Contact: Jon Pittam, ext 7400, e-mail: [email protected]

1 Summary

1.1 The accompanying report sets out for approval the proposed capital programme for 2006/07 to 2009/10, based on the guidelines agreed by Cabinet on 19 December 2005 and the support for capital schemes recently announced by the Government. The proposals take account of the County Council's capital strategy and the Prudential Code for Capital Finance in Local Authorities including the capital financing position, the level of debt outstanding and the consequences for the revenue budget and council tax.

1.2 The following decisions are sought, based on the recommendations of the Leader and Cabinet to the County Council, for the capital programme for 2006/07 to 2009/10:

1 That the policy on the use of unsupported borrowing be amended to require services to finance the cost of interest and the statutory minimum revenue provision on all `bridging' loans in the years that such costs are incurred (paragraph 3.10 of the main report)

2 That the County Council continues to lobby the Government to provide full revenue grant funding for Government supported borrowing allocations or provide its support as capital grants (section 4)

3 That, if the Government does not change the basis for its capital support as outlined in recommendation 2, the County Council limits the use of Government supported borrowing allocations from 2007/08 onwards to the amount that will replace debt falling out as a result of normal debt repayment, so that the total level of annual loan charges rises by no more than the overall increase in the revenue budget (paragraph 4.9)

4 That unsupported borrowing be used to meet the temporary shortfall of resources in 2005/06, estimated to be £9.3m, to be repaid from estimated surplus resources in 2006/07 (paragraph 2.4)

5 That the Director of Property, Business and Regulatory Services review and update the projections of capital receipts and report to Cabinet during summer 2006 (paragraph 2.4)

6 That the County Treasurer and Director of Property, Business and Regulatory Services review the basis for estimating the cost of fees and report to Cabinet during summer 2006 on proposals for bringing future years' capital expenditure flows into line with available resources (paragraph 2.5)

7 That the executive member for Adult Social Care be asked to report to an early meeting of Cabinet on the outstanding financing of the following schemes, as originally requested by Cabinet in February 2005, and that the approval of the Adult Services' capital programme be deferred until solutions for the financing shortfall on these schemes has been agreed by Cabinet (paragraph 7.2):

· £1.32m for Social Services' contribution towards the cost of the improvements already made to residential homes for older people

· £0.375m for the replacement day centre for older people in the Hythe and Dibden area

· £1.7m for the shortfall on the SWIFT social care IT system

8 That Children's Services schemes and resources totalling £7.277m be deferred from the 2005/06 capital programme to 2006/07 (paragraph 8.2)

9 That unsupported borrowing of £0.547m be approved to finance part of the cost of the replacement special school at Sundridge School, Havant to be repaid from part of the anticipated capital receipt from the sale of land at Woolston Road, Havant, subject to the requirement in recommendation 1 to fund the interest and repayment costs on an annual basis (paragraph 8.12)

10 That unsupported borrowing of up to £11.3m, including the Sundridge School scheme, be approved in principle for schemes in the Children's Services capital programme for 2006/07, subject to further reports to Cabinet on specific proposals and the requirement in recommendation 1 to fund the interest and repayment costs on an annual basis (paragraph 8.13)

11 That it be a recommendation to Council that:

a) Cabinet be authorised to determine any further use of unsupported borrowing within the County Council's agreed prudential framework for capital finance

b) approval of the capital programme for Adult Services for 2006/07 to 2009/10 be deferred pending agreement by Cabinet of solutions for the outstanding financing shortfalls arising from the existing schemes for improvements to residential homes for older people, the proposed replacement day centre for older people in the Hythe and Dibden area, and the SWIFT social care IT system

c) the remainder of the capital programme for 2006/07 be approved as set out in Appendix 4 of the accompanying report and subject to the conditions set out in section B.3 of the County Council's Financial Procedures and, where appropriate, to the approval of the executive member for Policy and Resources to proposals by executive members to retain more than a 25% share of capital receipts

d) the remainder of the capital programmes for 2007/08 to 2009/10 be approved as set out in Appendix 4 for the purpose of undertaking design work (including the preparation of feasibility and design project appraisals)

e) expenditure on preliminary design and planning work for major transport schemes be permitted when they have achieved a place in the County Council's Local Transport Plan, subject to the cost being met within existing Government allocations

f) authority be given to incur expenditure on land purchases as follows:

(1) up to the sum specified in respect of sites still required for the schemes included in the capital programme for the period 2006/07 to 2009/10 provided that the relevant scheme has been the subject of a feasibility or design project appraisal approved by the relevant executive member

(2) up to the amount included in the 2006/07 programme in respect of advance and advantageous land purchases.

2 Reason

2.1 The full County Council must agree the capital programme for 2006/07 to 2009/10 at its meeting on 22 February 2006. The Leader will present his budget speech and recommendations at that meeting, including proposals for the capital programme. This report provides the background to the capital programme and proposes the recommendations from the Leader and Cabinet to the County Council.

2.2 These decisions support all the aims of the corporate strategy as the capital programme provides financial resources for:

Aim 1 - maximising life opportunities

Aim 2 - stewardship of the environment

Aim 3 - achieving economic prosperity

Aim 4 - building strong and safe communities

Aim 5 - improving services

Aim 6 - developing councillors and staff.

3 Other options considered and rejected

3.1 Other options are not available as far as process and timetable are concerned, but the leaders of the opposition parties may wish to present their own recommendations on the capital programme to the County Council as amendments to these proposals.

4 Conflicts of interest declared by the decision maker or a member or officer consulted

4.1 Not applicable.

5 Dispensation granted by the Standards Committee

5.1 Not applicable.

6 Reason for the matter being dealt with if urgent

6.1 To meet the County Council budget decision-making timetable.

Approved by: Date:
Councillor T K Thornber, C.B.E