Hampshire County Council

22 February 2006 Item 8

Revenue Budget and Precept 2006/07 and Capital Programme 2006/07 - 2009/10

Report of the Leader and the Cabinet

With the concurrence of the Chairman under Section 100B (4)(b) of the Local Government Act 1972, this matter has been included on the agenda to ensure that timely decisions are taken with regard to the Revenue Budget and precept 2006/07 and the Capital Programme 2006/07-2009/10.

A. REVENUE BUDGET AND PRECEPT 2006/07

1. Summary

1.1 The Cabinet recommends a council tax increase of 4.7% and a proposed budget of £568m. Although the budget has increased from the budget guidelines (£566m) reported to the Cabinet on 19 December 2005, a 4.7% tax rise can still be sustained due to a higher surplus on collection funds (which has the effect of increasing income from council tax) and total savings of £10.8m to offset increased spending. This level of council tax has been achieved despite a further loss of £52,000 of Government grant in the County Council's final settlement and has been set within the Government's capping limit of 5%.

1.2 The Government grant increase of 2% for 2006/07 does not reflect the withdrawal of two specific grants (access and capacity: for delayed discharges from hospitals, and safeguarding children). Taking this into consideration, the true position is a mere 0.2% grant increase, which is below inflation and below the cost of other spending pressures impacting on the County Council, in particular adult social care and waste management. It is also the second lowest grant per head for county councils.

1.3 Despite strong representations made to Government by the County Council in respect of its provisional settlement, no changes have been made to the grant formula and there remains a damping grant from the general grant floor of £24m at the end of 2007/08 and a further loss of formula grant within adult social care of £14m. This will result in a £38m loss for which the budget strategy provides some one-off protection through the grant equalisation reserve. As this reserve can only be used once, it is essential that plans are put in place to reduce spending now and in the longer term.

1.4 As the Adult Social Care budget is the largest now that schools are fully funded by the new Dedicated Schools Grant (DSG), it is not surprising that pressures will be greatest here. This is a national problem but exacerbated for

1.5 Hampshire by the redistribution of grant away to other authorities outside the South-East.

1.6 The difficult grant position for services contrasts starkly with the new DSG for schools which sees a 6.4% increase in cash terms for 2006/07. This will allow identified cost pressures of £18.4m to be absorbed, and for new growth proposals for schools of £17.5m.

2. Main points

2.1 Executive Members have put forward service budgets in accordance within an agreed budget strategy, with the exception of a £2.7m shortfall for Adult Social Care in 2006/07. It is proposed to add £2.7m to the guideline cash limit to reflect this shortfall.

2.2 There has been growth in the guidelines of £3.4m to reflect anticipated pressures for Adult Social Care (£0.9m) and Children's Services (£2.5m).

2.3 Total growth proposals of £16.9m in 2006/07 have been identified for services. These proposals will be met in full as follows:-

2.4 The overall efficiency improvement and savings made in County Council terms are £15.7m, of which £10.6m count towards the Annual Efficiency Statement.

2.5 It is also proposed to commit additional one-off amounts in 2006/07 towards libraries (£220,000), the development of a bid for yellow bus funding (£60,000) and the continuation of the work by the Futures Group with schools to create a future vision of the County Council (£20,000). These one-off measures (including the £2.7m adult social care shortfall detailed in paragraph 2.1) totalling £3m can be met by two main sources, namely an increase in the collection fund surplus notified by district councils (£2.3m) and the remaining £692,000 from an increase in interest on balances and improved cashflows.

2.6 A number of corporate priorities have been identified as follows:-

	£'000
Democratic Processes	100
Older persons' communications	50
Members expenses	60
Equalities	20
Efficiency and internal audit	100
Repairs and maintenance	120
ACSOs - additional costs - use of contingency - new mobile team	100 -100 300
Policy and Resources savings	-60
Hampshire Action Teams	780
Resources devolved from Environment	-780
Total additions	690

2.7 Taking into account these corporate priorities and other factors (detailed in the table below), it is proposed that a budgeted contribution of £1.8m be made to balances to cover the risk of a £2m overspend on Adult Social Care in 2005/06, some default on late payments from health authorities and to cover the potential under-achievement of the stretching savings target of £6.4m for Adult Social Care in 2006/07:-

	£'000
Corporate Priorities	690
Interest on balances	-2,500
Interest on improved cash flow	-1,200
Unsupported borrowing costs	900
Reduced tax base	245
Flood protection	-250
Other base budget changes	215
Grant loss in financial settlement	52
Contribution to balances	1,848
Net addition to budget	-

The changes detailed above offset each other with no impact on council tax.

2.8 As the linking of budgets more closely with performance management is a key feature of the Audit Commission's Comprehensive Performance Assessment. all Executive Members are required to review their plans and monitor achievement against them during 2006/07 for all proposed growth and redeployment proposals. Particular emphasis is given to the monitoring of performance against specific plans for achieving all savings targets.

2.9 The principal area of risk management continues to be the uncertainty of grant loss in 2008/09 and beyond as detailed earlier in the report. Figures will be subject to the results of the comprehensive spending review 2007 and indications are that there will be a much lower spending increase nationally than in the spending review of 2004. Also, the outcome of the Lyons inquiry into the function, form and funding of local government should be completed by then. Taking these factors into consideration, it is proposed to plan for Government cash increases of between 0 and 2%. It is therefore necessary to reverse the 2005/06 strategy to run down the grant equalisation reserve in proportion to the loss of grant from 2005/06 through to 2007/08 and instead plan for the reinstatement of the reserve to provide some transitional, one-off support towards future grant loss

2.10 Projected balances at 31 March 2007 are estimated at £10.9m, which equates to 1.9% of the new budget base. This is higher than the previous target of 0.6% because of the introduction of the DSG for schools, which reduced the budget base but without any compensating reduction in the requirement for balances. This is because schools have their own collective balances of £33m. However, the amount of balances is still very low compared with most authorities despite the greater uncertainty that lies ahead whilst the Government funding position remains volatile.

2.11 Earmarked reserves at 31 March 2007 are estimated at £53.9m excluding schools. The principal reserves estimated at 1 April 2006 are pay and benefits transitional costs (£10.0m) and grant equalisation reserve (£25.0m) There are three key areas for reserves and balances, namely:

· To rebuild capacity in the grant equalisation reserve because of the grant floor (loss of £38m from 2008/09)


· To provide for the pay and benefits project in terms of continuing costs and any back pay or compensation settlement under the single status agreement


· Potential overspends in 2005/06 and 2006/07, particularly Adult Social Care, although all services will be expected to continue their normal budgetary control disciplines to remain within cash limits

2.12 The modernisation, restructuring and efficiency reserve was created in 2005/06 to cover the continuing costs arising from pay and benefits, as well as specific contingency pressures and potential liabilities identified whilst setting the 2005/06 budget. As pay and benefits will not now be implemented in 2005/06, it is proposed to switch £8.7m to the grant equalisation reserve to provide some one-off support for the general grant floor of £24m.

3. 2006/07 Budget

3.1 Taking all the changes detailed above into account the final budget proposals for 2006/07 can be summarised as follows:-

Service cash limits:

3.2 Other budgets for 2006/07:

3.3 Summary:

budget requirement is £28.2m (5.2%) (taking into account an adjusted budget base for 2005/06 of £540.1m because of the introduction of DSG for schools and other changes to formula and specific grant)

4. Treasury Management Strategy and Investment Strategy for 2006/07

4.1 For 2006/07, the Cabinet recommends that long and short term interest rates be closely monitored. Long term fixed-rate borrowing should be considered if long term rates stand at 4.5% or below, or at a higher rate if clear signs of a rising trend in rates occur. Using the same trigger rates, lender's option/borrower's options loans can be considered in order to generate short term savings in interest costs. Guideline targets of up to £22m and £13m are proposed for long term fixed rate borrowing and lender's option/borrower's options loans, which can be exceeded if the circumstances are appropriate.

5. Section 25 report, Local Government Act 2003

5.1 The Local Government Act 2003 comprises a series of duties and powers that give statutory support to important aspects of good financial practice. Section 25 of the Act requires the Chief Financial Officer (the County Treasurer) to report to the County Council when setting its council tax on the robustness of the estimates included in the budget and the adequacy of the financial reserves in the budget.

5.2 The County Treasurer's report on this matter is set out in detail in Appendix 1, but in summary it is suggested that provided the County Council considers the above factors and accepts the budget recommendations, including the level of earmarked reserves, a positive opinion can be given under Section 25 on the robustness of the estimates and level of reserves.

6. Consultation response

6.1 A general response was made by the Office of the Deputy Prime Minister to the County Council's representations on the provisional settlement. A further reply from the County Council highlighted that 0.2% effective grant support could not be termed as a generous settlement, which was not in line with either general inflation (2.7%) or the national pay award (2.95%). Nor had the issue of the £38m potential grant loss been dealt with.

7. Conclusion

7.1 The County Council faces many pressures for 2006/07 which are exacerbated by the continued loss of revenue support grant from the Government - Hampshire has the second lowest formula grant per head (after floors damping) and the lowest relative needs grant per head. However, the County Council has continued to receive the highest rating of 4 stars in the 2005 Comprehensive Performance Assessment and continues to build on its past success. The County Council continues to provide high quality services with a council tax in the lowest quartile in line with the Corporate Strategy.

RECOMMENDATIONS

a) That the Treasurer's report under Section 25 of the Local Government Act 2003 be taken into account when the Council determines its budget and precept for 2006/07 (Appendix 1)

b) That the revenue budget for 2006/07 (as set out in the draft budget book circulated separately) and the provisional budget for 2007/08 be approved

c) That the total budget requirement for the general expenses of the County Council for the year beginning 1 April 2006 be £568,360,000

d) That the County Council's band D average council tax for the year beginning 1 April 2006 be £910.62

e) That the County Council's council tax for the year beginning 1 April 2006 for properties in each tax band be:

	£
Band A Band A	607.08
Band B Band B	708.26
Band C Band C	809.44
Band D Band D	910.62
Band E Band E	1,112.98
Band F Band F	1,315.34
Band G Band G	1,517.70
Band H Band H	1,821.24

f) That precepts be issued totalling £ 444,717,358.55 on the billing authorities in Hampshire, requiring the payment, in such instalments and on such dates set by them and previously notified to the County Council, in proportion to the taxbase of each billing authority's area as determined by them and as set out below:

BasingstokeBBasingstoke and Deane Borough Council	60,116.70
East HampshiEast Hampshire District Council	46,626.44
Eastleigh BorEastleigh Borough Council	42,628.47
Fareham BoFFareham Borough Council	41,536.00
Gosport BoroGosport Borough Council	26,476.40
Hart District Hart District Council	36,860.00
Havant BorouHavant Borough Council	42,327.00
New Forest DNew Forest District Council	71,105.30
Rushmoor BoRushmoor Borough Council	29,980.50
Test Valley BTest Valley Borough Council	44,503.00
Winchester CWinchester City Council	46,207.85

g) That the annual investment strategy be approved (Appendix 2)

h) That the prudential indicators (Appendix 3) be approved.

B. CAPITAL PROGRAMME 2006/07 - 2009/10

1. Summary

1.1 The Cabinet has considered proposals put forward by Executive Members for the four years 2006/07 to 2009/10. The resultant draft capital programme is attached as a separate document. In drawing up their preferred programmes, Executive Members were requested to:

· prepare proposals for a locally resourced four-year capital programme within the current programme limits, adjusted for inflation

· prepare a programme of schemes supported by Government grants and scheme- or programme-specific supported borrowing allocations for 2006/07 and those expected to be supported in 2007/08, 2008/09 and 2009/10

· consider the use of unsupported borrowing in accordance with the County Council's policy on prudential borrowing

· consider possible private finance initiative (PFI) projects which might attract support from the Government.

1.2 There are some significant temporary shortfalls of resources available to fund expected capital expenditure in the period from 2006/07 to 2009/10 although this is forecast to rectify itself over time. Therefore it is proposed that unsupported borrowing be used to meet the shortfall in 2006/07 (estimated to be £9.324m), with decisions on funding the temporary shortfalls in 2007/08 and 2008/09 to be taken nearer the time. This financing position is the result of two main factors:-

_ A delay in obtaining capital receipts in 2005/06 which has reduced the expected amount available to finance the capital programme - disposals are expect to be completed in 2006/07


_ Higher levels of professional fees (around £1m per annum at current programme levels) required on capital receipt reinvestment schemes and capital building projects than allowed for in the general fee scale, and it also reflects the initial preparatory work needed for many new policy developments

1.3 The director of PBRS will review and update capital receipt projections during the summer and these will be reported to the Cabinet. The County Treasurer and the Director of Property, Business and Regulatory Services will review the level of provision that should be made for fees to ensure the successful delivery of building projects in future capital programmes. Payments and resources will continue to be closely monitored during in 2006/07, with regular progress reports to the Leader and the Cabinet indicating if any further action is required to restrain payments to the levels of resources estimated to be available. Executive Members will also review progress on their capital programmes at regular intervals during the year.

1 Unsupported borrowing

1.1 The unsupported borrowing proposals detailed in this report are within prudent limits and comply with the requirements of the Prudential Code for Capital Finance in Local Authorities. In respect of the policy on `bridging' loans, which will be repaid by eventual capital receipts, capital grants or contributions, the Cabinet agreed that services be required to fund the annual interest with the statutory minimum revenue provision of 4% in the year in which it is incurred, and not by rolling up the interest until the capital receipts are obtained. The effect of this will be to eliminate the strain on the County Council's annual revenue budget which would otherwise have to be met by savings elsewhere or charged to the council tax. Services would have to meet this annual cost from their revenue budgets or from their existing capital programmes, or by setting aside part of their shares of other capital receipts. Over the full period of each loan (in most cases one to three years), this change of policy will be cost neutral for services because having paid the interest costs annually, they will not have to give up part of their capital receipt at the end of the loan to fund what would have been the rolled up interest costs and the principal outstanding will have been reduced by the 4% annual repayments. It is suggested that this requirement is applied to all future bridging loans including the latest Children's Services proposals. Therefore, services will be required to specify how they plan to meet these costs in recommending their proposals to the Cabinet for unsupported borrowing for bridging purposes.

1.2 In respect of Government supported borrowing, it will be necessary to consider whether the County Council can afford to continue with its current policy of taking up in full all Government supported borrowing approvals. For authorities such as Hampshire where the revenue grant allocation is so low and hence it is subject to the floor damping mechanism that guarantees a minimum percentage increase in grant (2.0% in 2006/07 for education authorities), there is no immediate benefit from additional Government supported borrowing in terms of revenue grant. Unfortunately, the Government has decided to remove the capital adjustment that it has made in previous years to address this problem, with effect from 2006/07 onwards. Representations have been made to the Government by the County Council in response to the consultation on the revenue support grant and by other bodies such as the County Councils Network. A final decision on the extent that Government borrowing approvals are utilised in 2007/08 onwards can be taken by the Cabinet later in 2006 or early 2007.

3 Starts programme

3.1 Further to the budget guidelines agreed by the Cabinet in December 2005, some adjustments have been made, which include proposals by Executive Members for transfers between capital and revenue, as follows:-

· a revised split of the former Social Services guideline between Adult and Children's Services following further discussions between the two services

· a reduction of £0.232m per annum in the guideline for Environment to continue a virement to revenue agreed in 2005/06

· a continuation in 2006/07 of the addition made to Environment's structural maintenance provision each year since 2003/04 when an extra £3.5m was first added to the programme. The amount for 2006/07 is £2.989m after transferring £780,000 to the highways maintenance revenue budget

· further net virements to revenue requested by the Executive Member for Environment, which will transfer £119,000 to revenue in 2006/07 and £34,000 per annum in 2007/08 and subsequent years.

3.2. The total starts value of the four-year programme is £525m. The main elements are £388m for schemes supported by Government approvals, £132m for the four-year locally resourced programmes and £5m for land acquisition.

3.3 The proposed programme for Adult Services is in line with the guidelines for the locally resourced programme (£2.624m). This also includes schemes supported by Government grant to improve information management (£0.376m in 2006/07 and £0.367m in 2007/08), and by Government borrowing approvals for mental health (£0.346m in 2006/07 and £0.336m in 2007/08). However, there are some outstanding funding shortfalls totalling £3.4m arising from 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. As the majority of funding for these commitments is likely to come from the Social Services' share of capital receipts from disposals that have been approved but not yet completed, it is proposed that approval of the Adult Services' four-year capital programme is deferred until solutions for these issues have been agreed by the Cabinet.

3.4 The proposed programme for Children's Services of £182.2m over the next four years is supported mainly by the Government with capital grant and supported borrowing allocations. This includes schemes totalling £7.277m (Basingstoke School Plus, Sundridge School in Havant, Whiteley Primary and minor works), which the Executive Member for Children's Services wishes to defer from the 2005/06 starts programme to 2006/07 together with matching resources. Other main points are:

(a) New Deal for Schools (NDS) allocations have been divided between modernisation works (Children's Services capital programme) of £10.7m for 2006/07 and £10.9m for 2007/08, and condition works (Policy and Resources capital programme) of £12.6m for 2006/07 and £12.8m for 2007/08. The allocations for 2008/09 and 2009/10 are subject to completion of the Government's Comprehensive Spending Review 2007, however similar allocations have been assumed. The Government has provided its NDS allocations in 2005/06 by way of a 100% capital grant. However for 2006/07 this has changed and will now be provided as 60% supported borrowing and 40% capital grant. The supported borrowing proportion will increase to 70% in 2007/08.


(b) Building Schools for the Future (BSF) programme - the Department for Education and Skills (DfES) has confirmed that 2011 is the earliest date that Hampshire secondary schools could be included.


(c) Additional funding from 2008/09 onwards for large-scale primary school building projects has been announced by the DfES. Indicative national totals are £150m for 2008/09 and £500m a year thereafter. A consultation paper is expected soon, to include details of the allocation criteria and the basis of the funding support.


(d) The Government's support for overall capital investment in Children's Services for 2006/07 in the form of capital grant and borrowing approvals is £51m (£52m in 2005/06).


(e) Children's Centres - an indicative capital allocation of £9.515m has been made to provide 53 children's centres in Hampshire for 2006/07 and 2007/08. Specific schemes require DfES endorsement and the Cabinet will approve their addition to the capital programme when that endorsement is obtained.


(f) Included in the 2006/07 capital programme are two schemes (relocation of Woodlands Education Centre, Havant and rebuilding of Pinewood Infant School, Farnborough), which will be partly funded by contributions from the Insurance Fund totalling £4.6m.


(g) Unsupported borrowing, as part funding of the programme for 2006/07, of up to £11.3m is proposed for: Sundridge School, Havant; Kings Copse Primary, Hedge End; Freegrounds Infant, Hedge End; Shamblehurst Primary, Hedge End; Woodlands Education Centre, Havant and Henry Tyndale School, Farnborough, all in advance of capital receipts and Dowd's Farm Primary, Hedge End in advance of a developer's contribution. It is possible that the cash flow of payments and receipts will reduce the borrowing from the maximum level of £11.3m. The Cabinet has agreed a specific proposal for Sundridge School, Havant to use unsupported borrowing of £0.547m to be repaid from part of the anticipated capital receipt from the sale of land at Woolston Road, Havant.

(h) Loans - excluding the proposals detailed above, the Cabinet has previously approved unsupported borrowing for Children's services schemes totalling £17.4m, to be repaid from capital receipts. An additional £4.4m has been borrowed using the School Balances Loans scheme, also to be repaid from capital receipts and developers' contributions. All receipts are on target to be obtained during 2006/07 and 2007/08.


(i) A funding shortfall of £7.1m in 2004, reducing to £1.3m by February 2005 has now been eliminated mainly by reducing the number of NDS modernisation schemes and by unsupported borrowing against anticipated capital receipts.

3.5 There are still pressures on the Children's Services capital programme however. Looking ahead, there will be a need for new schools and extensions to serve residential developments in the proposed major development areas and other areas of significant new housing in the county. It is anticipated that additional capital expenditure in the region of £30m is likely to be required in 2007/08 and 2009/10, although exact timing is dependent on planning consents. Around half of this expenditure should be met by developers' contributions, with some of the Government's new pupil places allocations also being available (allocation continues at the relatively low level of just over £4m per annum in 2006/07 and 2007/08). Current indications show an estimated shortfall of resources is likely in 2008/09, the extent of which will be quantified and a strategy for dealing with it developed and reported to the Executive Member for Children's Services.

3.6 With regard to Environment, the Government's local transport plan (LTP) capital settlement for 2006/07 includes an allocation of £27.907m, an increase of 1.6% compared with the equivalent figure for 2005/06. In constructing the capital programme, allocations of £27.0m in 2007/08, £27.2m in 2008/09 and £27.5m in 2009/10 have been assumed. Other main points:-

(a) The potential exists for increases in the integrated transport part of these allocations from 2007/08 onwards by way of reward grants depending on the Government's assessment of the LTP.


(b) For 2006/07 the Government allocations will continue to be in the form of supported borrowing, but in 2007/08 this will change and part will be switched to capital grant (about 25% with any reward grants also allocated as capital grant).


(c) The programme includes Government supported expenditure on structural maintenance and integrated transport, which have been set at a level to ensure that the allocation for 2006/07 and the estimated allocations for the remaining three years are utilised fully.


(d) In addition, the Government has allocated £6.261m in 2006/07 for the A3 Corridor Bus Priority scheme, 50% as supported borrowing and 50% as capital grant. It is likely that allocations for major schemes in future years will be 100% capital grant.


(e) No provision has been made in the programme for any new major schemes as funding bids no longer have to be made at the start of a five-year LTP programme and instead can be submitted at any time. Several schemes are in preparation for possible bids, including Chickenhall Lane Link Road in Eastleigh and an additional Park and Ride scheme in Winchester.


(f) The previously agreed provision of £1m per annum to improve the County's household waste recycling centres has been included in the programme, which will be funded by Environment's share of capital receipts and by use of the Government's Waste Performance and Efficiency Grant. Future years' programmes will be subject to revision if actual grant levels are insufficient to support the full increase to £1m per annum.

(g) The provision for structural maintenance in 2006/07 includes an additional £2.989m above the guidelines set in December 2005 and continues the one-off additions to the programme in each of the last three years of £3.5m plus annual increases for inflation, after transferring £780,00 to the highways maintenance revenue budget.


(h) The annual increases in structural maintenance detailed above have enabled specific concerns about the condition of footways and rural carriageways to be addressed with an additional 305 footway and 98 carriageway schemes being implemented. This has resulted in an improvement in the local highways condition rating system and has helped to prevent further deterioration of the highway and a reduction in the maintenance backlog, particularly on footways. In addition, the increased investment has helped to improve the achievement of the Local Public Service Agreement target for accident reduction.


(i) The provision for environmental improvements, the Hampshire villages initiative and the regeneration of older urban areas has been reduced by £579,000 in 2006/07 and £494,000 per annum in later years by virement to the revenue budget.


(j) The locally resourced programme for 2006/07 has been supplemented by £66,000 funded from Environment's 25% share of its capital receipts obtained in 2005/06.

3.7 On 23 January 2006, the Cabinet authorised the Director of Environment to submit an expression of interest to the Department for Transport for a Private Finance Initiative (PFI) bid for the replacement of street lighting columns. As the proposal is at a very early stage, it has not been reflected in the Environment capital programme, which includes an allocation of £0.8m per annum for a conventionally procured replacement programme.

3.8 The proposed programme for Policy and Resources for 2006/07 includes the refurbishment of the Ashburton Court offices in Winchester at a cost of £40.2m, including the purchase of Capital House. The scheme will be funded by capital receipts (unsupported borrowing of up to £18m will be required in advance), a contribution from Winchester City Council and reduced future maintenance liabilities. As a result of the introduction of the dedicated schools grant (DSG), capital repairs of schools will be met from this grant rather than from local resources; provision of £10.2m in 2006/07 has been made with £10.9m for the remaining three years of the programme. The Policy and Resources programme also includes NDS-funded provisions for condition work in respect of school buildings (£12.6m in 2006/07 and £12.8m per annum from 2007/08). The allocation of the remainder of the Policy and Resources capital programme is broadly similar to the existing programme. The maintenance of the core buildings in the County Council's estate, through the capital repairs programme, continues to be the main corporate priority. There is provision in the first two years of the programme for investment by the County Council's business units for catering, supplies and transport management at an estimated cost of £0.368m in 2006/07 and £0.190m in 2007/08. These schemes will be financed from the business units' reserves. There is also the annual provision of £0.893m for advance and advantageous purchases of land.

3.9 With regard to Recreation and Heritage the proposed programme includes £0.4m of additional funding for the Winchester Cultural Centre, to be allocated as follows: £0.1m in 2006/07, £0.2m in 2007/08 and £0.1m in 2008/09.

3.10 In order to allow the County Council to participate in the future development of Manydown, the existing provision of £5m has been retained in the overall capital programme for 2008/09.

3.11 In previous years, a mid-year review of the capital programme has been undertaken by the Cabinet. It is proposed that this practice be continued, to include the following for review later in 2006:-

_ cost of fees for building schemes


_ the take-up of Government supported borrowing allocations in 2007/08 and later years


_ progress of the Strategic Property Review, including the identification of potential future capital receipts and their use


_ a review of asset management plans and the preparation of a formal plan for dealing with the backlog of maintenance liabilities as outlined in the Audit Commission's Annual Audit and Inspection Letter reported to the Cabinet on 23 January 2006


_ a revision of the capital strategy to reflect the above.

RECOMMENDATIONS

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

(b) That approval of the capital programme for Adult Services for 2006/07 to 2009/10 be deferred pending agreement by the 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) That the remainder of the capital programme for 2006/07 be approved as set out in the draft capital programme circulated separately, 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) That the remainder of the capital programmes for 2007/08 to 2009/10 be approved as set out in the draft capital programme for the purpose of undertaking design work (including the preparation of feasibility and design project appraisals).

(e) That 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) That authority be given to incur expenditure on land purchases as follows:-

(i) 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 study or design project appraisal approved by the relevant Executive Member, and


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

T. K. THORNBER, C.B.E.,

Leader.

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, it 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

Letters from Government departments on the capital allocations for 2006/07 and subsequent years.