Archived decisions

Contact: Bob Eardley, Strategic Planning Manager, 01962 846275

1. Summary

1.1 The following decisions are sought:

a) That the revised 2001/02 Education capital programme set out at Appendix 1 be approved.

a) That the schemes listed below, and the resources associated with them (with the exception of £637,000 resources for Bridgemary Community School) be deferred to 2002/03:

	£'000
Thornden Secondary, Chandler's Ford	414
Bridgemary Secondary, Gosport	637
Sharps Copse Primary, Havant	805
St Bede Primary	232
Test Valley Secondary	200
Minor works	632
William Price Trust
Minor works	433
Key Stage 2 classrooms
Balksbury Junior, Andover	236
Hook Junior	255
Buriton Primary, Petersfield	210
Lymington Junior	246
Minor works	398
Total	4,698

2. Reason

2.1 To update the education capital programme to take account of additional resources and progress with individual schemes.

3. Other options considered and rejected

3.1 Not applicable

4. Conflicts of interest declared by the decision maker or member or officer consulted

4.1 Not applicable.

5. Dispensation granted by the Standards Committee

5.1 Not applicable.

6. Reason(s) for the matter being dealt with if urgent

6.1 Not applicable.

Approved by: Date of decision:

Councillor D. Allen

1. Summary

1.1 This report proposes revisions to the Education 2001/02 capital programme in the context of progress with individual schemes, of Education's share of the capital receipts and other resources allocated by the Department for Education and Skills (DfES). A revised programme taking these factors into account is recommended (see Appendix 1). Pressures on the programme and prospects for 2002/03 are reported.

2. Background

2.1 Education Committee approved the 2001/02 capital programme on 23 January 2001 and approved the updated position on 18 July 2001. Since that time, additional resources have become available mainly through the share of capital receipts and further allocations from the DfES. There are, however, significant upward cost pressures which need to be taken into account in preparing a revised programme.

2.2 The proposed revised programme incorporates those schemes that need to be added to the original programme and takes into account those schemes proposed for deferral from 2001/02 to 2002/03.

2.3 The County Council has one of the largest education capital programmes in the country. In the context of significant increases in capital resources in recent years, the range and scale of the programme, covering a variety of schemes, including new schools, basic need and other extensions, remodelling, refurbishment of specialist areas and general improvements, is on a scale hitherto not seen even in Hampshire. During the last twelve months the County Council has contracted over 90 education major works projects, with a total value of £41m. This investment has required substantial increases in the resources required to implement the programme and is delivering very significant improvements to the physical facilities available to schools.

2.4 The scale of the capital programme is such that a number of significant decisions have to be taken and can be predicted quite early in the year. A number of decisions also have to be made to avoid delays in starting the implementation of the works. Throughout the year the programme is reviewed and managed by the County Education Officer and the Director of Property, Business and Regulatory Services through regular liaison meetings to identify key issues, priorities and overall resource concerns. This report summarises a range of issues and decisions which have been made with the Executive Member.

3. Capital Resources

3.1 Taking into account changes since the Committee agreed the 2001/02 capital programme, but excluding school contributions, particularly those schemes supported by the Seed Challenge initiative, the revised limit for the programme is £58.547m, made up as follows:

	£,000
Original starts programme	24,746
Carry Forward from 2000/01	22,239
Increased level of Formula Devolved Capital	2,110
Capital receipts, virement from revenue and balance from 2000/01 (including John Hanson Secondary School)	4,498
Early years allocation from Policy and Resources Committee	50
Schools Access Initiative	1,045
Targeted Capital Fund	805
Key Stage 2 Class Size Initiative	1,474
Special Units for pupils with Asperger's Syndrome	482
William Price Trust	1,000
Siskin Junior	98
Total	58,547

4. Capital Receipts and Virements

4.1 The Committee's share of 2000/01 capital receipts is £247,000. Of this sum, £114,000 from the sale of the Highwood Pupil Referral Unit site, Brockenhurst, is earmarked towards the cost of providing a replacement. The remainder of the capital receipts, £133,000, is available to support the programme as a whole.

4.2 The Policy and Resources Committee agreed on 17 July 2001 that a proportion, £356,000, of the revenue under-spending on the Education budget in 2000/01 should be returned to the Education Committee and vired in support of the capital programme. This was agreed on the basis that it would help to address the shortfall in the capital programme funding. At the same meeting is was agreed that an allocation of £50,000 be made towards the capital provision for an early years initiative in Basingstoke.

5. Supplementary Credit Approvals

5.1 The Supplementary Credit Approval (SCA) for Schools Access Initiative, together with a grant from the William Price Trust, were reported to Education Committee on 20 March 2001. SCA for Targeted Capital Fund and the grant for the Key Stage 2 Class Size Initiative were reported on 18 July 2001.

5.2 Since then the DfES has announced an indicative capital grant of £392,000 in response to a submission for funding support under the Neighbourhood Nurseries Scheme. Further details are in section 9 below.

5.3 In addition to these, the DfES has also allocated an SCA of £482,000 to support the provision of two special units for pupils with social, communication difficulties/autistic spectrum disorders. Further details are in section 10 below.

6. Building cost inflation and capital programme contingency

6.1 The Executive Member will be aware that it is normal practice at the beginning of each financial year to allocate a programme contingency principally to meet building cost inflation on schemes, but also for other unforeseen issues which arise. There is always a balance to be struck in making such provision. If the contingency is set at a particular level the net result may be that projects are subsequently deferred. The balance is to make a sensible provision without deferring too much work as a result. Building cost inflation over the last twelve months has been running at something approaching 6%-9% and can vary across the County Council's area, with perhaps higher levels in the north of the county, closer to London.

6.2 As each scheme is developed and tendered, it is normal practice to allocate at contract reconciliation stage an allowance for building cost inflation. The cumulative impact is summarised later on in this report. The principal reasons for building cost inflation running at a significantly higher level than retail price inflation are the volume of work in the industry, the shortage of labour in key trades driving up wage rates, significant difficulties in the supply chain for materials and the general increases in levels of public investment. Allocating a central contingency at the beginning of the year best protects the programme from the uncertainties that may arise during any particular year. It is inevitable that with rising building cost inflation the contingency would be exhausted.

7. Schemes proposed for deferral

7.1 The increased level of capital expenditure in the last two to three years is to be welcomed. The Policy and Resources Committee has already authorised the Director of PB&R to increase his capacity through contractors and consultants to ensure that more work can be delivered on site. In addition, specialist measures in procurement and advanced ordering have been implemented to allow the programme to be delivered. It is inevitable, given the large increase in the workload, that some schemes would have to re-programmed. The principal reasons for this are given below:


· implementation dates agreed with schools mean that the contract will be let in the next financial year. This does not represent a delay;


· projects or elements of schemes have been put on hold subject to bids being made for additional funds or funds being held in reserve for a future project;


· grant from the DfES has come to the County Council for specific works (e.g. Key Stage 1 Classes of 30) in one year, but will be implemented the following financial year in line with agreed completion targets;


· unforeseen events arise (e.g. flooding of St Bede Primary School, Winchester) which put on hold expenditure on a project subject to wider issues being resolved;


· under-capacity in the industry currently has not only led to increased inflation but to protracted tendering and contract negotiations which have delayed current projects and knocked on to future ones.

7.2 In this overall context, the County Education Officer and the Director of Property, Business and Regulatory Services have reviewed progress with the implementation of the current year's capital programme and have identified a number of schemes where contracts will not be let in this financial year. These are listed below. A number of the schemes for which funding was allocated from the £1m grant received from the William Price Trust were intended for later implementation and DfES funding for the Key Stage 2 initiative was allocated in July, making starts on site in the current year very difficult.

	£'000
Thornden Secondary, Chandler's Ford	414
Bridgemary Secondary, Gosport	637
Sharps Copse Primary, Havant	805
St Bede Primary	232
Test Valley Secondary	200
Minor works	632
William Price Trust
Minor works	433
Key Stage 2 classrooms
Balksbury Junior, Andover	236
Hook Junior	255
Buriton Primary, Petersfield	210
Lymington Junior	246
Minor works	398
Total	4,698

7.3 It is recommended that the schemes listed above be deferred to 2002/03. It is also recommended that the resources associated with the schemes, with the exception of the £637,000 allocated to Bridgemary Community School be deferred. The Bridgemary funding will provide resources for starts on other schemes to be brought forward and to help meet the increases in tenders; details are set out in section 8 below. Carrying forward the Bridgemary scheme without the resources means that the funding will need to be reinstated in 2002/03 as a first call on NDS Modernisation funding.

8. Proposed variations to the 2002/03 capital programme

8.1 The costs of a number of schemes are currently higher than anticipated and it would be prudent at this stage to identify the likely calls on the capital programme contingency to meet the anticipated shortfall. The level of contingency in the original capital programme was £1.4 million. As a result of the changes through the year and the proposals set out in this report for additional funding, carry forwards and the revised programme at Appendix 1, the level of contingency will be £1.5 million, which is an appropriate level for an overall capital programme of some £55 million The position on each of these schemes is as follows (all figures include fees):

School	Budget	Current estimate of scheme cost	Estimated call on cont-ingency
	£,000	£,000	£,000
Mill Chase Community, Bordon	983	1,090	107
Court Moor Secondary, Fleet	618	835	217
Robert May's Secondary, Odiham	981	1,068	87
Itchen Abbas Primary	109	155	46
Petersfield Infant	603	683	80
Droxford Primary	253	286	33
South Farnborough PRU	322	403	81
Westgate Secondary	274	378	104
Totals	4,413	4,898	755

8.2 The principal reason for the increase in estimated tender costs over the budget provision is the significant increase in tender price inflation in recent months, which is running on average at about 9% p.a. and is expected to be about 6% p.a. in 2002. Considerable efforts are made to bring all schemes within budget through discussions with schools to reduce costs and encourage contributions from their devolved capital, which reduce calls on the contingency.

Court Moor Secondary, Fleet

8.3 There is a basic need project to extend this school by 88 places and the budget figure is £618,000 including fees. The tender price for the scheme is £835,000, giving an overall project cost of £969,000 including fees. Considerable efforts have been made to reduce the cost of this scheme, but the extremely high level of building cost inflation which is currently being experienced has resulted in a shortfall of £351,000. Policy and Resources Committee and the school are contributing £134,000 towards the overall costs leaving a shortfall of £217,000 to be funded from the Education capital programme.

8.4 This project was tendered at what appeared within Hampshire to be the peak of the recent market. Its location in the north-east of Hampshire had a significant effect and inflation of around 20% was experienced over the duration of the project's development. Access to the site is complex and activities are split around a number of buildings, leading to a high cost for the contractor's management resources. The accommodation being provided is of a specialist nature, i.e. science, drama and dance, linked with existing buildings and attracting a premium cost.

8.5 In the light of these abnormal costs it is recommended that the remaining shortfall of £217,000 be funded from the capital programme contingency.

Thornden Secondary School, Chandler's Ford

8.6 There is a sum of £911,000 in the 2001/02 Education capital programme to provide additional basic need places and to "pump prime" specialist music school status and an application for capital grant to the Foundation for Sport and the Arts to provide a music hall.

8.7 Detailed costings have now been drawn up for the music hall project and it is proposed that the capital programme funding be split to provide £524,000 including fees towards the costs of its provision and £414,000 for the further additional basic need places, to be started in 2002/03.

8.8 Sources of funding are detailed below:

	£'000
Education capital programme	452
Thornden School devolved capital allocations, including 2003/04	150
Foundation for Sport and the Arts	75
Thornden School Appeals Fund	30
Business sponsorship	18
Governors' contribution	300
Friends of the school	3
Specialist School status - capital	100
Specialist School status - equipment	32
Hampshire Music Service	100
Land receipt	456
Equipment grant	30
Eastleigh Borough Council	15
Hampshire County Council (Policy & Resources)	50
Total	1,811

8.9 It is recommended that the education capital programme provision for work at this school be split between 2001/02 and 2002/03 as set out in paragraph 8.7 above.

8.10 The capital receipt from the sale of land at Thornden School is expected to be available at the end of the current financial year, subject to the Secretary of State's approval under Section 77 of the School Standards and Framework Act, and will be available to be credited to the capital programme in 2002/03.

Westgate Secondary School

8.11 There is a basic need project at this school and the budget in the capital programme is £274,000, including fees. This funding, together with other resources, was used to "pump-prime" a successful lottery bid for a new sports hall. The tender price for the scheme is £2,351,000; available funding totals £1,994,000, leaving a shortfall of £367,000. The contribution from Lottery funding has been increased by £253,000 to take account of the actual tender price, but it is not possible to increase funding from other sources, which includes Westgate's devolved capital allocations up to 2003/04, which total £103,000.

8.12 In order to meet the overall cost of the tender, and taking into account the additional funding that was sought and allocated by the Lottery, it is recommended that £104,000 be added to the education capital programme element of this funding.

Halterworth Primary School, Romsey

8.13 A recent inspection of a double temporary classroom at Halterworth Primary School, Romsey has revealed that the unit is in very poor condition and needs to be replaced urgently. There is no new funding available in the Education capital programme to carry out the necessary replacement with permanent accommodation, but in view of the urgency, it is proposed to use New Deal for Schools condition funding, which is part of the County Council's capital repairs budget. The school is very keen to provide ICT and SEN rooms at the same time as the temporary classroom replacement and would like to commit the whole of its devolved capital, including anticipation of allocations for 2002/03 and 2003/04 to enable this to be achieved. There would, however, still be a funding shortfall.

8.14 The County Council, in common with other LEAs, will begin to receive additional credit approvals in 2002/03 under the Government's New Deal for Schools Modernisation funding, which was reported to Education Committee in January 2001.Allocations will not be known until the end of the calendar year, but there is £555m available nationally for 2002/03 and 2003/4, one-third of which will be available next year. On the basis of pupil numbers, the County Council could expect to receive some £4m in 2002/03, although this sum is only a rough estimate and cannot be guaranteed.

8.15 As the provision of ICT accommodation is a high priority in the Education Asset Management Plan and in view of the opportunities for cost savings which would arise from making provision through one building contract, it is recommended that the shortfall should be funded from the £637,000 resources currently allocated to the Bridgemary Community School scheme (see paragraph 7.3). The provision for Bridgemary would be reinstated from the NDS Modernisation provision. Members will recall that the Education Committee agreed on 18 July 2001 to a similar approach to funding the removal of all temporary classrooms at Vernham Dean Gillum's Primary School.

8.16 Although it may be possible to phase the work and therefore not require additional resources at this stage, there is, in the present tender climate, a cost benefit of £30,000 in doing the whole project in one contract.

8.17 A breakdown of the proposed funding for the Halterworth scheme is shown below:

	£,000
New Deal for Schools Condition funding	250
School's Devolved Capital including 2003/04	67
Education capital programme (see above)	79
Total	396

Wellow Primary School

8.18 There is a sum of £116,000 (including fees) for a New Deal for Schools project included in the Education 2001/02 capital programme to replace a single temporary classroom in very poor condition. There is also another single temporary classroom on the school site. A development plan has been produced which demonstrates that it would be cost-effective to replace both temporary buildings at the same time.

8.19 The estimated cost of replacing both units and carrying out additional work requested by the school is £280,000 including fees. The school has agreed to contribute £50,000 of its devolved formula capital to the project leaving an overall shortfall of £114,000. Therefore, for an additional £114,000 it would be possible to remove all the temporary accommodation from the site. In view of the significant pressures on the capital programme and the expected further calls on the contingency for schemes still to be let, it is recommended that the additional £114,000 required should be provided in the same way as for the Halterworth Primary School scheme detailed above.

8.20 As for Halterworth Primary, this project could be phased but the cost benefit in doing the whole project in one contract, in this case, is £30,000.

8.21 If the Halterworth and Wellow schemes are approved, the total anticipated call on NDS Modernisation funding in 2002/03 would be £393,000, including £200,000 agreed on 18 July for Vernham Dean. This represents some 10% of the anticipated allocation.

Droxford Primary School

8.22 There is a project in the capital programme for a two class extension at the above school at a budget of £202,000 including fees. The latest estimated cost is £286,000 including fees. The Director of Property, Business and Regulatory Services has agreed to make a contribution of £10,000 to the scheme and the school has agreed to contribute £41,000 of its devolved formula capital to the project leaving an overall shortfall of £33,000. It is recommended that this be approved to allow the scheme to proceed.

John Hanson Secondary School, Andover

8.23 The cost limit for this scheme to relocate John Hanson Secondary School, Andover from its current site to a greenfield site in the west of the town is determined by the eventual level of the capital receipts available from the sale of the existing school site and detached playing field.

8.24 A report to Education Committee on 18 July 2001 confirmed that the main contract for the construction of the new school started on site in May 2001 and that a funding strategy which would enable the school to be completed for September 2002, despite the land sale not having been completed at the commencement of the contract, had been agreed by Policy and Resources Committee. The latest cost estimate reported to Policy and Resources Committee was £12.75m for construction and professional fees, plus a £0.75m contribution to Test Valley Borough Council (subject to the full capital receipts being realised). It is recommended that the provision in the current year's programme be adjusted to bring the estimate in line with the latest figures supplied to Policy and Resources Committee.

9. Early Years and Child Care allocations

9.1 The DfES recently announced allocations under the Neighbourhood Nurseries Initiative (NNI) 2001-2004. Included in that announcement was a capital sum for Hampshire of £391,860 to be spread over three financial years as follows:

2001/02: £177,210

2002/03: £153,300

2003/04: £61,350

9.2 Four proposals were put forward within the criteria for developing Neighbourhood Nurseries to be created in areas of disadvantage as defined by government. These are:

· The Sure Start Centre, Warren Park, Havant

· Sharps Copse Early Years Centre, Havant

· Trospac, Trosnant Early Years Centre, Havant

· Park Early Years Centre, Heron Wood, Aldershot

9.3 Further reports will be submitted proposing the allocation of specific sums to individual projects, as they are developed.

9.4 In addition to the Neighbourhood Nursery allocations, the DfES has also announced a capital grant for the building of local authority administered nursery education facilities in disadvantaged areas. This includes new build as well as extension to existing premises. The key objective for the grant it to ensure that the areas of greatest social disadvantage within local authorities have the necessary infrastructure to ensure that capacity is not a barrier in these areas to the expansion of nursery education places for three years olds.

9.5 The allocations cover 2002/03 and 2003/04 and are as follows:

2002/03: £424,350

2003/04: £424,350

9.6 The grants are subject to matched funding being available from LEAs. It is likely that these contributions will need to be a further call on the NDS Modernisation funding, as there are no alternative sources, other than where funding has been included in the capital programme for specific schemes. The DfES has set out a number of criteria on how the grant is to be used and a strategy on how it can be used in conjunction with the County Council's overall Early Years and Childcare Plan. A further report will be submitted once this work has been completed.

10. Special Units for Pupils with Social, Communication difficulties/autistic spectrum disorders.

10.1 At its meeting on 4 April 2001 the School Organisation Committee gave approval to the establishment of two special units: one at Robert May's School, Odiham and one at Romsey School, to cater for pupils with social, communication difficulties/autistic spectrum disorders. On 5 September the DfES allocated a supplementary credit approval to cover the capital costs of setting up these units.

10.2 Currently there are capital programme projects planned for both of these schools and the provision of the units will be incorporated into the building works.

11. Siskin Junior School, Gosport

11.1 As part of round six in the Single Regeneration Budget process, a bid to provide a community space at Siskin Junior School has been approved.

11.2 The community space will allow training and tuition for parents of both pre-school and mainstream school pupils. The initial focus group will be for parents of pre-school and Key Stage 1 pupil. The space will allow for a group of 20 parents.

11.3 The cost of the project is £98,000, including fees and the funding sources are as follows:

Single Regeneration Budgets	£64,000
School's Devolved Formula Capital	£18,000
Policy and Resources - recladding	£16,000
Total	£98,000

11.4 It is recommended that the resources be added to the resources available (see paragraph 3.1) and the project be included in the minor works programme.

12. Pressures on the capital programme

12.1 The anticipated position for 2002/03, taking into account the changes recommended in this report, suggests an initial shortfall of £6.08 million. This may well vary, depending on the allocations to be made following the forthcoming Annual Capital Guideline submission. When the 2001/02 capital programme was agreed in January 2001, severe funding pressures were noted, which resulted in schemes to the value of £6.7m being deferred to 2002/03 without resources. Although the forecast position for 2002/03 is currently slightly more optimistic than this, there is still a significant shortfall. Officers are currently developing proposals to reduce the shortfall over a number of years and these will be reported when the capital programme for 2002/03 to 2004/05 is reported in January 2002.

13. St Francis Church of England Aided Primary School, Chandler's Ford

13.1 The school was extended in 1995 on land owned by the County Council. It is necessary for the Diocese as promoters to acquire the land on which the extension was built. Following a number of procedural delays it is hoped to complete the sale within the current financial year.

13.2 The Diocese will receive 85% grant aid from the DfES based on most of the purchase cost and has asked whether the County Council will give a grant to cover the remainder of the cost.

13.3 The principle of the County Council giving a grant of this nature was set when the most two recent new aided schools were built - this one and Basingstoke, St Mark's CEA Primary. The cost of meeting this grant can be met from within the Education share of the proceeds as they are received making the grant self-financing.

13.4 It is proposed that approval be given to this grant.

14. Capital funding arrangements for 2002/03

14.1 The DfES have given the guidance on the arrangements for the next capital round for 2002/03. The annual submission by 30 September 2001 will cover the following:

· Provisional Indicators - commitments to support second and third years costs on schemes for which credit approval has already been given;

· Basic Need;

· Voluntary Aided school projects

14.2 In addition, LEAs are invited to make submissions by 17 December 2001 for Targeted Capital Fund (TCF) projects. This fund now incorporates the opportunity to bid for Special Education Needs (SEN) projects. The guidance confirms that SEN proposals for TCF will receive separate weighting so that they can compete fairly with, for example, Surplus Place Removal projects with high levels of recurrent savings.

14.3 The fund is being enlarged and the lower limit for bids is being raised from £250,000 to £400,000, except for SEN proposals, where the lower limit is set at £200,000.

14.4 Supplementary guidance for TCF is awaited. The DfES expects to announce the allocations under TCF in March 2002.

Recommendations

The following decisions are sought:

a) That the revised 2001/02 Education capital programme set out at Appendix 1 be approved.

a) That the schemes listed below, and the resources associated with them (with the exception of £637,000 resources for Bridgemary Community School) be deferred to 2002/03:

	£'000
Thornden Secondary, Chandler's Ford	414
Bridgemary Secondary, Gosport	637
Sharps Copse Primary, Havant	805
St Bede Primary	232
Test Valley Secondary	200
Minor works	632
William Price Trust
Minor works	433
Key Stage 2 classrooms
Balksbury Junior, Andover	236
Hook Junior	255
Buriton Primary, Petersfield	210
Lymington Junior	246
Minor works	398
Total	4,698

Appendix 1

Section 100 D - Local Government Act 1972 - Background Documents

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied-upon to a material extent in the preparation of this report.

N.B. the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act