COUNTY COUNCIL 13 SEPTEMBER 2001

REPORT OF THE

POLICY AND RESOURCES COMMITTEE

PART II

CAPITAL STRATEGY AND ASSET MANAGEMENT PLAN

1. As part of its proposals to introduce a single capital pot in 2002/03, the Government requires all Councils to prepare a Capital Strategy and Corporate Asset Management Plan. Whilst the Government initially promoted the capital pot as a way of improving the local accountability and freedom of local authorities, the Committee feels that this has been undermined by the way in which the scheme has been introduced in practice. The total pot of about £2.7bn for 2002/03 represents only 60% of the total Government support likely to be available for capital. The remainder will be withheld from the pot by Central Government Departments for allocation to specific schemes and programmes or, in the case of some education funding, direct to schools. Both the Department for Education and Skills and the Department of Health clearly prefer to retain control over their capital support, allowing only 27% and 43% respectively of their allocation to be included in the single capital pot. Even the global provision for schools in the pot will be monitored by the Government to make sure that it is actually spent on schools, in line with manifesto commitments.

2. In 2002/03, 95% of the single capital pot will be allocated on a service by service basis for education, local transport, social services and other services using similar arrangements as at present. The remaining 5% (or about £116m) will be allocated at the discretion of Ministers; this 5% is likely to be increased in subsequent years to perhaps 20%. On behalf of the Government the Department of Transport and Local Government in the Regions (DTLR) has consulted on the complex assessment basis for the 5% discretionary allocation which will reward local authorities according to the perceived quality of their capital strategies and asset management plans. In effect, the Committee feels that the discretionary allocation has become a reward for complying with the Government's particular view of what constitutes good practice in asset management instead of being allocated on the basis of need. The Government has been apprised of the County Council's concerns in these areas.

3. Notwithstanding its major misgivings over the system, the Committee has taken great care to produce draft documents which meet the Government's assessment criteria as published in their guidance, and feedback from the Government Office for the South East (GOSE) on "dry run" versions of these was encouraging. Comments from GOSE on suggested areas for improvement are reflected in the current versions of the documents which were submitted to GOSE at the end of July; copies of these are available in the Members' Rooms.

4. The preparation of these documents is extremely demanding of staff resources and the Committee is gravely concerned that the return, or "reward", from a single capital pot will not justify the effort expended, or the diversion of staff away from other duties.

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