Hampshire County Council

Buildings, Land and Procurement Panel Item

4 April 2006

Capital Repairs 2005/06 and 2006/07

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

1

Summary

1.1

The purpose of this report is to:

· Confirm the level of commitment against 2005/06 allocations

· outline the main budget issues for 2006/07 and beyond

· recommend approval to the proposed budget allocations for 2006/07

· seek approval for the addition of schemes to the programme of capital repairs in 2006/07.

1.2

The proposals in the report build on the principle established by previous Panel decisions that by bringing together resources from different mixes of funding over a longer planning horizon will maximise their strategic impact.

2

2005/06 Position

2.1

The major repair and traditional capital repair allocations were combined with effect from April 2005. The combined capital repairs budget for 2005/06 was £11m - this was augmented by a modest carry forward from 2004/05 of £211,000 and, following a recommendation by the Panel at their meeting on 5 April 2005, by £1.060m from the Advantageous Land programme (this funding was allocated to support four specific projects). The total funding available, including fees, was therefore £12.271m.

2.2

£7.3m of this budget was allocated to support key Corporate Risk Assessment priorities with the balance allocated to support other schemes and landlord strategic requirements.

2.3

The level of commitments against these allocations at the end of February 2006 is shown at Appendix 1. At this stage it is anticipated that the budget will be fully committed by year end but any slippage will be carried forward into 2006/07.

3

2006/07 and beyond

3.1

The capital repairs allocation for 2006/07 of £15.6m will be targeted at continuing to reduce maintenance liabilities and to address the priorities identified in the Corporate Risk Assessment. The proposed allocation is shown at Appendix 2.

3.2

From April 2006 Government funding for schools is to be provided by a separate grant, the Dedicated Schools Grant (DSG). The capital repair allocation previously provided from schools block revenue contributions will in future be funded from the DSG and will need to be spent in full on schools. This will reduce capacity to bring resources together in a way that maximises the impact of the individual funding streams and the change will further constrain the resources available to maintain the non-schools estate.

3.3

Inflation continues to run between 6-7% and this already high level is expected to increase as work on the 2012 Olympics moves ahead. The standard allocation of 2.5% has been added to the locally resourced capital repairs programme available for non-schools work. Following a decision of the Schools' Forum the full 7% has been added to the DSG capital repairs programme for 2006/07 and, provisionally, for 2007/08.

3.4

NDS funding has been confirmed for 2006/07 and 2007/08 but no further allocations will be announced until the Government has completed its Comprehensive Spending Review in 2007. If no further resources are identified the funding available for capital repairs to school buildings will reduce by over 50% in 2008/09 despite the positive impact provided by the DSG funding. The County Council is not expected to receive any funding from the Building Schools for the Future (BSF) programme until 2011 but may benefit from the additional funding from 2008/09 for building projects in primary schools recently announced by the DfES.

3.5

NDS allocations up to 2005/06 have been provided by the Government as 100% capital grant. For 2006/07 this support will be provided as 60% supported borrowing and 40% capital grant - in 2007/08 this moves to 70% supported borrowing and 30% capital grant. Supported borrowing should mean that the Government provides additional revenue grant to meet in full the loan charges incurred in servicing the borrowing. However, the County Council's low grant settlement means it is significantly below the minimum floor level for grant increases and any supported borrowing allocation would only have the effect of moving the County Council closer to the floor level at which grant increases can be received. For 2006/07 the County Council has decided to continue its policy of taking up in full all supported borrowing approvals but the extent to which it can continue to afford to do so without the benefit of the extra grant to fund the borrowing costs will be subject to review in 2007/08. Unless the Government changes the way in which it provides the NDS allocations this is likely to mean the 2007/08 allocation will not be taken up in full.

3.6

The Panel has previously approved a policy of planning resources over a three year timescale and expenditure in 2005/06 was managed tightly to ensure sufficient capacity was available in future years to accommodate a number of pressures including Ashburton Court. A further re-profiling of the locally resourced capital repairs programme is now proposed both to ensure that the agreed contributions to the funding of the Ashburton Court project are in place for 2008/09 and 2009/10 and to retain some capacity in 2007/08 to deal with the uncertainties about levels of NDS funding, the impact of DSG funding on resources for non-schools work and other issues. Details of the proposed profile for locally resourced capital repairs are shown at Appendix 3 and the total level of resources this would provide over the next four years are summarised in the table below:

3.7

2006/07 2007/08 2008/09 2009/10

£'000 £'000 £'000 £'000

Capital Repairs 5,358 7,584 5,666 5,691

DSG 10,194 10,907 10,907 10,907

NDS Condition 12,601 12,784

Total 28,153 31,275 16,573 16,598

3.8

3.8.1

Advantageous Land

Due to the pressures on the non-education capital repairs work, further issues, progress on DDA related work and the final funding for the new offices in the former Intech building, proposals are being made to the Leader to discuss the use of the 2005/6 advantageous land budget vote.

4

Capital Repairs Programme

4.1

Details of the schemes to be added to the programme of capital repairs are contained in Appendix 4.

5

Conclusions

5.1

The introduction by the Government of the Dedicated Schools Grant will again shift the balance of resources towards school buildings and away from the non education estate. This trend is further emphasised by the different inflation allocations in 2006/07 and 2007/08.

5.2

There remains some uncertainty about the longer-term future for NDS and what might replace it. The change in the way the Government provides its support may mean the County Council is unable to afford to take up the full allocation in 2007/08 and this would mean a significant reduction in resources available for schools.

5.3

The available resources will continue to be managed to achieve maximum impact in reducing maintenance liabilities and addressing Corporate Risk Assessment priorities.

6

Recommendations

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

1 The level of budgetary commitment in 2005/06.

2 The proposed allocation of the 2006/07 capital repairs budget.

3 The proposed re-profiling of resources between 2007/08 and 2009/10.

4 The additions to the Capital repairs programme detailed in Appendix 4.

Area of Work

Budget

Commitment

£'000

%

Corporate Risk Assessment

Condition of building fabric

2,406

95

Mechanical services failure

1,310

117

Structural collapse

726

69

Asbestos

700

93

Fire including arson

660

97

Electrical services failure

506

81

Legionella

254

28

DDA

216

117

Other priorities

548

77

Other Allocations

Joint funded landlord's minor works

737

90

Strategic maintenance

406

105

Landlord's contributions

350

101

County Farms

350

90

Other inc. contingency

2,042

69

Total

11,211

89

Virement from Adv. Land

1,060

66

12,271

87

Area of Work

Budget

£'000

Corporate Risk Assessment

Condition of building fabric

3,631

Mechanical services failure

1,064

Structural collapse

692

Asbestos

692

Fire including arson

1,330

Electrical services failure

851

Legionella

250

DDA

213

Other priorities

789

Other Allocations

Joint funded landlord's minor works

1,372

Strategic maintenance

744

Landlord's contributions

640

County Farms

640

Other inc. contingency

2,644

Total

15,552

2007/08

2008/09

2009/10

£'000

£'000

£'000

Original guideline

10,399

5,503

5,503

Proposed re-profiling

-3,000

1,000

2,000

Inflation - 2.5%

185

163

188

Contribution to Ashburton Court

-1000

-2,000

Revised guideline

7,584

5,666

5,691