Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. Finance and performance monitoring reports are considered regularly throughout the year. This confirms that appropriate management action is being taken, and enables the Executive Member to make any decisions necessary to approve this management action.

2) Issues Covered in Report:

2.1. The report gives a general overview of the financial position for Recreation and Heritage, and there are two specific issues that need to be addressed.

2.2. It is currently estimated that, if no managerial action were taken, there would be an overspend of £247,000, or 0.7% of the revenue budget. The pressures are in the Library Service budget, and management action such as vacancy management is being taken to address these pressures.

2.3. In addition, Recreation and Heritage have incurred legal costs in connection with a case relating to the Rights of Way Definitive Map. A judgement in favour of the County Council was overturned in the Court of Appeal. At this stage it is estimated that the total legal costs will be £220,000. Given the exceptional nature of the case and related costs, it is proposed to draw Cabinet's attention to the level of costs incurred.

3) Recommendations:

3.1. That the attention of Cabinet is drawn to the fact that Recreation and Heritage have incurred exceptional legal costs in 2008/09 amounting to £220,000.

3.2. That the financial and performance position for 2008/09 be noted and the managerial action being taken to balance the budget be endorsed.

MAIN REPORT

1) Purpose of the Report:

1.1. The purpose of this report is to make the Executive Member aware of the Recreation and Heritage financial and performance position for the current financial year and to seek approval for management action being taken to deliver a balanced budget. Exceptionally, the report also recommends that Cabinet's attention be drawn to the £220,000 of legal costs incurred in a case which was determined at the Court of Appeal.

2) Contextual Information:

2.1. The revenue budget originally approved for Recreation and Heritage was £33.333 million. This has since been enhanced by the following:

	£'000
· Recurring allocation for service developments	250
· Pay and Benefits funding	555
· Carry forward of LPSA grant	39
	844

As a consequence, the total budget is £34.177 million, as shown in the first table in Appendix D. Based on activity to the end of June, there is a potential overspend of £247,000 and management action is being taken to address this.

2.2. Performance information for the first quarter is summarised in Appendix E. Generally performance is encouraging, but there are indications that the combination of poor weather and the economic slowdown is having an effect on some services.

3) Key Issues:

3.1. The current cash limit, as shown in paragraph 2.1, has been enhanced by £844,000 which is 2.5% of the budget. The £250,000 allocation for service developments was reported in July.

3.2. The other significant addition is an allocation of £555,000 from corporate resources to fund the cost of the recently implemented Pay and Benefits. At this stage, the costs have been assessed at the departmental level, and an initial allocation to individual services has been made, which is reflected in service budgets in Appendix D. The precise allocation of the £555,000 to individual services is being reviewed in the light of a detailed analysis of the costs. A further allocation may need to be made when the impact of changes in the payment of allowances has been assessed in detail

3.3. As shown in Appendix C, there is a projected overspend - if no managerial action were taken - of £247,000 which represents 0.7% of the revenue budget. Whilst there are minor variances on other services, these balance out, and the main pressure is in the Library Service, and this pressure arises from two main sources.

3.4. The first of these is premises-related expenditure, which is projected to overspend by almost £100,000 - more than 4.5% of the premises budget. This pressure arises mainly from the recent increases in energy prices. This has affected other services too, but the number of libraries means that the impact is material in budgetary terms.

3.5. The other key pressure continues to be income - a national phenomenon amongst libraries. The budget has been reduced to reflect anticipated levels of income, but income is currently estimated to be £105,000 less than budgeted. As recently as 2003/04, income exceeded £2 million - by contrast the current estimate is just below £1.5 million.

3.6. As reported in July, for the first time Library Service budgets have been devolved locally this year. As in previous years, one of the main approaches to balancing the budget will be the active management of vacancies. The projected spending on employees is worst case, in that it does not allow savings that will arise from staff turnover. There will, therefore, inevitably be savings from this source, and the active management of vacancies - and of other sources of income and expenditure - will be the means of achieving other savings required.

3.7. The Library Service is in the process of implementing the Spydus Library Management System. The annual cost of the system is significantly lower than that of the current system. There are hardware and other one-off costs associated with implementation and these will result in further annual paynments. In order to fund these, budgets are being prudently managed, and this involves holding back expenditure including an element of the Materials Fund. The position will continue to be reviewed throughout the year.

3.8. Appendix E shows that Library visits in the first quarter of 2008/09 exceed the previous year's figure by more than 6.8%. If this rate of increase continues for all of 2008/09, Library visits will go up from 6.7 million to over 7.1 million, bucking the national trend. This is mainly due to the County Council's continuing programme of capital investment.

4) Legal Costs:

4.1. The Appeal Court recently overturned a High Court decision in a case which challenged the way in which Hampshire County Council (and most other local authorities nationally) receive and process applications to modify the Definitive Map. As a result, costs were awarded against the County Council. In total the legal costs of both parties are likely to be in the region of £220,000 depending on negotiations currently taking place.

4.2. It would normally be expected that the Countryside Service would bear the legal costs. However, the costs are almost 5% of the total Countryside revenue budget, and some 17% of the Rights of Way budget. Given the exceptional nature of the case and the costs, it is recommended that Cabinet's attention be drawn to this expenditure. The precise sum involved depends on the negotiations on the level of costs. This cost is not currently reflected in the outturn projections. If it were, this would add to (and virtually double) the budgetary pressures outlined above.

5) Other Services:

5.1. There are no other major variations on individual service budgets. However, the Museums Service had initially proposed to achieve its efficiency savings through increased income. As this is looking unlikely to be achieved, posts are being held vacant to achieve these savings.

5.2. More generally, and whilst it is too early to quantify, performance figures (see Appendix D) suggest that the current economic position could be having an impact on the use of services, as could the weather and the fact that Easter 2008 did not fall in the current financial year. Managers have been encouraged to manage their budgets prudently in the face of the potential loss of income arising from these factors.

6) Conclusions:

6.1. The Recreation and Heritage budget is under pressure, and managers are making all efforts to deliver a balanced budget whilst meeting performance targets. The pressures are exacerbated by the exceptional legal costs.

7) Outline of Options:

7.1. Option 1:

a) Taking no action

8) Summary Recommendations:

8.1. That the attention of Cabinet is drawn to the fact that Recreation and Heritage have incurred exceptional legal costs in 2008/09 amounting to £220,000.

8.2. That the financial and performance position for 2008/09 be noted and the managerial action being taken to balance the budget be endorsed.

CORPORATE OR LEGAL INFORMATION:

COMPREHENSIVE RISK & IMPACT ASSESSMENT:

This report is in accordance with the budget strategy and the County Council's financial management policy. This policy applies equally to all services and ensures consistent financial management decisions across all services.

Appendix E