Contact: Anne Hibbert, ext 7533, email [email protected]

1 Summary

1.1 This report proposes the capital programme for 2004/05 to 2007/08 (shown as Appendix 1).

2 Introduction

2.1 The Cabinet at its meeting on 15 December 2003 asked Executive members to prepare proposals for:

· a locally-resourced capital programme for the four-year period from 2004/05 to 2007/08 within the guidelines of the current capital programme adjusted for inflation

· capital schemes supported by Government approvals in the form of grants or Government supported borrowing in 2004/05 and those expected to be supported in 2005/06, 2006/07 and 2007/08

· possible capital projects which might be suitable for the private finance initiative (PFI) revenue support from the Government for 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 exclude the provision for North Popley and Manydown spread over the years 2004/05 to 2006/07 agreed by Cabinet in June 2003. A further report will be submitted to the Executive Member on the implementation of these projects.

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

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 Executive members may propose supplementing their capital guidelines under the `prudential framework' agreed by Cabinet at its meeting on 24 November 2003, thereby integrating more closely decisions on revenue and capital spending in support of Corporate Aims. These additions may include:

· virement from the Executive member's revenue budget to meet capital financing costs

· temporary unsupported borrowing, to provide bridging finance in advance of capital receipts or other contributions, with the cost of servicing the unsupported borrowing in the interim being met from the Executive member's revenue budget.

2.7 The 2004/05 guideline has been increased to include additional provision of £736,000 for school capital repairs funded by revenue contributions to capital, continuing the allocation agreed on a one-off basis in 2003/04.

3 Capital programme 2004/05 to 2007/08 - locally resourced schemes

3.1 The programme proposed for 2004/05 to 2007/08 is based upon the allocation of resources between priorities in the current 2003/04 to 2006/07 capital programme. The main corporate priority continues to be the maintenance of the core buildings in the County Council's built estate, through the capital repairs programme and supports the Corporate aim of improving services county-wide.

Business unit schemes

3.2 The introduction of the Prudential Code on Capital Finance from April 2004 allows the use of unsupported borrowing to be financed by virement from revenue. A proposal by IT Services to use this mechanism to fund various hardware, software and installation capital schemes will be submitted to a future meeting and this will avoid continuing business unit revenue deficits to finance investment later recovered by service user charges.

3.3 Hampshire Printing Services, County Supplies Hampshire Transport Management and HC3S are proposing some improvement schemes to be funded from business unit reserves.

Economic development

3.4 A new area of activity which is becoming increasingly important to the local economy is the need to promote the development of Broadband networks across Hampshire targeted at businesses and local communities. Also in order to pump prime various economic projects e.g. Local Food Centres it would be useful to have some provision in the capital programme. Both of these initiatives are in support of the Council's aim of leading the development of a strong and sustainable economy in Hampshire. It is proposed to create a programme for economic development projects with an allocation of £40,000 in each year of the capital programme.

4 Capital programme 2004/05 to 2007/08 - schemes supported by Government approvals

New Deal for Schools condition funding

4.1 The Department for Education and Skills has announced allocations for 2004/05 and 2005/06 from its New Deal for Schools (NDS) Modernisation Fund to bring school buildings up to the standards required to teach the modern curriculum. The overall allocation is split between suitability (improvement) work, which is managed by Education and funding to address the backlog of building condition work, which is managed by Policy and Resources. A split of these resources for 2004/05 in the ratio of 54% to condition and 46% to suitability was agreed by Executive Members in July 2003.

4.2 The NDS condition grant for 2004/05 is £17.2m, a £2.1m (14.1%) increase on the 2003/04 grant. For 2005/06 the grant reduces to £11.3m. The allocations include a specific sum earmarked by the DfES for investment in primary phase buildings. This new policy was announced during 2003 and is being introduced as a prelude to the introduction of Building Schools for the Future, which begins in 2005/06 and which will target investment on schools for secondary age pupils in specific local authority areas on a rolling basis over 10 to 15 years.

Electronic Government

4.3 In response to the County Council's initial proposals for implementing electronic government (IEG) the Office of the Deputy Prime Minister has granted £200,000 to the County Council in 2002/03 and another £200,000 in 2003/04. Additional grant of £350,000 is anticipated for 2004/05 with a further £150,000 in 2005/06. It is a requirement of these grants that they are committed to work identified in the IEG Statement.

Magistrates' Courts Committee

4.4 Capital funding for minor building works in 2004/05 has recently been agreed by the Department for Constitutional Affairs and is included in Appendix 1. Magistrates' Courts will become part of a new Government Agency from April 2005 and so do not form part of the County Council's capital programme from that date.

5 Private finance initiative schemes

5.1 There are no Policy and Resources schemes currently under consideration that would generate PFI credits from the Government.

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 2007/08 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 15% over the 2003/04 original budget of this service.

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

None.