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

1 Summary

1.1 This report is the first monitoring report for 2008/09 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets

· Policy and Resources business units

· Policy and Resources capital programme

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

1.2 At the end of May 2008, on-going budget pressures within corporately held land, sites for gypsies and travellers and the Coroner Service mean net expenditure for 2008/09 is likely to exceed the budget for these areas. Actions have been identified to manage the budget and the budgetary position will be monitored closely throughout the year. Other budgets are anticipated to be within cash limit. IT Services are predicting a trading deficit for this year, which, together with the deficit brought forward from 2007/08 will be recovered by the end of 2009/10. Other business units are expecting to meet their targets of a modest trading surplus.

1.3 Capital payments for the County Council for 2008/09 are forecast to be close to the estimate of £197.3m reported to Cabinet on 8 February 2008. No capital receipts had been received as at 31 May 2008.

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

Recommendations

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

2 To agree the proposed amendments to the 2008/09 budget to reflect the net underspend of £63,000 carried forward from 2007/08.

3 To agree an additional contribution of £6,000 towards the costs of maintaining the 101 non-emergency number during 2008/09, funded from balances.

1 Policy and Resources cash limited revenue budget 2008/09

1.1 The latest cash limit for 2008/09 is £59.8m as set out in Appendix 1. This includes additional allocations agreed by Cabinet in June 2008, provision for the cost of pay and benefits in 2008/09 and the carry forward from 2007/08 of the net underspending for Policy and Resources of £63,000.

1.2 The variations against the amended 2007/08 cash limit were:

Chief Officer controlled budgets:	£'000	£'000
Chief Executive:
Chief Executive support services Human resources support services	-9 -3	-12
Property Business and Regulatory Services:
Departmental budget County Farms Corporately held land Sites for gypsies and travellers Regulatory services Registration Castle restaurant	-33 +7 +29 +91 -35 +10 -23	+45
County Treasurer		-33
Other budgets:
Coroners County Council elections Members' support costs Audit fee Other services	+153 -57 -37 -36 -148	-148
Total for Policy and Resources		-125

1.3 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings and the Cabinet decides what use should be made of the other 50% underspending. On this basis £63,000 has been added to the Policy and Resources cash limit for 2008/09.

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

· that in accordance with corporate policy, 50% of any underspendings on chief officer controlled budgets and any overspendings should be carried forward to 2008/09

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

1.5 Proposed amendments to the 2008/09 budget to reflect carry forwards are:

	Overspending (+) Underspending (-)	Reduction (-) Addition (+) Carry forward to 2008/09
	£'000	£'000
Chief Executive	-12	+6
Property Business and Regulatory Services	+45	-45
County Treasurer	-33	+16
Coroners	+153	-
Balance available to be allocated in the revised budget to meet budget pressures on Coroners and other budgets		+86
		+63

1.6 Comments on these proposals together with other budget issues for 2008/09 based on monitoring of expenditure up to the end of May 2008 are given below.

Chief Executive's Department (including Human Resources)

1.7 At this early stage in the financial year, it is anticipated the Department will keep within its cash limit. Work is continuing on Hantsdirect with the implementation of Phase 2 and 3. Close budget monitoring is on-going from the processes and arrangements set up in 2007/08. Regular monthly financial reports are taken to the Hants Direct Review meeting and quarterly reports to DMT.

1.8 Funding for the establishment of Local Involvement Networks (LINks) has been allocated and totals £1,138,000 over three years with £378,000 available in the first year (2008/09). In addition £10,000 has already been received to assist with the procurement process.

1.9 HR have further SAP savings targets over the next two years, following on from the £410,000 achieved in 2007/08. In 2008/09 HR's budget includes £60,000 deducted from the Service Centre for SAP savings identified, with a further £60,000 as the final amount in 2009/10. These savings will contribute to the planned achievement of the 3% efficiency savings target in 2008/09 for the Chief Executive's department.

1.10 The transfer of Connexions staff has had an impact on HR's workload and corresponding funding has been received in the form of a cash limit increase of £96,400 for business as usual work and also one-off funding for set-up and transition costs in 2008/09.

1.11 The Remuneration and Benefits (R & B) team was allocated further one year funding for 2008/09, with £31,500 carried forward from 2007/08 for job evaluation management software. The R&B equal pay team also has funding allocated until March 2009.

County Treasurer's Department

1.12 The department's 2008/09 budget includes the final tranche of SAP benefit realisation savings amounting to £160,000, bringing the total annual savings delivered to £960,000. With these savings, the department plans to achieve 3% efficiency savings in 2008/09. Overall, the Treasurer's department budget is being managed to remain within cash limit.

1.13 2008/09 is the first year transition of the Student Support Unit to the Student Loans Company, the savings from which have been offset by the changes to the student finance policy. This requires the Student Support Unit to reduce their service in respect of the national transfer whilst having considerably more work on the eligibility assessments in the current year, a difficult balancing act. However, the Department for Innovation, Universities and Skills has recognised the impact of the new policy by allocating a specific grant in 2008/09 of £70,000.

1.14 The Systems Training Team has additional funding in this year, including corporate budget support, to enable training of staff throughout the County Council to fully utilise all financial systems.

Property Business and Regulatory Services

1.15 Department will carry forward an overspend of £45,000 from 2007/08. This will be absorbed within the overall cash limit by continuing the work done last year to reduce costs through the efforts to control staffing and minimise agency and consultant costs as well as the implementation of longer terms savings initiatives.

1.16 The most significant budgets in terms of size are Property Services, Office Accommodation and Repairs and Maintenance and at this early stage in the year all are expected to be managed within cash limit. The cash limit includes the carry forward of the unspent contingency for the repair and maintenance winter contingency of £0.3m. Regulatory Services comprising Trading Standards, Hampshire Scientific Service and the Accredited Community Safety Officer Service together with the Registration Service are also expected to be in balance.

Corporately held land

1.17 Based on the net income budget for Corporate Estate of £134,600 an overspend of £150,000 is currently forecast due to the costs of securing and maintaining properties awaiting disposal. In 2007/08 as in previous years the basic cash limit for the Corporate Estate budget was augmented by a contribution from capital receipts to offset these costs where disposal was imminent - this forecast does not allow for any additional funding of this nature in 2008/09.

1.18 The position for the Development Account in 2007/08 was helped by a negotiated refund of £75,000 of head lease payments covering more than one year. There is an ongoing benefit from the reduction which is expected to reduce the underlying deficit in 2008/09 to £47,000 but this should represent a worst case outcome and the position will improve if the remaining vacant units can be let.

Sites for Gypsies and Travellers

1.19 The Sites for Gypsies and Travellers budget continues to be under pressure with rising energy and site maintenance costs together with lower levels of income from the rent of pitches than is required to balance the budget. Rent levels are determined by the Rent Officer. The current projections indicate an overspend of £108,000 for 2008/09. A review of the service is currently been undertaken with support from the Treasurer's Consultancy team.

1.20 The department will continue to take action where possible to manage these total pressures within its existing resources.

HM Coroner Service

1.21 HM Coroner Service budget does not form part of PBRS' cash limited budget but the service is managed within PBRS. In recent years, costs associated with inquests and charges from hospitals e.g. for use of mortuary facilities have increased significantly and an overspend at similar levels to 2007/08 of £150,000 is currently anticipated. As indicated in paragraph 2.5, there is a sum of £86,000 available to offset this potential overspending and other budget pressures from the overall carry forward from 2007/08.

1.22 Additional inquests in the Portsmouth and South East Hampshire Coroner's District will be held during 2008/09 requiring the appointment of an additional Assistant Deputy Coroner and court space in which to hold the hearings. The estimated cost of these inquests is £100,000 and funding up to this amount is currently held in the central contingency.

Other non-departmental Policy and Resources budgets

1.23 At its meeting on 23 June 2008, Cabinet agreed the following additions to the Policy and Resources cash limit for 2008/09:

· the allocation from balances of £200,000 for the Policy and Resources grants panel towards the Winchester Cathedral educational centre appeal, to facilitate its use by Hampshire schools.

· the allocation from balances of £27,000 to contribute to the costs of maintaining the 101 non-emergency number during 2008/09

· the allocation from the invest to save reserve of £500,000 to cover the costs of a series of efficiency reviews and a review of the organisational structure for central services

· the allocation from unused contingency in 2008/09 of £156,000 to provide continuing funding through to the end of the financial year for Hampshire Action Team support and revised scrutiny arrangements pending the outcome of the review of the Hampshire Action Team pilot.

1.24 The actual contributions required to maintain the 101 non-emergency number have now been finalised and Hampshire County Council's contribution for 2008/09 is £33,000. An additional allocation from balances of £6,000 is proposed to fund the full contribution in 2008/09.

1.25 The Policy and Resources revenue cash limit has also been increased by £1.069m area based funding under the heading Safe and Strong Communities. As reported to the Executive Member for Policy and Resources in January 2008, a new statutory group including the chairs of each district Crime and Disorder Reduction Partnership (CDRP) will advise the Executive Member on how these resources can be used most effectively to achieve strategic and local objectives. At that meeting an initial allocation was agreed for each District Council and subsequently, at its meeting of 12 May 2008, Cabinet agreed to the disbursement of the remainder of the funds, partially subject to the agreement of other partners.

1.26 In accordance with the scheme for Members' devolved budgets, the balance unspent in 2007/08 of £220,000 has been carried forward to 2008/09.

Summary

1.27 At the end of May 2008, on-going budget pressures within corporately held land, sites for gypsies and travellers and the Coroner Service mean net expenditure for 2008/09 is likely to exceed the budget for these areas. Actions have been identified to manage the budget and the budgetary position will be monitored closely throughout the year. Other budgets are anticipated to be within cash limit.

Business Units

Property, Business and Regulatory

1.28 HC3S' target for the year is a modest surplus of £12,000, but meal numbers and income are continuing to increase. The service is also supported by School Meal grant funding and the final grant allocation was significantly higher than was included in the budget assumptions. Food price inflation continues to rise above the levels forecast in the trading account that was prepared in Autumn 2007 and the extent to which this offsets the benefits of improved income levels will be key to the final outturn.

1.29 Hampshire Transport Management expects to be able to confirm a reduction in its hire charges of around 2.5% for 2008/9 (5% in real terms) and early forecasts for the remaining PBR businesses indicate the targets for 2008/09 remain achievable. The combined target surplus for the year is £198,000.

IT Services

1.30 IT Services continues to invest as planned in a technology to support the development of key programmes including Hantsdirect, the new Data Centre, and Ashburton Court, using in particular, the IBM Enterprise Licence Agreement. IT Services will also be letting two significant contracts over the next two years for the Hampshire Public Service Network (HPSN) and hardware maintenance.

1.31 IT Services will continue to seek to mitigate the financial impact of these projects through service efficiencies and the development of service agreements with external partners which will reduce unit costs through a larger customer base.

1.32 The current investment programme will generate a trading deficit in the current year of £600,000. This is in accordance with the 5 year financial forecast which predicts that the trading deficit will be completely eliminated by the end of 2009/10.

2 Policy and Resources capital programme

2.1 The Policy and Resources capital programme for 2008/09 amounts to £54.7m, as set out in Appendix 2. This takes account of Cabinet's decisions in June to supplement the original programme with:

· schemes carried forward from 2007/08 plus the unallocated cash limit from 2007/08

· Policy and Resources' share of capital receipts

· An allocation from balances of £0.4m for building maintenance repairs for homes for the elderly

The cash limit also includes area based funding of £0.4m for capital grants under the heading Safe and Strong Communities.

2.2 The capital repairs programme, including New Deal for Schools, totals £42.5m and is controlled on an expenditure basis. The balance of £12.2m, is controlled on a starts basis. Of this, £1.9m relates to business unit schemes and £3m is allocated for a potential scheme for a Discovery Centre at Basingstoke.

2.3 As at 31 May 2008, expenditure on capital repairs totalled £6.7m, and schemes to the value of £0.1m had started, representing an overall commitment of £6.8m.

3 Overall capital payments and sources of finance

3.1 The capital financing approved by the County Council in February 2008 was based on capital expenditure of £197.3m. It is too early in the year to be able to forecast with any certainty the likely outturn level of capital expenditure, but based on previous capital expenditure profiles and actual payments at 31 May 2008, it is likely that the outturn will be close to the original estimate.

3.2 Actual spending in 2007/08 was £12m lower than forecast matched by an increase in the capital reserve, enabling higher than budgeted spending to be funded in 2008/09 from within the current financing plan.

3.3 The forecast of capital receipts for 2008/09 reported to County Council in February 2008 was £46.6m. As at 31 May 2008, no capital receipts had been received, and some slippage is likely to occur as a result of the slowdown in the residential property market.

4 Impact assessment

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

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

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

NB: the list excludes:

1. Published works

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

None.

Appendix 1

Policy and Resources Revenue budget - latest 2008/09 cash limit

Appendix 2

Policy and Resources 2008/09 capital programme