Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This report concerns the management of the Environment services' revenue budget for 2008/09, including further changes to the cash limit since the most recent budget monitoring report in September.

2) Issues Covered in Report:

2.1. The reports presents the outcome of the second quarter's budget monitoring review for the 2008/09 financial year, which was carried out in consultation with the various holders of delegated budgets within the Environment department.

2.2. A number of changes to the 2008/09 cash limit approved in February are set out, the net effect of which has been to increase the overall budget by £1.049 million to £116.171 million.

2.3. The outcome of the second quarter's budget monitoring review shows the financial position to be satisfactory for this stage in the financial year, with the anticipated outturn being in line with the approved cash limit.

2.4. However, the forecast assumes that action will be taken as required to fully attain the various savings assumptions built into the 2008/09 budget and that any further pressures on services will be absorbed.

3) Recommendation:

3.1. That the actions being taken to manage expenditure be approved.

MAIN REPORT

1) Purpose of the Report:

1.1. To present details of the second quarter's revenue budget monitoring position for the 2008/09 financial year, in order to provide reassurance that services are being managed within approved cash limits, in accordance with financial regulations.

2) Contextual Information:

2.1. The report presents the outcome of the second quarter's monitoring review for the 2008/09 financial year, covering the Environment services' revenue budget, which was carried out in consultation with departmental budget holders during September and October.

2.2. The Environment department's budget monitoring process reflects a comprehensive approach including a series of review meetings between finance section staff and those departmental officers with delegated service budget responsibilities. During this process plans for service spending during the year, together with trends in expenditure and income, are reviewed in comparison with the approved budget plan, in order to update the forecast outturn projection for each of the main service headings. The outcome of this process is initially reported to the department's management so that any necessary actions can be considered.

2.3. An update of the 2008/09 revenue budget cash limit is also provided, taking into account recent budget changes.

3) Key Issues:

3.1. In summary, the overall revenue budget monitoring position is satisfactory for this stage in the financial year and the expected outturn is currently shown to be in line with the approved cash limit. However, this forecast assumes that action will be taken as required to fully attain the various savings assumptions built into the 2008/09 budget and that any further pressures on services that emerge during the remainder of the year are absorbed.

4) 2008/09 Cash Limit Changes:

4.1. The previous monitoring report in September made reference to a number of adjustments that had been made to the revenue budget cash limit since its approval during February. These adjustments had increased the Environment services' cash limit by £3.281 million to £115.122 million. The following additional changes to the cash limit also now need to be taken into account:

· An initial allocation of £460,000 pay and benefits funding for 2008/09, approved by the Cabinet on 22 September 2008, from the central contingency set-up for the costs of pay and benefits implementation. Further allocations from the contingency will be considered later in the year once the second stage of the appeals process has been concluded, which would enable the impact of appeals on the pay bill to be assessed and a decision taken on whether to reflect the impact of appeals in allocations for 2008/09 and future years.

· A transfer of £6,000 from Policy and Resources reflecting the part year effect of agreed changes to the arrangements for the provision of staff learning and development within the department.

· An increase of £583,000, being the assessed call on the central waste management contingency, reflecting additional expenditure arising from the operation of the waste management contract during the second quarter of the year.

4.2. The adjusted cash limit, taking into account the above variations, is £116.171 million.

4.3. Appendix 1 provides an analysis of the adjusted budget over the main service headings, together with details of assessed expenditure to 30 September 2008. No overspendings or underspendings are predicted in comparison with the cash limits of the individual services at this stage of the financial year. Appendix 2 sets out details of the key volume and activity indicators for the second quarter. The main issues arising from the budget monitoring review are discussed in the following paragraphs.

5) Highways Maintenance:

5.1. The 2008/09 cash limited revenue budget for routine highways maintenance is £28.681 million. Total assessed expenditure to the end of September amounted to £13.2 million, being broadly in line with the expected spend profile for the first half of the financial year.

5.2. A number of minor changes to the highways maintenance programme have been made since the last budget monitoring review, following a revised assessment of spending need and changes to reflect the level of actual costs being incurred. These include additional allocations of £36,000 to the highways units for weed control, including Ragwort clearance in the New Forest area.

5.3. As a result of these changes, the level of unallocated highways reserves has reduced slightly from £390,000 to £342,000, which is a similar level to the position at an equivalent stage in the 2007/08 financial year and plans are currently being developed for the phased allocation of this sum to priority highways maintenance works during the second half of the year. No variation from the overall cash limit for routine highways maintenance is currently expected.

6) Public Transport:

6.1. The January 2008 report on the 2008/09 revenue budget identified that there were likely to be significant continuing pressures on the public transport service from contract re-tendering, the fall out of Government funding towards community transport and the ongoing impact of other initiatives such as the Hampshire rural transport pilots. These would need to be contained within the cash limit by reviewing services following the area review process, implementing lower cost options and seeking contributions from other sources, together with the utilisation of excess savings achieved during the 2007/08 financial year.

6.2. The current budget monitoring position suggests that overall passenger transport expenditure is expected to be contained within the service cash limit. A number of minor service changes and revised cost estimates are reflected in the most recent budget review of this service area, which has slightly increased the level of assessed commitments against the bus subsidies budget compared to the position previously reported in September. This includes the award of a short term contract for Service 68 Winchester-Salisbury so that its end date aligns with other contracts in the Andover area.

6.3. This leaves a contingent sum of only £20,000 available within the budget, on an ongoing full-year basis. The equivalent figure in the current financial year, taking into account the part-year effect of known cost variations, is £98,000 and would be required to meet any future cost pressures arising from contract variations, excess inflation from higher fuel prices and other issues. The financial position will continue to be reviewed regularly during the remainder of the year, including consideration of whether there are opportunities to carry forward resources to next year in support of the 2009/10 budget.

7) Waste Management:

7.1. The 2008/09 original budget for the waste contract related services budget was £45.833 million, based on estimated commitments at the time it was prepared during November 2007. No allowance was included in the 2008/09 base budget for growth in waste volumes beyond predicted 2007/08 levels, nor for future price increases, changes to landfill tax rates or other contract cost pressures.

7.2. As in previous years, a contingency amount has been set aside within the overall County Council budget to cover these inescapable pressures, the sum for 2008/09 being £4.377 million. Periodic allocations will be made throughout the year to increase the waste management cash limit, based on quarterly assessments of cost increases. The contingency allocation for the first quarter of the year was £648,000, as previously reported in September.

7.3. Overall waste disposal volumes during the first six months of the year have been lower, by 5.1%, compared with the corresponding period of 2007/08 and the allowance for growth of 2.2% included in the make-up of the central waste contingency. Within this figure, volumes from household waste collections have reduced slightly by 0.8% year-on-year, but household waste recycling centre volumes have reduced significantly by 15.0%. This latter figure reflects the continuing impact of the new contract arrangements for the management of the recycling centres and the introduction of trade waste controls, which has been successful in reducing waste volumes at these facilities.

7.4. The second quarter's call on the waste contingency has been assessed at £583,000, reflecting variations in the cost of the waste contract during this period, including contract price changes and increases to landfill tax. This sum has now been added to the service's cash limit. However, due to the volatility of waste quantities, it is still too early in the year to predict with any certainty future trends in waste volumes, or whether the contingency sum of £4.377 million will be sufficient to cover higher waste contract expenditure during 2008/09.

7.5. The total 2008/09 budget provision for the non-contract waste management services is £1.352 million. It is currently anticipated that overall expenditure will be contained within the cash limit for this part of the waste management budget, which covers the main non-contract related activities such as facility management, promotions and development and the disposal of abandoned vehicles.

8) Environment Department Staffing and Support Costs:

8.1. The overall 2008/09 budget for departmental staffing and support services is £27.890 million, mainly covering the running costs of the Environment department, together with the remaining agency arrangements with the district councils.

8.2. The 2008/09 budget includes the normal annual allowance for incidental net savings that are expected to arise during the course of the year from staff turnover, vacancies and other housekeeping efficiencies, after allowing for any offsetting increases in expenditure or reductions in income. For 2008/09 this net savings allowance has been set at £625,000, which is £125,000 higher than in the previous financial year.

8.3. The achievement of these savings will be tracked throughout the year in the various quarterly monitoring reports. For 2008/09 the second quarter's budget monitoring review has already identified actual and projected savings of £446,000, or just over 71% of the total requirement for the year, although this is partially offset by an anticipated reduction of £100,000 in departmental income this year from land search fees, reflecting the recent downturn in the housing market.

8.4. The overall position on the staffing and support services will need to be monitored carefully during the second half of the year to ensure that savings assumptions included in the budget are fully achieved and a further assessment of the position will be included in the report on the 2008/09 revised budget in January. The construction of the revised budget will also need to take into account the financial implications of recent legal appeals concerning Associated British Ports and the Minerals and Waste Framework and Four Dell Farm, Poles Lane, Otterbourne, once these costs have been determined.

8.5. As previously reported in September, a number of other planned savings totalling £726,000 from staffing and support costs were identified in constructing the 2008/09 original budget to offset a number of budget pressures, including staff salary increments, office accommodation, the ongoing higher cost of the 2007/08 pay award, additional resources to cover work transferred from districts and contributions towards corporate IT systems developments. These significant savings were reflected in the detailed cost centre budget allocations to budget holders at the beginning of the year and the outcome of the second quarter's budget monitoring review suggests that these savings are being achieved in accordance with the budget plan.

9) Conclusions:

9.1. A number of adjustments have been made to the Environment services' cash limit, increasing the overall budget by £1.049 million to £116.171 million. Further adjustments will need to be made throughout the remainder of the year for additional quarterly allocations from the central waste management contingency.

9.2. Expenditure on routine highways maintenance is being progressed in accordance with the latest approved programme. Highways maintenance revenue reserves currently stand at £342,000 which will be allocated to budget holders on a phased basis throughout the remainder of the year to cover operational pressures as they emerge.

9.3. On public transport only £20,000 now remains uncommitted, on an ongoing full-year basis, to meet any further cost pressures arising from contract variations, higher inflation or other issues.

9.4. Waste management disposal volumes show an overall reduction of 5.1% year-on-year based on the available figures for the April to September period. However, due to the various conflicting changes within this service area, it is still too early to predict any longer term trends in waste volumes from this information, or whether the overall waste contingency sum of £4.377 million will be sufficient to fully cover waste contract related expenditure during 2008/09.

9.5. The 2008/09 budget for departmental staffing and support costs includes planned savings from incidental staff turnover and other housekeeping which are being achieved in accordance with the budget plan. Anticipated lower income of £100,000 from land search fees has been taken into account in the financial projections. Additional cost pressures arising from recent legal appeals will need to be taken into account in constructing the 2008/09 revised budget in January, once these have been determined.

10) Summary Recommendation:

Please see the Executive Summary for the recommendation.

1793Rpt/306/BA

CORPORATE OR LEGAL INFORMATION:

IMPACT ASSESSMENTS:

Equalities Impact Assessment

Assessment of the Race Relations (Assessment) Act has been considered in this monitoring report. No adverse impact has been identified in terms of race, creed or gender.

Impact on Crime and Disorder

This is a monitoring report and has no impact on Crime and Disorder.

Appendix 1

This appendix is available on request.

Appendix 2

Environment

Revenue budget 2008/09

Summary of volume and activity indicators - covering the period to 30 September 2008

Highways maintenance

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

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

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

Street lighting energy consumption: 18.9 million Kwh

(40.2% of estimated full year consumption of 47.0 million Kwh)

Winter maintenance salting activity - number of days salting carried out to 30 June 2008: 6 days in April

(equivalent average during same period of previous four years: 1 day)

Road safety education

Pass plus courses completed: 260 - on target

Cycle proficiency training courses carried out: 394 - on target

Number of children trained: 1,970 - on target

School crossing patrols

Number of locations being covered: 289 (93.2% out of total of 310 sites)

Annual staff turnover rate as at 30 September 2008: 14.9%

(equivalent annual staff turnover rate as at 30 September 2007: 18.4%)

Traffic surveys

Manual surveys completed: 73 - on target

Automatic traffic counts and speed detection radar surveys: 91 - on target

Public transport support

Original 2008/09 budgeted number of supported bus services: 208

Actual number of supported bus service at 30 September 2009: 209

Planning and development

Total planning applications determined in 12 months to 30 September 2008: 150

(applications determined in 12 months to 30 September 2007: 140)

Waste management

Waste tonnages in 12 months to 30 September 2008:

Household waste collections: 605,071 (-1.2%)

Household waste recycling centres: 194,201 (-11.4%)

Overall waste tonnages: 799,272 (-3.9%)

Staffing and support costs

Annual staff turnover rate as at 30 September 2008: 14.8%

(equivalent annual staff turnover as at 30 September 2007: 16.9%)