Hampshire County Council Appendix 3

Capital Strategy

1 Introduction

1.1 This Capital Strategy has been approved by the County Council and the Corporate Management Team. It brings together the Council's key policies for managing all its capital assets, including land, buildings and roads, by:

· focusing attention on the most effective and efficient use of the Council's capital assets

· linking directly to the key aims in the Council's Corporate Strategy and to the Community Strategy

· improving the management and use of capital assets alongside the Council's policy and service objectives

· providing the strategy for the preparation of the Council's corporate asset management plan (AMP) and capital programme, and for Best Value reviews.

2 The Vision and Priorities for Hampshire, Community and Corporate Strategies

2.1 The Capital Strategy has been prepared within:

· the Council's Vision, which has been given a short-term focus by the Cabinet through the identification of four key priorities,

· the Corporate Strategy¹, and

· the developing Community Strategies.

2.2 The County Council is working with the eleven Hampshire district councils and other partner bodies to develop Community Strategies which involved setting up local strategic partnership (LSPs) for each district. The LSPs include elected members from the County Council and relevant district council together with representatives from other key partner agencies. In addition, a county-level strategic partnership has also been established to consider matters not dealt with by the district partnerships, involving sub-regional, regional and national partners. The priorities identified at the county level, along with those from district LSPs, will be reflected in future revisions of the Capital Strategy.

2.3 The Corporate Strategy translates the Vision and member priorities into action, moving the Council from its present position to where it and the community wants to be. There are six key aims¹ which provide the focus for all the Council's activities:

· maximising life opportunities

· stewardship of the environment.

· achieving economic prosperity

· building strong and safe communities

· improving services

· developing councillors and staff.

2.4 In addition, the Cabinet has identified four priorities for the Council in the shorter term:

· crime, youth and deprivation

· education and skills development

· older people

· transportation (mobility and accessibility) and economic housing.

2.5 The six key aims and the four priorities have implications for the Council's capital assets. Schemes are not included in the capital programme unless they contribute to meeting one or more of the six aims. For example, during the current financial year, the Council will:

· start work to provide 300 nursing care beds by the end of 2004

· start a major investment programme to support the development of discovery centres and the major refurbishment of libraries across Hampshire

· complete a £7.7m project to reorganise special school places in Winchester and Eastleigh

· undertake major condition repairs at over 250 service units ranging from resurfacing playgrounds to major structural repairs of timber-framed buildings

· invest in over 70 local transport schemes to improve safety, traffic management and use by cyclists and pedestrians.

2.6 The Capital Strategy takes account of the context of the Local Public Service Agreement¹ (PSA) with the Government, covering the period from 2002/03 to 2004/05. The additional capital investment required by the Local PSA, financed in part by unsupported borrowing approvals, has been included in the capital programme.

3 Framework for managing assets and the capital programme

3.1 The County Council approves the Capital Strategy, the corporate AMP and capital programme following consideration by the Cabinet. All these documents are subject to scrutiny by the Council's policy review committees. Responsibility for asset management within the Cabinet is allocated to the Executive Member for Policy and Resources.

3.2 At the officer level, the Asset Management Group provides a corporate approach to asset management. The Group is responsible for preparing the Council's Capital Strategy and corporate AMP. It is led by the Director of Property, Business and Regulatory Services (PBRS) and the County Treasurer, and reports to the Corporate Management Team. The Group includes senior representatives of service departments, as well as officers responsible for preparing the Council's Community Strategy to make sure that all the strategies are fully integrated.

3.3 The Director of PBRS manages and monitors the implementation of the capital programme for building works, together with service chief officers, in line with the Council's financial regulations, standing orders on contracts and the conditions agreed by the Council when the capital programme is approved. Project appraisals are prepared for major schemes at feasibility and design stages, before contracts are let. Regular reports monitoring the capital programme are considered by the Executive Member for each service. The overall progress on implementing the programme, including the resources to finance it, is reported to the Corporate Management Team and the Executive Member for Policy and Resources.

3.4 Chief officers responsible for individual capital schemes work with colleagues from other services and disciplines to maximise the benefit for all services from capital investment. The involvement of other departments is a key part of the project appraisal process for capital schemes. This makes sure that solutions that cut across the boundaries between services are identified at an early stage.

4 Existing strategies on capital matters

4.1 The County Council's approach to managing its assets and planning the capital programme recognises the corporate and integrated nature of asset management, with a framework based on a `corporate landlord'. The Executive Member for Policy and Resources is responsible as landlord for the Council's land and buildings. Users and occupants similarly have responsibilities as `tenants'. The Capital Strategy builds on this existing platform to provide high quality and effective assets, in support of the delivery of services, that are safe and fully accessible for all users and the public.

4.2 The Council considers that maintaining its existing assets is very important. Under its Strategy for the Built Estate, the Council identifies properties for which there is a long-term need and then invests in their maintenance to make sure they are maintained to appropriate standards. Planned programmes are then carried out to maintain their condition. Budgets for all the Council's repairs and maintenance of buildings, both capital and revenue, are controlled centrally as part of the Strategy. All community schools buy-back a comprehensive revenue property management service through a service level agreement. A particular issue at present is the repair and refurbishment of system-built buildings which are nearing the end of their life. Having completed a 10 year programme to replace the heating systems, the Council has approved a medium-term strategy for re-cladding and re-roofing the earliest marks of these buildings. Some of these system-built buildings are used for social services and investment is required in homes for older people built in the 1960s and early 1970s. A planned approach is also adopted for the structural maintenance of highways assets.

4.3 The Council has clear objectives for holding land and property and these provide the context for a rolling programme of property reviews. This systematic review started six years ago and has been completed and reported for all services except Transportation and Waste Management for which final reports are being finalised. It has identified opportunities for the re-use or disposal of surplus properties, rationalisations and issues regarding the suitability of premises for future service delivery. Sale proceeds are reinvested in the core building stock or other corporate priorities. The Council continues to give incentives to services to encourage them to recycle assets by allowing them to retain part of the proceeds for reinvestment. This makes sure that assets are suitable for their purpose, meet corporate and service objectives and are used efficiently and effectively.

5 Service plans

5.1 The strategic approaches adopted within each of the Council's service areas for capital investment and asset management are derived from the Council's Corporate Strategy and this Capital Strategy. The level of investment planned over the next four years for the main service areas is summarised in the covering context sheet.

5.2 An education AMP¹ has been prepared as required by the Department for Education and Skills, working closely with schools and governing bodies under the Council's Management Partnership arrangements. The key aims are to:

· Contribute to raising educational standards, including new provision for early years education with private and voluntary sector partners.

· Optimise the use of capital and other financial resources.

· Reflect the current and anticipated future needs of the curriculum.

· Underpin the County Council's strategy for the maintenance, repair and improvement of school buildings.

· Address the capital funding implications of falling school rolls.

5.3 The first full local transport plan¹ was submitted to the Department for Transport, Local Government and the Regions (DTLR) in July 2000. The main thrust of the plan tackles the following key transport policy concerns:

· Maintaining the transport network, dealing with essential repairs and making the network safe and efficient for all users.

· Reducing dependence on the private car and encouraging alternative modes of transport such as cycling, walking and public transport.

· Implementing the first element of South Hampshire Rapid Transit¹ (SHRT) between Fareham-Gosport-Portsmouth to address the severe transport problems and development pressures in southern Hampshire.

5.4 The priorities for the Council's social services assets are:

· Making sure that all facilities comply with the requirements of the Care Standards Act 2000.

· Modernising the Council's homes for older people, introducing intermediate and nursing care and reducing the number of delayed transfers from hospital to the minimum level practically achievable.

· Using the Council's sites and borrowing approvals to assist the development of supported housing with district councils, in pursuit of the `Supporting People' objectives of independent living and social inclusion.

· Modernising services for people with learning disabilities in line with the objectives of the White Paper `Valuing People'.

· Implementing the National Service Framework for older people.

· Refurbishing and upgrading the premises used to provide residential care for children.

· Meeting the requirements of health and safety, disability discrimination, equality and other legislation, and providing jointly with the health service equipment to help disabled people to remain in their own homes.

· Providing 500 new nursing care beds in new homes and extensions to existing care homes.

6 Cross service plans

6.1 Equally important are County-wide strategies including:

· The County Structure Plan¹, which identifies areas of significant growth in new housing over the next ten years. Schools, transport and community facilities will be needed and included in future capital programmes and bids. Substantial levels of additional resources will be required.

· The Corporate Sustainable Development Strategy¹, which promotes policies and actions to achieve sustainable development. Agenda 21 principles underpin the Council's actions and services, including capital investment. In addition, the regeneration of older urban areas and county towns supports the Council's policies for long-term land use and travel, improving the quality of life in those areas.

· The Corporate Water Action Plan¹. The Council adopts the best practice in the effective and efficient use of energy and water in its own properties.

· The Corporate Equalities Plan and Race Equalities Scheme¹, including access to services and facilities.

· The Council's e-government strategy¹ for delivering local government online across all of its services.

· The office accommodation strategy, which makes sure that all offices are fully used.

· The land disposal strategy, investing in roads and other infrastructure where these advance works will maximise returns. The Council also retains control over developments through the quality of the design and the use of planning policies to fulfil its environmental stewardship aims.

7 Links to the Performance Plan

7.1 The County Council's programme of reviews is set out in the Performance Plan¹. This programme looks at cross-cutting themes that affect all services across the Council. Issues of sustainability and e-government are considered for each review and reported in the Plan overall. The Capital Strategy sets the background for the consideration of capital issues in Best Value reviews. The outcome of the reviews is fed back to the Capital Strategy and the capital programme, along with recommendations from audit and other independent inspections.

8 Working with partners

8.1 The County Council works closely with all partner organisations on service matters that affect capital issues. These include district councils, neighbouring local authorities, the police and fire authorities, school governing bodies, the diocese, community and voluntary bodies, the health service, the lottery boards, national organisations such as Sport England, as well as the business sector including developers.

8.2 The joint working with district councils and others to develop the Community Strategy reinforces the wide range of existing partnership arrangements concerning capital schemes. The Council's close links with district councils and the neighbouring unitary authorities in Portsmouth and Southampton include the provision of community and leisure facilities in schools, local area transport strategies, a joint office strategy, the regeneration of older urban areas, integrated waste management facilities, coast protection, museums, special needs housing, community safety and disability discrimination. All involve capital investment or the use of assets. As an example of community planning in practice, the feasibility of relocating a secondary school in an urban area of Hampshire is currently being investigated with the local district council to make the redevelopment of the area more viable, sustainable and inclusive, as well as providing extra housing to meet Structure Plan targets. The concept of Discovery Centres is being developed with partners to provide library services, adult learning and community use in one building, leading to wider service use of existing assets for longer hours.

8.3 The partnership between the Council's social services and the health service over the use of assets is long established. Current examples include:

· The joint initiative to provide 500 new nursing care beds during 2004/05.

· Planning the construction of two jointly managed residential facilities for children with severe disabilities.

· Development of information systems to support joint mental health services across Hampshire.

· Exploring the development of shared office premises through a Local Improvement Finance Trust.

8.4 The voluntary sector continues to play a key role in many of the Council's capital projects, through the Hampshire Compact¹ developed with voluntary and community bodies. Examples of the voluntary sector's involvement include community and leisure facilities, village halls, local transport and social services facilities. The Council is also working with voluntary and private sector partners to provide early years education.

8.5 The Council is developing new partnerships with industry, including the use of longer-term contracts. It will also continue to work closely with specialist suppliers and contractors. The Quality Partnerships with bus, rail and freight operators are improving public and freight transport in the County. The Council also plays a leading role in the Hampshire Economic Partnership, which brings together local government, central government and training organisations to promote key economic development.

8.6 One of the most important partnerships is with central Government itself, and many of the Council's capital schemes result from close working with Whitehall departments and the Government Office for the South East (GOSE), as well as the European Union.

9 Consultation with the public and partners

9.1 The County Council consults widely with the public, its partner organisations, the business community, the voluntary sector and the Council's staff as part of the process of developing the Performance Plan and Community Strategy. This includes focus groups, opinion surveys, Citizens' Panel, response cards enclosed with the Performance Plan and the Council's flagship magazine for the public, `Hampshire Now'. The Council also consults residents' groups, trade unions and the business sector about the budget, including the capital programme. Following discussions with representatives of the business community in July 2001, it was agreed that the key objectives in the business plans of the Chambers of Commerce should be matched with the Council's key aims in its Corporate Strategy. The priorities for business are skills, employment, transport, infrastructure, housing and the constraints of planning on enterprise. The Chambers confirmed their involvement in consultation on area transport plans and via the Hampshire Economic Partnership.

9.2 An important part of the Council's consultation processes are the extensive and innovative discussions held at the planning and feasibility stage of each capital proposal with all partners and stakeholders. From these detailed, ground-level consultations, and from those on service plans, vital and practical information is drawn together to build up the Capital Strategy, supplementing the more broadly-based `top-down' consultations.

9.3 All these consultation processes are ongoing. The Council will continue to analyse the results and they will influence the content of both the Community Strategy and future capital strategies.

10 The capital programme

10.1 The County Council prepares and publishes a rolling four-year capital programme¹ within limits set by Government borrowing approvals and the Council's assessment of available local resources and the revenue implications of the proposed programme. The Council uses the later years of the programme to plan and prepare schemes. This includes work on design, land acquisition, and obtaining planning approvals and Government support.

10.2 The Council has refined its techniques for assessing priorities between schemes, evaluating options for capital investment that make the best use of its assets in terms of the benefits for services and financial returns. All schemes are developed to meet needs identified in the Capital Strategy and corporate AMP process, and must contribute to meeting the Council's key aims set out in the Corporate Strategy. If necessary, the Council top-slices resources to protect essential parts of the capital programme. Final judgement on political priorities, in the light of public consultation, are made by the County Council. This process has been applied to all schemes in the current programme as well as those currently being considered for inclusion. Full details of the process for assessing priorities are set out in the corporate AMP.

10.3 Linked to the four-year capital programme, the Council has incorporated the key financial elements of the Capital Strategy in its Financial Management Policy. It has also revised its financial control procedures, including the project appraisals and progress monitoring. This makes sure that the need for each scheme and its links to the Corporate Strategy and Best Value are fully considered by members of the Council before approval is given.

10.4 The Council's existing capital assets are reviewed during the preparation of the corporate AMP to see if they are still appropriate and give value for money, taking account of the investment necessary to maintain those assets.

11 Resources for capital and procurement

11.1 In the context of its financial strategy, the County Council will continue to use in full the borrowing approvals for which the Government provides grant support. In addition, the Council will maximise the use of capital resources from other bodies, provided that the proposed schemes are compatible with the overall Capital Strategy. This will include submitting bids to central Government, the European Union, health authorities and the National Lottery. The Council will encourage partner organisations to reflect their involvement in capital schemes by contributing to the costs, where appropriate.

11.2 The Council will consider all methods of procuring and financing its capital programme. It will adopt a public-private partnership (PPP) approach, including the private finance initiative (PFI), if this can be shown to be the best value for money and consistent with the Capital Strategy. This is more likely to be the case for larger schemes with an income stream, such as the South Hampshire Rapid Transit¹ scheme.

11.3 The Council has continued to develop its procurement strategy and is now procuring around half of its capital and major refurbishment programmes through partnerships and framework agreements. Partnership arrangements with mechanical and electrical design engineering consultants have recently been concluded, thus extending the Council's successful partnerships with consultants.

11.4 The outcomes of two major partnership projects demonstrate the benefits.

· John Hanson School was completed on time and the school took occupation as planned in September 2002. In addition agreement of the final account was achieved in parallel with completion of the project, £600,000 below the available funding.

· The Sir Harold Hillier Gardens Visitor Pavilion was successfully completed with the final account agreed within the Contract Sum. The success of the project is attributable to close teamwork with significant evidence of joint problem solving and co-operation to reach this outcome. With traditionally procured work of this size, final account negotiations could have run for long periods of time and consume valuable resources which would otherwise be directed towards new opportunities.

11.5 To date the Council has found that the newer procurement methods compare favourably to traditional tendering, particular benefits have included:

· greater commitment by contractors to jointly resolve issues and reduce costs

· major disputes leading to claims have been avoided

· higher quality products with fewer technical issues

· project programme objectives are being achieved

· costs compare favourably to competitive tendering and with a higher degree of certainty.

11.6 The Council has prepared an Agenda 21 environmental policy statement for property. Under this policy, buildings should be developed with consideration for environmental issues at all stages of their life cycle. A new primary school at Great Binfields in Basingstoke has been built to environmentally sensitive standards as a pilot scheme for the County Council. Similarly, for social services, a project to replace Alton Day Services for people with learning disabilities will incorporate solar heating, rain water harvesting and other sustainable development initiatives.

11.7 The Council will continue to make full use of its own resources to finance the capital programme, primarily from capital receipts and by using revenue finance mainly for capital repairs and structural highway maintenance, within the context of its overall financial strategy. The rolling programme of land reviews will continue to identify land and buildings no longer required which can be sold to provide resources for reinvestment. Where appropriate, the Council will `invest to save', especially in new IT technology. If the Government reforms its capital control system to allow additional borrowing, the Council will consider using such loans for suitable invest-to-save and for in/out projects, subject to appropriate business cases and revenue costs being contained within cash limits.

11.8 As part of its culture of partnership, the Council works closely with other organisations to maximise benefits from their capital investment. This includes joint transport investment by the Highways Agency, bus companies and the Strategic Rail Authority. For example, the Council is improving the infrastructure for the A3 road in conjunction with a bus company that has provided new buses and services for the route. The joint schemes listed in paragraph 8.2 reflect the close working of health authorities and social services.

11.9 The County Council will be looking for substantial additional resources from the Government over the next ten years to help provide the facilities required for the significant growth in new housing in the Hampshire County Structure Plan for 2001 to 2011.

12 Performance measurement

12.1 The Council has adopted the national performance indicators (PIs) for property published by the DTLR in March 2001. The results for all five national PIs have been calculated for the second year and published in the corporate AMP in July 2003. In addition, the County Council has continued to publish the results for its own local property PIs, which include user satisfaction, contractor performance, energy and water use and asset performance. These local PIs are used in conjunction with the national PIs for benchmarking with other providers. This includes the Egan construction indicators and use of the National Best Value Benchmarking Scheme. The local performance framework has been reviewed for 2003/04 with new performance targets established. PI information is being shared with SECAMP, the South East County Asset Management Plan network, enabling comparisons to be made with other county councils in the South East. Specialist consultants were commissioned to undertake a benchmarking exercise prior to letting the new engineering contracts worth £25m. Once longer-term trends are available, increasing use will be made of the results from the PIs and benchmarking work to help the Council to monitor and evaluate progress on implementing its Capital Strategy and corporate AMP.

12.2 The results for all property PIs are reported to members, service managers and partners as appropriate. Once completed and in operation, capital schemes are evaluated with users and lessons fed back to the preparation of future schemes. The Council's financial and business systems are currently being replaced in a major capital investment known as the Enterprise Project¹. Social services' core systems are also in the process of being replaced by the SWIFT system in a £5.2m project. They will conform to the DoH's `Information for Social Care' specification and will assist with the achievement of Local PSA targets. The integrated new systems will improve the collection and dissemination of performance measurement information. Phase 1 of SWIFT was launched on 1 July 2003.