Hampshire County Council

Buildings Land and Procurement Panel Item 11

24 March 2004

Capital and Major Repairs 2003/04 and 2004/05 and beyond

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

Because the activities covered by this report affect the majority of the County Council's services, they contribute to the achievement of all the corporate aims, in particular:

Aim 1 - maximising life opportunities - by providing a good quality, safe and

well maintained estate for the community to enjoy.

Aim 3 - Stewardship of the Environment - by ensuring the built estate is well

maintained and provides an environment in which people want to live.

Aim 5 - improving services - by providing good quality buildings that enable

improved service delivery.

1

Introduction

1.1

The purpose of this report is to:

· present Panel members with information on the level of commitment

against 2003/04 allocations

· outline the management issues in 2004/05

· seek approval to the proposed budget allocations for 2004/05

· seek approval for the addition of schemes to the programme of capital

repairs

1.2

The Panel has already agreed that the integration of capital repairs with NDS and school funding provides a unique opportunity over the next three years to maximise spending and value from these programmes. It is therefore important for planning and implementation reasons to view these programmes together over the next three years. This year's carry-forward, which is planned to be up to £4m, is part of the process of planning work over this timescale (rather than a 12 month cycle) where some £70m of resources are available to 2006/07. Regrettably beyond that point the picture is less clear in relation to future government approvals.

1.3

The paper endorses the earlier decisions to plan the work in an integrated way which effectively could mean significant carry-forwards in any 12 month period or (subject to the procurement and capacity issues raised elsewhere on the agenda) seeking members' approval to advance works and commitments, but with the provision of remaining within the overall cash limits for three years.

2.

2003/04 Position

2.1

Appendix 1 shows the level of commitment against the major repairs budget (which includes resources carried forward from last year and excludes fees) for major repairs. This shows that half of the available resources for major capital repairs were committed at 14 February. The budget for traditional capital repairs in 2003/4 amounts to £6.1m. To date £1.6m (excluding fees) has been committed representing 27% of available resources. As outlined in previous reports to Panel, this relates to the priority that has been given to undertaking work funded: first, from NDS Condition Fund; second, school-funded projects and third, capital and major repairs. As already noted in the case of school-funded projects, every opportunity is taken to co-ordinate schools' own funding with projects financed by Policy and Resources.

2.2

In asset management terms, and in seeking to achieve the maximum impact on the largest liabilities, it will be necessary to continue to plan:

· revenue maintenance to focus on preventative measures;

· major and capital repairs to meet significant liabilities (education and non education buildings)

· NDS on major school liabilities (e.g. SCOLA);

· Schools' funded work to complement the above; and

· specific capital allocations for Health and Safety.

2.3

Increasingly with NDS funded work having to be implemented within "18 month cycles" to meet DfES requirements, and other works being planned during holiday periods to avoid disruption at schools, a 3 year planning and implementation cycle becomes more evident and likely. The different contributions and mixes of funding will have more impact when they are planned and brought together as opposed to implemented as separate and independent works.

2.4

The Panel's decisions to implement fire surveys at residential properties, the implementation of the Sprinkler policy and the priorities established in the Corporate Risk Assessment (over an 18 month period) increasingly add to the complexity of planning and implementing the programmes in any particular 12 month period.

2.5

The above priorities have impacted on the rate of progress on traditional capital repairs, where a programme of work has been approved in line with available funding. Another factor has been the extent to which it has proven possible to provide adequate resourcing without committing the County Council to potentially unsustainable levels of longer-term expenditure.

2.6

When the initial budget allocations for 2003/04 were approved, a contingency of £1.5m was set aside which was subsequently allocated to an 18 month programme in line with high priority areas informed by the Corporate Risk Assessment. The major programme areas were:

· fire precautions

· asbestos management

· electrical services

· structural collapse

By mid February, 35% of the capital budgets set aside for these purposes had been allocated, with the remainder to be committed by the middle of 2004/05.

2.7

For the reasons outlined above, it is likely that it will be necessary to carry forward in the region of £4m of capital and major repairs resources to enable the approved programmes to be implemented in a sustainable manner and to address the issues in the following section of the report.

3.

2004/05 and beyond

3.1

The resources available in the 2004-05 capital programme are:

£000

Capital Repairs 6,354

Major Repairs 8,310

NDS Condition Fund 17,190

31,854

The capital repairs provision includes £736,000 which so far has only been made available in 2004/05, and the longer term NDS position is uncertain. It is therefore appropriate to continue to take a longer-term view of the resources available as the picture could be - if NDS were not available beyond 2005/06 - that funding would reduce over the years as follows:

2004/05

2005/06

2006/07

2007/08

£000

£000

£000

£000

Capital Repairs

6354

5618

5618

5618

Major Repairs

8310

8310

8310

8310

NDS Condition Fund

17190

11341

-

-

31854

25269

13928

13928

3.2

It is possible, therefore, that within two years resources could be less than half their current level. 2004/5 is also the first year in which the Government will specify specific minimum allocations for spending at primary schools due to changes planned from 2005/6 in the way capital funding for secondary schools is to be allocated and the start of the Building Schools for the Future initiative which will only target secondary schools.

3.3

There are other major issues which need to be addressed and which support a longer-term approach to resource management. The planned review of the capital programme due to be completed in May will consider:

· the possibility that funding will be required to contribute towards the

costs of redeveloping Ashburton Court. Whatever the future of Ashburton Court, significant capital repairs funding will be required and there could be merit in earmarking over the next three years a specific allocation to facilitate planning of work to Ashburton Court.

· A significant liability relates to the remedial work required for the corporate IT suite at headquarters involving potentially the replacement of fire detection, alarm and suppression systems, replacement of air-handling equipment and the impact of providing secondary generating capacity to the IT suite. While not all costs will fall on Policy and Resources the investment will be significant in any single period and it therefore makes sense to plan this over a three-year period.


· Subject to the final brief and scope of work at Winchester Discovery Centre, it is planned to include a programme of work for repairs and replacement of major components in the Jewry Street Library to coincide with major development works.

· The need to fund the urgent replacement of key property and related financial management IT systems which are currently mainframe systems; the mainframe will be withdrawn from April 2005. (In developing these systems, business practice improvements will be sought, although it is unlikely that these will deliver direct cash savings). Appendix 3 contains further information relating to the proposed replacement of main frame computer systems.

3.4

The capital programme provision for major repairs in 2004/05 is at the 2003/04 level, uplifted by 2.5% for inflation. It is recommended that the 2003/04 detailed allocation remain largely unaltered. This is because it is proposed to increase the allocation in support of County Farms and the Gypsy and Traveller Service, which will enable high priority and unavoidable commitments to be met, and enable Government Grant income to be maximised. The proposed allocations are shown in Appendix 2.

3.5

It is recommended in this report, for reasons mentioned in 1.2 and section 2, that the carry forward of £4m should be endorsed. Due to the exceptional and unusual liabilities, it may be some weeks before any definite recommendations will be made.

3.6

The proposed allocation of traditional capital repairs in 2004/05 is as follows:

Allocation

Proposed Allocation

2003/04

2004/05

£000

£000

Replacement systems and components

2050

2100

Electrical Safety

1030

950

Joint funded schemes and landlord's -

minor works and infrastructure contributions

1080

1100

Access initiatives

170

180

Land Management

125

130

Contingency

1744

1894

6199

6354

4.

Additions to Programme

4.1

It is proposed to add the following to the programme to be funded from Capital and Major Repairs:

£000

Refurbishment of Chantry House, Andover 290

Heating system, Birch House, Fleet 55

Landlord's portion of milk quota, County Farms 55

Playing fields drainage, Henry Cort School 71

Hatch Warren Junior School (see Appendix 4) 1,000

Wecock Young Persons Resource Centre 65

Aldershot Registration Office 92

Demolition of Leigh Park Nurseries, Havant 116

Penny Hill Caravan site - contribution to £115,000

Scheme to refurbish amenity block

(Government grant aided system - County Council contribution £29,000)

5.

Conclusions

5.1

The level of commitments on capital repairs is relatively low as a result of concentrating on priority schemes and ensuring the programme is delivered in a sustainable manner. This enables a longer-term view to be maintained to ensure that the programme is always addressing the County Council's priorities.

Recommendation(s)

That the Panel advises the Executive Member for Policy and Resources that: approval be given to:

1

The level of budgetary commitment.

2

The management of the programme over the longer-term.

3

The proposed allocations of the 2004/05 capital and major repairs budgets.

4

The proposed additions to the programme.

5

Any under commitment against the capital budgets being carried forward to 2005/06.

6

Following the further research and detailed design work, which is currently being completed with regard to replacing the CAC system, a further report be presented to BL&PP in May.

Work Type

Budget

Commitment

Percentage

(£'000)

(£'000)

Asbestos Removal

650

209

32.2%

Planned Maintenance

2,660

1,548

58.2%

Redecorations and major repairs associated with capital projects

1,365

1,050

76.9%

Planned Electrical Repairs

320

39

12.2%

Planned Mechanical Repairs

470

478

101.7%

Strategic Maintenance

1,310

533

40.7%

Fire Precautions

725

29

4.0%

External Works & Landscaping

390

200

51.3%

Demolition

165

56

33.9%

Vandalism Prevention

155

103

66.5%

Landlord's Contributions

655

176

26.9%

County Farms

456

415

91.0%

Non Functional Buildings

160

0

0.0%

Contingency

96

0

0.0%

Total

9,577

4,836

50.5%

Allocation

Proposed Allocation

2003/04

2004/05

£000

£000

1. Major Repairs

Asbestos Removal

250

250

Planned Maintenance

2,610

2,610

Redecorations and major repairs

associated with capital projects

1,365

1,365

Sub total

4,225

4,225

Major Engineering Repairs

Planned Electrical Repairs

320

320

Planned Mechanical Repairs

470

470

Sub total

790

790

2. Landlord's Programmes

Strategic Maintenance

1,060

1,060

Fire Precautions

370

370

External Works and Landscaping

390

390

Demolition

165

165

Vandalism Prevention Measures

155

155

Landlord's contributions

405

405

Sub total

2,545

2,545

3. Other Allocations

County Farms

225

370

Non functional buildings

160

170

Contingency

162

210

Sub total

547

750

TOTAL

8,107

8,310