Hampshire County Council

Buildings, Land and Procurement Panel Item

13 October 2005

Revenue and Capital Repairs 2005/06 - six-monthly review

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

This scheme will impact on the delivery of the following Corporate Aims:

Aim 1 - maximising life opportunities - by providing a high quality, safe and well maintained estate for the community to enjoy

Aim 5 - improving services - by providing quality buildings that enable improved service delivery

1

Introduction

1.1

This report updates Members on the current financial position for revenue and capital repairs and the New Deal for Schools (NDS) condition funding. In particular it:

· confirms that the NDS condition funding programme for 2004/05 has been delivered in line with central government targets

· highlights pressures in the non-Education sector that have not been able to benefit from NDS investment

· recommends additions to the NDS and capital repairs programme.

1.2

The report also updates Members on the new contract arrangements for the supply of electricity to large sites.

2

Revenue repairs

2.1

Appendix 1 shows that the level of commitment to date against the revenue repairs and maintenance budget is 82% of the £13.226m available with 38.5% of the financial year having elapsed. As in previous years this is explained in part by the inclusion of some £3m of budgets which are delegated with no buy-back arrangement. The remaining £10.3m shows a commitment of 77%. This is still a high proportion of the budget but the figure includes the full-year commitment under the engineering term maintenance contracts of £5.8m. Excluding these figures the remainder of the budget shows a commitment of 48%.

2.2

Recent storms in the south east of the county have resulted in flood damage to a number of schools in the Gosport and Havant area. Initial estimates indicate the works required would cost a minimum of £195,000 with Park Community School (£100,000) and Baycroft Special School (£70,000) the worst affected. Agreement has recently been given to fund major flood damage from the insurance fund.

2.3

Inflation continues to be a concern with average levels between six and seven percent experienced for a number of years and this was recognised in the 2005/06 budget with additional funding totalling £451,000 (3.6%) allocated to maintain the purchasing power of the budget. However, still higher levels are emerging in specific areas such as the engineering term maintenance contracts where it is estimated an average increase of 9% would have been required to maintain the previous year's level of service.

2.4

The 2005/06 revenue budget also incorporates a cashable efficiency savings target of £71,000. Opportunities in the current financial year to achieve cashable efficiency savings while maintaining the level of service are limited although initiatives in construction procurement will continue to have an impact in developing efficiency gains in this area.

3

Capital repairs

3.1

New Deal for Schools (NDS)

The County Council's 2004/05 NDS allocation was:

2004/05

£'000

Works 14,948

Fees 2,242

Total 17,190

3.1.1

The conditions of the Government grant require the 2004/05 programme be completed by 31 August 2005, in effect creating a 17 month financial year. This has been achieved, delivering over £17m of projects to schools. This figure however represents a high point in investment by the government under this scheme and allocations in the current and subsequent years are at a lower level.

3.1.2

The allocations for 2005/06 and 2006/07 are as follows:

2005/06 2006/07

£'000 £'000

Works 9,861 10,957

Fees 1,479 1,644

Total 11,341 12,601

3.1.3

Work has already started on the 2005/06 programme approved at the Panel meeting on 5 April and commitments of £7.6m have been made.

3.1.4

The Government has also indicated a further year of NDS investment in 2007/08 at broadly similar levels to 2006/07. The position after 2007/08 is more uncertain with no clear indications either of funding under the New Deal for Schools programme or the new Building Schools for the Future programme.

3.2

Capital Repairs

3.2.1

The NDS programme has had a significant impact on school buildings and it is estimated that some 50% of Hampshire schools have benefited from at least one major capital repairs project from this funding. However, this needs to be seen in the context of an overall liability in excess of £291 million and despite the extra resources from NDS there remains considerable pressure on planned maintenance such as structural inspections and the resulting remedial works.

3.2.2

As reported to Member's in April 2005, these pressures are most acute in the non-Education sector which does not benefit from NDS investment and there is a growing need to direct more significant sums of money into areas such as Social Services properties to address the increasing liabilities in this area.

3.2.3

The Capital Repairs budget for 2005/06 is £11m and proposals to allocate this money to meet statutory requirements such as asbestos inspection and electrical testing and inspection programmes and to address the condition liability were approved at the Panel meeting on 30 June. Commitments to date against these key risk areas (39.8% after allowing for full-year commitments) are in line with expectations.

4

Additions/amendments to Capital Repairs/NDS programmes

4.1

It is proposed to add/amend the NDS/Capital Repairs programme as detailed below:

Up to £100,000

Marlfield OPH - replacement of oil fired boiler and oil tank

Rookwood Phase II - window replacement, roofing and security improvements

Stubbington Business Centre fire precaution improvements

£100,000-£200,000

Addenbrooke OPH, Gosport - installation of new fire alarm and emergency lighting

Thurlston House OPH, Fleet - installation of new fire alarm and emergency lighting

Stocklands OPH, Calmore - installation of new fire alarm and emergency lighting

Vigo Infant and School Schools - SCOLA 1 cladding (increase NDS allocation)

Winchester Cultural Centre - contribution to infrastructure works

Wavell School - fire alarm replacement scheme (increase NDS allocation)

Yateley School - fire alarm replacement scheme (NDS)

Over £200,000

Term engineering contract support - defer funding previously allocated in 2005/06 for boiler replacement schemes at Barncroft Infant, Barncroft Junior, Oak Meadow Primary and Stockbridge Primary to 2006/07 NDS programme to enable £395,000 to be allocated to term engineering contract support (NDS).

Icknield Special School - recladding works - increase allocation to £310,000 (NDS)

Property Information System - see paragraph 6

5

Supply of Electricity to large sites

5.1

Tenders have recently been invited for the supply of electricity to 36 HCC sites (incl. 33 secondary schools) and 12 external customers (mainly colleges). At the BLPP meeting in June, Members were advised that "in a volatile market, the County Council is likely to come under pressure to conclude a contract quickly after bids have been received" and it was agreed that the Director of Property, Business and Regulatory Services should be authorised to conclude new contractual arrangements. In line with that recommendation, new contracts have been agreed with London Electricity for an initial contract period of one year with the option to extend up to a total of four years.

5.2

The current supplier, London Electricity, and 4 other companies submitted a total of 20 bids covering fixed prices for 12 and 24 months and green, CCL-X (Climate Change Levy Exempt) and brown energy. The bid from London Electricity represents the lowest overall cost offered by a single supplier. Members will be aware of the upward pressure on electricity prices and this environment is reflected in the results of the tender exercise:

£000's Current cost London 1 Yr

HCC (36 sites) 1,107 1,366

+ 23.4%

External (12) 751 935

+ 24.6%

Total (48) 1,858 2,301

+ 23.8%

5.3

London Electricity currently supply brown energy to these sites and did not submit a tender on this occasion for either green or CCL-X electricity. The energy supplied will, therefore, continue to be brown. Greener alternatives were available at a small premium, but this would also entail the administrative overhead and disruption that is inevitably linked to the re-registration of sites with new suppliers and these options were not pursued. The County Council continues to purchase a large proportion of its electricity from 'green' sources and will continue to invite tenders on the basis of a range of supply options.

6

Property Information Systems

6.1

The Panel has been provided with regular progress reports on the work to replace and improve a number of key property information systems. The first phase, a new SAP procurement system, was successfully implemented earlier in the year. The Panel has previously agreed to the development of a further phase of the project which will lead to the integration of land and building data and provide a platform for accessing graphical information. The Property Information Systems Project represents the first major investment in property IT systems for over ten years. The existing stand-alone databases were developed over 15 years ago, prior to the amalgamation of Property Services. While they have served the department well there are limitations relating to lack of integration and their complexity means that new development is now essential.

6.2

The Blueprint has now been prepared together with detailed cost estimates, timescales and scope. The estimated cost of this development is £650,000 with the costs being phased over this and the next financial year and it is anticipated that it will be implemented next summer. Approval to the first phase is included in paragraph 4.1.

Recommendation

That the Buildings, Land and Procurement Panel advise the Executive Member for Policy and Resources that approval be given to:

1

The additions/amendments to the NDS/Capital Repairs programme as detailed in paragraph 4.1.

Budget

£'000

Commitment

£'000

%

Non-Education Services

Redecorations

525

119

22.7

Engineering servicing and repairs

1,625

1,609

99

Minor structural repairs

769

544

70.7

Asbestos testing

40

4

10

Vandalism reinstatement

105

98

93.3

Sub-total

3,064

2,374

77.5

Contingency

343

Delegated to schools

Delegation under LMS scheme

2,194

2,194

100

Delegation under fair funding:

Community Schools

6,440

5,445

84.5

Foundation Schools

679

679

100

Sub-total

9,313

8,318

89.3

Other Allocations

Strategic consultants

380

164

43.2

Non functional buildings

100

20

20

Gypsy and Traveller Sites

26

0

0

Sub-total

506

184

36.4

Total

13,226

10,678

81