Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This report seeks approval for submission to the Leader and Cabinet of 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 has been prepared in consultation with the Executive Member and will be reviewed by the Culture and Communities Select Committee. It will be reported to the Leader and 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 the redeployment of resources, 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 which have been developed to support the priorities of the Corporate Strategy.

3) Recommendations:

It is recommended that: To approve for submission to the Leader and Cabinet:

3.1. The revised budget for 2008/09 totalling £34.616 million (as set out in appendices 1 and 2)

3.2. The base budget for 2009/10 totalling £35.198 million (as set out in Appendix 3)

3.3. The proposals for redeployment of resources totalling £430,000 in 2009/10 (as set out in Appendix 4)

3.4. The proposals for efficiency improvements totalling £0.947 million (2.7 % of the base budget) in 2009/10 (as set out in Appendix 5)

3.5. The annual review of income and charges (as set out in Section 6)

3.6. The summarised trading accounts of business units (as set out in Appendix 7)

3.7. The detailed budget for 2009/10 (as set out in Appendix 8)

3.8. The workforce implications of the proposed budget for 2009/10 (as set out in Appendix 10)

3.9. The provisional budget for 2010/11 of £35.828 million and for 2011/12 of £36.797 million (as set out in Appendix 11).

MAIN REPORT

1) Purpose of the Report:

1.1. This report sets out the proposed Recreation and Heritage revenue budget for 2009/10, a provisional budget for 2010/11 and 2011/12 and recommends a revised budget for 2008/09. This report has been prepared in consultation with the Executive Member and will be reviewed by the Culture and Communities Select Committee. It will be reported to the Leader and 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:

· 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

· 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

· income is to be maximised by reviewing charges in line with the average inflation on the related gross expenditure

· 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 the Corporate Strategy and the Corporate Business Plan to ensure that priorities are affordable and provide value for money and that resources follow priorities.

Key Issues

3) Revised budget:

3.1. The cash limit for the revised budget is £34.616 million. Appendix 1 summarises the movement from the original base budget of £33.333 million. The increase (£1.283 million - 3.9%) has resulted primarily from: the transfer of Adult Education from Children's Services (£155,000), a recurring growth allocation of £250,000 from the central contingency and a contribution of just over £690,000 for the impact of the new pay structure also from the central contingency. In addition to this, a one-off budget transfer, to be reviewed in the next financial year, was made by the Environment department to support the transition of the IT running costs associated with the river Hamble. There has also been an upward adjustment of the original base budget to reflect increases in the rates charges for Recreation and Heritage properties.

3.2. Regular monitoring reports in the course of the year have indicated significant pressures on the Department's revenue budget. Current projections indicating a potential overspend of £0.225 million, have previously been reported. This relates predominantly to the Library and Information Service where pressures are being caused by a combination of costs associated with staffing, utilities, the implementation of the new Library Management IT system (Spydus), and a continuing reduction in income. Steps have been taken to manage the overspend down and further action is planned to eliminate it altogether by the end of the financial year.

3.3. The recent increase in the cost of utilities has had a significant impact on all services in the Department. Since it has in excess of 50 establishments, the Library Service has been significantly affected, with costs increasing by almost £100,000.

3.4. Despite these pressures, the Library Service has continued to pursue policies which promote service improvement and development within the context of wider Departmental, Corporate and National priorities.

3.5. The Library service as a whole has achieved significant increases in visits against the national trend. Visits to the Winchester Discovery Centre for the period November 2007 and October 2008, have increased by 53% above those to the old lending and reference Libraries. There has also been an increase in the number of children participating in national initiatives such as the `Summer Reading' scheme in Libraries - further evidencing the increased use of the resources provided by Hampshire's Library Service.

3.6. Library Service provision has also been enhanced during the current financial year by a one-off allocation for the materials fund of £350,000 as agreed by full council. In addition, £120,000 has been allocated to the service from the recurring transfer of £250,000 from the central contingency to the Recreation and Heritage budget.

3.7. The allocation to the materials fund has enabled increased procurement of `best seller' collections, audio material and additional materials to support the National Year of Reading, while the additional funding has been used to facilitate Sunday opening at Andover and Aldershot Libraries. This has resulted in a 3% increase in the number of visits to Aldershot Library and an average of 250 people visiting Andover Library on a Sunday. There has also been scope to develop the Home Library Service in conjunction with wider corporate priorities and national agendas.

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 the Recreation and Heritage Department is £35.198 million at outturn prices for 2009/10. This compares to the provisional budget for 2009/10 estimated last year at £33.897 million.

4.2. Appendix 3 shows the composition of the base budget.

4.3. Overall, the base budget includes a net increase in expenditure of £1.865 million compared to the base budget for 2008/09 of £33.333 million. The key variations include:

· Adjustments to the 2008/09 original budget totalling £0.427 million.

· The deletion of a one-off addition to the Materials Fund (£0.35 million).

· Additional funding contributing to the increased costs of the new pay structure (£0.769 million), and the revenue effects of capital (£30,000)

· An overall increase of £1,014 million in relation to price changes: £0.894 million for general inflation, and £120,000 for Business Rates where the current year increase in prices, has been in excess of those factored into the 2008/09 original budget.

4.4 In addition, £0.430 million is required during 2009/10 for a number of essential developments which will help meet corporate priorities. These relate to a range of key initiatives emanating from the priorities of the County Council's Cultural, Rural Development, and Transforming Through Technology Strategies, and from the national Sustainable Communities Strategy.

4.5 Provision has been made to support the implementation of the new Library management system Spydus for the Library and Information Service and the new document management system Hantsfile for the wider Recreation and Heritage Department. Although physical implementation of the latter is not planned until the financial year 2010/11, provision is being made for the employment of a project manager in the forthcoming year to oversee the implementation process.

4.6 Increasing Countryside access and engagement with the local rural community is another priority on both the Departmental and wider agenda. To support this, provision is being made to expand the `Small Grants' scheme. To date in 2008/09, 16 Parish Councils have utilised the funding to improve access to their local countryside.

4.7 In conjunction with the current focus of the Children's Services Department, continuing support for initiatives aimed at increasing the engagement of, and opportunities for, young people is planned for 2009/10 - particularly those from disadvantaged backgrounds and at risk of exclusion.

4.8 Another priority for the Recreation and Heritage Department is the enhancement of existing adult learning opportunities and facilities in line with the well-being agenda. Provision is being made for activities targeted according to local priority such as the current funding of a Development Worker based at Winchester Discovery Centre, whose role is to expand the existing programme in rural libraries and the surrounding areas.

4.9 In view of the financial commitments referred to above, a contingency of £80,000 has been built into the Policy Fund to support wider service development. The Policy Fund was established through redeployment from other Service Budgets and serves as a mechanism to recycle and redistribute resources from within the Department thereby facilitating further service improvement and realignment.

4.10 The balance of funding for the service developments outlined above (£0.28 million) will be funded via the redeployment of departmental resources, the mechanism for which will be a 1% savings target levied equally upon each service. The contribution to the Library Management system will be funded directly by the Library and Information Service.

4.11 The efficiency targets for the Services are as follows:

· Museums and Archives £36,000

· Countryside Service £39,000

· Arts, Tourism, Marketing and Design £14,000

· Sport, Community and Outdoors Service £10,000

· Library and Information Service £315,000

· Policy Fund £12,500

4.12 The proposals for achieving these targets are as follows:

· Museums and Archives - reductions in staffing costs, maximisation of income and reductions in locally managed budgets.

· Countryside Service - to be achieved directly by countryside sites through a combination of reductions in expenditure on supplies and services and initiatives to increase income generation.

· Arts, Tourism, Marketing and Design - increased income targets for the Design Service.

· Sport, Community and Outdoors - reductions in funding to other bodies.

· Library and Information Service - management actions

· Policy Fund - review of priorities

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

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

· cost pressures absorbed within the budget guidelines

· 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

· annual efficiency improvements.

5.2. Details of cost pressures absorbed and of redeployment proposals of £430,000 are included in Appendix 4. The background to these, and the proposed management strategies are referred to above in section 4.

5.3. 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 efficiency improvements totalling £0.947 million (2.7%). Of these, £430,000 (1.2 %) represent usable budget savings which are incorporated in the redeployment proposals in Appendix 4.

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6) Review of charges:

6.1. The revenue budget for 2009/10 includes income of £7.688 million from fees and charges.

6.2. The fees and charges levied for the services provided by the Recreation and Heritage department are discretionary. Normally these are reviewed annually by Service Managers. Charges are set in accordance with the policies and frameworks approved by the Executive Member. Charges are adjusted where appropriate with the aim of maximising income or furthering service policy objectives.

6.3. Income derived from charging policies is integral to the maintenance of both current and future levels of service provided by the Department. Due to the potential impact of the current economic uncertainty upon the disposable income of service users, income generation will continue to be monitored closely throughout the financial year.

6.4. During 2008/09 charges were reviewed following reductions in the rate of VAT applied to goods and services, and deductions were made where possible. There will be no impact upon income generation.

7) Other Expenditure:

7.1. The budget includes some items which are not counted against the cash limit. This includes costs for central department support services (except where they have been given to departments to buy services), capital charges and the repair and maintenance of buildings. It also includes the costs of Member support which are rechargeable to the Policy and Resources budget for corporate and democratic core services.

7.2. With the exception of capital charges, the categories of expenditure referred to above are controlled by Policy and Resources. The final charges have not yet been agreed for the current and forthcoming financial year, hence at this stage of the budget reporting process they have been excluded pending confirmation.

8) Business units:

8.1. The trading accounts of the business units (Hampshire Wardrobe, arts marketing hampshire and the River Hamble) are summarised in Appendix 7.

8.2. The Hampshire Wardrobe, having transferred from Children's Services only one year ago, remains relatively new to the Recreation and Heritage Department. The unit is expected to generate a small surplus during 2009/10. In light of performance during the year to date however, this is considered to be a cautious projection.

8.3 A break-even position is also currently being projected for arts marketing hampshire. However this is currently under review as several sources of fixed income remain to be confirmed for the forthcoming year. Furthermore, owing to the current economic climate it is difficult to confidently predict levels of earned income.

9) Workforce implications:

9.1. The workforce implications of the proposed budget for 2009/10 are set out in Appendix 10. The 2009/10 base budget supports a planned workforce of 1011 full time equivalent (fte) staff. This compares with the original estimate for 2008/09 of 987 fte which is an increase of 24 fte.

9.2. The increase is due primarily to the transfer of Adult Education to Recreation and Heritage from the Children's Services Department. This change aside, with regards to pre-existing Services, there is in fact an estimated reduction of approximately 9fte during 2009/10 to be attained by natural turnover.

9.3. The net effect of proposals for growth, savings and redeployment of resources (Appendix 4) on staffing levels are as follows:

2009/10	-9 FTEs
2010/11	-9 FTEs
2011/12	-9 FTEs

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

10.1. 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	£ 35.858 million
2011/12	£ 36.797 million

10.2. The main variations between the financial years 2009/10 and 2010/11, and 2010/11 and 20011/12 are for inflation (£0.9 million and £0.8 million for the two years respectively), and also the invest to save repayment which is shown as a reduction of £175,000 to the R&H cash limit in 20010/11 and is then reversed for 20011/12.

11) Recommendations:

To approve for submission to the Leader and Cabinet:

11.1. The revised budget for 2008/09 totalling £34.616 million (as set out in appendices 1 and 2)

11.2. The base budget for 2009/10 totalling £35.198 million (as set out in Appendix 3)

11.3. The proposals for redeployment of resources totalling £430,000 in 2009/10 (as set out in Appendix 4)

11.4. The proposals for efficiency improvements totalling £0.947 million (2.7 % of the base budget) in 2009/10 (as set out in Appendix 5)

11.5. The annual review of income and charges (as set out in section 6)

11.6. The summarised trading accounts of business units (as set out in Appendix 7)

11.7. The detailed budget for 2009/10 (as set out in Appendix 8)

11.8. The workforce implications of the proposed budget for 2009/10

11.9. The provisional budget for 2010/11 of £35.828 million and for 2011/12 of £36.797 million (as set out in Appendix 11).

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.

Appendices

Appendix 1

Recreation and Heritage

Revised budget 2008/09

Calculation of the cash limit for the revised budget 2008/09

The following table shows the progression from the original budget for 2008/09 to the cash limit for the revised budget 2008/09. Both are at estimated outturn prices 2008/09.

Appendix 2

Recreation and Heritage

Revised budget 2008/09

Summary comparing the revised budget with the cash limit

Appendix 3

Recreation and Heritage

Revenue budget 2009/10

Calculation of the base budget 2009/10 - summary of cash limited expenditure

The following table shows the progression from the original budget for 2008/09 which was prepared at outturn prices 2008/09 to the base budget 2009/10 at outturn prices 2009/10.

Appendix 4

Recreation and Heritage

Proposals for growth and redeployment 2009/10 to 2011/12

Proposals are shown at outturn prices for the relevant year.

Appendix 5

Recreation and Heritage

Cashable efficiency improvements 2008/09 to 2011/12

Notes

Cashable efficiency improvements occur when:

- inputs (money, people, assets etc) are reduced but outputs remain unchanged

- the price of inputs (procurement, labour costs etc) are reduced but outputs remain unchanged.

a) Cashable efficiency improvements producing budget savings and meeting the Government's definition of efficiency include general procurement savings against the budget provision of a 2.5% increase in prices.

b) Cashable efficiency improvements producing budget savings but not meeting the Government's definition of efficiency include introducing new charges for services and fortuitous savings.

c) Cashable efficiency improvements not producing budget savings arise because the efficiency is avoiding unbudgeted cost e.g. staff reductions made to absorb increments, procurement efficiencies where costs are still exceeding 2.5%, capital receipts or developer contributions applied to avoid unplanned additional borrowing

Appendix 7

Recreation and Heritage

Business units - summarised trading accounts 2008/09 to 2011/12

Appendix 8

Recreation and Heritage

Revenue budget 2009/10

Analysis of variations by division of service

Appendix 9

Recreation and Heritage

Revenue Budget 2009/10

Reconciliation of the original 2008/09 budget on the following pages with the 2008/09 budget in the published budget book.

Appendix 10

Recreation and Heritage

Workforce levels and costs

Appendix 11

Recreation and Heritage

Provisional budget 2010/11 and 2011/12

The following table shows the progression from the 2009/10 proposed budget at outturn prices to the provisional budget for 2010/11 and 2011/12 at outturn prices.

Annex 1 to Appendix 11

Recreation and Heritage

Provisional budget 2010/11 and 2011/12

Analysis of variations by division of service