external debt consists mainly of borrowing from the Pension Fund and Hampshire Police Authority. Borrowing from these two sources reached peaks of £80.1m and £25.6m respectively. Interest to the Pension Fund and Police Authority was paid based on the monthly average seven-day notice rate, which over the year averaged 5.64%.

5 External lending

5.1 Surplus cash balances were lent out during the year to borrowers on the Council's approved list. The list is kept under continuous review to avoid the possibility of any capital loss. In 2007/08, it included the UK clearing banks, the top ten building societies, two highly rated European banks, and also three money market funds (MMFs). Funds can also be lent to other local authorities.

5.2 In 2007/08, the average daily cash balance was £191.70m and given interest earned of £11.35m, the average rate achieved on funds lent out temporarily was 5.92%.

6 Policy on Minimum Revenue Provision to repay debt

6.1 New capital financing regulations - The Local Authorities ( Capital Finance and Accounting ) (England) (Amendment) Regulations 2008 - came into force on 31 March 2008 and affect 2007/08 retrospectively. Previous regulations required local authorities to make a statutory minimum revenue provision for the repayment of debt ( known as MRP), generally based on 4% of the Authority's outstanding capital financing requirement, but subject to some detailed rules. The new regulations repeal the detailed rules and replace them with statutory guidance, while requiring local authorities to make 'prudent' provision for the repayment of debt. The statutory guidance recommends that before the start of each financial year, a local authority prepares a statement of its policy on making MRP for the approval of the full Council or equivalent. In this transitional year, it has been recommended that a statement for 2007/08 and 2008/09 should be approved as soon as practicable in 2008/09.

6.2 The guidance identifies four options for calculating MRP, but two of them are technical variants on the main options, so there are two main approaches identified:

· to continue to calculate MRP as if the former regulations remained in place. The Government intends to continue allowing for the cost of financing supported borrowing through the relative needs block of the formula grant on this basis. For this reason, the guidance suggests that this continues to represent a prudent approach to calculating MRP in respect of all capital expenditure incurred before 1 April 2008 and all supported capital expenditure from that date onwards.

· to base MRP on the life of the asset created by the capital expenditure. Authorities may choose to adopt this approach in respect of all their borrowing for capital purposes, but are advised that they should adopt this approach in respect of any unsupported borrowing taking place after 1 April 2008. Applied to all borrowing this approach would have some significant administrative implications, as it has not been necessary since MRP was introduced in 1990 to attribute borrowing for capital purposes to specific assets. The guidance suggests that MRP should either be calculated on an equal instalment basis over the life of the asset or on an annuity basis based on equal overall payments of principal and interest over the life of the asset, with the latter put forward as an option that is particularly appropriate for projects where the benefits expressed on an annual basis are likely to build up over time and be greater in the later years of the project.

6.3 Based on this guidance, the County Council's proposed policy for 2007/08 and 2008/09 is as follows:

· 2007/08 - to calculate MRP in accordance with the previous regulations in respect of all capital expenditure incurred prior to 1 April 2008

· 2008/09 - to continue to calculate MRP in respect of supported capital expenditure, incurred both before and after 1 April 2008, in accordance with the previous regulations (though in respect of new capital expenditure the County Council currently derives no immediate benefit from the Government's support). In respect of unsupported borrowing whether relating to capital expenditure incurred before or after 1 April 2008, it is proposed to calculate MRP on the basis of asset life, using the equal instalment basis and adopting asset lives that are no greater than those used to calculate the depreciation provision for the relevant assets.

6.4 The 2008/09 policy in respect of unsupported borrowing does represent a change of policy which could have a budgetary impact in either direction but is not expected to have a material impact on the level of capital financing charges in the three year budget.

7 Ratio of capital financing costs to net revenue stream

7.1 The ratio of financing costs to the net revenue stream shows the estimated annual revenue costs of borrowing (interest payable on debt plus the minimum revenue provision for repaying the principal less interest on balances) as a percentage of the amount in the draft revenue budget to be met from central government grant and by local taxpayers. Actual figures for 2006/07 and 2007/08 are set out in the table below, along with estimates for 2008/09, 2009/10 and 2010/11.

Table 9: Ratio of capital financing costs to net revenue

	2006/07 Actual £m	2007/08 Estimate £m	2007/08 Actual £m	2008/09 Estimate £m	2009/10 Estimate £m	2010/11 Estimate £m
Financing costs	34.0	37.8	32.0	43.3	45.9	44.5
Net revenue stream	568.4	598.2	598.2	642.7	663.1	686.1
Ratio	5.98%	6.32%	5.35%	6.74%	6.92%	6.49%

7.2 The ratio in 2007/08 is lower than the estimated 6.32% because of lower net financing costs due to higher interest on balances.

8 Financial health indicators

8.1 The Cabinet in May 2007 approved a medium term financial strategy which incorporated a set of financial health indicators, with the intention that they should be monitored on a quarterly basis as one element of the County Council's regular budget monitoring. A number of the indicators are prudential indicators which are commented on in the previous section of this report. The indicators are included in the attached Annex.

8.2 The budget variance indicators are more favourable than estimated and the underspending against the revised budget results in balances at 31 March 2008 being higher than forecast.

8.3 The capital programme management indicators reflect the higher level of schemes carried forward in 2007/08 than in recent years for the reasons set out in paragraph 3 of Appendix 9. The lower level of capital payments than forecast in 2007/08 resulted in third party receipts not being required in full to finance capital expenditure in 2007/08, which affects the relevant indicators.

8.4 External debt was contained both within the operational and authorised limits throughout 2007/08. The income collection indicators for debt more than 12 months old and less than 60 days old are slightly more favourable than targeted, at the year end though the proportion of debt more than 6 months old is slightly above target.


Summary of Indicators		2006/07	2007/08	2007/08	2008/09	2009/10	2010/11
		Actual	Estimate	Actual	Estimate	Estimate	Estimate
A Prudential indicators

Prudential indicators for capital expenditure
Capital expenditure	£m	173.2	189.0	177.1	197.3	172.5	159.9
Capital financing requirement	£m	574.2	587.5	586.3	615.9	622.0	640.7

Prudential indicators for affordability
Ratio of financing costs to net revenue stream	%	5.98	6.32	5.35	6.74	6.92	6.49

Prudential indicators for external debt
Actual external debt	£m	393.5	n/a	406.5	n/a	n/a	n/a

B Financial Health indicators

Variance from budget
Net service spending	%	-0.3	-0.2	-0.3	+/-1	+/-1	+/-1
Overall spending met from formula grant,	%	-1.1	-0.8	-1.4	+/-2	+/-2	+/-2
council tax and balances
Balances as a % of budget requirement	%	2.9	2.4	3.9	2.3	2.3	2.3

Capital programme management
Carry forward of schemes	%	26.7	20.0	29.0	20.0	20.0	20.0
Actual capital expenditure compared with estimate	%	-9.9	+/-10.0	-6.3	+/-10.0	+/-10.0	+/-10.0
Actual capital receipts and third party
contributions compared with estimate	%	-12.7	+/-10.0	-0.2	+/-10.0	+/-10.0	+/-10.0

Other prudential indicators
Maximum level of external debt:
£m	£m	485.0	590.0	455.0	620.0	620.0	630.0
As % of authorised limit	%	83.6	100.0	77.1	100.0	100.0	100.0
Upper limit on:
Fixed rate borrowing	£m	246.0	290.0	256.0	300.0	330.0	360.0
Variable rate borrowing	£m	239.0	350.0	202.0	370.0	380.0	390.0

Income collection
Outstanding debt more than 12 months old	%	17.1	17.5	16.1	17.5	17.5	17.5
Outstanding debt more than 6 months old	%	n/a	20.0	24.7	20.0	20.0	20.0 00
Outstanding debt under 60 days old	%	n/a	60.0	63.2	60.0	60.0	60.0
Debt written off compared with debt raised	%	0.2	<1.0	0.2	<1.0	<1.0	<1.0

Annual Efficiency Statement (AES): 2007/08 backward look

1 Introduction

1.1 The Gershon period covers 2005/06 to 2007/08. Efficiency improvements reported in 2004/05, however, also count towards the County Council's cumulative target.

1.2 The AES 2007/08 backward look must be submitted to Communities and Local Government (CLG) by 8 July 2008. The backward look will confirm efficiency improvements sustained since 2004/05 and additional gains achieved during 2007/08.

1.3 This report

· summarises the efficiency improvements contained in the County Council's proposed submission

· reviews efficiencies achieved and planned during the Gershon period

· includes (Annex A) variations to the 2007/08 forward look estimate

· includes (Annex B) the cumulative total at year end 2007/08

· includes (Annex C) the submission in the form specified by CLG

1.4 Approval is sought to submit the 2007/08 backward look to CLG.

2 Background

2.1 For 2007/08, the County Council's indicative cumulative efficiency target excluding schools is £47.34m, 7.5% improvements achieved and sustained, half of which must be cashable efficiencies.

2.2 Inflation is to be calculated using the GDP deflator currently at 3.25% except for certain areas. Service areas approved to use alternative deflators include Adult social services with a latest index estimate for 2006/07 of 3.6% and within Environment, the road construction index Roadcon is currently estimated at 5%. All figures quoted in this report have been uprated to 2007/08 prices.

2.3 Supporting statements are required for the backward look if:

· The cumulative total value of efficiency gains is less than the target for that year.

· The cumulative total value of cashable efficiency gains is less than the target for that year.

· The quality crosscheck data entered indicates that service quality has declined compared to the previous year.

3 2007/08 efficiencies achieved

3.1 The backward look contains £20.2m additional gains achieved in 2007/08, this represents 3.2% of the baseline. Cumulative efficiency improvements of £71.2m total 11.3% of the baseline and this surpasses the 7.5% target (£47.34m) by £23.9m (Annex B).

3.2 Of the £20.2m improvements identified in the backward look, all gains are expected to be ongoing. £17.4m is cashable and £2.8m is non-cashable, in accordance with CLG definitions and measurement guidelines.

3.3 Cumulatively, of the £71.2m total achieved by the end of 2007/08, £51.9m is cashable and £19.4m is non-cashable. The minimum cashable gains required by the CLG has been exceeded by £28.2m.

3.4 The Value for Money Delivery Plan states that where councils have achieved a significant level of ongoing cash-releasing gains in SR04, there is a mechanism to recognise this success in the CSR07 period.

3.5 In short, the value of any ongoing cash-releasing efficiencies achieved in SR04, as reported in Hampshire County Council's AES Backward look 2007/08, that are over and above 7.5% HCC's 2004/05 baseline expenditure (i.e. HCC target for total gains - cash-releasing and non-cashable in SR04) may be carried forward into CSR07. This enables HCC to carry forward £4.5m to 2008/09 against an efficiency improvement target of £20.6m (3%).

3.6 The main improvements achieved in 2007/08 are:

Adult Services (£7.1m)

· More cost effective placements and keen price negotiation (£3.4m)

· Supporting People (£1.9m)

· older people: modernisation of domiciliary care-additional weeks of care offset by overall reduction of long term packages (£0.5m)

· absorption of increments (£0.6m)

· more efficient administration (£0.4m)

· younger adults: purchasing (£0.3m)

Children's Services (£2.3m)

· home to school transport (£0.8m)

· absorption of increments (£0.3m)

· staff - absorption of school related increments (£0.3m)

· Early years inflation absorbed by providers (£0.2m)

· kinship care (£0.2m)

· management structure review (£0.1m)

· market supplement changes (£0.1m)

· more effective contract negotiation (IFM regional contract) (£0.1m)

Environmental Services (£1.7m)

· revenue impact of use of developer contributions and contractual rebate to finance capital expenditure (£0.8m)

· area/HQ review staff savings (£0.3m)

· waste efficiencies (£0.1m)

· staff savings (£0.1m)

· highways units efficiencies in scheme design (£0.1m)

· materials recovery facility (MRF) selling off excess capacity (£0.1m)

Policy and Resources (£8.0m)

· revenue impact of the disposal of operational land (£3.3m)

· HR resourcing centre (£1.1m)

o Cashable - staffing (£0.4m)

o Non cashable - advertising (£0.4m) and staffing (£0.3m)

· IT Services efficiencies (£0.8m)

· Legal Practice (£0.7m)

· absorption of increments (£0.6m)

· SAP benefits realisation (£0.5m)

· Corporate procurement (£1.0m)

Recreation and Heritage (£1.1m)

· absorption of increments (£0.3m)

· staff restructure (£0.2m)

· redirection of policy fund (£0.2m)

4 Comparison with the 2007/08 forward look

4.1 Efficiencies totalling £20.2m exceed those estimated in the forward look by £4.2m. Annex 1 summarises significant variations by service.

4.2 Although total efficiencies reported surpass the 7.5% cumulative target set for the end of 2007/08, supporting evidence of quality cross checks must be provided to demonstrate performance has improved or remained stable.

5 Quality Cross Checks

5.1 The CLG's measuring efficiency guidance states:

· If any crosscheck shows that service quality has not been maintained, an explanation must be provided as to why the action is an eligible efficiency gain.

· Local authorities are not required to use the same quality cross check in

succeeding years. However, if the cross check for a given sector or work stream is changed from the previous year's AES, then the value for the previous cross check must also be shown. In subsequent years, the value for that cross check need only be shown if it has deteriorated; and

· Local authorities may choose to use a quality cross check that shows deterioration in service quality. In such circumstances, an explanation should be provided in the accompanying text box as to why the actions taken have not impacted adversely on service quality and are thus eligible to be counted as an efficiency gain.

5.2 Omitting relevant supporting evidence to demonstrate could mean the reported gain becomes invalidated.

5.3 No major performance issues have arisen, however, the following explanations will be provided against three indicators showing a fall in performance:

· Adult Services: The C28 performance (households receiving intensive home care per 1,000 population aged 65 and over) has dropped slightly from 9.5% in 2006/07 to 9.2% in 2007/08. It represents 44 fewer people. This is in line with our direction of travel for modernised more effective and efficient services through our reablement service. This service supports people back into independence, reducing the need for high cost packages of care and was phased in during 2007/08.

· Recreation and Heritage: BV220 compliance with public library standards: 2006/07=2; 2007/08=1. There was a fall from 2 to 1 because the points achieved fell from 10.5 to 8.5, taking Hampshire Library and Information Service (HLIS) below the threshold of 9 points required to score 2. The fall was due to a failure by a 1% margin to meet Public Library Service Standards (PLSS) 8, children's overall satisfaction with their library.

· Environmental Services: The BV99 (number of casualties killed and seriously injured) increased from 612 in 2006/07 to 618 in 2007/08. Whilst this is a 1% fall in performance this indicator has shown an improvement in performance over the Gershon period. This performance indicator is used to support the non cashable improvements arising from accident reductions attributable to deployment of safety cameras.

5.4 As reported last year the comprehensive performance assessment (CPA) score for cultural services fell from 4 in 2005/06 (2005) to 3 in 2006/07 (2006), however, in 2007/08 (2007) this CPA score went up to 4 again. The CPA score for the Environmental Services block has also improved to 4 in 2007/08.

5.5 Adult Social Care's 2007/08 performance results will not be announced by CSCI until September 2008. In September 2007 Adult Service's were for the first time awarded 3 stars. Overall the department's performance in 2007/08, as measured by the Performance Assessment Framework (PAF) indicators, has improved with 90% of the indicators improving on last year, for example:

· 82 more people were provided with intensive home care in 2007/08 to help them live at home, 2,158 in total

· A further 380 older people where helped to live at home in 2007/08, 18,241 in total (C32 PAF indicator)

5.6 Not all quality cross check data is currently available, details are to be completed. The following is still outstanding:

· increased passenger numbers on routes served by Quality Bus Partnership, it is expected at the end of June.

5.7 All other quality cross checks demonstrate stable or improved performance, supporting the statement that efficiencies have been achieved with no deterioration in service quality.

6 Cumulative total to the end of 2007/08

6.1 For Hampshire County Council, there are broadly three type of efficiencies being reported:

· Cashable efficiencies that produce a budget saving

· Cashable efficiencies relating to the avoidance of costs not allowed for in the budget

· Non cashable efficiencies

7 Cashable efficiencies producing a budget saving

7.1 Of the cashable efficiencies reported in the 2007/08 backward look, gains producing budget savings amount to £7.1m. This is 1.1% of the baseline.

7.2 Table 1 above shows that cumulatively, since 2004/05, £20.8m cashable improvements that produce budget savings have been achieved, 3.3% of the baseline. Where these efficiency gains have arisen they have been largely redeployed within the budget of the relevant service.

Cashable efficiencies relating to the avoidance of costs which were not allowed for in the budget total

7.3 The County Council takes efficiencies seriously, control of costs and effective planning built into the budget setting procedures predate Gershon. Where such controls and planning produce improvements that are quantifiable and of no detriment to service provision they count as Gershon efficiency improvements, even though they do not produce budget savings.

7.4 Table 1 shows that £31m cashable improvements that do not produce a budget saving have been achieved during the Gershon period, 4.5% of the baseline.

7.5 £10.8m, 35% of these were found in Policy and Resources. Nearly half of these (£5m) relate to the use of capital receipts. Other examples include the control of employee costs through the absorption of increments within existing staff budgets and SAP benefits realisation.

7.6 Robust corporate procurement and purchasing through the Central Buying Consortium has produced real efficiencies, but there are also examples of prices that have increased by more than the GDP deflator and are not reported.

7.7 Reduced inputs used to produce the same outputs are counted as cashable efficiencies. Supporting People and the Guidance and Careers Service have maintained service levels despite reduced grant/income. The loss of grant means no further budget savings have been produced but more efficient working practices are recognised under Gershon as cashable gains.

Non-cashable efficiencies

7.8 Where more outputs are produced for the same inputs, non-cashable efficiencies are produced. For example, within Recreation and Heritage, existing budgets contributed to the Policy Fund at no detriment to service provision, resulting in support for new activities such as arts development in schools and working with young people in disadvantaged areas. Also services have been absorbing extra work such as admissions in Children's Services and freedom of information act responses in Environment, with no extra staff.

7.9 £19.4m non cashable efficiencies were achieved during the Gershon period (table 1). The most significant non-cashable efficiencies are the economic benefits of reduced accidents, injuries and fatalities achieved through the Safety Camera Partnership, a cumulative total of £10.3m (53%) by 2007/08, but the area is considered volatile and high risk.

8 Summary

8.1 The Annual Efficiency Statement 2007/08 backward look has been prepared in accordance with CLG guidelines to include efficiency improvements which surpass the County Council's target. Quality cross checks demonstrate stable or improving service quality.

8.2 Efficiencies totalling £20.2m exceed those estimated in the forward look 2007/08 by £4.2m.

8.3 The backward look contains £20.2m additional gains achieved in 2007/08, representing 3.2% of the baseline. Cumulative efficiency improvements of £71.2m total 11.3% of the baseline and this surpasses the 7.5% target (£47.34) by £23.9m.

8.4 The CLG's minimum requirement of cashable efficiencies has been exceeded enabling Hampshire County Council to carry forward £4.5m to 2008/09.

8.5 Performance evidence has been included, as appropriate.

9 Recommendation

9.1 The AES 2007/08 backward look be approved.

Hampshire County Council

Annual Efficiency Statement Backward look 2007/08

Significant variations since the forward look

Annual efficiency statement - backward look

Details

Local authority Hampshire County Council

Contact name Jensia Augustinussen

Job title Forward Planning Mgr

Email address [email protected]

Statement

Overarching Key Actions Taken

Children's services

Environmental services

Local transport (non-highways)

Non-school educational services

Homelessness

Procurement - construction

Transactions

Total

Ongoing gains sustained from 2006/07 (£)

Further gains achieved in 2007/08 (£)

...of which expected to be ongoing (£)

Cumulative gains as at end of 2007/08 (£)

Title

Total gains

...of which cashable(£)

Total gains

...of which cashable (£)

Total gains

...of which cashable (£)

Total gains

...of which cashable (£)

Related links

Adult social services

10,172,000

9,654,000

5,237,000

5,327,000

15,409,000

14,891,000

· Documents

· People

· Projects

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (enter 0 in 2006/07 and 1 in 2007/08 and explain in the text box)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable

1. Modernising Service Delivery: day care provision for physical disability and older people £157k; review of package and right sizing for domiciliary service £235k (saving has been achieved through the introduction of reablement focused domiciliary teams. Out of 2440 clients 49% had packages right sized and 25% required no further care support at the end of the reablement process), review of all purchased, day and domiciliary and high dependency packages for physical disabilities £400k (the same for less), more efficient mental health purchasing £167k; reduced average weekly cost for residential and physically disabled by moving clients into supported living £146k; more innovative procurement for learning disabilities clients in transition £110k (e.g to live in supported family PAF C30); reprovision of occupational therapy resource centre for people with learning disabilities £60k; improved work practices to maximise continuing care savings with health £345k.

2. Making better use of Human Resources: cost of increments contained within existing budgets £575k; more efficient alignment of management & administrative roles & responsibilities £651k.

3. Efficiencies on purchasing budgets: review of high cost packages for learning disability £1,003k (using the South East cost model pioneered by Hampshire County Council Adult Services Department to negotiate with providers on appropriate costs for residential clients); reprovision of intermediate care for older people £123k; more efficient purchasing for homecare £500k (below inflation same for less); maximising utilisation of in-house day services for people with physical disability 60k; better negotiation of service contracts as a result of introduction of care brokers 90k. Renegotiation of large domiciliary care block contracts £615k (same for less).

£520k less gains than the forward look, primarily as a result of delays in implementing the modernisation programme.

Quality crosscheck notes: Primary quality cross check from 2006/07 is the CSCI star rating for Adult social care: 2004=2*; 2005=2*; 2006=2*; 2007=3* including excellent for commissioning and use of resources

Overall 2007/08 PAF indicators: 90% of the indicators improved on last year eg:

- 82 more people were provided with intensive home care in 2007/08 to help them live at home, 2,158 in total (Needs to be confirmed). The C28 performance has dropped slightly from 9.5% (per 1k population aged 65 and over) in 2006/07 to 9.2% in 2007/08. It represents 44 fewer people. This is in line with our direction of travel for modernised more effective and efficient services through our reablement service. This service supports people back into independence, reducing the need for high cost packages of care and was phased in during 2007/08.

- A further 380 older people where helped to live at home in 2007/08, 18,241 in total (C32 PAF indicator).

1,897,000

1,240,000 789,000575,000 789,000 575,000 2,686,0001,815,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (enter 0 in 2006/07 and 1 in 2007/08 and explain in the text box)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing gains

1. Maintaining tight control of budgets, absorbing net costs arising from the annual cost of salary increments without detriment to the service, £220k.

2. A management structure review only produced £60k saving compared with a 2007/08 forward look target of £185k .
3.Procurement gains from IFA Regional contract £100k

4. Equalisation of market supplements achieved the £135k saving in the 2007/08 forward look

5. Revised method of operation for family group conferences £35k. This is half the anticipated saving.

6. Revised operation of the Teenage Pregnancy Partnership £25k.

Ongoing non cashable:

7. There has been an increase in the number of children whose needs can be met by kinship care rather than the more expensive in house fostering £214k.

In 2007/08 the residential services review which was estimated at forward look stage as producing £300k has not yet been implemented so no savings as yet.

Overall £246k less efficiencies identified than in the forward look estimate.

Quality crosscheck notes: Primary indicator: the percentage of core assessments that were completed within 35 working days (APA SS 11/C64). This indicator has been chosen over those suggested as its strongly regarded by CSCI as a good measure of both quality and efficiency in relation to vulnerable children. 2006/07=82%; 2007/08= 82%

Secondary indicator re increased foster care placements. % looked after children fostered by relatives or friends (APA SS 14) 2006/07=19%; 2007/08=20%

Culture and sport

2,013,000915,0001,100,000 900,000 1,100,000900,000 3,113,0001,815,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (enter 0 in 2006/07 and 1 in 2007/08 and explain in the text box)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable:

1. Major staff restructure implemented in Library service with year one savings of £230k and ultimately £1million p.a. - number of libraries and opening hours maintained

2. Controlled staff costs, mainly through tight vacancy management, to fund increases arising from increments (£280k) and further service efficiency targets - without detriment to service

3. IT efficiencies including negotiating suppliers' prices, reviewing staff members' systems access and switching to lower tariffs where appropriate £50k

Ongoing non cashable:

4. Services contributed from existing budgets to Department's Policy Fund, for supporting new initiatives, such as: pump-priming independent sector service development, development of County Council workplace activities, improving sustainability at major Country Park: £200k - overall service outturn remained within budget & CPA assessment improved

Quality crosscheck notes: Primary indicator: CPA score for culture is an overarching QCC: 2006/07(2006)=3; 2007/08 (2007)=4

Secondary indicator: BV220 compliance with public library standards: 2006/07=2; 2007/08=1 NB: There was a fall from 2 to 1 because the points achieved fell from 10.5 to 8.5, taking Hampshire Library and Information Service below the threshold of 9 points required to score 2. The fall was due to a failure by a 1% margin to meet Public Library Service Standards 8, children's overall satisfaction with their library.

Secondary indicator: BV170c - school pupil visits to museums 2006/07=35,188; 2007/08=37,770

2,100,000

1,986,000480,000 480,000480,000 480,000 2,580,0002,466,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (enter 0 in 2006/07 and 1 in 2007/08 and explain in the text box)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable

1. Staff savings in waste and in administration, including reduction in overtime, travelling and other costs - £114k

2. Ongoing savings from increased recycling and reduction in landfill - £110k

3. Materials recovery facility - selling excess capacity - £95k

4. Spatial Strategy - savings against operational and staffing budgets - £20k

5. Efficiency savings requirement from District Council administration - £55k

6. Service Level Agreement savings from less technical data and information being provided from external organisations -£29k

7. Printing and publication savings - £19k

8. Office Expenses savings - £38k

£19k fewer efficiencies than the AES forward look estimate. £25k anticipated non-cashable savings from the capital programme review were unable to be verified and so were removed. £6k of office expenses were mistakenly omitted from the forward look and have been added back in.

Quality crosscheck notes: Primary indicator - CPA score for Environment block. This indicator was chosen as it was felt to be more strategic than those suggested. CPA results 2006/07=3; 2007/08=4.

Secondary indicator re: % sum of household waste arising that has been sent for recycling, composting or energy recovery (BV82a, b & c); 2006/07=84.45%; 2007/08=85.78%.

Local transport (highways)

18,649,000

8,281,000

1,222,000

1,222,0001,222,000 1,222,00019,871,0009,503,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (explain fully in the text box)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable:

1. Savings arising from the rationalisation of highways staff, following a review of the Headquarters and area office management structures - £298k

2. Highways units efficiencies in scheme design - £100k

3. Traffic management - reduced advice and advertising - £40k

4. Intelligent Transport Systems savings - £25k

5. Negotiated contributions from developers have been used to fund projects that would otherwise have been funded from borrowing capital thus reducing debt and debt servicing costs - £759k

£110k fewer gains than estimated by the forward look. Developer Contributions are difficult to estimate in advance, and the outturn figure was £110k less than the original estimate

Quality crosscheck notes: Primary indicator - CPA score for Environment block. CPA results 2006/07=3; 2007/08=4.

Secondary indicator - re: non cashable improvements arising from accident reductions attributable to deployment of safety cameras - numbers killed & seriously injured (derived from BV99): 2006/07=612; 2007/08=618. Stable performance and an improvement during the Gershon period.

Secondary indicator - % of highways in need or repair. CPA indicator E11 based on BVPI 97b/224b for unclassified roads two year average 2006/07=13.2%; 2007/08=11.5%

513,000

12,0000 0 0 0513,00012,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Non-approved indicator (explain fully in the text box)

Yes

Quality crosscheck notes: Primary indicator re increased passenger numbers on routes served by Quality Bus Partnership have been revised for all years since the start of the Gershon period: 2006/07=10.05est; 2007/08= . This has been chosen over total passenger journeys, as figures on the routes closely monitored may be more accurate than the overall numbers which are supplied by commercial bus companies. 2007/08 figure to be provided at the end of June 08

LA social housing (capex)

0 0 000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Quality crosscheck notes:

LA social housing (other)

· Documents

· People

· Projects

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Quality crosscheck notes:

3,475,000

2,736,000 1,503,0001,183,000 1,503,0001,183,000 4,978,0003,919,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

CPA score for Children and Young People (Average score for all five aspects)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable:

1. Management restructure: £43k in 2007/08. The 2007/08 forward look anticipated savings of £135k but data quality staff have transferred without budget.
2. Absorbed increased staff costs arising from increments without detriment to service: £90k.
3.Home to School Transport: through invest to save, better contract prices and the minibus scheme an inflation gain which is the difference between the 2006/07 to 2007/08 benchmark of 7% and what was actually experienced: £808k. Counting as procurement for DCSF. Nothing was allowed in the 2007/08 forward look and only £197k at mid year so performance is better than prediction

4. Revised method of operation for family group conferences £15k. Only half the anticipated saving was achieved.

5. Early Years price inflation absorbed by providers £210k

6. Early years supporting extra 3 year olds within existing staff budgets: £17k

Ongoing non cashable

7. Staff - absorption of increments within business units and other services supporting schools £320k

£601k more efficiencies than estimated by the forward look. Greater savings on home to school transport partially offset by reduced progress on structure and support service review.

Quality crosscheck notes: Secondary indicator re efficiencies in the provision of early years places - termly average number of FTE 3 year olds in early years education* 2006/07=10,639 (NB *Education provided by private, voluntary and independent providers), 2007/08=11,113

Secondary indicator re absorption of loss of income from cessation of VTSC dividend % school leavers in education or employment. 2006/07=89.5%; 2007/08=91.4%. This demonstrates stable service performance.

Supporting people

1,888,0001,888,000 1,855,0001,855,0001,855,0001,855,0003,743,0003,743,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Average performance level for all local Supporting People services, using the six Core Objectives in the Quality Assessment Framework (Mode grade letter represented as 1=A, 2=B, 3=C, 4=D)

2.6

2.4

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable gains

1. Improved procurement of supporting people; a contract review process: £1,855k

£1,118k more efficiencies were achieve as a result of part-year and full-year effect of several strategic reviews of contracts. The original forward look reflected a part year effect only and did not include all reviews and did not include full year effects.

Quality crosscheck notes: Primary indicator: see above - Quality assessment framework. 2006/07 score=C; 2007/08 score=C

0 0 0 0 000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Other cross-cutting efficiencies not covered above

Corporate services

8,596,000

6,632,000

6,974,000

5,331,000 6,974,000 5,331,00015,570,00011,963,000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No deterioration in CPA `Use of Resources´ score (0=No, 1=Yes)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable

1. Tight control of budgets, absorbing net costs arising from the annual cost of salary increments without detriment to the service provision: £588k

2. Replacement of IT systems, as a result of business process re-engineering & the introduction of enterprise resource planning (ERP) software, Human Resources (HR): £410k achieved via continued improvement in corporate staff advertising delivery via the Resourcing Centre, (also see item 5). County Treasurer's Department: £114k through improved working practices, in accordance with process reviews facilitated by SAP, which enabled existing workloads to be carried with fewer staff

3. The sale of operational assets, less sales relating to non operational assets resulted in receipts eligible to yield a reduction in outstanding debt and debt servicing costs. Using the average long term borrowing rate: £3,280k

4. HR Resourcing Centre continue to make efficiency savings by implementing initiatives including:

a) embedding the restructure of a central resourcing team

b) re-engineering processes within recruitment & advertising

c) development and implementation of the corporate recruitment web site allowing candidates to view vacancies and apply on-line, together with the development of the HIOWLA regional recruitment portal
measurement: control of advertising costs less than budgeted for more volume of recruitments. 2,384 actual recruitments costing £371 each improved on the original budgeted volume of 1,829 at £683 each, totalling £366k advertising cashable efficiency savings.

5. IT - Windows Server Consolidation (virtualisation) £110k- transferring a number of applications onto virtual servers (effectively larger, more powerful servers that are sub-divided to allow them to host multiple applications and both test and live environments) yielding savings in the hosting and maintenance costs.

6. IT - restructuring of software asset management - £28k (part year effect) - The member of staff responsible for software asset management has retired and the responsibilities have passed to someone else who is able to absorb them in their current role thus saving 1 Fte.

7. IT - renegotiation of Mobex phones contract - £80k passed on to customers in the form of reduced charges.

8. IT - replacement of Castle Complex Network - £50k the replacement of data wiring has yielded maintenance savings as old equipment has been replaced.

9. IT - Headcount reductions - £190k 7.2 fte, achieved through more efficient working practices to produce the same levels of service across the department.

10. IT - replacement of CRT monitors - £15k with flat screens which are more energy efficient, reducing electricity consumption.

11. Production of a joint budget leaflet with most Hampshire Districts - £10k

12. Hampshire Transport Management contract hire reductions - £90k. Strong trading performance & cost reductions both in staffing and other areas provided the opportunity for HTM to pass on savings to Council departments and schools by reducing contract hire rates.

Ongoing Non cashable:

13. Legal Practice: Coping with extra work within existing resources. Measured by comparing the 53,801 budgeted fee earner hours with 63,591.1 actual hours worked. An extra 9,790.1 hours worked: average hourly rate £67 p/h: £654k worth of legal advice was provided to departments within existing resources

14. HR advertising for each recruitment budget, £683 per recruitment, so advertising would have totalled £379k more in 2007/08 with extra 555 recruitments. Staff budget per recruitment, would have totalled £595 per recruitment so staffing would have totalled £330k more in 2007/08 with extra 555 recruitments. As 555 more recruitments than originally budgeted at less cost, this demonstrates no detriment to service. Non-cashable therefore £379k - advertising; £330k staffing.
15. IT - Extend helpdesk hours - £237k achieved with no additional headcount increase.

16. IT - reduced unit cost of the Passport service - £43k achieved through volume growth and passed onto customers.

£3,056k more gains have been achieved than estimated.

Quality crosscheck notes: Secondary indicators re IT Services: the Service Level Agreement (SLA) for fixing all central hardware 2006/07=99.5%; 2007/8=99.9%, and the SLA for fixing all desktop equipment has gone up from 2006/07=100%; 2007/08=99.9% (there were 2 instances (out of 3,619) where the SLA was not met, this was due to illness and staff shortages). This demonstrates stable service performance.

Secondary indicator: BV166b: Trading Standards checklist 2006/07=100%; 2007/08= 100%

Secondary indicator: re Legal Practice: client feedback showing satisfaction with service quality in 2006/07=99.2%; 2007/08 (2007)= 99.7%. The achievement and maintenance of Lexcel accreditation, indicates continued compliance with best practice standards set by the Law Society.

Procurement - goods and services

1,763,000

1,149,000

1,012,000

586,000

1,012,000

586,000

2,774,000

1,735,000

· Documents

· People

· Projects

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Percentage of milestone activities completed in the National Procurement Strategy for Local Government (LIB242)

Yes

Key actions undertaken to achieve efficiency gain: Ongoing cashable:

1. Food: average savings from new contract, comprising reductions in price compared to previous contract. No change to type or products or level of service, with potential increase in quality of service through one order point and reduction in food miles. £294k

2. Agency Staff: extension to existing contract for 1 year with no increase in rates. £150k.

3. Child Care Vouchers: extension to existing contract for 1 year discount based on NI savings to HCC, saving is based on increased take-up compared to 2006/07, so this is the additional saving on top of 2006/07 already shown. £31k.

4. Wood Products & Misc Building Products: savings from new contract. All wood products supplied are FSC accredited. £2k.

5. Filing Cabinets: savings from a re-costing exercise from current two providers giving an overall saving of 20%. £5k.

6. Print Framework Contract: savings from new contract based on £300,000 outsourced works, seamless transition to new contract. £7k.

7. Designer Furniture: savings from new contract, no previous contract in place. Improved service delivery to end users, rationalisation of current 'designer furniture' vendors. £21k.

8. Flexible Working Furniture Contract: savings from new contract, no previous contract in place. Improved service delivery to end users, rationalisation of current 'flexible working' furniture vendors. £32k.

9. Library Security & Self Issue Systems: savings from new contract, no previous contract in place. £20k.

10. Photocopiers (NRG): further reductions in prices obtained through effective contract management and benchmarking. 10% price reduction on 35/45 copy per minute colour and black and white. Part year effect only. £8k.

11. Removals: reduction in prices compared to previous supplier. £16k.

Ongoing non-cashable:

12. Reduction in duplicate purchase order keying through an XML ordering link with main IT hardware supplier. 800 orders @ £28 per order. £22k.

13. Increase in fax and email of purchase orders - net saving compared to print and posting of purchase orders. £21k.

14. Cost avoidance - e-booking software - non-cashable saving contract price compared to original estimated budget. £100k.

15. Library management system - savings on contracted price - reinvested in hardware upgrade and other improvements. £60k.

16. Pricing in Proportion - cost avoidance - estimated full year effect of changing practice to avoid increased charges from Royal Mail's Pricing in Proportion changes. £162k.

17. Rail Warrants - cost avoidance of price increase by transferring 55 accounts into one account. £27k.

18. Auto-faxing and auto-emailing of Purchase Orders. 27,849 orders now sent electronically saving c. £1 in staff time and other real costs. £28k.

19. Reduction in Special Request Processing - saving in staff time. 26% reduction in 2007 compared to 2005. £5k.

The 2007/08 backward looks shows that £586k of procurement savings for common use goods and services were achieved against a forward look of £500k. £425k of non-cashable procurement savings were achieved against a forward look of £500k. The small shortfall was due to a slower rate of conversion to electronic purchase orders than originally planned.

Quality crosscheck notes: Primary indicator: the approved percentage milestone activities completed is referenced as LIB242; the completed scores used are LIB/P1 2006/07=90%; 2007/08= 90%. This demonstrates stable service performance.

Secondary indicator: Corporate procurement strategy in place and/or updated in last year. 2006/07=Yes; 2007/08=Yes

0 0 0 0 000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Quality crosscheck notes:

Productive time

00 0 0 0 000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Quality crosscheck notes:

0 0 0 0 000· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

No efficiency gains to be reported in this sector, (enter 0 in 2006/07 and 0 in 2007/08)

Yes

Key actions undertaken to achieve efficiency gain:

Miscellaneous efficiencies

00· Documents

· People

2007/08 Primary quality crosscheck

Quality crosscheck

2006/07

2007/08

Quality crosscheck met?

Overall CPA score (0=Poor, 1=Weak, 2=Fair, 3=Good, 4=Excellent)

Yes

Key actions undertaken to achieve efficiency gain:

Quality crosscheck notes:

51,066,000

34,493,00020,172,00017,369,00020,172,00017,369,00071,237,00051,862,000

Hampshire Pension Fund - 2007/08 accounts

1 Summary

1.1 This report presents the Pension Fund accounts for 2007/08.

2 2007/08 accounts

2.1 A draft revenue account for 2007/08 is shown in Annex 1 with equivalent figures for the previous year.

2.2 Overall, the Fund continued the pattern of recent years in generating a revenue surplus in 2007/08 of £127.3m. This was slightly less than the surplus in 2006/07 of £130.5m mainly because of lower investment income. The Fund's value at 31 March 2008 was £2,951.9m. This was an increase of 1.2% over the previous year despite the adverse movement in stock markets.

2.3 Employees' contributions rose by 5.3% compared with the previous year, from £45.3m to £47.7m. Whilst the pay award of 2.475% for all contributors from 1 April 2007 accounted for around half of this increase, there was a 20% increase in the amount of additional contributions made by employees, which were not matched by employers' contributions. The average number of contributors in the Fund remained stable at 46,905 during 2007/08 (46,930 contributors in 2006/07).

2.4 Employers' contributions increased by 13.6%. This was due both to the previously mentioned increase in employee contributions and the increase in employer contribution rates from 275% of employee contributions to 295%. This was the third of the annual step increases in employer rates from the 2004 valuation.

2.5 Transfer values received into the Fund remained unchanged at £16.9m, with both numbers of transfers and the average value staying broadly similar to those in 2006/07.

2.6 Pension payments rose 8.2% from £96.8m to £104.7m. Pensions were subject to an annual inflation rise of 3.9% in April 2007. The number of pensions in payment rose by 2.5%, from 25,620 to 26,255 and these new pensions were of a higher value.

2.7 Lump sum benefits increased by 19.8% from £24.9m to £29.8m. Changes in regulations effective from April 2006 allow members to commute part of their annual pension to increase their tax-free lump sum. Most of this increase was due to nearly £5m paid to members who had commuted some of their pension. This is twice the value paid in 2006/07. As a result of the commutation, approximately £0.4m a year less will be paid in ongoing pension payments.

2.8 Refunds of contributions paid in 2007/08 amounted to £0.1m, unchanged from its value during 2006/07. Only members with less than three months' membership are eligible for a refund of contributions so this figure should remain stable.

2.9 Transfer values paid out to other schemes rose by 15.4% from £12.2m in 2006/07 to £14.1m in 2007/08. This rise is mainly due to the completion of a group transfer of Southern Arts members to the West Midlands Pension Fund.

2.10 Administrative expenses increased by 6.2%. The charge per fund member for the County Treasurer's Department has been fixed for 2007/08 at the 2006/07 level of £14 per scheme member. However, higher membership numbers have led to an increase in the administrative recharge. In addition, the volume of legal work has increased following the planned diversification into alternative investments which generally require legal due diligence work to be undertaken.

2.11 Investment management expenses increased by 70.6%. This rise in fees reflects the significantly higher costs being incurred since January 2007. This follows the planned increase in the number of specialist fund management contracts as a result of the strategic review of the Fund's investment management arrangements and the need to diversify risks by increasing the number of separate managers. Managers normally charge sliding scale fees based on portfolio value. These fall proportionally as portfolios increase in size, so a larger number of smaller portfolios will inevitably increase fund management fees.

2.12 Investment income fell by 6.0%. This was largely a result of a technical change in January 2007 when the Fund transferred its holdings of UK index linked bonds to unit trusts that accumulate the income from interest on the bonds for reinvestment within the unit trusts instead of paying it out to investors. Therefore, the investment return is now reflected in terms of an increase to the capital value of the bond holdings as opposed to investment income paid to the investor.

3 Net assets statement

3.1 The net assets statement (or fund balance sheet) is also shown in Annex 1.

3.2 The market value of investments rose during 2007/08 by 1.4%. The overall Fund balance rose by 1.2%. Whilst the global credit crisis has resulted in a marginally negative net return on investments for 2007/08, the Fund balance has nonetheless increased due to net additions from dealings with members and employers.

3.3 Annex 2 contains a series of graphs showing trends in pension activities since 1978.

Pension Fund Accounts
Fund Account	2006/07	2007/08
	£'000	£'000
Dealings with members and employers
Contributions receivable:
Employers - normal	121,117	136,433
Employers - special	4,631	6,466
Employers - additional	6	-2
Members - normal	44,126	46,281
Members - additional voluntary	1,203	1,441

Transfers in:
Individual transfers	16,943	16,907

Benefits payable:
Pensions	-96,783	-104,739
Commutation of pensions & lump sum retirement benefits	-22,870	-28,098
Lump sum death benefits	-1,989	-1,681

Payments to and on account of leavers:
Group transfers out	0	-960
Individual transfers out	-12,194	-13,111
Refunds of contributions	-86	-53
State Scheme Premiums (CEP)	-9	4

Administrative Expenses	-1,768	-1,877

Net additions from dealings with members and employers	52,327	57,011

Returns on investments
Investment income:
Interest from fixed interest securities	7,223	4,622
Dividends from equities	55,815	57,837
Income from index-linked securities	46	49
Income from pooled investment vehicles	10,141	1,352
Net rents from properties	5,413	6,347
Income from property unit trusts	0	782
Income from other alternative investments	0	28
Interest on cash deposits	10,332	12,133
Other	142	589

Change in market value of investments:
Realised	315,414	99,767
Unrealised	-242,122	-192,634

Taxation	-5,382	-3,931

Investment management expenses	-5,563	-9,490

Net returns on investments	151,459	-22,549

Net increase in the fund during the year	203,786	34,462

Add opening net assets of the scheme	2,713,627	2,917,413

Closing net assets of the scheme	2,917,413	2,951,875


Net Assets Statement		31 March 2007	31 March 2008
		£'000		£'000
Investments at market value:
	Fixed interest securities	122,115		138,463
	Index linked securities	4,865		1,002
	Equities	1,734,964		1,699,486
	Pooled investment vehicles	593,801		675,814
	Property	110,950		117,050
	Property unit trusts	27,898		67,749
	Other alternative investments	1,052		52,153
	Cash deposits	291,077		176,348
	Total invested	2,886,722		2,928,065


	Net current assets and liabilities:
	Contributions due from employers	11,003		10,865
	Other current assets	21,848		16,172
	Current liabilities	-2,160		-3,227
	Net assets - balance of Fund	2,917,413		2,951,875


Reconciliation of the net movements of assets of the Fund


Opening net assets		2,713,627		2,917,413
Net income available for investment:
	Net additions from dealing with members and employers	52,327		57,011
	Investment income less expenses	78,167		70,318
Revenue surplus		130,494		127,329

Change in market value of investments		73,292		-92,867
Closing net assets		2,917,413		2,951,875

Recent trends in Pension Fund activities

1. Number of contributors

For the past thirteen years all part-time recruits have joined the LGPS automatically, whereas previously they only joined if they opted in.

2. Number of pensioners

This graph continues to show a remarkably consistent increase in the number of pensioners in the Fund.

3. Annual Income

These diagrams illustrate the growth of the Fund's annual income since 1979/80, together with the split over the four main elements. Annual income grew steadily throughout the 1980s and 1990s. Whilst it dropped slightly in 2000/01, it has since risen sharply as a result of increased employers' contribution rates.

4. Realised and Unrealised Profits / Losses

This diagram shows the realised profits / losses and, from 1986/87 when figures are available, unrealised changes in market value.

5. Growth of the Pension Fund

In spite of negative returns on investments, slightly higher net additions from dealings with members led to an overall marginal growth in the size of the Pension Fund this year, as the diagram below shows.

Financial Management Policy

Overall purpose : seek to ensure a high standard in the management of public finances in the best interests of the people of Hampshire.

Key policies designed to achieve this are to maintain and seek continuous improvement in both Financial Planning and the provision of Financial Services. In doing so, the Council has aimed to maintain its score of three (equivalent to the maximum score of four under the previous framework) for the financial aspects of the Comprehensive Performance Assessment, and aim to achieve the new level four.

A Financial Planning

Overall financial planning and budget strategy	Commentary
Budget strategy related to corporate priorities, as reflected in corporate Business Plan with links to, local public service agreement, and local area agreement.	Linkages to corporate priorities identified in reporting on growth and redeployment proposals with specific funding earmarked for local public service agreement and local area agreement pump priming.
Growth and saving plans to be submitted to the appropriate executive member or to Cabinet, identifying planned outcomes and performance improvements for budget growth and mechanisms for achieving any significant savings.	2007/08 savings plans monitored by the Cabinet on a quarterly basis.
Ensure that the long-term level of revenue commitments does not exceed long-term funding likely to be available including reasonable expected levels of future grant settlement and council tax.	Provisional budget limits set for each service in 2009/10 and 2010/11 based on three year grant settlement.
Ensure integration of medium term financial and service planning.	Workforce and financial data linked in corporate budget monitoring reports in 2007/08. Three year budget plan for 2008/098 to 2010/11 developed in support of corporate business plan.
Maintain three-year budget projections to support medium term financial planning subject to fine tuning of likely resource allocation decisions on an annual basis.	Three year budget plan for 2008/09 to 2010/11 agreed by County Council in February 2008 on a provisional basis.
Minimise levels of non-earmarked reserves, at a level determined by risk assessment, in order to maximise use of available funds on service provision.	Risk assessment included in 2007/08 budget identifying the need for higher balances in 2007/08 of 2.4% to reflect uncertainty about the achievability of savings targets and other specific risks.
Review the rationale and adequacy of earmarked reserves on at least an annual basis.	Reviewed twice-yearly in conjunction with approval of budget and final accounts.
Build up an earmarked reserve in recognition of the transitional costs of implementing Pay and Benefits proposals associated with equal pay compensation.	Further contributions to job evaluation transitional cost reserve made in 2007/08 to provide funding of £36.4m for equal pay compensation, backdated appeal costs and legal costs.
Seek to minimise the degree of instability in the employers' contribution to the Hampshire Pension fund, subject to objective of securing 100% funding in the long-term.	Employers rate increased from 17.7% to 18.1% of pensionable pay in 2008/09, in accordance with the stepped increase agreed following the 2007 actuarial valuation.
Continue policy of increasing budgets for Children's social care in line with increases in the national spending plans.	Policy continued to be applied in 2007/08.
Redistribute service budget guidelines to provide an increase of 4.3% in the Adult Services guideline from 2007/08 to 2009/10.	Reflected in 2007/08 budget and in three year budget plan for 2008/09 to 2010/11.
Set a schools budget in consultation with the Schools Forum based on specific grants allocated by the Government.	2007/08 budget set in consultation with the Schools Forum with a County Council contribution of £0.2m to reflect new services delegated to schools
Manage the application of the grant equalisation reserve in order to protect services from future grant loss from the 2006/07 revised formula.	Strategy for applying the reserve to mitigate the impact of grant loss over the next six years agreed by Cabinet in February 2008.
In order to allow services to operate within firm cash limits, allocate provision for inflation to services at the start of the financial year and require excess inflation to be absorbed.	All 2007/08 inflation allocations relating to cash limited budgets made prior to the beginning of the year.
Services expected to contain spending within the approved cash limit, with no supplementary allocations being available other than in exceptional circumstances unless a specific contingency provision made within the budget.	No supplementary allocations made in 2007/08 apart from allocations made from Pay and Benefits contingency.
Services expected to carry forward 100% of any overspending against the overall service cash limit, but are allowed to retain up to 100% of any planned underspendings identified prior to the approval of the following year's budget. 50% of any unplanned underspendings can automatically be carried forward.	Proposed that policy be applied in making decisions on 2007/08 final accounts.

Value for Money	Commentary
Require the continuing identification of efficiencies by expecting services to absorb any net cost arising from the annual cost of salary increments.	Applied in 2007/08 and 2008/09 budgets, requiring savings of £1.7m to be made to absorb the cost of increments in 2008/09.
Seek to deliver efficiency gains that exceed the targets set by the Gershon review.	Appendix 6 of this report contains the 2007/08 draft backward look Annual Efficiency Statement, demonstrating cumulative efficiency improvements significantly in excess of the Government's target.
Encourage service chief officers to submit applications for specific grants/partnership funding designed to maximise the resources available to the County Council, by allowing capital and revenue cash limits to be adjusted to reflect changes in grant levels.	Policy applied in setting cash limits for 2007/08 and in adjusting them for variations in grants during the year.
Require services to review the level of fees and charges at least annually and set budget limits on the assumption that the level of charges will be increased in line with assumed inflation on gross expenditure.	Budgets for 2007/08 and 2008/09 set on this basis, with proposals for reviewing charges considered by Executive Members.
Seek best value in spending, bearing in mind that considerations of quality, risk, sustainability, environmental impact, local economic development and equalities may all be relevant in addition to price.	Corporate procurement strategy achieved cashable and non-cashable efficiency improvements in 2007/08 totalling £1.0m
Seek to retain relatively low council taxes in Hampshire, with the aim of setting a tax in the lowest quartile of County Council taxes.	2008/09 council tax in lower quartile of those County Councils without fire funding responsibilities.

Capital programming	Commentary
Review capital strategy on an annual basis and prepare four year capital programme in accordance with the strategy.	Strategy reviewed in July 2007 and new three-year programme approved in February 2008, to match the three year period for Government capital grant and borrowing decisions.
Seek to maintain the level of the locally-resourced capital programme by continued recycling of surplus assets to generate capital receipts.	Programme for 2008/09 to 2010/11 based on planned capital receipts of £108m over the period.
Allow services to retain at least 25% of the value of their capital receipts and where necessary to finance investment in replacement assets, up to 100%.	Proposed that services retain £36.6m (57%) of 2007/08 capital receipts.
Adopt a Public Private Partnership (PPP) approach, including the use of the Private Finance Initiative (PFI), where this provides best value for the Council.	The County Council has had an outline business case in conjunction with West Sussex County Council and Southampton City Council for a Street Lighting replacement PFI project, approved by the Government for the allocation of PFI credits.
Make full use of Government supported borrowing, subject to the affordability of the additional capital financing costs generated.	£12.1m of supported borrowing not taken up in 2007/08, in accordance with decision taken in February 2007 on affordability grounds, in the context of the authority's position at the grant floor.
Seek to maximise capital resources by developing capital schemes in conjunction with external partners where appropriate.	£16.7m of capital payments funded by contributions from external partners in 2007/08.
Approve the use of unsupported borrowing within the framework of the County Council's prudential code - business unit investment where the financing costs will be funded by charges made to customers - `invest to save' projects generating savings which will enable the financing costs to be funded, capital receipts which will enable borrowing to be repaid, or alternative costs to be avoided. - temporary borrowing to cover short-term shortfalls in capital funding resources.	Unsupported borrowing of £21.7m undertaken in 2007/08 offset by a repayment of £14.9m, bringing the level of unsupported borrowing to £55.2m at the end of 2007/08.

B Provision of Financial Services

Effective management of budgets	Commentary
Devolution of financial management to service departments combined with appropriate financial training, provision of appropriate systems to generate management information and a framework of sound internal controls including Financial Regulations and procedures.	User group established to develop SAP reporting to meet financial information requirements more efficiently. A review of financial limits undertaken in conjunction with the democratic review to simplify the current framework of financial procedures and regulations. Extensive financial training continues to be provided.
Rigorous annual budgeting and budget monitoring processes, including regular reporting and briefing of executive members on projected service outturns relative to cash limits.	2007/08 saw the development of improved linkage between spending and activity data in corporate budget monitoring reports.
Maintain integrated accounting and budgeting systems which provide accurate and meaningful monitoring reports including the scope to profile expenditure for outturn forecasts and set a consistent overall financial framework across the authority, including for schools.	Implementation of SAP has delivered further integration of HR, finance and procurement and has been extended with development of SAP real estate module. Schools use of corporate systems is fundamental to this process.

Ensuring good practice and probity	Commentary
Assess the need for training in financial skills in line with the practices required by Investor in People status, and arrange delivery and evaluation of that training.	IIP status maintained in 2007/08 for Hampshire County Council. Internal health check showed good processes for delivery and evaluation of training
Recognise the statutory and corporate finance roles of the Chief Financial Officer in ensuring lawful and financially prudent decision-making through his membership of the Corporate Management Team.	County Treasurer is a member of the Corporate Management Team.
Report internal audit's strategy to the Governance Committee.	Reported to the March meeting of the Governance Committee.
Provide annual internal audit assessments for each department as part of the review of effectiveness of controls for the statement of internal control.	Assessments provided accordingly.
Develop IT systems designed to enhance the provision of financial management information to users.	SAP and Swift are designed to achieve this, with improvements made to the interface. There is an increasing emphasis on self-service in such areas as Payroll and Pensions information and local budget management.
Maintain Head of Profession arrangements whereby the head of each devolved finance unit has defined responsibilities for ensuring that both corporate and departmental needs are met.	The framework remains in place and is working well, with six Heads of Profession, now aligned to departmental structures.
Maintain and work with Chief Officers to apply Financial Regulations and associated financial procedures in support of good practice in financial administration and corporate governance.	Part of the annual audit report and assurance statement refers specifically to the compliance with financial regulations and other procedures which comprise the control framework.
Maintain an effective and efficient internal audit function which works co-operatively with the Council's external auditor.	The Audit Commission continues to rely on the work of internal audit and to comment favourably on quality and professional standards achieved in the annual management letter.
Comply with the CIPFA Code of Practice for treasury management.	Code complied with, as confirmed by external audit.
Comply with accounting and audit standards contained in the relevant Codes of Practice and CIPFA guidance.	All standards complied with.

Efficient and accessible processing of transactions	Commentary
Best practice in relationships with local contractors and suppliers, including paying of bills in line with Government prompt payment targets.	The Government's target of 100% is probably not realistic, but at over 95% the County is one of the better performers for this indicator.
An emphasis on continuous improvement driven by a customer focus as the best way to deliver good financial services.	The Quality Review carried out in Autumn 2004 continued this focus, and has informed the County Treasurer's service plan along with an emphasis on electronic transactions, business Process Innovation reviews and making the most of the Council's web presence.
All services to be available electronically in line with Government timescales, including moves towards employee self service and web-enabled transactions.	Achieved during 2005 as planned: this includes availability of on-line payment facilities. Employee self service continues to be developed with travel and expenses being piloted, as well as managers self service in SAP. Pensions have successfully piloted self service for employers, enabling them to enter their own data.
Obtain the Charter Mark for services dealing directly with the public, and seek to apply a similar approach to internal customers.	Pensions Services, Student Support and Financial Assessments currently hold the Charter Mark.
Keep transaction costs within the lowest 25% of costs among county councils.	Benchmarking continues to show good results. The "overhead" represented by finance as a proportion of the County Council's total spend continues to reduce, mainly due to the Benefit Realisation plan following SAP implementation. This is expected to reduce the costs of the finance function by £1.0m per year. Reductions of £0.8m towards this target had been achieved by 2007/08.

Capital spending and financing 2007/08

1 Introduction

1.1 This Appendix reports that:

· capital schemes costing £151.8m were committed during 2007/08 from the approved capital programme for the year of £213.9m

· this left schemes not committed by 31 March 2008 and unallocated cash limit totalling £62.1m which will be carried forward to 2008/09, subject to Cabinet's approval

· capital expenditure of £177.1m was incurred in 2007/08 and this can be financed within available resources

· it is proposed that £21.7m is borrowed for approved schemes under the Prudential Code for Capital Finance for which Government grant support will not be available

· capital receipts of £63.9m were achieved from the sale of assets in 2007/08.

2 Capital programme for 2007/08

2.1 Table 1 below shows that 71.0% of the capital programme for 2007/08 of £213.9m was started in the year.


Table 1 - Capital schemes committed in 2007/08
	£000	%

Approved value of the capital programme for 2007/08	213,903	100.0%
Schemes committed in 2007/08	151,775	71.0%
	-----------	---------
Balance of cash limit at 31 March 2008	62,128	29.0%
	-----------	---------

Schemes for which approval to carry forward to 2008/09 is now requested	48,125	22.5%
Schemes previously approved for carry forward	12,962	6.1%
Balance of cash limit remaining	1,041	0.4%
	-----------	---------
Cash limit to be carried forward to 2008/09	62,128	29.0%
	-----------	---------

2.2 The majority of the capital programme is controlled on a `starts' basis whereby the full estimated cost of the scheme is charged against the service's capital cash limit for the year in which the scheme is started. Some schemes, such as lump sum provisions and block votes, are controlled on an `expenditure' basis. In those cases, the amount actually spent in the year is charged against the cash limit. The total of £213.9m shown in Table 1 for the schemes committed in 2007/08 is an aggregate for both `starts' and `expenditure' schemes.

2.3 An analysis by service of the figures in Table 1 is provided in Annex 1.

2.4 Annex 2 shows the adjustments made to the original published capital programme for 2007/08 to reach the `approved value of the capital programme' shown in Table 1.

2.5 Annex 3 lists the schemes committed in 2007/08.

3 Carry forward of schemes not committed by 31 March 2008

3.1 The Executive Member for Policy and Resources agreed in April 2008 that capital schemes that were planned to start by 31 March 2008 but which, for various reasons, will not be committed until 2008/09 should be carried forward to 2008/09. This agreement in principle was subject to the cost of such schemes being accommodated within services' approved capital programme cash limits. Details of the schemes that it is now proposed should be carried forward in accordance with that decision are included in Annex 4. Each service has sufficient resources within their capital programme cash limits to allow all the proposed schemes to be carried forward.

3.2 The total value of schemes and cash limit to be carried forward is £62.1m. This includes £13.0m of Children's Services schemes for which approval to carry forward to 2008/09 has previously been given during 2007/08.

3.3 As Table 2 shows, the proportion of the 2007/08 programme that has been committed in the year, at 71.0%, is lower than has been achieved since steps were taken during 2001 to improve the delivery of the programme. Even so, a substantial programme of £151.8m has still been committed in 2007/08.


Table 2 - Percentage of capital programme committed

	2000/01	2001/02	2002/03	2003/04	2004/05	2005/06	2006/07	2007/08
	£m	£m	£m	£m	£m	£m	£m	£m
Value of projects
- committed	70.5	128.7	110.6	212.6	144.7	169.5	164.4	151.8
- carried forward	34.7	20.4	22.5	29.2	23.1	30.8	60.0	62.1
	--------	--------	--------	--------	--------	--------	--------	--------
Total programme	105.2	149.1	133.1	241.8	167.8	200.3	224.4	213.9
	--------	--------	--------	--------	--------	--------	--------	--------

Percentage committed	67.0%	86.3%	83.1%	87.9%	86.2%	84.6%	73.3%	71.0%

3.4 Approval is now sought to carry forward 74 individual schemes and block provisions (67 a year ago). In addition, approval has already been given January and April 2007 to carry forward 9 Children's Services schemes (20 a year ago).

3.5 The main reasons for the increase in schemes to be carried forward are:

· £15.7m of the Government's grant allocation for children's centres has not been committed. It will be aggregated with a further Government allocation for children's centres in the 2008/09 capital programme

· changes in scope, brief and planning of a number of Children's Services schemes for schools which meant that it was necessary to defer them to 2008/09. Some of these delays had been identified earlier in the year and the revised plans were built into the new three-year capital programme for 2008/09 to 2010/11 which was approved in February 2008

· £12.8m of capital repairs schemes funded from local resources and Government grant was not committed in 2007/08. This includes £2.0m for capital repairs funded by the Dedicated Schools Grant to be carried forward to 2008/09 subject to the approval by the Schools Forum of an increased limit for central spending in 2008/09. The majority of the remaining carry forward relates to New Deal for Schools projects which operate to a 31 August rather than 31 March grant deadline

· Adult Services committed less than half (43.7%) of their capital programme for 2007/08 which had been increased following a review by Cabinet in July 2006.

3.6 The reasons for not committing each individual scheme during the year are listed in Annex 4.

4 Capital expenditure and financing 2007/08

4.1 Total expenditure actually incurred in 2007/08, arising from the capital programme for 2007/08 and earlier years, was £177.1m. This is £12.0m or 6.3% lower than the revised estimate for 2007/08. The timing of capital expenditure flows between financial years is often difficult to predict. The delays in committing a significant proportion of the capital programme for 2007/08 will have reduced the level of payments in the year.

4.2 An analysis of the expenditure of £177.1m by service and type is included in Annex 5.

4.3 The proposed method of financing this expenditure is set out in Table 3 below:


Table 3 - Capital financing 2007/08

	Adjusted revised estimate	Actuals	Variation	Actual funding
	£000	£000	£000	%

Government supported borrowing	34,229	28,895	-5,334	16.3%
Prudential borrowing
- for capital schemes	17,954	21,684	3,730	12.3%
- repayments from capital receipts	-15,834	-14,939	895	-8.4%
Government capital grants	48,372	49,733	1,361	28.1%
Contributions from developers and outside agencies	10,495	16,698	6,203	9.4%
Capital receipts	64,508	58,151	-6,357	32.8%
Revenue reserves - trading units and insurance fund	1,599	1,008	-591	0.6%
Revenue contributions
- general corporate provision	27,987	27,987	-	15.8%
- set aside by schools	231	231	-	0.1%
- repayment from capital receipts of loans under the School Balances Loan Scheme	-480	-480	-	-0.3%
- transfer to capital reserve	-18	-11,901	-11,883	-6.7%
	-----------	-----------	-----------	-----------
	189,043	177,067	-11,976	100.0%
	-----------	-----------	-----------	-----------

4.4 The revised estimates of capital expenditure flows and capital resources agreed by Cabinet in February 2008 included a small surplus of resources of £18,000 which it was planned to transfer to the capital reserve. In the event, the lower level of actual capital expenditure in 2007/08 has enable this contribution to the capital reserve to be increased to £11.9m. This will be required to finance the delayed capital expenditure when it is incurred in 2008/09.

5 Borrowing

5.1 Since 1 April 2004, local authorities have been permitted to borrow for capital purposes without specific approval from the Government, provided their actions meet the requirements of the Prudential Code for Capital Finance introduced by the Local Government Act 2003. This is known as `prudential borrowing'. It does not attract any support from the Government towards the repayment and interest costs, which fall wholly on the County Council's own resources. Cabinet agreed criteria for the use of prudential borrowing in November 2003, with revisions in February 2006. Since then, its use has been agreed for a number of capital schemes, primarily on an invest-to-save basis. It is proposed that a total of £21.7m is borrowed in 2007/08 for these schemes, as summarised in Annex 6, in accordance with the approved criteria. Loans totalling £14.9m that are outstanding on three prudential borrowing schemes approved in previous years can be repaid in 2007/08 from capital receipts following the completion of land sales. These are the schemes at Nightingale Primary School in Eastleigh, Waterside Primary School in Hythe and the Everest Community School in Basingstoke.

5.2 The Prudential Code includes a number of indicators intended to illustrate whether local authorities are acting prudently. The County Council's latest position on these prudential indicators following the 2007/08 outturn is summarised in Appendix 5. It shows that the County Council continues to be in full compliance with the requirements of the Code.

5.3 In addition to the prudential borrowing, it is proposed that £28.9m of loans are raised in 2007/08 on the basis of the Government `supported' borrowing allocations which are supposed to attract revenue grant from the Government towards the repayment and interest costs. This is £5.3m less than the revised estimate for Government supported borrowing, as shown in Table 3. This reflects slippage in capital expenditure to 2008/09.

5.4 The Government considers its borrowing allocations to be fully supported by additional revenue support grant towards the loan charges. As previously reported to Cabinet, the Government changed the methodology with effect from 2006/07 for calculating the minimum floor level of revenue support grant for authorities, such as the County Council, whose grant increase falls below a floor threshold. Grant entitlements arising from the use of Government `supported' borrowing approvals in 2006/07 and future years will no longer automatically be added by the Government to the floor level of grant. Cabinet agreed in December 2006 that the capital programme should be reduced to that the take-up of `supported' borrowing approvals from 2007/08 onwards will be limited to the level consistent with an annual increase in the capital financing requirement of 2.5%. As a result, Government borrowing allocations totalling £12.4m will not be taken up in 2007/08.

5.5 The Government has also given £49.7m of capital grants towards expenditure in 2007/08.

6 Capital receipts

6.1 Capital receipts from the sale of land and property totalling £63.9m were obtained in 2007/08. This was similar to the estimate for capital receipts of £64.5m and is the largest annual total of capital receipts ever achieved by the County Council. Included in this total is the final staged payment for the completed sale of land at the Everest Community School which will not be received until March 2009 and so the total of capital receipts available for financing purposes in 2007/08 is £58.2m.

6.2 Services' proposed shares of capital receipts in 2007/08 are summarised in Annex 7. The County Council's policy allows services to retain 25% of capital receipts from the sale of their assets, with up to 100% for approved in/out schemes. Receipts from development account and county farm sales are retained for corporate use unless, in the case of county farm sales, alternative proposals are specifically approved. In accordance with this policy, services are entitled to £36.6m from the capital receipts of £63.9m in 2007/08. Cabinet has previously approved the addition to the capital programme of £32.8m from this amount, which has funded schemes including:

Winchester Children's Home

Hillier Gardens Visitor Centre

Waterside Primary School

Havant Education Centre

Prospect Special School, Havant

Firvale respite care unit in Basingstoke

Lanterns Children Centre, Winchester

Everest Community School, Basingstoke

Nightingale Primary School, Eastleigh

Improvements to household waste recycling centres

Improvements to the County Farms estate

Whitchurch library

Royal Victoria Country Park Chapel.

6.3 This leaves a total of £3.8m for which approval is now required for allocation to services, as set out in Annex 7.


Analysis of capital programme 2007/08 and requests by services to carry forward capital schemes to 2008/09

	(1)	(2)	(3)	(4)	(5)	(6)
	Approved value of programme	Schemes committed in 2007/08	Schemes for which approval to carry forward is now requested	Schemes already approved for carry forward	Unallocated cash limit available for carry forward to 2008/09	Total cash limit carried forward to 2008/09 (columns 3+4+5)
	£000	£000	£000	£000	£000	£000

Adult Services	6,754	2,952	3,802	-	-	3,802

Children's Services	107,316	68,378	25,431	12,962	545	38,938

Environment	43,728	41,569	2,159	-	-	2,159

Policy and Resources	53,815	37,130	16,193	-	492	16,685

Recreation & Heritage	2,290	1,746	540	-	4	544

	----------	----------	----------	----------	----------	----------
	213,903	151,775	48,125	12,962	1,041	62,128
	----------	----------	----------	----------	----------	----------

Details of these figures are provided in:

Annex 2 Approved value of programme, including adjustments to the capital programme originally agreed in February 2007 (column 1 above)

Annex 3 List of schemes committed in 2007/08 (column 2 above)

Annex 4 List of schemes not committed by 31 March 2008, to be carried forward to 2008/09 (column 3 above)


Services' capital cash limits 2007/08 - adjustments

	Adult Services	Children's Services	Environ- ment	Policy & Resources	Recreation & Heritage	Total
	£000	£000	£000	£000	£000	£000
Programme approved February 2007	4,139	84,282	50,976	39,085	769	179,251
Schemes brought forward from 2006/07	2,484	13,061	1,490	18,801	512	36,348
Balance of cash limit brought forward from 2006/07	-	293	-	182	24	499
Share of capital receipts from 2006/07	151	1,161	-	833	-	2,145
Use of capital receipt from 2007/08	-	370	-	-	-	370
Transfers between services	-20	-	-	-40	40	-20
Transfers to/from revenue	-	25	-	-971	265	-681
Adjustments to Environment's programme to manage expenditure flows within the resources available	-	-	-8,738	-	-	-8,738
Re-profiling capital repairs provisions	-	-	-	-8,000	-	-8,000
Government grant allocations:
Federating schools	-	555	-	-	-	555
Specialist schools	-	200	-	-	-	200
Swanwick Lodge secure unit	-	1,027	-	-	-	1,027
Children's Centres	-	3,228	-	-	-	3,228
Mobile technology for social workers	-	196	-	-	-	196
14-19 capital developments	-	1,229	-	-	-	1,229
Sustainable travel	-	453	-	-	-	453
Youth capital fund	-	-14	-	-	-	-14
Additional contributions to schemes	-	-	-	-	680	680
Approved use of prudential borrowing	-	1,250	-	4,025	-	5,275
Deletion of business units' schemes no longer required	-	-	-	-100	-	-100
	----------	----------	----------	----------	----------	----------
Approved value of programme 2007/08	6,754	107,316	43,728	53,815	2,290	213,903
	----------	----------	----------	----------	----------	----------

Capital Programme
Schemes committed in 2007/08		Value
		£000
Adult Services
Locally resourced programme
IT training base, Nuance Global House, Eastleigh		228
Information technology projects		129
Integrated Community Equipment Service (ICES) building		161
Fire precautions and improvements in residential homes etc		197
Older persons day centre, Horrill Centre, Dibden		750
Supported by Government allocations
Mental health services		185
Information management systems		313
Improving the care home environment		989
Total Adult Services		2,952
Children's Services
Children's homes		182
Swanwick Lodge secure unit, Fareham		1,047
Respite care unit for children with disabilities, Basingstoke		395
Belle Vue/Newport Federation, Aldershot		350
Bordon Infant School		400
Breamore Primary School		673
Burnham Copse Primary School, Tadley		2,700
Cadland Primary School, Holbury		2,347
Cherrywood Primary School, Farnborough		365
Dowds Farm Primary School, Hedge End		5,263
Durley Primary School		300
Freegrounds Infant School, Hedge End		600
Hale Primary School		630
Kings Copse Primary School, Hedge End		5,157
Kings Worthy Primary School, Winchester		1,450
Lee on Solent Junior School		250
Children's Services - continued
Liss Junior School		345
Marnel Infant and Junior Schools, Basingstoke		3,691
Romsey Primary School		3,167
Shamblehurst Primary School, Hedge End		600
Fernhill School and Language College, Farnborough		250
Staunton Park School, Havant		250
Baycroft Special School, Stubbington		439
Henry Tyndale Special School, Farnborough		564
Riverside Special School, Waterlooville		500
Basingstoke School Plus		250
Park Children's Centre, Aldershot		275
Hart and Rushmoor 14-19 Consortium		653
Schools' Devolved Capital		22,176
Children's centres		2,818
School security		356
Early years sustainability		584
Extended schools		527
Health and safety issues		273
Sustainability projects		301
Sports halls		300
School kitchens		250
Youth Capital Fund		96
Interest on borrowing		600
Other projects under £250,000		5,050
Schools Access Initiative	#	1,707
Furniture and equipment	#	247
Total Children's Services		68,378

Environment
Locally resourced programme
Environmental improvements		376
Waste management facilities management		64
Household waste recycling centres		1,048
Other minor works		30
Structural maintenance of roads and bridges	#	14,034

Supported by Government allocations
Casualty reduction programme
Surface treatment programme	#	1,489
Casualty reduction partnership (net)	#	393
Casualty safety audit programme (net)	#	317
Low cost safety schemes (net)	#	683
Area strategies - Central Hampshire
Sparkford Road, Winchester (net)		22

Area strategies - New Forest
Lyndhurst Intelligent Routeing Strategy		75
Station Road South (Mallard Court), New Milton (net)		50
Northern New Forest Heavy Goods Vehicle Restrictions		100
Area strategies - North Hampshire
A340/A339 Aldermaston Road Junction, Basingstoke (net)		1,500
Area strategies - Solent
Whiteley accessibility - Springles Lane closure		60
Whiteley accessibility - Swanwick Station interchange		50
Broadmarsh cycles, Havant (net)		240
Stubbington accessibility (net)		25
Hedge End to Southampton Quality Bus Partnership		200

Environment - continued
Fareham - Gosport Quality Bus Partnership
- bus priority (net)		80
- passenger information		245
Witherbed Lane Link and Segensworth roundabout (net)		600
Fareham Western Wards Western Distributor
- Schooner Way to Warsash Road (net)		1,400
Yew Tree Drive, Whiteley (net)		325
Hardley to Hythe cycle route (net)		14
Hythe Pier maintenance		90
Havant Quality Bus Partnership		170
Access to Gosport - Peel Common (net)		140
Other Integrated Transport
Safe and secure communities		500
Community transport vehicles		175
Minor schemes (net)		180
Access partnerships		35
Access to countryside	#	157
Community street lighting	#	67
Local Transport Plan monitoring and initiatives	#	30
Passenger transport information	#	200
Rail stations and interchanges	#	92
Safer routes to schools (net)	#	1,054
Minor traffic management (net)	#	410
Recreational cycling	#	4
Structural maintenance of roads and bridges (net)	#	14,845
Total Environment		41,569


Policy and Resources
Locally resourced programme
Ashburton Court, Winchester - refurbishment		4,025
Office accommodation		432
Economic prosperity		30
Coastal conservation		38
Capital repairs	#	5,589
Land management		152
County Farms		119
Contribution to village hall for Sherborne St John		47
Contribution to the Horrill Centre project, Dibden		58
Disposal of sites fees		531
IT Services
- Castle telephone system replacement and Enterprise licence		5,017
Advantageous land		157
Supported by Government allocations
New Deals for Schools condition funding	#	10,417
Capital repairs - schools	#	10,518
Total Policy and Resources		37,130
Recreation and Heritage
Locally resourced programme
Winchester Discovery Centre		100
Library improvements		245
Milestones product development		30
Allen Gallery and Curtis Museum, Alton		59


Recreation and Heritage - continued
Basing House		93
Odiham Castle phase 2		497
Countryside and rights of way improvements		123
Countryside - green fuel boiler		86
Countryside - contribution to Crab Wood		9
Lawrence House, Calshot - accommodation block		162
Calshot Mitchell building		7
Tile Barn Outdoor Centre, Brockenhurst - classroom		57
Community buildings and village halls		125
Disability Discrimination Act projects		7
Hot surfaces work contribution		20
Arts - Leigh Park Craft Initiative		11
Minor works		149
Overstatement of prior year commitments		-34
Total Recreation and Heritage		1,746
Total schemes committed in 2007/08		151,775

# indicates schemes controlled on an expenditure basis. All other schemes are controlled on a starts basis

Capital Programme 2007/08

Schemes not committed by 31 March 2008, to be carried forward to 2008/09

Schemes	Value	Latest	Reasons for Delay
	£000	Start Date
Adult Services
Fire precautions in residential homes	893	April 2008	Contract now let
Furniture and equipment in residential and day care premises	444	Ongoing	Linked to refurbishments of homes for older people
IT equipment	113	April 2008	Awaiting decisions on restructure
Minor works	487	August 2008	Technical resource constraints
Furniture and equipment in office bases	178	April 2008	Linked to delayed office moves
Extra care supported housing	166	April 2008	Awaiting completion of business case
IT projects	360	April 2008	Technical resource constraints
Community equipment stock	200	April 2008	Linked to the delay in the new
			community equipment building
Mental health services	432	April 2008	Technical resource constraints
Information management systems	148	April 2008	Delay of the Electronic Social Care Record (ESCR) project
Improving the care home environment	381	April 2008	Slippage on completions
Total Adult Services	3,802		56.3% of schemes approved to start in 2007/08 to be carried forward
Children's Services
Bishops Waltham Infants	20	April 2008	Delay in agreeing specification
Crescent/Norwood Federation	205	June 2008	Linked to ICT infrastructure
Fawley Infant School	50	September 2008	Planning issues
Hambledon Infant School	49	June 2008	Delay in agreeing specification
Riders Infant School, Havant	39	September 2008	School asked for design to be modified

Children's Services - continued
Sarisbury Junior	34	October 2008	Now part of a larger scheme
Bransgore Primary	30	October 2008	Awaiting scheme design
Ridgemede Junior, Bishops Waltham	30	April 2008	Delay in agreeing specification
Wildern School, Hedge End	650	September 2008	Awaiting contract formation
Crestwood College, Eastleigh	500	September 2008	Awaiting contract formation
Bay House School, Gosport	200	August 2008	Planning issues at initial site location
Robert Mays School, Odiham	170	October 2008	Awaiting Football Foundation bid
Wyvern School, Fair Oak	125	September 2008	Awaiting contract formation
Cams Hill School, Fareham	100	May 2008	Awaiting contract formation
Noadswood School, Dibden Purlieu	100	October 2008	Contract issues
Fort Hill School, Basingstoke	80	September 2008	Contract issues - now out to tender
Mountbatten School, Romsey	100	September 2008	Awaiting contract formation
St Francis Special School, Fareham	100	August 2008	Delayed agreement with school on scope of works
Bridge Education Centre, Eastleigh	1,649	July 2008	Planning delays
Dove House School, Basingstoke	100	August 2008	Awaiting assessment of tender
Samuel Cody Special School, Farnborough	100	August 2008	Awaiting assessment of tender
Stepping Stones Pre-School, Fordingbridge	60	October 2008	Linked to a larger scheme and external bids
Eastleigh 14-19 consortium	476	April 2008	Timing decisions by consortium
Block Votes
Schools Access Initiative	1,241	Various	)
Furniture and equipment	752	Various	)
Children's homes	700	Various	)
School security	367	Various	)
Health and safety	250	Various	) Funding unallocated and carried

Children's Services - continued
Education other than at school	407	Various	) forward to block vote for 2008/09
Management of falling rolls	450	Various	)
Fees to progress land sales	71	Various	)
Foster carers	87	Various	)
Youth Capital Fund	220	Various	Delays in starting projects
Mobile technology for social workers	196	April 2008	Delays in starting projects
Children's centres	15,704	Various	Carried forward to meet target over implementation period
Interest on borrowing	19	Various	To be incurred in later years
Total Children's Services	25,431		23.7% of schemes approved to start in 2007/08 to be carried forward
Environment
Structural maintenance - locally resourced	1,142	2008/09	Provision controlled on an expenditure basis
Beeches Hill, Bishops Waltham	25	2008/09	Objections by residents
Whitehill / Bordon market towns project	123	July 2008	Land issues
Andover Town Centre Accessibility (net)	150	August 2008	Funding problems due to higher than expected tenders. To be re-tendered
B3013 Reading Road South, Fleet pedestrian crossing (net)	70	May 2008	Change in the access to the nearby school meant that further survey work and consultation was required
Bordon country towns initiative	220	July 2008	To be carried out in conjunction with Whitehill / Bordon scheme above


Whitchurch country towns initiative	53	June 2008	To be carried out in conjunction with transport scheme in 2008/9 programme
Forton Road, Gosport - regeneration of older urban area	376	Not known	Extensive consultations with Gosport Borough Council required
Total Environment	2,159		4.9% of schemes approved to start in 2007/08 to be carried forward
Policy and Resources
Office accommodation	383	2008/09	Delays to various minor schemes
Economic prosperity	97	September 2008	Awaiting third party action under
			partnership project
County Supplies	208	April 2008	Testing and implementation to take place in schools' Spring break for operational reasons
Fort Gilkicker	100	Not known	Ongoing negotiation to secure disposal
Coastal defence works	167	April 2008	Various schemes to be carried forward
Regulatory services	47	2008/09	Carried forward to combine with 2008/09 allocation for equipment purchase
Hampshire Transport Management	607	May 2008	New transport workshop at Bishops Waltham not due to start until May 2008
Capital repairs - schools	2,019	2008/09	Major programme of structural work of £1.7m plus other minor delayed schemes to be carried forward subject to the approval by the Schools Forum of the increased limit for central spending in 2008/09
Capital repairs - other	1,093	2008/09	Delays to various schemes partly as a result of the poor weather earlier in the year

Policy and Resources - continued
New Deals for Schools condition funding	9,701	20008/09	Government funding requires that resources are spent by August 2008
Advance and advantageous land purchases	1,501	2008/09	Resources retained to have strategic impact when opportunity / need arises
Disposal of sites fees	53	2008/09	Resources retained to have strategic impact when opportunity / need arises
Advance fees	217	2008/09	Resources retained to have strategic impact when opportunity / need arises
Total Policy and Resources	16,193		30.1% of schemes approved to start in 2007/08 to be carried forward
Recreation and Heritage
Grants to village halls	150	Not known	Delays in finalising schemes
Calshot Activities Centre - sewerage works	25	2008/09	Operational reasons
Tile Barn outdoor centre Brockenhurst	135	2008/09	Operational reasons
Royal Victoria Country Park Chapel	150	2008/09	Operational reasons
Countryside and rights of way improvements	20	2008/09	Operational reasons
Arts schemes	60	2008/09	Operational reasons
Total Recreation and Heritage	540		23.6% of schemes approved to start in 2007/08 to be carried forward

Total not committed - all services	48,125		22.5% of schemes approved to start in 2007/08 to be carried forward
Add: Children's Services schemes previously approved for carry forward to 2008/09	12,962
Total schemes carried forward	61,087		28.6% of schemes approved to start in 2007/08 to be carried forward
Add: balance of cash limit carried forward	1,041
Total cash limit carried forward	62,128		29.0% of schemes approved to start in 2007/08 to be carried forward

Summary of capital expenditure 2007/08

Analysis by service

	£000	%

Adult Services	4,443	2.5
Children's Services	85,208	48.1
Environment	54,397	30.7
Policy and Resources	25,475	14.4
Recreation and Heritage	7,544	4.3
	-----------	--------
	177,067	100.0
	-----------	--------

Analysis by type of expenditure

	£000	%

Land	400	0.2
Construction work	143,896	81.3
Fees and salaries	23,935	13.5
Furniture, equipment and vehicles	8,836	5.0
	-----------	--------
	177,067	100.0
	-----------	--------

Prudential borrowing in 2007/08

	£000
For specific capital schemes
Winchester Discovery Centre	1,734
Dowd's Farm Primary School, Hedge End	931
Kings Copse Primary School, Hedge End	2,483
Shamblehurst Primary School, Hedge End	52
Freegrounds Infant School, Hedge End	42
Henry Tyndale Special School, Farnborough	105
Basingstoke School Plus	33
Burnham Copse Primary School, Tadley	481
Cadlands Primary School, Holbury	1,206
Kings Worthy Primary School	941
Romsey Primary School	2,482
Andover Children's Centre	21
Abbotts Ann Primary School, Andover	187
Roman Way Primary School, Andover	72
Andover Education Centre	327
Knights Enham Schools, Andover	200
Swanwick Lodge secure unit	650
Ashburton Court, Winchester	5,546
Recreation and Heritage various schemes	100
IT Services capitalised infrastructure costs	1,187
Locally resourced projects in lieu of Hantsdirect set-up costs	2,904
	---------
Total - specific schemes	21,684
Repayments from capital receipts
Nightingale Primary School, Eastleigh	-780
Waterside Primary School, Hythe	-1,168
Everest Community School, Basingstoke	-12,991
	---------
Total net prudential borrowing in 2007/08	6,745
	---------

Analysis of capital receipts 2007/08


	(1)	(2)	(3)	(4)
	Net capital receipts	Shares from in/out and other schemes		25% share of qualifying receipts now due to services
	Net capital receipts	Previously added to programme	Now available to be added to programme	25% share of qualifying receipts now due to services
	£000	£000	£000	£000

Adult Services	9,770	3,350	320	-
Children's Services	36,258	27,137	2,346	-
Environment	4,982	983	-	262
Policy and Resources
- Development account	8,982	-	-	-
- County farms	1,272	-	313	-
- Other	925	-	50	230
Recreation and Heritage	1,686	1,355	246	-
	-----------	-----------	-----------	-----------
	63,875	32,825	3,275	492
	-----------	-----------

Total now to be added to services' programmes			3,767
			-----------

The capital receipts used to repay prudential borrowing and loans from the School Balances Loan Scheme, totalling £15.4m, are included column (2) in the table above.

emos, etc and their location).

1 Significant partnership activity in 2007/08

1.1 The corporate policy on partnership working emphasises the County Council's commitment to work in partnership to achieve the best public services at the best possible value for the people of Hampshire.

1.2 As outlined in the Local Government Act 2000, the County Council has a duty to promote and support partnership working as part of its community leadership role. This means having a responsibility for setting a clear direction for the performance of partnerships themselves in achieving outcomes for the community as well as a responsibility for its own role and performance within the partnership.

1.3 This appendix reports on partnership activity in 2007/08 for partnerships with an annual turnover in excess of £250,000 and where there are no alternative member reporting arrangements. It includes:

	2007/08	Gross Exp £'000	Gross income £'000	Net (Income)/ Exp £'000
Section	Adult Services:
2	Integrated Community Equipment Service	3,289	3,289	0
3	Section 31 agreement: Hampshire Partnership Trust integrated mental health and substance misuse services	753	820	(67)

	Children's services
4	Section 31 agreement: Hampshire Children's Trust	1,526	2,347	(821)

	Environment
5	Safer Roads Partnership	2,342	2,934	(592)
6	Life 3	263	305	(42)
7	ESPACE	420	420	0

	Policy & Resources
8	Hampshire and Isle of Wight Improvement Board	544	1,300	(756)
9	Innovation Forum	241	900	(659)

	Recreation & Heritage
10	Hub	4,664	4,985	(321)

Adult Services

2 Integrated Community Equipment Service

Objectives

2.1 The Integrated Community Equipment Services (ICES) supports the three corporate priorities; Hampshire safer and more secure for all, Maximising well-being & Enhancing our quality of place. It does so through the timely provision of equipment to disabled, frail and elderly citizens. The range of equipment purchased and stocked is essential to enable people to remain within their own homes or within a community based setting. Most of the equipment is recycled and re-issued. It promotes independence and wellbeing and is central to safe and timely hospital discharges. The service prevents hospital, residential or nursing home admissions by minimising the risks of falls, immobility and breakdown of formal or informal care arrangements.

2.2 Until this year within Hampshire there were two equipment services, one situated in Basingstoke and the other in Portsmouth. In March 2007 the Executive Member for Adult Services approved the consolidation of the two stores into a single store located in Basingstoke covering the whole of Hampshire.

2.3 Table 1 summarises the overall cost of the service and the partnership funding arrangements

Table 1 - ICES Summary financial statement for 2007/08

COSTS:	£000s
Running Costs	1,256
Purchase of Equipment & Adaptations	2,013
Total Costs	3,289
Population served	900,000
Cost/head of population	£3.63

FUNDED BY:	£000s
Hampshire County Council	2,027
Hampshire PCT	1,262
Total Funding	3,289

2.4 For 2007/08 actual costs matched the budget. However, the budget was increased to reflect agreed additional investment by Hampshire CC and Hampshire PCT to meet the continued rise in demand for equipment as well as the one-off and ongoing costs of the new single store which became operational in summer 2007.

2.5 A Partnership Agreement is being prepared in accordance with Section 75 of the National Health Service Act 2006. Until the agreement has been formally signed off there is general consensus that a 50/50 split of any over/underspends is the only practical approach in the absence of any nationally recognised robust cost sharing methodology.

Partnership Working

2.6 Considerable progress in partnership working has been made in the current financial year between the new Hampshire PCT and Hampshire Adult Services:

· Agreement has been reached the overall size of the ICES budget to ensure the sustainability of the service and to meet national performance targets.

· Work is ongoing to formalise the partnership in a Section 75 agreement with formal sign off anticipated for Autumn 2008.

· The ICES Pooled Budget Group agreed that funding will be split on a 50/50 basis.

Financial Monitoring

2.7 Periodic financial reports were considered by the Partners and appropriate action was taken. Financial monitoring was also undertaken by the partners separately through their normal budget monitoring arrangements.

Performance against objectives

2.8 The key external performance indicator for ICES is D54 - Percentage of items of equipment and adaptations delivered in 7 working days (BVPI 56). Against this measure for 2007/08 performance improved over the previous year and over target.

Value for Money assessment

2.9 The economies of scale in terms of purchasing power, logistics and management arrangements have been well-established both locally and nationally. However, a major review of the ICES provision was completed in March 2007 and it was determined that one store servicing all of Hampshire (excluding Portsmouth & Southampton) would provided even better value and best fit with the strategic plans of Hampshire CC and Hampshire PCT. The additional benefits of the single store are:

· Best value in terms of staffing and overheads through the development of the new service model.

· Consistent service delivery and implementation of policy.

· Service discrepancies which currently exist between Basingstoke and Portsmouth ICES will be removed, enabling the implementation of a Hampshire wide service specification, agreed by both HCC and Hampshire PCT.

· Consistency of monitoring arrangements and performance data

· Reduced risk through not being dependant on the priorities of other local authority and PCT providers

Reporting Arrangements

2.10 During 2007/08 the focus of the partnership was on the consolidation of the two existing stores into the single larger store based at Lister Point, Basingstoke. This involved a number of meetings to plan and implement the project.

2.11 The Board consists of representatives from Hampshire County Council Adult Services Department and Hampshire PCT supported by Hampshire County Treasurers representative.

2.12 The future reporting arrangements will be confirmed when the Section 75 agreement is signed off later in the year.

2.13 Note the Hampshire representative is Martin Garbett, Service Manager. Contact at [email protected]

3 Section 31 agreement: Mid Hampshire mental health service reprovision

Objectives

3.1 The Mid Hampshire mental health service reprovision pooled budget was established in accordance with Section 31 of the Health Act 1999 and commenced on 1 October 2006. Its objective is to jointly commission modern health and social care mental health resources that meets the needs of adults with severe mental health problems and promote their independence.
The partner bodies are Hampshire PCT and Hampshire County Council.

Table 2 - Mid Hampshire mental health pooled budget summary financial statement for 2007/08

	£'000	£'000
Gross expenditure		753
Funded by:
Hampshire County Council	67
Hampshire PCT	720
Carry forward from 2006/07 surplus	33
Total funding		820
Surplus carried forward to 2008/09		67

Performance and reporting arrangements

3.2 The partnership board terms of reference have been completed and have been set out in schedule 5 of the Section 31 agreement. Day to day management arrangements through project management pathway are set out in Schedule 5. The Hampshire County Council lead representative is Lucy Butler, Strategic Commissioning Director Mental Health. Contact at [email protected].

Children's services

4 Section 31 agreement: Hampshire Children's Trust

Objectives

4.1 Hampshire's CAMHS Trust focuses on Child and Adolescent Mental Health Services (CAMHS) and includes all services in Hampshire aiming to promote and restore the emotional well-being of children and young people. The Trust is a partnership between Hampshire County Council's Children's Services Department, Hampshire Primary Care Trust and other organisations who provide support for children and young people with emotional, social, and mental health needs. This is a formal partnership agreement with pooled development budgets between Children's Services and Hampshire PCT established under section 31 of the Health Act 1999 (now section 75 of the National Health Service Act 2006).

Table 3 - CAMHS summary financial statement for 2007/08

	£'000	£'000
Gross expenditure		1,526
2007/08 funding:
Hampshire County Council	675
Hampshire PCT	920
	1,595
Carry forward from 2006/07 surplus	752
Total Funding		2,347
Surplus carried forward to 2008/09		821

4.2 Further information can be found on the CAMHS Trust website (see links below):

CAMHS Trust Home page

http://www3.hants.gov.uk/childrens-services/childrenandyoungpeople/mentalhealth/childtrusthome.htm

CAMHS Trust Board minutes

http://www3.hants.gov.uk/childrens-services/childrenandyoungpeople/mentalhealth/childtrusthome/hct-camhs-professions/hct-board.htm

Environment

5 Safer Roads Partnership

Objective

5.1 Hampshire and Isle of Wight Safer Roads Partnership aims to improve road safety and reduce the number of speed related casualties, by the use of speed cameras and through education and information.

5.2 What originally was the Safety Camera Partnership up until April 2007 was changed to become Safer Roads Partnership, with new arrangements for funding. Funding partners use the Road Safety Grant to finance the project. The Partnership includes seven partners:

· Hampshire County Council,

· Magistrates Court Committee,

· Southampton City Council,

· Portsmouth City Council,

· Isle of Wight Council,

· Hampshire Police Authority

· and as of Quarter 4 2007/08 Hampshire Fire and Rescue.

Hampshire County Council acts as Treasurer to the Partnership.

5.3 In 2007/08, Driver Awareness Training was introduced as an alternative to a fine and licence points. It is hoped that the income from these courses will help to reduce the reliance on Road Safety Grant for the funding of the partnership.

Table 4 - Safer Roads Partnership Project Summary Statement 2007/08

	£'000	£'000
Expenditure		2,342
Income	2,826
Carry forward balance from 2006/07	108
Total funding		2,934
Closing balance 31 March 2008		592

5.4 The balance brought forward as at 1 April 2007 represents interest carried forward from The Safety Camera Partnership of £107,933

5.5 Income received from Road Safety Grant via funding partners in the year was £2,551,365. This included £489,308 contribution from Hampshire County Council, in the form of a repayable loan. Interest of £95,257 was earned on this account in the year and £146,098 was received from Driver Awareness Courses. A further £33,096 was received from the department of transport relating to monies due to the police for 06/07 Quarter 4.

5.6 Expenditure on the account from 1 April 2007 to March 2008 totalled £2,341,623.

5.7 The closing balance on the account of £592,126 represents £203,190 of interest, £33,096 owing to the Police Authority, and £355,840 underspend against the original 2007/08 budget. This will be used to repay the Hampshire County Council loan.

Performance and reporting arrangements

5.8 The Partnership is governed by a protocol and financial procedures approved by the Partnership Steering Group, which also receives quarterly and annual reports on the performance of the partnership. All financial claims are subject to audit. Further details can be found on the Safer Roads website:

http://www.safetycamera.org.uk/index.asp

6 Life 3

Objective

6.1 The object of the Life 3 project was to restore 604ha of wetland habitat in the New Forest candidate Special Area of Conservation, and ensure their future sustainable management and regeneration.

6.2 The project began 1 July 2002 and ran for four and a half years until 31 December 2006. The project total expenditure was €3,793,832. 40% of which is funded by the European Union (EU). The remaining funds are sourced from the six partners: Hampshire County Council, Environment Agency, English Nature, Forestry Commission, National Trust and the Royal Society for the Protection of Birds. Hampshire County Council is also the beneficiary for the EU funds, with responsibility for receiving, verifying and paying claims from partners for their share of the EU funding.

6.3 All EU funds are received in Euros and all claims received from partners for their share of the EU funding are paid in Euros.

Table 5 - Life 3 summary financial statement for 2007/08


	€'000	£'000 *
Expenditure	333	263
Income	338	267
Carry forward balance from 2006/07	48	38
Closing balance 31 March 2008	53	42
* Euro conversion rate as at 31 March 2008 of 1 euro = 79p has been used to convert to pound sterling values

6.4 The expenditure represents the payments to partners made in 2007/08.

6.5 The final tranche payment was received in 2007/08 and was distributed between the partners, bringing a close to the project. Interest earned on the Euro account for the year amounted to €2122.39.

6.6 The accounts will now remain open for a further five years in accordance with the EU audit regulations. The remaining balance will then be distributed among the partners.

Performance and reporting arrangements

6.7 The final claim was independently audited before submission to EU, along with the detailed technical report showing how the project objectives have been achieved. Further details can be found on the Life 3 website:

http://www.newforestlife.org.uk/life3/life3index.htm

7 ESPACE

Objectives

7.1 ESPACE (European Spatial Planning: Adapting to Climate Events) is an ambitious four year European project that aims to prepare for the impact of climate change and develop solutions. It will also underline the need to adapt to climate change at local, regional, national and European levels.

7.2 The project commenced in September 2003 and was originally planned to run for four years until 2007. The total project budget was €4.75 million, approximately £3.2 million. Six of the ten partners agreed to extend the project for one year and the total budget is now €5.13, approximately £3.6 million. Hampshire County Council's share is approximately £1.2 million and is 50% funded by the INTTEREG IIIB North West Europe Programme (a European regional development fund). Further funding is received from Communities and Local Government (CLG) and the remaining balance is sourced from 10 partners: Hampshire County Council, Environment Agency, Regional Landscape Zenne Zuun en Zonien, South East Climate Change Partnership, South East England Regional Assembly, Surrey County Council, Waterschap Rivierenland, West Sussex County Council, Ministeria van VROM and Bayerisches Landesanmt fur Wasserwirtschaft. The extension of the project will be funded from the same sources as the original project.

7.3 The 6 partners taking up the extension of the project are Hampshire County Council, Environment Agency, South East Climate Change Partnership, South East England Regional Assembly, Waterschap Rivierenland and Ministeria van VROM.

7.4 Hampshire County Council is the lead partner in the ESPACE project and therefore responsible for receiving and verifying all partners' claims along with compiling the partnership claim, receiving and distributing funding from the INTTEREG IIIB and the DCLG.

7.5 All EU funds are received in Euros and all claims received from partners for their share of the EU funding are paid in Euros.

Table 6 - Summary financial statement 2007/08

	€'000	£'000
Opening balance 1 April 2007	0	0
INTTEREG Income	532	420
Expenditure	532	420
Closing balance 31 March 2007	0	0

7.6 The closing balance of zero is due to no Interreg funding due to be received or distributed until after 31 March 2008. Activity and finance on the project will continue into 2008/09 when the final claims will be submitted. The account will be kept open for a further five years from the end of the project in line with EU audit regulations.

Performance and reporting arrangements

7.7 All partner claims are subject to audit before submission on INTTEREG IIIB where claims are subject to further audit and verification against the technical objectives of the project, as detailed in the original bid documents. Further details can be found on the ESPACE website:

http://www.espace-project.org/

Policy and Resources

8 Hampshire and Isle of Wight (HIOW) Improvement Board

Objective

8.1 The HIOW Improvement Board was established by the HIOW LGA in 2006 to champion the transformational services agenda throughout Hampshire and the Isle of Wight and oversee the implementation of the Capacity Building Programme to achieve sustainable service improvement. This is to be achieved through developing further joint working between authorities and by building on the work already undertaken by the Efficiency and HR Collaboration groups who had already been working together for a year or so.

Partners

8.2 The Board includes one member from each HIOW LGA authority (this includes all county, unitary and district local authorities within Hampshire and the Isle of Wight and the National Park Authority for the New Forest.) The Board is chaired by Councillor Kendall, Leader of New Forest District Council. The Board is supported by an officer group with representatives from each authority and chaired by the Chief Executive of East Hants District Council.

Funding

8.3 In September 2006, the Board learned it was successful in its bid for Capacity Building Programme funding under the Regional Improvement Strategy for Local Government in the South East for the period 2006 - 2008. Total funding of £1.3m was awarded for the two year period with 50% being advanced each year. The cash fund is managed on behalf of the Improvement Board by the County Treasurer, Hampshire County Council. Interest earned on the cash balance is paid to the fund and the cost of financial administration is charged to the fund. For 2007/08 interest of £50,000 and costs of £6,000 were charged to the fund. The County Council provides staffing support for a number of the projects in addition to being lead authority for three.

Table 7 - HIOW Improvement Board summary financial statement as at 31 March 2008

Project	Lead Authority for this programme	Total project budget £'000	Claimed from fund as at 31 March 2008 £'000
Collaborative service delivery:
Council Tax & NDR collection	New Forest DC	150	85
Planning (+ £85,000 funding from the Planning Advisory Service	East Hants DC	100	18
Test Valley & New Forest Partnership	Test Valley BC	18	18
Waste Management	Basingstoke & Deane BC	132	0

Organisational development:
Wellbeing	New Forest DC	86	7
Building Leadership & Management Capacity	Portsmouth CC	118	11
Regional recruitment portal	Hampshire CC	200	200
Regional Learning Portal	Hampshire CC	60	5

Member development and Community engagement	Portsmouth CC	150	40

Procurement	Hampshire CC & East Hants DC	73	73
Retail enforcement pilot	East Hants DC	50	0

Programme Management	East Hants DC	163	87

Total expenditure		1,300	544

Performance and reporting arrangements

8.4 The Board approves the allocation of funds to individual projects in line with the original bid and after consideration of a more detailed business case. A key priority for the Board is to ensure that efficiency gains are deliverable during the life of the project and then beyond in order to achieve sustainable service improvement. An annual report summarising progress is presented by the Improvement Board to the HIOW LGA for submission to the Government Office for the South East (GOSE), the SE regional partnerships group and the LGA.

Further information is provided via the following web link:

http://extra.hiow.gov.uk/main/Groups/HIOW%20Improvement.aspx.

9 Innovation Forum

Objective

9.1 The Innovation Forum was created in 2003 to promote dialogue between central government, excellent local authorities and partners, on new ways of working to deliver better services to local communities.

Partners

9.2 The Forum members are local authorities that achieve excellent status (now four stars) in their Comprehensive Performance Assessment (CPA). Member authorities established a core group of six authority leaders to provide a steer for the work of the Forum. This core group has been chaired by the Leader of Hampshire County Council. The Forum is supported by Communities and Local Government (CLG) who manage the interface with central government, Local Government Association (LGA) who co-ordinate the involvement of leaders and the Improvement and Development Agency (IdeA) who provide support to particular work-streams and ensure learning from the Forum's activities is communicated to the wider local government audience and informs improvement activity across the sector. The Forum was wound up at the end of 2007/08 with the IdeA taking the programme forward.

Funding

9.3 Much of the work of the Forum is funded by participating partners with the CLG funding a part-time co-ordinator. In 2006/07, CLG allocated capacity building funding of £900,000 for a two year period with 50% being advanced each year. Policy for the use of this fund has been approved by the Core Leaders Group and the cash fund has been managed by the County Treasurer, Hampshire County Council. The cost of financial administration is offset by the interest earned on the positive net cash flow. With the forum being wound up at the end of 2007/08 the balance of funds is to be transferred to the IdeA in order to take the programme forward.

Table 8 Innovation Forum summary financial statement as at 31 March 2008

	Total Budget £'000	Claimed from the Fund £'000
2006/07 committed support for projects	496	50
2007/08 committed support for projects	404	191
Total expenditure funded by CLG	900	241

Performance and reporting arrangements

9.4 Projects, events and outcomes are communicated by the IdeA and included on their website:

http://www.idea-knowledge.gov.uk/idk/core/page.do?pageId=634845

9.5 It is in the nature of the Forum's activities that the impact or outcomes can take some time to come through either in new legislation and/or custom and practice. That is because the Forum is seeking radical, ground breaking new approaches to the most difficult problems and issues faced in the public sector.

Recreation and Heritage

10 Renaissance in the Regions - The South East Hub

Objective

10.1 Renaissance is the Government-funded programme to transform regional museums in England. Following the report Renaissance in the Regions 2001, the Government agreed to invest £70 million into selected Hub Museums in the regions to enable them to build capacity and deliver new ways of working.

10.2 Renaissance is funded through the Department of Culture, Media and Sport (DCMS), which sets targets for participating museums in relation to:

- increasing the number of visits to Hub museums

- increasing the participation of school-age children in Hub Museums

- increasing the participation of manual, semi-skilled and those receiving no income (C2DE) and black or minority ethnic groups (BME) and disabled people in Hub museums.

10.3 The Museums, Libraries and Archives Council (MLA) implements and administers the programme and reports to DCMS on progress. There are 4-5 Hub museums in each English region. For the South East, the partners are: Hampshire County Council Museums and Archives Service (Lead partner), The Royal Pavilion, Libraries and Museum, Brighton & Hove, Chatham Historic Dockyard Trust and Oxford University Museums.

Funding

10.4 Hub money represents 100% external funding. It is a condition that the County Council maintains its base level of funding for the museums. As lead partner in the hub, the County Council is responsible for chairing the monthly Hub Management Team meetings as well as providing the overall financial monitoring information. It also provides back office functions in terms of paying bills and collecting statistics.

Table 9 - HUB summary financial statement for 2007/08

	Budget	Actual	Balance
		2007/08	C/fwd
	£'000	£'000	£'000
Hampshire County Council Projects
2006/07 Carry Forward	105
Transfer from other councils	12
Total	117	73	44
2007/08 projects
Developing services for school aged children	189	173	16
Understanding Our Audiences	30	30	0
Modernising Museums	53	27	26
Opening the Doors	190	234	-44
Exhibitions	239	187	52
Standards and Collections	227	226	1
Total	1,045	950	95

Operational Management
2006/07 Carry Forward	54	47	7
2007/08 projects	291	248	43
Total	345	295	50

Other Councils projects
2006/07 carry forward	432
Transfer to Hampshire County Council projects	-12
Total	420	243	177
2007/08 projects	3,175	3,176	-1
Total	3,595	3,419	176

Total	4,985	4,664	321

Performance and reporting arrangements

10.5 The South east Museums Hub is working to a 2006-2008 Business Plan approved by the MLA. It has never overspent and has had to demonstrate delivery of Gershon savings in line with other Government Departments.

10.6 The Hub Management Team which consists of two representatives from each partner meets on a monthly basis to discuss current issues and update partners on their individual projects' progression. The Senior Finance Officer (Museums & Archives) monitors Hampshire's Hub budget on a monthly basis. He also attends quarterly Hub Management Team meetings to present the overall position of the South East Museums Hub. The meetings are minuted and distributed widely. A quarterly report is sent to the MLA on activity and financial performance.

10.7 Links: MLA South East website:

http://www.museumse.org.uk/south_east_hub/

Hampshire County Council

Assurance statement for the year ended 31 March 2008

Introduction

The Accounts and Audit Regulation 2003, amended in 2006, require the County Treasurer to maintain an adequate and effective system of internal audit.

From 2003/04 the Code of Practice on Local Authority Accounting in the United Kingdom has required the Leader and Chief Executive to sign a general statement of internal control as a note to the published accounts. During 2007/08, however, the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) published revised guidance regarding corporate governance in order to satisfy the requirements of Regulation 4(2) of the Accounts and Audit (Amendment) (England) Regulations 2006. As a result of this, an annual governance statement replaces the statement of internal control with effect from 1 April 2007.

To support the process of producing the annual governance statement, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

Responsibilities

It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control.

Basis of opinion

The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. The internal audit plan has been delivered in accordance with the Code of Practice for Internal Audit in Local Government in the United Kingdom, issued by CIPFA.

Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control.

Opinion

In my opinion Hampshire County Council has an appropriate framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council's objectives. Audit testing has shown that the controls are working in practice with some specific exceptions.

Ejner Knudsen

Chief Internal Auditor

County Treasurer's Department

Hampshire County Council

26 June 2008

This content is archived

Adjustments to service cash limits 2007/08

1 High risk/demand led budgets

2 Employee budgets

1 Expenditure outside service cash limits

1 Schools general reserve

2

3 Designated underspendings

4 Invest to Save and modernisation

5 PSA reward grant

Treasury Management Activities, Prudential and Financial Health Indicators 2007/08

1 Summary

2 Capital expenditure and capital financing requirement in 2007/08

3 External borrowing requirement in 2007/08

Actual external debt

4 External borrowing

Long-term borrowing

5 External lending

6 Policy on Minimum Revenue Provision to repay debt

7 Ratio of capital financing costs to net revenue stream

8 Financial health indicators

Annual Efficiency Statement (AES): 2007/08 backward look

1 Introduction

2 Background

3 2007/08 efficiencies achieved

4 Comparison with the 2007/08 forward look

5 Quality Cross Checks

6 Cumulative total to the end of 2007/08

7 Cashable efficiencies producing a budget saving

8 Summary

9 Recommendation

Annual efficiency statement - backward look

1 Summary

2 2007/08 accounts

3 Net assets statement

Capital spending and financing 2007/08

1 Introduction

2 Capital programme for 2007/08

3 Carry forward of schemes not committed by 31 March 2008

4 Capital expenditure and financing 2007/08

5 Borrowing

6 Capital receipts

1 Significant partnership activity in 2007/08

2 Integrated Community Equipment Service

Table 1 - ICES Summary financial statement for 2007/08

3 Section 31 agreement: Mid Hampshire mental health service reprovision

4 Section 31 agreement: Hampshire Children's Trust

Environment

5 Safer Roads Partnership

6 Life 3

7 ESPACE

Policy and Resources

8 Hampshire and Isle of Wight (HIOW) Improvement Board

9 Innovation Forum

10 Renaissance in the Regions - The South East Hub

Introduction

Responsibilities

Basis of opinion

Opinion