Capital spending and financing 2005/06

1 Introduction

1.1 This appendix reports:

2 Capital expenditure

2.1 Table 1 below shows that nearly 85% of the capital programme for 2005/06 was started in the year. It also shows the value of schemes and associated cash limit for which approval to carry forward to 2006/07 is requested.

Table 1 - Capital schemes started in 2005/06

 

£000

%

     

Approved value of the capital programme for 2005/06

200,323

100.0%

Schemes started in 2005/06

169,523

84.6%

 

-----------

---------

Balance of cash limit at 31 March 2006

30,800

15.4%

 

-----------

---------

     

Schemes for which approval to carry forward to 2006/07

   

is requested

20,236

 

Schemes already approved for carry forward

10,599

 

Balance of cash limit remaining

-35

 
 

-----------

 

Cash limit to be carried forward to 2006/07

30,800

 
 

-----------

 
     

2.2 The majority of the capital programme is controlled on a `starts' basis in which the full estimated cost of the scheme is charged against the service's capital cash limit for the year in which the scheme is started. Some schemes, such as lump sum provisions and block votes, are controlled on an `expenditure' basis, whereby the amount actually spent in the year is charged against the cash limit. The total of £169.523m shown in Table 1 for the schemes started in 2005/06 is an aggregate for both `starts' and `expenditure' schemes.

2.3 An analysis by service of the figures in Table 1 is provided in Annex 1.

3 Carry forward of schemes not started by 31 March 2006

3.1 The Executive Member for Policy and Resources agreed in April 2006 that capital schemes that were planned to start by 31 March 2006 but which, for various reasons, will not start until 2006/07 should be carried forward to 2006/07. This agreement in principle was subject to the cost of such schemes being accommodated within services' approved programme limits. Details of the schemes that it is now proposed should be carried forward in accordance with that decision are included in Annex 2.

3.2 The total value of schemes to be carried forward is £30.8m. This includes £10.6m of Children's Services schemes which have previously been approved for carry forward to 2006/07 during the course of the year.

3.3 Adult Services have requested that schemes costing £0.861m should be carried forward to 2006/07 even though the combined value of these schemes and those actually started in 2005/06 exceeds the service's capital cash limit for 2005/06 by £0.808m. The main reason for this excess is higher than planned expenditure on minor works, furniture and equipment in residential and day services premises (£0.235m) and on information technology (£0.501m). A further report will be made to Cabinet in July 2006 setting out proposals for funding the Adult Services capital programme, including the shortfall of resources that has accumulated over a number of years. In February 2006, Cabinet deferred approval of the Adult Services capital programme for 2006/07 to 2009/10 pending that report. Approval to carry forward schemes to the value of £0.861m is also subject to the outcome of that report as the authority to carry forward schemes is subject to the availability of resources within the service capital programme to undertake them.

3.4 As Table 2 shows, the proportion of the 2005/06 programme that has been started in the year, at 84.6%, is similar to the level achieved since steps were taken during 2001 to improve the delivery of the programme.

Table 2 - Percentage of capital programme started

             
 

2000/01

2001/02

2002/03

2003/04

2004/05

2005/06

 

£m

£m

£m

£m

£m

£m

Value of projects

           

- started

70.5

128.7

110.6

212.6

144.7

169.5

- carried forward

34.7

20.4

22.5

29.2

23.1

30.8

 

--------

--------

--------

--------

--------

--------

Total programme

105.2

149.1

133.1

241.8

167.8

200.3

 

--------

--------

--------

--------

--------

--------

             

Percentage started

67.0%

86.3%

83.1%

87.9%

86.2%

84.6%

             

4 Reasons for schemes not starting by 31 March 2006

4.1 The full reasons for not starting each scheme during the year are listed in Annex 2. Some are dependent upon specific negotiations and arrangements being made with third parties. In total, approval is now sought to carry forward 55 individual schemes and block provisions, in addition to the eight Children's Services schemes for which approval has already been given.

4.2 With the exception of Adult Services, the schemes listed in Annex 2 can be carried forward to 2006/07 subject to the latest estimated costs of the schemes being accommodated within the overall starts limits for 2006/07.

5 Capital expenditure and financing 2005/06

5.1 Total expenditure actually incurred in 2005/06, arising from the capital programme for 2005/06 and earlier years, was £184.8m. This is £2.0m or 1.1% lower than the revised estimate. The timing of capital expenditure flows is often difficult to predict and an outturn within 1.1% of the estimate is a good result. It is consistent with the monitoring forecasts reported to Cabinet and the Executive Member for Policy and Resources throughout the year. An analysis of the expenditure of £184.8m by service and type is included in Annex 3.

5.2 The proposed method of financing this expenditure is set out in Table 3 below:

Table 3 - Capital financing 2005/06

         
 

Adjusted

Actuals

Variation

Actual

 

revised

   

funding

 

estimate

     
 

£000

£000

£000

%

         

Government supported borrowing

41,462

40,908

-554

22.1%

Unsupported borrowing

       

- for capital schemes

10,256

12,892

2,636

7.0%

- repayments

-2,250

-2,250

-

-1.2%

- to meet temporary shortfall

9,325

1,861

-7,464

1.0%

Government capital grants

45,411

46,521

1,110

25.2%

Contributions from developers

       

and outside agencies

42,487

38,556

-3,931

20.9%

Capital receipts

5,530

10,720

5,190

5.8%

Capital reserve

3,615

3,615

-

1.9%

Revenue reserves - trading

       

units, on-street parking and

       

insurance

240

1,277

1,037

0.7%

Revenue contributions

       

- General corporate provision

29,674

29,674

-

16.1%

- Set aside by schools

1,039

986

-53

0.5%

 

-----------

-----------

-----------

-----------

 

186,789

184,760

-2,029

100.0%

 

-----------

-----------

-----------

-----------

         

5.3 The revised estimates of capital expenditure flows and capital resources agreed by Cabinet in February 2006 showed that it would be necessary to use temporary unsupported borrowing of £9.3m in 2005/06 pending the receipt of capital resources in 2006/07 and later years. In the event, the need to use unsupported borrowing to meet the temporary shortfall of resources has been reduced to £1.861m This reflects the lower payments in 2005/06 (£2.0m) and the completion of a planned sale of land (£5.2m) a few months earlier than had been assumed in the estimates.

6 Borrowing

6.1 Since 1 April 2004, local authorities have been permitted to borrow for capital purposes without specific approval from the Government, provided their actions meet the requirements of the Prudential Code for Capital Finance introduced by the Local Government Act 2003. Such borrowing does not attract any support from the Government towards the repayment and interest costs, which fall wholly on the County Council's own resources. Cabinet agreed criteria for the use of `prudential borrowing' in November 2003 and since then has approved the use of such borrowing for a number of capital schemes, primarily on an invest-to-save basis. It is proposed that a total of £12.9m is borrowed in 2005/06 for these schemes, as summarised in Annex 4.

6.2 The Code includes a number of indicators intended to illustrate whether local authorities are acting prudently. The County Council's latest position on these prudential indicators following the 2005/06 outturn is summarised in Appendix 6. It shows that the County Council continues to be in full compliance with the requirements of the Code.

6.3 In addition to the prudential borrowing, £40.9m of loans have been raised in 2005/06 that should attract revenue grant from the Government towards the repayment and interest costs. However, 2005/06 is the last year in which Government `supported' borrowing will attract additional revenue support grant. The Government changed its methodology with effect from 2006/07 for calculating the minimum floor level of grant for authorities such as the County Council whose grant increase falls below a floor threshold. Grant entitlements arising from the use of Government `supported' borrowing approvals in 2006/07 and future years will no longer automatically be added to the floor level of grant. The Cabinet will reconsider the future use of `supported' borrowing approvals in the light of this change in Government policy later in the year.

6.4 The Government has also given £46.5m of capital grants towards expenditure in 2005/06.

7 Capital receipts

7.1 Capital receipts from the sale of land and property totalling £10.7m were obtained in 2005/06, as summarised in Annex 5. Services can retain 25% of capital receipts from the sale of their assets, with up to 100% for approved in/out schemes. Receipts from development account and most county farm sales are retained for corporate use. In accordance with this policy, services are entitled to £3.195m from the capital receipts in 2005/06. Cabinet has previously approved the addition to the capital programme of £2.983m from this amount, leaving a total of £0.212m to be allocated to services now, as set out in Annex 5.

           

Annex 1

             
             

Analysis of capital programme 2005/06 and requests by services to carry forward capital schemes to 2006/07

             
 

(1)

(2)

(3)

(4)

(5)

(6)

 

Approved

Schemes

Schemes

Schemes

Cash limit

Cash limit

 

value of

started

for which

already

available

carried

 

programme

in

approval

approved

for carry

forward to

   

2005/06

to carry

for carry

forward to

2006/07

     

forward

forward

2006/07

(columns

     

is now

   

3+4+5)

     

requested

     
             
 

£000

£000

£000

£000

£000

£000

             

Adult Services

2,908

2,855

861

-

-808

53

             

Children's Services

95,568

77,623

6,756

10,599

590

17,945

             

Environment

45,636

43,005

2,631

-

-

2,631

             

Policy and Resources

46,596

37,274

9,322

-

-

9,322

             

Recreation & Heritage

9,615

8,766

666

-

183

849

             
 

----------

----------

----------

----------

----------

----------

 

200,323

169,523

20,236

10,599

-35

30,800

 

----------

----------

----------

----------

----------

----------

             

         

Annex 2

    Capital Programme 2005/06

         

    Schemes not started by 31 March 2006

   
           

    Schemes

Value

 

Latest

 

Reasons for Delay

     

£000

 

Start Date

 

 

     

 

 

 

 

 

    Adult Services

 

 

 

 

 

     

 

 

 

 

 

    Older Persons Day Centre,

375

 

Not known

 

Balance of funding to be identified

    Challenger Way, Hythe & Dibden

         

    Furniture and equipment in office

23

 

Various

 

Linked with building works scheme

    bases

         

    Mental Health services

425

 

Various

 

Balance of allocation

    Information management systems

38

 

Ongoing

 

Balance of allocation

           

    Total Adult Services

861

     

29.6% of schemes approved to start

         

in 2005/06 to be carried forward

           
           

    Children's Services

         
           

    Stanmore Primary, Winchester

263

 

December 2006

 

Location of new kitchen / dining facility

         

to be confirmed with new headteacher

    North Basingstoke Schools

1,125

 

To be confirmed

 

Awaiting progress of housing

         

development and strategy for provision

         

of future places to be determined

    Bridge Centre, Eastleigh

1,002

 

December 2006

 

Finalising brief together including mental

         

health service requirements

    Specialist status

         

    Cams Hill, Fareham

100

 

)

 

)

    Cowplain Secondary

100

 

)

 

)

    Crofton Secondary, Fareham

100

 

)

 

)

    Fernhill Secondary, Farnborough

100

 

)

 

)

    Mill Chase, Bordon

100

 

) Various

 

) Developing briefs with schools, many

    Quilley School of Engineering,

100

 

)

 

) of which are part of larger projects

    Eastleigh

   

)

 

)

    Testbourne, Whitchurch

100

 

)

 

)

    Warblington Secondary, Havant

100

 

)

 

)

    Winton School, Andover

100

 

)

 

)

           
           
           

    Children's Services - continued

         
           

    Block votes

         

    Education other than at school

30

 

Various

 

Funding unallocated and carried forward

    facilities

       

to add to the provision for 2006/07

    Furniture and equipment

197

 

)

 

)

    Health and safety

200

 

)

 

)

    Management of falling rolls

659

 

)

 

)

    Replace temporary Early

276

 

) Various

 

) Funding unallocated and carried

    Education units

   

)

 

) forward to the provision for 2006/07

    Secondary 14-19 Agenda

222

 

)

 

)

    Staff facilities

20

 

)

 

)

    William Price Trust

45

 

)

 

)

    Integrated children's systems

35

 

)

 

)

           

    Schools Access Initiative

         

    Portchester Secondary

300

 

July 2006

 

To be used as part of a larger project

    Other schemes

839

 

Various

 

Brief for the works is still being agreed

     

 

 

   

with the schools

           

    Early Years

         

    Early Years & Childcare facilities

100

 

) Various

 

) Funding unallocated and carried

    Sustainability Capital

543

 

)

 

) forward to the provision for 2006/07

           

    Total Children's Services

6,756

 

 

 

7.1% of schemes approved to start

     

 

 

 

 

in 2005/06 to be carried forward

     

 

 

 

 

 

     

 

 

 

 

 

    Environment

 

 

 

 

 

     

 

 

 

 

 

    Structural maintenance

 

 

 

 

 

    - locally resourced

1,303

 

) to be added

 

) Balance of provision for schemes

    - Government supported

453

 

) to provisions

 

) controlled on an expenditure basis

    Air quality and noise monitoring

16

 

) in 2006/07

 

) to be carried forward to 2006/07

    Recreational cycling

19

 

) programme

 

)

           

    London Road to Newbury Street,

150

 

May 2006

 

Late amendments to design required by

    Andover

       

district council

    Environment - continued

         
           

    Lyndhurst to Ashurst Cycles

490

 

September 2006

 

Land issues and English Nature

         

requirements

    Basingstoke Route 3 Quality Bus

200

 

August 2006

 

Changes to design following local

    Partnership

       

consultation

     

 

 

 

 

 

    Total Environment

2,631

 

 

 

5.8% of schemes approved to start

     

 

 

 

 

in 2005/06 to be carried forward

     

 

 

 

 

 

     

 

 

 

 

 

    Policy and Resources

 

 

 

 

 

     

 

 

 

 

 

    Aldershot Enterprise Centre

64

 

2006/07

 

Discussions with possible provider /

     

 

 

 

 

partners are in hand

    Fort Gilkicker

100

 

2006/07

 

Ongoing negotiation to secure disposal

    Coastal defence works

26

 

May 2006

 

Works delayed by further survey

    Land management minor schemes

44

 

2006/07

 

Consultation period extended

    Rowner Youth project

150

 

May 2006

 

Not started on site 

    Office accommodation

187

 

Various

 

Resources retained to have strategic

   

 

 

 

impact when opportunity / need arises

    Capital repairs

1,225

 

2006/07

 

Various schemes to be carried forward

     

 

 

 

 

to 2006/07

    New Deals for Schools

5,742

 

2006/07

 

Government funding requires that

     

 

 

 

 

resources are spent by August 2006

    Advantageous land purchases

499

 

2006/07

 

Resources retained to have strategic

     

 

 

 

 

impact when opportunity / need arises

    Disposal of sites fees

90

 

2006/07

 

Resources retained to have strategic

         

impact when opportunity / need arises

    Advance fees

45

 

2006/07

 

Expected to be required in 2006/07

    IT - investment in infrastructure

644

 

2006/07

 

Balance of approved investment

         

programme

    Business units:

 

 

 

 

 

    Supplies

225

 

2006/07

 

Various reasons

    Hampshire Transport Managem't

281

 

2006/07

 

Various reasons

           

    Total Policy and Resources

9,322

 

 

 

20.0% of schemes approved to start

     

 

 

 

 

in 2005/06 to be carried forward

    Recreation and Heritage

         

     

 

 

 

 

 

    Countryside and Rights of Way

88

 

Autumn 2006

 

Operational reasons

    improvements

 

 

 

 

 

    Discovery centres and library

143

 

Summer 2006

 

Delays in finalising schemes

    improvements

         

    Disability Discrimination Act

57

 

Summer 2006

 

Operational reasons

    schemes

         

    Staunton Country Park

13

 

Summer 2006

 

Assembling funds from other sources

    Grants to village halls

175

 

Unknown

 

Assembling funds from other sources

    Outdoor centres

48

 

Autumn 2006

 

Assembling funds from other sources

    Product development

34

 

Summer 2006

 

Delay in finalising scheme

    ICT development

49

 

Summer 2006

 

Operational reasons

    Museums and Archives

59

 

Summer 2006

 

Operational reasons

     improvements

 

 

 

 

 

     

 

 

 

 

 

    Total Recreation and Heritage

666

 

 

 

6.9% of schemes approved to start

     

 

 

 

 

in 2005/06 to be carried forward

 

 

 

 

 

 

           
           

    Total all services

20,236

 

 

 

10.1% of schemes approved to start

 

 

 

 

 

in 2005/06 to be carried forward

    Add: Children's Services schemes

 

 

 

 

 

    previously approved for carry

10,599

       

    forward to 2006/07

 

 

 

 

 

     

 

 

 

 

 

    Total schemes carried forward

30,835

 

 

 

15.4% of schemes approved to start

     

 

 

 

 

in 2005/06 to be carried forward

           

    Add: balance of cash limit carried

         

    forward

-35

       
           

    Total cash limit carried forward

30,800

     

15.4% of schemes approved to start

         

in 2005/06 to be carried forward

           
           

Annex 3

Summary of capital payments 2005/06

Analysis by service

 

£000

%

     

Adult Services

29,827

16.1

Children's Services

80,474

43.6

Environment

53,864

29.2

Policy and Resources

14,289

7.7

Recreation and Heritage

6,306

3.4

 

-----------

--------

 

184,760

100.0

 

-----------

--------

     

Analysis by type of expenditure

 

£000

%

     

Land

8,065

4.4

Construction work

138,678

75.0

Fees and salaries

28,434

15.4

Furniture, equipment and vehicles

9,583

5.2

 

-----------

--------

 

184,760

100.0

 

-----------

--------

Annex 4

Unsupported borrowing in 2005/06

For specific capital schemes

£000

 
     

Nursing care accommodation

934

 

Calshot Activities Centre accommodation unit

98

 

Nightingale Primary School, Eastleigh

606

 

Crestwood School sports facilities

2,106

 

Chiltern Primary School

1,749

 

Waterside Primary School

233

 

John Hunt of Everest replacement school

624

 

Dowd's Farm Primary School, Hedge End

615

 

Kings Copse Primary School, Hedge End

569

 

Capital House, Winchester

5,195

 

Ashburton Court, Winchester

163

 
 

---------

 

Total - specific schemes

12,892

 
     

Use of the LPSA Reward Grant to repay unsupported borrowing in previous years for LPSA projects

-2,250

 
     

Temporary borrowing to meet the funding shortfall in 2005/06

1,861

 
 

---------

 

Total unsupported borrowing in 2005/06

12,503

 
 

---------

 
     

Annex 5

Analysis of capital receipts 2005/06

 

(1)

(2)

(3)

(4)

 

Net

Shares from in/out

25% share of

 

capital

and other schemes

qualifying

 

receipts

- previously

- now

receipts

   

added to

available to

now due to

   

programme

be added to

services

     

programme

 
         
 

£000

£000

£000

£000

         

Adult Services

-

-

-

-

Children's Services

3,552

2,125

100

-

Environment

120

-

-

30

Policy and Resources

       

- Development account

5,865

200

-

-

- County farms

288

-

60

-

- Other

211

-

-

-

Recreation and Heritage

684

658

22

-

 

-----------

-----------

-----------

-----------

 

10,720

2,983

182

30

 

-----------

-----------

   
         

Total now to be added to services' programmes

212

     

-----------

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