Archived decisions

HAMPSHIRE COUNTY COUNCIL

Report for Information

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This report seeks approval for submission to the Leader and Cabinet the revised budget for 2008/09, detailed proposals for the 2009/10 budget and provisional budgets for 2010/11 and 2011/12.

1.2. This report will be reviewed by the Environment and Transportation Select Committee. The budget proposals will be included in a report to the Cabinet on 6 February 2009 to make final recommendations to County Council on 19 February 2009.

2) Issues Covered in Report:

2.1. The report considers revisions to the 2008/09 budget. In respect of the 2009/10 budget the report includes detailed proposals for redeployment of resources to meet service pressures matched by equivalent savings, together with efficiency improvements, the annual review of income and charges and the workforce implications of the proposed budget. The report outlines the provisional budgets for 2010/11 and 2011/12.

2.2. The budget proposals contained in this report are derived from the departmental service plans and to support the priorities of the Corporate Strategy.

3) Recommendations:

3.1 To approve for submission to the Leader and Cabinet:

(i) the revised budget for 2008/09 totalling £116 million (as set out in appendices 1 and 2), including proposals for the carry forward of resources totalling £314,000 to the 2009/10 budget;

(ii) the base budget for 2009/10 totalling £115.6 million (as set out in Appendix 3);

(iii) the proposals for additional expenditure to meet service pressures totalling £2.9 million in 2009/10, matched by equivalent redeployment of resources and other savings (as set out in Appendix 4);

(iv) the proposals for efficiency improvements totalling £2.3 million (2.0% of the base budget) in 2009/10 (as set out in Appendix 5);

(v) the annual review of income and charges (as set out in paragraph 6);

(vi) the detailed budget for 2009/10 (as set out in Appendix 7);

(vii) the workforce implications of the proposed budget for 2009/10 (as set out in Appendix 8);

(viii) the provisional budget for 2010/11 of £118.5 million and for 2011/12 of £120.2 million (as set out in Appendix 9).

MAIN REPORT

1) Purpose of the Report:

1.1. This report sets out the proposed Environment revenue budget for 2009/10, a provisional budget for 2010/11 and 2011/12 and recommends a revised budget for 2008/09. This report will be reviewed by the Environment and Transportation Select Committee. The budget proposals will be included in a report to the Cabinet on 6 February 2009 to make final recommendations to County Council on 19 February 2009.

2) Contextual Information:

2.1. The Cabinet agreed a three year budget plan for 2008/09 to 2010/11 in February 2008. The key features of the plan are as follows:

(i) it makes allowance for increased demand for social care services and for the projected higher costs of the waste management contract, but otherwise contains no provision for growth in service budgets;

(ii) all service budgets are uplifted for inflation based on the assumption that increases in pay and prices would be contained within an average increase of 2.5% per annum;

(iii) income is to be maximised by reviewing charges in line with the average inflation on the related gross expenditure;

(iv) it assumes that efficiency savings will be achieved to finance any proposed service developments, unfunded demand pressures or to cover excess inflation within the context of the Government's target for local government of annual efficiency savings of 3% per annum.

2.2. In order to maintain a three year financial plan, Cabinet agreed an updated medium term financial strategy in October 2008 to include 2011/12, based on similar assumptions.

2.3. For this service, the budget guidelines are:

2.4. The medium term financial strategy is closely linked to corporate priorities and the Comprehensive Improvement Plan to ensure that service developments are affordable and provide value for money and that resources follow priorities.

Key Issues

3) Revised budget 2008/09:

3.1. The most recent monitoring report in November presented the outcome of the half-year review of the Environment services' revenue budget for 2008/09, including actions that were being taken to manage expenditure within the cash limit.

3.2. The report presented a satisfactory position for that point in the financial year with the anticipated outturn being contained within the approved cash limit. However this projection assumed that further savings would be achieved during the second half of the year in order to offset additional cost pressures arising from the outcome of legal appeals and lower income from land search fees.

3.3. A further review of the budget position has recently been carried out within the Environment department and a revised budget for 2008/09 has been prepared taking into account recent information on trends in expenditure and income. The main issues arising from the preparation of the revised budget are set out in the following paragraphs.

Changes to 2008/09 cash limit

3.4. The most recent reported figure for the 2008/09 cash limit was £116.171 million, set out in the budget monitoring report in November. Subsequent adjustments, including adjustments between revenue and capital and transfers between Environment and other County Council services, have increased the cash limit to £116.311 million. Details are set out in Appendix 1.

Highways maintenance

3.5. The proposed 2008/09 revised budget for routine highways maintenance is £28.931 million, in line with the cash limit for this service heading. In addition, provision for structural highways maintenance totalling £28.991 million is included within the Environment capital programme, resulting in an overall highways maintenance budget for 2008/09 of £57.922 million

3.6. The revenue funded highways maintenance programme is currently being implemented as planned and no variations against the cash limited budget are currently forecast. Further allocations have recently been made to the operational highways units from highways reserves, including additional funding for the clearance of drainage to alleviate potential flooding problems.

3.7. Expenditure on highways maintenance salting and snow clearance has been higher so far during 2008/09. Up to the end of December 2008, salting of highways has been carried out on a total of 34 days, compared with an average of 19 days during the previous four years.

3.8. After allowing for the fixed cost elements of the budget, just over half of the winter maintenance allocation has already been spent by the end of December and it is thought possible that an overspending against the £3.3 million winter maintenance budget will occur this year, especially if there is significant snowfall. However, under the special budgeting rules that apply to this activity, an overspending would not impact against the 2008/09 cash limit as this would be covered by central balances. A further update on winter maintenance expenditure will be provided in the next budget monitoring report in March.

Road safety education

3.9. The revenue budget for road safety was increased by £544,000 earlier in the year reflecting the reduced County Council contribution towards the Hampshire and Isle of Wight Safer Roads Partnership (SRP) and loan repayment. Of this sum £75,000 has been applied to provide continued funding of the Pass Plus new driver training scheme, together with allocations totalling £195,000 towards advertising and enforcement of the Village 30 speed limit initiative.

3.10. Taking into account the above allocations, a sum of £274,000 currently remains uncommitted from the reduced SRP provision. It is recommended that £20,000 be transferred to the school crossing patrols budget to cover higher expenditure resulting from an increase in employment levels of crossing patrol officers, as no further funding can be found from other areas of this budget without it seriously affecting other aspects of the service. It is proposed that the remaining balance of £254,000 be carried forward to the 2009/10 budget, to provide additional resources next year for further road safety initiatives or other highways and transportation priorities, although the timing of this spending may result in some of this expenditure being incurred during the latter part of the current financial year.

Public transport support

3.11. An estimated underspending of £60,000 is available on public transport support. This relates to the currently unallocated share of savings from previous service reconfigurations, after taking into account further allocations for expenditure in support of the Hythe ferry and other changes.

3.12. It is recommended that this one-off sum be carried forward to the 2009/10 budget to help manage the anticipated pressures on this service next year, including higher costs arising from the area bus service retendering process.

Waste management

3.13. The approved original 2008/09 budget for the waste management contract related services was £45.833 million, based on estimated commitments at the time it was prepared during November 2007. In addition a contingency amount of £4.377 million was set aside within the overall County Council budget to cover estimated growth in waste volumes beyond predicted 2007/08 levels, future price increases, changes in landfill tax rates and other contract cost pressures.

3.14. Periodic allocations are made from this central contingency throughout the year to increase the waste management cash limit, based on quarterly assessments of cost increases on the contract related services. Allocations from the waste contingency during the first half of the year have totalled £1.231 million, which are included in the calculation of the 2008/09 revised budget of £47.076 million for the waste management contract related services.

3.15. Calls on the central waste contingency this year have so far been lower than anticipated when the budget was prepared, reflecting lower waste disposal volumes compared with the corresponding period of 2007/08 and the 2.2% allowance for growth included in the make-up of the waste contingency. This reduction includes the 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.

3.16. Latest available figures to the end of November show waste volumes were 6.3% lower than in the corresponding period of 2007/08. On the assumption that these trends continue for the remainder of the financial year, it is currently expected that the overall call on the central waste contingency will be at least £1 million lower than the total sum provided. Further increases to the waste management cash limit will be made later in the year to reflect subsequent quarterly allocations from the central waste contingency, once these have been assessed.

3.17. On the non-contract waste management services, an underspending of £70,000 is projected on the budget for the disposal of abandoned vehicles, reflecting lower expenditure under the new contractual arrangements, although this variation is subject to market volatility. It is recommend that this underspending be allocated in the revised budget to help offset pressures on the budget for staffing and support costs (see below).

Staffing and support costs

3.18. The recommended 2008/09 revised budget for staffing and support costs is £27.821 million, mainly covering the running costs of the Environment department, after taking into account cost recharges to the capital programme and other income, together with the remaining agency arrangements with the district councils.

3.19. The construction of the 2008/09 budget for staffing and support costs included an allowance of £625,000 for incidental net savings that were expected to arise during the course of the year from staff turnover and the normal delay in filling posts. The achievement of these savings is tracked during the course of the year as part of the quarterly budget monitoring reviews. The latest position, following the recent interim review, shows projected savings of £696,000, being £71,000 higher than the full-year savings target.

3.20. The excess turnover savings of £71,000, together with the sum of £70,000 available from the underspending on the waste management budget for the disposal of abandoned vehicles, has been used in the recommended 2008/09 revised budget to partially offset two significant pressures on the staffing and support budget. These relate to lower income from land search fees, reflecting the downturn in the housing market, together with the award of costs against the County Council following the outcome of recent legal appeals.

3.21. In total these pressures amount to some £417,000 of which £141,000 can be directly offset by using the available savings identified above. The 2008/09 revised budget assumes that further balancing savings of £276,000 will be achieved during the remainder of the year from within the staffing and support costs area to fully absorb this higher expenditure, although the achievement of these additional savings will need to be carefully monitored.

Summary of 2008/09 revised budget position

3.22. Detailed figures relating to the 2008/09 revised budget are shown in Appendix 7 (the green pages), whilst Appendix 2 provides a summary comparing the recommended revised budget to the cash limit, analysed over division of service headings.

3.23. Overall the recommended revised budget is £115.997 million, being £314,000 below the 2008/09 cash limit of £116.311 million. This position reflects the request that is being made to the Cabinet to approve the carry forward to the 2009/10 budget of £254,000 on road safety education and £60,000 on the budget for public transport support.

4) Base budget 2009/10:

4.1. The first stage in the construction of the budget for 2009/10 is the preparation of a base budget. This contains the current financial policies of the Council, to provide a starting point from which decisions can be made. The base budget for this service is £115.636 million at 2009/10 outturn prices, although this excludes allowance for price and volume changes on the waste contract services, which is covered by a provision within the central contingency

4.2. Appendix 3 shows the make up of the base budget. Overall, the base budget is £3.899 million higher than the 2008/09 original budget, including adjustments for higher inflation and re-pricing of the waste contract, together with an allocation of £1.601 million to cover future inflation during 2009/10. The main variations against the major budget headings are set out in the following paragraphs.

Highways maintenance

4.3. The highways maintenance base budget for 2009/10 is £29.502 million. This shows an overall increase of £2.546 million (9.4%) compared with the 2008/09 original budget, mainly representing:

(i) adjustments between capital and revenue to cover full year impact of re-pricing of budgets for the implementation of the new term highways contract (+£2,140,000). Although overall efficiency savings of £984,000 per annum were achieved from the new contract, in general terms the cost of routine highways maintenance work funded from the revenue budget has increased, whilst the price of structural maintenance funded from capital has reduced.

(ii) other increases including provision for additional road lengths and revenue effect of implementing capital programme schemes (+£314,000);

(iii) exclusion of expenditure included in the 2008/09 budget financed by the carry forward of planned underspendings from 2007/08 (-£510,000);

(iv) reduction in the provision for winter maintenance based on four-yearly average of expenditure (-£70,000); and

(v) provision for future inflation during 2009/10 (+£672,000).

4.4. In addition to the above revenue budget provision for routine highways maintenance, the proposed 2009/10 capital programme contains a further allocation of £27.064 million to cover the structural maintenance of roads and bridges.

Road safety education

4.5. The 2009/10 base budget for road safety education is £326,000. This represents an increase of £75,000 at constant prices, reflecting the continuation of funding for the Pass Plus new driver training scheme. This increase has been met from an equivalent reduction in the base budget provision for the County Council's contribution towards the Safer Roads Partnership.

Safer Roads Partnership

4.6. A sum of £1,501,000 has been included in the 2009/10 base budget for the County Council's contribution to the Safer Roads Partnership based on a continuation of the level of financial support provided in the 2008/09 budget, as adjusted for inflation. This figure is provisional at this stage pending approval of the partnership's budget for next year. As mentioned above, the 2009/10 base budget provision allows for the transfer of £75,000 to road safety education for the continuation of Pass Plus funding for a further year.

4.7. The contribution for 2009/10 is expected to fall by some £300,000 due to Driver Awareness Training income coming on stream, which would be largely reinvested in the partnership to deliver enforcement on our Village 30 routes.

Public transport

4.8. The base budget for public transport support and coordination has been set at £8.130 million, including an allowance of £155,000 for future inflation during 2009/10. The calculation of the base budget makes allowance for the absorption of the higher full-year costs arising from bus service re-tendering in the Winchester, Romsey and Totton and Waterside contract areas during 2008/09.

4.9. Within the overall total the 2009/10 base budget provision for expenditure on bus subsidies is £7.422 million, including support from district councils, other external contributions and area based grant. This sum is currently sufficient to cover expenditure on existing bus service contractual commitments, but leaves virtually no scope for the accommodation of any further cost increases from contract retendering, re-pricing or commercial services re-registrations during 2009/10.

4.10. It will therefore be necessary to continue to apply existing policies, including the rolling programme of area reviews, for the containment of expenditure within available budget limits where appropriate.

4.11. Provision of £1.577 million has been included in the 2009/10 base budget for provision of rural bus services. Although the County Council no longer receives direct support for these services from rural bus subsidy grant, it does still receive an equivalent amount from within the Government's overall allocation for area based grant.

Waste management

4.12. A base budget of £47.142 million has been set for the waste management services for 2009/10 being:

(i) £46.360 million for the waste contract related services, comprising the main waste disposal contract, trade waste income, recycling centres and household waste recycling centre (HWRC) management;

(ii) £0.782 million for the non-contract waste services including facilities maintenance, promotions and developments and the disposal of abandoned vehicles.

4.13. This continues with the approach adopted in previous years which treats the waste contract related services as a separate ring-fenced budget in line with the special guidelines agreed by the Cabinet.

4.14. For the contract related services, the base budget allows for the cost of current contractual commitments, including known and estimated waste tonnages for the current financial year, at January 2008 prices. The contract is subsequently re-priced each year, on 1 January, in line with changes to the Retail Prices Index (RPI). The 2008/09 base budget for the contract related services reflects increases of £3.134 million (6.8%) for inflation, covering contract re-pricing in January 2008 and the increases in the rate of landfill tax in April 2008. However, this is largely offset by a reduction of £2.607 million (-5.3%) in respect of other cost variations, including lower waste disposal volumes.

4.15. As in previous years, a central contingency sum, will be provided within the overall County Council budget to meet the estimated cost of growth in waste volumes beyond anticipated 2008/09 levels, future price and landfill tax increases, and any other potential service related pressures. Quarterly allocations will be made to the waste management budget in line with the actual cost increases incurred during the next financial year.

4.16. For the non-contract waste management services, the base budget reflects a roll-forward of the 2008/09 situation and is expected to be sufficient to match the likely level of expenditure on these services next year.

Staffing and support costs

4.17. The overall 2008/09 base budget for departmental staffing and support costs is £27.610 million. This shows an overall increase of £479,000 (1.8%) compared with the 2008/09 original budget, representing:

(i) the exclusion of expenditure included in the 2008/09 budget financed by the carry forward of planned underspendings from 2007/08 (-£470,000);

(ii) LPSA reward grant - deletion of non-recurring provision included in the 2008/09 original budget for project to accelerate release of developer contributions and for a programme of highways initiatives and innovations (-£420,000);

(iii) various budget transfers and adjustments between other County Council services (-£137,000);

(iv) Housing and Planning delivery grant - base budget increase to reflect actual level of grant support being received during the current financial year (+£200,000);

(v) provisional pay and benefits contingency allocation for 2009/10 (+£599,000);

(vi) provision for future inflation during 2009/10 (+£707,000).

4.18. The make-up of the base budget includes provision of £224,000 for staff salary increments payable from 1 April 2009, after making allowance for additional corporate funding towards the cost of implementing the new pay framework following the pay and benefits review. Offsetting efficiency savings have been identified to absorb this additional cost, in accordance with the base budget preparation guidelines.

4.19. For the purposes of presenting the detailed budget figures, the overall 2009/10 base budget provision for staffing and support costs is allocated across the standard division of service headings of highways and transportation, planning and development and waste management in the various appendices to this report, in line with the requirements of the relevant accounting codes of practice.

5) Cost pressures, redeployment proposals and efficiency improvements - 2009/10-2011/12

5.1. The Cabinet requires all services to consider and report on:

(i) cost pressures absorbed within the budget guidelines;

(ii) the redeployment of any resources required to offset any new spending priorities, or inescapable budget pressures, or legislative requirements which otherwise cannot be met within their budget guidelines;

(iii) annual efficiency improvements.

5.2. Details of cost pressures on services amounting to £2.947 million in 2009/10 are set out in Appendix 4. This appendix also contains proposals for savings and redeployment of resources to offset these pressures. These proposals are considered in more detail in the following paragraphs.

Highways maintenance

5.3. Pressures totalling £1,145,000 have been identified on the budget for routine highways maintenance together with an additional sum of £300,000 for street lighting, as set out below:

(i) term highways contract - the annual re-pricing of the contract at the beginning of 2009/10 will be based on the relevant inflation indices in October 2008 which were showing a year-on-year increase of 7.25%. This is 4.75% in excess of the corporate budget assumption for inflation next year of 2.5%. The estimated impact of the excess inflation on the routine highways maintenance budget is £665,000.

(ii) flood mitigation - additional expenditure totalling £380,000 in 2009/10 is proposed to begin to address the needs outlined in the Pitt report, including the preparation of a flood management plan, mapping of the drainage infrastructure and additional funding for improved cyclic maintenance.

(iii) verge and shrub maintenance - additional sum of £50,000 per annum to manage shrub encroachment, due to faster rates of growth.

(iv) speed limit review - £50,000 per annum for two years to cover a review on A and B roads, as required in Government guidance. Any expenditure arising from the review will need to be accommodated within future capital programmes.

(v) street lighting - anticipated increase in maintenance costs of £300,000 during 2009/10, rising to £600,000 per annum in a full year, based on an assumption that the Private Finance Initiative (PFI) project is implemented during the autumn of 2009.

5.4. The department's strategy for dealing with the pressures on the highways maintenance revenue budget is to seek further efficiencies by implementing a continuous programme of initiatives under the new term highways contract, together with a re-prioritisation of the overall highways maintenance programme to accommodate spending pressures and absorb higher inflation costs. The re-prioritisation will focus on pothole repairs and flood mitigation within existing resources.

5.5. Approved one-off corporate resources of £600,000 are available towards the higher street lighting maintenance costs following the implementation of the PFI, which are planned to be spread across 2009/10 and 2010/11, to be replaced by ongoing savings to be identified from within the department's budget once the final cost of the PFI contract is known.

5.6. Following a carbon reduction review and subsequent redefining of the output specification, it is now anticipated that there will be no increase in energy consumption under the PFI contract. However, if energy prices continue to rise, the service could expect a pressure of up to £1 million in 20011/12, when the energy supply contract is next renewed.

Road safety education

5.7. There is a need to provide continuing support next year to the Village 30 speed limit initiative, including provision for additional advertising campaigns and underwriting the cost of enforcement along the Village 30 routes.

5.8. Additional expenditure of £213,000 is required in 2009/10 for the above, which is proposed be met from an anticipated reduction in the County Council's contribution towards the Safer Roads Partnership, taking into account the additional income from driver awareness training that the Partnership is now receiving.

Public transport

5.9. Continuing pressures on the public transport budget are expected to arise in 2009/10 from the ongoing programme of contract retendering, the need for additional support to ferries and potentially higher costs on tendering community transport contracts, reflecting the transfer of risk to operators under the new contract arrangements. In addition, further budgetary pressures may arise from potential de-registration of commercial bus services.

5.10. It is not possible to be precise about the financial impact on the public transport budget of the above pressures at this stage. However, an indicative sum of £272,000 has been estimated for 2009/10, which is a prediction based on historic trends and local service knowledge.

5.11. As in previous years, the policy is to contain pressures on the public transport budget by utilising savings from the area review process, implementing lower cost options and seeking contributions from other sources wherever possible. However, efficiencies of £100,000 have been identified within the waste management revenue budget, including savings from the budget for the disposal of abandoned vehicles, and it is proposed that these be applied to public transport to mitigate the pressures faced. However the instability in the market for recyclables may impact on the availability of surplus funds.

Staffing and support costs

5.12. Pressures totalling £537,000 have been identified on the budget for departmental staffing and support costs, as set out below:

(i) highway management (£60,000) - additional staff resources are required for works and event coordination under the Traffic Management Act Network Management Duty. The departmental approach will be to phase-in these requirements and only provide next year for additional resources for the major programme of street lighting works co-ordination. However, further staff may be required by 2010/11. A full review of systems and roles will be undertaken prior to concluding what additional resources are necessary;

(ii) income (£100,000) - it is necessary to make provision to offset the loss of land search and other development related fees, arising from the downturn in the housing market and wider economy;

(iii) IT (£214,000) - additional expenditure of £159,000 is required to meet anticipated IT related costs associated with the re-occupation of Ashburton Court and the reconfiguration of Capital House and Monument House. In association with the office changes and introduction of flexible working arrangements, there will be a need to progress the implementation of the Hampshire Workstyle programme, at an estimated cost next year of £55,000;

(iv) partnership activities (£85,000) - relates to the need to provide longer term funding to enable County Council support to the Partnership for Urban South Hampshire (PUSH) to continue. To date, PUSH contributions have been funded from one-off underspends.

(v) externally funded staff (£78,000) - provision for an archaeologist within the Landscape Planning and Heritage section and a new post within the Ecology section to provide support to other councils and to replace consultants advice on highway schemes

5.13. The general approach has been to manage these pressures by seeking efficiencies in the staffing establishment and making reductions in non-pay overhead costs. Staff savings of £360,000 (-8 FTEs) have been identified within the highways management and strategy and information areas, whilst further efficiencies totalling £279,000, including a further reduction of 10 FTEs, have been or are planned to be achieved in the support services area, including a review of administrative services within the department. Part of these savings has been allocated to cover the longer term funding arrangements in support of the development of major transport infrastructure (see paragraph 5.16 below).

5.14. Match funding of £78,000 from other local authorities and highways fees is available to fully offset the cost of the two additional externally funded staff.

Major scheme development

5.15. The 2009/10 budget includes proposals for longer-term contributions towards the funding of major scheme feasibility studies and the development of the transport evidence base to support the bidding process for schemes, in order to access Growth Point and other funding sources. These are expected to provide significant additional resources for the improvement of major transport infrastructure in the future, such as the recent bid to the Community Infrastructure Fund for phase 1 of the Bus Rapid Transit project (£20 million).

5.16. A sum of £480,000 has previously been provided for this work in the 2008/09 budget, although this year the expenditure is being met from one-off resources, including planned underspendings which were carried forward from the 2007/08 budget. It is proposed that a transfer of £300,000 be made from the transport capital programme, which together with the staffing and support costs savings of £180,000 mentioned above, would provide longer-term funding and enable this expenditure to be maintained at the current year's level in 2009/10.

Efficiency savings

5.17. The Government has set an annual efficiency target for local government overall of 3%, all of which has to be cashable. Performance against this target is now published twice yearly as part of the national indicator set. Appendix 5 identifies new cashable efficiency improvements for 2009/10 totalling £2,318,000 (2.0% of the base budget). Of these, £1,315,000 (1.1%) represent usable budget savings which have been used in constructing the 2009/10 base budget or are incorporated in the redeployment proposals in Appendix 4.

5.18. Appendix 5 also provides an updated statement of the department's efficiency savings being achieved during 2008/09, totalling £3,882,000 (3.5%). A further £2.035 million of efficiencies has been identified during the course of the year, since the original efficiencies programme was prepared this time last year. These include just over £1 million from reduced trade waste at HWRCs and the mitigation of energy price increases through effective procurement.

6) Review of charges

6.1. The service's 2009/10 revenue budget includes income of £11.2 million from fees and charges.

6.2. There are some mandatory and national charges which the County Council is not able to vary. The main example for the Environment services being planning application fees. Most other charges to users are designed to ensure full recovery of costs, including an appropriate contribution towards departmental overheads.

6.3. Wherever possible, charges are reviewed regularly in accordance with financial regulations, or rise automatically in line with increases in costs, and are expected to produce additional income of £0.3 million during 2009/10, in line with the assumption included in the inflation allocation.

7) Other Expenditure

7.1. The budget includes some items which are not counted against the cash limit. At the present time this includes the budgets for capital charges, flood protection, adjustments for pension and early retirement costs, and estimates for expenditure and income relating to the operation of the landfill allowances trading scheme (LATS).

7.2. Further adjustments to the 2009/10 budget will be made later on in the budget preparation process, including charges for central departments support services and for repairs and maintenance of buildings. These costs are excluded at this stage because Policy and Resources controls this expenditure and the budgets and subsequent allocation of expenditure to other services has not yet been agreed.

7.3. Included within the Environment services' cash limit are costs relating to Member support, which will be recharged to the Policy and Resources budget for corporate and democratic core services, also at a later stage of the budget process.

8) Workforce implications:

8.1. The workforce implications of the proposed budget for 2009/10 are set out in Appendix 8.

8.2. The 2009/10 budget supports a planned workforce of 823 full time equivalent (FTE) staff. This compares with the original estimate of 864 FTEs, which is an overall reduction of 41 FTEs. This variation relates to:

(i) a base budget reduction of 27 FTEs, mainly relating to transfer of a number of former County Council staff to the new contractor for the management and maintenance of the Highways Agency Area 3;

(ii) the net effect of proposals for growth, savings and redeployment of resources as set out in Appendix 4, resulting in a reduction of 14 FTEs. This reflects approved or planned reductions of 18 staff, mainly from the support services and highway management areas, which are partially offset by two new posts in support of Traffic Management Act related work and two additional employees to be externally funded.

9) Provisional budget for 2010/11 and 2011/12:

9.1. The provisional budget at outturn prices for 2010/11 and 2011/12 for this service is set out in Appendix 11 and summarised below:

2010/11	£118.5 million
2011/12	£120.2 million

9.2 The provisional budgets make allowance for future years' inflation together with other base budget changes in line with the approved guidelines. These include reductions in 2010/11 for items of non-recurring expenditure carried forward from previous year's underspendings and variations to the level of expenditure funded from Government grants.

10) Conclusions:

10.1 The above proposals set out a revised budget for 2008/09, the revenue budget for 2009/10 and provisional budget for 2010/11 and 2011/12. The recommended budgets are in line with the medium term financial strategy approved by Cabinet in October 2008.

11) Recommendations:

Please see the Executive Summary for the recommendations.

1866/Rpt/489/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 general report covering the whole of the budget for the department, and this report cannot set out detailed crime and disorder implications. However, crime and disorder implications of specific issues raised in the budget would be reflected in individual service plans and project reports where appropriate.

Climate Change

This is a general report covering the whole of the budget for the department, and this report cannot set out detailed climate change implications. However, climate change implications of specific issues raised in the budget would be reflected in individual service plans and project reports where appropriate.

Appendices