BACKGROUND Comprehensive Spending Review 2010 marked the beginning of the grant reduction programme Local government anticipating a 28% cut in grant over the period HCC reduction is 43% over period (around £80M) Further cut of £27M in 2015/16 Inflationary pressures of around £14M per annum Social care demography and complexity pressures of £11.5M per annum Total savings requirement of £200M from 2011/12 to 2015/16 Net budget is around £750M

HCC RESPONSE Aim to deliver 4 years savings in 2 - £55M in 2011/12 and £45M in 2012/13 Based on original grant projections, this plus 1.9% council tax increase pa would have balanced the budget by 2014/15 Scale of grant reductions was greater than expected Council Tax Freeze Grant meant no base council tax income being generated each year No savings target in 2014/15 to give time and capacity to deliver further £93M by 2015/16 financial year Early delivery of savings in 2014/15 will provide funding for future transformation and change

BUSINESS RATE RETENTION 2013/14 estimate of £451M to be collected across Hampshire (excluding unitaries) 9% retained by HCC (£41M), £180M by districts £225M goes back to Government HCC receives £63M top up grant Estimates for next year up to £465M BUT Impact of accruing for potential appeals in current year producing significant deficits Many authorities at the safety net threshold (i.e. loss of more than 7.5% of income)

BUDGET 2014/15 – FINANCIAL SUMMARY £17.8M loss of Government grant £12.4M inflation and base changes £11.5M of social care growth £6.3M of savings from Children’s for Early Intervention Grant loss and £3M of slipped savings from Adults No increase in Council Tax Nothing assumed for New Homes Bonus but Government have now confirmed that we will keep this Net Deficit of £32.2M for the year - will be met by increased investment income and £25M draw from Grant Equalisation Reserve

UPDATE FOLLOWING SETTLEMENT New Homes Bonus being retained in current form (funding for LEPs now through additional borrowing) Council Tax Freeze Funding ‘in baselines’ from 2016/17 - £28.4M for HCC Revenue support grant lower by £1.4M following further 1% cut to Departmental Expenditure Limits Council tax surplus offset by business rates losses and RSG reduction Still need £25M draw from reserves to balance the budget

TRANSFORMING THE COUNCIL TO 2015 Programme based around corporate workstreams as in previous years. Key areas : –External spend –Working with Health (Better Care Fund and Public Health integration) –Integrated Business Centre –Senior management and staff overheads –IT Spend Target of £93.2M to be in place by April

CAPITAL PROGRAMME 2013/142014/152015/16 £’000 Adult Services11,6816,08114,481 Children’s Services89,96889,35773,497 Environment49,65641,80738,000 Policy and Resources56,29039,56030,310 Land and Site Purchase746 Total208,341177,551157,034 Total Programme 542,926

CAPITAL INVESTMENT – CONFIDENTIAL UNTIL 29 TH JANUARY Broadband investment to deliver 95% coverage of super fast broadband - £13M HCC investment Replacement for project resilience - £12M per annum using new homes bonus funding £12M investment in Country Parks Setting money aside for infrastructure investment to unlock key development sites Grants for ‘Investing in Hampshire’ – Tourism and Heritage School places continues to be a pressure - £30M extra from Government over next 2 years, £165M already being spent on providing 9,000 new school places across Hampshire £45M extra care housing programme Reviewing impact of flooding and potential remedies