Hampshire County Council

Budget Book 2018/19

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Contents

Statement from the Leader of Hampshire County Council.......................................... 2

Introduction from the Chief Financial Officer............................................................... 4

Medium Term Financial Strategy and Context............................................................ 5

Introduction to the Budget for 2018/19 ..................................................................... 10

Council Tax 2018/19 ................................................................................................. 12

Council Taxes in Hampshire 2018/19 ................................................................... 13

Comparative County Councils Council Taxes 2018/19 ......................................... 14

Revenue Budget 2018/19 ......................................................................................... 15

Subjective Analysis of Net Departmental Expenditure 2018/19 ............................ 17

Adults’ Health and Care Budget Summary 2018/19 .............................................. 18

Children’s Services Budget Summary 2018/19 ..................................................... 22

ETE Budget Summary 2018/19 ............................................................................ 26

Policy & Resources Budget Summary 2018/19 .................................................... 28

Capital ...................................................................................................................... 33

Summary of Overall Capital Programme............................................................... 34

Summary of Capital Programme 2018/19 ............................................................. 35

Summary of Capital Programme 2019/20 ............................................................. 36

Summary of Capital Programme 2020/21 ............................................................. 37

Capital Payments and Sources of Finance ........................................................... 38

Reserves .................................................................................................................. 39

Treasury Management & Prudential Indicators ......................................................... 42

Glossary ................................................................................................................... 43

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Statement from the Leader of Hampshire County Council

“As Leader of the County Council, I am delighted to be able to present to you the Budget Book for 2018/19. All councils are facing significant financial challenges because of demand pressures, inflation and grant reductions by Government.

“Since the start of national austerity measures, we have worked diligently to stretch every penny – delivering savings, reinvesting in new, more efficient ways of working, making prudent use of our reserves, and delivering more with less. Residents have told us they support this approach, and it has proven effective –we have delivered £340 million in savings since 2008. We have fewer buildings, fewer staff and are making greater use of new

technology.”

Residents in the average band D property will be paying £1,200.96 for Hampshire County Council services in 2018/19 – or around £1.31 extra per week.

“Even with the agreed 5.99% increase in the council tax precept for 2018/19 (which is made up of a 2.99% core council tax increase which Government now expects all councils to implement, and 3% specifically to support adult social care pressures), Hampshire’s council tax precept will still be nearly £100 lower than it would have been when measured against inflation since 2010.

“Nevertheless, we still have an extremely difficult period ahead of us because by 2019, we face a further £140 million gap in our funding even after allowing for council tax increases. After this time, Government support grants will cease altogether, leaving us to make some very tough decisions.”

"This is no mean feat when factored alongside the very tough decisions we have needed to make in order to live within our means. A balanced budget for 2018/19 has been achievable thanks to the scale and capacity of Hampshire County Council, and our careful stewardship of taxpayers’ money – adopting a prudent, long term financial strategy, despite significant and well-documented on-going financial pressures, together with growing demand for services and rising inflation.”

In the autumn, the Leader and Cabinet Members recognised the importance of school crossing patrols, community transport, and Household Waste Recycling Centres to the people of Hampshire in the 2018/19 budget, and gave a commitment to find alternative options. “I am pleased that through a combination of identifying new savings, and using the increased council tax flexibility, alternatives have been found that still achieve the necessary reduction in overall spending by a further £140 million by April 2019”.

“We will continue to lobby Government on our proposals for longer term solutions, to help protect these services in the future”.

“At the same time as delivering a balanced revenue budget, few local authorities can boast the extent of capital investment proposed by Hampshire over the next three years. Our £540 million capital programme will generate growth in Hampshire's economy, jobs and quality of the environment - delivering schemes which include educational choice for pupils, from £146 million investment in new and extended school buildings; continued progress in strengthening Hampshire’s infrastructure with

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£120 million for the structural maintenance of roads and bridges; as well as £133 million for integrated transport schemes to improve access to key employment areas”.

“Despite the need for on-going major financial constraint across the public sector as a whole, Hampshire County Council is determined to sustain stable finances on behalf of the taxpayers of Hampshire, while delivering some of the best local services to residents, as we have done for many years – ensuring we protect the most vulnerable in our communities.”

Councillor Roy Perry – Leader of Hampshire County Council

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Introduction from the Chief Financial Officer

The Budget Book for 2018/19 aims to set out simply the County Councils financial plans for the coming year.

It outlines some of the key financial issues in areas such as revenue and capital spending, reserves and treasury management

It contains a summary of the budget approved by the County Council on 22 February 2018 and other information regarding the funding of the overall budget, including the way in which the Council Tax is set. It details for each department the main components of the departmental budget, as well as signposting further information which provides some context

and sets out the challenges faced.

It also contains the Capital Programme which runs up until 2021.

If you would like more information on the budget or have any questions on the content then contact information is contained within this Budget Book.

Carolyn Williamson – Director of Corporate Resources

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Medium Term Financial Strategy and Context

Introduction

The County Council reviews its budgetary position annually and produces a rolling three year plan, known as the Medium Term Financial Strategy (MTFS). This plan considers the financial climate at both the local and national level together with available resources and budgetary pressures in arriving at a financial strategy.

The MTFS provides a focus on both revenue expenditure (day-to-day running costs of providing services) and capital expenditure (long-term investment in infrastructure, like schools and roads), as well as setting out the Council's overall financial strategy.

The MTFS is framed by the strategic plan which sets out the County Council’s purpose, ambition and priorities for the medium term and the County Council has been developing its service plans and budgets for 2018/19 and future years in keeping with the ‘Serving Hampshire’ priorities.

The Medium Term Financial Strategy was approved by the County Council in November 2017. The report considered detailed savings proposals from Departments as part of the Transformation to 2019 (Tt2019) Programme, set out the financial context; including the Council’s approach to commercial activity and detailed the outcomes of the ‘Serving Hampshire – Balancing the Budget’ public consultation. It also included an Equality Impact Assessment for each saving proposal and informed and directed work on detailed budget planning for 2018/19 that took place over the autumn.

Financial Context

Local government has taken the biggest hit in terms of central government cuts since 2010. The scale of the reductions, alongside a degree of volatility around the phasing and timing of these cuts, make it difficult for authorities to plan their spending priorities strategically. As a consequence, the need for effective medium term planning has never been stronger.

In response to concerns from the sector, as part of the Local Government Finance Settlement, the Government announced that it would offer a four-year settlement to authorities who can ‘demonstrate efficiency savings’ over the period up to 2019/20. This offer, which is seen as supporting local authorities in strengthening financial management, provides authorities with greater but not absolute funding certainty.

The County Council’s Efficiency Plan which was initially approved as part of the County Council’s MTFS in July 2016 was also published with supplementary narrative for submission to the Department for Communities and Local Government (DCLG) in October 2015 sets out what the County Council will do to address the financial challenge over the medium term to 2019/20.

The commitment to four-year funding through its Efficiency Plan will enable the County Council to plan its service delivery with greater certainty of funding over the medium term thereby ensuring the best possible outcomes for the residents of

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Hampshire. However, it should be noted that whilst the four year settlement is helpful to the medium-term financial stability of the County Council, this certainty only relates to the Revenue Support grant which is a decreasing proportion of total council funding.

The County Council’s gross expenditure continues to be in the region of £1.9bn and the Authority remains in a very strong financial position, which is testament to the organisations ability to plan and ensure that it is appropriately placed to deal with the future challenges that lie ahead.

Up to 2017/18, some £340m had already been removed from budgets and plans are in place to save a further £140m by 2019/20, taking the total to almost half a billion. In many cases those savings have been required to meet rising demand for our provision of services to the most vulnerable, as well as addressing our falling funding.

County Council Priorities

As the County Council embarks on its next transformation programme – Transformation to 2019 – the need for a robust, strategic narrative is crucial. Central Government continues to reduce the amount of funding it gives to the County Council and at the same time, demand for County Council services is increasing. As a result, the County Council needs to deliver a further £140m savings by 2019 – bringing the Authority’s cumulative spending reductions to nearly half a billion pounds by 2019/20.

In this context, the County Council requires a strategic narrative that will support the Authority to make tough, but necessary, choices about future services. The ’Serving Hampshire - Strategic Plan 2017 – 2021’ is intended to guide decision-making to ensure that Hampshire taxpayers’ money is targeted where it is needed most, and where it can make the greatest difference.

Hampshire County Council is one of the country’s leading local authorities, with many services rated as ‘excellent’ and the Authority’s ambition is to continue to transform and shape services for the future, in line with the Authority’s evolving financial strategy. This means doing things more efficiently and providing high quality, responsive services that meet the needs of our customers and improve the quality of life for the residents of Hampshire. Our plan to achieve this focuses on four strategic aims, which bring together a number of priorities under the following themes, to form the overarching framework for our services:

Hampshire maintains strong and sustainable economic growth and

prosperity – The first strategic aim relates to Hampshire’s future economic

growth and prosperity.

People in Hampshire live safe, healthy and independent lives – The

second strategic aim is about supporting people to live safe, healthy and

independent lives by focusing the County Council’s resources where need is

greatest, and where it can make the biggest difference.

Hampshire enjoys a rich and diverse environment – The third strategic aim

balances the first by ensuring that Hampshire’s economic success does not

come at the expense of the county’s environment and heritage.

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Hampshire enjoys strong, inclusive communities – This strategic aim is about recognising the resources, skills and strengths that exist in local communities and that, when utilised, can help reduce the demand and dependency on County Council services.

Reductions in central funding to councils combined with rising demand for care services mean that our corporate strategy and medium term financial plan focus on targeting resources at the most vulnerable people while becoming more efficient in the delivery of our services. The County Council recognises that its ability to continue to deliver front line services will depend on its capacity to generate new funding streams, streamline the way that residents access services and support and encourage self-sufficiency, whilst protecting the most vulnerable.

As a result, the County Council has had to make some tough decisions and whilst service improvement remains at the heart of everything the County Council does, increasingly services will be targeted at those who most depend on them – particularly children at risk of abuse and neglect, and adults who cannot look after themselves.

Our Approach to Delivery of Efficiencies and Savings

The current financial strategy that the County Council operates, works on the basis of a two-year cycle of delivering departmental savings to close the anticipated budget gap, providing the time and capacity to properly deliver major savings programmes every two years, with deficits in the intervening years being met from the Grant Equalisation Reserve.

The County Council’s success in delivering its savings plans is demonstrated by the fact that it has been able to contain expenditure within budget and has achieved under spends in each of the financial years since 2010/11, despite taking significant sums of money out of the budget. The County Council has a proven track record in successfully responding to the financial pressures in local government, managing with significantly reducing resources and the MTFS approved in November 2017 provided more background to the overall financial position to 2020.

In line with the financial strategy that the County Council operates, no savings targets were set for departments in 2018/19 and a net draw in the order of £26m will need to be taken from the Grant Equalisation Reserve (GER) to balance the budget. Any early achievement of resources from proposals during 2018/19 as part of the Tt2019 Programme will be retained by departments to use for cost of change purposes, to cash flow the delivery of savings or to offset service pressures

Transformation to 2019 Programme

One of the key features of the County Council’s well documented financial strategy and previous savings programmes has been the ability to plan well in advance, take decisions early and provide the time and capacity to properly implement savings so that a full year impact is derived in the financial year that they are needed.

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This approach has also meant that savings have often been implemented in advance of need and this has provided resources both corporately and to individual departments to fund investment in capital assets and to fund further change and transformation programmes to deliver the next wave of savings.

Whilst this has been a key feature of previous cost reduction programmes it was recognised without doubt that the Tt2019 Programme, the fourth major cost reduction exercise for the County Council since 2010, would be significantly more challenging than any previous transformation and efficiency programme against the backdrop of a generally more challenging financial environment and burgeoning service demands.

The Tt2019 Programme will mean a cumulative cost reduction of £480m for the County Council over the past decade (see Figure 1 below).

Figure 1. – Cost Reduction Exercises Including Tt2019 Programme Requirement

Departments have looked closely at potential opportunities to achieve the required savings and unsurprisingly the exercise has been extremely challenging because savings of £340m have already been driven out over the past seven years. The sheer size of the 19% target requires a complete “re-look”; with previously discounted options and more radical changes having to be considered. It has been a significant challenge for all departments to develop a set of proposals that, together, can enable their share of the Tt2019 Programme target to be delivered.

Inevitably, Tt2019 will involve complex transformational, policy and service change across all services over the next few years. In addition, given the financial context and the fact that the Tt2019 Programme will increase the cumulative total of savings to £480m, it is inevitable that some of the changes will involve service reductions in addition to efficiencies and income generation.

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Whilst Tt2019 represents an immense challenge, the County Council does have significant capacity, capability and experience to tackle the task, highlighted by its track record to date. As tough as the forward agenda is, we know that the County Council is as well placed as any other local authority to deliver on the continuing financial challenges that apply in the sector.

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Introduction to the Budget for 2018/19

The County Council’s revenue budget and precept for 2018/19 and the capital programme for 2018/19 to 2020/21 were approved on 22 February 2018.

The following pages set out a summary of the Revenue Budget and Precept for 2018/19 and the Capital programme for 2018/19 to 2020/21.

The deliberate strategy that the County Council has followed for dealing with grant reductions since 2010 is well documented. It involves planning ahead of time, making savings in anticipation of need and using those savings to help fund transformational change to generate the next round of savings.

In line with the financial strategy that the County Council operates, which works on the basis of a two year cycle of delivering departmental savings to close the anticipated budget gap, no savings targets were set for departments in 2018/19 and a net draw in the order of £26m will need to be taken from the Grant Equalisation Reserve (GER) to balance the budget. Any early achievement of resources from proposals during 2018/19 as part of the Transformation to 2019 (Tt2019) Programme will be retained by departments to use for cost of change purposes, to cash flow the delivery of savings or to offset service pressures.

The County Council is able to set a balanced 2018/19 budget that makes provision for further funding within contingencies for children’s social care and that addresses the rising cost of adults’ social care, as well as providing one off resources that will help the County Council to face its inevitable future financial pressures. This budget package includes a council tax increase of 5.99% of which 3% will contribute towards the increased costs of adults’ social care.

What the 2018/19 budget will be spent on:

Gross Budget £1,976.3m

Adults' Health and Care -£497.5m

Schools - £859.6m

Children's Services (excludingschools) - £183.0m

Economy, Transport andEnvironment - £143.1m

Policy and Resources - £160.7m

Capital financing (includingfunding from revenue) - £49.6m

Other Corporate Items - £82.8m

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How the 2018/19 budget is funded:

The Capital Programme delivers schemes totalling £540m over the three years from 2018/19 to 2020/21. This follows a revised programme of £343m for 2017/18, providing a total capital programme of £883m over the four years. This includes investment over the next three years of £146m to ensure there is a school place for every child in Hampshire, £120m for structural maintenance of roads and bridges and £133m for transport schemes including nine major infrastructure schemes, totalling £108.6m, of which five are expected to start in 2018/19 and £107m for major improvement of school and other County Council buildings.

Further information can be found in the full Revenue Budget and Precept 2018/19 and Capital Programme 2018/19 – 2020/21 report and appendices.

If you would like more information please contact: Post: The Director of Corporate Resources

Hampshire County Council The Castle Winchester Hampshire SO23 8UB

Telephone: 01962 847533 Email: budget@hants.gov.uk

Departmental income -£267m

Interest receivable - £7.6m

Dedicated Schools Grant -£747.3m

Other Specific Governmentgrants - £173.3m

General Government grants- £92.4m

Business rates - £46.2m

Surplus on collections funds- £4.7m

Council Tax - £608.5m

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Council Tax 2018/19

In 2016/17 the Government implemented a clear shift in council tax policy following five years of freezing council tax, supported by the allocation of council tax freeze grant. The Government ended this support and presumed that local authorities would put up their council tax by the maximum they are allowed each year in the period to 2020. For Hampshire County Council this was 3.99% per annum, which included an extra 2% flexibility to pay for the increasing costs of adults’ social care.

In 2017/18 they granted local authorities the flexibility to bring forward some of this increase and to raise the precept by up to 3% that year and the year after within the cap of 6% over the next three years to 2019/20.

Given the continued pressures within Adults’ Health and Care and the challenges presented by the Tt2019 Programme the County Council agreed to increase council tax by 4.99% in 2017/18 in line with government policy (including the further flexibilities granted in the provisional settlement) in recognition of the pressures facing local authorities due to the growing cost of adults’ social care.

In addition, in the provisional Local Government Finance settlement in December 2017 the Government announced an increase in the referendum limits which for the County Council rose from 2% to 3%.

Reflecting this change in the referendum limits and recognising the shift in government policy and the fact that the Government have presumed that local authorities will put up their council tax by the maximum they are allowed a 5.99% increase in council tax was approved at the meeting of Full Council.

This increase equates to a total of £1,200.96 per annum for the average Band D household a rise of £67.86 or approximately £1.31 per week.

More information is available on line about the budget and council tax and the adult social care precept.

The amount of council tax payable depends on the valuation band of your home and

more information about the council tax bands is also available online.

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Council Taxes in Hampshire 2018/19

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Comparative County Councils Council Taxes 2018/19

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Revenue Budget 2018/19

Original Budget 2017/18

Adjustment Proposed Budget 2018/19

£'000 £'000 £'000

Departmental Expenditure

Adults’ Health and Care 355,587 43,368 398,955

Children's – Schools 786,892 19,993 806,885

Children's – Non Schools 150,067 16,974 167,041

Economy, Transport and Environment 108,014 4,492 112,506

Policy and Resources 87,564 3,957 91,521

1,488,124 88,784 1,576,908

Capital Financing Costs

Committee Capital Charges 135,264 (223) 135,041

Capital Charge Reversal (136,489) 160 (136,329)

Interest on Balances (8,395) 800 (7,595)

Capital Financing Costs 51,775 (11,474) 40,301

42,155 (10,737) 31,418

RCCO

Main Contribution 14,034 (3,452) 10,582

RCCO from Reserves 8,529 (8,529)

22,563 (11,981) 10,582

Other Revenue Costs

Contingency 35,880 22,533 58,413

Dedicated Schools Grant (732,102) (15,168) (747,270)

Specific Grants (159,861) (13,453) (173,314)

Pensions – Non Distributed Costs 18,526 1,765 20,291

Apprenticeship Levy 1,350 1,350

Flood Protection Levy 623 25 648

Coroners Expenditure 1,650 97 1,747

Business Units (Net Trading Position) 164 54 218

(835,120) (2,797) (837,917)

Net Revenue Budget 717,722 63,269 780,991

Contributions to / (from) Earmarked Reserves

Transfer to / (from) Earmarked Reserves 19,520 (47,733) (28,213)

Trading Units Transfer to / (from) Reserves (242) 165 (77)

RCCO from Reserves (8,529) 8,529 0

10,749 (39,039) (28,290)

Use of General Balances 900 (1,900) (1,000)

BUDGET REQUIREMENT 729,371 22,330 751,701

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Original Budget 2017/18

Adjustment Proposed Budget 2018/19

£'000 £'000 £'000

BUDGET REQUIREMENT 729,371 22,330 751,701

Funded by

Business Rates and Government Grant (156,274) 17,723 (138,551)

Business Rates Collection Fund Deficit /

(Surplus) 696 (767) (71)

Council Tax Collection Fund Deficit / (Surplus) (6,963) 2,336 (4,627)

COUNCIL TAX REQUIREMENT 566,830 41,622 608,452

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Subjective Analysis of Net Departmental Expenditure 2018/19

Adults' Health &

Care

Children's - Schools

Children's - Non Schools

Economy, Transport & Environment

Policy & Resources

Total

£'000 £'000 £'000 £'000 £'000 £'000

Employees 99,283 510,549 70,959 31,831 112,382 825,004

Premises 2,821 32,695 1,516 7,078 35,755 79,865

Transport 5,231 3,485 29,508 1,148 2,011 41,383

Supplies and Services 11,698 127,167 12,847 4,544 48,136 204,392

Third Party Payments 337,234 108,529 74,720 109,283 2,076 631,842

Transfer Payments 41,236 395 2,039 51 43,721

Support Services 5,374 77,110 2,868 3,243 7,521 96,116

Expenditure (*) 502,877 859,930 194,457 157,127 207,932 1,922,323

Fees and Charges (60,054) (18,132) (3,527) (9,398) (45,128) (136,239)

Grants & Contributions (38,230) (16,378) (11,573) (8,990) (5,127) (80,298)

Rental Income (15) (288) (1,519) (2,425) (4,247)

Sales Income (93) (14,007) (76) (2,715) (1,310) (18,201)

Other Miscellaneous Income (58) (4,184) (527) (3,332) (1,414) (9,515)

Internal Income (#) (5,472) (344) (11,425) (18,667) (61,007) (86,039)

Income (103,922) (53,045) (27,416) (44,621) (116,411) (345,415)

Net Expenditure 398,955 806,885 167,041 112,506 91,521 1,576,908

* Difference in gross expenditure between the figures above and those on page 10 is due to internal charges which feature in the analysis above to reflect the budgets managed by the

individual Departments but which are excluded from the council tax presentation to avoid double counting.

Subjective analysis breaks down the budget by reference to the inputs the budgets relate to as opposed to by the service provided (the

outputs).

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Adults’ Health and Care Budget Summary 2018/19

Reports were presented in January to the Executive Member for Adult Social Care and the Executive member for Health and Public Health that set out the budget proposals (which have since been approved) along with challenges and priorities for the Department.

The budget for 2018/19 is set out below and more information about the services provided by the Department is available online.

Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Director:

Director 1,277 1,277

Strategic Commissioning and Business Support:

Strategic Commissioning 20,943 (2,882) 18,061

Transformation

Transformation 3,579 (136) 3,443

Older People and Physical Disabilities:

Older People and Physical Disabilities Community Services

182,065 (56,456) 125,609

Learning Disabilities and Mental Health Services:

Learning Disabilities Community Services 116,252 (10,778) 105,474

Mental Health Community Services 18,331 (1,384) 16,947

Contact Centre 665 665

Internal Provision:

Internal Provision 58,519 (21,823) 36,696

Reablement 21,161 (9,753) 11,408

Governance, Safeguarding and Quality:

Safeguarding 4,281 (690) 3,591

Centrally Held:

Centrally Held 22,908 22,908

Total Adults’ Services 449,981 (103,902) 346,079

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Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Public Health:

Central (*) 2,710 2,710

Information & Intelligence 22 22

Nutrition 959 959

Drugs & Alcohol 9,278 9,278

Dental 180 180

Tobacco 2,109 2,109

Children 5-19 4,036 4,036

Children Under 5 (*) 16,566 16,566

Health Checks (*) 1,447 1,447

Miscellaneous Health Improvement & Wellbeing (**) 5,717 (20) 5,697

Sexual Health (*) 9,843 9,843

Health Protection (*) 29 29

Public Health 52,896 (20) 52,876

Adults’ Health and Care Cash Limited Budget 502,877 (103,922) 398,955

* Includes mandated services

** Specific services include

- Domestic abuse services - Mental Health promotion - Some Children’s and Youth PH services

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Children’s Services Budget Summary 2018/19

The Department’s priorities are set out in the report presented to the Executive

Member for Children’s Services Children’s Services in January. This report also

details the budget proposals for 2018/19 (which have since been approved) along

with challenges facing the Department.

The budget for 2018/19 is set out below and more information about the services provided by the Department is available online.

Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Early Years: 80,393 (278) 80,115

Schools Block 606,079 (49,765) 556,314

High Needs 105,727 (3,002) 102,725

Central Block: 8,116 8,116

Other Schools Grants: 59,615 59,615

Total Schools Budget 859,930 (53,045) 806,885

Young Peoples Learning & Development 1,117 (392) 725

Adult & Community Learning 2,393 (2,004) 389

Asset Management 144 (58) 86

Central Support Services 1,264 (1,491) (227)

Educational Psychology Service 3,878 (2,313) 1,565

Home to School Transport 32,605 (425) 32,180

Insurance 39 39

Monitoring of National Curriculum Assessment 164 (113) 51

Parent Partnership, Guidance and Information 203 203

Pension Costs (includes existing provisions) 2600 2600

School Improvement 1,634 1,634

SEN Administration, Assessment, Co-ordination

& Monitoring 2,189 (97) 2,092

Statutory/Regulatory Duties 1,295 (586) 709

Service Strategy & Other Ed Functions 46,015 (5,083) 40,932

Management & Support Services 4,147 (1,829) 2,318

Early Achievement of Savings 773 773

Other Education & Community 54,445 (9,308) 45,137

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Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Services for Young Children 2,340 (745) 1,595

Adoption Services 4,435 (753) 3,682

Asylum Seekers 3,487 3,487

Education of Children Looked After 872 (747) 125

Fostering Services 28,158 (124) 28,034

Leaving Care Support Services 5,209 5,209

Other Children Looked After Services 2,930 (190) 2,740

Residential Care 26,904 (8) 26,896

Special Guardianship Support 2,206 2,206

Children Looked After 74,201 (1,822) 72,379

Other Children & Families Services 2,170 (786) 1,384

Direct Payments 1,625 1,625

Other Support for Disabled Children 318 (77) 241

Short Breaks (Respite) for Disabled Children 5,531 (27) 5,504

Targeted Family Support 9,407 (4,868) 4,539

Universal Family Support 42 42

Family Support Services 16,923 (4,972) 11,951

Youth Justice 8,764 (7,187) 1,577

Safeguarding & Young Peoples Services 20,373 (809) 19,564

Services for Young People 2,063 (1,405) 658

Management & Support Services (Including

government grants and legal costs) 11,174 (382) 10,792

Early Achievement of Savings 1,882 1,882

Non-Distributed Costs 122 122

Children's Social Care 140,012 (18,108) 121,904

Total Non-Schools Budget 194,457 (27,416) 167,041

Children’s Services Cash Limited Budget 1,054,387 (80,461) 973,926

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ETE Budget Summary 2018/19

Reports were presented in January to the Executive Member for Economic Development and the Executive member for Environment and Transport that set out the budget proposals (which have since been approved) along with challenges and priorities for the Department.

The budget for 2018/19 is below and more information about the services provided by the Department is available online, including transport, waste and planning.

Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Highways Maintenance 14,322 (2,930) 11,392

Street Lighting 10,450 (481) 9,969

Winter Maintenance 6,144 6,144

Concessionary Fares 13,143 (25) 13,118

Other Public Transport 7,913 (2,616) 5,297

Road Safety 2,311 (1,019) 1,292

Other Highways, Traffic & Transport Services 2,839 (2,887) (48)

Staffing & Operational Support 27,852 (18,447) 9,405

Highways, Traffic and Transport 84,974 (28,405) 56,569

Waste Disposal Contract 61,238 (14,923) 46,315

Environment & Other Waste Management 1,491 (1,172) 319

Strategic Planning 1,324 (357) 967

Chichester Harbour Conservancy 193 193

Waste, Planning and Environment 64,174 (16,452) 47,794

Departmental and Corporate Support 4,474 (928) 3,546

Early achievement of savings 2,640 1,200 3,840

Total Environment and Transport Services 156,334 (44,585) 111,749

Economic Development 793 (36) 757

Total Economic Development 793 (36) 757

Total ETE Cash Limited Budget 157,127 (44,621) 112,506

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Policy & Resources Budget Summary 2018/19

Policy & Resources (P&R) encompasses a range of Departments including

Corporate Services and Culture Communities and Business Services (CCBS).

Budget proposals for 2018/19 are detailed in the report to the Executive Member for

Policy and Resources.

The budget for 2018/19 is set out below and includes those areas providing support services to the County Council and partners (such as finance, human resources and IT) in addition to services to the public. More information about some of the front facing services provided is available online.

Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Legal 4,738 (2,243) 2,495

Transformation 2,677 (1,665) 1,012

Governance 3,235 (772) 2,463

Transformation and Governance 10,650 (4,680) 5,970

Finance 10,211 (6,494) 3,717

Human Resources (HR) 11,911 (7,545) 4,366

Information Technology (IT) 38,472 (17,131) 21,341

Audit 1,579 (918) 661

Customer Business Services 7,156 (4,752) 2,404

Corporate Resources Transformation 854 854

Corporate Resources Management 1,621 (1,438) 183

Corporate Resources 71,804 (38,278) 33,526

Communication, Marketing & Advertising 804 (239) 565

Corporate Customer Services 3,107 (283) 2,824

Web Team 575 (12) 563

Insight and Engagement 722 722

Chief Executives Office & Leadership Support 764 764

Customer Engagement Service 5,972 (534) 5,438

Total Corporate Services 88,426 (43,492) 44,934

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Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Corporate & Democratic Representation 66 66

Grants to Vol 227 227

Grants & Contributions to Voluntary Bodies 806 806

Southern Sea Fisheries 307 307

Members Devolved Budgets 390 390

Rural Affairs 200 200

Other Direct and Corporate Services 235 (14) 221

P&R Non-Departmental Budget (Direct) 2,231 (14) 2,217

Members Support Costs 1,835 (86) 1,749

Repair & Maintenance 24,288 (16,476) 7,812

Strategic Asset Management 1,509 (255) 1,254

Other Miscellaneous 363 (32) 331

P&R Non-Departmental Budget (Central) 27,995 (16,849) 11,146

Total Other Policy and Resources 30,226 (16,863) 13,363

Transformation 210 210

Rural Broadband 250 250

CCBS IT Budget and Rural Funding 76 76

Transformation and Business Management 536 0 536

Regulatory Services 4,994 (3,918) 1,076

Business Support 3,160 (2,327) 833

Scientific Services 1,767 (1,718) 49

Asbestos 1,413 (1,434) (21)

Community and Regulatory Services 11,334 (9,397) 1,937

Risk, Health & Safety 203 (4) 199

Sir Harold Hillier Gardens 87 87

Culture & Heritage: 290 (4) 286

Corporate Estate 118 (312) (194)

Country Farm 178 (675) (497)

Development Account 405 (820) (415)

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Service Activity Expenditure

Budget

Income

Budget

Net

Budget

£’000 £’000 £’000

Sites for Gypsies and Travellers 86 (31) 55

Property Services 27,711 (26,024) 1,687

Office Accommodation / Workstyle 5,780 (1,189) 4,591

Facilities Management 8,436 (5,099) 3,337

Hampshire Printing Services 1,860 (1,996) (136)

Caretaking and Cleaning Services 384 (395) (11)

Segensworth Unit Factories (12) (12)

Print Sign Workshop 9 9

Property Services and Facilities: 44,967 (36,553) 8,414

CCBS Planned Contribution to Cost of Change 632 461 1,093

CCBS P&R Services 57,759 (45,493) 12,266

Library Services 13,794 (2,798) 10,996

Energise Me Grant (Sport) and Talented Athletes

Scheme 141 141

Community 164 164

Community and Regulatory Services: 14,099 (2,798) 11,301

Countryside 7,342 (4,480) 2,862

Cultural Trust Grant and HCC Arts related costs 2,634 2,634

Archives 1,024 (294) 730

Outdoor Centres 3,338 (3,143) 195

Community Grants & Policy Fund 977 977

Culture & Heritage: 15,315 (7,917) 7,398

CRC Planned Contribution to Cost of Change 2,107 152 2,259

Total CCBS CRC Services 31,521 (10,563) 20,958

Total CCBS Cash Limited Budget 89,280 (56,056) 33,224

Total P&R Cash Limited Budget 207,932 (116,411) 91,521

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32

33

Capital

The Capital Programme delivers schemes totalling £540 million over the three years from 2018/19 to 2020/21. It will provide:

£146m of investment in new and extended school buildings in Hampshire in

the period 2018/19 to 2020/21 to ensure there is a school place for every child

in Hampshire, providing a big boost for the local economy through jobs and

construction materials.

£120m for structural maintenance of roads and bridges in Hampshire over the

next three years.

£133m for integrated transport schemes including nine major infrastructure

schemes, totalling £108.6m, of which five are expected to start in 2018/19.

£11m on flood risk and coastal defence.

£107m for major improvement of school and other County Council buildings

over the next three years.

The County Council’s capital programme has been maintained and expanded over recent years, continuing the trend of ensuring that we invest wisely in maintaining and enhancing our existing assets and delivering a programme of new ones.

The County Council also has the opportunity through its capital programme (and borrowing powers) to support its MTFS and the Efficiency Plan through the progression of schemes where there is a clear financial benefit. Such schemes focus on clear priorities, and those that generate revenue benefits in future financial years, in the form of clear and measurable revenue savings or longer term income generation either directly or through council tax or business rate yield.

Service improvement is at the heart of everything the County Council does and it is also important in the current financial climate that key services are able to continue and prosper. Therefore, whilst it is recognised that prudential borrowing and the resultant impact on revenue must be a key consideration, where there are specific priorities in line with the County Council’s focus on service improvement, then the programme will continue to be expanded where it is affordable to do so and delivers measurable revenue savings.

The County Council’s ability to continue to provide significant resources to invest in specific priorities, in line with the County Council’s focus on service improvement, and to generate revenue benefits in future financial years, even in times of austerity, is a testament to the strong financial management and rigorous approach to planning and delivering savings that has been applied; and to the benefits that can be achieved from working at scale.

The programme takes account of the County Council’s capital strategy and the Prudential Code for Capital Finance in Local Authorities including the capital financing position, the level of debt outstanding and the consequences for the revenue budget and council tax.

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Summary of Overall Capital Programme

Revised 2017/18

2018/19 2019/20 2020/21 Total

£’000 £’000 £’000 £’000 £’000

Adults’ Health and Care 55,127 11,175 481 481 67,264

Children’s Services 135,151 80,868 60,174 55,070 331,263

Environment and Transport

76,839 139,670 80,324 44,558 341,391

Policy and Resources 75,478 22,828 22,228 22,228 142,762

Total 342,595 254,541 163,207 122,337 882,680

540,085

The detailed programmes for each of the departments were presented in separate

reports to Executive Members in January and can be found at the following links:

Adults’ Health and Care

Children’s Services

Environment and Transport

Policy and Resources

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Summary of Capital Programme 2018/19

Value of Schemes Starting in 2018/19

Construction Works

Fees Furniture, Equipment, Vehicles &

Grants

Total Cost

Funded by

Local Resources

Government Grants

£'000 £'000 £'000 £'000 £'000 £'000

Adults’ Health and Care 241 40 10,894 11,175 481 10,694

Children’s Services 69,595 10,773 500 80,868 7,153 73,715

Environment and Transport 111,353 27,952 365 139,670 46,956 92,714

Policy and Resources 16,430 2,627 3,125 22,182 4,646 17,536

197,619 41,392 14,884 253,895 59,236 194,659

Advance and advantageous land purchases 646

Programme Total 254,541

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Summary of Capital Programme 2019/20

Value of Schemes Starting in 2019/20

Construction Works

Fees Furniture, Equipment, Vehicles &

Grants

Total Cost

Funded by

Local Resources

Government Grants

£'000 £'000 £'000 £'000 £'000 £'000

Adults’ Health and Care 241 40 200 481 481 0

Children’s Services 51,832 7,842 500 60,174 55,562 4,612

Environment and Transport 66,256 14,068 0 80,324 28,052 52,272

Policy and Resources 15,915 2,542 3,125 21,582 4,046 17,536

134,244 24,492 3,825 162,561 88,141 74,420

Advance and advantageous land purchases 646

Programme Total 163,207

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Summary of Capital Programme 2020/21

Value of Schemes Starting in 2020/21

Construction Works

Fees Furniture, Equipment, Vehicles &

Grants

Total Cost

Funded by

Local Resources

Government Grants

£'000 £'000 £'000 £'000 £'000 £'000

Adults’ Health and Care 241 40 200 481 481 0

Children’s Services 47,451 7,119 500 55,070 50,458 4,612

Environment and Transport 39,432 5,126 0 44,558 14,556 30,002

Policy and Resources 15,915 2,542 3,125 21,582 4,046 17,536

103,039 14,827 3,825 121,691 69,541 52,150

Advance and advantageous land purchases 646

Programme Total 122,337

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Capital Payments and Sources of Finance

2018/19 Estimate

2019/20 Estimate

2020/21 Estimate

£'000 £'000 £'000

Adults’ Health and Care 31,000 27,900 13,000

Children’s Services 98,100 106,500 85,000

Environment and Transport 94,300 96,800 79,000

Policy and Resources 58,800 36,000 22,700

Land Acquisition 600 600 600

Total Capital Payments 282,800 267,800 200,300

2018/19 Estimate

2019/20 Estimate

2020/21 Estimate

£'000 £'000 £'000

Loans 46,500 45,700 31,100

Prudential Borrowing Repayments (11,400) (10,000) (9,600)

Capital Receipts 12,100 8,200 3,600

Government Grants 134,600 175,200 147,300

Contributions from Other Bodies 64,300 56,900 31,500

Contributions from Reserves 26,100 0 0

Revenue Contributions to Capital 10,600 (8,200) (3,600)

Total Sources of Finance 282,800 267,800 200,300

Note: Capital payments include schemes in the 2017/18 and earlier years’ programmes as well as

payments on schemes starting in 2018/19 to 2020/21

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Reserves

To provide capacity to manage financial risks, the County Council holds contingency provisions; an appropriate risk assessed level of balances and reserves that are suitable and adequate.

Contingency provisions (£58.4m in 2018/19) are held in respect of key risk items such as inflationary pressures, income risk and demand pressures to enable those more volatile budgets to be managed. These provisions represent the recommendation by the Director of Corporate Resources of a prudent approach to budgeting given the potential pressures the County Council faces. It is important to note that whilst these do represent significant available resources, they must be set in the context of the size and complexity of the County Council’s gross budget and the efficiency and change programme.

The General Fund Balance is the only reserve that is in effect not earmarked for a specific purpose. It is set at a level recommended by the Chief Financial Officer at around 2.5% of the budget requirement and in effect it represents a working balance of resources that could be used at very short notice in the event of a major financial issue.

Each year a review is undertaken to establish the appropriate level of balances to be held based on an assessment of strategic, operational and financial risks facing the authority including the ability to deliver planned savings. The recommended level of balances for 2018/19 based on the risk assessment remains at circa £21.5m.

In addition to these general balances and contingencies, the County Council has access to reserves as part of an on-going strategy for the management of the County Council’s financial resources over the medium term. The County Council’s Reserves Strategy (set out in the MTFS) is now well rehearsed and continues to be one of the key factors that underpin our ability not only to provide funding for transformation of services but also to give the time for the changes to be properly planned, developed and implemented.

The County Council has continually explained that reserves are kept for many different purposes and that simply trying to bridge the requirement for long term recurring savings through the use of reserves only serves to use up those reserves very quickly (and means that they are not available for any other purposes) and merely delays the point at which the recurring savings are required.

The County Council’s approach to reserves has been applauded in the past by the government and the External Auditors as a sensible, prudent approach as part of a wider MTFS. This has enabled the County Council to make savings and changes in service delivery in a planned and controlled way rather than having to make urgent unplanned decisions in order to reduce expenditure.

This approach is well recognised across local government and an article in the Municipal Journal by the Director of Local Government at the Chartered Institute of Public Finance and Accountancy stated

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“What reserves do allow authorities to do is to take a more medium term view of savings and expenditure and make decisions that give the best value for money. This is better than having to make unnecessary cost reductions in the short term because they do not have the money or funding cushion to allow for real transformation in the way they provide services.”

We are now in an extended period of austerity which will last longer than anyone had previously predicted and the medium term view highlights a continued need for reserves to smooth the impact of reductions in funding and enable time for the planning and implementation of change to deliver savings.

Current earmarked reserves together with the General Fund balance totalled £524.2m at the end of the 2016/17 financial year, an increase of approaching £27m on the previous year This is in line with the Medium Term Financial Strategy (MTFS) as provision is built up in departmental cost of change reserves to enable support of transformation activity and of revenue spend whilst savings programmes are put in place, and in the Grant Equalisation Reserve (GER) ahead of a large planned draw in 2018/19.

The table below summarises by purpose the total level of reserves and balances that the County Council holds and compares this to the position reported at the end of 2016/17.

Balance Balance % of

31/03/2016 31/03/2017 Total

£'000 £'000 %

General Fund Balance 20,598 21,498 4.1

Fully Committed to Existing Spend Programmes

Revenue Grants Unapplied 35,530 25,163 4.8

General Capital Reserve 124,137 126,075 24.1

Street Lighting Reserve 9,237 26,087 5.0

Community Transport Reserve / Other 2,091 1,977 0.3

170,995 179,302 34.2

Departmental / Trading Reserves

Trading Accounts 15,671 12,753 2.5

Departmental - Cost of Change Reserve 53,926 85,658 16.3

69,597 98,411 18.8

Risk Reserves

Insurance Reserve 25,423 20,571 3.9

Investment Risk Reserve 1,000 1,500 0.3

26,423 22,071 4.2

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Balance Balance % of

31/03/2016 31/03/2017 Total

£'000 £'000 %

Corporate Reserves

Grant Equalisation Reserve 75,206 40,755 7.8

Invest to Save 9,077 31,100 5.9

Corporate Policy Reserve 5,109 4,632 0.9

Corporate Efficiency Reserve 7,902 - 0

Organisational Change Reserve 3,593 2,905 0.5

100,887 79,392 15.1

Total HCC Earmarked Reserves available to the County Council

367,902 379,176 72.3

Other Earmarked Revenue Reserves

M3 LEP Reserve - 1,396 0.3

Schools Reserves 55,950 46,679 8.9

55,950 48,075 9.2

Total Revenue Reserves and Balances 444,450 448,749 85.6

Capital Reserves

Capital Grants Unapplied 52,844 75,415 14.4

52,844 75,415 14.4

Total Usable Reserves 497,294 524,164 100.0

Further detail about these reserves and the County Council’s strategy can be found at Appendix 6 of Annex A to the full report.

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Treasury Management & Prudential Indicators

Treasury Management is concerned with managing the Council’s long term borrowing and lending activity and managing cash flows on a day to day basis to ensure that sufficient funding exists to pay staff and suppliers throughout the year.

The Chartered Institute of Public Finance and Accountancy’s Code of Practice for Treasury Management in Public Services (the CIPFA Code) and the Prudential Code require authorities to determine the Treasury Management Strategy Statement (TMSS) and Prudential Indicators (PIs) on an annual basis. The TMSS also includes the Annual Investment Strategy (AIS) that is a requirement of the DCLG’s Investment Guidance.

As per the requirements of the Prudential Code, Hampshire County Council adopted the CIPFA Treasury Management Code at its meeting in February 2012.

The purpose of this TMSS, which fulfils the Council’s legal obligation under the Local Government Act 2003 to have regard to both the CIPFA Code and the DCLG Guidance, is therefore to set out:

Treasury Management Strategy for 2018/19

Annual Investment Strategy for 2018/19

Prudential Indicators for 2018/19, 2019/20 and 2020/21

Minimum Revenue Provision (MRP) Statement

The County Council has potentially large exposures to financial risks through its investment and borrowing activity, including the loss of invested funds and the effect of changing interest rates. The successful identification, monitoring and control of risk are therefore central to the Council’s Treasury Management Strategy.

The TMS is reviewed annually and provides the framework within which authority is delegated to the Director for Corporate Resources to make decisions on the management of the Council’s debt and investment of surplus funds.

Further detail can be found at Appendix 8 of Annex A to the full report.

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Glossary

This Glossary explains some of the terms that are used within this Budget Book or related reports. These definitions are intended to assist the reader, rather than reflect the exact technical sense in which the terms are used.

Further definitions can also be found in the published Statement of Accounts which contains a glossary.

Actual – Short for actual expenditure and income. The amount actually spent or received within a particular period, as compared to the estimated / budgeted expenditure. Any difference between estimates and actuals is referred to as an over or (under) spend or a variance.

Apprenticeship Levy – A Government scheme whereby employers with a pay bill over £3m must set up a fund to cover the costs of any Apprenticeship schemes. Any balance of this fund not used on training schemes should be returned to the Government.

Balances & Reserves – Accumulated sums that are maintained either earmarked for specific future costs or commitments or generally held to meet unforeseen or emergency expenditure.

Bands (council tax) – Domestic properties are allocated to one of eight bands for the purpose of assessment of council tax. The bands are defined with reference to property values at 1 April 1991 as follows:

Band Value Range Multiplier

A Up to £40,000 6/9 67%

B £40,000 to £52,000 7/9 78%

C £52,000 to £68,000 8/9 89%

D £68,000 to £88,000 9/9 100%

E £88,000 to £120,000 10/9 122%

F £120,000 to £160,000 13/9 144%

G £160,000 to £320,000 15/9 167%

H Over £320,000 18/9 200%

Council taxes are set for Band D properties (the band which is supposed to represent the average home). The tax for properties in other bands is set as the Band D tax times the multiplier in the table.

Band D Equivalents – The number of Band D properties in an area which would raise the same council tax as the actual number of properties in all bands. Properties are converted to an equivalent based on that of band D. For example, one band H property is equivalent to two band D properties, because the taxpayer in a Band H property pays twice as much council tax.

Billing Authority – A local authority empowered to set and collect Council Tax, and manage the Collection Fund, on behalf of itself and Precepting Authorities in its area.

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Budget Requirement – The amount each authority estimates as its planned spending, after deducting any income it expects to raise from fees and charges for services, specific grants from the Government and any funding from reserves. The budget requirement is set before the beginning of the financial year and is financed from general Government grant, business rates and the council tax.

Business Rates – See NNDR

Business Units – See Trading Units

Capital Charges – Charges to reflect the cost of depreciation of fixed assets used in the provision of services. These are reversed out, so there is no impact on Council Tax.

Capital Expenditure – Expenditure on the acquisition of a fixed asset or expenditure, which enhances and not merely maintains the value or increased the life of an existing fixed asset.

Capital Financing Costs – A charge to revenue for: interest on loans raised to finance capital expenditure and to provide for the repayment of loans. These must not be confused with capital charges to services.

Capital Receipts – Income that the Council receives from selling capital assets (buildings, land etc.). Such income may only be used to repay loan debt or to finance new capital expenditure not to finance ongoing revenue costs, although the 2015 Autumn Statement provided greater flexibility about the use of capital receipts for assets sold after 1 April 2016.

Capital starts – Value of schemes in the capital programme committed to start in a financial year through the signing of contracts or the placing of orders. At Hampshire County Council, control over capital expenditure is exercised by controlling starts in each year.

Cash Limit – A defined figure set by the Council that represents the maximum budgeted expenditure that a service can spend on its activities.

CIPFA – Charted Institute of Public Finance & Accountancy the leading professional accountancy body for public services.

Collection Fund – A ring-fenced account maintained by a billing authority recording the amounts collected in council tax and NNDR, from which it distributes the income to itself and its major preceptors, it also pays the Government its share of NNDR collected. If billing authorities collect more or less council tax and NNDR than they expected at the start of the year, the surplus or deficit is shared in proportion.

Comprehensive Spending Review – Comprehensive Spending Review (CSR) is a governmental process in the UK carried out by HM Treasury to set firm expenditure limits, and through public service agreements define the key improvements that the public can expect from these resources. Spending reviews typically focus upon one or several aspects of public spending while the CSR focuses upon each government department’s spending requirements from a zero base (i.e. without reference to past plans or, initially, current expenditure). The latest spending review announced in Autumn 2015 covered four years up to and including 2019/20.

Contingency – A sum included usually as a central provision within the budget to meet expenditure where timing and scale is uncertain.

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Council Tax – The charge for individual properties is based on the value of the property. The Valuation Office Agency assesses the properties in each district area and assigns each property to one of eight valuation band (A to H). The level of Council Tax is set on the basis of the number of Band D equivalent properties. Council Tax levels for dwellings in other bands are set relative to the Band D baseline.

Depreciation – The measure of the reduction in the value of a capital asset from its use; i.e. through wearing out, consumption or other reduction in the useful economic life of a fixed asset.

Dedicated Schools Grant – Dedicated Schools Grant (DSG) is a ring-fenced grant provided to local authorities by the Department for Education (DfE) to fund revenue expenditure by schools.

Fixed Assets – Assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, equipment, vehicles, plant and machinery, community assets and investment properties.

Formula Grant – General government grant is a source of funding for local authorities. There are no restrictions on what it can be spent on.

General balances – Money held in reserve by the Council that is not allocated to any specific purpose, i.e. is not part of earmarked reserves. Information on how the amount of money deemed necessary to be held is calculated can be found in the section about Reserves. See page 38.

Gross Expenditure – The total cost of providing the Council's services before deducting income from Government grants, or fees and charges for services.

Income & expenditure – Any money that comes from outside the Council, whether from central government, or from individuals and companies paying for services provided by the Council, is classified as income. Anything spent by a department, whether on staff, contracted services, or supplies, is classified as expenditure.

Levy – A levy is an amount of money a local authority is compelled to collect (and include in its budget) on behalf of another organisation. The levying body may be a Government agency (such as the Environment Agency) or a local body such as a National Park. The main difference between a levy and a precept is that the latter appears as a separate item on the Council Tax bill.

Local government finance settlement – This is announced annually and sets out the amount of funding (or revenue support grant) that local government will receive for the following year from central government. Proposals are made in December, with the final settlement normally being announced following consultation in January.

Minimum Revenue Provision (MRP) – The minimum amount which must be charged to revenue each year and set aside as provision for repaying external loans and meeting other credit liabilities.

National Non-Domestic Rrates (NNDR) – Also known as business rates. The business rating system under which the level of charge is set nationally by the Government. The rates are collected by local authorities and shared, with government currently receiving 50% of the amount collected.

Net Expenditure – Gross expenditure less fees and charges for services and specific grants but before deduction of revenue support grants and NNDR.

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Objective Analysis – There are two basic ways of breaking down budgets or spending figures into more detailed components. By reference to the type of establishment or activities (i.e. outputs) the figures relate to known as objective analysis, or by reference to the inputs (for example employee costs) that the figures relate to known as subjective analysis.

Precept – The amount of money a precepting authority requires from the Collection Fund. This is used to pay for the services that they provide

Precepting Authority – Local authorities, including police and fire authorities, which cannot levy a council tax directly on the public nit have the power to precept a billing authority.

Private Finance Initiative PFI – A form of public private partnership where local authorities pay for the use of assets held by the private sector.

Provision – An amount of money set aside in the budget to meet liabilities that are likely to arise in the future because of a legal liability, but which cannot be quantified with certainty.

Prudential Code – Developed by CIPFA and introduced from April 2004 as a professional code of practice to support local authority capital investment planning within a clear, affordable, prudent and sustainable framework and in accordance with good professional practice.

Prudential Indicators – These are indicators determined by the local authority to define its capital expenditure and asset management framework. They are designed to support and record local decision making in a manner that is publicly accountable; they are not intended to be comparative performance indicators.

Recharges – Charges made by one part of the Council to another.

Reserves – The Council’s reserves fall into two categories. The ‘un-earmarked’ reserve is the balance on the General Fund. An ‘earmarked’ reserve is an amount set aside in the Council’s accounts for specific purposes. See Balances

Revenue Contributions to Capital Outlay (RCCO) – The mechanism by which items of capital expenditure can be financed by budgeted transfers from the General Fund or from earmarked reserves.

Revenue Expenditure – Expenditure on day to day running costs to provide services during the financial year. Distinct from capital expenditure on projects which benefit the authority over a period of more than one financial year.

Ring Fencing – Reserving a budget for a particular purpose, or preventing transfers between one budget and another.

Revenue Support Grant (RSG) – A general grant paid to local authorities by the government to support their expenditure.

Schools’ Budget – A defined set of activities delegated to schools that are usually funded from specific government grant (primarily DSG).

Section 151 Officer – Section 151 of the Local Government Act 1972 requires Councils to nominate an officer to be responsible for the proper administration of their financial affairs. This officer (who must be a qualified accountant belonging to one of the recognised chartered accountancy bodies) must report to the Council any unlawful financial activity involving the authority or if they believe expenditure is likely

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to exceed resources. For Hampshire County Council, the Director of Corporate Resources is the Council's S151 Officer.

Specific Grants – Grants paid to the council for a specific purpose such as the DSG.

Subjective Analysis – See objective analysis.

Taxbase – The number of Band D equivalent properties in a local authority's area. This figure is used by the Council to calculate Council Tax and also by the Government to calculate the Council's grant entitlement.

Trading Units – Local authority services, which are, or are generally intended to be, financed mainly from charges levied on the users of the service, also described as Business Units.

Valuation Bands – See Bands (council tax).

Variance – When comparing the amount actually spent within a particular budget with estimated expenditure, any difference between estimates and actuals is referred to as a variance or an over / under spend.

Virement – A conscious decision to use approved budgets originally intended for one purpose for a different purpose. The rules concerning virements are contained in the County Councils Financial Regulations.