County Council Revenue and Capital Budget Monitor 2006/07

HERTFORDSHIRE COUNTY COUNCIL Agenda Item No:

CABINET MONDAY 18 DECEMBER 2006 AT 2.00 P.M. 3

COUNTY COUNCIL REVENUE AND CAPITAL BUDGET MONITOR 2006/07 – as at September 2006

Report of the Finance Director

Author: Andrew Nightingale, Assistant Finance Director Tel: 01992 555331

Executive Member: Robert Gordon

1. Purpose of the Report

1.1 To inform Cabinet of the forecast outturn for Revenue and Capital Budgets in respect of 2006/07, based on the monitoring position as at September 2006.

2. Summary

2.1 In response to the budget monitoring position for the first quarter of 2006/7, at its meeting of 16 October Cabinet required all departments to develop strategies to bring their spending back within budget either by correcting overspends or identifying compensating underspends. The outcome of this work was reported back to Cabinet on 20 November. As a result, Cabinet resolved that the identified planned savings of £10.218m and the unplanned savings of £1.564m be transferred to the special provision, and that £10.222m of the special provision be vired to service budgets to fund the projected overspends reported as at September 2006. Cabinet also resolved that the progress of the Directors of Adult Care Services and Children, Schools & Families in mitigating further their departments’ projected overspends reported at September 2006 be included in future reports to Cabinet. The Audit Committee has also been asked to consider issues relevant to its remit arising from the CSF overspends on out of county placements and children with disabilities.

2.2 As a result of the budget transfers approved by Cabinet on 20 November, the latest monitoring position shows no variance against the Latest Approved Budget (LAB) of £508.950m. As a result of these transfers the balance on the special provision has now risen to £10.544m and the balance on the pay and price contingency is £484,000. On the basis of monitoring information to date, a contribution to balances of up to £11m is projected at year end. A summary analysis of the latest approved budget is given in Appendix A

2.3 In order to provide a comprehensive record of the overspends and compensating underspends prior to the Cabinet decision to transfer budgets, Section 1 of this report gives the principal reasons for the previously reported variations in the forecast revenue outturn and are listed in Table 2 (Para 1.2).

2.2 Table 3 (Para 3.1) analyses by service the projected capital underspend of £23,357m, 0eee24e1dd29489e790bf4da2b69d229.doc 1

Analysis by type of variance is shown in Table 4 (para 3.1), whilst a summary analysis across services is given in Appendix B.

2.4 The change in Government Funding to Dedicated Schools Grant (DSG) has meant that any variances in CSF schools budget are ‘ring-fenced’ and can not be used elsewhere. This is explained further in section 3 of this report.

2.5 General Balances as at 1 April 2006 were £28.2m. Given the planned use of £9m of reserves in the 2006/07 budget, plus the anticipated need to use £1.5m of these reserves to fund the impact of the Mumby judgement, the estimated level of general balances as at the end of March 2007 is £17.7m, before taking into account the impact of over / underspends during the course of the year.

2.6 The reported 2006/07 prudential indicators show that no limits have been breached nor are they expected to be in the remainder of the year.

3. Conclusions

3.1 Cabinet is asked to consider the information contained in this report.

0eee24e1dd29489e790bf4da2b69d229.doc 2

1. REVENUE BUDGET VARIANCES

1.1 Table 1 below summarises the variances by service using the criteria previously laid down in Financial Regulations 2000.

Table 1: Budget Variances 2006/07

Planned Unplanned Net Overspends Under- Under- Variances Spends spends £000 £000 £000 £000 CSF Education Non- 920 (2,179) (250) (1,509) Schools CSF Children’s Services 5,270 (2,492) (400) 2,378 CSF Cultural Services 103 (198) 0 (95) Adult Care Services 2,853 (810) (419) 1,624 Environment 500 (3,300) (495) (3,295) Fire & Rescue 122 (297) 0 (175) Resources Portfolio 454 (904) 0 (450) (Corporate) Non-Distributed costs 0 (38) 0 (38) Totals at 31/03/07 10,222 (10,218) (1,564) (1,560)

1.2 The following table shows those variances of £75,000 or more against the latest budget. Detailed explanations for these variances are listed in sections 1.3 to 1.7.

Table 2

Forecast Over/ (Undersp end) Service Description Para £000 Ref. CSF Education Learning and School Effectiveness 1.3.1 219 Non-Schools Area Pay and non Pay Home to school transport 1.3.2 98 Information Analysis 1.3.3 (92) Premature retirements 1.3.4 300 Human Resources 1.3.5 130 ICT 1.3.6 (183) Grants Inward Funding 1.3.7 (834) Trading Balances 1.3.8 (250) Youth Service 1.3.9 146 School Payroll costs 1.3.10 (500) Landlord related maintenance 1.3.11 (500) CSF Children’s Children with Disabilities 1.3.12 1,009 Services Out county care placements 1.3.13 900 Transport 1.3.14 (88) Looked After Children Areas 1.3.15 115 Family Centres 1.3.16 (454) Social Care & Prevention Strategy 1.3.17 (1,100) 0eee24e1dd29489e790bf4da2b69d229.doc 3

Residence orders/adoption allowance 1.3.18 165 Pay and non Pay 1.3.19 1,858 Higher Further Education support 1.3.20 194 Residential Homes 1.3.21 374 Family Placement 1.3.22 600 Mumby Judgement 1.3.23 (700) Leaving Care 1.3.24 (311) Human Resources 1.3.5 55 ICT 1.3.6 (79) CSF Libraries, Pay and non Pay 1.3.25 (198) Arts & Heritage Adult Care EPD Non-Residential care packages 1.4.1 800 Services Non-Residential Income 1.4.2 900 Elderly Residential and Nursing Care 1.4.3 800 Learning Disability Care Packages 1.4.4 (454) Blue Badge Administration 1.4.5 80 Transport 1.4.6 200 Day Services Review 1.4.7 277 Adaptations 1.4.8 200 Grant slippage 1.4.9 (719) Section 117 provision 1.4.10 (100) Direct payment surpluses 1.4.11 (300) Repairs and Maintenance 1.4.12 (110) Environment Routine Maintenance 1.5.1 315 Street Lighting 1.5.2 185 Passenger Transport 1.5.3 (95) Waste Management 1.5.4 (600) Strategy, Planning and Information 1.5.5 (100) Discretionary programme 1.5.6 (400) Accident reduction 1.5.7 (150) Transport planning 1.5.8 (50) Integrated Transport Programme 1.5.9 (2,400) Fire & Rescue IRMP & Staffing 1.6.1 (297) Resources Elections 1.7.1 220 Portfolio (Corporate) Chief Executives 1.7.2 110 Corporate Communications 1.7.3 80 County Human Resources 1.7.4 (183) Other Services 1.7.5 (212) Information Technology 1.7.6 (200) Corporate Repairs & Maintenance 1.7.7 (250)

Forecast Underspend >£75K (1,579) Variances All Services < £75k Variances 19 Total Forecast Underspend (1,560)

1.3 CHILDREN, SCHOOLS & FAMILIES (CSF)

1.3.1 Learning and School Effectiveness Area Pay and Non-Pay £219,000 or 1.8% overspend

This budget supports the infrastructure costs for Education Access, including Education Welfare, Education Psychology and Advisory, Inclusion and Disability teams in the local areas. There has been significant pressure on this budget from use of agency staff to support current vacancies. The current national shortage of Education Psychologists has had an impact on the average costs of recruiting to these hard to fill positions. Management action is being taken to bring the budgets back into line including reduced use of agency staff, which may reduce the projected overspend.

A review of this area is currently being undertaken to increase effectiveness through business process changes and service review of contracts. This review will identify the organisational and service changes required to ensure the service is in a position to deliver the Learning & School Effectiveness Portfolio priorities over the next three years. These proposals will deal with the current pressures and also deliver efficiencies in 2007/08.

1.3.2 Home to School Transport £98,000 or 1.0% overspend

This overspend is due to the transportation of students to a new school site following the closure of New Briars School due to subsidence. This expenditure was not budgeted for, as this situation arose late in the 2005/06 financial year. Whilst there has been ongoing work to mitigate the impact of this pressure, by reviewing the route and reducing the number of vehicles, this overspend is as a result of emergency procedures which could not have been predicted.

1.3.3 Information Analysis £92,000 or 13.9% underspend

The underspend reported relates to data analyst vacancies. These have resulted from an inability to recruit to these hard to fill posts and the situation will be reviewed in the context of the review of ICT services as part of the Support Services Transformation

1.3.4 Premature retirements £300,000 or 5.9% overspend

The overspend is related to the costs of premature retirement and severance pay from the intervention and closure of Collenswood School.

1.3.5 Human Resources £185,000 or 17.8% overspend

The budget reflects the pay, non pay and associated HR overheads which include the appointments/employee relations team. The implementation of the new SAP system has had an ongoing impact on the costs of processing changes to the payroll system. The costs of supporting continued internal restructuring has also impacted on this budget. A review of the underlying systems is being undertaken to simplify processes and reduce this impact.

1.3.6 ICT £262,000 or 5.3% planned underspend

We have reviewed the required investment in ICT in the context of new technologies and the planned moves for staff as part of The Way We Work. We have also sought to maximise use of grant. This will result in planned savings of £262,000 in the current year.

1.3.7 Grants Inward Funding £834,000 or 3.7% planned underspend

There are a large number of specific grants received within CSF, related to schools and the Local Authority, which are either ring-fenced or linked to specific streams of activity for which there is some flexibility. CSF has established an Inward Funding Group to review and co-ordinate the entire range of grants to ensure that its use is maximised against priorities. In 2006/07 a number of these grants have not been specifically applied (Sure Start £384,000, Adult and Community Learning £300,000 and Standards Fund £150,000) and it is proposed to off-set these against overhead costs within the budget.

1.3.8 Trading Balances £250,000 or 1.6%unplanned underspend

This saving relates to balances from planned trading activities supported by an effective business plan. The accumulated balances which are the result of the effective planning by Financial Services for Schools will be applied to offset the projected service overspend.

1.3.9 Youth Service £146,000 or 3.2% overspend

As part of the restructuring of the Youth Service, which was not completed until April 2006, there was an expectation that service efficiencies could be made to off-set this pressure. Late in the review it became apparent that these could not be delivered without significant risks to the service in the context of the “Youth Matters” agenda. This overspend reflects the shortfall of £146,000 against target efficiencies of £275,000.

1.3.10 Charging full cost of payroll services to schools £500,000 planned underspend

There is potential to transfer SERCO payroll costs to the Schools Budget. This would release a further £500,000 in the current year and is to be included as a proposal for the 2007/08 budget. Given that it would count as an in-year re-determination of the budget and an intention to vary the level of central expenditure (as this funding has not been delegated to schools in the current year) the explicit agreement of the Schools Forum is needed.

1.3.11 Landlord related maintenance £500,000 planned underspend

Savings of £500,000 can be achieved from this budget by deferring start of works on uncommitted schemes until the start of the new financial year.

1.3.12 Children with Disabilities £1.009m or 46.7% overspend

This budget covers services for disabled children including respite care and homecare support for children with disabilities and their families. The payments for packages of care are either made to the suppliers or to the families through the direct payment scheme. The predicted overspend is made up of a number of elements; an increase in the uptake of direct payments, significant increases in packages for 4 children and a historic overspend on respite care packages (£340,000).

Direct Payments are a statutory requirement to be offered to parents of children with disabilities in lieu of a commissioned service. This enables young people to make better use of support services and provide more stable care packages. CSF is obliged to offer this as a first service where it will meet needs and parents request it. The availability of Direct Payments has increased overall demand for services for children with disabilities. This experience has been replicated across other local authorities.

Whilst we had anticipated some increase in demand for this service the increase has been larger than predicted. The number of families receiving direct payments has increased by 43 (34%) from 126 to 169 since the end of 2005/06 and by 117 (225%) since the end of 2004/05. If this trend of increased numbers continues at the current rate then we expect to have 200 cases in receipt of direct payments by the end of the financial year. The average cost of direct payment support is £5,000.

Whilst a proportion of these cases were already receiving support from the service, the move away from the relatively less expensive shared care option and the number of new cases are anticipated to result in an increase of £350,000 in the current year.

Urgent action is being under taken to implement a strategy which brings this budget under control and establish a long term action plan to manage and fund this area of service.

CSF budget proposals for 2007/08 will recognise a pressure in this area but are dependent upon this historic overspend being brought under control.

1.3.13 Out County Placements £900,000 overspend

A potential overspend on Out of County social care placements of £1.546m has been previously reported as an area of uncertainty. Following a further review by CSF this pressure should now be recognised as a likely overspend of £900,000.

1.3.14 Social Care Area Transport £88,000 or 7.2% planned underspend

Management action to reduce expenditure in this area has resulted in a reduction in the numbers of clients being transported and a decrease in the average cost of transport per client. However, given the volatility of client numbers there is a risk. Although expenditure on this budget is related to changes in numbers and movements in Looked After Children placements experience in previous years would suggest that this is a reasonable assumption.

1.3.15 Looked After Children Areas £115,000 or 12.4% overspend

This overspend is due to an increased use of sessional workers to supervise contact visits. Courts are more prescriptive about contact arrangements and sessional workers are being used to cover this work while the area team changes are being implemented and the scale of contact supervision required is reviewed.

1.3.16 Family Centres £454,000 or 16.8%planned underspend

This budget supports staffing costs at Family Centres. The increase in underspend of £152,000 in the current month relates to vacant posts held pending the review of staffing structures for the centres as part of the budget proposals for 2007/08. This is in addition to previous slippage on recruitment to the Burymill Family Centre and the new contact centre, supporting identification of relevant needs of potential clients in local areas.

1.3.17 Social Care & Prevention Strategy £1.1m or 76.1% planned underspend

Significant issues have been identified in relation to performance in completion of initial and core assessments and the need to improve standards of practice across all of the Social Care Teams. The investment in capacity to improve practice is estimated to cost £1,858m in the current year as set out in paragraph 3.8. Given that this is a key safeguarding priority, resource of £1.1m has been identified from the LAC Strategy to offset this pressure.

1.3.18 Residence orders/adoption allowance £165,000 or 9.3% overspend

Improved performance against the percentage of looked after children who are adopted is a key target for the authority. The overspend represents an increase of twelve new adoption/residential order placements in the current period. This removes these children out of the LAC population. It was anticipated that this growth would be off-set by equivalent savings within the fostering allowance budget. However due to increases in the overall LAC population and LAC not moving through the system as quickly as they should, these savings have not been realised. A review of the overall placement strategy is being commissioned. This will develop the range of appropriate placements within overall resources.

1.3.19 Area Social Workers Pay and Non-Pay £1.858m or 11.8% overspend

The movement of £400,000 in the budget relates to the cost of the Capacity Building Team in social care which has been established in addition to the increased investment in the Area Teams. The Director of CSF recommended this further course of action to accelerate improvement in areas of poor performance identified in the Ofsted Annual Performance Assessment. This one-off expenditure on improvement addresses one of the seven corporate key challenges for the County Council and was approved in an urgency report on 9th October 2006.

1.3.20 Higher Further Education support £194,000 or 144.7% overspend

The improvements in educational performance for Looked After Children has resulted in an increasing number of care leavers participating in further education opportunities. It is anticipated that there will be an increase of 18 young people leaving care going on to further education in the current academic year. The overspend principally relates to the cost of sponsorship and equipment costs. This level of service has a positive effect against performance indicators for the authority. A review of the overall budget for this area of service is being undertaken to see if these costs can be contained within existing resources.

This pressure is acknowledged in the CSF budget proposals for 2007/08 onwards.

1.3.21 Residential Homes £374,000 or 10.5% overspend

There are currently significant pressures on staff resources largely as a consequence of vacancies and long term sickness/maternity in residential children’s homes. These account for 15% of the overall establishment. Given that this service has to be fully operational around the clock there has been a requirement to recruit more costly agency staff.

Management action to address these issues is being taken including recruitment in a newly formed Child Care Support team which will reduce the need for agency staff. This is a bank of peripatetic staff to cover vacancies and sickness and reduce the need for agency staff. However, the levels of vacancies and long term sickness being experienced is higher than this team can cover.

The overspend also includes the refurbishment costs (£40,000) related to the Health and Safety requirements at the re-provisioned unit at Wilbury Road. This had been identified as a budget pressure at the end of 2005/06.

1.3.22 Family Placement £600,000 or 6.8% overspend

This budget covers payments made to Foster Carers. The overspend reflects a 7% increase in foster care placements and is a result of the increasing Looked After Children population. The budget funds 599 placements, there are currently 640 active placements. Pressure on this budget has been exacerbated by a reduction in the number of kinship placements rather than the planned expansion.

In addition a shift in the number of leaving care age young people from 13 to 20, who attract a higher placement cost, has also been apparent this year. This is in the context of an increasing number of care leavers. This has resulted in an increase in the average cost of placements. Leaving care service provision continues to be difficult to commission, whilst demand is high. This has impacted on areas of the LAC budgets. A Leaving Care Strategy Group is reviewing service delivery in order to improve support and reduce pressure on the budget.

There has also been continuing demand for additional support on outside school activities. Increased expenditure in this area accounts for £50,000 of the projected overspend. A review of exceptional payments is currently being undertaken with a view to containing the pressure within the existing budget.

A review of all areas of LAC support and placements is being undertaken in order to develop a range of provision within available resource.

1.3.23 Mumby Judgement £700,000 or 7.9% planned underspend

This budget relates to the provision for potential claims against the Mumby judgement for kinship care costs within the 2006/07 budget. Given the overall pressure on placement costs within the budget for 2006/07, CSF have not reviewed the remuneration scheme for kinship carers in the current year. Provision against the risk of any claim for back-dating of kinship allowance for 2004/05 and 2006/06 of £1.5m is provided for within general reserves. There has been significant pressure on placement costs in 2006/07 and a review of placements has been commissioned as part of the refresh of the LAC strategy. This will include kinship care. It is anticipated that the current estimated sum within general reserves will be sufficient to meet the risk of backdated costs in respect of kinship carers. Therefore it is proposed to allocate the provision in the current year against placement overspends.

1.3.24 Leaving Care £311,000 or 15.6% planned underspend

Whilst there has been expansion in the level of supported lodgings and housing in 2006/07, – there have been continuing issues with the delivery of the contracted provision from NCH. Given this a review of the provision for care leavers is currently being undertaken with a view to implementing a new model which addresses the needs of these young people. The reduced capacity of NCH has resulted in pressures on placement costs elsewhere in the budget and it is proposed that this resource is targeted against those pressures.

1.3.25 Libraries Pay & Non Pay £198,000 or 0.9% planned underspend

There are three elements to this underspend the most significant of which is related to Libraries for the 21st Century. A decision to rephrase the implementation of the opening hours in order to minimise the impact of recruitment costs will result in savings of £84,000 in the current year.

In addition as part of work to secure efficiencies contract negotiations for the Bibliomondo support contract were entered into in February 2005 with a view to securing efficiency improvements and savings. In February 2005 HCC negotiated a three year extension to the Bibliomondo support contract for the Concerto library management system which has delivered savings both in 2006/07 and 2007/08 amounting to £60,000.

A review of PC support costs has resulted in a reduced charge of £53,000 to the IT budget.

1.4 ADULT CARE SERVICES (ACS)

1.4.1 EPD Non-Residential care packages £800,000 or 2% overspend

Following close scrutiny of these budgets, the current expectation is that there will be an overspend of £800,000, an improvement of £500,000 from the August monitor. On a budget of £39.4m, this represents an adverse variance of 2%. Management Action Plans are still in place to try to contain expenditure within budget. The risk of increased pressures on this demand led budget was taken into account in the setting of the level of the 2006/07 special provision.

1.4.2 Non-Residential Income £900,000 or 15% overspend 0eee24e1dd29489e790bf4da2b69d229.doc 10

The target income built into the budget for this year is £5.9 million. This has been increased by £3.1 million over the 2005/06 budget to reflect the extra income arising as a result of the change in the charging policy and the introduction of charges for transport to Day Care. Following the first six billing runs, it is projected that there will be a shortfall of £900,000 in 2006/07, due to a combination of the delay in completing assessments and less people paying lower amounts than expected. It should be noted that £400,000 of the predicted overspend relates to a loss of income from full cost payers, and that this should be directly offset by a reduction in expenditure on care packages. The latest predicted outturn reported above shows this to be the case, so the net position is a £500,000 overspend. This estimate is based on the assumption that all income will be collected, i.e. it includes no provision for bad debts, which could worsen the situation. At this stage, it is envisaged that there should be no problem in achieving the targeted income in 2007/08

1.4.3 Elderly Residential and Nursing Care £800,000 or 1.4% overspend

Latest commitment information shows that, if placement numbers and unit costs continue at the current level, this budget will overspend by £800,000, which equates to 1.4%. Action plans are in place to rectify this, including Area Managers approving all new packages. The budget for Elderly Residential and Nursing Care Placements is £53.5million. It should be noted that this budget and the non-residential care budget should be considered together, as increasing residential care should reduce home care and vice versa. Also of note, however, is that both areas of expenditure are particularly volatile. Pulling back on spend in this area is likely to mean fines are incurred for delayed transfers, which, as a daily rate, exceed the cost of a care placement.

1.4.4 Learning Disability Care Packages £454,000 or 1.36% underspend

Latest projections show that this budget will underspend by £454,000. This is due to concerted management action in three main areas: a) the implementation of revised methods of negotiating residential care placements with suppliers b) alternative care packages being made available to clients rather than residential care provision i.e. Day Care, Home Care or Supported Living c) Some packages being either completely or partially funded by Health following negotiation.

1.4.5 Blue Badge Administration £80,000 or 60% overspend

The ACS budget targeted savings on administration of the blue badge scheme of £100,000. The majority of this was expected to be achieved by increasing the charge for a blue badge from the current £2. At the time of setting the budget, indications from the Department of Transport were that they would release guidance in 2006/07 to allow Authorities to do this. This has not happened. To date, whilst the service has identified £20,000 through administrative efficiencies, there is a pressure of £80,000 remaining, on an admin budget of £133,000.

1.4.6 Transport £200,000 or 3.6% overspend

A budgeted savings target of £200,000 will not be met. Steps are in place to review and more tightly control transport costs and it is envisaged that this pressure will reduce next year. However, the current demand for transport remains high, and each package needs to be reviewed with an aim to reduction in usage or more cost effective provision.

1.4.7 Day Services Review £277,000 overspend

Progress in achieving the target savings is slower than envisaged when the budget was set, leading to a pressure of £277,000 (a £35,000 improvement on the position reported last time). Contracts are in the process of being renegotiated and this should result in a part year saving of £223,000 in 2006/07. However, the targeted full year saving should be achieved in 2007/08.

1.4.8 Adaptations £200,000 or 79% overspend

A pressure has arisen in this area, which may be as a result of District Councils reaching their expenditure limits and may be happening to reduce delayed discharge or prevent the need for more costly care packages. This budget should therefore be considered in the context of other care provision budgets highlighted above.

1.4.9 Grant Expenditure Slippage £719,000 Unplanned / Planned underspend

A review of the current commitments against grants shows that action can be taken to slip planned schemes and thereby not incur expenditure in 2006/07 of £400,000 relating to Telecare, Carers and Learning and Development grants. In addition, as the Telecare programme managers did not come in to post until August 2006 leading to programme delay unplanned savings of £319,000 will also arise in the year

1.4.10 Reduce S117 Provision £100,000 Unplanned underspend

A number of clients have been identified as due a refund from HCC and a provision has been made in the balance sheet to repay them. This could be reduced by £100,000.

1.4.11 Direct Payment Surpluses £300,000 Planned underspend

A number of Direct Payments clients have fairly large surpluses on their accounts and a review of these is likely to mean that, in some cases, payment can cease until the balances return to a more acceptable level.

1.4.12 Repairs and Maintenance £110,000 Planned underspend

By halting repairs and maintenance for the rest of the year, other than in cases where this was due to a Health and Safety requirement, a saving of £110,000 can be made.

1.5 ENVIRONMENT

1.5.1 Routine Maintenance £315,000 or 1.5% overspend

There has been no change to this projected overspend this month. The projected overspend on this budget is due to increases in energy costs for illuminated signs. The most recent change in projection was in August, increasing the overspend by £215,000. This was due to an increase in demand for Category 1 (reactive) repairs compared to the allocated budget, but lower energy costs than anticipated for illuminated signs.

1.5.2 Street Lighting £185,000 or 2.6% overspend

There has been no change to this projected overspend this month. There is no change in projected overspend this month. The most recent change in projection was a £315,000 decrease in overspend in August, due to lower than previously anticipated increase in energy costs.

1.5.3 Passenger Transport £95,000 or 0.9% unplanned underspend

Efficiency savings of £195,000 for Dial-a-Ride identified in 2005/06 can now be removed from the 2006/07 budget. At its September meeting, Cabinet approved the virement of £100,000 of this underspend to fund the registration service’s computerised booking system.

1.5.4 Waste Management £600,000 or 2.3% underspend

This underspend has increased this month by £200,000. The trend of lower growth in tonnage of waste being disposed of and increased trade income due to organisational changes has continued so that a larger underspend is now forecast.

1.5.5 Strategy, Planning and Information £100,000 or 1.6% underspend

This underspend has increased this month by £60,000. Management action prolonging vacancy periods continues to be taken, which is increasing the planned underspend in order to offset overspend pressures being experienced elsewhere in the department.

1.5.6 Programme including Client support £400,000 planned underspend

A total of £1.6m is made available for Joint Member Panel allocation. At this stage of the year it is estimated that up to £400,000 of the provision may remain uncommitted. By delaying the start of the remaining programme a £400,000 saving can be targeted.

1.5.7 Accident Reduction Programme £150,000 planned underspend

The total budget for these works is £1.7m. Schemes estimated to cost £150,000 have not yet been committed and these can be phased for completion in the next financial year.

1.5.8 Transport Planning activity in Hemel Hempstead £50,000 planned underspend

This saving represents the County Council’s contribution to the post Buncefield Transport Plan where it is proposed to make the contribution in the next financial year saving £50,000 this year.

1.5.9 Integrated Transport Programme (ITP) £2.4m planned underspend

£1.9m of the ITP budget has yet to be contractually committed and can be rephased for 2007/08. In addition, for those projects already within the procurement phase further savings of £500,000 may be possible subject to discussion with the contractors.

This rephasing of works may mean that both the design and works team suppliers are likely to need to release resources. This poses some risk to next year’s delivery programme as the external market for these resources is extremely buoyant.

1.6 FIRE & RESCUE

1.6.1 IRMP & Staffing Vacancies £297,000 or 1.15% unplanned underspend

Following the implementation of the council's integrated risk management plan, it is estimated that £105,000 net savings will be achieved in 2006/07. Service overspends have also been offset in part by an underspend of £192,000 on uniformed pay due to fire fighter vacancies.

1.7 RESOURCES PORTFOLIO (CORPORATE)

1.7.1 Elections £220,000 or 139.2% overspend

The elections budget represents the budget needed to pay for any by-elections in year, with any surplus set aside as a provision to fund the county elections as they occur. The amount set aside each year is no longer adequate, partly as a result of the growing costs of elections due to increased demand for postal voting. Increased provision also needs to be set aside because it cannot be assumed that costs will be saved due to holding county council elections at the same time as general elections. In order to cover the costs of elections and set up adequate provision for county elections the annual budget needs to be increased by £220,000. The current annual budget is £158,000.

1.7.2 Chief Executives £110,000 or 7.5% overspend

SMB have agreed to find £100,000 to fund preparation work for the authority’s Comprehensive Performance assessment. There is also a pressure of £10,000 for 2006/07 due to the recruitment of the East of England officer. This pressure is to cover the HCC contribution to the post.

1.7.3 Corporate Communications £80,000 or 10.8% overspend

The reshaping of Corporate communications function and the appointment of a Director of communications has generated an in year pressure of £80,000.

1.7.4 County Human Resources £183,000 or 7.1% planned underspend

County Human Resources have planned to fund the projected overspends, by utilising the savings made on vacancies held to date. In addition, action will be taken to keep to a minimum the spend on consultants and training.

1.7.5 Other Services £212,000 planned underspend

Savings of £44,000 will be made from bank charges and audit fees. Other small savings on training, consultancy and contracts will return savings of £30,000. CSB members and budget holders have been asked to continue to monitor their budgets carefully. If all overspends can not be funded by the above action, then CSB may need to consider reducing the provision set aside for elections by £138,000, thus deferring the risk of a future pressure to when the next county council elections are held.

1.7.6 Corporate Information and Communications Technology £200,000 planned underspend

Due to some turnover of staff, and delays in the recruitment process, £80,000 can be saved on staff salaries this financial year. In previous years, such underspends within the staffing budget have allowed flexibility to engage consultants on priority IT projects. Declaring this underspend removes this flexibility.

Recent negotiations with Microsoft have resulted in a change in the Enterprise licence agreement for this financial year only. This will generate a one-off saving in 2006/07 of £80,000.

The main project activity for this year is the upgrade in technology in line with the TW3 project at County Hall. Base infrastructure has been purchased and commitments made to upgrade commencing January 2007. The current spending profile/plan indicates that a balance of £40,000 may remain at year end.

1.7.7 Corporate Offices Repair & Maintenance £250,000 planned underspend

The £250,000 from Corporate offices is made up of deferring revenue schemes and some reactive maintenance contingency to next year including a £150,000 internal county hall redecoration. Again, if there are essential items that need repairing or replacing at County Hall in particular then this would create difficulties in delivering the full saving proposed.

2. AREAS OF CONCERN

There are a number of budgets showing current overspends/underspends because of actual spending to date, known commitments or where there are risks and significant uncertainties associated with spending projections. No variations are projected at the year- end on these budgets as it is anticipated that management action in place will contain the potential risks. However these budgets represent areas of concern and are detailed below.

2.1 CHILDREN, SCHOOLS AND FAMILIES (CSF)

2.1.1 Education Out County placements

There is a potential overspend on Education Out County placements of up to £436,000. This is an extremely volatile demand led budget where the impact on an additional placement can create an average annual commitment to the budget of £50,000 per annum (£1,300 per week).

There has been an increase of 4 placements in the current year, a number of which have been at the higher end of the placement continuum relating to emotional and behavioural difficulties. In addition fee increases by providers have resulted in a pressure of £250,000 on this budget.

Whilst every effort is made to prevent placement of children in out county provision, this can be overridden by recommendation from tribunals based on advice from external agencies. CSF have planning, monitoring and transition arrangements in place to provide early information on the placement requirements for future years across all agencies. This is now supported by the allocation of key members of CSF, Adult Care Services and Connexions staff to the annual review to promote smooth transition. In addition CSF are working closely with our commissioning teams at both a local and regional level to manage contract and fee increases in future years.

2.1.2 Human Resources Support Costs

Potential costs associated with a number of personnel tribunal cases have been identified at £216,000, although final costs are yet to be determined.

2.1.3 Theatreis Theatre Project

CSF are reviewing the potential resource to back the successful bid from the Snap People’s Theatre Trust to become a beacon organisation for the East of England. This relates to a three year programme from the theatre to promote and develop the arts for young people in Hertfordshire. There is a potential overspend of £105,000.

2.1.4 Unaccompanied Asylum Seekers

The authority receives a grant contribution from the Home Office to support the costs of Unaccompanied Asylum Seekers. The grant rate reduces from £100 per day for those under 16 to £54 per day for those up to 18 years. For those young people over 18, for whom the authority still retains responsibility, grant is only payable if particular threshold requirements are met. There is an increasing trend in the number of young people over 18 for whom the authority can no longer claim support from the Home Office. Such support includes accommodation, travel and subsistence.

Along with the Local Government Association, the Council has made representations to the Home Office on the impact that this is having. The Home Office is currently reviewing the impact of this across England and Wales and has indicated that further grant will be available in-year. At this point the level of grant is uncertain. There is a potential overspend of £98,000.

2.1.5 Child Litigation Unit SLA

This budget funds both the Service Level Agreement (SLA) for the Child Litigation Unit and costs associated with external specialist legal fees. The potential overspend of £241,000 reflects the current level of usage against the SLA which is estimated to be in excess of 1,000 hours greater than the agreement (£100,000). This reflects the high number of cases overall, including a backlog of cases from last year. In addition the overspend predicted for specialist legal fees (£100,000) is due to an increase from the number of complex High Court cases requiring expensive counsel. However, there is potential for some rebates against the costs to be payable by the end of the year and these currently being investigated.

2.2 ENVIRONMENT

2.2.1 Carry Forwards

The department made requests to carry forward budget from 2005/06 to 2006/07 totalling £274,000. Cabinet declined to approve these requests at its meeting on 19th June 2006 and so the costs have either been funded by rephrasing other expenditure, in line with the cabinet decision, or the expenditure on the carry forward request has been postponed.

2.2.2 School Crossing Patrols

Despite a determined effort to recruit new staff, vacancy levels remain high. This is likely to result in an underspend at the end of the year, although opportunities will be researched for potentially vireing this money to Safety Engineering to install physical measures to help offset the need for the current number of SCP posts.

2.2.3 Safety Camera Partnership

Income from the operation of Hertfordshire’s Safety Cameras has reduced despite there being little change in the number of incidents being reported. Action has been taken to reduce expenditure and investigations are being made to find the reason for the reduction in the conversion rate to fines.

3 CHILDREN, SCHOOLS & FAMILIES (CSF) SCHOOLS

3.1 The change in Government Funding to Dedicated Schools Grant (DSG) has meant that any variances in CSF schools budget are ‘ring-fenced’ and can not be used elsewhere. The budget figure of £70.344m for schools relates to the accounting adjustments for the authority’s responsibilities for FRS17 Retirement Benefits and capital charges. Variances against the Schools Budget are shown against the gross school budget (excluding FRS17 and Capital Charges) of £565.329m.

3.2 The following table shows those variances of £75,000 or more against the latest CSF schools budget. Detailed explanations for these variances are listed in sections 3.3.

Table 3

Forecast Over/ (Undersp end) Service Description Para £000 Ref. CSF schools SEN Recoupment 3.3.1 (466) Units and Bases 3.3.2 (100) Earmarked Pupil Funding (EPF) 3.3.3 140 Additional Welfare & Tuition 3.3.1 (179) Nursery provision 3.3.4 (1,831) Dedicated Schools Grant 3.3.5 (193) Maternity 3.3.6 502 Forecast Underspend CSF schools (2,127) >£75K Variances < £75k Variances 54 Total Forecast Underspend CSF (2,073) schools

3.3 CHILDREN, SCHOOLS & FAMILIES (CSF) SCHOOLS VARIANCES

3.3.1 SEN Recoupment and Additional Welfare & Tuition £645,000 or 8.7% underspend

Inter-authority Recoupment operates in arrears. At the end of each financial year income and expenditure for that financial year is estimated and accrued. This means that during 2006/07 financial year claims are sent and received by authorities for the financial year 2005/06.

The movement this month of £35,000 is due to more children leaving school than expected who had statements of special educational needs who previously were supported through this budget.

3.3.2 Units and Bases £100,000 or 5% underspend In 2006/07 a £200,000 provision was made in this budget for the unfunded costs of the upper pay scale for teachers in special needs provision in mainstream schools. (Only a proportion of these costs is met from the separate pay progression grant.) Following further work it is expected that only about half this provision will be required in 2006/07.

3.3.3 Earmarked Pupil Funding (EPF) £140,000 or 54.5% overspend

The overspend in EPF is due to an increased number of allocations to pupils meeting the criteria. Although the percentage of agreed applications has remained the same the total number of applications from schools has increased. This increased perception of need from schools is not out of line with the national picture of increasing pressures on SEN budgets that are heavily centralised and primarily targeted to individual pupils. Like many other authorities Hertfordshire is currently undertaking a review of its SEN funding arrangements in mainstream schools to try to address this and other issues.

3.3.4 Nursery provision £1.831m or 14.2%underspend

This budget funds nursery education places in private and voluntary providers. The level of take up is a product of parental decisions over where to place children and whether or not to take up the full entitlement. Recent extensions in entitlement have the potential to impact on parental decisions over placing children, creating extra uncertainty in the monitoring of this budget.

There are three elements to the current underspend:

1) Provision for an increased participation rate £1m

For 2006/07 the DfES increased its assumed participation rate for three year olds in nursery education from 85% to 90% of the population (Hertfordshire's participation rate was 85% in the spring term 2006, made up of 94% of older 3s but only 65% of younger 3s).

Therefore, in calculating Hertfordshire's DSG, the DfES used an estimate for three year olds of 90% of the population rather than the actual January 2006 pupil numbers. This increased the DSG by approximately £1m (300 pupils). It was unclear whether Hertfordshire's participation rate would actually increase towards 90% and therefore in the budget process the additional £1m of DSG was not initially earmarked for this purpose. However, there was concern that recent developments in private sector nursery provision (such as the extension from 33 to 38 weeks funded provision a year, plus greater flexibility around taking entitlements) would tend to increase the participation rate. In the event a one off saving of £1m arose on the Minimum Funding Guarantee as a result of the application of the headroom in 2006/07. This saving was transferred to the private nurseries budget in 2006/07 to form a provision against an increase in the participation rate towards 90%. This provision is intended to cover the two years of the current funding period, 2006/07 and 2007/08 on the basis that, under DSG rules, the unspent share of the £1m from 2006/07 can be carried forward for use in 2007/08. So far in 2006/07 the overall participation rate has not increased . However, two new DfES funded initiatives on nursery funding are imminent: the pilot for extending funded provision from 12.5 to 15 hours per week with increased flexibility and the pilot for extending provision for two year olds. It is uncertain to what extent these initiatives will produce an increase in the overall participation rate for three year olds.

2) Pupil Numbers £200,000

The participation rate of 3 year olds is not constant in each of the three terms (spring, summer and autumn). For DSG purposes, the DfES measures the participation rate in the Spring Term. In Hertfordshire this is when the rate for three year olds is at its highest because older 3s (those of an age eligible to attend maintained nursery classes) constitute two thirds of the cohort in the spring term. In the autumn term older threes comprise half the cohort and in the summer 5/12 which has an impact on the participation rate.

Due to the relatively low participation rate for younger 3s the summer and autumn term pupil numbers are marginally less than provided for in the base budget.

3) Impact of Increase to 38 funded weeks

From April 2006 the DfES extended pupils’ entitlement in private nurseries from 33 to 38 funded weeks per year. Provision was made in the current budget for additional funding got this expansion of the entitlement.

There are two aspects to this underspend:

Term lengths £240,000 Not all nurseries have yet increased their term lengths. (For example in the summer term 2006 approximately 120 nurseries were not open for the full 13 week potential entitlement.) This is expected to cause an underspend of approximately £240,000.

Flexibility £391,000 It is the DfES' intention that parents be offered flexible nursery provision. Therefore in recent years the "envelope" of time, over which pupils' entitlement can be spread, is longer than the number of funded weeks in the term. Total entitlement is, however, limited to not more than five sessions a week multiplied by the number of funded weeks in the term. As part of the move from 33 to 38 funded weeks, the length of the "envelope" of time over which entitlement can be spread has also increased (for example from 14 to 21 weeks in the summer term). Pupils in day nurseries, attending over the full period of the envelope but for fewer than the maximum five sessions per week, therefore have had a longer period over which to collect their entitlement. This increases their funded sessions by a higher proportion than the overall increase in funded weeks. In contrast pupils in term time only nurseries, which have historically been open for longer than the number of funded weeks, could previously use the envelope of time to claim for all or virtually all the sessions they attended. The increase in their funded sessions is therefore proportionately less than the overall increase in funded weeks. The net effect has been that the overall number of funded sessions has not increased by as much as the budgeted increase in funded weeks.

A point to note is that, to achieve a participation rate of 90% in the spring term, and given the high take-up rate among older 3s, a major increase in the number of younger 3s in provision would probably be required. Younger 3s make up a larger proportion of the cohort in the summer and autumn terms and thus the cost of the increase is disproportionately high in these two terms, a factor that the DfES' extra £1m does not fully take account of. Assuming that the increase to 90% participation in the spring term was largely made up of younger 3s, it is estimated that, had this occurred in 2006/07, the entire £12.9m budget would have been required.

3.3.5 Dedicated Schools Grant £193,000 or 0.3% underspend

Following a correction to its pupil number data, the DfES has increased Hertfordshire's DSG by £84,000. This is in addition to the £109,000 variance previously reported which resulted from the final January 2006 pupil count being 31 pupils higher than the predicted level published in the section 52 budget statement. In line with the new school funding arrangements the authority has discussed the final DSG notifications with the Schools Forum. It is proposed that the £193,000 be carried forward within DSG balances to the 2007/08 financial year.

3.3.6 Maternity £502,000 or 40.1% overspend

There has been an increase in both the volume and average pay for maternity claims from schools which is predicted to result in an overspend of £502,000. This demand led budget is extremely volatile and relies on prompt notification from schools of planned maternity leave.

There have been significant increases in Teachers pay-scales since 1999. Additionally the introduction of the Upper Pay Scale, Advanced Skills Teachers and Assistant Head- teachers has accelerated progression of teachers on their respective pay-scale. Development of policies by Central Government has made extended maternity leave more attractive, along with the protection afforded to teachers wishing to return on a part time basis.

The Council now employs 7.5% more teachers (9753 fte) than in 1999 (9073 fte).

Greater awareness amongst schools with payroll arrangements outside of the authority has increased the level of claims by 240% from 2002/03. Overall claims have increased by 149 (46%) from 2002/03 - with a continuing increased trend.

4. CAPITAL BUDGET

4.1 Projected Outturn and Variances

Expenditure for the Capital Budget is estimated to be £23,357m below the latest budget at outturn. Analysis of this variance by portfolio is shown in table 3.

Table 3

Forecast Forecast Executive Member Portfolio LAB Outturn Variance £'000 £'000 £'000 Education & Children's Services 111,094 93,768 (17,326) Libraries, Heritage and Arts 3,724 2,286 (1,438) Adult Care 20,657 17,069 (3,588) Environment & Transport 60,274 59,769 (505) Community Safety: Fire & Rescue Service 7,146 7,146 0 Resources 43,861 43,361 (500) Community Safety: Trading Standards & Registration 75 75 0 TOTAL 246,831 223,474 (23,357)

The variance of £23,357m can be analysed as overspends of £345,000, underspends of £3,173,000 and slippage of £20,529m. The variance is analysed by portfolio in table 4 below:

Table 4

Total Slippage Overspends Underspends Variance

£000 £000 £000 £000 Education & Children's Services (14,541) 345 (3,130) (17,326) Libraries, Heritage and Arts (1,395) 0 (43) (1,438) Adult Care (3,588) 0 0 (3,588) Environment & Transport (505) 0 0 (505) Community Safety: Fire & Rescue Service 0 0 0 0 Resources (500) 0 0 (500) Community Safety: Trading Standards & Registration 0 0 0 0 Total (20,529) 345 (3,173) (23,357)

Note: - Table 5 shows those projects with material variances from approved budget.

Table 5

Executive Member Description Para. Ref. Forecast Portfolio variance £000

Education & Children’s General Fund Services Stevenage Secondaries 3.2.1 (2,606) Heathcote Secondary 3.2.1 (472) Lonsdale School 3.2.1 (202) Presdales Secondary Sports 3.2.2 (1,670) Hall South West Herts Schools 3.2.3 (1,130) St George’s School 3.2.4 (862) Hoddesdon Review 3.2.5 (651) CSF Family Assessment 3.2.6 (650) Centre Stevenage Primaries 3.2.7 (510) Birchwood High 3.2.8 (400) Roundwood Park School 3.2.9 (394) Highfield School Sports Hall 3.2.10 (390) Boxmoor House 3.2.11 (387) Tudor Primary School 3.2.12 (385) Queens School 3.2.13 (350) Breachwood Green 3.2.14 (330) Youth Programmes 3.2.15 (300) Unit/KS4 learning centre, Hemel Chancellors 3.2.16 (299) Key Stage 4 Learning Centres: Watford (Chessbrook) 3.2.17 (200) Hitchin 3.2.17 (100)

Knights Templar School 3.2.18 (115) Ashwell 3.2.19 (100) Sir John Lawes School 3.2.20 (100) Aycliffe Drive School 3.2.21 (95) Turnford School 3.2.22 - PFI Scheme 3.2.23 345

Externally Funded Secondary Capacity 3.2.3 (2,000) Modernisation Widford School 3.2.24 (275)

Table 5 continued

Self Financing Schemes St Marys Cheshunt 3.2.25 (1,445)

Howe Dell 3.2.26 (1,144)

ACS General Fund Marsh Lane Day Centre 3.3.1 (1,000) Jubilee Day Centre 3.3.2 (450)

Self Financing Hornbeams Day Centre 3.3.3 (1,238) Balmoral Day Centre 3.3.4 (900)

Environment Externally Funded LTP Integrated Traffic 3.4.1 (430) Measures

Libraries, Heritage & General Fund Arts Hertford Library Reprovision 3.5.1 (1,010) Libraries for 21st Century 3.5.2 (385)

Resources Annual provisions

Borehamwood 3.6.1 (500)

Variances < £100,000 (227)

3.2 Education & Children’s Services

General Fund

3.2.1 Building Schools for the Future (BSF)

The DfES has now asked the 50 local authorities which have projects identified for waves 4 to 6, including Hertfordshire to start preparations for BSF and to indicate their readiness to deliver by 13 October 2006. The DfES will evaluate each authority’s readiness to deliver and make further announcements in December 2006. Authorities selected for wave 4 will commence their programmes in January 2007. Cabinet agreed at their meeting of 24 July 2006 to commit £750,000 of the overall resources earmarked for Stevenage in order to progress the BSF project. Consideration of the unallocated £2,568,000 set aside for Stevenage schools will be made in light of decisions regarding the BSF programme.

Stevenage Secondaries – slippage £2,606,300 (Basic Needs) Heathcote Secondary – slippage £472,459 (Basic Needs) Lonsdale School – slippage £202,316 (Basic Needs)

3.2.2 Presdales Secondary Sports Hall – slippage £1,670,000 (County Funded)

This scheme has been delayed due to planners’ objections to the location of the sports hall. The planners preferred location for the sports hall is on the site of existing tennis courts but this would require re-location of the tennis courts at extra cost to elsewhere on the site. As a result there was a requirement for top-up funding, which has now been identified in 2006/08 CSF Capital Programme. This scheme is due for completion September 2008.

3.2.3 South West Herts Schools - underspend £1.130m (County Funded), £2m (Modernisation)

The county funded allocation for South West Herts Schools was initially well over £2million. A significant amount was spent at Queens School to provide additional places on the Bushey side of Watford and at the same time the Authority began negotiations with Rickmansworth School (Foundation) to create more places which proved unsuccessful.

In addition £2m of the Secondary Capacity Modernisation scheme for 2005/06 was set aside to deal with a possible need for increased capacity in South West Herts (Rickmansworth area). However, that need has not materialised and therefore the £2m is now available for other pressures within schools.

At its September meeting cabinet approved the use of these underspends to cover the additional costs arising on projects at Turnford and Howe Dell schools following the contractor failure. So in 2006/7 £370,000 has been vired to the Turnford project for this purpose. The remainder will be carried forward to deal with costs expected to arise in 2007/08 on these projects.

3.2.4 St George’s School, Harpenden £862,000 slippage (£562k New Pupil Places, £300k County Funded) This is a large and complex school managed project to provide additional places. As a result this scheme has taken longer in the initial stage than was originally anticipated. The project is now progressing and the contractor is expected on site in April 2007.

3.2.5 Hoddesdon Review - slippage £650,700 (Basic need)

This allocation of Basic Need monies for Hoddesdon is being held pending the completion of the Hoddesdon Primary Review Autumn 2006.

3.2.6 CSF Family Assessment Centre – slippage £650,000 (County Funded)

Cabinet approval was required for the use of a redundant school site for the location of the Centre, which resulted in slippage in the start of this scheme. Approval was received in July 2005. This scheme is now subject to the PFI scheme programme which is not anticipated to commence until April 2007.

3.2.7 Stevenage Primaries – slippage £510,000 (New Pupil places)

This scheme was delayed due to additional public consultation, on the future of Stevenage Primaries. The scheme started in January 2006 and completion is expected September 2007.

3.2.8 Birchwood High – slippage £400,000 (County Funded)

The complex sequential multi phase nature of this project has led to some slippage in the programme between financial years. Additional targeted capital was approved and cash 0eee24e1dd29489e790bf4da2b69d229.doc 26

flow reprofiled for the 2006/08 programme. Town planning conditions are likely to increase costs, which will be the subject of a separate cabinet report in December.

3.2.9 Roundwood Park School, replace 8 mobiles slippage £394,000 (Modernisation supported borrowing)

This scheme was delayed due to additional public consultation with local residents. This scheme is now progressing to the planning Application stage, but it will not be on site until next financial year.

3.2.10 Highfield School Sports Hall slippage £390,000 (Modernisation supported borrowing) This scheme is being delayed due to a slightly protracted design phase and investigations into a more cost effective method of procurement.

3.2.11 Boxmoor House – slippage £386,700 (County Funded)

This scheme is on hold pending a decision on the closure of Boxmoor House and on-going discussions about its possible replacement. This budget is being held pending a decision on the site.

3.2.12 Tudor Primary slippage £385,000 (County Funded)

This scheme was held until the outcome of the primary review of school places in Hemel Hempstead. (Proposals consulted on in September 2006). The project has now been given the go ahead to progress. (as of September 2006).

3.2.13 Queens School slippage £350,000 (Modernisation supported borrowing)

As this is a Foundation school the project is being designed and managed by their consultants. This is a large and complex scheme as a result it has taken slightly longer in the initial design stage than was originally anticipated.

3.2.14 Breachwood Green JMI - slippage £330,000 (County Funded)

Complex design issues have lengthened the design process. Works are expected to be completed August 2007.

3.2.15 Youth Programmes Unit/ Key Stage 4 Learning centre, Hemel – slippage £300,000 (County Funded)

This development now forms part of the overall strategy for Key stage 4 learning centres. Proposals for the Hemel Hempstead Centre redevelopment have impacted on the decisions related to the proposed site for this centre and it likely that an alternative site will have to be found. It is therefore anticipated that the majority of the works will occur in 2007/08.

3.2.16 Chancellors School, science laboratories slippage £299,000 (Modernisation supported borrowing)

This is part of a County Wide programme of science laboratory refurbishments which is now split into two phases to ensure smooth implementation and value for money. Chancellors School will fall within phase 2 of the programme, with works rescheduled on site from May to September 2007 0eee24e1dd29489e790bf4da2b69d229.doc 27

3.2.17 Key Stage 4 Learning Centres: Watford (Chessbrook) slippage £200,000 (County Funded) Hitchin slippage £100,000 (County Funded)

After further detailed design work the refurbishment / alteration work have been rescheduled. The majority of the planned works will take place in 2007/08

3.2.18 Knights Templar School– slippage £115,000 (County funds £35k, Modernisation supported borrowing £80k)

The current estimated cost was above the original budget level and cabinet has agreed the additional funding to complete the scheme from New Pupil Places. This scheme is now due for completion summer 2007. Slippage is the result of the scheme being reviewed and the resultant additional funding requirement.

3.2.19 Ashwell Primary School Slippage £100,000 (County Funded)

This scheme is being delayed due to a slightly protracted design phase.

3.2.20 Sir John Lawes School– retention £100,000 (County Funded)

This scheme is now complete but the final payments will not be processed until after the defects liability period has ended. 3.2.21 Aycliffe Drive slippage £95,000 (Modernisation supported borrowing)

This scheme was held until the outcome of the primary review of school places in Hemel Hempstead (proposals consulted on in September 2006). The project has now been given the go ahead to progress (as of September 2006). This scheme is expected on site summer 2007 with completion in the 2007/08 financial year. 3.2.22 Turnford School

The original contractor awarded the contract for the extension of this school ceased trading in June 2006. As a result the project faces a three month delay and additional costs of £370,000 in 2006/07 and £180,000 in 2007/08. Cabinet have approved virement from underspends elsewhere within the CSF capital programme to cover the projected additional costs of this scheme.

3.2.23 PFI Scheme set up costs forwarded £345,000 (County Funded)

The PFI scheme is to provide new and replacement children’s homes, refurbished family support centres, and a replacement family assessment centre. This scheme has been in development for four years, it contains a diverse mix of new builds and refurbishments. The original budget was set after discussions with consultants based on their experience of other similar size schemes at the time. However given the complexity of this scheme and unforeseen site issues this budget has proved insufficient therefore this cost will need to be considered as part of the 2007/08 capital programme proposals.

Externally Funded

3.2.3 South West Herts Schools - underspend £1.130m (County Funded), £2m (Modernisation/Externally Funded)

Please see narrative in General Funded

3.2.24 Widford School – slippage £275,185 (Modernisation grant)

This scheme has been delayed due to town planning and English Heritage concerns. This scheme is expected to start later in 2006. Protracted timescales to acquire town planning and listed building consent, together with the need to increase the specification for some items, mean that the current projected costs for this project are £47,000 over the approved budget of £268,000. Emergency approval to increase the budget is being sought at the end of November. The additional cost of £47,000 can be met from de minimis underspends with the capital programme

Self Financing Schemes

3.2.25 St Marys Cheshunt – slippage £1,445,000

There have been delays due to town planning, judicial review, land sale and development technicalities. Planning permission for development of the existing school site has been recently received. A final application to the DfES for the release of the funding has been made and approval is awaited, a decision is expected Autumn 2006.

3.2.26 Howe Dell - slippage £1,144,000 (Subsequent year overspends – £ 1,183k 2007/08; £17k 2008/09)

The original contractor awarded the contract for the construction of the new school ceased trading in June 2006. As a result the project faces a delay and additional costs are expected of £1,200k in 2007/09. This will need to be considered as part of the 2007/08 capital programme.

3.3 Adult Care

General Fund

3.3.1 Replacement of Marsh Lane Day Centre (Ware) – slippage £1,000,000

Latest figures indicate that only £1,991m will be required in 2006/07 with the balance of the scheme being spent in 2007/08 and 2008/09. This will result in slippage against the current programme of £1,000m. This is based on a build start on site of October 2006.

3.3.2 Replacement of Jubilee Day Centre, St Albans – slippage £450,000

The latest figures indicate that only £105,000 of fees will be incurred in 2006/07. In order to fund increased costs of the Marsh Lane Project, Cabinet approved virement of £409,000 from the 2006/07 budget provision for the Jubilee Day Centre and resolved that an updated business case for the replacement of the Jubilee Day Centre be considered as part of the development of the 2007/08 capital programme.

Self Financing

3.3.3 Hornbeams Day Centre, Hatfield – slippage £1,238,000

It is currently expected that a start will be made on the community hub element of this scheme in September 2006 and as a result it is anticipated there will be slippage of £1.238m.

3.3.4 Balmoral Day Centre, Watford – slippage £900,000

The central government white paper "valuing people" serves as the national service framework for Learning Disabilities and contains a requirement to modernise day services. Currently L D day services are mostly delivered from large, isolated buildings and a model has been developed that consists of a service provided from one or two small Hub Community Bases with a range of outreach services provided in the community. Because of the complexities around the hub nature of this day centre, and the difficulty in identifying a building in Bushey there is likely to be slippage of £900,000.

3.4 Environment

Externally Funded

3.4.1 LTP Integrated Transport Measures – slippage £430,000

Work on the railway station schemes at Cheshunt, Carpenters Park, Bushey and Watford has been delayed due to difficulties with our rail partners. These are unlikely to be resolved until after April 2007 so the funds will need to be made available as slippage in 2007/08.

3.5 Libraries, Heritage & Arts

General Fund

The adjustment in the LAB of £508k in the current period relates to the availability of Section 106 monies to fund a number of schemes. This includes:

 Hatfield Library - Refurbishment part funded by 106 partly by Libraries for 21st Century  Watford Library - Refurbishment of first floor and redecoration of lecture hall, gallery and reference library.  London Colney Refurbishment – extending library area to give more community information space.

3.5.1 Hertford Library Reprovision – slippage £1,010,000

Issues with the wider aspects of the scheme now appear to be virtually resolved. McMullens have not yet appointed a developer, although this is expected by the end of 2006. Once this has taken place a start date for the development will be confirmed. Given this we expect a significant proportion of the scheme to slip in the current financial year.

3.5.2 Libraries for 21st Century – slippage £385,000

This scheme covers both the costs of refurbishment and fees for the replacement and refurbishment of libraries.

Refurbishment work at Tring, together with part funding of refurbishments at Welwyn, Watford, St Albans, London Colney and Goffs Oak will be undertaken throughout 2006/07. Work on the refurbishment of Hatfield Library is scheduled to commence in January 2006 and will be completed by July 2007. Therefore slippage of £385,000 is expected against this scheme.

3.6 Resources

Annual Provisions

3.6.1 Borehamwood, Hertswood School site, £500,000 capital scheme for playing field improvement.

This scheme arose as a consequence of obtaining DfES consent to sale of 'playing field land' on 2 of the 3 major sales completed in earlier years that funded the school reorganisation scheme. Slippage [to 07/08] is now expected as works have not commenced owing to ongoing discussions between the School and the LEA on how best to use the capital to improve facilities for the sports curriculum. It has been made clear the sum is fixed.

Capital Issues in Resources 20006/07

Land Purchase, Feasibility and Rationalisation

This budget has significant areas of expenditure which could result in an overspend in 2006/07. This expenditure will be recovered by HCC in future years from the enhanced capital receipts.

Strategic acquisition and re-sale 45 Sale Drive, Baldock £260,000

This was approved on 11 May 2006. The intention is for a re-sale within the year and for the receipt to directly replenish this budget. There are however legal issues to resolve before the re-sale can take place and there is a possibility that the receipt will not happen until 07/08.

Cheshunt, Land Assembly for Relocation and Expansion of St Mary's High School [C of E V.A].

Finalisation of the various land acquisitions and exchanges is nearing completion [expected to occur in next 2/3 months]. That will deliver a new site for development of the 1st newly built secondary school in Hertfordshire for over 30 years. The buildings area of the existing site will be sold by the Diocese [£5.03m estimate] with the HCC share of value [£2.72m] being used to provide LEA grant to the capital funding of the new premises. Ownership of the rest of the site will transfer HCC, part will be allocated to Goff’s School for additional playing fields. Part [west playing field - c 3 acres] will be retained out of use and promoted for housing development through the Local Development Framework process. The Borough of Broxbourne needs to find more housing land following the East of England Plan EIP Panel dwelling numbers allocations. The costs of the land acquisitions/swaps will be incurred in 06/07 and in total are estimated at £900,000. This extraordinary item is being funded by virement from the £1m held as contingent repairs notice spend at Langleybury, with that prospective sale now well advanced. There is however, a risk that if Langlebury isn’t sold then the £1m will be needed.

Watford Fire Station

The self financing scheme to relocate Watford Fire Station was agreed by Cabinet in July 2004. HCC are now in a position to go ahead with the acquisition of the site for the new Fire Station, 223-229 Lower High Street, Watford. These acquisitions are a long leasehold from Watford Borough Council at a cost of £810,000 and the balance of a long lease from Stapletons (Tyre services) Ltd at a cost of £1,250,000. The capital receipt of £5,500,00 from the sale of the existing Fire Station in Whippendell Road is expected in June 2007. This property will be retained for use by the fire service on a leaseback scheme until the new fire station is operational.

Appendix A COUNTY SUMMARY REVENUE BUDGET MONITOR AS AT 30 September 2006 (all figures in £'000) SERVICE Original Carry Approved Latest Projected Projected Carry Budget Forward Virements Approved Spend at Variance Forwards from & Tech Budget Year End 2007/08 2005/06 Adj Requested CSF Education Non-Schools 69,059 0 (769) 68,290 68,290 0 0 CSF Children's Services 85,287 0 1,960 87,257 87,257 0 0 CSF Cultural Services 20,669 0 (100) 20,569 20,569 0 0 Children, Schools & Families 175,015 0 1,091 176,106 176,106 0 0

Adult Care (including Money 218,993 0 1,562 220,555 220,555 0 0 Advice Unit) Adult Care Crime & Drugs 2,692 0 0 2,692 2,692 0 Strategy Unit 0

Environment 117,836 0 (2,889) 114,947 114,947 0 0

Community Safety: Fire and Rescue Service 40,919 0 58 40,977 40,977 0 0 (including Pensions) Civil and Emergency Planning 665 0 0 665 665 0 0 Trading Standards and Consumer 2,569 0 (10) 2,559 2,559 0 Protection 0 Registration Service 808 0 100 908 908 0 0 Coroners Service 966 0 0 966 966 0 0 Total Community Safety 45,927 0 148 46,075 46,075 0 0

Resources Portfolio (Corporate 10,107 0 (100) 10,007 10,007 0 0 Services) Central Capital Financing and 28,745 0 0 28,745 28,745 0 0 Interest on Balances Contingency 642 0 (158) 484 484 0 0 Special Provision 5,300 3,684 1,560 10,544 10,544 0 0 Precepts 1,789 0 0 1,789 1,789 0 0 Additional Capital Programme 0 0 0 0 0 0 Support 0 Office Rationalisation Project 940 0 (330) 610 610 0 0 Non Distributed costs 4,808 0 (621) 4,187 4,187 0 0 Capital Charges non operational (37,993) 0 (72,685) (110,678) (110,678) 0 assets Asset Management Revenue 23,276 0 2,029 25,305 25,305 0 Account 0 Pensions Int Cost & Expected (22,418) 0 0 (22,418) (22,418) 0 RoA 0 Pension Reserve Appropriation 1,789 0 0 1,789 1,789 0 0

NET REVENUE BUDGET 575,659 3,684 (70,393) 508,950 508,950 0 0 Funded from Balances 0 0 0 0 0 0 COUNTY FUND TOTAL 575,659 3,684 (70,393) 508,950 508,950 0 0

CSF Schools funded by direct 0 0 70,344 70,344 68,271 (2,073) 0 government grant

Appendix B Capital Budget Monitor as at 30 September 2006 Adjustments Previous Original and Year Spend at Year End Executive Member Portfolio Budget Virements Slippage LAB Year End Variance * £000 £000 £000 £000 £000 £000 Education & Children's Services General Funded 15,758 0 23,604 39,362 26,900 (12,462) Externally Funded 38,895 0 3,360 42,255 39,980 (2,275) Self Financing 5,533 0 7,149 12,682 10,093 (2,589) Annual Provisions 15,844 (111) 1,062 16,795 16,795 0 Total Education & Children's Services 76,030 (111) 35,175 111,094 93,768 (17,326)

Libraries, Heritage and Arts General Funded 1,744 0 1,029 2,773 1,335 (1,438) Externally Funded 0 508 3 511 511 0 Self Financing 0 0 0 0 0 0 Annual Provisions 433 0 7 440 440 0 Total Libraries, Heritage and Arts 2,177 508 1,039 3,724 2,286 (1,438)

Adult Care General Funded 3,217 0 3,166 6,383 4,933 (1,450) Externally Funded 1,147 316 4 1,467 1,467 0 Self Financing 6,550 0 4,966 11,516 9,378 (2,138) MH SCE R 0 328 75 403 403 0 Annual Provisions 888 0 0 888 888 0 Total Adult Care 11,802 644 8,211 20,657 17,069 (3,588)

Environment & Transport General Funded 51,354 0 1,791 53,145 52,640 (505) Externally Funded 4,534 100 695 5,329 5,329 0 Self Financing 0 0 0 0 0 0 Annual Provisions 1,688 0 112 1,800 1,800 0 Total Environment & Transport 57,576 100 2,598 60,274 59,769 (505)

Community Safety: Fire & Rescue Service General Funded 475 0 117 592 592 0 Externally Funded 0 0 0 0 0 0 Self Financing 2,000 0 3,994 5,994 5,994 0 Annual Provisions 427 0 133 560 560 0 Total Community Safety: Fire & Rescue Service 2,902 0 4,244 7,146 7,146 0

Resources General Funded 2,045 0 2,044 4,089 4,089 0 Externally Funded 0 0 0 0 0 0 Self Financing 13,700 6,166 11,410 31,276 31,276 0 Annual Provisions 4,884 393 3,219 8,496 7,996 (500) Total Resources 20,629 6,559 16,673 43,861 43,361 (500)

Community Safety: Trading Standards & Registration Annual Provisions 44 31 0 75 75 0 Total Community Safety: Trading Standards & Registration 44 31 0 75 75 0

Total 171,160 7,731 67,940 246,831 223,474 (23,357)

 underspends shown in brackets

APPENDIX C

PRUDENTIAL INDICATORS 2006/2007 – 30th SEPTEMBER 2006

Projected Original Indicator Position at 30th for 2006/07 Sep 2006 1. Capital Expenditure 223,474 215,160k 2. Capital Financing Requirement 461,584k 461,584k (CFR)

Position at 30th Original Indicator Sep 2006 for 2006/07 3. Treasury Position Borrowing 345,275k 443,000k Investments 300,859k 210,000k Net Borrowing 44,416k 233,000k 4. Net Borrowing Less than CFR  5. Authorised Limit (against 345,275k 482,000k maximum position) 6. Operational Boundary 345,275k 448,000k 7. Upper limited on fixed interest 100% 100% rates (against maximum position) 8a. Upper limits on variable 0% 30% interest rates (against maximum position) 8b. Limits on Fixed Interest Rates 345,275k 461,000k Limits on Variable Interest 0 138,000k Rates 9. Maturity structure of fixed rate borrowing (against maximum position) Under 12 months 0.01% 25.00% 12 months to 2 years 0.01% 40.00% 2 years to 5 years 0.01% 60.00% 5 years to 10 years 0.00% 80.00% 10 years and above 99.97% 100.00% 10. Investments greater than 364 £12m £20m days (Maximum Limit)