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 second 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.

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 £74.6 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. This figure includes budget transfers from service departments into Policy and Resources to reflect the centralisation of IT budget management for corporate systems and the associated infrastructure. It also includes budget transfers to Policy and Resources for the centralised Facilities Management function. As agreed by Cabinet in September 2009, it excludes the budget for the Coroners' Service.

3.3. Comments based on the monitoring of net expenditure up to the end of August 2009 are given below.

Chief Executive's Department

3.4. 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. As mentioned in the last report there remain a number of areas of expenditure which are currently funded on a temporary basis in 2009/10 and these are being reviewed so that a decision can be taken to either cease the activity or secure funding on a permanent basis.

3.5. Changes to the cash limits arising from implementation of the Corporate Services review have yet to be made.

3.6. Given the likely pressure on the budget in future years every effort will be made to plan for an under spend in the current year to carry forward to 2010/11.

Property, Business and Regulatory Services (PBRS)

3.7. The three largest Property budgets of Property Services, Office Accommodation and Repairs and Maintenance are all expected to be within cash limit, as outlined in the previous report.

Corporate Estate, Development Account and Sites for Gypsies and Travellers

3.8. The previous monitoring report, based on early results from the end of May, identified notable pressures in the Corporate Estate budget which has been adversely affected by the slowdown in the property market and the consequent delays in disposing of properties. Indications were that these pressures could be contained within the overall cash limits for the service. This position has been confirmed since the last budget monitoring report.

3.9. Our strategy will be to continue to manage the overall position to ensure these pressures are minimised and contained and to prepare for a more challenging financial environment ahead.

Regulatory Services

3.10. Regulatory Services covers Trading Standards, Hampshire Scientific Service, the Accredited Community Safety Officer Service and the Registration Service. In line with the previous budget monitoring report it is currently expected to deliver the overall service within cash limits.

County Treasurer's Department

3.11. The Treasurer's department continues to face a number of pressures in 2009/10. These include supporting the change and efficiency agenda of the County Council through personalisation, Workstyle and the implementation of the Corporate Services reviews. This work is being carried out by the financial consultancy team and devolved finance units in service departments. Additional demand is faced from the intensive running of the payroll post Pay and Benefits, including the removal of pay protection in September. Preparation for the 2010 Pension Fund valuation and the changes in the Pension Fund regulations are expected to impact on workload. Further pressures include working with Schools Forum to reduce school balances and the roll out of Financial Management in Schools (FMSiS).

3.12. The department is continuing to manage the pressures whilst maintaining valued services and seeking efficiency savings. It is anticipated that the cash limit will be met although there may be scope for a small under spend to help with the phasing of the nationalisation of the Student Support service over the next two financial years.

Non-departmental Policy and Resources Budgets

HM Coroners' Service

3.13. This has been a Policy and Resources service managed in PBRS and has experienced cost increases significantly in excess of inflation over the course of the past five years. The overspend in 2008/09 was £282,000 and the early forecast provided in the previous monitoring report was for an overspend of £300,000. Based on latest estimates this figure is now expected to be £200,000.

3.14. Following on from the previous budget monitoring report on 23 July 2009, further budget adjustments are proposed in 2009/10 in order to fund the over spend on Coroners Service in 2008/09. This allows for the increase in budgets in 2009/10 for Grants to the Voluntary Sector and for Members' Devolved Budgets in line with under spends at the end of 2008/09. The Coroner's 2008/09 over spend will instead be funded from savings in other non-chief officer controlled budgets totalling £62,000 and from the transfer of the centrally held contingency for the additional inquests in the Portsmouth and the South East Hampshire district of £91,000, against which additional spending of only £31,000 has been incurred.

3.15. Due to the limited scope to influence the level of spending on the Coroners' Service it has been agreed by Cabinet that the budget be excluded in future from service cash limits. This means that the impact of higher spending on Coroners' will affect the resources available for the overall County Council budget rather than potentially affecting other Policy and Resources services. The County Council will continue to make representations to central government regarding the lack of local authority accountability for the Coroners' Service and call for central funding to be put into place.

Other non-departmental Policy and Resources budgets

3.16. No significant variations on non-departmental budgets have been identified in this review.

3.17. This part of the Policy and Resources budget includes the Members' grants budget totalling £0.8million for 2009/10. To date, authorised grants of £99,836 have been processed for payment.

Summary

3.18. At the end of August 2009, a number of budget pressures are being managed, particularly within corporately held land and the Coroners' Service. With the exclusion of the Coroners' Service from the cash limit, the overall position for Policy and Resources is projected 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, County Supplies and PBR Cleaning Service has a combined target surplus for 2009/10 of £422,000 on a total turnover of £40 million. The previous monitoring report based on the first two months' activity indicated that this target would be met. Results during the second quarter have been favourable and the forecast remains for the target to be achieved.

IT Services

4.2. The IT trading forecast outturn continues to show a small surplus for 2009/10 as outlined in the last budget monitoring report. The short and medium term trading forecasts are dependent on the following factors.

4.3. Turnover is expected to increase from original estimates by almost £1 million as a result of new internal and external business, particularly in consultancy and hosted applications. This increased level of activity will result in some additional expenditure but there will be increased economies of scale.

4.4. Implementation of the new HPSN2 contract will cost in the region of £1.2 million. The new contract is expected to deliver revenue savings approaching £1 million per annum once all services have been migrated with potential further efficiencies for schools.

4.5. A number of other efficiency measures are being targeted. These include server virtualisation and replacement of ageing data storage hardware. These, together with a number of other planned improvements, are expected eventually to reduce operational costs by over £700,000 per annum.

4.6. No account has been taken of savings that will be generated as a result of the implementation of the Corporate Services Review of IT. Implementation will be completed by March 2010 and annual savings in excess of £1 million are anticipated through consolidation of services commencing in 2010/11.

4.7. Costs of corporate systems and the associated infrastructure have been excluded from the trading account and transferred to a central budget within Policy and Resources. In the past these costs have been recovered from services through recharging. These service budgets have been transferred to Policy and Resources to fund the central budget. These costs will now be controlled centrally in order to reflect the corporate nature of this infrastructure.

Hantsdirect Roll-out Programme

4.8. 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 £54.2 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.

5.2. The County Council was asked by the Department for Children, Schools and Families to identify projects where New Deal for Schools funding for 2010/11 could be spent early in order to support the economy. Schemes totalling £4.3 million were identified in the Policy and Resources capital programme. This amount has been brought forward from 2010/11 into 2009/10.

5.3. The capital repairs programme, including New Deal for Schools, totals £46.5 million and is controlled on an expenditure basis. Other projects totalling £7.4 million are controlled on a starts basis. The balance of £0.3 million is currently unallocated.

5.4. As at the end of August, committed expenditure on the capital repairs programme was £16.7 million and schemes to the value of £4 million had started, representing an overall commitment of £20.7 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.

6.2. It is too early at this stage in the financial year to predict with certainty the likely outturn level of capital expenditure. However, based on previous capital expenditure profiles and actual payments as at the end of August 2009, indications are that capital expenditure will be slightly in excess of the original forecast payments. This is in line with a re-profiling of payments to take into account the under spend of £19.5 million during 2008/09.

6.3. The forecast of capital receipts for 2009/10 reported to County Council in February 2009 was £4.7 million. As at the end of August 2009 capital receipts were £0.4 million.

7. Recommendation

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

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

.

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 - changes to 2009/10 cash limit

Policy and Resources 2009/10 capital programme