Archived decisions

REPORT OF THE

CABINET/LEADER

PART I

REVIEW OF THE CAPITAL PROGRAMME, AND POLICY AND RESOURCES BUDGET MONITORING 2004/05

1. In approving the Capital Programme for 2004/05 to 2007/08 in February, the County Council agreed that the programme should be reviewed again later in 2004 with particular reference to a number of outstanding issues, including the prospects for capital receipts in 2004/05 and later years, the need for investment and infrastructure in development land to maintain the flow of capital receipts, the possible use of borrowing that is not supported by Government grants, and potential private finance initiative schemes.

2. The Cabinet has now carried out a detailed review of the Capital Programme with particular reference to the issues mentioned in the previous paragraph, together with a number of other considerations. In summary, there is an increase in the forecast level of capital receipts over the two year period of 2004/05 and 2005/06 of £3m which, after careful consideration, the Cabinet recommends should be used as follows to allow certain projects to proceed from planning to implementation:-

£m
Existing shortfall of resources 1.500
Replacement day centre for older people in Hythe and Dibden 0.375
Special needs education in east Hampshire 0.375
Household waste recycling centres 0.750
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Total 3.000
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Forecasts of capital receipts in years after 2005/06 depend on progress in developing the County Council's land at North Popley. The Capital Programme approved in February assumed that capital receipts would be £6.3m per annum from 2006/07 onwards. The overall total for capital receipts, including reinvestment projects in the two year period from 2004/05 to 2005/06 is now forecast to be at least £47m.

3. A synopsis of the changes proposed to the Capital Programme, including an explanation of the proposals for the use of the additional £3m capital receipts referred to above, is set out below:-

    (a) North Popley and Manydown Development Areas and Relocation of the John Hunt of Everest Community School, Basingstoke

    The major development area at North Popley, Basingstoke will provide the County Council's mainstream of capital receipt opportunities between 2005/06 and the end of the decade. As the Council will be aware, experience from previous development areas has shown that returns are maximised if the County Council invests in advance in infrastructure for such sites. The estimated cost of the infrastructure for North Popley is £13.5m.

    The North Popley proposals necessitate the relocation of the John Hunt of Everest School and it is proposed to add this to the Education Capital Programme for 2005/06 at a cost of £25.4m of which some 85% will be funded from capital receipts, developer contributions and community contributions from Basingstoke and Deane Borough Council. The shortfall of £4.3m remaining is proposed to be met in the short term from unsupported borrowing to be repaid from the future flows of capital receipts from the development of the land at North Popley. This contribution is, in effect, an addition to the Education Capital Programme from corporate resources.

    (b) Winchester Cultural Centre, Jewry Street, Winchester

    The existing capital programme includes provision of £2.8m for the proposed Cultural Centre in Jewry Street, Winchester. In addition, a capital receipt will be available from the sale of the redundant building at North Walls (the location of the existing reference library and headquarters buildings). Winchester City Council has confirmed that it will also contribute towards the project. Part of the original provision for the Winchester Library project (some £1.4m) was used to build the new Alton library. The construction of this library is nearing completion and in due course the redundant site in Alton will be marketed for housing development and it is proposed that the proceeds should be returned to the Winchester project. These sources of funding give a total cash limit for the Winchester Cultural Centre of £6.6m. As the capital receipt from the sale of North Walls will not be available until the end of the development at Jewry Street, it will be necessary to use unsupported borrowing to bridge the gap temporarily.

    (c) Replacement Day Centre for Older People serving Hythe and Dibden

    During last year's review of the programme, it was agreed that discussions should be entered into with New Forest District Council regarding an offer of a site for a replacement day centre for older people serving the Hythe and Dibden area at no cost to the County Council. The existing facility run by Age Concern is at the end of its life. Whilst the County Council would have to find the principal share of the funding at some £0.75m, it would avoid the need to pay the development value for a site. It is proposed, that £0.375 is met from Social Services' existing capital programme and £0.375m from the additional £3m capital receipts referred to earlier.

    (d) Education - Reorganisation of Special Needs Provision in East Hampshire

    The County Council was successful in 2003/04 in securing £5m from the Government's targeted capital fund for the reorganisation of special education in east Hampshire. The total estimated cost of the scheme is in the order of £7.1m. Contributions from other sources including the sale of the potentially redundant land leaves an estimated £0.375m to be found which again is suggested can be met by a contribution from corporate resources.

    (e) Education Capital Programme - Additional Developer Contributions

    Since approval of the revised capital programme for 2004/05, additional developer contributions of £360,000 have been received and it is proposed that the Education Capital Programme limit be increased by that amount.

    (f) Household Waste Recycling Centres

    The Cabinet has examined a business case prepared by the Director of Environment which proposed that the existing provision in the capital programme for household waste recycling centres be increased from £0.316 per annum to £1m per annum for 7 years from 2005/06. This would enable the full programme of relocations, improvements and new sites to be completed and the Cabinet commends this to the County Council.

    4. The proposals set out in Paragraph 3 above, if agreed, are sufficiently significant to warrant a revision of the County Council's prudential indicators under the new framework for Local Authority capital finance; the revised indicators are therefore set out in Appendix 1 for the Council's formal approval. Unsupported borrowing for John Hunt of Everest School (£4.3m) and North Popley infrastructure (£3.3m) increases this total of unsupported borrowing under this new prudential code to £28.8m (of which £20m is for nursery care accommodation).

    5. The approval of the County Council is sought to changing the basis of control for lump sum capital schemes. Currently, the capital programme is controlled on a "starts" basis which means that a scheme is considered to be committed against the capital programme's cash limit when the scheme has started. Whilst this is the most appropriate method for controlling the majority of schemes in the capital programme, there are, however, some lump sum provisions in the programme that are spent on a large number of small schemes and it would be more practical to control these on an "expenditure" basis. This would mean that the charge against the capital programme's cash limit for the year was the total expenditure actually incurred in the year. This is the basis for controlling the revenue budget and a number of the lump sum provisions for which this change is proposed are similar to revenue budgets, for example, capital repairs to buildings and the structural maintenance of roads. A full list of the fifteen categories of projects that are suitable for control on this basis is set out in Recommendation (x) below and if the proposed change is agreed it will be necessary to amend the control total for at least eight of the fifteen categories of project. These proposed changes will not lead to any increase in the overall level of capital payments incurred by the County Council and are commended to the Council for approval.

    RECOMMENDATIONS:

    (i) That the scheme to replace the John Hunt of Everest Community School in Basingstoke be added to the Education Capital Programme for 2005/06 at a cost of £25.429m, to be funded from contributions from developers and Basingstoke and Deane Borough Council and from the sale of the existing school site, together with the use of unsupported borrowing in 2004/05 and 2005/06 totalling £4.3m.

    (ii) That the scheme to provide infrastructure for the development of land at North Popley, Basingstoke be added to the Policy and Resources Capital Programme for 2005/06 at a cost of £13.5m, to be funded from the provision in the capital programme for 2005/06 of £10.2m for North Popley and Manydown, with the balance of £3.3m met from unsupported borrowing in 2005/06 and 2006/07.

    (iii) That the provision of £5m for the County Council's share of the acquisition of land at Manydown be reinstated in the capital programme when it is next reviewed provided that development of the Manydown site has not been excluded from the Basingstoke and Deane Local Plan, to be funded from the capital receipts from the development of North Popley.

    (iv) That the provision of £2.8m currently in the Recreation and Heritage Capital Programme for the Winchester Cultural Centre be increased to £6.6m, funded from the sale proceeds for the library buildings in Alton and North Walls, Winchester and a contribution from Winchester City Council with any increase in costs above £6.6m to be met from Recreation and Heritage's existing resources.

    (v) That the scheme for a replacement day centre for older people in the Hythe and Dibden area be added to the Social Services Capital Programme for 2005/06 at a cost of £0.75m, with the funding to be met from Social Services' capital resources currently unallocated (£0.375m) and corporate resources (£0.375m).

    (vi) That the scheme to reorganise special education in east Hampshire be added to the Education Capital Programme for 2005/06 at a cost of £7.1m, to be funded from the allocation of £5m received from the Government's targeted capital fund, and from capital receipts, capital repairs and other existing resources totalling £1.725m, with the balance of £0.375m to be funded from corporate resources.

    (vii) That the provision in the Environment Capital Programme for 2005/06 to 2007/08 be increased from £0.316m per annum to £1.0m per annum, to be funded from Environment's share of capital receipts, including the disposal of highways land at Town Centre West, Basingstoke and the Government's proposed Waste Management Performance Reward Grant.

    (viii) That the Education Capital Programme limit be increased by a further £360,000 to reflect additional developer contributions.

    (ix) That the revised prudential indicators set out in Appendix 1 be approved.

    (x) That the basis of control for the following lump sums schemes in the capital programme be changed from a "starts" basis to an "expenditure" basis with effect from 2004/05:

    Education

    Schools access initiative

    Furniture and equipment

    Environment

    Structural maintenance
    - locally resourced
    - Government supported

    Low cost safety

    Community safety initiative

    Rural partnership schemes

    Passenger transport information

    Railway stations/interchanges

    Air quality and noise monitoring

    Local Transport Plan monitoring/initiatives

    Recreation cycling

    Coast Protection Act