2017/18 Budget Book

Hampshire County Council

Budget Book 2017/18

Contents

Statement from the Leader of Hampshire County Council ...... 2 Introduction from the Chief Financial Officer ...... 3 Medium Term Financial Strategy and Context ...... 4 Introduction to the Budget for 2017/18...... 9 Council Tax 2017/18 ...... 11 Council Taxes in Hampshire 2017/18 ...... 12 Comparative County Councils Council Taxes 2017/18 ...... 13 Revenue Budget 2017/18 ...... 14 Subjective Analysis of Net Departmental Expenditure 2017/18 ...... 16 Adults’ Health and Care Budget Summary 2017/18 ...... 17 Children’s Services Budget Summary 2017/18 ...... 21 ETE Budget Summary 2017/18 ...... 25 Policy & Resources Budget Summary 2017/18 ...... 27 Workforce ...... 32 Capital ...... 33 Summary of Overall Capital Programme ...... 34 Summary of Capital Programme 2017/18 ...... 35 Summary of Capital Programme 2018/19 ...... 36 Summary of Capital Programme 2019/20 ...... 37 Capital Payments and Sources of Finance ...... 38 Reserves ...... 39 Treasury Management & Prudential Indicators ...... 42 Glossary ...... 43

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 2017/18. All councils are facing significant financial challenges because of demand pressures, inflation and grant reductions by Government. In Hampshire, these pressures have left us needing to close a funding gap of £98 million by April this year. We are doing our level best to shield residents as far as possible from any impact, while protecting the quality of local services. We recognise the pressures on the NHS and that is one of the reasons we considered it important to put as much funding as possible into social care.” “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 – as by April this year, we will have delivered £340 million in savings since 2008. We have fewer buildings, fewer staff and are making greater use of new technology.” “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 on which we will need to seek residents’ views.” “It is only because of our strong financial stewardship over many years with careful forward planning, and because of our size - enabling us to make the most of economies of scale, that we have been able to bear the brunt of all these pressures – and still be a position to invest in the future prosperity of the County.” “For example, this budget will see the County Council inject £520 million into the local economy, building plans and jobs over the next three years. Capital projects include creating 10,915 new primary and secondary school places; investing in Hampshire’s roads, bridges and flood defences; providing new transport schemes to link key employment areas; and grant funding to Hampshire organisations that bring economic and cultural benefits to the local economy. “There are very few other local authorities that could continue to provide this significant scale of investment into the fabric of their local communities at this time, while ensuring residents continue to receive sustainable, high quality services - which remain among the best in the country.”

Councillor Roy Perry – Leader of Hampshire County Council

Introduction from the Chief Financial Officer

The Budget Book for 2017/18 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 16 February 2017and 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 signposting further information which provides some context and sets out the challenges faced. It also contains the Capital Programme which runs up until 2020. 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

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 2017/18 and future years in keeping with the ‘Shaping Hampshire’ priorities.

The Medium Term Financial Strategy to 2020 was approved by the County Council in July 2016 in order to inform and direct work on detailed budget planning that took place over the summer.

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 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 2015/16, some £242m has already been removed from budgets and plans are in place to save a further £98m by 2017/18, taking the total to £340m. 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.

Further savings targets of £140m, with £120m to be delivered by departments by 2019/20 were set out in the MTFS and approved in July 2016 on the assumption that council tax would be increased by the maximum permissible in line with current Government policy.

County Council Priorities

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 be a modern business providing public services. 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:

 Health and Wellbeing – Improving health and wellbeing for all.  Economy – Promoting economic prosperity and protecting the environment.  Communities – Working with communities to enhance local services.  Efficiency – Delivering high quality, cost-effective public 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.

The County Council’s corporate strategy will be refreshed in 2017 and will be subject to public consultation. Specifically, residents’ views will be sought on the allocation of County Council spending against its priorities.

Devolution

The County Council commissioned Deloitte to conduct an independent study to provide an initial analysis of how services could be provided across the whole county at lower cost. The report (the Executive Summary of which is available on line) explored a number of detailed options for unitary local government at the Hampshire and Isle of Wight (HIOW) level. Deloitte concluded that the creation of a new unitary structure for local government in Hampshire could result in lower council tax for the majority of Hampshire households, streamline services and deliver tens of millions of pounds of savings each year.

At this stage, there are no firm proposals on how the local government structure in Hampshire might develop. Therefore whilst a new unitary structure could generate efficiencies over the next four years, it is not currently included as a potential option within the efficiency plan.

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 freezing Council Tax for five consecutive years up to and including the 2015/16 financial year.

The MTFS approved in July 2016 provided more background to the overall financial position to 2020. Of particular importance, is the fact that not only is the County Council able to meet, on a one off basis, the additional deficit in 2017/18 generated as a result of changes to the resource distribution methodology, but has also identified sufficient resources to bridge the estimated deficit of £70m in 2018/19. This has enabled the County Council’s successful strategy of setting two-year savings targets to be continued.

The Increasing Challenge

One of the key features and underlying success factors of the transformation programmes within the County Council is that the planning, development and implementation of the programmes are undertaken well in advance. This has meant that where possible early savings can be safely achieved and conversely that reserves (from early savings delivery) can be used to bridge budget deficits in ‘interim’ years. This has given the time and capacity to properly implement the savings over a longer time frame with greater care and less disruption.

The decisions taken by the County Council in October 2015 to approve the Transformation to 2017 (Tt2107) Savings Proposals moved the programme from development into implementation. This was some 17 months before the savings were required to be fully realised but this timeline allowed for effective preparation prior to implementation.

The Chief Executive’s report on Transformation to 2017 – Report No. 9 provided an update to Cabinet in December 2016. At that stage progress for the programme as a whole was largely in line with expectations with a total of £65m already secured and at least £70m anticipated by the end of the calendar year. That said, the size of the remaining challenge faced must not be underestimated and further close monitoring of the programme will continue to ensure the programme is delivered so that the financial resilience and stability of the County Council is maintained.

Looking ahead, the programmes of work in Adults’ Health and Care will continue to require real attention, strong leadership and management focus. There are a number of risks, dependencies and external factors that will require ongoing management input and attention and in a number of areas, risks to delivery could actually increase rather than reduce, at least in the immediate term. On the other hand, the relative success with the overall programme to this point means that appropriate leadership attention can begin to be turned towards the planning for the successor Transformation to 2019 Programme (Tt2019).

There is absolutely no doubt that this fourth major cost reduction exercise for the County Council since 2010 will be significantly more challenging than any previous transformation and efficiency programme against a backdrop of a generally more challenging financial environment.

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

Inevitably, Tt2019 will involve complex transformational, policy and service change across all services over the next few years. This will be undertaken alongside any slipped delivery of the Tt2017 Programme and an unrelenting business as usual agenda – all set within the context of an uncertain Government led devolution agenda.

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.

Introduction to the Budget for 2017/18

The County Council’s revenue budget and precept for 2017/18 and the capital programme for 2017/18 to 2019/20 were approved on 16 February 2017.

The following pages set out a summary of the Revenue Budget and Precept for 2017/18 and the Capital programme for 2017/18 to 2019/20.

The deliberate strategy that the County Council has followed to date for dealing with grant reductions during the prolonged period of austerity, which involves planning ahead of time, making savings in advance of need and using those savings to help fund transformational change to generate the next round of savings, is well documented.

In line with this financial strategy savings targets for 2017/18 were approved as part of the 2015/16 budget setting process and detailed savings proposals were developed through the Tt2017 Programme and approved by Executive Members, Cabinet and County Council in September and October 2015. Given this position, no new savings proposals were presented as part of the 2017/18 budget setting process and the Tt2017 Programme will achieve savings of £98m which have been incorporated into the revenue budget.

The County Council is able to set a balanced 2017/18 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 4.99% of which 3% will contribute towards the increased costs of adults’ social care.

What the 2017/18 budget will be spent on:

Adults' Health and Care = Gross Budget £451.7m £1,902.8m Schools = £859.6m

Children's Services (excluding schools) = £164.6m Economy, Transport and Environment = £136.9m

Policy and Resources = £148.4m

Capital financing (including funding from revenue) = £73.1m Other Corporate Items = £68.5m

How the 2017/18 budget is funded:

Departmental income = £273.0m Interest receivable = £8.4m

Dedicated Schools Grant = £732.1m Other Specific Government grants = £159.9m General Government grants = £111.4m Business rates = £44.9m

Surplus on collections funds = £6.3m Council tax = £566.8m

The Capital Programme delivers schemes totalling £520m over the three years from 2017/18 to 2019/20. This follows a revised programme of £319m for 2016/17, providing a total capital programme of £839m over the four years. This includes investment over the next three years of £179m to provide 10,915 new school places, £109m for structural maintenance of roads and bridges and £100m for transport schemes.

Further information can be found in the full Revenue Budget and Precept 2017/18 and Capital Programme 2017/18 – 2019/20 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: [email protected]

Council Tax 2017/18

In 2016/17 the government implemented a clear shift in council tax policy and assumed that local authorities would put up their council tax by the maximum 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. Further flexibilities were announced in the provisional settlement to bring forward some of this increase and to raise the precept by 3% in 2017/18 and 2018/19 within the cap of 6% over the next three years to 2020.

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 adult social care a 4.99% increase in council tax was approved at the meeting of Full Council.

This increase equates to a total of £1,133.10 per annum for the average Band D household a rise of approximately £1 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 rates is also available online.

Council Taxes in Hampshire 2017/18

Council Tax Change Budget Total Change 2017/18 from Requirement Council to Total Local Authority (including 2016/17 2017/18 Tax Council Tax parish Council (including parish 2017/18 from averages) Tax averages) 2016/17 Band D (£) % Band D (£) Band D (£) % (1) (2) (3) (4) (5) Basingstoke & Deane 131.19 4.48% 169.52 1,493.59 4.60% East Hampshire 201.62 0.70% 244.97 1,564.02 4.09% Eastleigh 194.77 0.69% 288.41 1,557.17 4.10% Fareham 150.22 3.44% 203.36 1,512.62 4.49% Gosport 212.81 2.41% 365.27 1,575.21 4.31% Hart 237.11 2.79% 248.49 1,599.51 4.34% Havant 192.78 0.00% 295.95 1,555.18 4.02% New Forest 241.32 3.97% 314.40 1,603.72 4.52% Rushmoor 192.73 2.66% 277.00 1,555.13 4.36% Test Valley 172.26 3.25% 291.29 1,534.66 4.46% Winchester 210.24 3.84% 316.18 1,572.64 4.51%

District average 193.50 2.69% 269.28 1,555.90 4.37%

Hampshire County Council 1,133.10 4.99% 1,458.02

Portsmouth 1,279.12 4.99% 2,566.00 1,508.42 4.65% Southampton 1,406.68 4.99% 2,663.37 1,635.98 4.68% Isle of Wight 1,529.99 5.12% 2,360.22 1,695.45 4.92%

Hampshire Fire and Rescue 63.84 1.98% 103.60

Police and Crime 165.46 3.12% 456.30 Commissioner for Hampshire

Column (1) shows the Band D Council Tax set by each council. For districts with parishes and special expenses, an average figure is shown. County and unitary council figures include the adult social care precept

Column (2) shows the percentage change in Council Tax from that set in 2016/17.

Column (3) shows the budget requirement of each authority per Band D property. For districts with parishes and special expenses, an average figure is shown.

Column (4) shows the total Council Tax for each area, including the amounts for the district or unitary, parish and special expenses averages, Police and Crime Commissioner, Fire and Rescue Authority (except Isle of Wight), and County Council (except unitary areas).

Column (5) shows the percentage change in the total Council Tax compared with 2016/17.

In parished districts, some services are only provided by the district council in unparished areas or where the parish council does not provide those services. The cost of these services is declared as special expenses and is charged only to council taxpayers who receive the services from the district council. In this respect they are like parish precepts.

Comparative County Councils Council Taxes 2017/18

Total Care Council Increase Precept Tax % Increase Band D

Somerset CFA 3.99% 2% £1,124.79 1 HAMPSHIRE CFA 4.99% 3% £1,133.10 SE Staffordshire CFA 4.95% 3% £1,142.54 Worcestershire CFA 2.94% 2% £1,155.31 Essex CFA 2.97% 3% £1,163.70 Northamptonshire 4.98% 3% £1,166.59 Leicestershire CFA 3.99% 2% £1,172.38 Lincolnshire 3.95% 2% £1,173.42 Kent CFA 3.99% 2% £1,178.82 SE Gloucestershire 3.99% 2% £1,179.26 Suffolk 3.00% 3% £1,183.50 North Yorkshire CFA 3.99% 2% £1,189.50 Cambridgeshire CFA 2.00% 2% £1,190.43 Derbyshire CFA 3.99% 2% £1,211.66 Buckinghamshire CFA 4.99% 3% £1,218.08 SE Lancashire CFA 3.99% 2% £1,221.74 Hertfordshire 4.99% 3% £1,245.83 Norfolk 4.80% 3% £1,247.94 West Sussex 3.95% 2% £1,255.59 SE Devon CFA 4.99% 3% £1,267.92 Cumbria 3.99% 2% £1,281.02 Warwickshire 3.99% 2% £1,298.88 East Sussex CFA 4.99% 3% £1,314.36 SE Dorset CFA 4.99% 3% £1,326.87 Surrey 4.99% 3% £1,331.55 SE Oxfordshire 4.99% 3% £1,345.59 SE Nottinghamshire CFA 4.75% 3% £1,351.97 £0 £500 £1,000 £1,500 Averages All counties 4.23% £1,224.90

Counties with CFAs 4.16% £1,210.20

Counties without CFAs 4.33% £1,246.29

Council tax payers in Hampshire and other English counties with Combined Fire Authorities (CFA) are charged for fire services by the CFA. As a result, the council tax figures for counties with CFAs are not directly comparable with those for counties without CFAs. SE indicates counties in the South East

Revenue Budget 2017/18

Original Adjustment Budget Budget 2017/18 2016/17 £'000 £'000 £'000

Departmental Expenditure Adults’ Health and Care 380,117 (24,530) 355,587 Children's - Schools 759,457 27,435 786,892 Children's - Non schools 167,116 (17,049) 150,067 Economy, Transport and Environment 111,479 (3,465) 108,014 Policy and Resources 94,352 (6,788) 87,564 1,512,521 (24,397) 1,488,124 Capital Financing Costs Committee Capital Charges 116,719 18,545 135,264 Capital Charge Reversal (117,122) (19,367) (136,489) Interest on Balances (7,334) (1,061) (8,395) Capital Financing Costs 62,896 (11,121) 51,775 55,159 (13,004) 42,155 RCCO Main Contribution 12,510 1,524 14,034 RCCO from Reserves 1,994 6,535 8,529 14,504 8,059 22,563 Other Revenue Costs Contingency 40,477 (4,597) 35,880 Dedicated Schools Grant (708,099) (24,003) (732,102) Specific Grants (159,152) (205) (159,397) Pensions - Non Distributed Costs 16,632 1,894 18,526 Flood Protection Levy 603 20 623 Coroners Expenditure 1,367 283 1,650 Business Units (Net Trading Position) (570) 734 164 (808,782) (26,338) (835,120)

Net Revenue Budget 773,402 (55,680) 717,722 Contributions to / (from) Earmarked Reserves Transfer to / (from) Earmarked Reserves (37,688) 57,208 19,520 Trading Units Transfer to / (from) Reserves 679 (921) (242) Business Strategy Opportunities (1,500) 1,500 0 RCCO from Reserves (1,994) (6,535) (8,529) (40,503) 51,252 10,749 Use of General Balances 900 0 900 BUDGET REQUIREMENT 733,799 (4,428) 729,371

Original Adjustment Budget Budget 2017/18 2016/17 £'000 £'000 £'000

BUDGET REQUIREMENT 733,799 (4,428) 729,371

Funded by

Business Rates and Government Grant (192,724) 36,450 (156,274) Business Rates Collection Fund Deficit / 1,226 (530) 696 (Surplus) Council Tax Collection Fund Deficit / (Surplus) (9,642) 2,679 (6,963)

COUNCIL TAX REQUIREMENT 532,659 566,830

Subjective Analysis of Net Departmental Expenditure 2017/18

Adults' Children's - Children's - Economy, Policy & Total Health & Schools Non Schools Transport & Resources Care Environment £'000 £'000 £'000 £'000 £'000 £'000

Employees 96,873 539,646 65,731 30,180 108,375 840,805 Premises 2,753 45,425 1,442 6,037 39,634 95,291 Transport 5,104 5,840 25,324 1,247 2,062 39,577 Supplies and Services 12,375 139,297 11,832 4,502 45,160 213,166 Third Party Payments 293,775 94,142 63,161 104,750 2,053 557,881 Transfer Payments 40,607 237 1,059 51 41,954 Support Services 2,821 35,093 4,512 2,492 5,706 50,624 Expenditure (*) 454,308 859,680 173,061 149,208 203,041 1,839,298

Fees and Charges (59,820) (51,615) (3,005) (8,787) (26,586) (149,813) Grants & Contributions (#) (36,051) (12,585) (11,095) (8,361) (4,792) (72,884) Rental Income (15) (879) (253) (1,350) (2,385) (4,882) Sales Income (93) (7,599) (74) (2,552) (1,242) (11,560) Other Miscellaneous Income (113) (80) (2,758) (9,315) (12,266) Internal Income (2,629) (110) (8,487) (17,386) (71,157) (99,769) Income (98,721) (72,788) (22,994) (41,194) (115,477) (351,174)

Net Expenditure 355,587 786,892 150,067 108,014 87,564 1,488,124

* Difference in gross expenditure between the figures above and those on page 9 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. # Includes Hampshire School Allocations

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

Adults’ Health and Care Budget Summary 2017/18

The Adults’ Health and Care Department has been developing its service plans and budgets for 2017/18 and future years in keeping with the ‘Shaping Hampshire’ priorities and the key issues. 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 2017/18 is set out below and more information about the services provided by the Department is available online.

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Director: Director 1,535 1,535 Strategic Commissioning and Business

Support: Strategic Commissioning 16,028 (1,963) 14,065 Policy and Business Intelligence 1,530 (105) 1,425 Transformation 2,522 (138) 2,384 Older People and Physical Disabilities: Older People and Physical Disabilities Community 181,511 (51,014) 130,497 Services Learning Disabilities and Mental Health

Services: Learning Disabilities Community Services 111,661 (8,784) 102,877 Mental Health Community Services 20,258 (1,491) 18,767 Continuing Healthcare 301 301 Internal Provision and Front Door: Internal Provision 52,467 (19,178) 33,289 Front Door 1,406 (267) 1,139 Reablement 19,867 (8,957) 10,910 Governance, Safeguarding and Quality: Safeguarding 4,732 (412) 4,320 Centrally Held: Centrally Held (12,970) (6,392) (19,362) Total Adults’ Services 400,848 (98,701) 302,147

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Public Health: Central (*) 2,595 2,595 Children 5-19 4,036 4,036 Children Under 5 (*) 16,566 16,566 Dental 180 180 Drugs & Alcohol 9,357 9,357 Health Checks (*) 1,447 1,447 Health Protection (*) 29 29 Information & Intelligence 32 32 Miscellaneous Health Improvement & Wellbeing (**) 5,821 (20) 5,801 Nutrition, Obesity and Physical Activity 1,188 1,188 Sexual Health (*) 10,100 10,100 Tobacco 2,109 2,109 Public Health 53,460 (20) 53,440

Adults’ Health and Care Cash Limited Budget 454,308 (98,721) 355,587

* Includes mandated services

** Specific services include

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

Children’s Services Budget Summary 2017/18

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 2017/18 (which have since been approved) along with challenges facing the Department.

The budget for 2017/18 is set out below and more information about the services provided by the Department is available online.

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Early Years 73,572 (194) 73,378 Schools Block & High Needs 727,211 (72,594) 654,617 Central Block 4,107 4,107 Other Schools Grants 54,790 54,790 Total Schools Budget 859,680 (72,788) 786,892

Young Peoples Learning & Development 943 (365) 578 Adult & Community Learning 2,533 (2,001) 532 Asset Management 617 (60) 557 Central Support Services 552 (500) 52 Educational Psychology Service 3,438 (2,050) 1,388 Home to School Transport 28,494 (308) 28,186 Insurance 38 38 Monitoring of National Curriculum Assessment 142 142 Parent Partnership, Guidance and Information 199 199 Pension Costs (includes existing provisions) 3,204 3,204 School Improvement 2,718 2,718 SEN Admin, Assessment, Co-ord & Monitoring 2,422 (85) 2,337 Statutory/Regulatory Duties 1,561 (233) 1,328 Service Strategy & Other Ed Functions 43,385 (3,236) 40,149 Management & Support Services 1,619 (1,162) 457 Other Education & Community 48,480 (6,764) 41,716

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Services for Young Children 2,159 (438) 1,721 Adoption Services 3,820 (345) 3,475 Asylum Seekers 2,000 2,000 Children Placed with Family & Friends 853 853 Education of Children Looked After 771 (460) 311 Fostering Services 27,674 (120) 27,554 Leaving Care Support Services 3,135 3,135 Other Children Looked After Services 1,252 (75) 1,177 Residential Care 20,827 20,827 Special Guardianship Support 1,987 1,987 Children Looked After 62,319 (1,000) 61,319 Other Children & Families Services 2,129 (100) 2,029 Direct Payments 1,059 1,059 Other Support for Disabled Children 273 (57) 216 Short Breaks (Respite) for Disabled Children 4,962 (27) 4,935 Targeted Family Support 10,168 (4,600) 5,568 Universal Family Support 109 109 Family Support Services 16,571 (4,684) 11,887 Youth Justice 8,546 (7,246) 1,300 Safeguarding & Young Peoples Services 20,041 (598) 19,443 Services for Young People 2,829 (1,739) 1,090 Management & Support Services 9,865 (425) 9,440 Non-Distributed Costs 122 122 Children's Social Care 124,581 (16,230) 108,351 Total Non-Schools Budget 173,061 (22,994) 150,067

Total Children’s Services Budget Cash 1,032,741 (95,782) 936,959 Limited Budget

ETE Budget Summary 2017/18

The Economy, Transport and Environment (ETE) Department has been developing its service plans and budgets for 2017/18 and future years in keeping with the ‘Shaping Hampshire’ priorities and the key issues. 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 2017/18 is below and more information about the services provided by the Department is available online, including transport, waste and planning.

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Highways Maintenance 14,228 (1,882) 12,346 Street Lighting 9,741 9,741 Winter Maintenance 5,996 5,996 Concessionary Fares 13,911 (25) 13,886 Other Public Transport 6,852 (1,735) 5,117 Road Safety 2,696 (929) 1,737 Other Highways, Traffic & Transport Services 2,844 (2,887) (43) Staffing & Operational Support 26,169 (17,280) 8,889 Highways, Traffic and Transport 82,437 (24,738) 57,699

Waste Disposal Contract 58,093 (13,906) 44,187 Environment & Other Waste Management 1,612 (932) 680 Strategic Planning 1,222 (357) 865 Chichester Harbour Conservancy 193 193 Waste, Planning and Environment 61,120 (15,195) 45,925

Departmental and Corporate Support 4,579 (1,223) 3,356

Early achievement of savings 289 289

Total Environment and Transport Services 148,425 (41,156) 107,269

Economic Development 754 (38) 716 Early achievement of savings 29 29

Total Economic Development 783 (38) 745

Total ETE Cash Limited Budget 149,208 (41,194) 108,014

Policy & Resources Budget Summary 2017/18

Policy & Resources encompasses a range of Departments including Corporate Services and Culture Communities and Business Services (CCBS). Budget proposals for 2017/18 are detailed in the report to the Executive Member for Policy and Resources.

The budget for 2017/18 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 Income Net Budget Budget Budget £’000 £’000 £’000

Legal 4,637 (2,370) 2,267 Transformation 1,044 (151) 893 Governance 2,858 (409) 2,449 Transformation and Governance 8,539 (2,930) 5,609

Finance 9,860 (6,215) 3,645 Human Resources (HR) 11,234 (7,128) 4,106 Information Technology (IT) 34,947 (16,170) 18,777 Audit 1,568 (908) 660 Customer Business Services 7,943 (4,431) 3,512 Corporate Resources Management 2,097 (1,193) 904 Corporate Resources 67,649 (36,045) 31,604

Communication 469 (10) 459 Marketing and Advertising 317 (241) 76 Corporate Customer Services and Web Team 3,061 (295) 2,766 Insight and Engagement 651 651 Chief Executives Office 728 728 Leadership Support 64 64 Customer Engagement Service 5,290 (546) 4,744

Total Corporate Services 81,478 (39,521) 41,957

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Corporate Management & Democratic 66 66 Management Grants to Voluntary Organisations (Leader Grants) 222 222 Grants to Local Organisations 787 787 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 Budgets (Direct) 2,207 (14) 2,193

Members Support Costs 1,735 (14) 1,721 Corporate Contribution to Trading Units 105 105 Repair and Maintenance 28,606 (21,041) 7,565 Strategic Asset Management 1,501 1,501 Other Central Support Services 355 (32) 323 P&R Non-Departmental Budgets (Central) 32,302 (21,087) 11,215

Total Other Policy and Resources 34,509 (21,101) 13,408

Transformation 57 57 Rural Broadband 243 243 Transformation and Business Management 300 0 300

Regulatory Services 4,819 (3,387) 1,432 Community Grants & Policy Fund 977 977 Sport 183 (4) 179 Community 205 (45) 160 Library Services 14,604 (2,718) 11,886 Business Support 3,359 (2,585) 774 Scientific Services 0 8 Asbestos 1,759 (1,751) (1) Community and Regulatory Services: 1,423 (1,424) 15,415

Service Activity Expenditure Income Net Budget Budget Budget £’000 £’000 £’000

Countryside 6,576 (3,755) 2,821 Outdoor Centres 3,360 (3,126) 234 Arts & Museums 2,960 2,960 Archives 1,058 (256) 802 Risk, Health & Safety 193 193 Sir Harold Hillier Gardens 312 312 Culture & Heritage: 14,459 (7,137) 7,322

Corporate Estate 109 (298) (189) Country Farm 174 (675) (501) Development Account 403 (820) (417) Sites for Gypsies and Travellers 85 (31) 54 Property Services 29,700 (28,009) 1,691 Office Accommodation / Workstyle 5,989 (850) 5,139 Facilities Management 8,132 (5,095) 3,037 Print Sign Workshop 9 9 Property Services and Facilities: 44,601 (35,778) 8,823 CCBS Planned Contribution to Cost of Change 365 (26) 339

Total CCBS 87,054 (54,855) 32,199

Total Policy and Resources Cash Limited Budget 203,041 (115,477) 87,564

Workforce

The County Council has from the outset been managing the reduction in the workforce in response to the reductions in government grant in a planned and controlled way by the use of managed recruitment, redeployment of staff where possible and voluntary redundancy, which has been used to effectively and sensitively achieve staff reductions at what is a very difficult time.

The table below provides a summary of the workforce changes that are expected to happen by the end of 2017/18 and take account not only of the anticipated reduction in posts as a result of the ongoing implementation of savings proposals but also other changes and transfers that have or will impact on departments during the year:

FTE Estimate as at 31 March 2017 10,090.3 Changes Relating to Savings (126.6) Transfers and Other Changes 74.0 Estimate as at 31 March 2018 10,037.7

The net change in posts is a decrease of 52.6 FTE. This reflects the fact that in some areas the number of roles is reducing and changing whilst in others we are reconfiguring services and the workforce to deliver the required outcomes in a different way. In addition, business is being expanded either through partnership working or through the extension of trading activities and departments are providing resources to drive change and transformation. This accords with the County Council’s continued innovative and diverse approach to tackling the financial challenges that it faces and its ability to provide sufficient capacity and resources to ensure that the savings needed to balance the budget are delivered.

Capital

The Capital Programme delivers schemes totalling £520 million over the three years from 2017/18 to 2019/20. It will provide:

 £179m of investment in new and extended school buildings in Hampshire in 2017/18 to 2019/20 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  £109m for structural maintenance of roads and bridges in Hampshire over the next three years  £100m for integrated transport schemes including seven major infrastructure schemes, totalling £85m, of which six are expected to start in 2018/19  £122m for major improvements 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.

Summary of Overall Capital Programme

Revised 2017/18 2018/19 2019/20 Total 2016/17 £’000 £’000 £’000 £’000 £’000

Adults’ Health and Care 69,937 481 481 481 71,380 Children’s Services 92,960 106,737 44,079 82,145 325,921 Economy, Transport and 106,900 52,546 118,818 38,086 316,350 Environment Policy and Resources 48,796 33,312 21,664 21,664 125,436

Total 318,593 193,076 185,042 142,376 839,087

520,494

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

 Economy, Transport and Environment

 Policy and Resources

Summary of Capital Programme 2017/18

Value of Schemes Starting in 2017/18

Construction Fees Furniture, Total Funded by Works Equipment, Cost Local Government Vehicles & Resources Grants Grants £'000 £'000 £'000 £'000 £'000 £'000 Adults’ Health and Care 413 68 481 481 Children’s Services 91,621 14,366 750 106,737 68,905 37,832 Economy, Transport and Environment 45,088 7,458 52,546 15,123 37,423 Policy and Resources 25,929 4,362 2,375 32,666 4,496 28,170

163,051 26,254 3,125 192,430 89,005 103,425

Advance and advantageous land purchases 646

Programme Total 193,076

Summary of Capital Programme 2018/19

Value of Schemes Starting in 2018/19

Construction Fees Furniture, Total Funded by Works Equipment, Cost Local Government Vehicles & Resources Grants Grants £'000 £'000 £'000 £'000 £'000 £'000 Adults’ Health and Care 241 40 200 481 481 Children’s Services 37,838 5,491 750 44,079 12,349 31,730 Economy, Transport and Environment 94,454 24,364 118,818 35,864 82,954 Policy and Resources 16,289 2,604 2,125 21,018 3,206 17,812

148,822 32,499 3,075 184,396 51,900 132,496

Advance and advantageous land purchases 646

Programme Total 185,042

Summary of Capital Programme 2019/20

Value of Schemes Starting in 2019/20

Construction Fees Furniture, Total Funded by Works Equipment, Cost Local Government Vehicles & Resources Grants Grants £'000 £'000 £'000 £'000 £'000 £'000 Adults’ Health and Care 241 40 200 481 481 Children’s Services 70,512 10,883 750 82,145 63,792 18,353 Economy, Transport and Environment 33,904 4,182 38,086 12,579 25,507 Policy and Resources 16,289 2,604 2,125 21,018 3,206 17,812

120,946 17,709 3,075 141,730 80,058 61,672

Advance and advantageous land purchases 646

Programme Total 142,376

Capital Payments and Sources of Finance

2017/18 2018/19 2019/20 Estimate Estimate Estimate £'000 £'000 £'000

Adults’ Health and Care 34,300 22,200 12,100 Children’s Services 98,900 103,700 50,700 Economy, Transport and Environment 89,600 85,500 65,300 Policy and Resources 59,200 38,300 28,900 Land Acquisition 600 600 600

Total Capital Payments 282,600 250,300 157,600

2017/18 2018/19 2019/20 Estimate Estimate Estimate £'000 £'000 £'000

Loans 48,700 33,800 19,500 Prudential Borrowing Repayments (9,900) (11,500) (8,900) Capital Receipts 8,300 6,000 4,400 Government Grants 150,400 128,400 156,800 Contributions from Other Bodies 58,900 58,700 6,500 Contributions from Reserves 12,200 24,300 Revenue Contributions to Capital 14,000 10,600 (20,700)

Total Sources of Finance 282,600 250,300 157,600

Note: Capital payments include schemes in the 2016/17 and earlier years’ programmes as well as payments on schemes starting in 2017/8 to 2019/20

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 (£40.5m in 2016/17) 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.

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 2016/17 based on the risk assessment is £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

“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 £497.3m at the end of the 2015/16 financial year, an increase of circa £35m on the previous year. This was in line with the MTFS as provision was built up in departmental cost of change reserves to enable support of transformation and of revenue spend, whilst savings programmes were put in place, and in the Grant Equalisation Reserve (GER) ahead of the large draw in 2016/17.

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 2014/15.

Balance Balance % of 31/03/2015 31/03/2016 Total £'000 £'000 %

Fully Committed to Existing Spend Programmes Capital Grants Unapplied 48,368 52,844 10.6 Revenue Grants Unapplied 36,161 35,530 7.1 General Capital Reserve 133,926 124,137 25.0 Street Lighting Reserve 6,263 9,237 1.9 Community Transport Reserve / Other 1,795 2,091 0.4 226,513 223,839 45.0

Departmental / Trading Reserves Trading Accounts 15,725 15,671 3.2 Departmental - Cost of Change Reserve 42,651 53,926 10.8 58,376 69,597 14.0 Risk Reserves Insurance Reserve 26,808 25,423 5.1 Investment Risk Reserve 500 1,000 0.2 27,308 26,423 5.3

‘Available’ Reserves Corporate Policy Reserve 3,976 5,109 1.0 Invest to Save 9,461 9,077 1.8 Corporate Efficiency Reserve 8,981 7,902 1.6 Organisational Change Reserve 3,593 3,593 0.7 Grant Equalisation Reserve 50,881 75,206 15.2 76,892 100,887 20.3

HCC Earmarked Reserves 389,089 420,746 84.6

Balance Balance % of 31/03/2015 31/03/2016 Total £'000 £'000 %

Schools Reserves 52,462 55,950 11.3

Total Earmarked Reserves 441,551 476,696 95.9

General Fund Balance 20,598 20,598 4.1

Total Reserves and Balances 462,149 497,294 100.0

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

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 2017/18  Annual Investment Strategy for 2017/18  Prudential Indicators for 2017/18, 2018/19 and 2019/20  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.

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. 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. 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. 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. FTE – An acronym for ‘Full Time Equivalent’ i.e. a full-time member of staff = 1 FTE, a part-time member of staff working 2.5 days a week = 0.5 FTE. 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. 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 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 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.