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1. Summary

1.1 This report updates progress on and proposes amendments to the 2002/03 Integrated Transport programme (Appendix 1). It also proposes the capital programme for Environment for 2003/04 to 2006/07 (Appendices 2 and 3).

2. Introduction

2.1 On 23 December 2002 the Cabinet asked Executive Members to prepare proposals for:

(i) 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;

(ii) 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; and

(iii) 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 Government support being available.

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

£'000

2003/04 12,776

2004/05 12,776

2005/06 12,776

2006/07 12,776.

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 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.

2.5 In addition, Executive Members may supplement their guidelines with their services' own resources, either by virement from their revenue budgets or by using their share of capital receipts obtained in 2001/02 as allocated by Cabinet in July 2002. Executive Members may also anticipate in these proposals their share of those capital receipts actually obtained so far in 2002/03.

2.6 The level of Government support for transport capital works for 2003/04 is £27,549,000, which is an increase of 16.1% over the equivalent figure for 2002/03. The indicative figure for 2004/05 has increased to £27,591,000, whilst the figure for 2005/06 remains unchanged at £21,385,000. In addition, the Government has made £5,142,000 available to the County Council and Portsmouth City Council to allow a start to be made on any necessary advance works on the South Hampshire Rapid Transport (SHRT) scheme.

3. Transport Capital Programme 2002/03 - Progress and Proposed Amendments

3.1 In order to prepare a programme for 2003/04 to 2006/07 in line with Government borrowing approvals, it is necessary to review the progress of the current year's programme. Good progress has been made in implementing the enhanced 2002/03 starts programme and adequate commitments have now been made to ensure that the full level of this year's Government borrowing approvals will be utilised. As a consequence, it has recently become necessary to delay the start of some schemes originally programmed for 2002/03. The proposed revised programme for 2002/03 is detailed in Appendix 1.

3.2 The proposed changes primarily result from the need to curtail the 2002/03 programme to avoid the possibility of overspending. The latest forecast is that the SHRT project (Fareham-Gosport-Portsmouth) will have a gross spending in 2002/03 of £4 million, which will mean a call on County Council credit approvals of £2.6 million. After allowing for expected expenditure of £10.8 million on structural maintenance of roads, bridges and flood damage repair, there is £18.6 million available for spending on integrated transport works in this year.

3.3 There are also 2002/03 programme changes required because of increased costs on current projects. An allowance of £620,000 needs to be made with respect to increased costs on the A3 Bus Priority Corridor (Widley to Purbrook), compared with the starts value in 2001/02. The casualty reduction programme for 2002/03 needs to be amended to reflect increased costs at Bashley Crossroads and Fisher's Pond, as well as increased emphasis on low-cost accident remedial schemes (incorporating schemes at Calmore and Yateley) and the introduction of a new project at Lymington High Street. There are additional costs at Station Interchange/City Road, Winchester which occurred during construction and cost changes to projects at Fareham bus and rail stations.

3.4 There was an initial allocation of £900,000 with respect to Broadmarsh, Havant, largely for road reconstruction. It is proposed by the South East Hampshire Transportation Panel that, as the major reconstruction works will not now proceed in 2002/03, the allocation will be replaced by a programme of smaller projects in the area in keeping with Local Transport Plan (LTP) policies. Maintenance works on Broadmarsh Road and a new ticket office at Havant station are committed in 2002/03, but improvements at Havant bus station and a Toucan crossing on Petersfield Road, Havant are candidates for future years' programmes.

3.5 The changes result in a proposed revised 2002/03 starts programme for integrated transport of £18.8 million. The total value of the projects deferred is £8 million. These have all been considered for inclusion in the 2003/04 programme, which is discussed later in this report. The proposed programme for 2003/04 is set out in Appendices 2 and 3 and all other identified schemes to be considered for future years are listed in Appendix 4.

3.6 The proposed revised 2002/03 starts programme from Government approvals is:

£'000

Integrated Transport 18,831

Structural Maintenance/Bridges 9,450

Total 28,281

4. Local Transport Settlement 2003/04

4.1 On 10 December 2002 the Government Office for the South East wrote with its assessment of Hampshire's LTP Annual Progress Report (APR) (submitted in July 2002) and its allocation of resources.

4.2 The letter congratulated the County Council on producing a strong APR which was clear and easy to read. The total block allocation was £27.549 million, comprising £14.393 million for integrated transport and £13.156 million for maintenance. This compared with indicative allocations of £12.743 million and £7.893 million respectively, notified in the December 2001 LTP settlement. The latest settlement continues the upward trend in support for highways maintenance provided by the Government over the past two years. Included in the allocation for integrated transport was an amount of £880,000 in respect of the MIRACLES project.

4.3 The County Council has also been allocated funding for SHRT to allow a start to be made on any necessary advance works for the scheme. Altogether £5.142 million has been made available to the County Council and Portsmouth City Council.

4.4 Although the Government recognised the importance that the County Council attaches to the A3 Bus Priority Corridor, it has not yet been able to form a view on whether the scheme passes the tests to determine eligibility for funding. However, the letter did indicate that the Government would be willing to consider the case for the scheme before the next settlement, subject to outstanding issues being resolved.

4.5 The letter also revealed that progress on transport had again been assessed as "well above average" (the highest assessment grade). The County Council will receive £2.391 million in extra discretionary funding as part of the Single Capital Pot (SCP), which is an increase of 10.3% over the amount received in 2002/03. Performance in transport planning is a significant, but not the only, factor in the achievement of this award.

5. Transport Resources 2003/04 to 2006/07

5.1 The County Council's transport schemes are funded by Government, either through specific grant and credit approvals (for schemes costing over £5 million) or through the general allocation of credit approvals in the Local Transport Settlement (for schemes costing less than £5 million).

5.2 The new programme has been produced on the basis that there is now £36 million available for highway maintenance and bridges and £41 million for integrated transport for the three years 2003/04 to 2005/06 (2004/05 awards are subject to performance, with particular reference in the settlement letter to highways maintenance performance). The year 2006/07 will be the first of the next five year LTP. For planning purposes it has been assumed that the allocation will be the same as for 2005/06.

5.3 The Government credit approvals specifically identified for integrated transport will allow spending in 2003/04 of £14.393 million.

5.4 The revised 2002/03 (and earlier) programme projects are expected to incur £8 million of costs in 2003/04 (see Appendix 5). The £14.4 million credit approval is also required to cover development costs of post 2003/04 projects, including major schemes. In 2003/04 it is planned to control work in this area to keep within a fees cost of £2 million.

5.5 There is then a total requirement of £10 million to cover past commitments and the development of future schemes, leaving £4.4 million available for spending in 2003/04 on schemes in the new 2003/04 starts programme.

5.6 A 2003/04 starts programme of £8.33 million is proposed. The programme will need to be carefully managed to deliver spending of no more than £4.4 million in 2003/04 (taking into account two factors, firstly that a percentage of the total costs of the projects will have already been spent in fees in 2002/03 and secondly, that some of the costs will not be incurred until 2004/05). This means that the start date of some higher cost projects would need to be programmed for the latter part of the year.

5.7 It is proposed that £3 million of the new starts is required for high priority projects and programmes, set out in the table below.

Priority Projects for 2003/04 Starts Programme

5.8 The programme level available (after allowing for the priority projects above) is £5.33 million. A draft programme has been drawn up which gives priority to prepared schemes supporting the LTP objectives of safety, widening travel choice, making best use of transport networks and developing partnerships with the community (the fifth objective, maintaining the network, is covered by the maintenance programme - Appendix 2).

5.9 It should be noted that, unless additional funding is found, high profile projects, such as the A35/A326 Colbury Loop junction improvement, will be delayed until late in 2003/04 and the A3 Bus Priority Stages 3 to 5 until 2004/05.

Potential Additional Resources

A3 Bus Priority Major Scheme Bid

5.10 The A3 bid for £25 million to cover expenditure on the project from 2003/04 onwards has not been accepted by the DfT. However, the DfT has not rejected the proposal outright and further justification is to be provided by the County Council and the bid may be accepted at a later date.

Single Capital Pot

5.11 In 2001/02 the Cabinet agreed that the whole of the `discretionary' element of the SCP (£2.2 million) could be used for the Environment programme, with the Bar End Recycling Centre, Winchester as principal project, unless funding was required for SHRT. In the event nearly all of the funding has been required for SHRT and none has been used for Bar End.

5.12 The County Council has received an allocation of £2.39 million for the `discretionary' element of the SCP for 2002/03. This funding is derived by the Government top-slicing national credit approval funds for transport, education and social services (44% from transport).

5.13 The Cabinet will propose to the County Council the way that this £2.39 million is divided. Should a significant proportion of this sum be allocated to Environment then this could be used to ensure the progress of the Bar End Recycling Centre and the A3 Bus Priority scheme.

5.14 The Environment Department is to look at Private Finance Initiative opportunities for waste, and street lighting column replacement, and these could be supported from the SCP.

5.15 Allowing for expenditure commitments already made in the 2002/03 programme and earlier, and the need to accommodate major scheme fees, the credit approval funded proposed starts programme is as follows:

6. Major Transport Schemes

6.1 It is also proposed to introduce a number of major transport schemes in the four year period.

South Hampshire Rapid Transit (Fareham-Gosport-Portsmouth Light Rapid Transit)

6.2 It is anticipated that there will be a start to the works on this project in the 2004/05 financial year. The cost of the scheme, net of Portsmouth City Council's contribution, is currently estimated to be £119 million over a three year period.

A3 Bus Priority Corridor

6.3 This project has, to date, been funded from the LTP Integrated Transport Block Allocation. The capital programme up to 2002/03 (with proposed amendments in paragraph 3.3 above) has allocated £10.2 million for stages 1 and 2. Included in this total is Phase 2a, for which a project appraisal for £600,000 is scheduled for consideration shortly. There is a contract arrangement in place which covers construction of the whole project.

6.4 The scheme has not yet been accepted for Government support from 2003/04, but further justification is being provided to the DfT so that it could be given approval in the near future. The bid for the major scheme for expenditure, with effect from 2003/04 onwards, totals £25 million.

Other Major Schemes

6.5 The current financial position means that the preparation costs relating to future major scheme bids need to be funded from within the County Council's transport capital allocation. To keep costs within reasonable levels it is necessary to curtail development of the major scheme programme to two active schemes and one reserve.

6.6 The County Council's priority project, because of its potential for the local economy, is a link from south of Eastleigh to Chickenhall Lane and Bishopstoke Road. There is a developer proposal to construct a scheme which initially received planning approval which was overturned following a legal challenge. Should the developer succeed in reversing this decision (this spring) then the developer could provide the southern part of the scheme and co-fund the second (northern) part. In this case the County Council may need only to support the balance of the second (northern) part of the route, but this would still qualify as a major scheme as it would cost over £5 million.

6.7 In the event of the challenge being unsuccessful, the County Council would need to develop a proposal for the whole route for consideration as a major scheme. The earliest expected start date for a scheme funded through the major scheme bid process is 2006/07 (which requires a formal bid containing all necessary transport, economic and environmental assessments completed by July 2005). The estimated cost of the scheme will vary considerably, from £10 million up to £60 million, depending on the extent of the work the County Council would have to undertake. For the purpose of this report, an intermediate estimate of £30 million has been assumed.

6.8 The second project proposed for detailed development is Stubbington Bypass, costing up to £25 million, for a July 2006 submission and a start in 2007/08.

6.9 Botley Bypass and the corridor leading down to Park Gate are proposed to be kept in reserve at present, with a review later in 2003.

7. Highways Maintenance and Bridges

7.1 The allocation within the LTP settlement for highway maintenance and bridges for 2003/04 was £13.156 million, and for 2004/05 provisionally £14.471 million, compared with the earlier indicative allocations of £7.893 million for each year. The 2004/05 allocation is subject to the authority's performance towards achieving the national target of halting deterioration by 2004 and in tackling its maintenance backlog.

7.2 It is proposed that the programmes for 2003/04 and 2004/05 be increased to £12.706 million and £14.471 million respectively. The programme for 2003/04 is £0.45 million less than the LTP allocation, to cover commitments carried forward from 2002/03. The 2003/04 programme will include major maintenance work on the A334 at Curdridge (Winchester District) and the first stage of work on the A325 (Sleaford to Alice Holt) in East Hampshire.

7.3 Since the settlement letter gave no indication of the allocation for 2005/06, it is considered prudent at this stage to propose a programme at about the level of the initial indicative figure of £7.893 million for that year and for 2006/07. It is therefore suggested that programmes of £8 million be included for structural maintenance of highways and bridges, funded from Government borrowing approvals in 2005/06 and 2006/07.

8. Integrated Transport

8.1 The background to the integrated transport proposed programme is discussed in Section 5 of this report and the proposed programme for 2003/04 based on the LTP transport allocation is set out in Appendix 2.

Area Transport Strategies

8.2 It is not possible (unless extra funding becomes available) to accommodate all of the projects deferred from the 2002/03 programme. However, each Area Transport Strategy has been allocated at least one scheme in 2003/04.

8.3 The integrated transport programme comprises the ten Area Transport Strategy programmes (recommended by the Area Strategy Panels), county-wide programmes and priority projects. There is to be a review of Area Transport Strategies during 2003/04 and it is likely that there will be a smaller number of Panels operating after the review. Individual schemes have consequently not been identified in the proposed programmes beyond 2003/04.

8.4 Many Area Strategy schemes are being developed and it is anticipated that these schemes will form the main part of the County Council's transport capital programme in 2004/05. It is anticipated that a review of programmes will be carried out, with a proposed new programme for 2004/05 being prepared during 2003. Programmes from 2005/06 for the new strategy areas will be identified in due course. In the meantime work will continue on the development of identified schemes from the existing programme (listed in Appendix 4) within the overall fees limit of £2 million.

County-wide Programmes

8.5 It is proposed to retain the casualty reduction programme at its current level, based on a £1 million per annum programme of low-cost accident remedial schemes, and also to continue with the other county-wide programmes. It is further proposed to put all Safer Routes to School schemes into the county-wide programme (some are currently within Area Transport Strategy programmes) and also to extend the remit of the Home Zones programme to encompass wider community generated projects, complementing the Rural Partnership programme currently confined to rural areas.

Summary of Integrated Transport Programmes

8.6 The proposed programme from Government approvals is as follows:

Details of the county-wide programmes will be submitted to the Executive Member for Environment in due course.

9. Capital Programme 2003/04 to 2006/07 - Schemes within the Guidelines for the Locally Resourced Capital Programme

9.1 The guidelines for locally-resourced programmes include allocations for Structural Maintenance of Non-Principal Roads, Environmental Improvements, Regeneration of Older Urban Areas, Landfill Sites Remedial Works and Household Waste Recycling Centres (HWRCs). The allocations are:

(i) £11,068,000 for Structural Maintenance of Non-Principal Roads;

(ii) £386,000 for Environmental Improvements;

(iii) £955,000 for Regeneration of Older Urban Areas;

(iv) £59,000 for Landfill Sites Remedial Works; and

(v) £308,000 for HWRCs

for each of the four years. It is proposed that, in 2003/04 only, £50,000 from the allocation for HWRCs be utilised to provide a one-off capital grant to the Hampshire Natural Resources Trust. Further details of the proposed programmes will be submitted to the Executive Member for Environment at a later date.

9.2 In addition, the share of capital receipts obtained in 2001/02 totalling £56,000, as allocated by Cabinet in July 2002, is available. It is proposed that this sum be allocated as a contribution to private streetworks.

10. Developer Funded Programme

10.1 Schemes wholly or partly funded by developers' or other contributions are included in the programme, with details in Appendices 2 and 3. The programme totals £6.3 million for 2003/04 and £11.8 million in 2004/05. Schemes have only been included where there is reasonable confidence on programme dates. It is expected that the programmes for 2005/06 and 2006/07 will be of the same order as 2003/04 and 2004/05, but details cannot be provided yet.

11. Waste Management Programme (Supplementary Credit Approval Supported)

11.1 A programme of environmental control schemes at landfill sites has been prepared for 2003/04. It is anticipated that the works will largely relate to pollution control and site monitoring, and will cost £100,000, to be funded from successful Supplementary Credit Approval (SCA) applications. SCA proposals for 2004/05 and beyond are less certain at this stage and a notional £100,000 has been included for each of the final three years of the programme.

12. Private Finance Initiative Schemes

12.1 The capital programme guidelines require Executive Members to identify possible capital projects which might be suitable for the PFI, subject to further reports on the outline business case for each scheme and Government support being available.

12.2 For the Environment services, the Government has already announced that £300 million in PFI credits would be made available during 2003/04 to authorities in England (outside London) as part of its objective to tackle the backlog of street lighting maintenance in its 10 Year Plan. The allocation of the PFI credits would be made through an annual bidding round.

12.3 The first stage of the bidding round will be an invitation to submit an expression of interest, which will be in March 2003. Work is currently being undertaken to consider whether or not the County Council should make a bid under this proposal, although from a practical point of view it may be difficult to develop a satisfactory business case for street lighting maintenance and column replacements, as this function is already covered by a long-term contract with Southern Electric.

12.4 It is clear that there is a need to replace a number of HWRCs due to expiry of temporary planning permissions, unsuitability of sites (too small, traffic congestion, etc) and the need to fill two gaps in service provision. However, no capital programme exists. If new sites are not developed then the current service will be substantially affected, leading to customer dissatisfaction and a reduction in recycling achievements.

12.5 A review of policy is under way, which will consider what future options could be developed for a revised service that will meet demand for recycling and also respond to the impact of new EU laws that will see a considerable change in the requirement to collect, store and reprocess materials. These plans, combined with other initiatives, are intended to result in Hampshire's recycling rates being among the highest in Europe. A report will be produced by the spring offering some alternative ways forward and funding implications. One option may be to consider a PFI package. An initial discussion with 4P's indicates that the objectives clearly meet the allocation for waste and recycling and they would be willing to offer consultancy advice. Should this be a route to be taken it will also require appropriate third party consultancy in the development of a business case.

13. Capital Programme Summary

13.1 On the basis of the position outlined above, the total value of the capital programmes submitted for consideration for the four years to 2006/07 is as follows:

Note: The above figures are net of developers' contributions.

14. Revenue Implications

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

14.2 The total revenue implications for the four years of the starts programme, including capital charges, represent a real term increase of 24% over the 2002/03 original budget for this service.

7682/JWB

APPENDIX 3

ENVIRONMENT

CAPITAL PROGRAMME 2003/04 TO 2006/07