Contact: Graham Hart, ext 7533

1 Summary

1.1 This report proposes a capital programme for 2003/04 to 2006/07 for Policy and Resources within the guidelines set by the Cabinet. The Policy Review Committee are invited to comment on the report prior to the Executive member for Policy and Resources agreeing a submission to the Cabinet.

2 Introduction

2.1 The Cabinet at its meeting on 23 December 2002 asked Executive members to prepare proposals for:

· a locally-resourced capital programme for the four-year period from 2003/04 to 2006/07 within the guidelines of the current capital programme adjusted for inflation, and

· capital schemes supported by scheme or programme specific Government grants and borrowing approvals for 2003/04 and those expected to be supported in 2004/05, 2005/06 and 2006/07

· possible capital projects which might be suitable for the private finance initiative (PFI) and attract revenue support from the Government towards their capital element in 2004/05 to 2006/07, subject to further reports on the outline business case for each scheme and the Government support being available.

2.2 For this service, the guidelines for the locally resourced programme are:

2.3 The guidelines include an addition of 2.5% for inflation, in line with the non-pay inflation assumption for the revenue budget.

2.4 To this can be added schemes funded by business units from their reserve accounts. These amount to £329,000 in 2003/04.

2.5 Executive members may vary these guidelines between years provided their total four-year guideline is not exceeded and bunching of payments in any one year or front-loading are avoided.

2.6 The higher guideline in 2003/04 is based on the proposal to allocate to capital repairs the provision of £0.7m made for revenue contributions to capital within the schools block, which has been utilised to make corporate contributions towards flood and storm damage repairs over the past two years. The provision could be used in 2003/04 to finance capital repairs in schools related to asbestos management.

3 Capital programme 2003/04 to 2006/07 - schemes within the guideline for the locally resourced capital programme

3.1 The programme proposed for 2003/04 to 2006/07 is based upon the allocation of resources between priorities in the current 2002/03 to 2005/06 capital programme. The main corporate priority is the maintenance of the core buildings in the County Council's built estate, through the capital repairs programme.

3.2 The Policy and Resources programme currently includes an annual capital contribution of £25,000 to capital works at Sir George Staunton Country Park. It is proposed that this provision should be transferred to the Recreation and Heritage capital programme to bring all of the County Council funding for the Park within Recreation and Heritage control.

4 Capital programme 2003/04 to 2006/07 - schemes supported by Government approvals

Electronic Government

4.1 In response to the County Council's initial proposals for implementing electronic government the Office of the Deputy Prime Minister granted £200,000 to the County Council in 2002/03 as a means of meeting expenditure associated with the IEG Statement. A similar award will be made in 2003/04. It is a requirement of these grants that they are committed to work identified in the IEG Statement which was recently submitted to, and approved by, the Leader. So far £94,000 has been committed on electronic forms software and a further £100,000 will be needed for the implementation of a web content management system. The work programme for 2003/04 on e-government will commit the remaining resources.

4.2 Quite separate from the County Council's capital grant of £400,000 there is also £2 million of funding granted to the Hampshire and Isle of Wight e-government partnership, where to meet commitments on e-government it is anticipated that some £350,000 of expenditure will be incurred in 2002/03 and the remainder to be spent by 31 March 2004.

New Deal For Schools Condition Funding

4.3 As part of its strategy for providing resources to improve the condition of school buildings, the Department for Education and Skills has allocated £14.4m of grants for 2003/04, slightly less than the £15.0m provisionally allocated in December 2001. Allocations for 2004/05 and 2005/06 are not expected to be announced until March and so cannot be included in the capital programme at this time.

4.4 Following the new Regulatory Reform Order for Voluntary Aided Schools Liabilities and Funding of Premises, Local Education Authorities are no longer responsible for elements of voluntary aided schools projects. This change was effective from 1 April 2002 and the DFES has reduced the 2002/03 grant allocation by £113,000. The 2002/03 capital programme provision must consequently be reduced by this sum.

5 Private Finance Initiative schemes (PFI)

5.1 There are two possible PFI proposals under active consideration in connection with the Policy and Resources capital programme. Funding of £40m has been agreed in principle by the Health Service for the Nursing Care Investment Programme, designed to provide 500 extra nursing care beds. The County Council has applied for a supplementary credit approval for the balance of £20m required to implement the full programme. If this application was unsuccessful, an alternative approach might be to promote a PFI scheme for the new-build elements of the strategy as an alternative route for seeking Government support.

5.2 The Executive member for Policy and Resources agreed in July 2002 to a feasibility study for the redevelopment of the Carfax site adjacent to the Records Office and Ashburton Court; these proposals would require a PFI type funding option.

6 Capital Programme Summary

6.1 On the basis of the position outlined above, the total value of the capital programmes submitted for consideration for the four years to 2005/06 are:

7 Revenue Implications

7.1 The revenue implications of the proposed capital programme are as follows:

7.2 The total revenue implications for the four years of the starts programme, including capital charges, represent a real term increase of 7.8% over the 2002/03 adjusted original budget of this service.

Recommendations

1 That the capital programme for 2003/04 to 2006/07 as set out in Appendix 1 be approved for submission to the Cabinet.

2 That the capital programme provision in 2002/03 for New Deal for Schools Conditions Funding be reduced from £12.111m to £11.998m, as a result of the change in funding arrangements for voluntary aided schools.

3 That the provision for the County Council's capital contributions to Sir George Staunton Country Park be transferred to Recreation and Heritage.

4 That the potential PFI proposals for Nursing Care investment and for the redevelopment of sites in Winchester be noted.

Section 100 D - Local Government Act 1972 - background papers

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.

NB the list excludes:

1. Published works.

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

TITLE FILE

Policy and Resources Capital Programme 2003/04

i:\ . . . . \ian\docs\docs\capreport dec2002b.doc