71 CAPITAL PROGRAMME 2002/03 - 2005/06

1. The Cabinet has considered proposals put forward by Executive Members for the four years 2002/03 to 2005/06. The resultant draft capital programme is attached as a separate document. In drawing up their preferred programmes, Executive Members were requested to prepare proposals for a locally resourced four-year capital programme within their current programme limits and in addition to submit capital schemes supported by Government grants and scheme-specific borrowing approvals for 2002/03, and those expected to be supported in 2003/04, 2004/05 and 2005/06.

2. The total starts value of the four year programme is £498.5m. The main elements are £112m for South Hampshire Rapid Transit Phase I, £255.1m for schemes supported by Government grant and borrowing approvals, and £115.3m for the four year locally resourced programme.

3. The Education programme for the next four years totals £79.2m including £3.9m carried forward from 2001/02. Government general borrowing approvals amount to £31.6m, and Government supplementary borrowing approvals for New Deals for Schools Modernisation Fund to £18.5m. There is also a further £22.7m by way of devolved capital allocations direct to schools and Seed Challenge grants to match schools' own funding. The Government's formula-based support for capital spending on Education will increase by 62% in 2002/03 and will have more than doubled in 2003/04 compared with 2001/02. In addition to the support outlined above, the Government is expected to announce the results of bids for Targeted Capital Fund for schools in March 2002 and if the County Council has been successful, the additional schemes will be added to the capital programme in April.

4. South Hampshire Rapid Transit Phase I is a main element in the programme. The total cost of the Fareham-Gosport-Portsmouth section of the scheme has been included for 2003/04. The cost of this part is estimated to be £190m at 2002/03 prices with the County Council's share being £133m. The Government has indicated that it will support 75% of the public sector cost of the scheme. The total funding for the scheme, including how the Government support will be paid and how the remaining 25% will be financed, will become more clear as the procurement process is finalised. The Executive Member for Environment has been requested to report to Cabinet before the scheme is committed on how the capital and revenue costs will be funded as any such costs not covered by Government support or external contribution will need to be met from resources already available to the Environment Service. The Environment Programme for 2003/04 onwards includes four other major schemes, namely the Chickenhall Lane Link, Eastleigh (£16m), Botley Bypass (£18m), Strategic Park and Ride, Southampton (£6m) and three stages of the A3 Corridor Bus Priority Scheme (totalling £24.3m). These schemes have not yet been accepted for Government support and the funding for any design and other preparatory work will be found from within the overall transport allocation.

5. The Policy and Resources capital programme includes the final year of the £7.1m programme to refurbish older people's homes. The £0.5m reduction in capital repairs to fund that programme has been restored from 2003/04. The balance of £0.7m per annum has been allocated to the relocation and improvement of recycling centres, the improvement of rights of way including byways open to all traffic, and capital repairs of buildings other than schools. No other major changes to the balance of the existing guideline programme have been made, although additions to the 2002/03 and 2003/04 programmes have been included for investment by the County Council's business units for printing, transport management, catering and supplies. The grant-backed provision from the Government under the New Deal for Schools Condition programme of £12.1m in 2002/03 and £15.1m in 2003/04 to improve the condition of school buildings will be used largely for capital repairs and so they have been added to the Policy and Resources capital programme. The Government has allocated capital grants of £0.2m in 2002/03 to each local authority to support proposals for implementing e-Government with a further £0.2m to follow in 2003/04 subject to good progress. These allocations have been included in the programme. Finally, the programme also includes an annual provision of £0.8m for advance and advantageous purchases of land.

6. The capital programmes for Recreation and Heritage, and Social Care are in line with the guidelines set in December 2001 with the addition to the Social Care programme for 2002/03 of two schemes supported by Government grant namely £366,000 to improve information management, and £136,000 for IT for looked after children.

7. In last year's report to Council, Members were advised of the Government's proposals to introduce a "single capital pot" in 2002/03 for allocating its capital approvals. The concept was presented by the Government as a way of increasing Councils' financial freedom, but in practice very little has changed with only the borrowing approvals for local transport being added to the previous allocation of general borrowing approvals. The Government has top sliced 5% of the resources in the single capital pot to create a discretionary pool to be allocated to Councils at the discretion of Ministers. All the County Council's plans scored sufficiently highly for it to be awarded the maximum amount of borrowing approval from the discretionary pool, namely £2.168m, but as the County Council needed to be successful in the assessment process just to stand still, this sum is not really additional funding. The Cabinet proposes allocating the £2.168m to Environment for a relocated waste recycling centre in Winchester and for the potential acquisition and refurbishment of some buildings, but recommend that the resource should not be committed until the revenue and capital costs of South Hampshire Rapid Transit have been determined.

8. Capital receipts continue to provide valuable support for the capital programme. A review of receipts shows that it will be possible to increase the capital programme for Policy and Resources by £500,000 per annum from 2001/02 for fees incurred on the disposal of sites and to provide for an additional £4m of capital spending over the next four years in excess of current guidelines. This can be used to increase the existing locally resourced capital programme by £2m in both 2003/04 and 2004/05 and a report back to Cabinet is proposed on priorities for investment in this respect.

9. With regard to payments and resources, resources in 2001/02 and 2002/03 will match the forecast level of capital payments in those years with the use of the balance available in the capital reserve. By 2003/04, however, there will be a shortfall of resources of £2.5m, lower than the gap of £4.2m identified in last year's programme. Payments and resources will continue to be closely monitored and regular reports brought to Cabinet.

10. Every year, when the County Council approves the new starts programme it is required to give a number of approvals and limits concerning the programme. There is now an opportunity to review some of these "conditions" to bring them into line with the new Constitution and financial regulations, and a copy is set out as Annex 1. Once approved, the conditions will apply to successive capital programmes and will not be affected by the particular circumstances of each year's programme. Accordingly, the County Council will not be required to reaffirm the same conditions every year.

RECOMMENDATIONS:

(i) That the capital programme for 2002/03 be approved as set out in the attached draft capital programme subject to the conditions set out in Annex 1 of this report.

(ii) That the capital programmes for 2003/04 to 2005/06 be approved as set out in the draft capital programme for the purpose of undertaking design work (including the preparation of feasibility and design project appraisals).

(iii) That expenditure on preliminary design and planning work for major transport schemes be permitted when they have achieved a place in the County Council's Local Transport Plan, subject to the cost being met within existing credit approvals.

(iv) That approval be given to incur expenditure on land purchases as follows:

(a) Up to the sum specified in respect of sites still required for the schemes included in the capital programme for the period 2002/03 to 2005/06 provided that the relevant scheme has been the subject of a feasibility or design project appraisal approved by the relevant Executive Member.


(b) Up to the amount included in the 2002/03 programme in respect of advance and advantageous land purchases.

(v) That the carrying out of feasibility studies for potential "in/out" schemes be approved, the cost to be met from within approved revenue budgets.

(vi) That the Executive Member for Policy and Resources be authorised to approve requests from Executive Members to undertake any design work associated with potential "in/out" schemes, provided that such costs as may fall on the County Council are met from within the relevant Executive Member's capital programme limits.

T.K. THORNBER, CBE

Chairman

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