Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

1.1. The purpose of this paper is to seek endorsement of the action being taken by officers to manage budgets within the cash limits for 2009/10 as adjusted for the carry forward of an under spending from 2008/09.

1.2. This report is the first monitoring report for 2009/10 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets

· Policy and Resources business units

· Policy and Resources capital programme

· The County Council's capital payments and sources of finance.

1.3. At the end of June 2009, a number of budget pressures are being managed, particularly within corporately held land, the development account, sites for gypsies and travellers and the Coroners' Service. However, with the probable exception of the Coroners' Service, the overall position for Policy and Resources is to be within cash limit. Business units are expecting to meet their targets of a modest trading surplus.

2. Contextual information

2.1. Since the Policy and Resources revenue budget was approved by the County Council in February 2009, a number of changes have been made to reflect the carry forward of budget from 2008/09, transfers between services, allocations from central contingency and other sources of funding. The latest cash limited budget is set out in Appendix C.

2.2. In February 2009, the County Council approved the Policy and Resources capital programme and the financing strategy for the overall County Council capital programme based on capital expenditure of £159 million. The latest capital programme for Policy and Resources, is set out in Appendix D.

3. Financial position as at 30 June 2009

3.1. The latest cash limit for 2009/10 is £65.3 million as set out in Appendix C. This includes the carry forward from 2008/09 of the net under spending for Policy and Resources and some allocations re-phased from 2008/09 into 2009/10.

3.2. In order to propose the detailed carry forward of over and under spending from 2008/09, an analysis of the variations against the final 2008/09 cash limit is given below:

3.3. The Executive Member for Policy and Resources agreed in May 2009 that services can carry forward 100% of unplanned under spending with 50% available in 2009/10 and 50% available in 2011/12 - a potentially difficult year after the current spending review period.

3.4. The current policy for carry forwards of under and over spending within Policy and Resources is based on the following assumptions:

· For Chief Officer controlled budgets, that 50% be carried forward,

· For other budgets, that there should be no automatic policy of carrying forward either under or overspendings unless an overspending is likely to lead to an under spending in the following year or vice-versa.

The balance of 50% of the under spending would be carried forward to 2011/12.

3.5. If the over spending on the Coroners' Service is initially covered by matching under spending on non Chief Officer controlled budgets, a net overspending of £61,000 remains. Given the nature of the service, it is unrealistic to envisage that an over spending can be clawed back in 2009/10 and it is proposed that the £30,000 that would need to be recovered in 2009/10 be offset proportionately against the 50% carry forwards relating to Chief Officer controlled budgets.

3.6. Proposed amendments to the 2009/10 budget to reflect carry forwards are:

3.7. Comments on these proposals together with other budget issues for 2009/10 based on monitoring of expenditure up to the end of June 2009 are given below.

Chief Executive's Department

3.8. Current projections show that the budgets for the Chief Executive's department (including Human Resources) will be contained within the cash limits for 2009/10. There are a number of areas where there are budget pressures which will need to be monitored closely during the year. There are also some areas of expenditure which are currently funded on a temporary basis in 2009/10 and these will need to be reviewed during the course of the year to either cease the activity or secure funding on a permanent basis.

3.9. There are also likely to be changes to the cash limits due to the establishment of the new Facilities Management team, plus any budget realignment arising from implementation of the Corporate Services review.

Property Business and Regulatory Services (PBRS)

3.10. PBRS' three largest budgets, Property Services, Office Accommodation and Repairs and Maintenance total £19.1million and make up 78% of the overall cash limit. During the course of the year these budgets will continue to support the delivery of major corporate projects including Hampshire Workstyle and the implementation and further development of a new centralised Facilities Management service. As part of the Corporate Services Review Property Services is also undertaking a major restructure which is expected to generate efficiency gains. At this early stage in the year all three budgets are forecast to remain within the cash limit.

Corporate Estate, Development Account and Sites for Gypsies and Travellers

3.11. The Corporate Estate budget supports properties awaiting disposal that are declared surplus to operational requirements and is a net income budget. Due to the changing nature of the portfolio as new properties are transferred in and others disposed of, the budget has proved challenging to manage within cash limit. The Development Account supports properties held for investment or economic development purposes and is also a net income budget. The Sites for Gypsy and Travellers budget is a net expenditure budget incorporating income from rental of pitches and provision of utilities and the costs of maintaining the sites and providing the service. These three budgets were all overspent in 2008/09.

3.12. Pressures continue in all three areas, in particular the Corporate Estate budget which has been adversely affected by the slowdown in the property market and consequent delays in disposing of properties. Management action to address these pressures will continue and any remaining financial pressures are expected to be contained within PBRS' overall cash limits.

Regulatory Services

3.13. Regulatory Services covers Trading Standards, Hampshire Scientific Service, the Accredited Community Safety Officer Service and the Registration Service. Despite some emerging pressures it is currently expected to deliver the overall service within cash limits.

County Treasurer's Department

3.14. At this point in the year it is anticipated that the Treasurer's department will remain within the cash limit whilst continuing to deliver valued services and on-going efficiency savings. 2009/10 will see the second phase of the nationalisation of the Student Support service and the transfer of several areas of the department to the new Facilities Management provision. Other challenges within the department include the continuing manually intensive running of payroll post Pay and Benefits with a significant number of staff on spot salaries and in September the removal of pay protection, the ongoing roll out of the Financial Management in Schools (FMSiS) external assessments and the changes in the Pension Fund regulations which have made the scheme more complicated. These and other pressures will be aided in the current financial year by the planned carry forward from 2008/09 of £200,000 and the unplanned under spending to be carried forward of £24,000.

Non-departmental Policy and Resources Budgets

HM Coroner Service

3.15. This is a Policy and Resources service managed by PBRS and has experienced cost increases significantly in excess of inflation over the course of the past five years. 73% of the cost of providing the service is represented by the use of NHS mortuary facilities together with medical tests and other costs associated with holding inquests and these costs have increased by 64% since 2004/05. The budget was overspent by £282,000 in 2008/09. In addition to these existing pressures two decisions by Hampshire Coroners are currently the subject of judicial review. The additional costs associated with judicial review are not yet clear but the provisional forecast is for an overspend against the cash limit of £300,000.

3.16. The Executive Member for Policy and Resources has made representations to the Ministry of Justice about the lack of accountability for the Coroners' service and the County Council has supported the LGA's response to the Coroners Bill, calling for central funding to be put in place.

Apprenticeships

3.17. The Corporate Management Team recently agreed proposals to increase apprenticeship opportunities for young people within the County Council, and it is proposed that pilot scheme funding of up to £300,000 over a two year period be identified within the Policy and Resources budget. This would supplement the funding allocated to departments for developing apprenticeships in 2004/05. Some initial additional funding of £50,000 can be earmarked in 2009/10 from the remaining balance of reward grant from the first Public Service Agreement and this can be supplemented from unallocated funding within the Policy and Resources capital programme and further savings that may arise.

Summary

3.18. At the end of June 2009, a number of budget pressures are being managed, particularly within corporately held land, the development account, sites for gypsies and travellers and the Coroners' Service. However, with the probable exception of the Coroners' Service, the overall position for Policy and Resources is to be within cash limit.

4. Property, Business and Regulatory Services Business Units

4.1. The group of business units including Hampshire County Council Catering Service (HC3S), Hampshire Transport Management, Hampshire Printing Services, Corporate Procurement and County Supplies and PBR Cleaning Service has a combined target surplus for 2009/10 of £422,000 on a total turnover for all the business units of £40 million. At this early stage in the year it is expected that this target will be met.

IT Services

4.2. Pressure from the major investment programmes of recent years has eased somewhat and the current outturn forecast for 2009/10 is that IT Services will generate a small trading surplus of up to £250,000.

4.3. The major issues facing the department in 2009/10, which will have an impact on the trading account, include the migration of the data centre, supporting the re-occupation of Ashburton Court, HPSN2, Hantsfile and meeting the expectations of Hampshire Workstyle. The full financial impact of these projects is not yet known, but early estimates are included in the forecast above.

4.4. The plans for 2009/10 assume that further efficiency gains in excess of £1 million, or 3% of turnover, will be made. Efficiency savings of around £700,000 have been identified to date, largely in data storage and server virtualisation and plans are in place to ensure that these are achieved.

4.5. No assumptions have been made about the impact of the Corporate Services Review on IT costs and revenues, however some costs have been taken out of business administration following the review of facilities management and changes to the IT trading model.

Hantsdirect Roll-out Programme

4.6. The programme had £1.2 million of funding at the beginning of 2009/10. The current forecast shows the projects in the current scope of the programme will be completed this financial year within the available budget.

5. Policy and Resources capital programme

5.1. The Policy and Resources capital programme for 2009/10 amounts to £50.2 million, as set out in Appendix D. This includes the carry forward of schemes not started in 2008/09 and the 2008/09 unallocated cash limit. It allows for the proposed additional contribution of £225,000 to the Basingstoke library project.

5.2. The capital repairs programme, including New Deal for Schools, totals £42.3 million and is controlled on an expenditure basis. The balance of £7.9 million, is controlled on a starts basis.

5.3. As at 30 June 2009, committed expenditure on capital repairs totalled £10.4 million, and schemes to the value of £3.7 million had started, representing an overall commitment of £14.1 million.

6. Overall capital payments and sources of finance

6.1. The capital financing approved by the County Council in February 2009 was based on capital expenditure of £159 million. It is too early in the year to be able to forecast with any certainty the likely outturn level of capital expenditure, but based on previous capital expenditure profiles and actual payments at 30 June 2009, it is likely that the outturn will be close to the original estimate.

6.2. Actual spending in 2008/09 was £19.5 million lower than the revised estimate. The lower spending was largely on schemes supported by Government allocations resulting in a lower take up of Government supported borrowing. The use of local resources to fund capital expenditure was in line with the revised estimate.

6.3. The forecast of capital receipts for 2009/10 reported to County Council in February 2009 was £4.7 million. As at 30 June 2009, capital receipts of £0.4m had been received.

6.4. The Department of Health has allocated funding to nine local authority led partnerships to develop and test improved information sharing across health, social care and wider community support services. The objective is to create a more efficient and transparent system of information sharing to avoid duplication in assessments and ensure that people receive the best quality care and support. Hampshire has been selected as one of the nine local authorities and allocated grant of £2.8m to cover the cost of the project. It is recommended that the Adult Services capital programme be increased by £2.8m funded by the additional grant.

7. Recommendation(s)

7.1. That the action being taken by officers to manage revenue budgets within the cash limits for 2009/10 be endorsed.

7.2. To agree the proposed amendments to the 2009/10 budget to reflect the net under spend of £256,000 carried forward from 2008/09.

7.3. That the Adult Services 2009/10 capital programme be increased by £2.8m financed by the Common Assessment Framework grant allocated by the Department of Health.

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

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Other Significant Links

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

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

2. Impact on Crime and Disorder:

2.1. 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 have no adverse impact on the prevention of crime

3. Climate Change:

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

the proposals in this report do not have a specific impact on carbon footprint/energy consumption

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

the proposals in this report do not have a specific impact on climate change

Policy and Resources revenue budget - latest 2009/10 cash limit

Policy and Resources 2009/10 capital programme