HAMPSHIRE COUNTY COUNCIL

Decision Report :

Decision Maker:			Executive Member for Policy and Resources
Date of Decision:			29 January 2009
Decision Title:			Policy and Resources Revenue Budget 2009/10, 2010/11 and 2011/12
Decision Reference:			544
Report From:			The County Treasurer and Chief Officers
Contact name:		Anne Hibbert
Tel:	01962 847533			Email:	[email protected]

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 has been prepared in consultation with the Executive Member and will be reviewed by the Policy and Resources 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 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:

To approve for submission to the Leader and Cabinet:

3.1. The revised budget for 2008/09 totalling £59.5 m (as set out in appendices 1 and 2)

3.2. The base budget for 2009/10 totalling £61.9 m (as set out in Appendix 3)

3.3. The proposals for redeployment of resources totalling £1.5m in 2009/10 (as set out in Appendix 4)

3.4. The proposals for efficiency improvements totalling £2.4m (2.4% of the proposed budget) in 2009/10 (as set out in Appendix 5)

3.5. The summarised trading accounts of business units (as set out in Appendix 6)

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

3.7. The workforce implications of the proposed budget for 2009/10 (as set out in Appendix 9)

3.8. The provisional budget for 2010/11 of £59.1m and for 2011/12 of £59.6m (as set out in Appendix 10).

MAIN REPORT

1) Purpose of the Report:

1.1. This report sets out the proposed Policy and Resources 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 Policy and Resources 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, including a lower 2% pay increase assumption for 2011/12.

2.3. For this service, the budget guidelines are:

	£m
2009/10 guideline	54.6
2010/11 provisional guideline	55.0
2011/12 provisional guideline	56.0

2.4. The medium term financial strategy is closely linked to the Corporate Strategy 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 £59.5m. The calculation is shown in Appendix 1.

3.2. A summary comparing the revised budget with the cash limit is set out in Appendix 2. Further comments are provided below.

Chief Executive's department

3.3. Spending pressures in 2008/09 are being managed within the department's cash limit and spending and income levels have been reviewed to identify opportunities to carry forward under spendings to 2009/10 to help to meet additional budget pressures in 2009/10. These pressures are outlined in section 6 of this report. In the light of this it is proposed to carry forward £300,000 on the main departmental budget. This under spend arises from tight budget management, additional external income for the legal work associated with developers' contributions and savings from staff turnover, including some senior posts in the department.

3.4. In addition, a provision of £400,000 was carried forward from 2007/08 to meet any restructuring costs associated with the corporate services reviews. It is estimated that £200,000 of this will be used in 2008/09 and therefore it is requested that the balance of this provision is also carried forward.

3.5. In relation to Human Resources, it is estimated that there will be an under spend of £105,000 from delays in implementing new systems pending the outcome of the corporate services review and from general savings. It is requested that this sum is also carried forward to 2009/10.

3.6. The Corporate Communications budget for 2008/09 included £50,000 to carry out a staff survey which is carried out every three years. However, the survey is not now expected to take place this financial year and it is proposed to carry forward to 2009/10 the funding earmarked for the survey.

3.7. On the Hantsdirect operating budget, there is an under spend of £100,000 and there are further smaller under spends on Members training (£20,000), HATs and Scrutiny (£15,000) and elections (£59,000). Again it would ease pressures on these budgets in 2009/10 if these small sums could be carried forward.

County Treasurer's department

3.8. Sound budget management for 2008/09 is delivering a planned under spend of £200,000. This arises largely because of the success in achieving the late grant from the Department for Children, Schools and Families (DCSF) for the increased one off workload for Student Support in 2008/09, some significant impacts of turnover in specific areas of the department and the success in securing work with the New Forest National Park Authority.

3.9. One of the main issues currently facing the Treasurer's department is the national transfer of the Student Support unit from 2008/09, phased over three years, and the continuing need to deliver a quality service during that period. It is proposed to carry forward £100,000 to manage the transfer of the Student Support service. A further £100,000 is to address budget pressures for the wider department, which are outlined in section 6 of this report.

Property, Business and Regulatory Services

3.10. Property, Business and Regulatory Services (PBRS) revenue pressures in 2008/09 are set out in the following paragraphs. All other budgets are expected to be at cash limit. Every effort will be made to manage these pressures within PBRS' overall resources. Proposals for carry forward are included in 3.11 and 3.13.

3.11. The Repairs and Maintenance budget includes a contingency to deal with the effects of unusually harsh winter weather. In previous years any under spending against this contingency has been carried forward in full. The full allocation in 2008/09 is £404,000 and, with the main winter months still ahead, very little of this had been spent by the end of November. It is likely that there will be some further calls on this money over the remainder of the year but in line with previous practice approval is sought to carry forward in full any unspent balance of the contingency at year end.

3.12. The Property Services budget is currently expected to be underspent at year end by up to £100,000. This view is based in part on assumptions about the stage projects will have reached by year end and their associated fee income.

3.13. The client budget for the HQ catering facility will under spend in 2008/09 as the refurbishment of Ashburton Court continues. The new restaurant will open in the summer of 2009 and it is proposed to carry forward £40,000 into 2009/10 to contribute to set up costs associated with the new facility.

3.14. Expenditure on Office Accommodation is forecast to exceed the budget by £181,000. This results from the significant increase in the price of electricity.

3.15. The Corporate Estate budget has been adversely affected by:

· the change in business rates for vacant properties,

· a higher than usual requirement to make assets safe

· the high cost of assets recently brought into the account

· current market conditions - properties remaining in the Corporate Estate portfolio for longer.

3.16. The 2008/09 overspend is currently forecast at £166,000 and this is likely to increase to £200,000 for 2009/10. In the past, these pressures have been partially offset by top-slicing capital receipts to cover short-term management costs prior to disposal. These projections assume this will no longer be possible in the short to medium term due to market conditions. Actions under consideration to reduce the overspend in 2009/10 include increased use of demolition.

3.17. The Development Account has been adversely affected both by maintenance costs required to be carried out under the terms of the leases and costs associated with units being vacant for longer than originally projected - the forecast overspend for 2008/09 is £69,000. The longer term position will depend on success in letting units but again the overall market conditions may mean both increased difficulty in letting units and higher levels of bad debt.

3.18. 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 projection for 2008/09 is an overspend of £97,000. A review of the service is currently being undertaken with support from the Treasurer's Consultancy team and proposals will be brought forward in the summer of 2009.

3.19. Regulatory Services budgets will be under pressure as a result of work to develop the corporate community safety strategy covering all statutory agencies in Hampshire - part year cost in 2008/09 of £65,700. It is proposed to use part of the contingency sum within the budget from the carry forward of the under spending in 2007/08 to cover the corporate community safety strategy costs in 2008/09.

3.20. Impact of excess inflation - price increases of up to 80% for the new electricity contract for the year from October 2008 are estimated to have a major impact on Office Accommodation costs. The additional costs in 2008/09 are estimated at £181,000 and £210,000 in 2009/10. The ongoing inflation in excess of 2.5% for construction costs can be offset by savings from the new engineering term maintenance contract. Higher business rates of £122,000 including levies relating to the Business Improvement District (BID) have been met from contingency.

3.21. HM Coroner Service is a Policy and Resources service managed within PBRS. In recent years the service both in Hampshire and nationally has faced cost pressures from above inflationary increases in charges from hospitals and the cost of analyses and testing. In addition, the number of reported deaths and those requiring inquests and post-mortems continues to rise. A central contingency of £100,000 for higher coroners costs was included in the 2008/09 budget, but an overspend of £180,000 is anticipated for 2008/09 and this position is likely to continue into 2009/10.

3.22. A separate contingency of £100,000 is also being held to cover the costs of an increased number of inquests being held in the Portsmouth and South East Hampshire Coroner's District during 2008/09 and 2009/10. To date £8,800 has been incurred with no change in the total estimated cost.

Other budgets

3.23. The Home to School Transport pilot started towards the end of the 2006/07 financial year and runs for three complete academic years to the end of the 2010 summer term. In total, £1.5m was set aside for the pilot of which £700,000 will have been spent by the end of 2008/09. The unspent allocation in 2008/09 of £190,000 will be carried forward to 2009/10.

3.24. External audit fees for 2008/09 are likely to be less than the budget by £15,000, although this depends on the amount of audit time required to complete the audit of individual grant claims.

3.25. The budget for grants to voluntary organisations has not been fully committed and it is proposed to carry forward the forecast uncommitted sum of £70,000 to assist in supporting the work of voluntary organisations given the impact of the economic recession.

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 £61.9m at outturn prices. This compares to the provisional budget for 2009/10 estimated last year at £54.6m (excluding £0.1m growth and redeployment proposals).

4.2. Appendix 3 shows the make up of the base budget.

4.3. Overall, the base budget includes a net increase in expenditure at constant prices of £3.5m . The main variations are:

· Variations to offset the excess cost of inflation (-£0.5m)

· exclusion of expenditure included in the 2008/09 budget which was financed by the carry forward of planned under spending from 2007/08 ( -£0.6m)

· exclusion of items funded by one-off use of reserves or balances or which were approved on a non-recurring basis including time-limited initiatives or spending that is subject to review including Pay and Benefits implementation, Hantsdirect roll out, Home to School Transport pilot, Student Support transfer, PSA1 reward grant, Hampshire Senate (-£2.3m)

· additional provision for the estimated cost of the 2009 County Council elections (+£0.9m)

· allocations from contingency for pay and benefits impact and Hantsdirect (+£2.6m)

· invest to save funding for projects to recover Land Deeds and review business rates (+£0.1m)

· Area based grant funding for local involvement networks (LINks) and safer and stronger communities priorities (+£1.4m), which are included in the central contingency in the 2008/09 budget

· Transfers from other departments (+£0.5m)

· Planned underspendings in 2008/09 carried forward to 2009/10 (£1.4m)

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. Section 6 of this report identifies a number of cost pressures affecting the services funded by Policy and Resources, in some cases with associated redeployment proposals or savings and in other cases potential sources of funding that are still being explored. Details of redeployment proposals of £1.5m are included in Appendix 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 £2.4m. Of these, £0.9m relate to Business Unit and Corporate efficiency savings, leaving £1.5m or 2.4% relating to the Policy and Resources proposed budget.

Corporate or cross-departmental savings

5.4. Hampshire Workstyle is a major project with the potential to deliver ongoing efficiency savings though more efficient use of County Council buildings. An efficient centralised Facilities Management service will be a necessary part of the overall project. Work to date has involved exploration of options to develop a business case which will include a financial appraisal including anticipated savings.

5.5. The Procurement Development team based at County Supplies is continuing to achieve annual savings through contracting for goods and services and supporting departments in more specialist procurement areas. Annual savings to date have been in the order of £0.5m with £0.76m targeted for 2008/09. Further savings of £0.5m are anticipated in 2009/10.

5.6. The Rates Revaluation team continues to assess rates charges to County Council buildings and, in line with previous years, a figure of £1m is expected in 2008/09. The savings accrue across school and non-school properties and this is reflected in the funding of the team. In 2008/09 around 95% of the total savings are expected to apply to school premises with £50,000 savings for other County Council buildings.

5.7. This pattern is expected to change in 2009/10 with a preliminary forecast of £1.2m savings of which £800,000 would relate to schools and £400,000 to other HCC properties. The team will benefit from an additional surveyor post in 2009/10 funded on an invest to save basis.

5.8. Hampshire Transport Management provides vehicles to all departments of the County Council. Following good trading performance in 2007/08 it was able to reduce contract hire prices to County Council customers by 4% and planned to hold prices at that level in 2008/09. Good performance has again allowed a further in-year price reduction in 2008/09 of 2.5% with 2009/10 prices to be held at this lower level. The additional saving in 2008/09 is £80,000 with a further sum of £83,000 in 2009/10.

Departmental savings

5.9. The County Treasurer's department has delivered a number of cashable savings to remain within the cash limit and exceed the 3% cashable efficiency savings target:

· SAP benefits realisation - the department has met its SAP benefits realisation targets each year since 2004/05 and will have delivered a total of £960,000 per annum as at the end of 2008/09. The cash targets have been met as a result of changing ways of working and delivering more efficient or cost effective services, most recently for example, with BACs email advices and the reorganisation of the Adults Services devolved finance unit.

· Pay slip printing - reviewing the printing and packaging of payslips has produced annual savings of £30,000 and reduced the critical path for payroll running by a day.

5.10. Within Property, Business and Regulatory Services, the engineering term maintenance contract, funded from the revenue repairs and maintenance budget was renewed in August 2007 and savings of £200,000 were anticipated from the new arrangements. A review of the savings after the first full year has identified savings of £276,000 and these have been redeployed to meet other priorities within the budget and to offset excess inflation.

5.11. The Winchester headquarters contract was excluded from this arrangement and, as part of the Facilities Management project has now been combined with building repairs to form a new contract which was let from October 2008. Part year savings from this contract are provisionally estimated at £50,000 increasing to £100,000 in 2009/10.

5.12. The senior management arrangements in Property Services are being considered as part of the corporate services reviews. Proposals will be brought forward early in 2009.

5.13. Departmental budgets are not funded for the additional costs of increments and re-gradings but are met by efficiency savings. For Policy and Resources, efficiencies have been achieved to fund £0.6m of the 2008/09 cost of increments.

6) Chief Officer controlled budgets

Chief Executive's Department

6.1. In assessing the resource requirements for the Chief Executive's Department for 2009/10 to 2011/12 there are a number of uncertainties as the future role and functions of the Department are currently being reviewed as part of the Corporate Services Review. The outcome of these reviews is likely to require some re-alignment of budgets and prioritisation of resources.

6.2. The approach to preparing the budget has been to try to absorb known pressures either through efficiency savings or income generation. There are however a few areas of ongoing activity which have been funded on a temporary basis which will either require an extension of the temporary arrangements or permanent funding to be found if the activities are to continue. These relate primarily to the continuing work on Equal Pay and Remuneration and Benefits and to the current Hampshire Action Teams (HATS) pilot.

6.3. An additional pressure in 2009/10 will be the cost of the full County Council election. The estimated cost of running the election has been reviewed with the Districts following the move of the election to coincide with the European election and the best estimate is that the cost to the County Council will be approximately £1m. Funding at this level has been allocated within the budget including the carry forward of the 2008/09 budget for elections as none are required in the current year.

6.4. Each Division of the Department has reviewed its current budget, the provisional budget for 2009/10 and associated pressures. The following is a summary of the outcomes of those reviews which demonstrate the actions that have been taken or are planned in order to redirect resources to meet priority areas.

Human Resources (HR)

6.5. The major pressure within the HR budget relates to the requirement for specialist skills to address the ongoing work on remuneration and benefits and manage the Equal Pay work. The new pay framework is now in place and Hampshire has become one of a minority of local authorities which has achieved full delivery against the requirements of the National Single Status Agreement. There are however still some elements specifically in relation to appeals, review of the Individual Performance Planning (IPP) processes and certain market supplements that remain to be completed.

6.6. As part of the Corporate Services Review of HR, the Director of HR is reviewing the function with a view to moving the focus from the regulatory aspects to a more strategic role. There will be a continuing need for strong governance arrangements however; the intention will be to mainstream this with core HR activity thereby significantly reducing the cost in 2010/11.

6.7. It is estimated that the additional cost of the Remuneration and Benefits team in 2009/10 will be £425,000 potentially reducing to £250,000 in 2010/11 depending on the agreed future work programme. The estimated cost of the HR work in relation to equal pay is a further £125,000 in 2009/10 reducing to £65,000 in 2010/11. The latter is dependant on the majority of the current cases being dealt with by mid 2010. It is therefore proposed to allocate £550,000 from the Pay and Benefits reserve to fund these teams in 2009/10.

6.8. Other pressures on the HR budget relate to:

· the final element of the SAP savings targets in the shared service centre. To meet this, an invest to save plan is being developed totalling some £126,000 which, it is suggested, will deliver net savings in excess of £155,000 pa after 3 years.

· A new budget pressure arises from the requirements for checking staff under the new Independent Safeguarding Authority. These costs which will ultimately fall on departments and schools are estimated to cost around £50,000 for departments and £155,000 for schools in 2009/10, with an increasing impact in subsequent years. There are also implications for HR in implementing the new arrangements and these are estimated at £100,000 in 2009/10 and 2010/11.

Corporate Communications

6.9. The last year has seen the introduction of a fourth edition of Hampshire Now residents' magazine as it is clear from focus group work that the public continue to want more communication from the County Council. There is also clear evidence that the level and quality of communication contributes to residents' overall satisfaction levels with the authority. In response to this, the Corporate Communications Team has also launched a tailored programme of road shows designed to showcase services in local areas. The events target both rural and hard to reach areas particularly addressing issues of both a lack of engagement and dissatisfaction. These improvements have all been funded either from within existing budgets or by raising income.

6.10. In addition to existing workloads, the coming year will see an increased need for communications to support the authority's focus on rural issues and community involvement. The ability to meet the increasing demand for communication is predicated on the ability to generate income through advertising and other sources. Given the current economic climate, a concern for these areas of work and for future development is the possibility that advertising revenues may reduce and therefore the position will be closely monitored through the year.

6.11. Efficiencies have also been achieved within the market research contract for the new Place Survey with the County Council successfully linking up with 11 district councils to undertake government required consultation with Hampshire residents.

Policy Unit

6.12. The main pressure area relates to the HATS pilot. The operation of HATS is currently subject to an external Improvement and Development Agency (IDeA) review which will assess their contribution, taking views from a wide range of stakeholders and setting the experiences of Hampshire into the national context. Following the findings of this review, proposals will be developed to set out the options for Cabinet to consider how to take forward the locality working agenda - whether via HATs or a successor to HATs. On the basis that there will be a need for some form of locality working it will be necessary to ensure there is suitable budget provision. Given that the shape or scale of this has not yet been determined it would seem prudent to use the existing cost of the HATs which is approximately £400,000 of which £115,000 is currently contained within the base budget.

6.13. The Local Area Agreement budget, which was established with one-off LPSA2 reward grant money, is projected to be fully depleted during 2008/09. There may therefore be a budget pressure to continue to support this partnership working. These cost pressures are as yet unknown but, as an indication, are likely to be around £10,000 for the basic support activities and another £30,000 for a full year if the Council needs to fund the partner Voluntary Community Services post again (funding for this post currently expires in August 2009).

6.14. Performance monitoring - a review of the systems and information required to drive performance improvement across the organisation is currently taking place. This is likely to result in the need for systems improvement and better access to information regarding our relative position to other organisations. At present there is not an estimate for this.

Legal Practice

6.15. The main pressure in the Legal Practice relates to equal pay claims. The funding for additional legal support to deal with these cases was made on a temporary basis. It is important that we have robust arrangements in place to defend the County Council against these claims. The estimated cost of the in-house support required is £100,000 in 2009/10 and £50,000 in 2010/11. It would also be prudent to make provision for a further £150,000 and £75,000 for external legal costs in the two years. It is proposed to allocate funding from the Pay and Benefits reserve to fund these costs.

6.16. The strategy for accommodating increases in work in the Legal Practice is to discuss with departments what additional funding they are able to provide to deal with work on their behalf. This together with reviewing the overall allocation of resources as part of the Corporate Services Review will be the approach taken to deal with other pressures in the Legal Practice.

Democratic Services

6.17. Democratic Services is also an area of the Chief Executive's Department that is subject to review as part of the re-configuration of Corporate Services and therefore the outcome of the review may have resource implications.

6.18. A specific pressure area is the management and administration of education appeals. In 2007/08 staff time charged to appeals support amounted to £78,000. For 2008/09 up to mid-October 2008 the total was £78,000. The profile is similar in relation to non staffing costs associated with appeals. The Schools Forum supported new money from the Schools Budget of £50,000 in 2009/10 and a further £25,000 in 2010/11 making a full year £75,000 for 2010/11 onwards for the increased pressures on the appeals service. This will then be included within the Schools Budget proposals in the budget paper going to the Executive Lead Member in January.

Other Budgets

6.19. The budget for Emergency Planning is currently under pressure arising from funding of the Hampshire and Isle of Wight Local Resilience Forum (LRF) and the requirement to enter into a contract for the provision of Temporary Mortuary Arrangements. The launching of a National Professional Competency Framework for Emergency Planners has also increased the cost of training. A review of staffing will take place however there is still likely to be a potential shortfall in the region of £50,000.

6.20. In the last year there has been an increase in the number of applications for Blue Badges. It is estimated that around 25,000 badges will be issued which is a 25% increase. The process for issuing Blue Badges is being reviewed to see if it can be made more efficient for example by increasing web self service.

6.21. Economic Development has similar pressures to other parts of the Department in that a significant number of posts are funded from external sources. If the income streams do not continue then it will not be possible to sustain the current level of activity in Economic Development.

6.22. Services continue to be transferred to Hantsdirect which is the subject of one of the Corporate Services Reviews. In addition to the review, a health check is to be carried out on Hantsdirect to assess operational performance and to evaluate the impact of this major change initiative which has introduced a new way of working for the County Council

6.23. From a corporate perspective rather than a departmental one. It will be important during the budget process to ensure that resources are earmarked for the next stage of the rollout of the rural policy, objectives and action and the impact of establishing a Hampshire wide skills board.

Summary

6.24. The department faces a number of resource pressures in 2009/10, most of which should be contained within existing resources. Wherever possible these will be addressed as part of the Corporate Services Review and, if appropriate, with the departments that are generating increased workloads.

6.25. Costs associated with the Corporate Services Reviews are being charged to the invest to save reserve. It is estimated that approximately £100,000 will be committed against this reserve in 2008/09 with any further expenditure falling into 2009/10.

County Treasurer's department

6.26. The County Treasurer's department has continued to work on various change and innovation projects to deliver cashable savings and service improvements including meeting the SAP benefits realisation targets of £960,000 per annum. Benchmarking has been an important tool in identifying value for money and external assessment continue to evidence good performance. The 2009/10 to 2011/12 budgets have been prepared in line with the Cabinet set cash limits.

6.27. The department faces a number of challenges in 2009/10:

· The nationalisation of the Student Support service is underway with a run down over a three year period from 2008/09. For 2009/10 the service has to achieve further reductions of £345,000 whilst maintaining excellent service delivery.

· Support Services will be a critical part of the implementation of the Facilities Management of the HQ buildings. Some of the services the section provides will be a part of the new FM provision and staff and resources will need to transfer.

· Internal Audit have generated considerable new work through the Financial Management Standard in Schools (FMSiS) external assessment of schools and new work from the New Forest National Park Authority. Further challenges are expected for our FE college contracts in relation to the perceived independence of the service as the commissioning and planning for 16-19 education transfers to the County Council in 2010.

· The running of payroll post Pay and Benefits, the operation of pay awards and step increases and the payroll running process generally has become significantly more manually intensive with many staff on spot salaries and protected pay.

· Changes in Pension Fund regulations, which have made the scheme more complex and increased the number of members with deferred benefits, have required a fundamental review of service standards and of the resources required to administer the scheme. This was reflected in the draft Administration Strategy presented to the Pension Fund Panel in December. The impact in 2009/10 of implementing the strategy will increase staffing levels in Pension Services by 7 FTEs, which will be recovered in the charge made to the Pension Fund. Administration costs per member are expected to remain within the lower quartile for Local Government pension schemes.

· The department has been running with a reduced management team. This arrangement causes serious pressures given the extent of work at this level including that for Police and Fire as well as the national work that management team members carry out. This will need to be reviewed during 2009/10.

6.28. The department continues to deliver valued services and outcomes to meet corporate priorities but recognises the need to deliver on-going efficiency savings and further significant service improvements. To help with this transition the department is planning to carry forward an under spend of £100,000 for the Student Support transition and to achieve a £100,000 under spend in 2008/09 to help manage the wider departmental pressures in 2009/10. Continued support for the transitional period of Pay and Benefits in Payroll Technical is sought at £45,000 in 2009/10. This will leave a £200,000 pressure which will be met through turnover and efficiency savings in the department.

Property, Business and Regulatory Services

Impact of capital strategy

6.29. The capital budget strategy has a significant impact on the Property Services revenue budget through the reduced scope for fee income. The level of fee income required to deliver a balanced overall position is significant as 65-70% of revenue costs are supported by fee charges with only 30-35% covered by the cash limited budget. Based on the reductions in both PBRS' and other departments' locally resourced programmes the total loss of fee income in 2009/10 including feasibility is estimated at £690,000, though the proposals in the 2009/10 capital programme relating to advance fees for feasibility work assist in offsetting this loss next year. The shortfall is expected to increase further as a result of a slowdown in reinvestment programmes in other departments.

6.30. To offset this anticipated loss of fee income in the longer term three strategies will be pursued:

· Further reduction in the use of external consultants - reliance on consultants has been significantly reduced over the past four years and further reduction will be constrained by the need both to obtain specialist services and cover areas where recruitment has proved difficult.

· Target increased external fee income - this will clearly be limited by the market. It is likely that other local authorities will be facing similar issues so the market may be smaller than in recent years and competition from the private sector might be more intense.

· Management action to reduce costs through increased efficiency and possibly reducing headcount. If the whole of the £690,000 gap had to be made good by reducing headcount this would equate to 17 full time equivalents.

6.31. However an interim solution for 2009/10 will be required to allow these actions to be put into effect. The capital budget report elsewhere on this agenda proposes a carry forward of £1m of capital repairs funding: it is proposed to transfer £200,000 of this carry forward to revenue in 2009/10 to offset some of the anticipated fee income losses in the short term.

Hampshire Workstyle and Facilities Management

6.32. Hampshire Workstyle is a key corporate initiative to improve service delivery by making better use of County Council buildings, providing a more efficient facilities management service and developing and implementing mobile and flexible working practices. Financially its objectives are to develop an approach that brings ongoing revenue savings and is broadly neutral in capital terms. The project is being led by PBRS and a small core team from within existing resources has been established reporting to the cross-departmental Programme Board. As the scope of the work increases to take the project forward this team will need to be supplemented with additional capacity.

6.33. These longer-term costs will be included as part of the programme's business case to be brought to Cabinet in 2009. Additional resources estimated as being required in 2009/10 total £249,000 and it is proposed to transfer an equivalent sum to revenue from £2m of capital repairs funding already agreed to support this and other corporate workstreams.

6.34. PBRS is also leading the Facilities Management (FM) project with work in the initial phase concentrating on the development of a centralised FM service at Headquarters. Again, a small team has been set up within existing resources with a temporary client role filled by secondment and funded by contributions from all departments affected by the initial phase.

6.35. Subsequent phases to extend the approach across other areas of the County Council would ultimately be funded from efficiency improvements although an interim invest to save solution may be required.

6.36. The proposals contained in paragraphs 6.32 to 6.35 can all be found from within existing resources. These corporate projects will deliver significant efficiencies and improvements in service delivery.

Sustainability and the Carbon Reduction Commitment

6.37. The Government is introducing a Carbon Reduction Commitment (CRC - a capped carbon trading scheme) for large non intensive energy users, such as the County Council from 2010. Under this scheme the County Council will be required to buy carbon allowances initially equal to its emissions but after a period of two years a cap will be introduced to ensure participating organisations reduce their emissions over time with a 15% reduction required by 2020. The costs of purchasing CO₂ emissions allowances will be recycled to the County Council but the extent to which this happens will be determined by the authority's place in a carbon league table.

6.38. To prepare for this new regime and to minimise the cost of the County Council's participation, a number of actions are proposed - these include introducing an automated meter system to all main fuel sources (smart meters), complying with the Carbon Trust standard, and implementing a Carbon Management Plan.

6.39. Proposals are being worked up at officer level with input from the Property/Built Estate Members' Panel and additional feasibility and start up costs are estimated at £187,000. A carry forward from 2008/09 of £2m of capital repairs funding to support this has already been agreed and it is proposed to transfer £187,000 to revenue in 2009/10 to offset these initial development costs.

6.40. It should be noted that the built estate, whilst a significant source of carbon emissions is only one of a number of sources across the County Council. These proposals are intended to cover PBRS's area of responsibility only.

Community Safety

6.41. The Accredited Community Safety Officer Service plays a key role in supporting the corporate priority of Hampshire safer and more secure for all and since its inception has been very well received by residents, other local authorities and the police. The service has benefited from external funding from other councils within Hampshire which has been helpful in contributing to the provision of a county-wide service. One authority, New Forest District Council (NFDC), has now decided it can no longer afford to provide funding at the current level and proposes to reduce its contribution by a further £54,000 in 2009/10. A redeployment proposal is outlined in paragraph 8.3 to compensate for this loss of funding.

6.42. In accordance with the County Council's key priority of `Hampshire safer and more secure for all' it has been agreed that PBRS should play an increasing role in managing community safety issues across Hampshire. Key achievements to date include the engagement of all statutory agencies in the County Strategy Group on Crime and Disorder. This has led to a programme of core business, agreed strategic priorities for the County Agreement linked to the LAA `safer communities' targets, and a programme of commissioned services. The proposed approach seeks to link to the existing CADDIE programme and the Community Safety Practitioners' Forum at a part-year additional cost of £65,700 in 2008/09 rising to £94,000 in 2009/10. Potential grant funding for this is being pursued.

Affordable and Key Worker Housing

6.43. This remains an important corporate and service priority and to deliver the main Affordable and Key Worker Housing Strategy priorities will require continuing support to the Hampshire Alliance for Rural Affordable Housing (HARAH) Rural Housing Enabler post at £40,000 per annum (agreed as part of the previous year's budget) and also an annual £50,000 Affordable and Key Worker Housing budget to facilitate the County Council's own projects. The latter has been funded for the past four years from an earmarked capital receipt but this funding ends in 2008/09. Options for future funding are being explored.

7) Review of charges:

7.1. The Policy and Resources 2009/10 revenue budget includes income of £12.7m from fees and charges. This represents an increase of £2.5m (25%) on the 2008/09 original budget. The majority of the above inflation increase relates to additional external income generated by Property Services through shared service agreements and projects with other local authorities.

7.2. There are some mandatory and national charges which the County Council is not able to vary. The main examples relate to the recovery of legal costs and the registration of births, deaths and marriages.

7.3. Discretionary charges are reviewed annually except when they are subject to agreements which cover longer periods when the review takes place at the end of the period of the agreement. Examples of charges not subject to annual review are most commercial lease rentals and agricultural lettings.

8) Other Expenditure

8.1. Non-departmental budgets within the Policy and Resources cash limit include:

· Members' devolved budgets

· Grants to voluntary organisations

· Grants to Councils of Community Service

· Contributions to other national and local organisations

· Subscriptions to Government bodies

· External audit fee

· Hantsdirect set up costs

· Home to School Transport pilot

8.2. The 2009/10 budget includes provision for Members' devolved budgets at £10,000 per Member.

8.3. The County Council's annual subscription to the South East England Regional Assembly (SEERA) ceases at the end of 2008/09. It is proposed to transfer this budget saving of £50,000 to the Accredited Community Safety Officer Service to compensate for the withdrawal of funding for the service by New Forest District Council.

8.4. A decrease in the 2008/09 external audit fee arose from the exclusion of the 2007/08 corporate assessment. The Audit Commission's proposals for 2009/10 have not yet been received, but their consultation document suggests there may be a significant annual addition to their inspection work and charge, in place of a more substantial charge in every third or fourth year for a corporate assessment. The budget proposals for 2009/10 - 2011/12 are based on the estimated 2009/10 outturn according to the Audit Commission's consultation document, adjusted for an assessment of the discounts that might be awarded to the County Council according to their perception of our level of risk and the amount of audit work required.

8.5. The rollout of Hantsdirect will extend into 2009/10 in order to manage effectively the transitional risks associated with the transfer of the more complex Children's and Adult Services and to ensure that new service priorities are adopted within the transferred service. This will add to the set up and transitional operational costs within the Policy and Resources budget by £0.4m in 2008/09 and £1.6m in 2009/10. This can be achieved however without affecting the overall budget and council tax strategy by extending the pay back period of the project by two years.

8.6. The Home to School Transport pilot continues until the end of the Summer term 2010. The balance remaining of the original £1.5m budget will be allocated £621,000 in 2009/10, including the £190,000 carried forward from 2008/09 and £184,000 in 2010/11 in order to meet the forecast expenditure.

8.7. The budget includes some items which are not counted against the cash limit. This includes adjustments for pension and early retirement costs in accordance with Financial Reporting Standard 17 (FRS 17). Budgets to cover depreciation on the assets used to deliver Policy and Resources services and the recharge of central support services will be included for presentation to Cabinet in February.

9) Business units:

9.1. The trading accounts of the business units are summarised in Appendix 6.

Business Services Group

9.2. The underlying financial position of the PBRS business units continues to be strong with a planned overall surplus in 2009/10 of £421,000.

9.3. The largest single contribution to this figure is from HC3S where the benefit of the School Meals Grant funding together with a rise in both pupil meal numbers and the price of meals is expected to more than offset the significant increase in direct staffing costs following the implementation of the new pay arrangements from April 2007. HC3S is expected to generate a surplus of £225,000.

9.4. Hampshire Transport Management is targeting a £73,000 surplus despite planning no increase to contract hire prices following two years of reductions to rates. The 2009/10 charges are on average 5% lower in cash terms than the rates charged in 2006/07.

9.5. County Supplies is planning a surplus of £103,000. The trading operation includes the Procurement Development team that have worked successfully with other departments such as Adult Services and Environment to deliver procurement savings across major areas of spend. The costs of this team are partly supported by corporate funding of £94,000. As in previous years annual savings to the County Council from County Supplies' contracting activity are expected to be £0.5m.

IT Services

9.6. IT Services maintain a 5 year financial forecast in order to predict and to manage significant changes in annual expenditure, and so to provide stable IT costs for departments. The forecast is built up from the current service accounts and takes into consideration both known and anticipated changes. Full account is also taken of the efficiencies planned or delivered to date.

9.7. IT Services is currently investing in several large projects to deliver the necessary tools and infrastructure to enable corporate initiatives including: Hampshire Workstyle, Personalisation of services, Hantsdirect, Partnerships, Information Exploitation and Services for Schools. The IT Services 5 Year Financial Plan reflects this and the underlying trading model is broadly in balance and has been approved by the County Treasurer.

9.8. On current forecasts, the trading account will return a surplus in 2009/10 and eliminate the brought forward deficit during 2010/11. Expenditure increases in 2009/10 will be mitigated by the completion of some of the current work programmes and further efficiency savings of 3% per annum have been assumed. Marginal growth of service income is anticipated.

9.9. IT Services faces a number of challenges in addition to supporting the large investment programmes. For example, potential disruption to the business in 2009 as IT Services staff are transferred to the refurbished Ashburton Court and the Data Centre is moved. Planning is at an advanced stage to ensure that any disruption is minimised.

9.10. The impact of the current programme of IT developments is well understood but unsurprisingly, there are a range of emerging developments which will have an impact on future plans. These include:-

· Changes to the way data is stored and managed, driven partly by the termination and re-tendering of the current supplier arrangements and the requirements of the new information management system. This is likely to result in lower unit costs but massively increased volumes and there is expected to be some initial increase in costs.

· Re-tendering of the voice and data network contract (HPSN) which is due to end in November 2009. This is not necessarily expected to deliver cost savings although there will be improved network resilience and greater bandwidth particularly to remote sites, and the tendering will ensure continued best value can be demonstrated.

· A greater emphasis on flexible and mobile working technologies and the extension of services to a wider range of partner organisations. This is likely to require further development of the underpinning service, Hantsnet, to ensure greater resilience, availability and security. This will support more efficient working practices more widely.

· Partnership working and shared services, notably with the Health Service and other local authorities. This promises to create economies of scale, but may require initial investment as well to realise the benefits.

· The need for extended hours of service availability, driven by the move towards new ways of working and the need to deliver services to customers more flexibly and securely will require investment in additional IT infrastructure and support.

9.11. There are, in addition, external pressures on costs. Some suppliers have notified their intention to increase prices well above anticipated inflation in 2009. Software suppliers in particular have advised that annual licence fees will increase by between 10% and 30% whilst electricity costs have increased by 80%. These two factors alone will add almost 2.4% to IT Services costs.

9.12. These pressures will be met where possible through further cost savings and a number of areas are being explored. For example, server virtualisation technology is being used to reduce the size, and cost, of the core hardware whilst the new integration software is expected to deliver further efficiencies around data storage and data management.

10) Workforce implications:

10.1. The workforce implications of the proposed budget for 2009/10 are set out in Appendix 9. Inclusive of 1,253 staff working in business units, the 2009/10 base budget supports a planned workforce of 3,072 full time equivalent (FTE) staff. This compares with the adjusted original estimate for 2008/09 of 2,997 FTEs which is an increase of 79 FTEs after allowing for a reduction of 17 posts as a result of the first phase of the transfer of the Student Support Service to the Student Loan Company. 67 of the additional posts are in business units whose budgets are determined by the income achieved from internal and external customers. 45 of these are in HC3S as a result of new contracts in secondary schools. The remaining posts are funded from additional income or contributions from service budgets, mainly to support increased demand for services, the transfer of services such as Connexions, or the development of new services such as Children's Centres. Overall the impact on the Policy and Resources budget is neutral as there are no long term resources being added.

10.2. The net effect of proposals for redeployment of resources (Appendix 4) on staffing levels are as follows:

2009/10	No change
2010/11	-9 FTEs
2011/12	-2 FTEs

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

11.1. The provisional budget at outturn prices for 2010/11 and 2011/12 for this service is set out in Appendix 10 and summarised below:

2010/11	£59.1m
2011/12	£59.6m

11.2. As compared with the 2009/10 proposed budget, the provisional budget for 2010/11 excludes £3m non-recurring 2009/10 expenditure including £0.9m for the 2009 County Council elections and £1.6m for Hantsdirect. It also excludes £1.3m for the one-off redeployment proposals in 2009/10. The 2010/11 provisional budget also excludes the £1.4m underspendings from 2008/09 planned to be used in 2009/10. It includes a provision for inflation based on pay and other price increases of 2.5%.

11.3. The 2011/12 provisional budget excludes £0.7m non-recurring 2010/11 expenditure. It includes a provision for inflation based on pay rises of 2% and other price increases of 2.5%

11) Recommendations:

To approve for submission to the Leader and Cabinet:

12.1. The revised budget for 2008/09 totalling £59.5m (as set out in appendices 1 and 2)

12.2. The base budget for 2009/10 totalling £61.9m (as set out in Appendix 3)

12.3. The proposals for redeployment of resources totalling £1.5m in 2009/10 (as set out in Appendix 4)

12.4. The proposals for efficiency improvements totalling £2.4m (2.4% of the proposed budget) in 2009/10 (as set out in Appendix 5)

12.5. The summarised trading accounts of business units (as set out in Appendix 6)

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

12.7. The workforce implications of the proposed budget for 2009/10 (as set out in Appendix 9)

12.8. The provisional budget for 2010/11 of £59.1m and for 2011/12 of £59.6m (as set out in Appendix 10).

CORPORATE OR LEGAL INFORMATION:

LINKS TO THE CORPORATE STRATEGY
			Yes	No
Hampshire safer and more secure for all			X
Corporate Business plan link no (if appropriate)
Maximising well-being			X
Corporate Business plan link no (if appropriate)
Enhancing our quality of place			X
Corporate Business plan link no (if appropriate)

OTHER SIGNIFICANT LINKS:
Links to Previous member decisions:
Title	Ref	Date
Cabinet	257	27 October 2008
Direct Links to Specific Legislation or Government Directives
Title			Date

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 published works and any documents which disclose exempt or confidential information as defined in the Act.)
Document	Location
none

COMPREHENSIVE RISK & IMPACT ASSESSMENT:

1. Equalities Impact Assessment:

a) Equality objectives are not considered to be adversely affected by the proposals of this report.

2. Impact on Crime and Disorder:

a) The County Council has a legal obligation under Section 17 of the Crime and Disorder Act 1998 to consider the impact of all decisions it makes on the prevention of crime. The proposals in this report include redeploying £50,000 to support the Accredited Community Safety Officer Service.

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

· Proposals to meet sustainability and the carbon reduction commitment are included in section 6 of this report.

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

· Other than those in part a) above, the proposals in this report do not have a specific impact on climate change.

Appendices

Appendix		Colour
1	Revised budget 2008/09 - calculation of the cash limit	yellow
2	Revised budget 2008/09 - comparison with cash limit	yellow
3	Base budget 2009/10 - summary of cash limit	pink
4	Proposals for redeployment 2009/10, 2010/11 and 2011/12	yellow
5	Efficiency statement	yellow
6	Business units - summarised trading accounts	White
7	Revenue budget 2009/10 - analysis of variations by division of service	blue
8	Revenue Budget 2009/10 - budget book detail	green
9	Workforce levels and costs 2008/09 revised and 2009/10 original	blue
10	Provisional budget 2010/11 and 2011/12	pink
10 - Annex 1	Provisional budget 2010/11 and 2011/12 - analysis of variations by division of service	blue

Appendix 1

Policy and Resources Service

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.

				£'000	£'000
Original budget 2008/09 at outturn prices					55,728
Transfers to/from other services and contingency allocations: Commons registration transfer to Recreation and Heritage Transfer from Children's Services for HR support for Connexions IT Disaster Recovery offset by lower insurance premiums Financial Training Team HATs and Scrutiny Coroners					-14 61 311 120 156 100
=	Adjusted original budget				56,462
Inflation Provision added since the original budget for: Business rates					122
Other variations: Carry forward 2007/08 under spend : Winter maintenance contingency Members' devolved budgets Chief Executive's department Economic Development workforce inclusion County Treasurer's pay and benefits HR pay and benefits LPSA2 Pump Priming Grant Other Carry forward to 2009/10 : Chief Executive's department Hantsdirect operating costs Human Resources Corporate Services Review Corporate Communications staff survey Members' training HATs and Scrutiny LPSA pump priming grant County Treasurer's planned under spend County Council elections HQ catering client budget Home to School Transport pilot Grants to Voluntary Organisations Invest to save funding: Corporate services efficiency reviews Estates ratings surveyor Deed recovery project Transfers between services: Talented Athletes from Children's and Recreation and Heritage VCS/equalities support Grant funding: Student Support specific grant Area based funding for Safe and Strong Communities Area based funding for LINks Contingency allocations: Hantsdirect - operational costs (1 year only) Hantsdirect roll out costs Grants to Voluntary Organisations - Winchester Cathedral 101 non-emergency number maintenance costs Hampshire Senate Community Action Hampshire - Support for rural Housing enablers Pay & Benefits Corporate funding Coroners				330 220 203 96 40 32 29 92 -300 -100 -105 -200 -50 -20 -15 -60 -200 -59 -40 -190 -70 500 16 29 29 15 70 897 379 47 448 200 33 -100 40 694 9	1,042 -1,409 545 44 1,346 1,371
=		Cash limit for the revised budget 2008/09			59,523

Appendix 2

Policy and Resources Service

Revised budget 2008/09

Summary comparing the revised budget with the cash limit

	Cash Limit	Revised Budget	Variation
	£'000	£'000	£'000	%
Chief Executive	11,190	11,190	-	-
Human Resources	6,317	6,317	-	-
County Treasurer	5,544	5,544	-	-
Property, Business and Regulatory Services
Property Services	6,949	6,849	-100	-1.4
Repair and Maintenance	4,715	4,715	-	-
Office Accommodation	5,970	6,151	+181	3.0
Corporate Estate	-134	32	+166	124
Development Account	-387	-318	+69	18
Sites for Gypsies and Travellers	96	192	+97	102
County Farms	-334	-334	-	-
Regulatory Services	5,471	5,471	-	-
Registration	248	248	-	-
Hilliers	519	519	-	-
Other	91	91	-	-
Savings to be identified	-	-413	-413	-
	23,204	23,204	-	-
Other budgets:
Coroners	984	1,164	+180	18.3
External audit fee	300	285	-15	-5.0
Members' devolved budgets	1,000	1,000	-	-
Grants to voluntary sector	1,570	1,570	-	-
Safe and Strong Communities	893	893	-	-
Other	8,521	8,521	-	-
Savings to be identified	-	-165	-165	-
Total	59,523	59,523	-	-

Appendix 3

Policy and Resources Service

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.

		2009/10 Base Budget
		As estimated last year (from last year's App 11)	Now proposed
		£'000	£'000
Original budget 2008/09 at outturn prices * as reported to Policy and Resources Executive Member 28 January 2008		55,058*	55,728
Adjustments to 2008/09 original budget as agreed by Cabinet 8th February 2008: Hampshire Senate Promoting Apprenticeships Rural Housing Chief Executive's dept 2007/08 underspending Grants to Voluntary Organisations underspending Transfers to/from other services: Commons Registration HR support for Connexions IT Disaster Recovery Financial Training Team HATs and Scrutiny Coroners		100 50 40 400 80	-14 61 311 120 156 100
=	Adjusted original budget	55,728	56,462
Increases for inflation to reflect November 2008 prices:
-	Inflation allocated during 2008/09 from the central inflation contingency for business rates Excess cost of inflation over the inflation allowance: Electricity Other		122 235 255
Original budget at November 2008 prices			57,074
Other variations
-	Reductions to offset excess inflation		-490
-	Exclusion of non-recurring 2008/09 expenditure: 2007/08 carry forwards Chief Executive's department (inc HR) County Treasurer's department Grants to Voluntary Organisations Pay and Benefits Equal Pay Non recurring growth items Hampshire Senate Apprenticeships Student Support transfer PSA Pump priming grant PSA1 reward grant for LAA initiatives Affordable housing provision (capital receipt) SAP savings Hantsdirect set up costs Home to school transport pilot End of 3 year funding for The Lights, Andover Economic Development (year 2 of 2 LABGI)	-450 -100 -80 -498 -70 -100 -50 -345 -60 -328 -40 -60 -380 -500 -40 -100	-450 -100 -80 -498 -211 -100 -50 -345 -60 -328 -40 -60 -380 -69 -40 -100
-	Additions to base budget: County Council Elections Corporate travel strategy Allocations from contingency: Pay and Benefits corporate funding Hantsdirect roll out Hantsdirect operating costs (I year only) Rural Housing (from 2nd homes council tax) VCS / Equalities support Invest to save: Deeds recovery Business rates Area based grant contingency: LINks Safe and stronger communities Transfers to/from other services: Developer contribution manager Budget realignment between services For SAP savings Corporate training Planned underspendings in 2008/09: Chief Executive's department Hantsdirect operating costs Human Resources Corporate Services Review Corporate Communications staff survey Members' training HATs and Scrutiny LPSA pump priming grant carried forward County Treasurer's department County Council elections HQ catering client budget Home to School Transport pilot Grants to Voluntary Organisations	800 2	882 2 899 1,200 400 40 22 50 48 379 1,069 65 413 -10 300 100 105 200 50 20 15 60 200 59 40 190 70
Allocation for future inflation:
-	Provision for all pay awards of 2.5% in 2009/10	1,375	1,380
-	Increase in local government employers' pension contributions	202	203
-	Provision for non-pay inflation at 2.5%	-79	-79
-	Reduction for increased income	-123	-126
=	Base budget 2009/10 at outturn prices	54,594	61,919

Appendix 4

Policy and Resources Service

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

Proposals are shown at outturn prices for the relevant year.

Agreed proposals will be incorporated into future year's base budgets and so on-going costs are shown in the first year only. One-off costs are shown in the first year and subtracted from the following year.

					Staffing (FTEs)
		2009/10	2010/11	2011/12	2009/10	2010/11	2011/12
		£'000	£'000	£'000
Redeployment proposals:
Chief Executive:
	HR pay and benefits team	425	-425	-	-	-7	-
	HR team - equal pay claims	125	-60	-65	-	-1	-1
	Employment law team - equal pay litigation	100	-50	-50	-	-1	-1
	External legal costs - equal pay litigation	150	-75	-75	-	-	-
County Treasurer:
	Pay and benefits implementation	45	-45	-	-	-	-
Property, Business and Regulatory Services:
	Community Safety Officer Service	50			-	-	-
	Hampshire workstyle project team costs	249	-249		-	-	-
	Carbon reduction commitment	187	-187		-	-	-
	Property Services	200	-200		-	-	-
	Total redeployment proposals	1,531	-1,291	-190	-	-9	-2
	Funding:
	Transfers from capital	636	-636
	Transfer from SEERA budget	50
	Pay and Benefits reserve	845	-655	-190
	Total funding	1,531	-1,291	-190

Appendix 5

Policy and Resources Service

Cashable efficiency improvements 2008/09 to 2011/12

	2008/09 £'000	2009/10 £'000	2010/11 £'000	2011/12 £'000
a) Cashable efficiency improvements producing a budget saving and meeting the Government's definition of efficiency:	-	-	-	-
b) ) Cashable efficiency improvements producing a budget saving but not meeting the Government's definition of efficiency: Rates	50	350	0	0
c) Cashable efficiency improvements not producing a budget saving: SAP benefits realisation savings: Human Resources County Treasurer's Cost of increments: Chief Executive's Human Resources County Treasurer's Property, Business & Regulatory Water filter savings BACS advice emailing savings Post and packing despatch New catering and company status contracts Training Manager and Admin posts Employee Self Service roll-out Engineering term maintenance contract HQ facilities management contract Registration Services modernisation Reduction in South East Employers subscriptions Chief Executive's Newsflash database Business Units: HTM contract hire reductions Restructuring software asset management Replacement of external contractors with permanent staff Ring network Tivoli storage manager Use of systems integration software IT exchange data storage HPSN staffing reductions HPSN call tariff and line rental reductions New Hantsweb technology platform TSM implementation Telephone call charge discount Mobile data card reduced tariffs Closer working headcount reductions IT maintenance contract retender Business Intelligence & CIT headcount reductions Business support headcount reductions Service delivery headcount reductions Corporate savings: Capital receipts Corporate procurement	60 160 189 148 104 162 6 7 3 2 34 14 276 50 111 4 15 80 28 77 75 40 0 1 20 73 7 32 56 6 55 56 77 20 25 50 761	60 0 189 148 184 485 0 0 0 2 0 0 0 50 0 0 0 83 0 0 0 0 300 0 0 0 0 0 0 0 0 0 0 0 0 0 500	0 0 189 148 184 300 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 420 0 0 0 0 0 0 0 0 0 0 0 0 0 500	0 0 189 148 184 200 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 420 0 0 0 0 0 0 0 0 0 0 0 0 0 500
Total cashable efficiency improvements	2,934	2,401	1,741	1,641
Policy and Resources (excluding Business Units and Corporate savings) as % of Policy and resources cash limit	2.3%	2.4%	1.4%	1.2%

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, increased service demand met without a commensurate increase in costs.

Appendix 6

Policy and Resources Service

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

		Original budget 2008/09	Revised budget 2008/09	Base budget 2009/10	Provisional forecast 2010/11	Provisional forecast 2011/12
		£'000	£'000	£'000	£'000	£'000
	Hampshire Printing Services Trading Account Income Expenditure	-2,398 2,340	-2,776 2,718	-2,572 2,552	-2,686 2,636	-2,740 2,689
	Net Operating surplus	-58	-58	-20	-50	-51
	Reserve Account Surplus brought forward Surplus Depreciation Funding of capital expenditure	-498 -58 -63 0	-514 -58 -63 0	-635 -20 -63 0	-718 -50 -63 0	-831 -51 -63 0
	Surplus carried forward	-619	-635	-718	-831	-945
	IT Services Trading Account Income Expenditure	-31,335 30,523	-33,399 34,135	-34,369 33,676	-33,166 32,755	-33,340 33,327
	Net Operating (surplus)/deficit	-812	736	-693	-411	-13
	Reserve Account Deficit brought forward (Surplus)/deficit Depreciation	1,873 -812 0	465 736 -105	1,096 -693 -105	298 -411 -105	-218 -13 -105
	(Surplus)/deficit carried forward	1,061	1,096	298	-218	-336
	Caretaking and Cleaning Support Service Trading Account Income Expenditure	-402 402	-457 424	-423 423	-434 434	-442 442
	Net Operating surplus	0	-33	0	0	0
	Reserve Account Surplus brought forward Surplus Funding of capital expenditure	-138 0 0	-149 -33 0	-182 0 0	-182 0 0	-182 0 0
	Surplus carried forward	-138	-182	-182	0	0
	County Supplies Trading Account Income Expenditure	-9,967 9,926	-10,251 10,092	-10,507 10,404	-10,770 10,664	-10,985 10,877
	Net Operating surplus	-41	-159	-103	-106	-108
	Reserve Account Surplus brought forward Surplus Depreciation Funding of capital expenditure	-1,017 -41 -66 0	-1,258 -159 -66 0	-1,483 -103 -66 0	-1,652 -106 -66 0	-1,824 -108 -66 0
	Surplus carried forward	-1,124	-1,483	-1,652	-1,824	-1,998
	Segensworth Unit Factories Trading Account Income Expenditure	-20 0	-17 0	-18 0	-18 0	-18 0
	Net Operating surplus	-20	-17	-18	-18	-18
		kjhkljh
	Reserve Account Surplus brought forward Surplus Funding of capital expenditure	-239 -20 0	-247 -17 0	-264 -18 0	-282 -18 0	-300 -18 0
	Surplus carried forward	-259	-264	-282	-300	-318
	HC3S Trading Account Income Expenditure	-17,442 17,430	-18,318 18,050	-18,891 18,666	-19,331 19,133	19,516 19,516
	Net Operating (surplus)/deficit	-12	-268	-225	-198	0
	Hampshire Cleaning Services Trading Account Income Expenditure	-605 605	-598 595	-600 600	-615 615	-627 627
	Net Operating surplus	0	-3	0	0	0
	Hampshire Transport Management Trading Account Income Expenditure	-7,573 7,486	-7,237 7,147	-7,435 7,362	-7,621 7,546	-7,773 7,967
	Net Operating surplus	-87	-90	-73	-75	-194
	Former DSO Reserve Account
	Surplus brought forward Surplus Depreciation Funding of capital expenditure	-611 -99 -89 50	-1,295 -361 -89 50	-1,695 -298 -89 50	-2,032 -273 -89 50	-2,344 -194 -89 50
	Surplus carried forward	-749	-1,695	2,032	-2,344	-2,189

Appendix 7

(on blue paper)

Policy and Resources

Revenue budget 2009/10

Analysis of variations by division of service

	Adjusted original budget 2008/09	Variation in inflation to November 2008 prices		Other base budget variations	Inflation allocation to 2009/10 outturn		Growth and redeploy-ment proposals	Revenue Budget 2009/10
	£'000	£'000	%	£'000	£'000	%	£'000	£'000
Cash limited expenditure by division of service
Net cash limited expenditure
Expenditure outside cash limit: Capital charges FRS17 pension adjustment
Specific grants
Total net expenditure

Appendix 7 cont.

Appendix 7 cont.

Appendix 8

Policy and Resources

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.

	£'000
Net expenditure on page B69 of the published budget book	26,738
Adjustments for items not included in the budget book: Pension costs Support Service recharges Charges to Corporate and Democratic Core	-716 25,828 -742
Adjustments made to the original budget figures:	734
Total net expenditure for 2008/09 original budget shown overleaf on page B69	51,842

Appendix 9

Policy and Resources Service

Workforce levels and costs

	2008/09 Revised	2009/10 Original
	£'000	£'000
Analysis of workforce costs in base budget:
Salaries of permanent staff (including employer's national insurance and pension contributions)	61,453	66,100
Temporary/fixed term/casual staff	536	423
Agency staff	699	70
Additional hours	356	277
Total workforce costs	63,044	66,870
Average FTE staff actually in post (nb this should equal actual FTEs in post plus vacant positions open to be filled minus an assumption for average turnover)	1,807	1,819
Staffing changes in redeployment proposals:
Variation in staff (FTEs)		-
Variation in budget (£'000)		-
Workforce implications of budget proposals:
FTE posts available		1,819
Workforce budget available (£'000)		66,870

Appendix 10

Policy and Resources Service

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.

			As estimated last year (from last year's App 11)	Now proposed
			£'000	£'000
Proposed budget 2009/10 at outturn prices			54,664	63,400
Base budget variations:
	Exclusion of non-recurring 2009/10 expenditure: County Council elections Financial Training Team Deeds recovery project Student Support transfer Economic Development LABGI Hantsdirect Home to School Transport pilot Exclusion of non-recurring redeployment proposals: HR pay and benefits team HR equal pay claims Legal Services equal pay claims County Treasurer's pay & benefits Hampshire workstyle project team Carbon reduction project team Property Services		-800 -131 -55	-882 -120 -22 -131 -55 -1,600 -247 -425 -60 -125 -45 -249 -187 -200
	2008/09 under spending used in 2009/10: Chief Executive's department Hantsdirect HR Corporate Services review Corporate Communications Members' training HATs and scrutiny LPSA pump priming grant County Treasurer's department County Council elections HQ catering client budget Home to School Transport pilot Grants to Voluntary Organisations			-300 -100 -105 -200 -50 -20 -15 -60 -200 -59 -40 -190 -70
	Return of funding for Corporate Strategy coordinator		7	7
	Addition to LINks grant Pay and Benefits funding			2 6
Growth and redeployment proposals				-
Allocation for future inflation			1388	1,392
Provisional budget 2010/11 at outturn prices			55,073	59,050
	Base budget variations: Exclusion of non-recurring 2010/11 Expenditure: Student Support transfer Deeds recovery project Home to School Transport pilot			-239 -29 -184
	Exclusion of non-recurring Redeployment proposals: HR equal pay claims Legal Services equal pay claims			-65 -125
Growth and redeployment proposals				-
Allocation for future inflation				1,231
Provisional budget 2011/12 at outturn prices				59,639

Annex 1 to Appendix 10

(on blue paper)

Service

Provisional budget 2010/11 and 2011/12

Analysis of variations by division of service

	Proposed Budget 2009/10	Base budget variations	Growth and redeployment	Inflation allocation to 2010/11 outturn		Provisional Budget 2010/11	Base budget variations	Growth and redeployment	Inflation allocation to 2011/12 outturn		Provisional Budget 2011/12
	£'000	£'000	£'000	£'000	%		£'000	£'000	£'000	%	£'000
Cash limited expenditure by division of service
Net cash limited expenditure
Expenditure outside cash limit
Specific grants
Total net expenditure

Inflation will need to be allocated over divisions of service to be included in the cabinet report going out 29 Jan 2009.